IN THE SUPREME COURT OF THE STATE OF DELAWARE
THE JOSEPH PENAR FAMILY §
TRUST, by its Trustee Joseph §
Penar; THE WALDER FAMILY §
TRUST, by its Trustee, Cecile §
Donnamarie Newkirk; ALLEN § No. 250, 2016
COOPER, individually; SUE §
COOPER, individually; and THE §
ALLEN AND SUE COOPER §
TRUST, by its Trustees, Allen and §
Sue Cooper, § Court Below: Court of Chancery
§ of the State of Delaware
Plaintiffs Below-Appellants, §
§ C.A. No. 10441
v. §
§
JASEN ADAMS, DAVID §
HARTCORN, and BRIAN §
TOLLEFSON, §
§
Defendants Below-Appellees, §
§
and §
§
PREMIUM OF AMERICA, LLC, §
and PREMIUM HOLDING, LLC, §
§
Nominal Defendants Below- §
Appellees. §
Submitted: November 2, 2016
Decided: November 16, 2016
Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, and
SEITZ, Justices.
ORDER
This 16th day of November, 2016, upon consideration of the parties’ briefs
and the record in this case, and following oral argument, it appears to the Court
that:
(1) Appellants are members of a Delaware limited liability company
formed by a bankruptcy court order to receive the assets of two affiliated
companies in the viatical life insurance business. They claim on appeal that the
Court of Chancery erred when it dismissed their direct and derivative claims
against the defendants whom they allege misappropriated funds from the company
and thereby shorted them when liquidating the company’s assets.
(2) We affirm on the basis of the court’s April 28, 2016 decision. After
rightly expressing frustration with the appellant’s failure exercise its statutory right
to demand books and records before filing suit,1 the Vice Chancellor carefully
reviewed the pleading deficiencies in the amended complaint. He correctly
determined that the appellants’ failure to allege in a non-conclusory fashion the
circumstances of the alleged misappropriation required dismissal of the amended
complaint.
(3) We note that our decision today does not leave appellants without a
future remedy. Court of Chancery Rule 15(aaa) and other rules of claim or issue
1
6 Del. C. § 18-305.
2
preclusion will not bar appellants and other members from asserting claims for
misappropriation or improper distribution of assets as part of the winding up of the
limited liability company.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Court of
Chancery is hereby AFFIRMED.
BY THE COURT:
/s/ Collins J. Seitz, Jr.
Justice
3