Summary
declining to appoint a custodian under 8 Del. C. § 226 where the reason for a purportedly deadlocked director election was stockholders' refusal to attend meetings resulting in a failure to reach quorum; ordering a stockholder meeting under 8 Del. C. § 211 instead to ensure quorum and avoid a contrived deadlock
Summary of this case from Mehra v. TellerOpinion
Civ. No. 17223.
Date Submitted: October 26, 1999.
Date Decided: November 5, 1999. Date Revised: March 3, 2000.
Jesse A. Finkelstein, Catherine G. Dearlove and Janine M. Salomone, Esquires, of RICHARDS, LAYTON FINGER, P.A., Wilmington, Delaware; Attorneys for Plaintiffs.
Judith Nichols Renzulli, Esquire, of DUANE, MORRIS HECKSCHER LLP, Wilmington, Delaware; and Robert J. Valihura, Jr., Esquire, of ROBERT J. VALIHURA, JR, P.A., Wilmington, Delaware; and William F. Griffin, Jr., Esquire, of DAVIS MALM D'AGOSTINE P.C., Boston, Massachusetts; Attorneys for Defendants.
MEMORANDUM OPINION
CORRECTED PAGE
would defeat a quorum,3 Lily caused the meeting to be canceled and as a result, no de jure directors were elected. The plaintiffs contend that the defendants purposefully absented themselves from that meeting to defeat a quorum. Whether intended or not, that clearly was the effect of the defendants' actions. Indeed, the last annual stockholders meeting of Cumberland Farms at which a de jure board of directors was elected, as the 1997 meeting.
The issue that has divided the two shareholder factions is whether or not the board should include "outside," non-family members. The plaintiffs are resolute in their position that the board must include outside directors; the defendants, equally resolutely, insist that they will not accept a board consisting of anyone other than family members. As further evidence that the shareholders are deadlocked on that issue, plaintiffs point to the fact that on September 28, 1999, after this lawsuit was filed, Demetrios and George executed a written consent calling for the election of the four Family Directors as the de jure Cumberland Farms board. Lily and Byron refused to sign the consent, because they would not accept a board that had no independent, non-family members. The positions of the two stockholder factions on this issue appear to be firmly entrenched. The