Gould v. Gould, C.A. No. 3332-VCP (Del. Ch. Jan. 7, 2011), read opinion here.
The issue addressed in this dissolution proceeding was whether to grant a motion to amend the complaint in order to add new claims and a third-party claim pursuant to Chancery Rule 15(a).
Although the Court explains in detail the factual background of this dissolution proceeding and the disputes that have arisen in the more than two years since a trustee was appointed by the Court to oversee the winding-up of the company and the sale of its assets, this 30-page decision focuses on the motion to amend the complaint to assert new claims against the original parties and to add third-parties as a result of alleged causes of action that arose out of the proposed sale of the company’s assets based on an auction conducted by the trustee after the parties stipulated to a dissolution.
Also helpful for those involved in dissolution proceedings is a reference to case law in the Court of Chancery that addresses the limited scope of issues that are normally permitted to be asserted in dissolution proceedings. See page 27.
Key Legal Principles Addressed by the Court
Amid the backdrop of disputes over the details of dissolution and the sale of assets at an auction of a closely-held business, the Court addressed whether claims related to the auction of the company’s assets should or could be brought in Delaware. The key legal standards addressed by the Court include the following:
1) The Court addressed the liberal standard for a motion to amend claims and to add new claims pursuant to Court of Chancery Rule 15(a). See page 14 of slip op.
2) The Court addressed the two-part test that is typically applied to do an initial analysis of whether the Court has personal jurisdiction over a person or entity. See page 16.
3) The Court explained the “conspiracy theory of personal jurisdiction” by which a party to the conspiracy can be sued in Delaware as long as one other member of the conspiracy has sufficient contacts with Delaware. See page 19.
4) The agency theory of personal jurisdiction was addressed, for example, involving a subsidiary that serves as an agent for a parent corporation for purposes of satisfying the prerequisites for imposing personal jurisdiction over an entity. See page 21.
5) The Court performed an analysis of the principles involved in forum non conveniens, even assuming that personal jurisdiction does exist. See page 23.
After a careful analysis the Court concluded that it would allow the additional claims and the additional parties to be added to the lawsuit. Moreover, it determined that it would wait to determine whether it would authorize the trustee to distribute any funds from the sale, until after such time as further proceedings were conducted on the new claims that were added.