DealLawyers.com Blog

I’m not privy to Vice Chancellor Laster’s holiday gift wish list, but I’m pretty sure that having the Bandera Master Fund case deposited back onto his desk wasn’t on it.  Nevertheless, that’s precisely what the Supreme Court did last week in Bandera Master Fund LP, et al. v. Boardwalk Pipeline Partners, LP, et al. (Del. 12/25).

We’ve blogged about Bandera a half-dozen times, and – because I didn’t want this particular lump of coal in my stocking either – I’ll refer you to those blogs for details on the factual background and claims made in the lawsuit.  Anyway, when we last heard from the Chancery Court, Vice Chancellor Laster issued a lengthy opinion dismissing the case based on his interpretation of the scope of the Delaware Supreme Court’s 2022 decision overruling his prior post-trial decision in the case.

In this decision, the Supreme Court said that the Chancery Court read its prior decision too broadly. The Court said that the Chancery Court erred by interpreting its conclusion that language in Boardwalk’s partnership agreement exculpated its general partner from claims premised on the alleged failure to satisfy a contractual opinion condition effectively resolved all of the plaintiff’s claims. Instead, the Court said that its opinion was limited solely to whether the language of the limited partnership agreement exculpated the general partner:

It is true, as the Court of Chancery observed, that we intended our exculpation ruling to “put the breach of contract claim [i.e., Count I] to rest,”at least with respect to a damages award against the General Partner and Boardwalk. True, also, that we “believed the breach of contract claim was over,” again, at least as to damages. But the breach of contract claim was “put to rest” and “over” because we determined that the only party who, under the Court of Chancery’s partial judgment, was found liable in damages was exculpated.

Simply put, we did not—because it was unnecessary to our determination of the exculpation issue—rule on whether the Opinion Condition had failed and whether that failure caused the General Partner to breach the Partnership Agreement.

In this decision, the Supreme Court again reviewed the facts and circumstances surrounding the challenged legal opinion and concluded that its shortcomings were such that the general partner failed to satisfy the opinion condition and breached the terms of the limited partnership agreement.  As a result of that conclusion, the Court held that tortious interference claims against the general partner’s controller could move forward.  It also said that because its prior decision didn’t address whether any of the other defendants were exculpated, the Chancery Court “may, to the extent necessary,” consider that issue now.

Justices Valihura and LeGrew dissented from the majority’s decision, and said that the Court should have affirmed the Chancery Court’s conclusion that the opinion condition had been satisfied.  In doing so, they cited Justice Valihura’s concurring opinion in the Supreme Court’s 2022 decision in the case, which set forth the dissenting justices views on how Delaware courts should approach claims challenging the good faith of a professional rendering a legal opinion.

– John Jenkins