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Of course, this is not to say that a company like Trenwick America might not

possess claims against insiders who injure the company and then cause the company to

make false representations that cover up the wrongdoing. But the claim that the

disclosing company made misrepresentations is not a fraud claim, it is a claim related to

the original wrongdoing. The misdisclosure might have relevance for the vitality of the

underlying claim — such as by defeating an argument that a stockholder vote cleansed

any breach of fiduciary duty or by tolling a statute of limitations129 — but it would not

give rise to a separate claim for fraud.130 The reason is simple, the entity would not have

been relying to its detriment on the fraudulent statement because its controllers were

aware of the actual state of affairs. For this reason, our law has treated claims by

stockholders that corporate disclosures in connection with a stockholder vote or tender

were materially misleading as direct claims belonging to the stockholders who were

asked to vote or tender.131

Therefore, for all these reasons, I conclude that the complaint fails to state a claim

of fraud against the Trenwick or Trenwick America directors.132

129 , __ A.2d __, 2006 WL 585606, at *6-*7 (Del. Mar. 8, 2006) (reiterating the reality that in a context when a transaction’s economic unfairness would cause injury to the corporation itself, disclosure claims have relevance primarily to the standard of review; if the entire fairness standard applies, the ultimate question remains whether the terms of the transaction were substantively fair to the corporation).

130 One can also imagine a scenario when a corporation’s directors commit fraud, giving rise to liability on the part of the company to third parties. Depending on whether the positive law precludes such a claim, one can conceive of the corporation having a claim for indemnity against the directors to make the company whole for the payments it had to make to the third parties as a result of the directors’ wrongdoing.

131 132


, 857 A.2d 1017, 1029 (Del. Ch. 2004).

The defendants advance another defense I do not rely upon. That defense is premised on the

notion that Trenwick America cannot bring a claim against them because the knowledge of


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