Daniel L. Herrmann

This case involved clients of a brokerage firm who alleged that the firm breached its fiduciary duties by switching their money market sweep accounts to funds managed by a new venture partner without adequately disclosing that the firm would gain a financial interest in the venture through the transfer of client assets. The Court of Chancery dismissed the state law claims, but the Delaware Supreme Court reversed that dismissal and reinstated the claims for breach of fiduciary duty of disclosure and loyalty, along with related aiding and abetting claims. The court held that the disclosures in the notification letter and prospectus were inadequate because they only implied the firm's interest rather than stating it expressly, and implications cannot substitute for clear statements of fact on a mixed question of fact and law. The court also rejected federal preemption arguments, finding no direct conflict with securities regulations that would bar the state claims.

business & regulatory

The case concerned whether Delaware taxpayers who filed a joint federal return claiming the two-earner married couple deduction under I.R.C. § 221 could also claim that deduction when electing to file separate Delaware state income tax returns. The Delaware Supreme Court affirmed the Superior Court's reversal of the Tax Appeal Board, holding that the deduction is unavailable for state tax purposes in this scenario. The court reasoned that Delaware law requires married couples filing separate state returns to recompute their federal adjusted gross income as if each had filed separate federal returns, consistent with longstanding administrative practice under Tax Ruling 82-1. This approach aligns with Delaware's single tax rate schedule for all filers, which does not create the federal-style marriage penalty that § 221 was designed to address. The ruling upheld the Secretary of Finance's authority to issue the regulation as not inconsistent with state tax statutes.

taxes

The case was an appeal by Robert D. Hughes from his Superior Court conviction for first-degree murder of his wife based entirely on circumstantial evidence such as blood drops, a rope from a child's wagon, and items at the crime scene. The Delaware Supreme Court reviewed the trial record detailing the investigation, Hughes's statements to police, medical examiner testimony on the time and cause of death, and events during jury deliberations. The court focused on whether the trial judge sufficiently investigated potential jury prejudice after the panel was exposed over a weekend recess to a newspaper article referencing statements by witnesses and prosecutors that were not introduced at trial, despite the jury's denial of having read any news accounts and the existence of undecided jurors at separation.

criminal lawprocedure

The case involved a dispute over real property in Wilmington that the Court of Chancery had previously placed under a constructive trust for the benefit of plaintiffs Sannini and DiMichele after finding that defendant Oleda Casscells breached a fiduciary duty by purchasing it for herself while working as a saleswoman for their real estate broker. At the second stage of the bifurcated proceeding, the court determined that the plaintiffs must reimburse the Casscells $395,000 (subject to an existing mortgage) to obtain title, but the plaintiffs neither made the payment nor posted a supersedeas bond to stay the order. When the plaintiffs failed to tender payment within the ten-day period set by the December 19, 1977 order, the constructive trust dissolved by its terms, allowing the Casscells to sell the property to a third party. On appeal, the Delaware Supreme Court held that the plaintiffs' challenge to the reimbursement amount was moot because the sale deprived the court of the ability to grant effective relief, and it affirmed the lower court's judgment.

propertyprocedure

The case involved a service station operator, Tulowitzki, who had leased and operated an Atlantic Richfield station in Delaware since 1968 under successive one-year leases that included rights to use the company's trademarks and a renewal policy tied to fuel sales volume. As the 1976 lease expired, Atlantic presented a renewal that added a provision requiring the lessee to pay averaged monthly rent for potential vapor recovery equipment that federal EPA rules might mandate, and it refused to renew without that addendum; Tulowitzki rejected the term, Atlantic cut off fuel deliveries, and litigation followed over whether the relationship qualified as a franchise and whether the demand was unjust or unconscionable. The Court of Chancery ruled for Atlantic, and the Delaware Supreme Court affirmed, assuming arguendo that a franchise existed under the Franchise Security Law, because the addendum did not constitute an unjust non-renewal without good cause or bad faith given the uncertain but possible regulatory requirement, the use of system-wide average costs, and the absence of any showing that the terms were unreasonably one-sided. The court also found no violation of the Retail Sales of Motor Fuel Law and rejected claims that the relationship qualified as a franchise under either the statutory definition or common-law precedents. The decision rested on the principle that superior bargaining power alone does not establish unconscionability without an absence of meaningful choice and substantively unfair terms.

business & regulatory

This case involved a personal injury lawsuit in which the plaintiff struck her head on a metal electrical meter box attached to a utility pole by the defendant power company, resulting in vision loss and other injuries. The plaintiff alleged negligence in the box's placement at 70 inches high next to a sidewalk in a residential area under foliage without warnings, and a jury awarded her $145,000 in damages. The defendant appealed, arguing the trial court should have directed a verdict due to insufficient proof of the standard of care (claiming expert or custom evidence was required) and contributory negligence by the plaintiff. The Delaware Supreme Court affirmed, holding that the reasonable-person standard of care could be determined by the jury without such evidence in this common-knowledge scenario, that sufficient facts supported a negligence finding, and that contributory negligence was not established as a matter of law.

torts & liability