The Delaware Supreme Court on Tuesday revived a derivative challenge to Diamond Resorts International's $2 billion sale to Apollo Global Management, ruling that shareholders should have been informed of the chairman's opposition to the deal.

The ruling from a three-judge panel of the high court reversed a “stark” decision from Vice Chancellor Tamika Montgomery-Reeves in July, which found that the reasoning behind Stephen J. Cloobeck's abstention from a board vote recommending the sale was immaterial to investors' decision to support the transaction.

“Here, the founder and chairman's views regarding the wisdom of selling the company were ones that reasonable stockholders would have found material in deciding whether to vote for the merger or seek appraisal, and the failure to disclose them rendered the facts that were disclosed misleadingly incomplete,” Chief Justice Leo E. Strine Jr. wrote for the Supreme Court.

According to court documents, Cloobeck, who founded Diamond Resorts in 2007, had expressed his reservations about the sale in two separate board meetings in the run-up to the $30.25 per share sale to Apollo, saying that mismanagement at Diamond Resorts had depressed the deal price. As a result, he said, it was not the right time to pursue a sale of the company.

But while shareholders were told about Cloobeck's decision to abstain, the company's regulatory filings never disclosed the specific concerns he expressed to other directors.

Shareholders focused on the omissions in a bit to stave off dismissal of the suit last year, arguing that the information would have altered the total mix of information and thus their ability to make an informed decision on whether to support the sale.

Montgomery-Reeves, however, sided with the director defendants' argument that investors had overwhelmingly accepted Apollo's tender offer based on all of the relevant facts available at the time.

On appeal, Diamond Resorts' directors argued that Cloobeck's reasons for not supporting the sale were simply expressions of opinion, which cannot be considered a material fact requiring disclosure. Strine, however, noted that proxy statements are often filled with opinions, and shareholders should not have been left to wonder why Cloobeck had withheld his support.

“It is inherent in the very idea of a fiduciary relationship that the stockholders that directors serve are entitled to give weight to their fiduciaries' opinions about important business matters,” Strine wrote in a 16-page opinion.

“Accepting the notion that board disclosures should portray boards of directors as monolithic bastions of groupthink, within which no good faith back-and-forth occurs and no differences of opinion about important issues exists, would do little to breed respect for director decision-making.”

He was joined in the opinion by Justices Karen L. Valihura and Gary F. Traynor.

Attorneys for both sides were not immediately available to comment.

The shareholders are represented by Craig J. Springer and Peter B. Andrews of Andrews & Springer and Jeremy Friedman, Spencer Oster and David Tejtel of Friedman Oster & Tejtel.

The Diamond Resorts directors are represented by Raymond J. DiCamillo and Elizabeth DeFelice of Richards, Layton & Finger and Mark A. Kirsch, Jefferson E. Bell and Brian M. Lutz of Gibson, Dunn & Crutcher.

The case is captioned Appel v. Berkman.