Sunday, November 24, 2013

Cede & Co. v. Technicolor, Inc. case brief

Cede & Co. v. Technicolor, Inc. case brief summary
741 P.2d 840 (1987)


CASE SYNOPSIS
Plaintiff shareholder filed a motion to amend the complaint in its appraisal action against defendant surviving company to add fraud and unfair dealing claims or, alternatively, to consolidate the action with its action for fraud and breach of fiduciary duty against defendants, surviving company, directors of surviving company at time of merger, corporation, and corporation's chairman. Defendants filed a motion to dismiss the fraud complaint.

CASE FACTS
Plaintiff shareholder filed a complaint against defendant surviving company seeking an appraisal of its shareholdings pursuant to Del. Code Ann. tit. 8, § 262. Plaintiff later filed a complaint alleging fraud and breach of fiduciary duty against defendants, surviving company, directors of surviving company at time of merger, corporation, and corporation's chairman. Plaintiff filed motions to amend the complaint in its appraisal action to add fraud and unfair dealing claims or, alternatively, to consolidate the action with its fraud action. Defendants filed a motion to dismiss the fraud complaint.

DISCUSSION

  • The court denied defendant's motion to dismiss because plaintiff was not foreclosed by § 262 or otherwise from later filing a fraud action because at the time plaintiff filed its appraisal action, it neither knew or had reason to know of the existence of facts giving rise to the claim of breach of duty and fraud. 
  • The court held that plaintiff could not simultaneously litigate its appraisal and fraud actions because the remedies were inconsistent, and plaintiff had to make an election as to a remedy no later than the time at which either of the actions was set for trial.

CONCLUSION
The court denied the motion to dismiss of defendants, surviving company, directors of surviving company at time of merger, corporation, and corporation's chairman, because plaintiff shareholder was not precluded from seeking a breach of fiduciary duty remedy by previously filing an appraisal action. However, the court held that plaintiff had to elect which remedy to pursue no later than at the time one action was set for trial.

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