LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
Capital Corp. v. Gatz Properties, LLC, is an iconic opinion
from the Delaware Court of Chancery that was issued on Jan. 27, 2012 and highlighted
on these pages here. This decision is momentous because it explains
why fiduciary duties will apply by default to managers and controlling members
of LLCs unless those duties are expressly waived in the LLC's operating
On Feb. 23, 2012, the Court issued a
post-trial Order granting attorneys' fees to the prevailing Plaintiffs in
the amount of over $660,000. As explained in the Court's opinion, the award was
due, in part, to errant litigation tactics. The Court, in its opinion last
month, awarded Plaintiffs "one-half" of their reasonable attorneys' fees. The
post-trial, procedurally indecorous manner in which the exact amount of
fees was determined might serve as a cautionary tale, or a "teaching
moment" for those who seek to object to the amount of fees awarded pursuant to
the decision of the Court of Chancery to award "reasonable" fees in an amount
to be determined. See, e.g., the last
post-trial letter to the Court from Plaintiffs' counsel, just prior to the
Court's ruling on fees.
(The Court's opinion from last month must
be noteworthy, if only because former Chancellor William Chandler, now with the
Wilson Sonsini firm, also made time along with his new colleague Ryan
McLeod, to summarize the case in a post available here.)
The author of the Auriga opinion recently succeeded Chancellor Chandler
as the current Chancellor for the Court of Chancery.
for Plaintiffs' first post-trial letter to the Court regarding the
issue of fees awarded, explained why there was a procedural imbroglio
about how the fees awarded by the Court should be determined. The post-trial
reply letter to the Court from counsel for Defendants had a different view
of footnote 184 of the Court's opinion (quoted in full below), which
referred to the axiom that it takes more time to clean up a pizza thrown
against the wall than it does to throw the pizza. The Court's
post-trial transcript ruling on fees explains why one of the parties might
have benefitted from giving more thought before "throwing a pizza" as that
phrase was used in footnote 184 of the Court's opinion regarding the award of
attorneys' fees in this case. The Court's ultimate fee award proves
the point. Kudos to John Reed,
victorious counsel for Plaintiffs, who hails from DLA Piper's Wilmington,
The famous footnote 184 from the
opinion in this case provides as follows: "The
Minority Members' counsel shall submit an affidavit setting forth this amount
[of fees awarded] to Gatz within five days of this decision. Unless Gatz's
counsel fully produces their own billing records in full in support of an
argument that the Minority Members' bills are too high, I shall consider the
Minority Members' amount sought to be reasonable. In objecting to the amount of
the fee, Gatz and his counsel should remember that it is more time-consuming to
clean up the pizza thrown at a wall than it is to throw it."
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Eckert Seamans.
For more information about LexisNexis
products and solutions connect with us through our corporate site.