The Delaware Court of Chancery applied Delaware General Corporation Law to a previously undefined area of Kentucky law when it dismissed a corporate waste claim against Xcell Energy because defendants accused of waste did not have a fiduciary obligation to the company.
“Courts applying Kentucky law have often looked to Delaware for guidance on novel issues of corporate law,” said Vice Chancellor John W. Noble in Xcell Energy and Coal v. Energy Investment Group. “This court treats a claim for waste arising under Delaware law as a species of breach of fiduciary duty claim. In other words, if there is no fiduciary relationship, then there cannot be liability under a fiduciary-duty-based theory of waste. Xcell did not argue, nor is the court convinced from its independent review, that Kentucky would depart from this general corporate law principle.”
