Perry v. Neupert
C.A. 2017-0290-VCL
Del. Ch.Dec 6, 2017Background
- Israel Perry formed Côte d’Azur Estate LLC (a Delaware single‑member LLC) to hold a French villa; he died March 18, 2015; his wife Lilly claims she is sole heir and thus inherited the membership interest.
- Defendants (Neupert and the Company) assert Israel assigned the LLC membership to a Liechtenstein private foundation in a May 1, 2013 “Deed of Assignment,” so the Foundation owns the equity.
- After Lilly refused to sign a member consent authorizing Neupert as manager, Neupert caused Delaware filings (June 29–30, 2016) converting the LLC to a Delaware corporation, filed a certificate of incorporation, and purported to issue 10,000 shares to the Foundation.
- Evidence (emails) shows Neupert and Foundation representatives earlier treated the LLC as owned by Israel’s estate after his death and acknowledged Lilly’s heir status, then later adopted the Foundation‑ownership story and granted Neupert an “unlimited power of attorney” used to effect the conversion.
- Lilly sued in Chancery seeking to invalidate the conversion and asserted tort claims; the Company counterclaimed for a declaration that the Foundation owns the shares. Lilly moved under Ct. Ch. R. 19 to join the Foundation as an (involuntary) counterclaim plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Foundation is a party who should be joined under Ct. Ch. R. 19(a) | The Foundation claims the shares; disposition without it could impair its interests and prevent complete relief | The defendants rely on the Deed of Assignment and contend the Foundation already owns the shares; they oppose joinder or treat it as unnecessary | Foundation should be joined under Rule 19(a); its claim to the shares makes joinder necessary for complete relief |
| Whether the Foundation is subject to service/jurisdiction in Delaware (Long‑Arm Statute + Due Process) | Lilly: Foundation may be served under § 3104 via the conspiracy theory because Delaware‑directed acts (conversion filings) occurred and were foreseeable to the Foundation | Defendants contend jurisdictional analysis should be limited or that filings were done by an agent so not attributable | Court holds jurisdictional showing sufficient at this stage: conspiracy theory + Delaware filings by Neupert provide statutory and constitutional hooks; Foundation appears subject to service |
| Whether the court should add the Foundation as an involuntary plaintiff under Rule 19(a) last sentence | Lilly seeks involuntary joinder if Foundation will not join as plaintiff | Defendants did not establish impossibility of service; involuntary‑plaintiff relief applies only in a “proper case” and when no other jurisdictional route exists | Court declines to decide involuntary‑plaintiff question now because service under the Long‑Arm Statute appears feasible; directs Lilly to serve Foundation as relief defendant and may seek realignment or involuntary joinder later if needed |
| Whether factual record shows a conspiracy or coordinated conduct supporting joinder and jurisdiction | Lilly points to timing, emails, power of attorney, conversion filings and issuance of shares to infer concerted scheme to deprive her of interest | Defendants point to the Deed of Assignment and filings as evidence of Foundation ownership and legal transfers | Court finds the record (emails, POA, Delaware filings, issuance of shares) supports a reasonable inference of coordinated conduct between Neupert and Foundation sufficient for Rule 19 joinder and for conspiracy‑based jurisdiction at this preliminary stage |
Key Cases Cited
- Istituto Bancario Italiano SpA v. Hunter Eng’g Co., 449 A.2d 210 (Del. 1982) (establishes five‑part conspiracy test for asserting jurisdiction over nonresident conspirators)
- Fläkt Woods Gp. SA v. Matthew, 56 A.3d 1023 (Del. 2012) (discusses scope of Long‑Arm Statute and conspiracy theory in Delaware jurisdiction analysis)
- Hercules Inc. v. Leu Tr. & Banking (Bah.) Ltd., 611 A.2d 476 (Del. 1992) (Long‑Arm Statute should be broadly construed to the constitutional limit)
- Elster v. American Airlines, Inc., 106 A.2d 202 (Del. Ch. 1954) (holders of rights implicated by litigation are indispensable parties to suits to cancel or challenge those rights)
- Hodson v. Hodson Corp., 80 A.2d 180 (Del. Ch. 1951) (owner of stock is an indispensable party to actions to cancel shares)
- Shaffer v. Heitner, 433 U.S. 16 (U.S. 1977) (limitations on using in rem sequestration to create jurisdiction; discussed regarding situs‑based contacts and jurisdictional limits)