Chancery Court Finds Majority Partner Breached Contractual and Fiduciary Obligations to the Minority
By Scott Waxman and Claire White
In this Chancery Court decision, VC Laster examined damages owing to plaintiffs for claims of breach of contract and breach of fiduciary duties of care and loyalty in connection with the sale of a partnership’s assets. The plaintiffs, partners in a D.C. partnership, had proved at trial that the sale by the majority partners (U.S. Cellular) to a related party was not entirely fair to them, as minority holders.
On the breach of contract claim, VC Laster found that defendants had breached a confidentiality provision in the partnership agreement by sharing confidential information regarding the partnership with a valuation firm, for the purposes of obtaining a valuation for the sale transaction. Notwithstanding the breach, only nominal damages were awarded as plaintiffs failed to show proof of actual injury from the breach. Among other facts, the Count highlighted that the confidentiality provision in the partnership agreement could have been waived by the majority partners.