Koch v. Stearn

Supreme Court of Delaware · 1993 · Corporations

628 A.2d 44 (1993)

Updated August 22, 2026

Corporationsmootnessvacaturcross-appealres judicataappellate reviewDelaware Supreme CourtCourt of Chancery

Facts

Showcase was in financial difficulty, and Koch offered to invest up to $2 million on the condition that Stearn resign as president and chief executive officer. At a specially arranged April 7, 1992 board meeting, the Koch Group voted to remove Stearn as president and chief executive officer, and Koch also appointed DeSena as a fifth director. The Court of Chancery later held that Stearn's removal at that meeting was invalid but that DeSena's election was valid. Stearn then resigned from Showcase and voluntarily dismissed his direct appeal challenging DeSena's election, while Koch and Showcase continued their cross-appeal challenging the ruling on Stearn's removal.

Issue

When a cross-appeal challenging part of a Chancery judgment becomes moot during the appellate process, should the Delaware Supreme Court dismiss the cross-appeal and vacate the portion of the judgment under review? More specifically, does Stearn's resignation or voluntary dismissal of his direct appeal moot Koch and Showcase's cross-appeal concerning the validity of his removal?

Rule

Delaware appellate courts do not entertain advisory opinions or hypothetical questions; when an appeal or cross-appeal becomes moot, it must be dismissed. When mootness during the appellate process prevents a party from obtaining appellate review, the appellate court may, in the interests of justice and upon request, apply the rule of vacatur and direct the lower court to vacate the portion of its judgment at issue, particularly to avoid unfair preclusive or precedential effect.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a Section 225 dispute in Wilmington, the Court of Chancery ruled that Nora Velez was not validly removed as chief executive officer of Harbor Slate Media, but also ruled that Ethan Pike was validly elected to the board. Nora appealed the board-election ruling, and Harbor Slate and its lead investor cross-appealed the removal ruling. Before argument, Nora voluntarily dismissed her own appeal, and the board-election ruling therefore became final.

What should the Delaware Supreme Court do with the remaining cross-appeal?

Explanation. The majority held that Delaware appellate courts do not decide moot issues or advisory questions. Where the appellant's voluntary dismissal makes final the ruling that independently validates the later board action, the cross-appeal no longer presents an actual controversy and must be dismissed as moot.