The Delaware Supreme Court’s majority decision in Bandera focused primarily on the terms of the MLP’s partnership agreement and the appropriate way to interpret those terms under Delaware’s version of the Revised Uniform Limited Partnership Act. In her concurring opinion, Justice Valihura focused on the Chancery Court’s approach to the legal opinion delivered to the general partner in satisfaction of the call right’s opinion condition.
In the Chancery Court, Vice Chancellor Laster conducted a detailed review of the process by which the law firm came to render the legal and was sharply critical of that process, but Justice Valihura’s concurring opinion said that it was the Vice Chancellor’s decision to engage in that kind of review that got him off-track. She went on to explain that under Delaware law, courts should take a more deferential approach focusing on whether the lawyers were acting in good faith when they rendered the opinion. The concurring opinion found ample evidence of that good faith effort, and concluded that the Chancery Court erred in deciding otherwise:
In sum, I believe that the trial court erred in holding that the Opinion was rendered in bad faith. Under existing Delaware law, opinions of counsel are entitled to deference. It is not the place of a trial court, or this Court, to substitute our own judgment for that of the lawyers who are asked to render legal opinions. Although lawyers should always strive to reach the legally correct answer, the law does not require that opinions of counsel be substantively correct.
What the law requires is that lawyers undertake a good faith effort. Such good faith effort is entitled to deference. Although there are, for sure, outer limits to this deference, this case does not push beyond that boundary in my view. Because the trial court’s findings of bad faith are inextricably intertwined and dependent upon this legal error, I would reverse. In the aggregate, the record rather supports the conclusion that Baker’s Opinion was rendered in good faith and, at a minimum, was not rendered in bad faith.
— John Jenkins, DealLawyers.com, December 21, 2022