COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: May 12, 2017
Date Decided: July 31, 2017
Michael Hanrahan, Esquire Rolin P. Bissell, Esquire
Paul A. Fioravanti, Jr., Esquire Elena C. Norman, Esquire
Samuel L. Closic, Esquire Tammy L. Mercer, Esquire
Eric J. Juray, Esquire Benjamin M. Potts, Esquire
Prickett, Jones & Elliott, P.A. Young Conaway Stargatt & Taylor, LLP
1310 North King Street 1000 North King Street
Wilmington, DE 19801 Wilmington, DE 19801
David E. Ross, Esquire
John A. Eakins, Esquire
Ross Aronstam & Moritz LLP
100 South West Street
Wilmington, DE 19801
Re: In Re Energy Transfer Equity L.P. Unitholder Litigation,
Consolidated Civil Action No. 12197-VCG
Dear Counsel:
This letter addresses the two issues that the parties identified as outstanding
following my Memorandum Opinion of February 28, 2017 on the parties’ cross
motions for partial summary judgment. The underlying dispute arises from the
Defendants’ participation in an alleged discriminatory and self-dealing transaction.1
1
Defined terms in this letter have the same meaning assigned to them in the Memorandum Opinion
issued on the parties’ cross-motions. The Memorandum Opinion can be referenced for a detailed
recitation of the parties’ dispute. See In Re Energy Transfer Equity L.P. Unitholder Litigation,
2017 WL 782495 (Del. Ch. Feb. 28, 2017).
After review of the parties’ supplemental submissions, including Plaintiffs’ final
submission of May 12, 2017, I find that summary judgment with respect to the
remaining issues is properly denied because a full record would assist the Court in
reaching an appropriate decision.2 I note that this case is proceeding shortly to a trial
that, regardless of my decision here, will require resolution of various legal and
factual disputes arising out of several intertwined provisions of the applicable LPA.
First, the Defendants seek via summary judgment, essentially, a declaration
that failure to receive Special Approval for a conflicted transaction, under a safe
harbor provision of the LPA, is not, in and of itself, a breach of the LPA. They point
out that, generally, optional safe harbors are just that: optional, not mandatory,
contractual provisions. Failure to pursue such options, accordingly, is of itself not
typically a breach. The specific factual situation here, however, includes both the
Defendants’ affirmative undertaking to seek safe harbor and certain other provisions
of the LPA that cross-reference, and potentially trigger, according to the Plaintiffs,
an obligation to conform to the safe harbor provision. Importantly, the Defendants
contend that they did comply with the Special Approval process of the safe harbor
provision, Section 7.9 of the LPA. Such considerations weigh in favor of declining
2
See In re El Paso Pipeline Partners, L.P. Derivative Litig., 2014 WL 2768782, at *8–9 (Del. Ch.
June 12, 2014) (explaining that there is no “right” to summary judgment and that the Court may
exercise its discretion to deny summary judgment when a more full record would be helpful to
“clarify the law or its application”) (citations omitted).
2
to issue the Defendants’ desired pronouncement here. If the Defendants are correct
that they complied with Section 7.9, the declaration they seek would be advisory.
Moreover, to the extent the issue must be resolved, the effect of failure to receive
Special Approval under this unique contract is best decided on a full factual record
where the alleged interrelation of the provisions and proven facts at trial can be
decided and interpreted in harmony.
Second, the Defendants’ request to dismiss the Unitholder Defendants as non-
parties to the LPA is also denied. The Defendants point out that the Plaintiffs’ theory
is contractual breach; the Defendants argue that the Unitholder Defendants are not
bound by the LPA as a matter of law. The Plaintiffs allege the Unitholder
Defendants were not passive recipients but rather active participants in the alleged
improper issuance, and point to language in the LPA under which, in their view,
contractual liability does attach to the Unitholder Defendants under the facts they
intend to prove at trial.3 I also note that these individuals received the bulk (over
85%) of the purported improper issuance, and rescissory damages and similar
equitable relief is sought here. To preserve my ability to grant full relief, whether it
is contractual or equitable, and in light of the controlling language of this LPA and
facts of this case, decision on this issue is also inappropriate, I believe, sans a full
record.
3
See, e.g., Pls’ Answering Br. 39–44.
3
To the extent the foregoing requires an Order to take effect, IT IS SO
ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
4