In re LNR Property Corp. Shareholders Litigation
Delaware Court of Chancery
896 A.2d 169 (2005)
- Written by Rich Walter, JD
Facts
Former minority shareholders (plaintiffs) in LNR Property Corporation (LNR) sued members of LNR’s board of directors and LNR’s controlling shareholder, Stuart Miller (defendants), in Delaware’s chancery court. The suit accused Miller and the directors of having breached their fiduciary duties in connection with LNR’s sale in a freezeout merger. Allegedly, the directors failed to exercise proper oversight over Miller, who controlled both the merger negotiations and the outcome of those negotiations, and the special committee set up to review the merger agreement was a toothless sham. The resulting merger cashed out the minority shareholders, allegedly on unfavorable terms, but left Miller and several of the directors with hefty sale profits, along with management positions and substantial shares of stock in the acquisition vehicle formed to effectuate the merger. Miller and the directors moved for dismissal, arguing that because the suit alleged neither self-interest nor lack of independence on the part of a majority of the directors, the board’s decision to approve the merger was entitled to deference under the business-judgment rule.
Rule of Law
Issue
Holding and Reasoning (Lamb, J.)
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