The Delaware Supreme Court issued an order Monday acknowledging it misconstrued the scope of plaintiffs' claims in a high-stakes class action lawsuit involving Boardwalk Pipeline Partners and ordered reargument of the case.
The court granted motions for reargument filed by both sides in *Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP*, a case that has significant implications for Delaware partnership law and corporate governance. The unusual step of ordering reargument came after the justices determined their majority opinion contained a fundamental error in understanding the plaintiffs' unjust enrichment claim.
The case involves several investment funds, including Bandera Master Fund LP, Bandera Value Fund LLC, and Bandera Offshore Value Fund Ltd., along with other unitholders who sued Boardwalk Pipeline Partners and its corporate affiliates. The defendants include Boardwalk Pipeline Partners LP, Boardwalk Pipelines Holding Corp., Boardwalk GP LP, Boardwalk GP LLC, and Loews Corporation.
According to the court's order, the justices initially misunderstood the scope of the plaintiffs' unjust enrichment claim under Count V of their complaint. The court had believed the claim was based solely on defendants' payment of a Call Right exercise price that was allegedly artificially depressed by certain disclosures referred to as "Potential Exercise Disclosures."
"The Court's majority opinion misconstrued the scope of the plaintiffs' unjust-enrichment claim under Count V of the operative complaint," the justices wrote in their order. "In particular, the majority's decision was based on its understanding that the plaintiffs' unjust-enrichment claim was premised solely on the defendants' payment of a Call Right exercise price that was artificially depressed by the Potential Exercise Disclosures."
Based on this understanding, the Delaware Supreme Court had affirmed the Court of Chancery's dismissal of the plaintiffs' disclosure claim and subsequently dismissed the entire unjust enrichment claim. However, the justices now acknowledge this interpretation was incomplete.
"We are now convinced that our understanding of the scope of the plaintiffs' unjust enrichment claim was incomplete," the court stated. The order indicates that while Count V of the complaint centers on the relationship between the Potential Exercise Disclosures and alleged unjust enrichment by Loews Corporation, it also contains additional allegations that the court had not fully considered.
The case originated in the Delaware Court of Chancery under docket number 2018-0372 before being appealed to the state's highest court. The Delaware Supreme Court case number is 439, 2024, and the matter was submitted to the justices on Jan. 12, 2026, with the reargument order issued Jan. 20, 2026.
The five-justice panel considering the case includes Chief Justice Seitz and Justices Valihura, Traynor, LeGrow, and Griffiths, sitting en banc. The fact that both parties filed motions challenging the court's initial decision suggests the ruling had significant implications that concerned lawyers on both sides of the dispute.
Reargument orders are relatively uncommon in appellate courts and typically occur only when a court identifies a substantial error in its reasoning or when new legal arguments emerge that could materially affect the outcome. The Delaware Supreme Court's willingness to acknowledge its error and order reargument demonstrates the complexity of the legal issues involved and the court's commitment to reaching the correct legal conclusion.
The case involves sophisticated questions of partnership law, corporate governance, and fiduciary duties in the context of master limited partnerships. Boardwalk Pipeline Partners operates as a master limited partnership in the energy infrastructure sector, making the case particularly significant for similar entities and their investors.
The unjust enrichment claims at the heart of the dispute involve allegations that defendants improperly benefited at the expense of unitholders. Such claims are common in corporate litigation but can be complex to adjudicate, particularly when they intersect with disclosure obligations and the exercise of contractual rights.
The reargument will give both sides an opportunity to present their positions again before the Delaware Supreme Court, potentially leading to a different outcome than the initial ruling. The court has not yet scheduled oral arguments for the reargument, but such proceedings typically occur within several months of the order.
This development underscores the ongoing evolution of Delaware corporate and partnership law, as the state's courts continue to refine legal standards governing complex business relationships. Delaware's Court of Chancery and Supreme Court are widely recognized as leading authorities on corporate law matters, making their decisions particularly influential for businesses organized under Delaware law.
The case will likely be closely watched by practitioners in corporate law, particularly those specializing in partnership disputes and investor rights. The ultimate resolution could establish important precedents for similar cases involving master limited partnerships and unjust enrichment claims in the corporate context.