Miller v. HCP & Co.
Delaware Court of Chancery
2018 WL 656378 (2018)
Christopher Miller (plaintiff) founded Trumpet Search, LLC, whose operating agreement gave HCP & Company's (defendant) Class D and E membership units first claim to roughly the first $30 million of any sale, restricted sales only to third parties, let a board majority approve any sale, and waived all fiduciary duties among members and board members; HCP controlled four of Trumpet's seven board seats. After HCP's board members announced a planned $31 million sale to MTS Health Partners, giving non-HCP board members just five days to find a competing offer, competing bids pushed MTS's offer up to nearly $43 million, though non-Class-D/E members still received almost nothing. Miller sued, seeking an order that the implied covenant of good faith and fair dealing required the board to run a full auction to maximize value for all members, and HCP moved to dismiss.
Whether the implied covenant of good faith and fair dealing implies terms in a contract that address development of contractual gaps that neither party to the contract anticipated at the time of contracting.