Nguyen v. View, Inc.

Citation: Not availableDocket: CA 11138-VCS

Court: Court of Chancery of Delaware; July 26, 2017; Delaware; State Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

In the case Nguyen v. View, Inc., the dispute centers on a Series B preferred stock financing pursued by View in 2009, for which Paul Nguyen, a majority stockholder, initially consented as part of a Settlement Agreement. This agreement included a seven-day revocation period, which Nguyen exercised to withdraw his consent. However, View had already closed the financing without Nguyen's knowledge and later contested the validity of his revocation. The matter was submitted to arbitration, where the arbitrator ruled on December 18, 2015, that Nguyen's revocation was valid, rendering the Series B Financing void.

Subsequently, View attempted to rectify its capital structure through ratifications of various corporate acts, including the void Series B Financing, invoking Delaware General Corporation Law Section 204. Nguyen filed an Amended Verified Complaint challenging the validity of these ratifications under Section 205. View's motion to dismiss the complaint was denied by the Court on June 6, 2017, which found that Nguyen had sufficient facts to suggest the Series B Financing was void and that the attempts to ratify it were invalid.

View later sought reargument on the dismissal under Court of Chancery Rule 59(f), which was denied. The Court clarified that a corporate act that the majority of shareholders declined to authorize could not be retroactively approved. It determined that Nguyen's revocation of consent constituted a deliberate decision not to authorize the Series B Financing, rather than a mere failure of authorization that could be ratified under Section 204.

Nguyen's claims for declaratory judgment regarding the invalidity of the 2016 ratifications under Section 204 were upheld, and the motion to dismiss was denied. A motion for reargument will not be granted unless the court has overlooked a controlling law or misapprehended facts affecting the decision. View's reargument rests on two points: (1) the court allegedly misunderstood a corporation’s power to rectify defective acts under Section 204, and (2) it improperly excluded 'rejected' acts from ratification under the same section. View contends that the statute's reference to 'power to act' means that the corporation only needs to be authorized to take the type of act, rather than having the actual ability at the time of the act. However, the court had previously rejected this interpretation, confirming that the defective acts must be within the corporation's power at the time they were purportedly taken. The court highlighted that the Series B Financing lacked valid consent from the majority stockholder when it closed, rendering it void. View's citation of In re Xencor, where a settlement agreement was ratified despite a failure of authorization, was deemed inapplicable due to the differing circumstances in this case. Regarding the second argument, View's assertion that 'rejected' acts should be included within acts invalidated by lack of authorization had already been addressed and dismissed by the court, making it an insufficient basis for reargument.

View has not demonstrated that the Court overlooked any relevant law or facts, leading to the denial of the Motion for Reargument. The definition of 'failure of authorization' in Section 204 does not distinguish between various forms of failure or invalid votes. An action is either consented to or not; a decision by stockholders not to consent does not prevent the Company from later certifying the action. View's interpretation of Nguyen's revocation of consent contradicts the plain meanings of 'failure' and 'rejection,' undermining the significance of stockholders’ voting rights. View's counsel acknowledged that their reading of Section 204 could allow ratification of actions previously rejected by stockholders, a scenario not supported by the statute's text or legislative intent. Additionally, the Court will not entertain claims that have already been addressed and dismissed.