VGS, Inc. v. Castiel
Delaware Court of Chancery
2000 WL 1277372 (2000)
David Castiel (plaintiff) formed Virtual Geosatellite LLC (the LLC) to pursue an FCC license. The only member of the LLC was Virtual Geosatellite Holdings, Inc. (Holdings). Subsequently, Ellipso, Inc. (Ellipso) and Sahagen Satellite Technology Group LLC (Sahagen Satellite) joined the LLC as members. Castiel controlled Holdings and Ellipso. Peter Sahagen controlled Sahagen Satellite. The LLC agreement provided that Holdings received 660 units (63 percent of the equity in the LLC), Sahagen received 260 units (25 percent), and Ellipso received 120 units (12 percent). The LLC was controlled by a board of three managers. Castiel had the power to appoint and remove two of the managers, and Sahagen had the powers with regards to the third manager. Castiel named himself and Tom Quinn as managers and Sahagen named himself as the third manager. Soon after, the relationship between Castiel and Sahagen soured as the two had different ideas as to how the LLC should be run. Sahagen convinced Quinn that Castiel could not run the LLC properly and Sahagen and Quinn, without notice to Castiel, merged the LLC into VGS, Inc. (VGS) (defendant). The LLC thus ceased to exist and Sahagen took control of VGS. VGS issued stock in such a way that reduced Holdings’s and Ellipso’s combined interest from 75 percent in the LLC to 37.5 percent in VGS. Meanwhile, Sahagen went from owning 25 percent of the LLC to 62.5 percent of VGS. The only reason that Sahagen and Quinn did not give Castiel notice of the merger was because Castiel had the ability to remove Quinn as manager and certainly would have if he had been given notice of the merger. Castiel brought suit.
Rule of Law
Holding and Reasoning (Steele, V.C.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 708,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 708,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.