The main party of interest in a living trust had invested more than $2 million in three limited liability companies that operate as private investment funds. Several of the funds’ operating agreements said that they would dissolve and wind up affairs after 10 years.
When the 10-year mark came and went, the trust owner became concerned about her investments. From July to September 2016, the owner sent three demands to the fund manager requesting to see specific books and records for the funds.
Each time, the manager refused, saying the company had the right to keep information confidential.
The owner of the living trust, a long-time Bradley client, had Bradley attorneys represent the trust in a suit filed in October 2016 against the fund manager. In addition to demanding access to information and records pertaining to their client’s investments, the Bradley attorneys alleged potential mismanagement of the funds and sought recovery of attorney fees and costs.
In Delaware, to obtain access to books and records, a party must prove it has a proper purpose for seeking the information. The Bradley client had to overcome a defense that the requests were merely made for purposes of harassment and that the fund manager had the right to deny the requests on the basis of confidentiality.
Bradley was successful at trial in obtaining a complete victory for our client on all grounds. The Delaware Chancery Court ruled the trust had met its burden of establishing a proper purpose for its requests.
Additionally, the court concluded that the defendant had acted in bad faith in defending the suit and made the extraordinary ruling of awarding attorneys’ fees and costs to the Bradley client.
