Journal of Business & Technology Law


CaseDoerler v. American Cash Exchange Inc.
Court, StateDelaware Chancery Court, Delaware
Date of Decision, Type of Case2/19/2013, Shareholder Issues
Case NumberCivil Action No. 7640VCG
Citation2013 WL 616232
  
Facts Of CaseStockholders of American Cash Exchange, Inc. ("ACE"), plaintiffs, brought this action seeking access to certain books and records of ACE. Plaintiffs assert that the reasoning behind this sought after access is because they want to value their stock and investigate possible breaches of fiduciary duty. ACE, defendant, holds patents on technology that enable individuals without bank accounts to execute domestic and cross-border cash remittances. However, ACE has brought in virtually no revenue for the past ten years and has suffered significant losses from operations each year since its inception. Plaintiffs allege that several of ACE's disclosures regarding optimistic financial projections were inaccurate and thus warrant an investigation being brought.
  
HoldingPlaintiffs presented credible evidence that the controlling stockholders of ACE have engaged in self-dealing with the corporation. However, Vice Chancellor Glasscock believed the request was overbroad and limited the inspection to books and records related to insider transactions.
  
Court ReasoningThe Court will compel production only of books and records that are essential and sufficient for shareholders to effectuate the purpose. Plaintiffs originally sought to investigate all current contracts of ACE but the Court believed that this request was overbroad and did not have any limitations on each category of documents requested. However, plaintiffs did present evidence for being able to look at ACE's general ledger and certain accounts receivable, pending a revision on the form of order by the plaintiffs.

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