Susan M. BLAUSTEIN; Hilda K. Blaustein Trust, F/B/O Susan M. Blaustein, U/A Dated 8/2/72, by and through its Trustee Susan M. Blaustein; Morton K. Blaustein Trust U/W Item XVII-A F/B/OSusan M. Blaustein, by and through its Trustee Susan M. Blaustein; Morton K. Blaustein Trust U/W Item XVII-B F/B/OSusan M. Blaustein, by and through its Trustee Susan M. Blaustein; Morton K. Blaustein Trust U/W Item XVII-C F/B/OSusan M. Blaustein, by and through its Trustee Susan M. Blaustein; and Morton K. Blaustein Trust U/W Item XVIII-C F/B/OSusan M. Blaustein, by and through its Trustee Susan M. Blaustein, Plaintiffs Below, Appellants,
LORD BALTIMORE CAPITAL CORPORATION and Louis B. Thalheimer, Defendants Below, Appellees.
Submitted: Nov. 6, 2013.
Court Below: The Court of Chancery of the State of Delaware, C.A. No. 6685-VCN.
Upon appeal from the Court of Chancery. AFFIRMED.
Peter J. Walsh, Jr., Esquire, Matthew D. Stachel, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware; Of Counsel: Nicholas T. Christakos, Esquire (argued) and Ronald R. Massumi, Esquire, Sutherland Asbill & Brennan LLP, Washington, D.C. for Appellants.
S. Mark Hurd, Esquire (argued) and Adam M. Kress, Esquire, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware, for Appellee Lord Baltimore Capital Corporation.
John L. Reed, Esquire, DLA Piper LLP (US), Wilmington, Delaware, for Appellee Louis B. Thalheimer.
Before HOLLAND, BERGER, JACOBS and RIDGELY, Justices and WITHAM, Judge,[*] constituting the Court en Banc.
In this appeal we consider whether a minority stockholder in a closely held corporation has a right to a non-conflicted board decision on whether to repurchase her shares. The stockholder argues that such a right exists, both under common law fiduciary duty principles and under the implied covenant of good faith and fair dealing. The Court of Chancery found that the common law does not impose any duties on directors of closely held corporations to consider buying out minority stockholders. The trial court also found that, given the language in the repurchase provision of the stockholders agreement, the implied covenant of good faith and fair dealing does not create any duty to negotiate a reasonable repurchase price. We agree and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
This dispute arises from Susan M. Blaustein's  unsuccessful attempts to sell her stock in Lord Baltimore Capital Corporation, a closely held Delaware corporation that was created by members of the Thalheimer family in 1998. The Thalheimer stockholders are Louis Thalheimer (" Louis" ), Marjorie Thalheimer Coleman (" Marjorie" ), and Elizabeth Thalheimer Wachs (" Elizabeth" ).
On January 1, 1999, Blaustein and her sister, Jeanne, became stockholders pursuant to the Lord Baltimore Capital Corporation Shareholders' Agreement. Paragraph 7(d) of the Shareholders' Agreement addresses repurchases of stock from minority stockholders. That provision states:
Notwithstanding any other provision of this Agreement, the Company may repurchase Shares upon terms and conditions agreeable to the Company and the Shareholder who owns the Shares to be repurchased provided that the repurchase is approved either (i) by a majority, being at least four, of all of the Directors of the Company then authorized (regardless of the number attending the meeting of the Board of Directors) at a duly called meeting of the Board of Directors or (ii) in writing by ...