Delaware Business Litigation Report

Court of Chancery Dismisses Claims Against Third-Party Defendants for Lack of Personal Jurisdiction Despite Officer and Agent Status

Amaysing Technologies Corp. v. CyberAir Communications, Inc., 2005 WL 578972 (Del. Ch. March 3, 2005). Amaysing Technologies Corp. ("ATC") brought an action for breach of a loan agreement against CyberAir Communications, Inc. ("CyberAir"). CyberAir filed a third-party complaint alleging various misrepresentations and frauds against Robert Mays, Jr., and Raymond Atilano, both of whom were officers and shareholders of ATC, and Med Fadel, an agent of ATC (together referred to as "Third-Party Defendants"). Third-party Defendants filed a motion to dismiss under Court of Chancery Rule 12(b)(2) for lack of personal jurisdiction, which the court granted. CyberAir set forth three grounds for personal jurisdiction over the Third-Party Defendants. First, CyberAir asserted that the Third-Party Defendants voluntarily submitted to the jurisdiction of the Court of Chancery by written agreement. Second, they contended that the Third-Party Defendants should be judicially estopped from contesting personal jurisdiction based on allegedly contradictory arguments previously advanced by ATC. Third, CyberAir asserted that jurisdiction over the Third-Party Defendants existed under Delaware's long-arm statute, 10 Del. C. - 3104, both individually and under the "conspiracy theory" of jurisdiction. As to the first theory, the court held that the Third-Party Defendants were not bound by the agreement, which they did not sign, because Delaware law clearly holds that officers of a corporation are not liable on corporate contracts as long as they do not purport to bind themselves individually. The court also found the judicial estoppel claim unpersuasive because there was nothing contradictory between a previous argument made by ATC, which addressed documents held in escrow, and the Third-Party Defendants' position that those documents were not binding because they were still being held in escrow. The court likewise found no basis for jurisdiction under the long-arm statute because: (1) the decision by Fadel and Atilano causing ATC to file suit in Delaware did not satisfy the statute; and (2) a corporation generally cannot be deemed to have conspired with its officers and agents for purposes of establishing jurisdiction under the conspiracy theory. Share