Daugherty v. Dondero

The Court of Chancery granted Defendants' motion to dismiss two counts arising from the dilution of Plaintiff's equity and voting interests under Court of Chancery Rule 12(b)(6), holding that the complaint failed to state a claim.

Plaintiff owned common stock of NexBank Capital, Inc. Plaintiff filed this complaint alleging that NexBank's board of directors and their trusts comprised a control group with concomitant fiduciary obligations to the minority stockholders of NexBank. Plaintiff took issue with 2016 and 2017 stock offerings that were allegedly offered at a discounted price to participants and alleged that his equity and voting interests were diluted because of the stock offerings. Count I claimed that the defendants breached their fiduciary duties and controllers, and Count II claimed that NexBank board members named as defendants breached their fiduciary duties as directors. The Court of Chancery held that the complaint failed to state a claim under Gentile v. Rossette, 906 A.2d 91 (Del. 2006), as to either stock offering and thus dismissed the complaint.