Saturday, April 21, 2007

Costa Brava Partnership III, L.P. v. Telos Corp., (Cir. Ct. for Baltimore City)

Issued April 19, 2007--Order and Opinion by Judge Albert J. Mattricciani, Jr.

An earlier opinion in this case was issued on November 29, 2006. It is synopsized here. In that earlier opinion, the Court denied the plaintiffs' motion for the appointment of a receiver.

Here, the plaintiffs had asked asked the Court to enjoin defendants and their agents from pursuing or closing any sale of the corporation's assets outside the ordinary course of business until May 31, 2007, when two new Class D directors will be elected to the corporation's board. Defendants countered that plaintiffs' request for a preliminary injunction sought extraordinary relief to which they were not entitled under Maryland corporation law or the facts of this case.

The Court adopted the defendants' position that the request was one for a preliminary injunction. It denied the request because it concluded that the plaintiffs were unable to establish that they had a likelihood of succeeding on the merits of their claim. Specifically, the Court concluded that "at this point [in time]" the plaintiffs are unable to persuade it that the current directors lack the requisite independence to consider a sale of the corporation's assets.

The order, together with supporting opinion, is available in PDF.

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