Appeal Denied in Question of Parallel Claims Of Fiduciary Duty, LLC Agreement Breaches

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By Michael Greene

April 21 — The Renco Group Inc. will not be allowed to immediately appeal a Delaware Court of Chancery finding that its breach-of-fiduciary-duty and aiding-and-abetting claims could not proceed in parallel of breach-of-contract claims against MacAndrew AMG Holdings LLC.

In an April 20 letter opinion, Vice Chancellor John W. Noble declined to certify an interlocutory appeal even though he observed that “interesting and important questions of law and case administration lie at the intersection of contract, fiduciary duty, and aiding and abetting.”

Instead, he found that circumstances of this case did not warrant exercising the court's discretion in certifying an appeal.

“As desirable as appellate instruction would be, interlocutory appeals are not favored if they would not be case dispositive,” Noble wrote.

Moreover, he found that he could not ignore that Renco had prevailed in parallel litigation on similar grounds for which it now sought an interlocutory appeal.

“The cases are, in so many ways, mirror images of each other and should proceed, as they have, on the same basis,” he added.

Interrelationship of Claims

In a Jan. 29 opinion, Vice Chancellor Noble declined to dismiss Renco's claims alleging that the MacAndrew breached an LLC agreement between the parties.

While the court found a claim for breach of the implied covenant of good faith and fair dealing could survive alongside the breach-of-contract claim, breach-of-fiduciary claims were dismissed because Renco failed to show that a fiduciary duty existed independent of the rights under the LLC agreement.

“The Holdco Members chose to govern their relationship with a complex, negotiated agreement,” Noble opined. “If Defendants have violated any of Plaintiff’s rights, the [LLC] agreement—not some general duty of loyalty or care—governs the remedy to which Plaintiff is entitled.”

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Che Odom at codom@bna.com

The opinion is available at http://courts.delaware.gov/opinions/download.aspx?ID=222520.