Mattes v. Checkers Drive-In Restaurant
Annotate this Case
Download PDF
C OURT OF CHANCERY OF THE S TATE OF DELAWARE S TEPHEN P. LA M B C W VICE-CHANCELLOR OURT I L M I N G T O N, H O U S E DELAWARE 19801 November 15,200O Paul A. Bradley, Esquire McCarter & English, LLP Mellon Bank Cente,r Suite 950 919 Market Street P.O. Box 111 Wilmington, DE 19899 Jesse A. Finkelstein, Esquire Raymond J. DiCamillo, Esquire Peter B. Ladig, Esquire Richards, Layton & Finger One Rodney Square P.O. Box 551 Wilmington, DE 19899 RE: Craig Mattes v. Checkers Drive-In Restaurants, Inc. C.A. No. 17775 Gentlemen: This is an action under Section 220 of the Delaware General Corporation Law to compel defendant, Checkers Drive-In Restaurants, Inc., to make certain documents available for inspection and copying by plaintiff, Craig Mattes, or his attorneys or agents. Checkers has filed a timely motion to dismiss the Amended Complaint on the ground that Mattes s demand did not comply with the statutory requirements of 6 220. Because Mattes s demand failed to comply with the mandate of the statute, the motion to dismiss will be granted and the Amended Complaint will be dismissed. Haber v. Harnischfeber. Del. Ch., C.A. No. 6930, Hartnett, V.C. (Feb. 3, 1983). Maus v. Checkers Drive-In Restummts, Inc. C.A. No. 17775 November 15,200O Page 2 of 3 The demand at issue is dated September 12, 2000. It was made under oath by an attorney purporting to act on behalf of Mattes but was not accompanied by a power of attorney, as is mandated by 6 220(b). The September 2000 demand was the last in a series of demands made on behalf of Mattes beginning on August 9, 1999. The earlier demands were defective for a variety of different reasons, ranging from the fact that Mattes was not a record owner of Checkers stock before June 2,2000, to the absence of an oath, to the failure to state a proper purpose for the inspection.2 After suing on the September 2000 demand, Mattes submitted an affidavit in the litigation verifying the demand and confiig that the lawyer who made the demand was acting as his authorized attorney. He did not make a new demand conforming to the statute and sue on it. My decision on this motion is controlled by the general rule that the express statutory requirements of 6 220 as to the form of a stockholder demand should be strictly followed. 3 Among other reasons, strict adherence to those requirements furthers the interest of insuring prompt and limited litigation of actions under 6 220.4 Thus, for example, complaints have been dismissed where the demand is not made under oath, or where the complaint is filed less than five days after the demand is delivered.6 These cases also reveal another reason to strictly adhere to the statutory requirements for form of demand, having to do with the right of the corporation to receive and consider a demand in proper form before litigation is initiated. That right of the corporation is defeated and an integral part of the statute rendered nugatory when, as happened here, the demand does not satisfy the statutory mandate and an effort to comply with the The only pertinence of the earlier demands is that one of them was accompanied by a power of attorney signed by Mattes on August 24, 1999, authorizing the same lawyer who later signed the September 2000 demand to act on his behalf to assert my rights as a shareholder in the Checkers Corporation . . . to review and copy corporate books and records. I am unable to conclude that the delivery of this power of attorney in 1999 satisfied the requirement of Section 220 that it accompany the September 2000 demand. 3 Gay v. Gm!on ht.1 Corp., Del. Ch., C.A. No. 5541, Hartnett, V.C. (Mar. 3 1, 1978). Bear Stearns & Co. v. Pabst Brewing Co., Del. Ch., C.A. No. 5456, Brown, V.C. (Nov. 23, 1977). 5 Haber v. Harnischfeber, Del. Ch., CA. No. 6930, Hartnett, V.C. (Feb. 3, 1983). 6 Frank v. Libco., Del. Ch., C.A.. NO. 12412, Hartnett, V.C. (Dec. 8, 1992). Ma#es v. Checkers Drive-In Restaurants, Inc. C.A. No. 17775 November 15, 2000 Page 3 of 3 requirements of form is made during the course of the litigation without delivering a new form of demand. It is important to point out that corporate defendants in 6 220 cases must raise their technical defenses to the demand in a timely manner. Those objections should be pleaded with specificity in the answer (or upon later discovery) and should be brought to the attention of the court for its prompt consideration. Otherwise, as the Delaware Supreme Court noted in Van Leewan v. Gas Service Co., this court should not permit the late assertion of hypertechnical defenses unless the defendant is able to make a good faith showing . . . that it could not by its own efforts and diligence determine the existence of such defense prior to its actual assertion. )f Recently, for example, I refused to permit the eve-of-trial assertion of a defense based on the lack of an oath, where the defendant was unable to make such a showing.8 Here, there has been no unreasonable delay. And, while trial is scheduled for December 6, 2000, there remains enough time for the plaintiff to make a demand in proper form and, if necessary, amend his complaint before trial. In the circumstances, I see no reason to excuse plaintiffs failure to comply with the mandated statutory form. For these reasons, I have today entered the enclosed order of dismissal. Under the terms of that order, the matter will be dismissed with prejudice on December 1, 2000 unless plaintiff has fast moved for leave to further amend his complaint to allege the corporation s failure to comply with a demand made in proper form. Very truly yours, n SPLlcaj Enclosure oc: Register in Chancery Del. Supr., 467 A.2d 455 (July 6, 1983)(ORDER). Sahagen Satellite Technology Group, LLC v. Ellipse, inc., Del. Ch., C.A. No. 18020, Lamb, V.C. (Sept. 27, 2000). C IN THE COURT OF CHANCERY OF THj3 STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY > CRAIG MATTES, > > Plaintiff, > C.A. No. 17775 > V. > CHECKERS DRIVE-IN RESTAURANTS, INC.,. Defendant. > > 1 > ORDER OF DISMISSAL For the reasons stated in the Court s November 15,200O letter opinion, the Amended Complaint in this action shall be dismissed with prejudice on December 1, 2000, unless plaintiff shall have first moved for leave to further amend the complaint. J November / , 2ooO ,/ !&ice Chancellor ,
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
