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Stahl v. Apple Bancorp, Inc. - 579 A.2d 1115 (Del. Ch. 1990)

Rule:

Upon an application for mandatory preliminary relief, plaintiff must show more than a reasonable probability of success on the merits; he must clearly establish the legal right he seeks to protect or the duty he seeks to enforce. 

Facts:

Plaintiff shareholder owned substantial stock in a banking corporation. Plaintiff decided to announce a public proxy contest for remaining shares of the corporation's stock. In response, defendant directors elected to defer the company's annual meeting to explore the possibility of selling the company. Plaintiff filed a complaint alleging that defendants improperly decided to defer an annual meeting on the grounds that plaintiff's contest was likely to succeed. Accordingly, plaintiff asserted the need for a preliminary injunction to require the annual meeting. The trial court denied the injunction on the grounds that defendants' reaction was a response that bore a reasonable relation to a valid corporate interest. 

Issue:

Was plaintiff shareholder entitled to preliminary injunction on the ground that the annual meeting was improperly deferred by defendant directors because plaintiff’s contest was likely to succeed?

Answer:

No

Conclusion:

The chancery court denied plaintiff's injunction, holding that defendants' decision to defer the annual directors meeting was made with a reasonable relation to protecting a corporate interest because the proxy contest could have been considered a threat to the company's existence. Generally, preliminary injunctive relief will be granted if plaintiff demonstrates that it is reasonably probable that he will succeed on the merits and that, if the requested relief is denied, he will suffer harm that is both irreparable and greater than the harm that would befall defendants if the relief is granted. Where plaintiff seeks not merely mandatory relief, but final relief -- in the sense that a result after trial could not practically reverse the grant of preliminary relief -- then, absent an extraordinary circumstance, the court ought not to grant such relief where material facts are in substantial dispute.

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