LIGHTNING RELEASES: Ocean, New Jersey (2/10/2014)- A team of lawyers at Scarinci Hollenbeck led by partner Anthony R. Caruso, Esq. won a major victory in Delaware Chancery Court recently. Vice Chancellor Glasscock ruled in favor of their clients, American Capital Acquisition Partners LLC and related individual principals as Plaintiffs, in an action against financial conglomerate LPL Financial LLC and LPL Holdings Inc.
Defendants had purchased Plaintiffs’ operations in 2011. Part of the purchase price was to be paid after the acquisition based on future revenues. The lawsuit stemmed from the absence of post-closing earnings when Plaintiffs expected to accrue more revenue and felt they were precluded by Defendants from doing so.
Plaintiffs filed suit in Delaware Chancery Court against Defendant LPL Financial LLC and LPL Holdings, Inc. and in New Jersey on a related action against Andrew Putterman and Fortigent LLC. Plaintiffs assert several claims including fraud, bad faith and conspiracy against the Defendants. Defendants immediately filed a motion attempting to dismiss Plaintiffs’ complaint by alleging a failure by Plaintiffs to plead a claim.
Defendant LPL Holdings and Defendant LPL Financial were unsuccessful to the extent that the Court agreed with Plaintiffs and allowed two of Plaintiff’s claims to go forward to trial. The Court held that Plaintiffs have pleaded sufficient facts to support the inference that Defendants breached the implied covenant of good faith and fair dealing by interfering with Plaintiffs’ ability to generate revenue, thereby preventing Plaintiffs from attaining the revenue targets sufficient to trigger payment under the contingent purchase price arrangement. Additionally, the court sustained Plaintiffs’ breach of contract claim.
“This is an important victory for our clients, as now they will get the opportunity to prove their case in court,” says lead attorney and partner on the case, Anthony R. Caruso, Esq. “I would like to commend my colleagues Charles Yuen, who argued before the court, and Eleanor Grinshteyn who assisted in all aspects of the case. We are confident that our clients will be effective in telling their story as to how they were mistreated by Defendants LPL Financial LLC and LPL Holdings Inc. We all look forward to exposing the facts in this case.”
Senior Associate Eleanor Grinshteyn commented that “it is a rare and meaningful occurrence when a Delaware court allows a breach of implied covenant of good faith and fair dealing claim to continue.”
Defendant LPL Holdings and Defendant LPL Financial are now required to file a formal answer to the active claims being asserted by Plaintiffs, and then the parties will enter the discovery period. A decision in the related New Jersey action is expected soon.
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Scarinci Hollenbeck (www.scarincihollenbeck.com; @S_H_Law) is a New York, New Jersey and Washington, D.C. law firm that serves a diverse group of clients in numerous industries. The full service, general practice law firm retains a highly trained legal team with expertise in several areas, including Corporate Transactions and Business Law, Insurance Law, Cyber Security & Data Protection Law, Bankruptcy and Creditor’s Rights, Environmental and Land Use Law, Litigation, Public Law, Commercial Real Estate, Sports and Entertainment Law, and Tax, Trust & Estate Law. Top-tier personnel, innovative technology and superior client service adds to Scarinci Hollenbeck’s reputation as one of the most highly ranked law firms in the New York, New Jersey and Washington, D.C. area.