Chancery Court Rule 12(b)(6) – Page 3

Even Languorous Litigation Must Abide Rule 12(b)(6), Chancery Court Holds

Aug 04 2017

In Beach to Bay Real Estate Center LLC et al. v. Beach to Bay Realtors Inc. et al., Civil Action No. 10007-VCG (Del. Ch. July 10, 2017), the Delaware Court of Chancery granted in part the defendants’ motion to dismiss because the plaintiffs’ alleged only conclusory facts in support of their claims for breach of fiduciary duty and constructive trust. The court also dismissed the plaintiffs’ claim for breach of implied contract based on an oral LLC operating agreement, a theory of recovery that was in tension with the sole written document proffered by the plaintiffs and the plaintiffs’ own allegations about the parties’ obligations to the LLC.

Chancery Court Dismisses Breach of Duty Claim and Denies Quasi-Appraisal Relief Sought by Stockholders after Merger

Jun 27 2017

By Scott E. Waxman and Uri S. Segelman

In In re Cyan, Inc. Stockholders Litigation, C.A. No. 11027-CB (May 11, 2017), the Delaware Court of Chancery dismissed Cyan, Inc. stockholders’ complaint alleging breach of duty by Cyan’s board in merging with Ciena Corp., holding that the plaintiffs had failed to plead sufficient facts to support a reasonable inference that a majority of Cyan’s board was interested in the transaction or acted in bad faith so as to sustain a non-exculpated claim for breach of fiduciary duty. In so doing, the court further denied plaintiffs’ claim for equitable relief of quasi-appraisal, holding that since such relief is typically awarded to redress disclosure deficiencies that are the product of a fiduciary breach, and given that plaintiffs failed to identify any material misrepresentation or omission from Cyan, or to allege any other viable claim for a fiduciary breach, there was no basis to impose a quasi-appraisal remedy.

Failure to Make Demand to the Board of Directors Dooms 50% Owner’s Breach of Fiduciary Duty Claims Against Co-Owner

May 19 2017

By: Michelle McCreery Repp and Benjamin Kendall

In Dietrichson v. Knott, C.A. No. 11965-VCMR (Del. Ch. Apr. 19, 2017), the Chancery Court dismissed the entire complaint brought by one member of a limited liability company against another member for paying himself an unauthorized salary and misappropriating the proceeds of a sale of the company’s assets, concluding that the claims made were derivative rather than direct stockholder claims. The Court also held that plaintiff’s claims were not “dual-natured” (i.e., having both direct and derivative aspects), because the plaintiff failed to plead that the transaction resulted in both an improper transfer of economic value and voting power from the minority equity holders to the controlling equity holder.

Tag:Chancery Court Rule 12(b)(6)