United States District Court, D. Delaware
GREGORY M. SLEET, Chief District Judge.
On July 25, 2012, the plaintiff, Wakley, Limited ("Wakley"), filed an Amended Complaint asserting five counts against the defendant, Ensotran, LLC ("Ensotran"), including: breach of contract, conversion, fraudulent misrepresentation, negligent misrepresentation, and unjust enrichment. (D.I. 6.) On September 17, 2012, Ensotran filed an Answer to Wakley's Amended Complaint, asserted Counterclaims against Wakley, and filed a Third-Party Complaint against Elmer Yuen ("Yuen"), Donna Baar ("Donna"), Roger Baar ("Roger"), and Rosebank Enterprises, LLC ("Rosebank") (collectively, the "third-party defendants"). (D.I. 8.) Ensotran's Counterclaim/Third-Party Complaint asserts claims against Wakley and the third-party defendants for conversion and breach of fiduciary duty as to "embezzled funds, " seeks injunctive relief protecting confidential information under theories of contract breach of fiduciary duty, and conversion, and seeks injunctive relief for the return of financial records. ( Id. at 25-41.) Presently before the court is Donna's, Roger's, and Rosebank's (collectively, the "moving third-party defendants") Motion to Dismiss the Third-Party Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2, 4-6). (D.I. 24.) On June 26, 2013, the court ordered Ensotran and the moving third-party defendants to submit supplemental briefing addressing whether the court may exercise personal jurisdiction over Donna and Roger under 6 Del. C. § 18-109, specifically regarding whether Donna and Roger acted only as delegates or representatives of Wakley and/or the Ensotran Board. (D.I. 46.) For the reasons that follow, the court grants the moving third-party defendants' motion to dismiss the Third-Party Complaint under Rule 12(b)(2) for lack of personal jurisdiction.
Wakley is a company located in Hong Kong that invests in technology companies. (D.I. 6 at 1.) Yuen is Wakley's principal. (D.I. 8 at 12; D.I. 49 at 4.) Donna and Roger are married and reside in California. (Id.) Rosebank is a California corporation that is owned and controlled by Donna and Roger. ( Id. at 13.)
Ensotran is a Delaware limited liability company that acts as a holding company for intellectual property, including a low-cost manufacturing process for producing wire-grid polarizers. ( Id. at 11-12.) Primal Fernando ("Fernando") is the inventor of Ensotran's wire-grid polarizer manufacturing process. ( Id. at 13.) Fernando and Steven Fischer ("Fischer") founded Ensotran in the fall of 2010. ( Id. at 14.)
In late November 2011, Yuen was introduced to Fernando and Fischer, and Yuen introduced them to Roger. (Id.) The third-party defendants entered into a nondisclosure agreement ("NDA") to protect Ensotran's intellectual property rights. ( Id. at 15.) Ensotran then disclosed its wire-grid polarizer manufacturing process, which was being developed at the College of Nanoscale Science & Engineering at the State University of New York in Albany, New York ("CNSE"). (Id.)
On or about January 3, 2012, Yuen and Ensotran concluded negotiations whereby Wakley would purchase a one third equity interest in Ensotran for a purchase price of $1, 666, 666.67. ( Id. at 16-17.) Wakley and Ensotran then revised an Offering of Membership Interests Term Sheet ("Term Sheet"), which set the parameters for the transaction. (Id.; Id., Ex. E.) The revised Term Sheet provided that Ensotran would be managed by a three-member board, consisting of: (1) Fernando, Chief Executive Officer of Ensotran, (2) Fischer, President of Ensotran, and (3) Wakley, or a person appointed by Wakley. (ld., Ex. E.) Pursuant to the Term Sheet, Wakley was to appoint a Vice President of Business Development and a Financial Controller to Ensotran, both to be paid by Wakley. ( Id. at 17; Id., Ex. E.)
Wakley appointed Yeun as the third board member, Roger as Vice President of Business Development, and Donna as Financial Controller. (ld. at 18.) Roger's duties were as follows:
The Vice President of Business Development shall report to the Board of Directors. The Vice President of Business Development shall have the sole responsibility to negotiate any sale, or licensing of any of the assets of Ensotran LLC, or the sale of Ensotran LLC or its involvement in any joint ventures, subject to the decisions and instructions of the board.
( Id., Ex. E (emphasis added).) Donna's duties were as follows:
The Financial Controller shall report to the Board of Directors. The Financial Controller shall have complete oversight and management of the finances of Ensotran LLC, subject to the decisions and instructions of the board.
(Id. (emphasis added).)
Wakley transferred $1, 666, 666.00 to Ensotran's bank account in two installments. ( Id. at 19; Id., Ex. F.) On February 21, and April 12, 2012, Donna prepared balance sheets that indicated Wakley had a one third equity interest in Ensotran ...