## Facts

- Superior Vision Services, Inc. (SVS), a Delaware corporation, issued stock under agreements and charter provisions that prohibited dividends on certain securities unless the prohibition was waived.
- A waiver required consent of at least two-thirds of the interests in the purchased securities; ReliaStar Life Insurance Company (ReliaStar) owned about 44%, making its consent effectively necessary.
- SVS’s board approved a dividend policy conditioned on obtaining the required stockholder consent.
- ReliaStar refused to consent to the dividend waiver.
- SVS alleged ReliaStar’s refusal was self-interested and wrongful, arguing ReliaStar functioned as a controller owing fiduciary duties and, in any event, was constrained by the implied covenant of good faith and fair dealing when exercising its consent right.
- ReliaStar moved to dismiss under Court of Chancery Rule 12(b)(6).

## Issues

1. Whether a 44% stockholder with a contractual/charter-based veto over dividends is a controlling stockholder (or otherwise a fiduciary) liable for refusing to consent to a dividend.
2. Whether an express, unconditional consent/veto right over dividends is limited by the implied covenant of good faith and fair dealing so that withholding consent can be actionable.

## Decision

- The court granted ReliaStar’s motion to dismiss for failure to state a claim.
- The court held SVS did not plead facts showing ReliaStar exercised actual control over SVS’s board or corporate decision-making; the veto right and minority ownership did not, by themselves, create fiduciary duties.
- The court held the implied covenant of good faith and fair dealing did not restrict ReliaStar’s exercise of an unqualified contractual right to withhold consent to dividends.
- Because the governing documents did not condition consent on any standard (such as reasonableness or good cause), ReliaStar could withhold consent for any reason or no reason.

## Legal Principles

- Under Delaware law, fiduciary duties are owed by directors and controlling stockholders; a stockholder holding less than a majority is a controller only if it actually dominates corporate decision-making such that directors’ independent judgment is displaced.
- A contractual power to block a specific corporate action is not equivalent to control of the corporation and does not alone create fiduciary status.
- The implied covenant of good faith and fair dealing is a narrow, contract-based doctrine that fills gaps to protect the parties’ shared expectations; it cannot be used to rewrite clear contractual allocations of authority.
- When a charter or contract grants an express, unconditional right to consent or veto, the implied covenant generally does not add a judicially created “reasonableness” limitation absent textual support.

## Conclusion

The court dismissed SVS’s suit because a minority stockholder’s negotiated veto over dividends, without allegations of actual board domination, does not create fiduciary duties, and the implied covenant does not impose a reasonableness constraint on an expressly unconditional consent right.


Superior Vision Servs., Inc. v. ReliaStar Life Ins. Co., 2006 WL 2521426 (Del. Ch. Aug. 25, 2006)