The Delaware Court of Chancery on Thursday ordered Palantir Technologies Inc. to turn over corporate records to a company run by Marc Abramowitz, in an unusual court battle that highlights the growing animosity between the reticent Silicon Valley firm and one of its biggest early investors.

Vice Chancellor Joseph R. Slights III said in a 50-page memorandum opinion that Abramowitz had demonstrated a proper purpose of investigating potential fraud and mismanagement in the private software company, which specializes in big data analytics.

The ruling came nearly one year after Abramowitz's KT4 Partners sued for access to a swath of corporate information after a falling out with CEO Andrew Karp in 2015. That dispute has since sparked litigation in a California state court, where Palantir accused Abramowitz of using his influence as a major investor to extract sensitive trade secrets.

Typically, Delaware books-and-records actions are resolved in the span of just a few months, as long as a plaintiff establishes a narrow cause for enforcing stockholder inspection rights under state statute. However, Abramowitz's suit was built, Slights said in the opinion, on “hearsay, double hearsay and, at times, triple hearsay,” drawing the case into a protracted legal dispute over the scope of his investigation, with both sides trading accusations of wrongdoing.

Abramowitz had accused Palantir, among other things, of failing to convene stockholder meetings and improperly barring Abramowitz and other investors from selling stock while allowing sales by Karp and other executives. Abramowitz also asked for access to documents in order to investigate the value of the firm and Karp's compensation as its chief executive.

Palantir countered that Abramowitz's inspection demand was unrelated to KT4's interests as a stockholder. Rather, the company said, Abramowitz was trying to gain leverage in the California suit and obtain pre-suit discovery on breach of contract and tortious interference claims he planned to bring against Palantir.

The fraught nature of the litigation belies the once congenial relationship that Abramowitz once enjoyed with Palantir's brass.

After an initial investment of $100,000 in the Palo Alto, California, company in 2003, KT4 increased its holdings to approximately $60 million, Abramowitz said. In the 15 years he spent as an investor, Abramowitz was given “unique access” to Palantir executives, and met with Karp at least a dozen times, according to Slights opinion.

However, the relationship fractured in the summer of 2015, when Karp called Abramowitz and accused him of stealing the firm's intellectual property. Abramowitz then moved to sell his entire position to Brooklands Capital Strategies, but was blocked once Palantir principals got word of the transaction.

Abramowitz sent Palantir an information request in August 2016 under an agreement that allows “major investors” to view certain, nonconfidential records. Palantir told Abramowitz that it was reviewing the request, but the following month the company increased the threshold to qualify as a major investor, stripping KT4 of its special status.

The following month, Palantir filed its trade secrets suit in California Superior Court, accusing Abramowitz of stealing information involving clinical drug trials, cybersecurity insurance and oil and gas exploration. KT4 filed its book-and-records suit in Delaware in March 2017.

In his ruling, Slights agreed with Palantir that some of KT4's stated purposes reflected Abramowitz's personal desire to gain an upper hand and build out a case against Palantir unrelated to his interests as a stockholder. But he still allowed access to other areas, saying KT4 had cleared the low bar for forcing production.

“These are not proper purposes,” Slights said of KT4's bid for documents related to some corporate transactions.

“With that said, KT4 has sustained its burden of demonstrating a credible basis of wrongdoing in certain respects that do affect its interests as a Palantir stockholder.”

Slights ruled that KT4 could investigate corporate stock sales, Palantir's refusal to hold stockholder meetings and the amendments that limited KT4's rights. But he blocked Abramowitz's probe into Palantir's valuation and Karp's compensation.

Attorneys for both sides were not immediately available to comment.

The California action is still pending in state court.

KT4 partners was represented in the Delaware action by Barry S. Simon and Jonathan B. Pitt of Williams & Connolly in Washington, D.C., and Bartholomew J. Dalton and Andrew C. Dalton of Dalton & Associates.

Palantir was represented by Kevin J. Orsini and Rory A. Leraris of Cravath, Swaine & Moore and Blake Rohrbacher, Kevin M. Gallagher and Kelly L. Freund of Richards, Layton & Finger.

The Delaware case is captioned KT4 Partners v. Palantir Technologies.