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Laws-info.com » Cases » Delaware » Chancery » 2012 » Sydell Protas v. Richard E. Cavanagh, et al.
Sydell Protas v. Richard E. Cavanagh, et al.
State: Delaware
Court: Delaware District Court
Docket No: CA #6555-VCG
Case Date: 05/04/2012
Plaintiff: Sydell Protas
Defendant: Richard E. Cavanagh, et al.
Preview:IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SYDELL PROTAS, individually and on behalf of all others similarly situated, Plaintiff, v. RICHARD E. CAVANAGH, KAREN P. ROBARDS, FRANK J. FABOZZI, KATHLEEN F. FELDSTEIN, JAMES T. FLYNN, JERROLD B. HARRIS, R. GLENN HUBBARD, W. CARL KESTER, RICHARD S. DAVIS, HENRY GABBAY, G. NICHOLAS BECKWITH, III, KENT DIXON, ROBERT S. SALOMON, JR., BLACKROCK, INC., MERRILL LYNCH & CO., INC., BANK OF AMERICA CORPORATION, PNC FINANCIAL SERVICES GROUP, INC., Defendants, and BLACKROCK CREDIT ALLOCATION INCOME TRUST IV, Nominal Defendant. ) ) ) ) ) ) ) Civil Action No. 6555-VCG ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

MEMORANDUM OPINION Date Submitted: March 30, 2012 Date Decided: May 4, 2012

Seth D. Rigrodsky, Brian D. Long, and Gina M. Serra, of RIGRODSKY & LONG, P.A, Wilmington, Delaware; OF COUNSEL: Steven J. Toll, Joshua S. Devore, and Joshua M. Kolsky, of COHEN MILSTEIN SELLERS & TOLL PLLC, Washington, D.C.; Lynn L. Sarko, of KELLER ROHRBACK, LLP, Seattle, Washington; Gary Gotto and James A. Bloom, of KELLER ROHRBACK, P.L.C., Phoenix, Arizona, Attorneys for Plaintiff. Robert S. Saunders, Stephen D. Dargitz, and Daniel R. Ciarrocki, of SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, DE; OF COUNSEL: Seth M. Schwartz and Jeremy A. Berman, of SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, New York, New York, Attorneys for Nominal Defendant BlackRock Credit Allocation Income Trust IV and Defendants Richard S. Davis, Henry Gabbay, and BlackRock, Inc. Cathy L. Reese and Joseph B. Warden, of FISH & RICHARDSON, P.C., Wilmington, Delaware; OF COUNSEL: David Onorato, Dana L. Post, and Pamila Gudkov, of FRESHFIELDS BRUCKHAUS DERINGER US LLP, New York, New York; Attorneys for Defendants Merrill Lynch & Co., Inc., and Bank of America Corporation. Gregory P. Williams, Lisa A. Schmidt, and Christopher H. Lyons, of RICHARDS LAYTON & FINGER, P.A., Wilmington, DE; OF COUNSEL: Eric M. Roth and Adam S. Hobson, of WACHTELL, LIPTON, ROSEN & KATZ, New York, New York, Attorneys for Defendant The PNC Financial Services Group, Inc. James L. Holzman and Gary F. Traynor, of PRICKETT, JONES & ELLIOTT, P.A., Wilmington, Delaware; OF COUNSEL: Jeremy Feigelson and W. Barton Patterson, of DEBEVOISE & PLIMPTON LLP, Attorneys for Defendants Richard E. Cavanagh, Karen P. Robards, Frank J. Fabozzi, Kathleen F. Feldstein, James T. Flynn, Jerrold B. Harris, R. Glenn Hubbard, W. Carl Kester, G. Nicholas Beckwith, III, Kent Dixon and Robert S. Salomon, Jr.

GLASSCOCK, Vice Chancellor

This matter involves allegations of breach of duty made by a common stockholder of a Delaware statutory trust against the trustees of that trust, as well as claims by the stockholder against those entities she alleges aided and abetted the breach. The Plaintiff failed to make a pre-suit demand against the Defendant trustees, who she concedes were independent and disinterested when they took the actions complained of. For the reasons given below, I find that the Plaintiff's claims are derivative, and not direct. The Plaintiff, therefore, has a long row to hoe. To survive a motion to dismiss in these circumstances under Section 3816 of the Delaware Statutory Trust Act ("DSTA"),1 a plaintiff must plead particularized facts raising a reasonable doubt that the actions of the trustees were taken honestly and in good faith. Because a careful reading of the complaint discloses that the Plaintiff has failed to so plead, her complaint must be dismissed. I. BACKGROUND The facts below are taken from the Plaintiff's Amended Verified Derivative and Class Action Complaint.2 A. The Parties Plaintiff Sydell Protas is a common stockholder in Defendant BlackRock Credit Allocation Income Trust IV ("BTZ" or the "Fund"), a Delaware statutory

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12 Del. C.
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