Philip R. Shawe and Shirley Shawe, Respondents Below-Appellants v. Elizabeth Elting, Petitioner Below-Appellee

Summary

The Supreme Court of Delaware affirmed the Court of Chancery’s appointment of a custodian to sell a solvent corporation whose owners and directors were irreconcilably deadlocked and whose dysfunction threatened actual and irreparable harm. The court held that the statutory challenge to the custodian’s authority to sell was waived because it was raised for the first time on appeal, but concluded that the statute permitted the sale and that the Court of Chancery did not abuse its discretion after considering and attempting less intrusive alternatives. The court also declined to consider a newly raised constitutional challenge and held that Shirley Shawe was bound by the dismissal with prejudice of derivative claims. Justice Valihura, dissenting, would have held that the statute did not authorize a forced sale of stock over a stockholder’s objection and would have required a less intrusive remedy.