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Opinion of Vice Chancellor Laster in Toll Brothers Lawsuit

Opinion of Vice Chancellor Laster in Toll Brothers Lawsuit

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Published by DealBook
Opinion by Vice Chancellor Travis Laster of Delaware's Court of Chancery regarding Toll Brothers.
Opinion by Vice Chancellor Travis Laster of Delaware's Court of Chancery regarding Toll Brothers.

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Published by: DealBook on Mar 05, 2010
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05/25/2012

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The Complaint sets forth two counts.Count I asserts a claim for breach of

fiduciary duty under Brophy v. Cities Service Co., 70 A.2d 5 (Del. Ch. 1949), which

recognized the right of a Delaware corporation to recover from its fiduciaries for harm

caused by insider trading.Count II asserts a generalized claim for contribution and

indemnification. The defendants (including Toll Brothers as nominal defendant) have

moved to dismiss these claims. First, all defendants contend that the Complaint fails to

plead demand futility for purposes of Court of Chancery Rule 23.1. Second, all

defendants contend that the statute of limitations bars any claims based on the individual

defendants’ stock sales. Third, the Outside Director Defendants argue that a claim for

breach of fiduciary duty has not been pled as to them. Finally, and most boldly, the

defendants argue that Delaware should abandon its traditional role of policing against

breaches of the duty of loyalty by fiduciaries of Delaware corporations, at least where the

underlying wrong involves insider trading, and that Brophy is an outdated precedent that

should be rejected.2

2

SeeOpening Brief In Support Of The Motion To Dismiss The Amended

Complaint of Defendants Blank, Braemer, Shapiro And Marbach On The Grounds That

Brophy v. Cities Service Co. Should Be Rejected And Plaintiff Has Failed To State A

Breach Of Duty Of Loyalty Claim (hereinafter “Def. Op. Br.”);Reply Brief In Support

Of The Motion To Dismiss The Amended Complaint of Defendants Blank, Braemer,

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