Prince's estate fight is happening in this Delaware court. Here's why

A ruling by a Delaware judge has refused to dismiss a fight over the estate of the late superstar artist Prince.

Prince’s former business advisors are suing members of Prince’s family and partial heirs to his $150 million estate, claiming his half-sister broke a contract to cut the business advisors out of management of the estate.

Friday’s ruling rejected an effort by the defendants to dismiss the lawsuit and sets up the matter for future litigation and potentially a trial in Delaware's Chancery Court.

Prince died in 2016. Litigation over his estate, estimated by tax officials to be worth some $150 million, has carried on for years.

Why is this litigation happening, and why in Delaware?

He had no will so his estate was divided equally among his six siblings. Three sold their stakes to a music publishing company. The three others were ordered by a court in Minnesota to consolidate their interest into a company that became known as Prince Legacy, LLC and formed in Delaware.

Prince Legacy LLC manages the late music icon’s estate in collaboration with a company set up by the music publishing group that purchased the interest of the other heirs.

Prince’s former business advisors, L. Londell McMillan and Charles Spicer Jr. assisted the heirs through the estate litigation and in setting up the Prince Legacy LLC. They were granted a 10 percent interest in the company as compensation.

The formation of Prince Legacy LLC also gave McMillan and Spicer management authority over the company. In setting up the management company, one of Prince’s siblings, Sharon Nelson, had sought management authority, but that was rejected by her siblings. Eventually, she agreed that McMillan and Spicer would have management authority.

But over time, she came to regret that and inserted herself into management functions like staffing and event decisions at the Paisley Park Museum, Prince’s former home and studio.

Editor's Note: A copy of the judge's ruling can be found at the bottom of this story.

She later rallied some of her siblings and made an effort to remove the two business advisors as managers. Over a series of meetings, the siblings eventually pushed through what they claimed was an amendment to the LLC agreement that ousted the two.

What does the latest ruling say?

McMillan and Spicer sued the siblings and their heirs in Chancery Court in January. The litigation seeks an order invalidating the LLC amendment that led to their ouster and a ruling that the defendants breached covenants of good faith, fair dealing and the agreement itself in removing the two men as managing members.

The defendants sought to have the lawsuit dismissed on a number of grounds.

On Friday, Chancellor Kathaleen St. Jude McCormick granted summary judgment to the plaintiffs on one of those claims, ruling that the terms of the LLC agreement clearly prohibit the defendants’ attempts to amend it. The ruling solidifies that the previous LLC agreement is still in force and the two advisors are still the company's managers.

She also ruled against each of the defendants’ arguments seeking dismissal, setting the matter up for further litigation or potential trial.

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com.