Question

A. Summarize the court's holding in Patrick v. Allen in Ch. 39 of your text. 355 F. Supp. 2d 704 (2005)

B. Summarize the Court's holding in In Re Caremark, Intl. in Ch. 39 of your text. 698 A. 2d 959 (1996)

Answer 1

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A. Summarize the court's holding in Patrick v. Allen in Ch. 39 of your text. 355 F. Supp. 2d 704 (2005)

Since Shapiro involved a motion for summary judgment, the court had evidence before it from which to discern the corporation's purpose. Here, neither the Complaint nor the documents incorporated therein dictate that the present use of the Property is consistent with the corporate purpose of RPO. Accordingly, Plaintiff has pled corporate waste sufficiently to survive Defendants' motion to dismiss. Defendants' motion to dismiss is granted in part and denied in part. To the extent Plaintiff claims that Defendants Nathaniel Kramer, Hans Kertess, Richard Rainwater and Dixon Boardman breached their fiduciary duties by failing to negotiate for a sale of the Property, those claims are dismissed. Plaintiff’s claims that Allen and Kramer breached their fiduciary duties by offering to purchase additional RPO shares are also dismissed. In all other respects, Defendants' motion is denied.

B. Summarize the Court's holding in In Re Caremark, Intl. in Ch. 39 of your text. 698 A. 2d 959 (1996)

Held. There was no evidence that the directors knew that there were ARPL violations, and there was no systemic or sustained failure to exercise oversight. However, the terms of the settlement merely required Caremark to institute policies to further assist in monitoring for violations. Therefore the settlement was approved. Directors are potentially liable for a breach of duty to exercise appropriate attention if they knew or should have known that employees were violating the law, declined to make a good faith effort to prevent the violation, and the lack of action was the proximate cause of damages. A breach of duty to exercise appropriate attention, as the court notes, is more difficult for Plaintiffs to prove than a breach of the duty of loyalty. Most decisions that would come under this duty will resemble many decisions shielded by the business judgment rule.

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