Posts in Jurisdiction

Court Of Chancery Dismisses Improperly Notarized Complaint

Bessenyei v. Vermillion, Inc., C.A. 7572-VCN (November 16, 2012)

This is a troubling decision.  One plaintiff, through the efforts of the other plaintiff who is a lawyer, used a false verification when the complaint was filed. The Court of Chancery requires all complaints be verified.  As a result, the Court dismissed the complaint under the rule of Parfi where the dismissal is on the merits.

Seems right so what is troubling?  Delaware lawyers typically believe their clients when they are sent a verification that the client did what the verification says, appeared before a notary to sign it. This is an odd case because there was some indication that was not being done. Still, how far should we  go?  The short answer is that we need to ask the client: "Did you get this signed in front of a notary like it says"?

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Court of Chancery Dismisses Limited Liability Partnership Act Suit

New Media Holding Company LLC v. Brown,  C.A. 7516-CS (November 14, 2012)

This decision deals with a hole in Delaware jurisprudence.  Generally, the statutes authorizing each form of Delaware entity contain a provision whereby the managers of that entity submit themselves to the jurisdiction of the Delaware courts for acts in their managerial capacity.  But, as this decision points out in dismissing the complaint for want of personal jurisdiction over the defendants, that is not the case under the Delaware limited liability partnership statute.  This seldom used act may need to be amended as a result.

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Court Of Chancery Explains Conspiracy Jurisdiction

Hospitalists of Delaware, LLC. v. Lutz, C.A. 6221-VCP (August 28, 2012)

This is an important decision because it explains the theory of jurisdiction over alleged conspirators. While that basis for jurisdiction has been around since the Istituto Bancario decision, it is still hard to understand.  The guidance this decision provides to that law and the conspiracy theory in general is very helpful.

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Court Of Chancery Explains Limits Of Jurisdictional Discovery

Picard v. Wood, C.A. 6526-VCG (July 12, 2012)

A plaintiff must offer some basis to believe the defendant is subject to the Court's jurisdiction before he will be permitted to take jurisdictional discovery.  Owning an interest in a Delaware LLC is not enough.

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Court Of Chancery Permits Jurisdictional Depositions

Reid v. Siniscalchi, C.A. 2874-VCN (May 25, 2012)

Discovery in aid of proving jurisdiction is usually available.  But is there a limit?  This decision explores that question and permits depositions to prove jurisdiction.

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Court Of Chancery Resolves Who May Bring Derivative Claims After Dissolution

Matthew v. Laudamiel, C.A. 5957-VCN (February 21, 2012) This decision resolves who may bring a derivative claim after an LLC has been dissolved.  The argument made by 1 of the parties was that after dissolution, any member may bring a derivative claim directly.  The Court rejected that argument and concluded that the claim still must be brought in the name of the LLC and that a petition might also be filed to have the entity restored to bring such a claim or for a trustee to be appointed to do so. This decision also dealt with an important jurisdictional issue under the so-called conspiracy theory.  It holds that the alleged conspirator must be aware that the conspiracy involves an action in Delaware in furtherance of the conspiracy, before the conspiracy is completed and the harm done. Share

Court Of Chancery Explains The Incorporation Basis For Personal Jurisdiction

Connecticut General Life Insurance Company v. Pinkas, C.A. 5724-VCN (October 28, 2011)

It is sometime claimed that the act of incorporating a Delaware corporation is enough to subject the incorporator to jurisdiction in Delaware.  After all, an old case does do just that.  But as this decision points out, the act of incorporating has to be an integral part of the actions that give rise to the claims asserted.  That is not so easy to show and did not work in this case.

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Superior Court Upholds Jurisdiction After Merger

Universal Capital Management Inc. v. Micco World Inc., C.A. 10C-07-039 RRC (June 2, 2011)

This is a useful case because it covers just about every basis to assert jurisdiction over non-Delaware residents for their actions in Delaware.  It also upholds jurisdiction over a former Delaware corporation that merged out of Delaware.

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Court Of Chancery Explains Jurisdictional Discovery

Reid v. Siniscalchi,  C.A. 2874-VCN (January 31, 2011)

 When personal jurisdiction over a defendant is challenged, the plaintiff has the right to take limited "jurisdictional discovery."  Exactly what that means is well explained by this decision.

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Delaware Supreme Court Affirms Forum Selection Clause

Ingres Corporation v CA Inc. , C.A. 105, 2010 (December 1, 2010)

This decision strongly affirms that a forum selection clause that picks Delaware is going to be enforced in Delaware.  That is true even when there is prior litigation elsewhere.

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Delaware Superior Court Creates Commercial Litigation Division

Delaware's Superior Court has joined the ranks of courts in other states by creating a "business court" for commercial disputes between companies. The new "court" is technically a division within the existing Delaware Superior Court and has major advantages for resolving business disputes. Among those are:

1. Three very experienced judges have been assigned to cases filed in the new divisions and will stay with those cases until they are completed.

2. Each case will be subject to a tight case management order designed to control litigation expenses and keep the litigation moving to completion.

3. Discovery of electronically stored data will be subject to special "e-discovery' orders that will limit expense and avoid disputes.

4. Protocols are to be adopted for each case to control expert witness discovery and the recovery of inadvertently produced privileged information.

The creation of this new division followed an extensive review of business courts through out the United States by a Special Committee and adopts the best procedures of those other courts. The Delaware Superior Court and the Delaware Court of Chancery have been consistently voted the best courts for business disputes in the United States.  For more details, see the Administrative Directive establishing the new division and the Special Committee's report.

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Court Of Chancery Upholds Forum Selection In England

Ashall Homes Limited v. ROK Entertainment Group Inc., C.A. 4643-VCS (April 23, 2010)

This decision is interesting because it upholds a forum selection clause requiring litigation in England.  How these parties could have not chosen Delaware seems unbeliveable.

The opinion also applied the forum selection not just to disputes that were based on the parties' contract, but also to tort claims that arose out of the same facts.  In short, you cannot plead around the forum you chose.

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Supreme Court Clarifies Forum Non Conveniens Rules

Lisa, S.A. v. Mayorga,  C.A. 410, 2009  (Del.  April 20, 2010)

This decision clarifies the effect of where an action is first filed.  When the case is filed first in Delaware, a Delaware court may only dismiss it on the grounds the forum is inconvenient when the defendant can show it will be an "overwhelming hardship" to litigate it in Delaware.

On the other hand, when an action is first filed in a forum other than Delaware, the general rule is to defer to the other jurisdiction and stay or dismiss the second suit filed in Delaware.  While there are numerous exceptions to this general rule, the burden is much less to have the case dismissed.

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Court of Chancery Extends Jurisdiction to Parent Entity

Vichi v. Koninklijke Philips Electronics N.V., C.A. 2578-VCP (December 1, 2009)

This decision provides a full review of the basis for jurisdiction over foreign entities by the Court of Chancery. This includes a discussion of the limits of the conspiracy theory of jurisdiction.

Most interestingly, the Court holds that a parent company may be subject to Delaware jurisdiction because of the acts of agents of its subsidiaries, at least when those agents had the apparent authority to act for the parent. That may occur when, as here, the parent entity touts the business interrelationship of it and all its subsidiaries. This is another example of getting not wanting what you wished for and a caution against ignoring the separateness of corporate entities in how they do business.

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Court of Chancery Explains McWane Exceptions

Choice Hotels International Inc. v. Columbus-Hunt Park DR BNK Investors LLC, C.A. 4353-VCP (October 15, 2009)

Delaware courts frequently must decide if a case filed in Delaware should be stayed in favor of another action filed elsewhere. While we wonder why anyone would want to leave Delaware, it happens. This decision carefully reviews when even "summary" proceedings filed in Delaware may be stayed in favor of another litigation. When a "summary" proceeding seeks to determine who is in change of a Delaware entity, there is a policy against staying the action because of the need to promptly resolve that important issue.

This is a case where that policy did not overcome the rule that a first filed action should proceed even over a Delaware case. Of course, given that the plaintiff in Delaware had filed first in Maryland, that hurt its claim to proceed in Delaware. The use of a status quo order also mitigated against the need to move quickly in Delaware.

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