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Ting v. Silver Dragon Resources, Inc.

Superior Court of Delaware, New Castle

June 3, 2015

TSANG MUN TING, Plaintiff,
v.
SILVER DRAGON RESOURCES, INC., TRAVELLERS INTERNATIONAL, INC., and MARC HAZOUT, Defendants.

Submitted: February 18, 2015

M. Duncan Grant, Esquire, Christopher B. Chuff, Esquire, Pepper Hamilton LLP, Attorneys for Plaintiff.

David L. Finger, Esquire, Finger & Slalina, LLC, Attorney for Defendants.

OPINION

WILLIAM C. CARPENTER, JR. JUDGE

Before this Court is Defendants Travellers International, Inc. ("Travellers") and Marc Hazout's ("Hazout") Motion to Dismiss for Lack of Personal Jurisdiction. For the foregoing reasons, Travellers' Motion is hereby GRANTED and Hazout's Motion is DENIED.

FACTUAL AND PROCEDURAL BACKGROUND

In the Spring of 2013, Plaintiff Tsang Mun Ying ("Plaintiff") as part of a group of affiliated investors ("Investors") entered into negotiations with Defendant Silver Dragon ("Silver Dragon") to acquire operating control of the Company by appointing a new slate of directors to replace all but one of the directors on Silver Dragon's then current board.[1] In exchange, the Investors would provide loans to Silver Dragon totaling $3, 417, 265. Towards the end of December 2013, the terms of the negotiations were put into a written agreement ("Agreement") to be executed by the Investors and the existing board of Silver Dragon. This Agreement contained choice of law and choice of forum provisions designating application of Delaware law and dictating that any action relating to the Agreement would be brought in Delaware.[2]

Throughout December, Hazout; the Director, President, CEO and Principal Financial and Accounting Officer for Silver Dragon, made representations to the Investors, including Plaintiff, that the Agreement would be signed by the resigning directors, would be delivered to them within days, and that Silver Dragon's board would resign on December 31, 2013.[3] On December 30, 2013, in reliance upon representations that the executed documents would be delivered the next day, Plaintiff made a wire transfer to Silver Dragon in the amount of $1, 014, 140.[4]Shortly after receiving the funds, counsel for Silver Dragon wrote to the Investors indicating that they were waiting on one more signature, but in the meantime attached the signatures of three of the four directors, including Hazout.[5]

Unfortunately, the Agreement was never completed because one of Silver Dragon's directors refused to execute the Agreement.[6] However, the Complaint alleges that despite repeated written demands for the return of the funds that had been advanced, Defendants refuse to return payment to Plaintiff. Plaintiff asserts that the funds were used to pay various debts of Silver Dragon, including approximately $750, 000 used to pay Travellers, whose President and sole shareholder is Hazout.

Plaintiff asserts in Counts I, II and III of the Complaint, that Defendants Silver Dragon, Travellers and Hazout were unjustly enriched, committed fraud, and made a fraudulent transfer in violation of 6 Del. C. § 1304. Travellers and Hazout have moved to dismiss these claims pursuant to Superior Court Rule 12(b)(6) for lack of personal jurisdiction.

Silver Dragon is a publicly traded company incorporated in Delaware with its principal place of business in Toronto, Canada. Travellers is a private investment banking company incorporated in Ontario, Canada, with its principal place of business in Toronto, Canada. Travellers is owned and controlled by a single stockholder, Hazout, an individual residing in Toronto, Canada who also serves as Director, President, CEO and Principal Financial and Accounting Officer for Silver Dragon.[7]

STANDARD OF REVIEW

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff is obligated to establish a prima facie case, that personal jurisdiction is sound.[8] "Although the plaintiff must plead specific facts and cannot rely on mere conclusory assertions, the factual record is read in the light most favorable to the plaintiff."[9] "There are two legal questions to be answered in considering a motion under Rule 12(b)(2)…whether there is a statutory basis for serving the ...


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