Delaware Court of Chancery
2001 WL 221509 (2001)
In 1998, Ralph Grant (plaintiff), Julee Mitchell (defendant), and Jack Meltzer founded Phoenix Environmental, LLC (Phoenix) to bring a computer program to market. In 1999, the founders began converting Phoenix into a corporation called Epasys, Inc. (Epasys). The founders hired McDermott, Will & Emery (McDermott), a law firm, to help them incorporate. In December 1999, a certificate of incorporation was filed naming Grant as incorporator. McDermott also prepared a directors’ consent document that elected officers for Epasys: (1) Grant as President and (2) Mitchell as Treasurer and Secretary. Grant. This form had signature lines listing Mitchell and Grant as directors, but they never signed it. On January 7, 2000, McDermott delivered a Foreign Corporation Certificate (Certificate) to Epasys. The Certificate identified Grant and Mitchell as both officers and directors of Epasys. Grant and Mitchell signed the Certificate in their capacity as officers. In 2000, the relationship among the founders deteriorated. By August 2000, Grant wanted to remove Mitchell and Meltzer from Epasys, and Grant hired McDermott to assist him. McDermott claimed that no board of directors for Epasys had been named yet. McDermott then had Grant, as the sole incorporator, prepare written consent naming Grant as the sole director of Epasys. As the sole director of Epasys, Grant then removed Mitchell and Meltzer from their jobs. Mitchell sought declaratory relief stating that Grant had already exercised his authority as incorporator of Epasys to name Mitchell as a director of Epasys.
Rule of Law
Holding and Reasoning (Strine, J.)
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