Leone v Owsley

Leone sued Owsley and another member of a limited liability company alleging bad faith in setting the purchase price for Leone’s interest. The district court granted summary judgment holding Owsley and the other member immune under the applicable Delaware statute. The panel reversed and remanded. It held that the district court erred in its good faith analysis as Delaware precedent adopts the common law rebuttable good faith standard when members rely on outside experts and has heled evidence that the mangers withheld material information from the expert can rebut the presumption. The panel held that while the district court appeared to adopt an intentional state of mind requirement, it also quoted the applicable standard in Delaware law and thus did not use an incorrect mental state analysis. The panel held that the district court improperly applied the Delaware bad faith rule it adopted as there was evidence Owsley and the other member lied to the experts about Leone’s conduct, failed to provide correct financial information, lied about the future prospects of the company, instructed the expert to make pessimistic assumptions and the expert relied on these misrepresentations and instructions. Thus a jury could find for Leone and summary judgment was improper.