Smollar v. Potarazu ( 2016 )


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  •                                                        EFiled: Jun 29 2016 01:47PM EDT
    Transaction ID 59209624
    Case No. 10287-VCS
    COURT OF CHANCERY
    OF THE
    STATE OF DELAWARE
    417 S. State Street
    JOSEPH R. SLIGHTS III                                          Dover, Delaware 19901
    VICE CHANCELLOR                                              Telephone: (302) 739-4397
    Facsimile: (302) 739-6179
    June 29, 2016
    Sidney S. Liebesman, Esquire                 David L. Finger, Esquire
    Montgomery, McCracken, Walker                Finger & Slanina, LLC
    & Rhoads, LLP                            One Commerce Center
    1105 North Market Street, Suite 1500         1201 N. Orange Street, 7th Fl.
    Wilmington, DE 19801                         Wilmington, DE 19801
    Robert D. Goldberg, Esquire                  Kathleen M. Miller, Esquire
    Biggs and Battaglia                          Smith, Katzenstein & Jenkins LLP
    921 North Orange Street                      1000 West Street, Suite 1501
    Wilmington, DE 19801                         Wilmington, DE 19801
    Re:    Smollar v. Potarazu
    C.A. No. 10287-VCS
    Date Submitted: May 23, 2016
    Dear Counsel:
    VitalSpring Technologies, Inc. (“VitalSpring”) stockholders, Britt Family
    Investments LLC, Jeff Waters, and the Kenneth F. Logue Revocable Declaration
    of Trust DTD (“Movants”) have brought a Motion to Intervene as representative
    Smollar v. Potarazu
    C.A. No. 10287-VCS
    June 29, 2016
    Page 2
    plaintiffs in this derivative action pursuant to Court of Chancery Rule 24 (the
    “Motion”). The Motion currently stands unopposed.1
    Intervention as of right is appropriate, pursuant to Court of Chancery
    Rule 24, “when the applicant claims an interest relating to the . . . transaction
    which is the subject of the action and . . . the disposition of the action may . . .
    impede the applicant’s ability to protect that interest, unless the applicant’s interest
    is adequately represented by existing parties.”2       As VitalSpring stockholders,
    Movants have an “interest” in pursuing VitalSpring’s claims of wrongdoing
    (including breach of fiduciary duty, misappropriation of assets and waste) against
    the defendant, Sreedhar Potarazu, as initially asserted in a complaint filed by
    Marvin Smollar in October 2014.3
    1
    Tr. of Oral Arg. on Pl.’s Mot. for an Interim Award of Att’ys’ Fees and Expenses; Britt
    Family Investors LLC, Jeff Waters, and the Kenneth F. Logue Revocable Decl. of Trust
    DTD’s Am. Mot. to Intervene, at 65.
    2
    Ct. Ch. R. 24.
    3
    See United Rentals, Inc. v. RAM Hldgs., Inc., 
    2007 WL 4327770
    , at *1 (Del. Ch.
    Nov. 29, 2007) (“Consideration of an intervener’s standing is implicit in the court’s
    analysis of the elements of Rule 24.”).
    Smollar v. Potarazu
    C.A. No. 10287-VCS
    June 29, 2016
    Page 3
    By opinion and order of today’s date, the Court has granted a motion to
    disqualify Mr. Smollar and his counsel from further participation in this litigation.
    Consequently, Movants’ interests are no longer “adequately represented by
    existing parties.”4 Their ability to protect their interests, as well as the interests of
    all similarly situated VitalSpring stockholders, in pursuing a final resolution of this
    action will be impaired unless and until another representative plaintiff intervenes.
    Accordingly, Movants are entitled to intervene as a matter of right, and the Motion
    must be granted.5
    IT IS SO ORDERED.
    Very truly yours,
    /s/ Joseph R. Slights III
    4
    Ct. Ch. R. 24.
    5
    Michelson v. Duncan, 
    1980 WL 273542
    , at *2 (Del. Ch. Apr. 1, 1980) (allowing the
    movant to intervene as a matter of right following former plaintiff’s disqualification, and
    holding that because he has the right to intervene, “he should not be compelled to
    undergo discovery, at this time, as to issues other than the issue of whether he is in fact
    now a stockholder of [the company] and was such at the time of the transactions which
    are the subject of this suit”).
    

Document Info

Docket Number: CA E10287-VCS

Judges: Slights V.C.

Filed Date: 6/29/2016

Precedential Status: Precedential

Modified Date: 6/29/2016