Tuesday, May 15, 2018
The Trial of Anne Boleyn
On this day in 1536, Anne Boleyn, as well as her brother George, was tried on allegations of adultery and incest. The conclusion of the “trial” was a foregone conclusion. On May 12, four of the men with whom Anne was accused of having engaged in adultery, Mark Smeaton, Henry Norris, William Brereton and Francis Weston, had already been convicted, and, so goes the adage, it does take two to tango.
Although some incomplete notes of the trial do survive, sadly no transcript is available; it would no doubt make interesting reading. It is clear that both Anne and then George (George’s trial was separate and held after that of Anne) denied all charges against them. Those denials (as well as the expected denials of the other men charged with having committed adultery with Anne) must be accepted at face value. As has been demonstrated by several scholars, most conclusively Eric Ives, Anne and her various co-conspirators could not have been guilty of the charges made – even with the incomplete records available to us today, it can be demonstrated that in numerous instances Anne and a particular gentleman were charged with having committed adultery at a particular time and place when, in fact, either or both of them were at a different place or even two difference places. The truth, however, was not the issue; the outcome of the trial was a foregone conclusion before it ever started. Henry was tired of Anne, and Cromwell had been charged to bring about her fall. End of story.
On May 14, Cramner, Archbishop of Canterbury, had declared the marriage of Henry and Anne to have been invalid ab initio, possibly (the papers as to his determination have been lost) on the basis of her prior contract of marriage to Henry Percy the son of the then Fifth Earl of Northumberland (this Henry would be the Sixth Earl). An alternative basis was that Mary Boleyn, Anne's sister, had been Henry's mistress, and on that basis the marriage could have been invalid based upon consangruity. Regardless as to why, Anne would not die as the Queen of England, having never been validly married to Henry, and their daughter Elizabeth (the future Queen Elizabeth I) was rendered illegitimate.
All of Mark Smeaton, Henry Norris, William Brereton and Francis Weston, along with George Boleyn, would be executed on May 17. Anne’s death would not take place until May 19.
Friday, May 11, 2018
Waiving the Right to Bring a Derivative Action
In a pair of recent cases involving, respectively, Delaware and Nevada LLCs, the courts were called upon to determine whether each LLC’s operating agreement waived the ability of the minority members to bring a derivative action.
Both suits were decided in New York. In the case involving the Delaware LLC, Talking Capital LLC v. Omanoff, the court rejected the assertion that the structure of the operating agreement, which utilized a board with broad powers, was sufficient to eliminate the ability to bring a derivative action. It was noted as well that, were that argument accepted, it “would inherently immunize managing members who commit wrongdoing.” That decision as well noted that the provision of the Delaware LLC Act addressing derivative actions was not qualified by “unless otherwise provided in the operating agreement”, noting that this left open the question as to whether § 18-1001 of the Delaware LLC Act is mandatory or subject to modification by the members.
In the case involving the Nevada LLC, Human Nature Las Vegas Inc. v. Gildea, the New York Court was reviewing an operating agreement for a Nevada LLC. Under the Nevada LLC Act, the right to bring a derivative action is clearly subject to modification, the statute providing “unless otherwise prohibited by the… operating agreements.” In that instance, while the operating agreement required that at least a majority of the three members approve certain key decisions including whether to “commence or settle any litigation or arbitration or hire or terminate any counsel in connection with such litigation or arbitration,” that language was insufficient to eliminate the ability to bring a derivative action.
These two cases have been reviewed by Peter Mahler in his blog New York Business Divorce in an April 23, 2018 posting titled Can LLC Agreement Waive Right to Sue Derivatively? Not in these two cases; HERE IS A LINK to that posting.
While neither of these courts found it necessary to reach the ultimate question, namely can the right to bring a derivative action be waived, there is a Kentucky trial cout decision to that effect. In J & B Energy, Inc. v. Caldwell, the Kentucky Court of Appeals was focused upon whether or not one of the participants in a particular transaction was acting as the attorney for the other members. Unfortunately, not appealed in that case was a determination by the trial court that certain language in the operating agreement was sufficient to waive the right to bring a derivative action. I reviewed that issue in a blog posting on October 6, 2014 titled Waiver of the Right to Bring a Derivative Action? HERE IS A LINK to that discussion. I have otherwise taken the position that the capacity to bring a derivative action is not subject to modification in the operating agreement. For example, I blogged on that issue on May 19, 2015 in a posting On Further Reflection, “No”; HERE IS A LINK to that posting.
Thursday, May 10, 2018
Distinguishing a Written Operating Agreement from a Signed Operating Agreement
Under the Kentucky LLC Act, numerous of the default rules may be modified only if done in a written operating agreement. Put another way, while oral and course of conduct operating agreements are permitted under the LLC Act, those agreements are not effective to modify a default rule that the Act requires be modified only by means of a written instrument. There is not, however, a general requirement that a written operating agreement be signed by the members. While there are a few very narrow exceptions to the rule, such as with respect to the obligation to contribute additional capital to the company, a member is bound by the written operating agreement irrespective of whether they have ever signed it. Indeed, they may be bound by an agreement they have never seen.
These rules can become quite important when there is disagreement as to whether the terms of a written operating agreement have ever been approved.
These principles were recently applied in a decision in New York, a state whose LLC Act is in many respects similar to that of Kentucky. Therein, in 223 Sam, LLC v. 223 15th St., LLC, there existed a dispute as to whether a document that was exchanged by email constituted the final agreed upon operating agreement for the company. Peter Mahler, in his blog New York Business Divorce, has reviewed the 223 Sam, LLC decision; HERE IS A LINK to that posting.
Sunday, May 6, 2018
The Sack of Rome and the Papal Swiss Guard
Today marks the anniversary of the Sack of Rome in 1527 by troops of Charles V, Holy Roman Emperor.
Since the late 15th Century Italy (or at least the region we today identify as Italy – the notion of the region as a nation was long in the future) had been repeatedly invaded by forces from Northern Europe, each seeking to claim dominion over one area or another. Rival claimants to the crown of Naples caused as much trouble as did anything, but economic rivalry between for example Genoa and Venice did nothing to calm the waters. Pope Alexander VI gave command of the papal army to his son/nephew (which is a matter of dispute) Cesare in order to bring some order, and Pope Julius II would actually don armor and lead his army into battle, again in an effort to bring some stability to the situation. While Erasmus would condemn Julius for doing so, he did ignore the fact that the targeted cities surrendered to him.
But back to the Sack of Rome. Charles’ forces were at this point battling the League of Cognac, it being comprised of France, Milan, Venice, Florence and the Papal States . Keeping track of the various Leagues through the Italian Wars is a troubling task; the League of Cambrai was initially formed against Venice by the Papacy, France, Spain and the Holy Roman Empire. Later the initial members would be allied against France with Venice as an ally. Later Venice and France would be against the Papacy, Spain and the Holy Roman Empire. After a significant victory over the French army the troops were restive in that they had not been paid – most were mercenary. Pillaging Rome would be a way of paying the troops. The city was not well defended, although its formidable walls did need to be and were breached. Their commander having fallen in the course of the attack, discipline immediately broke down among the troops, and a sack of over three days began.
The Pontifical Swiss Guard, created only in 1506 under Pope Julius II, rose to the occasion. Of its then number of 189, 147 would fall defending Pope Clement VII, affording him time to take refuge in the Castel Sant’Angelo (Hadrian’s Mausoleum). In recognition of this event, new members of the Pontifical Swiss Guard are sworn in on May 6. Earlier today, in the continuation of that tradition, Pope Francis I officiated at the swearing in of a number of new Swiss Guards.
There was in 2013 an event unique to the Guard, namely the recognition of a Pope’s retirement. Benedict XVI left the Vatican as Pope, flying to the Castle Gandolfo. The Swiss Guard accompanied him to the castle and there stood guard. When the moment his resignation became effective, and Benedict became not Pope but Pope Emeritus, the Guards left their station at the castle and returned to Rome. While the Vatican has its security forces, and they no doubt continued to provide protection for Benedict, the Swiss Guard serve the Pope.
Of course this was not the only sack of Rome – it had fallen many times in its long history. It fell to the Normans in 1084, in 546 by the Ostrogoths, in 455 by the Vandals, in 410 by the Visigoths and in 387 BC by the Gauls.
Thursday, April 26, 2018
Delaware Chancery Court Addresses Obligation to Set Aside Reserves for Known Claims;“Undissolved” to LLCs so Creditor Claims May be Pursued
Delaware Chancery Court Addresses Obligation to Set Aside Reserves for Known Claims; “Undissolved” to LLCs so Creditor Claims May be Pursued
Yesterday, the Delaware Court of Chancery (Vice Chancellor Glasscock) issued an opinion addressing the obligation of an LLC to set aside reserves to satisfy likely claims. In this instance, the LLCs had dissolved and set aside nothing in the way of reserves to satisfy reasonably expected claims from some former members dissatisfied with the appraisal methodology utilized to determine their redemption price. Vice Chancellor Glasscock found that the zero reserve was inappropriate, and on that basis “undissolved” the LLCs. Capone v LDH Management Holdings, LLC, C.A. No. 11687-VCG (Del. Ch. April 25, 2018).
The plaintiffs in this action have been executive officers of defendant LDH. After termination of employment, LDH was entitled to redeem their interests in the company pursuant to a valuation performed as of the last day of the prior year. In this instance, however, LDH jumped the gun and performed the valuation before the end of the year. That valuation came it at essentially $1.4 billion. However, an essentially contemporaneous offer to sell part of the company received significantly higher valuations. The plaintiffs objected that those higher valuations, determined by what third parties would actually pay for the business, should have been taken into account in the valuation. Specifically, they asserted that the failure to consider those offers would violate the board’s obligation that they determine the value “in good faith” as specified in the operating agreement.
The Delaware LLC Act sets forth a detailed process for the dissolution of an LLC. One of those requirements, set forth at section 18-804(b)(3), requires that the LLC:
Make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the limited liability company or that have not arisen but that, based on facts known to the limited liability company, are likely to arise or to become known to the limited liability company within 10 years after the date of dissolution.
Otherwise, the LLC Act requires as well that:
A limited liability company which has dissolved … shall pay or make reasonable provision to pay all claims and obligations, including all contention, conditional or un-matured contractual claims, known to the limited liability company.
Del. LLC Act § 18-804(b)(1).
The bulk of the opinion was then devoted to whether the complaints made by the plaintiffs over a series of emails and phone calls with respect to the valuation methodology employed by the company put it on notice of the claims. The court ultimately determined that the company had notice of the potential claims and had acted inappropriately in setting aside a zero reserve based thereon. The ultimate merits of that claim will be resolved in litigation already pending in New York.
What Vice Chancellor Glasscock did order was that the certificates of cancellation filed with respect to the subject LLCs be in effect withdrawn and the LLCs reinstated. This is necessary in that, under Delaware law, once a certificate of cancellation is filed, no suits can be brought by or against of the LLC. With those certificates of cancellation now no longer in effect, the LLCs continue in existence, and the New York lawsuit may proceed.
FYI, Kentucky does not have the concept of a certificate of cancellation, and a dissolved LLC may continue to sue or be sued after its dissolution.
Today Began the Renaissance (?)
By certain reckoning, today is the anniversary of an event in 1336 off from which is dated the Italian Renaissance. It was on that day that the poet Petrarch climbed to the top of Mount Ventoux in southern France. Petrarch was by no means the first person to have a climbed this “mountain” - it's only slightly over 6000 feet in height. Rather, his climb was considered noteworthy because he simply did it for the experience.
Whether this was, actually, the beginning of the Renaissance is open to significant debate. By then Petrarch had already completed a new epic poem in Latin titled Africa (it is about the second Punic war). Regardless, he would go on to be a prolific letter writer, corresponding with persons including Boccaccio, and would locate the writings of numerous classical writers, including Cicero.
All is not, however, good with Petrarch. He is credited with identifying the so-called “Dark Ages.” In fact, the purported “Dark Ages” never existed.
Tuesday, April 24, 2018
Beware Greeks Bearing Gifts
Today marks the anniversary of the traditional Fall of Troy in 1184 B.C., thereby bringing to its culmination the Trojan War.
The Fall of Troy is not recounted in Homer’s Iliad, the iconic epic, it rather covering only a period of ten days to two weeks within the supposed ten-year span of the war. The Fall of Troy through the subterfuge of the Trojan Horse is briefly mentioned in the Odyssey and is referenced in several other Greek sources. The story would not find, however, its full development until Virgil’s Aeneid.
Some modern historians have attempted to explain the story as an analogy, suggesting actually that an earthquake – Poseidon, whose portfolio included horses, was as well the god of earthquakes. I, for one, would rather retain the literal interpretation.
Regardless it is a great story, especially the fall of Achilles to Paris after the former killed Hector. Speaking of which, the movie Troy misstated the story, likely because they wanted to keep Brad Pitt on the screen. Achilles was killed before the fall of Troy; he never entered the city.
Some might consider the Trojan War to be ancient history. It’s all matter of perspective. At the time of the Fall of Troy the Egyptian civilization had been flourishing already for 2000 years.