Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Grace v. Ashbridge LLC

Court of Chancery of Delaware

December 31, 2013

CHARLES B. GRACE, JR., Plaintiff,
v.
ASHBRIDGE LLC, a Delaware limited liability company, Defendant.

Submitted Date: September 5, 2013

R. Montgomery Donaldson, Esquire and Lisa Zwally Brown, Esquire of Montgomery, McCracken, Walker & Rhoads, LLP, Wilmington, Delaware, and Gregory M. Harvey, Esquire of Montgomery, McCracken, Walker & Rhoads, LLP, Philadelphia, Pennsylvania, Attorneys for Plaintiff.

Christopher J. Curtin, Esquire of MacElree Harvey, Ltd., Wilmington, Delaware, and Alfred A. Gollatz, Esquire of MacElree Harvey, Ltd., West Chester, Pennsylvania, Attorneys for Defendant.

MEMORANDUM OPINION

NOBLE, Vice Chancellor

Plaintiff is the co-trustee of a family trust that held, among other assets, the shares of a Delaware corporation that was later converted into the Defendant, a Delaware limited liability company. Plaintiff also is, and was, the chairman, a member of the governing boards, and a member or shareholder of the limited liability company and its predecessor corporation. When the trustees of the family trust filed two accountings in a Pennsylvania court, family member beneficiaries of the trust filed objections that in part alleged breaches of fiduciary duty by the trustees and diminution in value of the trust's interest in the corporation due to imprudent investments, improper loans, and self-dealing transactions by Plaintiff. Because of the offices Plaintiff held in the Defendant and its predecessor corporation, Plaintiff asserts he is entitled to advancement and indemnification from the Defendant for his defense to the objections, a failed mediation, and the present action.

Plaintiffs amended complaint is a patchwork of facts and allegations that provides an outline of what transpired but omits certain key details. In response to Plaintiffs initial complaint, which was even scarcer in detail, the Defendant moved for a more definite statement to understand better the grounds upon which Plaintiff claimed his rights to advancement and indemnification. Although Plaintiff clarified certain allegations, the Court cannot, as a matter of law, grant relief upon those grounds as set forth in his amended complaint. Because Plaintiff sought relief only under the operating agreement of the successor entity limited liability company even though the sole allegations in the objections involve the predecessor corporation and a related entity, the Court cannot order the limited liability company to make advancement and to indemnify based upon the alleged wrongs relating to those distinct entities. Plaintiffs complaint is dismissed for the reasons that follow.[1]

I. BACKGROUND

Charles B. Grace, Jr. ("Grace" or the "Plaintiff) became one of several cotrustees of a family trust (the "Residuary Trust") settled upon the death of his father, Charles B. Grace, in 1969. The Residuary Trust included cash, real property, and preferred and common shares of the family-owned Heintz Investment Company. Heintz Investment Company was renamed the Ashbridge Corporation in 1981.[2] Ashbridge Corporation, a Pennsylvania corporation, merged with and into Ashbridge Partners, LLC, a Delaware limited liability company, on December 31, 2008. On that same day, it changed its name to Ashbridge LLC (the "Defendant").[3]

Grace is a member of Defendant and was a shareholder of Ashbridge Corporation before its merger into Defendant. Grace also serves on the Board of Managers and as chairman of Defendant; he likewise was the chairman and a member of the governing board of the predecessor entity, Ashbridge Corporation.[4]The trustees of the Residuary Trust filed two accountings to which its beneficiaries, Eugene G. Grace, III, Eugene G. Grace, IV, Andrea Grace, and Alexandra Grace (the "Beneficiary Objectors"), filed objections on September 4, 2012 (the "Objections") in the Court of Common Pleas of Chester County, Pennsylvania, Orphans' Court Division (the "Orphans' Court Proceeding").[5] The Objections asserted

1. As set forth above, the trustees breached their fiduciary duty in directing, approving, consenting to and/or acquiescing in the formation and operation of AIM;[6]
2. Objectants object to the diminution in value of the trust's ownership interest in Ashbridge Corporation as reflected in the Accounting as a result of trustee Charles Grace's imprudent investments, improper loans and/or reckless and wanton self-dealing transactions, all of which were made in complete disregard to the rights and interests of the trust's beneficiaries, and all of which the remaining trustees failed to prevent, monitor, and/or remedy.
3. Objectants object to BNY Mellon's fees and commissions in the amount of $154, 826.99 in regard to BNY Mellon's breaches of fiduciary duty concerning trustee Charles Grace's imprudent investments, improper loans and reckless and wanton self-dealing transactions to the substantial detriment of the assets of the trust.[7]

The Objections also describe various background transactions, including that AIM was founded in 1992; that in or about 2001, Ashbridge Corporation was induced to make cash transfers to AIM in a variety of ways; and that in or about April 2010, a private wealth management and family services company acquired the assets of AIM with consideration to have been delivered around April 2013 based on the performance of the AIM assets.[8] The Objections only refer to the actions of Grace, Ashbridge Corporation, and AIM. Ashbridge Corporation's successor entity, the Defendant, is not mentioned even once.

Although the dispute primarily concerns the Objections, Grace also sought reimbursement of expenses from the Defendant before the Objections were filed. On June 8, 2011, Grace purportedly provided an undertaking to the Defendant as required by Section 10.4 of its operating agreement;[9] however, Grace does not explain why or upon what grounds he sought advancement and indemnification on that occasion.[10] On December 23, 2011, counsel to Defendant's Board of Managers (the "Board") wrote to Defendant's long-time outside counsel ("Reed Smith") stating the Board would not pay Reed Smith for legal services performed after June 15, 2011, and that Reed Smith had represented both Defendant and Grace without obtaining the informed consent of the Board.[11]

After retaining new counsel, Grace contacted the Board's counsel again in November 2012 regarding advancement and indemnification. On December 6, 2012, the Board's counsel advised the Board that it was not obligated to authorize advancement and indemnification to Grace. At the December 19, 2012 meeting of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.