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March 9, 2009

Client Warning Flags (In Re Keck)

The facts giving rise to a recent Report and Recommendations of the Hearing Board of the Illinois Attorney Registration & Disciplinary Commission in In re Keck, No. 06 CH 90 (March 6, 2009), shows a primary "warning flag" of a client that cannot be unsatisfied:

Catherine ... and William Murphy were married on November 18, 1988 and divorced in February 2003. After the divorce action was filed in 1998, Catherine was represented by several different attorneys. She described herself as a client who was very involved, and "hands-on." In the spring of 2002, when Catherine's divorce proceedings had been ongoing for four years and after the court ruled that a prenuptial agreement was valid, she decided that her current attorney ... was overwhelmed by the case and needed the assistance of another attorney.

Id. at 2.  Four years, and several attorneys on, Catherine wanted the assistance of a new lawyer.  As Gomer Pyle would have said:  "Surprise! Surprise! Surprise!"  Guess who was the subject of a grievance? 

Hat tip to the Legal Profession blog.

posted by Gary Rosin

March 9, 2009 in Commentary | Permalink | Comments (0) | TrackBack

March 8, 2009

Care in Contracting. BASF v. POSM II Properties Partnership LP (Del. Ch. 2009)

BASF Corp. v. POSM II Properties Partnership LP, C.A. No. 3608-VCS, (Del. Ch. March 3, 2009) (for opinion, see Delaware Corporate and Commercial Litigation blog), involved tiered limited partnerships.  BASF was a limited partner in POSM II Properties Partnership, LP formed to build and lease a facility to Lyondell's predecessor-in-interest, ARCO.  The partnership's general partner was POSM II Properties, the initial general partner of which was ARCO (later, Lyondell Chemical Company).  BASF's predecessor-in-interest, Mobil, had negotiated for a right to withdraw from the partnership if ARCO (or, now, Lyondell) or its affiliates no longer operated the facility.  After Basel AF S.C.A.acquired Lyondell, Lyondell became a wholly-owned subsidiary of LyondellBasel.  BASF claimed that, even though Lyondell was still operating the facility, the change in control of Lyondell triggered the withdrawal right.  Slip Op. at 3-4.

Vice Chancellor Strine, noted that the parties' agreement tied the withdrawal right to Lyondell's operation of the facility, and not to a change in control of Lyondell itself.  Id. at 4-7.  He declined to find a de facto change in control:

If the parties t... had reached a bargain to give [BASF] a right to walk away and be bought out upon a change of control of [Lyondell], one would have expected them to use the common technique and do that explicitly. In this regard, it is notable that change of control provisions often detail the precise scenarios that qualify, whereas, under BASF’s approach, the parties would either have to reach an after-the-fact accord on what corporate events qualified as an implied change in the operator or have a court do so. 

Delaware law does not invest judicial officers with the power to creatively rewrite unambiguous contracts in this manner.

Id. at 13  (footnote omitted).

Certainly, it's hard to imagine that major oil companies didn't know about acquisitions and mergers, and the effect of various structures used in acquisitions on the rights of the parties.

Hat tip, Francis G.X. Pileggi.

posted by Gary Rosin

March 8, 2009 in Commentary, Partnership Cases | Permalink | Comments (0) | TrackBack