Mitchell Partners, L.P. v. AMFI

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MITCHELL PARTNERS, L.P., ) a California limited partnership, ) individually and on behalf of all others ) similarly situated, ) ) Plaintiff, ) ) v. ) C.A. No. 2020-0985-KSJM ) AMFI CORPORATION, ) a Delaware Corporation, JACK B. ) YANCEY, CAROLYN PUGH, ) BARBARA WOODBURY, MARILYN ) HESS, CAROL HARRISON, T.B.H. ) CORP., a Delaware Corporation, ) LITTLE SABINE, INC., a Delaware ) Corporation, DUNES MOTEL, INC., a ) Delaware Corporation, and HOLI ) CORP., a Delaware Corporation, ) ) Defendants. ) POST-TRIAL MEMORANDUM OPINION Date Submitted: July 22, 2026 Date Decided: October 1, 2026 R. Bruce McNew, Kevin D. Levitsky, COOCH AND TAYLOR, P.A., Wilmington, Delaware; Counsel for Mitchell Partners, L.P. Sarah R. Martin, Bryan T. Reed, GREENBERG TRAURIG, LLP, Wilmington, Delaware; Frank E. Merideth Jr., GREENBERG TRAURIG, LLP, Austin, Texas; Counsel for AMFI Corporation, Jack B. Yancey, Carolyn Pugh, Barbara Woodbury, Marilyn Hess, Carol Harrison, T.B.H. Corp., Little Sabine, Inc., Dunes Motel, Inc., and Holi Corp. McCORMICK, C.  In 2019, AMFI Corporation disclosed that it had $20 million worth of Class B stock outstanding. This was news to the plaintiff, who had acquired AMFI Class A stock years earlier unaware of the existence of the Class B stock. To investigate the origin of the Class B shares, the plaintiff demanded inspection of AFMI’s stock ledger. In response, AMFI produced documents that did not meet the legal standard of a stock ledger and did not reflect any Class B shares. So the plaintiff filed this action. In its original form, the complaint claimed that the company failed to maintain a stock ledger and that the company’s directors breached their fiduciary duties by allowing this to happen. The defendants took an indignant posture early in the litigation, appearing to dismiss much of the plaintiff’s legal pursuit as quixotry. Yet after the plaintiff demonstrated deficiencies with the company’s stock ledger on summary judgment, the defendants worked in good faith to correct the stock ledger. To the defendants’ dismay, that did not end the litigation. By this time, plaintiff’s suspicion had grown to question the existence and issuance of the Class B shares, and the plaintiff added new claims on these issues. This made the defendants more indignant, and intractable litigation followed. Years of contentious proceedings made way to trial on the merits. This post-trial decision ends the imbroglio. Ultimately, the factual record proved less complicated than the human dynamics that perpetuated the dispute. The defendants demonstrated that AFMI issued the Class B shares before the plaintiff had standing to challenge the issuance, and the plaintiff failed to show any bad faith on the part of AMFI’s fiduciaries. This decision enters judgment for the defendants. I. FACTUAL BACKGROUND The court held trial over three days. The record comprises 259 trial exhibits, live testimony from four fact and two expert witnesses, deposition testimony from eight witnesses, and 18 stipulations of fact. These are the facts as the court finds them after trial.1 A. American Fidelity Life Forms AMFI As Its Holding Company Through A Reorganization. AMFI Corporation (the “Company”) is a Delaware holding company.2 Its subsidiaries and affiliates operate in the life insurance business and own real property in Florida.3 Before AMFI was formed in March of 1982, the business that would merge into AMFI operated as American Fidelity Life Insurance Company (“American Fidelity Life”). American Fidelity Life is a Florida corporation founded 1 This decision cites to: C.A. No. 2020-0985-KSJM docket entries (by docket “Dkt.” number); trial exhibits (by “JX-” number); the trial transcript, Dkts. 360–62 (“Trial Tr.”); and stipulated facts set forth in Section II of the Stipulation and Pre-Trial Order, Dkt. 349 (“PTO”). The parties called the following fact witnesses: Victoria Corporaal (former AMFI stock transfer agent); Carol Harrison (AMFI director and former American Fidelity Life treasurer); William Mitchell (Mitchell Partners representative); and Marilyn Woodbury, named in the caption as Marilyn Hess (AMFI President and director). The parties called the following expert witnesses: John Drum (AMFI’s damages expert) and Joseph Raymond (Mitchell Partners’s damages expert). The parties submitted the deposition transcripts of the live witnesses and called the following witnesses by deposition only: Carolyn Pugh (former AMFI director and former American Fidelity Life treasurer) and Jack Yancey (AMFI director and American Fidelity Life President). The transcripts of the witnesses’ respective depositions are cited using the witnesses’ last names and “Dep. Tr.” If a witness sat for multiple days of deposition, the day is identified (e.g., “Day 1”). 2 PTO § II ¶ 3. 3 Id. 2 in 1956 by Charles Woodbury to provide life insurance products to active-duty service members.4 American Fidelity Life had several subsidiaries formed to develop, own, and operate hotels and other properties on the Florida Gulf Coast—T.B.H. Corp.; Little Sabine, Inc.; Dunes Motel, Inc.; and Holi Corp. (collectively, the “Hotel Subsidiaries”).5 In early 1982, American Fidelity Life decided to restructure the business for operational flexibility and regulatory advantages (the “Reorganization”).6 As the Reorganization was originally conceived, AMFI would serve as a holding company of American Fidelity Life, which would merge with a subsidiary of AMFI (the “Merger”) under the parties’ agreement (the “Merger Agreement”).7 American Fidelity Life stockholders would receive shares of AMFI stock in exchange for their shares of American Fidelity Life stock on a one-to-one basis.8 The subsidiary’s common stock, held by AMFI, would be converted into American Fidelity Life stock, which would be the only outstanding American Fidelity Life stock.9 4 JX-10 (“Form S-14”), Ex. 8 (“Request for Rulings”) at 81; Trial Tr. at 526:7–527:2 (M. Woodbury). This decision refers to Barbara, Charles, and Marilyn Woodbury by their first names. The court intends no familiarity or disrespect. 5 See Request for Rulings at 82; JX-156; PTO § II ¶ 3. 6 JX-11 (“1982 Proxy Statement”) at 19–20; Trial Tr. at 534:8–535:3 (M. Woodbury). 7 1982 Proxy Statement at 18; Form S-14, Ex. A (Merger Agreement) at 46. 8 Merger Agreement at 46–47. 9 Id. at 46. 3  The board then tweaked the plan to avoid federal tax liability from the Reorganization.10 As amended, the plan involved two classes of AMFI stock: Class A voting stock and Class B non-voting stock. The AMFI Class A voting stock would be issued to stockholders in exchange for 100% of American Fidelity Life’s Class A stock. The AMFI Class B stock would be issued to American Fidelity Life in exchange for ownership of two of American Fidelity Life’s investment subsidiaries, AMFI Investments Corporation (“Investments Corp.”) and Little Sabine, Inc.11 According to American Fidelity Life’s accounting advisor Peat, Marwick, Mitchell & Co., issuing Class B stock to American Fidelity Life in exchange for all of the stock of Investments Corp. and Little Sabine would make those companies subsidiaries of AMFI rather than American Fidelity Life and would thus ensure that the Reorganization was a tax-free exchange.12 The American Fidelity Life board drafted a supplemental agreement (the “Supplemental Agreement”) to effectuate the issuance of Class B stock to American Fidelity Life in exchange for Investments Corp. and Little Sabine. The Supplemental Agreement provided that, on the effective date of the Merger, American Fidelity Life would transfer all of the Investments Corp. and Little Sabine stock to AMFI, and that AMFI would transfer its Class B stock with a fair value of $1,000 per share to 10 1982 Proxy Statement at 21, 29–31. 11 Form S-14, Ex. B (Supplemental Agreement) at 53. 12 Request for Rulings at 83–86. 4 American Fidelity Life.13 The fair value of Investments Corp. and Little Sabine, and thus the number of AMFI Class B shares ultimately issued to American Fidelity Life, would be determined as of the effective date of the Merger Agreement.14 The Supplemental Agreement provided that the effective date of the Merger Agreement would be delayed until (i) the Reorganization was approved by the Florida Insurance Commission and (ii) the U.S. Internal Revenue Service issued a ruling that the Reorganization was a tax-free transaction.15 The Supplemental Agreement also provided that if a favorable ruling from the IRS on the tax-free nature of the Reorganization was not received before December 1, 1982, the transaction could proceed if the Company’s accountants formally opined that the transaction would be tax-free.16 On February 19, 1982, Peat Marwick submitted a Request for Rulings seeking the IRS’s determination that the Reorganization was tax-free.17 The Request for Rulings attached the balance sheet of American Fidelity Life as of December 31, 1981, and the balance sheets of Investments Corp. and Little Sabine as of February 17, 1982.18 13 Supplemental Agreement at 53. 14 Id. 15 Id. at 52. 16 Id. 17 Request for Rulings at 81, 85–86. 18 Id., Exs. A–C at 89–91. 5  On March 12, 1982, American Fidelity Life’s board held a special meeting where it approved the Reorganization.19 The American Fidelity Life board also formed AMFI, approved AMFI’s bylaws and charter, approved the Merger Agreement and Supplemental Agreement, and resolved that the Merger Agreement and Supplemental Agreement be submitted for stockholder approval at a May 17, 1982 annual meeting.20 On the same day, the newly created AMFI board of directors (the “Board”) held its first meeting to approve the Company charter, bylaws, and form of stock certificates.21 Germane to this litigation, the Company’s charter authorized the issuance of 1,700,000 shares of Class A voting stock and 20,000 shares of Class B non- voting stock.22 The charter also provided that Class B stockholders were entitled to a $1,000-per-share liquidating preference in the event of any liquidation, dissolution, or winding-up of the Company.23 The Board approved the Merger Agreement and the Supplemental Agreement and formed the subsidiary that would merge with American Fidelity Life in the 19 JX-9 at 1–2. 20 Id. 21 JX-8 at 1–2. 22 JX-7 at 2. 23 Id. at 3. 6 Merger.24 The Board reviewed additional documents relating to the Merger, including a Form S-14 registration statement describing the Reorganization.25 On April 16, 1982, AMFI filed the Form S-14 with the U.S. Securities and Exchange Commission.26 The Form S-14 included a proxy statement soliciting support for the Reorganization. That proxy statement was distributed to American Fidelity Life stockholders four days later.27 The proxy statement described the Reorganization in detail and explained that, as part of the Reorganization, AMFI would have both Class A voting stock and Class B non-voting stock, and that AMFI would issue Class B stock to American Fidelity Life in exchange for all of Investments Corp.’s and Little Sabine’s stock.28 The proxy statement also stated that the Merger would be delayed pending the IRS ruling and that the exchange would have no effect on the value of AMFI Class A shares.29 American Fidelity Life stockholders approved the Merger, the Merger Agreement, and the Supplemental Agreement on May 17, 1982.30 The Board met again on July 26, 1982.31 According to the meeting minutes, Charles Woodbury reported that the IRS had declined to rule on the tax-free nature 24 JX-8 at 4. 25 Id. at 5. 26 Form S-14 at 1. 27 See id. at 4–5; 1982 Proxy Statement at 1. 28 1982 Proxy Statement at 19–21, 25. 29 Id. at 21, 23. 30 JX-13 at 1. 31 JX-14 at 1. 7 of the Reorganization, but Peat Marwick had opined that the Reorganization was tax- free.32 As such, the Board resolved to move forward with the Merger, making it effective as of July 30, 1982.33 The Board also resolved that Peat Marwick should help determine the value of Investments Corp.’s and Little Sabine’s stock as of July 30, 1982 and authorized the Company to issue Class B stock to American Fidelity Life based on Peat Marwick’s advice.34 AMFI was unable to locate and produce the Peat Marwick valuation during this litigation.35 But the Request for Rulings stated that AMFI would issue 20,000 shares of AMFI Class B stock as a result of the Reorganization, implying that Peat Marwick valued Investments Corp. and Little Sabine at $20 million.36 AMFI claims that after the July 26 Board meeting, AMFI issued the 20,000 shares to American Fidelity Life. During this litigation, AMFI produced a photocopy of a stock certificated dated July 30, 1982 (the “Class B Stock Certificate”).37 The Class B Stock Certificate states that AMFI was authorized to issue 1,700,000 shares of Class A stock and 20,000 shares of Class B stock.38 American Fidelity Life is listed as the registered holder of 32 Id. 33 Id. at 1–2. 34 Id. at 2–3. 35 PTO § II ¶ 12. 36 See Request for Rulings at 83; id., Ex. E at 97. 37 JX-241 at 1; see also Trial Tr. at 246:8–12 (Harrison) (confirming JX-241 is a copy). 38 JX-241 at 1. 8 the 20,000 Class B shares, and the Class B Stock Certificate bears the signatures of Charles Woodbury and AMFI’s then-secretary, Ruben E. Mauch.39 From 1983 onwards, AMFI included its Class B stock in its consolidated financial statements as “Retained Earnings.”40 B. AMFI Undergoes A Reverse Stock Split In 1983. In 1983, the Board proposed a 300:1 reverse stock split to reduce the number of stockholders and deregister the Company with the SEC.41 On June 24, 1983, AMFI issued a proxy statement soliciting support for the transaction ahead of an August 4 annual meeting.42 The proxy statement explained to AMFI stockholders that they could “expect that there would be substantially less information about the Company available to them” as a result of the reverse stock split if it was approved.43 The proxy statement also informed AMFI stockholders that AMFI would be authorized to issue up to 5,667 Class A shares and 20,000 Class B shares after the reverse stock split.44 The proxy statement did not mention the issuance of Class B shares to American Fidelity Life or the effect of the reverse stock split on Class A stock relative 39 Id. 40 See, e.g., JX-53 at 6, 9, 21; JX-58 at 9, 12, 25; JX-240 passim; see also Trial Tr. at 257:2–267:14 (Harrison); Pugh Dep. Tr. at 44:15–45:11, 48:1–9. 41 JX-18 at 16–17. 42 Id. at 1. 43 Id. at 22. 44 Id. at 3. 9 to Class B stock.45 AMFI’s stockholders voted to approve the reverse stock split on August 4, 1983.46 C. American Fidelity Life Transfers Class B Stock To The Hotel Subsidiaries In 1993 Or 1994. Defendant Carol Harrison was an accountant for American Fidelity Life from 1977 to 1981.47 After a brief leave, she returned as treasurer of American Fidelity Life in 1984 and stayed until she retired in 2017.48 She did not work for American Fidelity Life, AMFI, or any of their affiliates during the Reorganization or reverse stock split. As American Fidelity Life’s treasurer, Harrison prepared AMFI’s consolidated financial statements and registration statements.49 In 1993 or 1994, Harrison was reviewing the work papers of an accountant that had prepared AMFI’s financial statements the previous year.50 She saw a line item on AMFI’s unconsolidated financial report showing Class A and Class B shares. 51 Unaware of the existence of Class B shares, she spoke to other AMFI officers about the line item, and the other officers stated that Class B shares were issued in connection with AMFI’s formation.52 45 Id. at 17, 22–23. 46 JX-19 at 1. 47 Trial Tr. at 239:7–11 (Harrison). 48 Id. at 239:16–23, 241:17–19 (Harrison). 49 Id. at 240:12–22 (Harrison). 50 Id. at 244:16–23, 245:11–19 (Harrison). 51 Id. at 245:11–19 (Harrison). 52 Id. at 247:10–17, 248:11–21 (Harrison). 10  At the home offices of American Fidelity Life, Harrison searched a locked room containing stock certificates for AMFI and the Hotel Subsidiaries.53 Inside a fireproof file cabinet, she found a manila folder containing the Class B Stock Certificate.54 After finding the Class B Stock Certificate, Harrison circled back to other AMFI officers to understand the background concerning the Class B stock.55 She then reviewed microfilm of the Hotel Subsidiaries’ general ledgers and balance sheets and discovered ledger entries totaling slightly over $20 million, which was the implied value of the shares that AMFI transferred to American Fidelity Life as reflected on the Class B Stock Certificate.56 Not understanding the entries, Harrison contacted Saltmarsh, Cleaveland & Gund, the accounting firm that prepared them.57 Saltmarsh accountant Ben Stevens investigated the firm’s work papers and explained to Harrison that the entries were related to the Hotel Subsidiaries’ acquisition of “Class A or Class B stock” from American Fidelity Life.58 53 Id. at 247:5–17, 249:16–21 (Harrison). 54 Id. at 246:2–247:24 (Harrison); see also JX-241. Though JX-241 is a photocopy, Harrison credibly testified that the copy accurately reflects the stock certificate she found. Trial Tr. at 246:2–247:7 (Harrison). 55 Id. at 248:11–21 (Harrison); see also JX-234 at 1. 56 Trial Tr. at 249:6–250:13 (Harrison). 57 Id. at 250:18–251:4 (Harrison). 58 Id. at 251:7–15, 252:6–12 (Harrison). Stevens has since passed away. Id. at 251:5– 6 (Harrison). 11  Stevens directed Saltmarsh to make correcting entries in the Hotel Subsidiaries’ ledgers reflecting the Class B stock holdings. As of April 1, 1994, Saltmarsh included the Class B stock on the Hotel Subsidiaries’ balance sheets.59 D. American Fidelity Life Formally Assigns The Class B Stock To The Hotel Subsidiaries In 2016. Around 2014 or 2015, the Hotel Subsidiaries engaged a new auditor, Warren Averett, LLC.60 In June 2016, Warren Averett emailed American Fidelity Life’s assistant treasurer Rebecca Healer and her coworker Sean Webster to request additional supporting documentation for the transfer of AMFI’s Class B stock to the Hotel Subsidiaries.61 At the time, the only documentation Warren Averett had was an email attachment with a photocopy of the Class B Stock Certificate and a sticky note on the document describing the allocation of those shares to the Hotel Subsidiaries: 5,000 shares to Little Sabine; 2,000 shares to Dunes Motel; 7,000 shares to Holi; and 6,000 shares to T.B.H.62 Warren Averett asked whether there was any formal documentation reflecting the transfer of AMFI Class B stock from American Fidelity Life to the Hotel Subsidiaries.63 Webster replied, explaining that: 59 Id. at 251:16–22, 274:5–13, 462:24–463:11 (Harrison); see, e.g., JX-234 at 3–7 (Little Sabine 1994 general ledger reflecting $5 million investment in stock). 60 Trial Tr. at 574:12–16 (M. Woodbury); see, e.g., JX-192 at 1. 61 JX-67 at 4. 62 See id. at 2–4; JX-68 at 2.The stock certificate and note appear to have been produced as JX-17, but JX-17 was not authenticated during this litigation, and Defendants do not rely on it. 63 JX-67 at 4. 12  [American Fidelity Life] assumed the Mortgage in ’82 for Little Sabine, but they did not have the Cash-on-Hand. At the time the determination was made to [debit] Surplus and [credit] Mortgage. Later in ’94 [Harrison] with the assist [sic] of [Stevens] from Saltmarsh made the determination that a correcting entry had to be made; [debit] Investments-Stock and [credit] Special Contributions (previously ‘Surplus’). As of 2002 Little Sabine showed an Asset balance in Loan Costs (previously ‘Investment-Stock’) for $5M (as per the previous attachment break-out). Aside from account names nothing has changed in terms of monetary value or classification since ’94. Additionally, all the Class B Stock transactions [Mortgage Loans] [sic] in question during ’82, along with the correction/treatment, were handled in the same manner unilaterally for all our hotel properties that were involved in [the] ’94 Saltmarsh entries.64 Webster attached Little Sabine’s 1994 balance sheet showing a $5 million investment in stock, as well as Little Sabine’s 2002 general ledger showing $5 million in “Loan Costs.”65 Healer also opined: In 1982 Stock was issued to [American Fidelity Life] and an entry was made to the hotel books for loans to assist the hotels[.] ... In 1994, 12 years later, [Harrison] and [Stevens] (from Saltmarsh) researched and determined the entry was incorrect in 1982 because it dealt with stock. The following entry was performed which in effect reversed the Special Contribution entry and placed the [debit] side into the Investment in Stock account because stock was given as a loan. 64 JX-63 at 1. 65 Id. at 3–4. 13  Over the years, the loan was paid back by the hotels. Technically, the hotels bought the stock over time by repaying their loan.66 Healer also noted that, to her and Webster’s knowledge, there were no stock certificates reflecting the transfer or meeting minutes reflecting the transaction.67 After Webster and Healer provided these explanation to Warren Averett, the accounting firm replied confirming that their understanding was that the 20,000 shares of AMFI’s Class B stock had been transferred from American Fidelity Life to the four Hotel Subsidiaries.68 Warren Averett also requested that the Hotel Subsidiaries obtain “some proof of legal ownership” of the Class B stock.69 Warren Averett suggested the Hotel Subsidiaries confer with their legal counsel on the best method of obtaining the documentation.70 Harrison then reached out to American Fidelity Life’s counsel, requesting that she “prepare a simple assignment or whatever would accomplish the transfer legally from American Fidelity Life” to the Hotel Subsidiaries.71 Counsel emailed Harrison, asking when the Class B stock was actually assigned to the Hotel Subsidiaries.72 66 JX-67 at 3–4. 67 Id. at 3. 68 Id. at 2. 69 Id. 70 Id. 71 JX-68 at 1–2. 72 Id. at 1. 14 Harrison replied, “April 1, 1994,” as that was the date that Saltmarsh included the Class B stock on the Hotel Subsidiaries’ balance sheets.73 Counsel created a document stating that American Fidelity Life lacked the documentation to confirm the transfer of AMFI’s Class B stock to the Hotel Subsidiaries and confirming that the stock was transferred for value on or about April 1, 1994, effective as of the same date.74 The Stock Assignment was signed and notarized by American Fidelity Life’s president, Jack Yancey, on August 23, 2016.75 E. Class B Stock Appears On AMFI’s 2019 Financials. Two years later, Defendant Carolyn Pugh became American Fidelity Life’s treasurer and was tasked with preparing AMFI’s financial statements.76 She was aware that AMFI’s Class B stock had been accounted for in retained earnings and historically had not been broken out.77 But she made the determination that AMFI’s Class B stock should appear separately on AMFI’s financial statements, like preferred shares.78 Thus, AMFI’s Class B stock was listed separately on its financial statements for the first time in 2019.79 73 Id.; Trial Tr. at 274:3–13 (Harrison). 74 JX-28 (“Stock Assignment”) at 1. 75 Id. at 2; Yancey Dep. Tr. at 49:13–50:13. 76 Pugh Dep. Tr. at 12:11–19, 14:8–9. 77 Id. at 44:21–45:5, 48:1–9. 78 Id. at 42:14–43:8. 79 JX-97 at 2. 15  F. Plaintiff Learns Of AMFI’s Class B Stock For The First Time Over Twenty Years After Acquiring Class A Stock. Plaintiff Mitchell Partners owns shares of Class A AMFI stock. Plaintiff has been a record stockholder of AMFI since 199880 and has continuously owned Class A shares since then.81 Plaintiff learned of the existence of the Class B stock from AMFI’s 2019 financial statements.82 On October 7, 2020, Plaintiff served an inspection demand under 8 Del. C. § 220 to inspect AMFI’s stock ledger and investigate the Class B stock.83 In response, AMFI offered to produce a series of stock cards for inspection.84 The stock cards did not include any record of the Company’s Class B stock.85 80 PTO § II ¶ 2; JX-35; Dkt. 108 (“Second Am. Compl.”) ¶ 8 (alleging that Plaintiff has owned AMFI Class A common stock since June 19, 1998). Plaintiff stated in briefing that it became a stockholder of record in 1996. Dkt. 363 (“Pl.’s Post-Trial Opening Br.”) at 15. Plaintiff’s representative testified at trial that it first acquired Class A shares in 1989. Trial Tr. at 14:15–16:6 (Mitchell) (describing the “big black book” marked as JX-236 as the ledger maintained by Plaintiff’s general partner and the entry “dated September 14, 1989” as follows: “The B is for buy, one share at 21,500 per share, at a total cost, including broker fee, of 21,752.”). Nonetheless, Plaintiff stipulated that, as alleged in the Second Amended Complaint, it has owned Class A shares since June 19, 1998. PTO § II ¶ 2. The court accepts the stipulated fact as true. 81 Id.; JX-236; Trial Tr. at 16:7–12 (Mitchell). 82 See Trial Tr. at 19:15–20:18 (Mitchell). 83 Second Am. Compl., Ex. A at 2, 5, 8–9. 84 See id., Ex. B at 3 (stating that AMFI “does not maintain a current stock list in the regular course of its business” but noting that “[t]he Company does maintain stockholder cards, and those will be made available for inspection”). 85 See id.; PTO § II ¶ 14. 16  G. Litigation Ensues. On November 13, 2020, Plaintiff initiated this class action, asserting two counts arising from AMFI’s allegedly deficient stock ledger.86 Defendants moved for summary judgment on both claims in the original complaint on May 23, 2022.87 Before that motion was resolved, Plaintiff twice amended its complaint, both times retaining the two counts subject to Defendants’ motion.88 The operative complaint is the Second Amended Verified Class Action Complaint, which contains five counts: • In Count I, Plaintiff alleges that AMFI failed to keep and maintain a valid stock ledger.89 Plaintiff seeks an injunction requiring AMFI to maintain its stock ledger in compliance with the Delaware General Corporation Law.90 • In Count II, Plaintiff alleges that Yancey, Pugh, Harrison, Barbara Woodbury, and Marilyn Woodbury (the “Director Defendants”) breached their fiduciary duties by failing to cause AMFI to keep and maintain a valid stock ledger.91 • In Count III, Plaintiff seeks three alternative forms of declaratory relief as to AMFI and the Hotel Subsidiaries: (i) that no Class B Shares are issued or outstanding; (ii) that if the Class B Shares were issued, the issuance was defective and they are void; or (iii) if the Class B Shares 86 Dkt. 1. 87 Dkt. 30. 88 See Dkt. 93; Second Am. Compl. 89 Second Am. Compl. ¶¶ 55–60 (on page 47; paragraph numbers occasionally repeat throughout the Second Amended Complaint). 90 Id. ¶ 60 (on page 47). 91 Id. ¶¶ 61–64 (on pages 47–48). 17  were validly issued, the transfers of the shares to the Hotel Subsidiaries constituted waste.92 • In Count IV, Plaintiff claims that the Director Defendants breached their fiduciary duties with respect to the invalid issuance and conveyance of the Class B Shares.93 • In Count V, pled in the alternative if the Class B Shares are found to be validly issued and outstanding, Plaintiff seeks declaratory relief against all defendants and asserts breaches of fiduciary duty against Defendants Barbara and Marilyn Woodbury, both on the ground that the proxy statement AMFI issued in connection with the reverse stock split made material omissions related to the Class B shares.94 H. AMFI Corrects Its Stock Ledger To Include The Class B Shares. Shortly after Plaintiff filed the Second Amended Complaint, a court-appointed Special Magistrate issued a report and recommendation on Defendants’ motion for summary judgment, concluding that Delaware law requires a company’s stock ledger to account for all of its stock, including non-voting shares, and that AMFI admitted that it did not have any stock cards reflecting issuances and transfers of Class B shares.95 In a letter decision dated July 3, 2024 (the “Letter Decision”), the court adopted the Special Magistrate’s recommendation in large part, denying Defendants’ motion for summary judgment on both counts.96 92 Id. ¶¶ 65–71. 93 Id. ¶¶ 72–74. 94 Id. ¶¶ 75–79. 95 Dkt. 109 at 9–12. 96 Dkt. 131 at 6–7. The court declined to grant summary judgment for Plaintiff on Count I, as the Special Magistrate recommended, because Plaintiff had not moved for that relief. Id. at 7. 18  The Letter Decision concluded that AMFI’s stock ledger was deficient because it failed to include “(i) stock cards for Class B stockholders; (ii) stock cards for inactive stockholders; (iii) all stock cards associated with each active Class A stockholder; and (iv) the full names and addresses of all active Class A stockholders.”97 After the court’s ruling, the Company endeavored to correct these deficiencies. Regarding the Class B shares, Victoria Corporaal, AMFI’s stock transfer agent, created a control card for the Class B shares and made ledger sheets for each of the entities which owned Class B stock.98 Corporaal had always maintained the “inactive stockholder cards” for the Class A shares, but she had not included them in the ledger.99 Corporaal copied and produced all the inactive stock cards. 100 She also retyped the active cards to ensure that they were legible and included the names and addresses of the stockholders on each card, and she copied and produced all old cards and cancelled stock cards.101 Corporaal included her ledger sheets (or work papers) she uses as a backup for the ledger cards, even though she does not consider this part of the stock ledger.102 97 Id. at 2–3 (quoting Dkt. 109 at 10–11). 98 Trial Tr. at 156:7–14 (Corporaal). 99 Id. at 156:20–23 (Corporaal). 100 Id. at 156:24–157:6 (Corporaal). 101 Id. at 157:7–158:8 (Corporaal); see generally JX-251; JX-252. 102 Trial Tr. at 159:15–160:9 (Corporaal); JX-253. Corporaal testified that she inadvertently failed to copy one page of the control card. Corporaal Dep. Tr. at 40:22– 41:20 (Day 2); Trial Tr. at 158:15–159:7 (Corporaal). Plaintiff claims that Defendants 19  I. Litigation Continues. This litigation moved forward in fits and starts. While the court resolved Defendants’ motion for summary judgment, Defendants moved to dismiss Counts III through V of the Second Amended Complaint on October 13, 2023.103 In July 2024, the court rejected Count III’s claim that the Class B share issuance constituted waste and dismissed Count V as to Pugh and Harrison.104 Plaintiff moved for summary judgment on Count I of the Second Amended Complaint on October 7, 2024. Plaintiff argued that the Letter Decision’s finding that AMFI’s stock ledger was inadequate constituted the law of the case.105 Defendants did not produce an updated stock ledger during briefing on that motion.106 While Plaintiff’s first motion for summary judgment was pending, Plaintiff also moved for summary judgment on Count III on January 27, 2025.107 On July 28, 2025, the court granted summary judgment for Plaintiff on Count I, finding that Defendants did not show that there was a dispute of material fact as to the sufficiency of AMFI’s stock ledger.108 The court denied Plaintiff’s motion for have purposefully withheld this page. Pl.’s Post-Trial Opening Br. at 6–7. The record does not support that accusation. See Corporaal Dep. Tr. at 40:22–41:20 (Day 2). 103 Dkt. 111. 104 Dkt. 132 (Mitchell P’rs, L.P. v. AMFI Corp., 2024 WL 3289389, at *1 n.5, 8 (Del. Ch. July 3, 2024)). 105 Dkt. 143 at 25–26. 106 See Dkt. 230 (Mitchell P’rs, L.P. v. AMFI Corp., 2025 WL 2105837, at *4 (Del. Ch. July 28, 2025)). 107 Dkt. 169. 108 Mitchell P’rs, 2025 WL 2105837, at *4–5. 20 summary judgment on Count III in the same decision, finding that there was a dispute of material fact as to whether AMFI issued Class B shares in 1982.109 Although Plaintiff won on its claim for declaratory relief under Count I, Plaintiff continued to pursue a permanent injunction under Count I to correct the ledger.110 Plaintiff moved for class certification on September 4, 2025. Plaintiff sought to certify as a class any Class A stockholders not named as defendants as to Counts I and III, and as to Counts IV and V to the extent the court awards damages resulting from the issuance of Class B shares.111 Defendants opposed the motion.112 The court held the motion in abeyance pending trial.113 After sprawling discovery and copious motion practice, the court held trial on March 30, April 1, and April 2, 2026.114 The parties completed post-trial briefing on June 30.115 The joint schedule of evidence was submitted on July 16 and the court heard oral argument on July 22.116 109 Id. at *5–6. 110 PTO § IV ¶ 1. 111 Dkt. 235 at 2–3. 112 Dkt. 247. 113 Dkt. 300 at 13:17–23. 114 Dkt. 355. 115 Dkt. 368 (“Pl.’s Post-Trial Reply Br.”). 116 Dkts. 369, 371. 21 II. LEGAL ANALYSIS Plaintiff seeks relief in connection with Counts I and II (the “Stock Ledger Claims”) and Counts III, IV, and V (the “Class B Claims”). The analysis takes these claims in turn. A. The Stock Ledger Claims Counts I and II comprise the Stock Ledger Claims. In Count I, Plaintiff claims that the Company breached its statutory obligation to maintain a stock ledger. In Count II, Plaintiff claims that the Director Defendants breached their fiduciary duties by letting that happen. The court granted summary judgment in Plaintiff’s favor on Count I, finding that the stock ledger did not comply with Delaware law.117 The Company then endeavored to correct the deficiencies identified by the court, arguing that it effectively mooted Count I.118 Plaintiff continued to press for relief on Count I at trial, arguing that AMFI’s stock ledger remains deficient and that “[o]nly a permanent injunction has any realistic chance at ensuring future compliance.”119 Plaintiff does not state or apply any legal standard as to its pursuit of a permanent injunction. Plaintiff makes several factual claims, some of which are unsupported, describing AMFI’s stock 117 Mitchell P’rs, 2025 WL 2105837, at *5. 118 Dkt. 365 at 28–31 (summarizing remedial efforts). 119 Pl.’s Post-Trial Opening Br. at 8. 22 ledger.120 For example, Plaintiff contends that the control card is incomplete due to a missing page.121 But as Defendants proved at trial, that omission was due to a photocopying error committed during discovery.122 And as to the legal standard, Plaintiff summarily states that “[t]his is intentional conduct and a breach of duty” and that “[o]nly a permanent injunction has any realistic chance at ensuring future compliance.”123 This conclusory argument is insufficient to support Plaintiff’s claims for injunctive relief under Count I.124 Plaintiff’s Count II claim for breach of fiduciary duty due to the Director Defendants’ failure to maintain a stock ledger similarly fails. Plaintiff argues that Count II should be subject to enhanced scrutiny because the Director Defendants harbored conflicts in connection with maintaining the ledger, but Plaintiff does not adequately or convincingly identify those conflicts.125 120 See id. at 5–8 (describing the stock ledger as “a series of backdated entries” and “incomplete,” and arguing that “[d]ifferent ‘practices’ exist for the different classes of stock” and “[n]othing is in writing”). 121 Id. at 6. 122 Trial Tr. at 158:18–159:9 (Corporaal). 123 Pl.’s Post-Trial Opening Br. at 8. 124 See Dkt. 137 at 4 n.10 (citing Merck & Co., Inc. v. Bayer AG, 2023 WL 2751590, at *15 (Del. Ch. Apr. 3, 2023), aff’d, 308 A.3d 1190 (Del. 2023) (TABLE), for the proposition that if a party “intended to preserve [an] argument, it should have addressed it in a more meaningful way,” and citing Macrophage Therapeutics, Inc. v. Goldberg, 2021 WL 2585429, at *4 (Del. Ch. June 23, 2021), for its finding that the defendant’s failure to cite any authority in support of his legal argument constituted a waiver of the issue). 125 Pl.’s Post-Trial Opening Br. at 46–48. 23  Plaintiff alternatively argues that Count II states an oversight claim under Caremark.126 But Caremark requires a showing of bad faith, which Plaintiff has failed to prove.127 Delaware law does not provide for any specific form or manner in which a stock ledger must be kept, nor did the Letter Decision prescribe one.128 The Director Defendants testified that AMFI has always had a transfer agent and kept ledger cards kept reflecting its shares.129 Marilyn Woodbury testified that she was not aware nonvoting shares needed to be recorded on the ledger, as AMFI did not