Cavalier Oil Corp. v. Harnett
Delaware Supreme Court
564 A.2d 1137 (1989)
- Written by Abby Roughton, JD
Facts
William Harnett (defendant) owned 1,250 shares of stock in EPIC Mortgage Servicing, Inc. (EMSI), which represented a 1.5 percent interest in EMSI. In November 1984, EMSI merged into Cavalier Oil Corporation (Cavalier) (plaintiff). Harnett opposed the merger. Cavalier offered Harnett $93,950 for Harnett’s EMSI shares, but Harnett rejected Cavalier’s offer. Cavalier commenced an appraisal action in the Delaware Court of Chancery under 8 Del. C. § 262 to determine the fair value of Harnett’s shares. Cavalier argued that the vice-chancellor should take the de minimis nature of Harnett’s 1.5 percent interest into account in the valuation. The vice-chancellor rejected that argument and concluded that the purpose of a § 262 appraisal action was to value EMSI as a whole rather than to value any specific fraction of EMSI’s shares owned by Harnett. The court ultimately valued Harnett’s shares at $347,000. Cavalier appealed to the Delaware Supreme Court, asserting that the court had improperly refused to apply a discount in valuing Harnett’s EMSI shares.
Rule of Law
Issue
Holding and Reasoning (Walsh, J.)
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