Sunday, November 24, 2013

Rabkin v. Philip A. Hunt Chemical Corporation case brief

Rabkin v. Philip A. Hunt Chemical Corporation case brief summary
498 A.2d 1099 (Del. 1985)


CASE SYNOPSIS
Plaintiffs, the minority stockholders and their corporation, sought review of the order of the Court of Chancery (Delaware), which granted a motion to dismiss filed by defendants, the majority stockholders and their corporation, and denied plaintiffs leave to amend their complaints in an action that challenged the merger of the minority stockholder corporation with the majority stockholder corporation.

CASE FACTS
The minority stockholders sought to enjoin the proposed merger of the majority stockholder corporation with the minority stockholder corporation. The minority stockholders challenged the proposed merger on the grounds that the price offered was grossly inadequate because the majority shareholders unfairly manipulated the timing of the merger to avoid a one-year commitment regarding the purchase of the additional shares. Additionally, the minority stockholders contended that specific language in the majority stockholders' schedule 13D, which they filed when they first purchased the stock, constituted a price commitment by which they failed to abide contrary to their fiduciary obligations. The majority stockholders and its corporation argued the minority stockholders' claims were primarily directed to the issue of fair value; therefore appraisal was the only available remedy.

DISCUSSION
The court held that the facts alleged by the minority stockholders regarding the majority shareholders' avoidance of the one-year commitment supported a claim of unfair dealing that was sufficient to defeat the motion to dismiss.

CONCLUSION
The decision of the trial court was reversed because the minority stockholders and their corporation alleged sufficient facts concerning the majority stockholder corporation's avoidance of a one-year commitment that was sufficient to defeat a motion to dismiss.


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