Fisk Ventures, LLC. v. Segal
Delaware Court of Chancery
2009 WL 73957 (2009)
In 1996, Dr. Andrew Segal (defendant) formed Genitrix, LLC (Genitrix) to commercialize his biotechnology concepts of directing the human immune system to attack cancer and infectious diseases. In 1997, Genitrix entered into a patent license agreement with Whitehead Institute of Biomedical Research and Massachusetts Institute of Technology. Under the agreement, the license gave Genitrix the worldwide right to develop, sell, and commercialize licensed products and services derived from the patent rights. In 1997, Fisk Ventures, LLC (Fisk) (plaintiff) contributed $842,000 in cash in exchange for Class B interests in Genitrix. A five-person board managed the affairs of Genitrix and could only act with the approval of 75 percent of its members. Genitrix’s LLC agreement provided that Genitrix could only be dissolved with the written consent of 75 percent of the membership interests or the entry of a decree of judicial dissolution. The board was unable to act without Class A and Class B shareholders in agreement. Segal owned the majority of Class A shares, and Fisk owned the majority of Class B shares. Segal and Fisk regularly disagreed over the direction and operation of Genitrix and disagreed on the raising and use of operating capital and whether to dissolve Genitrix. A vote on dissolution was taken, and Segal and the Class A members voted against dissolution. At the time of the vote, Genitrix had no office, no capital funds, no grant funds, generated no revenue, and was unable to operate in furtherance of its business purposes. The members became deadlocked because less than 75 percent of the membership of Genitrix was in favor of dissolution. The only other opportunity for members seeking dissolution was through a decree of judicial dissolution. Fisk filed a motion seeking judgment in favor of a petition for dissolution.
Rule of Law
Holding and Reasoning (Chandler, J.)
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