The Delaware Court of Chancery on Monday denied a plaintiff access to redacted documents in a derivative dispute alleging that the general partner's conflicts committee acted in bad faith in approving a $3 billion transaction that undervalued the firm's assets by $500 million.

In a 16-page letter opinion, Vice Chancellor Sam Glasscock III ruled that the private emails were covered by attorney-client privilege and held, in a matter of first impression, that a narrow exception to the privilege did not apply to a limited partnership in the absence of a fiduciary relationship.

Paul L. Morris, an oil executive and investor in Spectra Energy Partners, had sought discovery of the communications in his breach of contract suit, after Glasscock last June held that the half-billion valuation gap raised an inference that members of the committee had acted in bad faith in approving the deal. Morris argued in court documents that the emails were necessary under the Garner exception in order to prove breaches on the part of directors.

However, Glasscock noted that Spectra Energy Partners had taken advantage of a provision of Delaware law, which allows parties to a limited partnership agreement to eliminate all fiduciary duties that would otherwise be owed by general partners.

“The litigants here are contractual counterparties,” he said. “Given the absence of any fiduciary relationship between these parties, the mutuality of interest that underpins the Garner exception does not exist.”

The ruling was the first written opinion in Delaware to address the issue of whether the Garner exception applied in such a context, Glasscock said.

Glasscock also ruled on Monday that Morris' request did not meet ”at-issue” exception to attorney-client privilege, finding that it was Morris himself who injected the privileged emails into the litigation.

“The plaintiff is simply seeking discovery relevant to allegations he himself advanced in his complaint,” Glasscock wrote. “That does not give him carte blanche to invade the
attorney-client privilege as to discovery material that bears on those allegations.”

Grant & Eisenhofer director Michael J. Barry, who represents Morris, declined to comment Tuesday on the substance of Glasscock's ruling, saying that the letter opinion “speaks for itself.”

An attorney for Spectra Energy Partners did not return a call seeking comment on the decision.

Glasscock last June denied Spectra Energy Partners' motion to dismiss Morris' breach of contract claim alleging that the managing partners had violated a contractual obligation to act in good faith by approving a transaction that was “patently unfair and unreasonable” to investors.

The vice chancellor, however, tossed Morris' claims for breaches of the implied covenant of good faith and fair dealing and tortious interference by the firm's parent, Spectra Energy Corp.

Morris is represented by Barry, Stuart M. Grant and Michael T. Manuel of Grant & Eisenhofer.

Spectra Energy Partners is represented by Robert S. Saunders and Ronald N. Brown of Skadden, Arps, Slate, Meagher & Flom.

The case is captioned Morris v. Spectra Energy Partners.