Sara Hildegard Ensing v. Hans Ensing and Oiggol Holding, LLC
CA 12591-VCS
| Del. Ch. | Mar 6, 2017Background
- Hans and Sara Ensing operated an Italian winery and hotel through two Delaware LLCs: International Wine Capital Partners, LLC (IWCP) and Loggio Finance LLC (Loggio). Sara was manager of both; Hans was neither member nor manager.
- IWCP is manager-managed; Sara was designated guardian for the Minor Children who are members and signed IWCP’s Operating Agreement on their behalf. Hans previously consented to her authority as guardian.
- After the couple separated in 2015, Hans attempted to seize control: he produced a Pledge Agreement and a Trust Agreement (purporting to give him control), removed Sara as manager by written consents, sold Loggio’s 70% interest in the Italian company to Oiggol (an entity he controlled), and issued/transferred new IWCP units to Oiggol.
- Sara sued under 6 Del. C. § 18-110 seeking declaratory relief that Hans’s removals, appointments, and transfers were void; the case was expedited and tried as a summary proceeding.
- Forensic evidence showed the Pledge and Trust Agreements were likely fabricated (PDF metadata, common IP source for emails, implausible signatures); Hans refused court-ordered electronic discovery, violated a status-quo order, and misled the court about his passport.
- The Court found Hans lacked authority under the IWCP Operating Agreement, failed to give proper notice of meetings, and that the challenged transfers and unit issuances were void; the Court awarded sanctions (two-thirds of Sara’s fees and all forensic-expert fees) for Hans’s bad-faith litigation conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Hans’s removal of Sara as manager and his appointment as manager of IWCP/Loggio | Sara: Operating Agreement gives her exclusive guardian/manager authority; Hans had no membership or managerial rights and no authority to act for the Minor Children | Hans: Relies on Trust Agreement, Pledge Agreement, and later guardian voting rights under Italian law to justify removal and appointment | Held: Removal and appointment void. Trust/Pledge not authentic; Operating Agreement governs and designates Sara as guardian. Hans’s late Italian-law theory struck as untimely. |
| Effectiveness of IWCP July 8, 2016 meeting (notice) | Sara: She did not receive proper notice per Operating Agreement; she did not attend; actions taken at meeting thus invalid | Hans: Claimed he acted as guardian and provided notice via registered agent | Held: Notice inadequate (sent to registered agent, not to Sara at her known address); actions at the meeting invalid. |
| Validity of Loggio’s sale of 70% interest in S.A. Villa Loggio to Oiggol | Sara: Hans lacked authority to transfer Loggio’s interest; sale had no real payment; self-dealing to his own entity | Hans: Claimed managerial authority (based on sham documents) to effect sale | Held: Transfer void; Hans had no authority; payment not made; transaction self-interested and invalid. |
| Issuance/transfer of 350 new IWCP units to Oiggol | Sara: Operating Agreement prohibits unauthorized transfers and requires new members to execute joining instrument; manager lacked power to issue units | Hans: Claimed authority via his actions at the July 8 meeting and guardian voting | Held: Issuance/transfer void. Operating Agreement prohibits such a transfer absent required procedures and written joinder by transferee. |
Key Cases Cited
- Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228 (Del. 1997) (contracts unambiguous on their face control and extrinsic evidence may not vary terms)
- Tandycrafts, Inc. v. Initio P’rs, 562 A.2d 1162 (Del. 1989) (American Rule: each party bears its own fees unless bad-faith exception applies)
- Arbitrium (Cayman Is.) Handels AG v. Johnston, 705 A.2d 225 (Del. Ch. 1997) (bad-faith litigation conduct justifies fee-shifting when proven by clear evidence)
- Auriga Capital Corp. v. Gatz Props., LLC, 40 A.3d 839 (Del. Ch. 2012) (court’s broad discretion in fixing attorneys’ fees; standards for review of fee requests)
- Nagy v. Bistricer, 770 A.2d 43 (Del. Ch. 2000) (bad-faith standard and limits on fee-shifting applied sparingly)
- Kortum v. Webasto Sunroofs, Inc., 769 A.2d 113 (Del. Ch. 2000) (untimely invocation of foreign law may be excluded)
- Lippman v. Kehoe Stenograph Co., 95 A. 895 (Del. Ch. 1915) (special meetings held without due notice are unlawful and acts done thereat are void)