A Delaware court has denied a motion for summary judgment in a legal battle between LawIQ, Inc. and its former director, Terrance MacGregor. The decision affects the ongoing dispute over the validity of a stock agreement and raises questions about fiduciary duties within corporate governance.
The case, LawIQ, Inc. v. Terrance MacGregor, was filed under docket number C.A. No. 2023-0742-KSJM. The ruling comes after a series of events that began when MacGregor was terminated from his positions at LawIQ, triggering a company right to reacquire his shares.
LawIQ, Inc., which operates under the name ARBO, was co-founded by MacGregor and Charles Moldenhauer in September 2014. Initially, Moldenhauer and other investors held 55% of the company’s equity, while MacGregor owned 35%. In February 2019, the company transitioned from a limited liability company to a corporation, which included a Restricted Stock Agreement that allowed the company to reacquire shares if MacGregor was terminated.
The dispute began in December 2020 when Moldenhauer made offers to buy MacGregor's shares, which MacGregor rejected. In February 2023, Moldenhauer used his voting power to terminate MacGregor from his director role, triggering the reacquisition right under the stock agreement. MacGregor contested this termination, leading to LawIQ filing a complaint on July 20, 2023, seeking a declaration that the stock agreement was valid.
MacGregor responded with counterclaims, asserting that the stock agreement was invalid and alleging that Moldenhauer breached his fiduciary duties by removing him without cause to avoid paying fair market value for his shares. The court previously dismissed MacGregor's first counterclaim but allowed the second one regarding fiduciary duty to proceed.
On April 10, 2026, LawIQ filed a motion for summary judgment, arguing that MacGregor's claims were an attempt to circumvent the stock agreement. They cited a previous Supreme Court ruling stating that fiduciary claims arising from the same facts as contract obligations are typically barred.
However, Chancellor Kathaleen St. J. McCormick ruled against the motion, stating, "There is no right to a summary judgment." The court emphasized that even when facts are not disputed, a more thorough examination is often necessary, especially when subjective matters like motive and intention are involved.
The court noted, "It is not reasonably certain that there is no triable issue," indicating that questions regarding Moldenhauer's motivations and actions were still in dispute and could not be resolved through a summary judgment.
This ruling means that the case will continue to trial, where both parties will have the opportunity to present their arguments and evidence. The outcome could have significant implications for corporate governance and fiduciary duties, particularly in cases involving minority shareholders.
The denial of the summary judgment motion allows MacGregor's claims to move forward, potentially leading to a trial where the court will explore the facts surrounding Moldenhauer's actions and the validity of the stock agreement in greater detail.
Looking ahead, the case may still be appealed, although details regarding any potential appeal were not available in the court filing. The ongoing legal battle highlights the complexities of corporate law and the importance of clear agreements and fiduciary responsibilities within companies.