December 21, 2016 / 12:32 AM / 7 months ago

Kinder Morgan wins dismissal of $171 mln investor lawsuit

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WILMINGTON, Del., Dec 20 (Reuters) - The Delaware Supreme Court dismissed on Tuesday a $171 million investor lawsuit against Kinder Morgan Inc stemming from the pipeline operator's acquisition of El Paso Corp and its affiliates.

The lower Court of Chancery ruled last year that Kinder Morgan was on the hook for the bulk of the damages owed to investors in a master limited partnership, or MLP, which was shortchanged in deals with its own parent, El Paso Corp.

Kinder Morgan had argued it was being held liable over deals it was not involved in, except that it ended up acquiring both the buyer and seller in the transactions at the center of the lawsuit.

The Delaware Supreme Court agreed, and said if it allowed the damage award to stand "useful transactions would be deterred or priced at a lower value because third-party acquirers would find themselves having bought into litigation morasses."

Jeffrey Squire, an attorney who represented the plaintiff, declined to comment. A Kinder Morgan spokesman was not immediately available for comment.

The dismissed lawsuit began with deals in 2011 in which El Paso Pipeline Partners, an MLP, bought subsidiaries of its parent company, El Paso Corp.

Peter Brinckerhoff, an investor in the MLP, sued in 2011 and argued the MLP was coerced into overpaying.

Vice Chancellor Travis Laster found that the committee that governed the MLP and the committee's advisers acted in bad faith in approving the deal.

Brinckerhoff's lawsuit was a derivative action, meaning he brought it not on behalf of himself and other MLP investors, but on behalf of the MLP itself.

Kinder Morgan bought the MLP during the litigation, and the pipeline operator reasoned that in doing so it also acquired the litigation, rendering the case moot.

The Supreme Court said Brinckerhoff could have challenged the price Kinder Morgan paid for the MLP to better reflect the value of his lawsuit, but noted he chose not to. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Shumaker)

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