Deutsche Bank AG v. Devon Park Bioventures, L.P.
CA No. 2017-0822-SG
Del. Ch.Jun 30, 2021Background
- Deutsche Bank obtained an English judgment (now ≈ $300M with interest) against Sebastian Holdings for unpaid margin obligations.
- Sebastian owned a ~23% limited-partnership interest in Devon Park Bioventures, L.P., a Delaware LP.
- During and after the English litigation, Sebastian purportedly transferred the Devon interest first to VBI (2012) and later to Universal Logistic Matters, S.A. (renamed CPR Management, S.A., the Transferee Entity) in 2014.
- Devon LP (and its Delaware GP) withheld further distributions; one distribution was wired to the Transferee Entity but later transfers were rejected.
- Deutsche sued in Delaware seeking, inter alia, a declaration that Sebastian still owns the interest and relief to collect on the English judgment; Sebastian and the Transferee Entity moved under Ct. Ch. R. 12(b)(2) to dismiss for lack of personal jurisdiction.
- The Court held that neither the long-arm statute nor due process support jurisdiction over the foreign defendants (no substantial acts or effects in Delaware; conspiracy theory fails) and granted the motions to dismiss in part; the TRO restraining distributions remains in place pending other proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 3104(c)(1) (transacts business in Delaware) supports jurisdiction | Transaction (assignment of a Delaware partnership interest) + Delaware choice-of-law clause shows transaction tied to Delaware | Transfer of foreign parties' ownership interest in a Delaware LP is not, without more, transacting business in Delaware | Not a basis for jurisdiction; mere transfer of Delaware LP interest and a choice-of-law clause insufficient |
| Whether § 3104(c)(3) (tortious injury in Delaware) supports jurisdiction | Fraudulent-transfer and conspiracy caused injury connected to a Delaware entity | Tortious acts and effects occurred outside Delaware; injury is to a foreign creditor, not to Delaware | No tortious injury in Delaware alleged; statute not satisfied |
| Whether conspiracy/joint-action theory supports jurisdiction | Co-conspirators purposely directed substantial acts/effects to Delaware (mix of contacts demonstrates foreseeability) | Alleged acts in furtherance of conspiracy occurred outside Delaware; no substantial act/effect in Delaware attributable to defendants | Conspiracy theory fails—no substantial act or substantial effect in Delaware shown |
| Whether exercise of jurisdiction comports with due process (minimum contacts) | Aggregation of contacts (ownership of Delaware interest, distributions, choice-of-law, Delaware counsel, appointment of Delaware GP as attorney-in-fact) suffices for purposeful availment | Contacts are fortuitous or peripheral; conduct and dispute arose abroad; defendants lacked purposeful availment of Delaware forum | Due process not satisfied; defendants do not have sufficient minimum contacts with Delaware |
Key Cases Cited
- Hercules Inc. v. Leu Tr. & Banking (Bahamas) Ltd., 611 A.2d 476 (Del. 1992) (Delaware’s long-arm statute is to be construed broadly but within due-process limits)
- Istituto Bancario Italiano v. Hunter Engineering Co., 449 A.2d 210 (Del. 1982) (ownership of stock in a Delaware corporation alone does not confer personal jurisdiction)
- Papendick v. Robert Bosch GmbH, 410 A.2d 148 (Del. 1979) (contacts consisting only of corporate ownership of a Delaware subsidiary are insufficient for jurisdiction)
- Greenly v. Davis, 486 A.3d 669 (Del. 1984) (dismissal where only contact was a proposed sale of stock in a Delaware corporation)
- Mobile Diagnostic Grp. Holdings, LLC v. Suer, 972 A.2d 799 (Del. Ch. 2009) (forum-related conduct must give rise to the claims for long-arm jurisdiction)
- Werner v. Miller Tech. Mgmt., L.P., 831 A.2d 318 (Del. Ch. 2003) (minimum contacts inquiry and fairness considerations under due process)
- Crescent/Mach I Partners, L.P. v. Turner, 846 A.2d 963 (Del. Ch. 2000) (conspiracy jurisdiction is narrowly construed and requires specific factual proof)
- Hazout v. Tsang Mun Ting, 134 A.3d 274 (Del. 2016) (choice-of-law clauses and corporate-official actions may support jurisdiction only where other connections to the forum exist)