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at which management made a cursory presentation. To state a claim of disloyalty, a

complaint might allege that a board undertook an acquisition of a company controlled by

one of its directors because that director was having financial problems and the board, in

bad faith, decided to prefer his interests to that of the company. What a plaintiff may not

do, however, is simply allege that a majority independent board undertook a business

strategy that was “all consuming and foolhardy”71 and that turned out badly and thereby

seek to have the court infer that the later failure resulted from a grossly deficient level of

effort or from disloyal motives.

That is all that the Litigation Trust has done here. Therefore, the Litigation Trust

has not stated a claim that the directors of Trenwick breached their duty of care or loyalty

to Trenwick itself in approving the Chartwell and LaSalle mergers, and the

reorganization of Trenwick.

I emphasize Trenwick itself for a reason. As I understand Delaware law, the

Litigation Trust may not assert claims on behalf of Trenwick America against the

Trenwick board of directors without piercing Trenwick’s veil in some manner. That is, if

there was a breach of fiduciary duty by conduct at the Trenwick-level toward Trenwick

America, the proper defendant is Trenwick itself, as the parent corporation, not the

directors of Trenwick. Delaware law does not blithely ignore corporate formalities and

the Litigation Trust has not explained how the Trenwick directors, as opposed to

Trenwick, can be deemed to be a “controlling stockholder” group that owes fiduciary

duties to a subsidiary.


Compl. ¶ 35.


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