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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

Lu V. Malpiede, Neil Malpiede, Julie S. Karchin, JJL Partners, Mary Jane Howard, and Roger H. Papazian, Plaintiffs Below, Appellants, v. George W. Townson, Richard O. Starbird, Hugh W. Hunter, William J. Barrett, Merle A. Johnston, Royalty Acquisition Corp., Royalty Corporation, and Knightsbridge Capital Corporation, Defendants Below, Appellees

Headnote

The effect of 102(b)(7) provisions on litigation is significant. Exculpation provisions eliminate of monetary liability directors for violations of their duty of care. Consequently, if a plaintiffs alleges only that directors violated their duty of care and that caused them some damage, there is no remedy available at law for these plaintiffs. Where the court is unable to provide a remedy, judicial economy requires that a case be dismissed. In Malpiede, the Delaware courts ecounter just such a situation. The result is not surprising: a duty of care claim is dismissed for failure to state a claim for which there is a remedy available.