April 02, 2018

MONTH-IN-BRIEF: Business Litigation & Dispute Resolution

Mac R. McCoy, Sara Bussiere

Business Litigation

Court of Chancery Issues Reminder That Equity Has Its Limits

By Benjamin M. Potts, Young Conaway Stargatt & Taylor, LLP

In The Ravenswood Investment Company, L.P. v. The Estate of Bassett S. Winmill, et al., C.A. No. 3730-VCS (Del Ch. Mar. 22, 2018), the Delaware Court of Chancery addressed the rare situation where a plaintiff proves a breach of fiduciary duties but fails to provide evidence supporting a remedy for that breach. In a post-trial decision, the court acknowledged the “problematic” dynamic that arises when small companies’ decision-makers grant themselves compensation. The court found that such a dynamic resulted in a breach of fiduciary duty, but it also found that no remedy was warranted. As the court cautioned, “[w]hile this court endeavors always to remedy breaches of fiduciary duty, it cannot create what does not exist in the evidentiary record[.]” In other words, “[e]quity is not a license to make stuff up.” While this result may seem harsh, the court’s decision serves as a reminder that to succeed on a claim for breach of fiduciary duty, a plaintiff must prove both a breach and damages caused by that breach. 

Mac R. McCoy

United States Magistrate Judge, Middle District of Florida

Mac R. McCoy is a United States Magistrate Judge in the Fort Myers Division of the United States District Court for the Middle District of Florida.  Prior to his federal judicial appointment on July 1, 2015, Judge McCoy was a Shareholder in the National Trial and National Class Actions Practice Groups at Carlton Fields, P.A. in Tampa, Florida.

Sara Bussiere

Associate, Bayard

Sara E. Bussiere is an associate in Bayard’s Litigation Department. Sara concentrates her practice on corporate and commercial litigation in the Delaware Court of Chancery, Delaware Superior Court, and the United States District Court for the District of Delaware. Sara counsels clients concerning the General Corporation Law of the State of Delaware and Delaware’s alternative entity statutes. Sara has experience in a broad range of corporate matters, including fiduciary duty claims, corporate and alternative entity control disputes, advancement and indemnification claims, trade secret and noncompetition agreement disputes, and other breach of contract claims. Sara also has experience advising corporate entities in receivership or seeking dissolution.