Coaxial Communications, Inc. v. CNA Fin. Corporation

Supreme Court of Delaware · 1976 · Corporations

367 A.2d 994 (Del. 1976)

Updated August 22, 2026

Corporations8 Del. C. § 211annual meetingstockholder meetingstayMcWaneprompt justiceinterlocutory appeal

Facts

CNA alleged, and it appeared undisputed, that it owned approximately 50.98% of Coaxial's issued and outstanding stock. Coaxial had not held a stockholders' meeting for the election of directors for more than thirteen months. Before CNA filed the Delaware action, Coaxial had sued CNA in federal court in Ohio, alleging federal securities violations, fraud, and breach of contract in the transactions by which CNA acquired its interest in Coaxial, and sought rescission or reformation of those transactions. Coaxial sought to stay the Delaware Section 211 action pending the Ohio litigation, but the Chancellor denied the stay and ordered the meeting held.

Issue

Whether the appeal could challenge the earlier denial of a stay after final judgment, and, if so, whether the Chancellor abused his discretion by refusing to stay a Delaware Section 211 proceeding in favor of prior federal litigation in Ohio involving the same parties and related issues.

Rule

Under 10 Del. C. § 144, failure to appeal an interlocutory Chancery order does not bar review of that order on appeal from the final order. In a Section 211 action, a stockholder makes a prima facie case by proving that it is a stockholder and that no meeting for the election of directors has been held for more than thirteen months. Although Delaware generally favors staying later-filed litigation when a prior action elsewhere involves the same parties and issues and the other court can do prompt and complete justice, a stay need not be granted when prompt justice is not shown to be available in the foreign action, especially because Section 211 is a summary proceeding designed to provide prompt relief.

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Blue Harbor Imaging, Inc., a Delaware corporation based in Portland, has not held a stockholders' meeting to elect directors in 15 months. Elena Park owns 2% of Blue Harbor's outstanding shares and files in the Delaware Court of Chancery seeking an order requiring an annual meeting.

Assuming no other complicating facts, has Elena established a prima facie entitlement to relief in the summary proceeding?

Explanation. A prima facie case in this summary proceeding requires proof of only two elements: the applicant is a stockholder, and no meeting to elect directors has been held for more than 13 months. The majority opinion emphasized that the statute does not distinguish between large and small stockholders and is designed to provide prompt relief once those two facts are shown. (Derived from Coaxial Communications, Inc. v. CNA Fin. Corporation (1976).)