United States District Court, D. Delaware
ROBERT W. SEIDEN, ESQ. Receiver for SOUTHERN CHINA LIVESTOCK, INC., Plaintiff,
SCHWARTZ, LEVITSKY, AND FELDMAN LLP, Defendant.
K. Hogan, Hogan McDaniel, Wilmington, DE - attorneys for
Patrick M. McGrory, Tighe & Cottrell, P. A., Wilmington,
DE - attorneys for Defendant
NOREIKA, U.S. DISTRICT JUDGE
the Court is a motion to dismiss (D.I. 6) filed by Defendant
Schwartz, Levitsky, and Feldman LLP ("Defendant" or
"SLF") seeking dismissal of the Complaint (D.I. 1)
filed by Plaintiff Robert W. Seiden, Esq. ("Plaintiff or
"Seiden"), Receiver for Southern China Livestock,
Inc. because of a number of deficiencies, including: lack of
personal jurisdiction under Rule 12(b)(2), forum non
conveniens under Rule 12(b)(3), insufficient process
under Rule 12(b)(4), as well as failure to state a claim
given the statutes of limitations and in pari
delicto under Rule 12(b)(6). For the following reasons,
the Court will dismiss Plaintiffs Complaint against SLF for
lack of personal jurisdiction.
China Livestock International, Inc. was a company
incorporated under the laws of Nevada as a holding company
for a registered company in China. (D.I. 1 at ¶ 6). SLF
is a limited liability partnership organized under the laws
of Canada with a principal office in Toronto. (D.I. 7 at 3,
Exh. B at ¶ 2). SLF is registered with the Public
Company Accounting Oversight Board ("PCAOB") as is
required by 15 U.S.C. § 7211 et seq. to prepare
or furnish audit services to U.S. entities. (Id. at
11). As is mandated by 15 U.S.C. § 7216, SLF maintains
an "agent in the United States upon whom may be served
any request by the Commission or the Board under this section
or upon who may be served any process, pleading, or other
papers in any action brought to enforce this section."
SLF designated the Corporation Services Company, a Delaware
corporation, as its agent for these purposes. (D.I. 1 at
¶ 5). SLF does not itself own or maintain any offices in
Delaware. (D.I. 7 at 3, Exh. B at ¶¶ 3-5).
November 25, 2009, SLF was retained to audit the financial
statements of Southern China Livestock International, Inc.
for fiscal years 2008 and 2009. (D.I. 1 ¶ 20, Exh. C).
On January 28, 2010, SLF concluded its audit of consolidated
financial statements and stated that they "present
fairly, in all material respects, the financial position of
Southern China Livestock International Inc."
(Id. at ¶ 19). Months later, on March 29, 2010,
Expedite 4, Inc. ("Expedite"), a Delaware
corporation, acquired Southern China Livestock International,
Inc. in a reverse takeover transaction. (Id. At
¶ 7). On July 9, 2010, Expedite changed its name to
Southern China Livestock, Inc. ("SCLI").
(Id. At ¶ 8).
2010, SLCI sought to raise $10 million through a private
placement memorandum ("PPM") based on the strength
of SLF's audit report. (Id. at¶ 22). The
PPM raised approximately $7, 594, 965 from investors.
(Id.). SCLI filed a registration statement with the
Securities and Exchange Commission ("SEC") in May
2010, but ultimately withdrew the statement in August 2011.
(Id. At ¶ 10). Between August 2010 and February
2011, SLF continued its role as SCLI's auditor and signed
off on several filings to the SEC. (Id. at ¶
29). On August 15, 2011 SCLI filed a form 15-12G with the SEC
terminating its responsibilities to make filings.
(Id. at ¶ 30). Plaintiff alleges that SCLI
executives transferred cash from the company to themselves
and misappropriated monies for their personal gain.
(Id. at ¶ 27).
was appointed receiver of SCLI by the Court of Chancery of
the State of Delaware on January 17, 2014. (Id. at
¶ 31). As SCLI's receiver, Seiden brought an action
in the United States District Court for the Southern District
of New York asserting six claims against SLF: (1) breach of
contract; (2) negligence/gross negligence; (3) aiding and
abetting or participating in breach of fiduciary duty; (4)
aiding and abetting or participating in fraud; (5) fraudulent
conveyances; and (6) unjust enrichment. See Seiden v.
Schwartz, Levitsky, and Feldman LLP, Civ. No.
16-cv-05666, 2017 WL 2591785 (S.D.N.Y. June 14, 2017)
("Seiden I”) The Court dismissed
Seiden's claims for lack of personal jurisdiction.
December 28, 2017, Plaintiff filed this action, alleging
claims identical to those in his S.D.N.Y complaint. (D.I. 1
at ¶¶ 33-52). Plaintiff seeks both actual and
punitive damages from SLF. (Id. at ¶¶
53-56). On February 2, 2018, SLF filed a motion to dismiss
for lack of personal jurisdiction under Rule 12(b)(2),
forum non conveniens under Rule 12(b)(3),
insufficient process under Rule 12(b)(4), as well as failure
to state a claim given the statutes of limitations and in
pari delicto Tinder Rule 19(b)(6) (D.L 6, 7).
to Rule 12(b)(2) of the Federal Rules of Civil Procedure, the
Court may dismiss a suit for lack of jurisdiction over the
person. When a defendant challenges a court's exercise of
personal jurisdiction under Rule 12(b)(2), "the
plaintiff bears the burden of establishing personal
jurisdiction by a preponderance of the evidence and must do
so by 'establishing with reasonable particularity
sufficient contacts between the defendant and the forum
state.'" Turner v. Prince Georges County Public
Schools, 694 Fed.Appx. 64, 66 (3d Cir. 2017)
(quoting Mellon Bank (East) PSFS, Nat'l Ass'n v.
Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). "To
meet this burden, the plaintiff must produce 'sworn
affidavits or other competent evidence,' since a Rule
12(b)(2) motion 'requires resolution of factual issues
outside of the pleadings.'" Erasure's Pest
Control, Inc. v. Air Cleaning Equip., Inc., C.A. No.
17-323-RGA-MPT, 2018 WL 337747, at *1 (D. Del. Jan. 9, 2018)
(quoting Time Share Vacation Club v. Atlantic Resorts,
Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984)). "[W]hen
the court does not hold an evidentiary hearing on the motion
to dismiss, [however], the plaintiff need only establish a
prima facie case of personal jurisdiction and the plaintiff
is entitled to have its allegations taken as true and all
factual disputes drawn in its favor." Miller Yacht
Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004)
(citing Pinker v. Roche Holdings, Ltd., 292 F.3d 361
(3d Cir. 2002)); see also Bank Brussels Lambert v.
Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d
Cir. 1999) ("Where a 'court [has chosen] not to
conduct a full blown evidentiary hearing on the motion, the
plaintiff need make only a prima facie showing of
jurisdiction through its own affidavits and supporting
materials.'") (quoting Marine Midland Bank, N.A.
v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)).
requirements, one statutory and one constitutional, must be
satisfied for personal jurisdiction to exist over a
defendant. Bell Helicopter Textron, Inc. v. C & C
Helicopter Sales, Inc., 295 F.Supp.2d 400, 403 (D. Del.
2002). "First, a federal district court may assert
personal jurisdiction over a nonresident of the state in
which the court sits to the extent authorized by the law of
that state." Id. (citing Fed.R.Civ.P. 4(e)).
The Court must, therefore, "determine whether there is a
statutory basis for jurisdiction under the Delaware long-arm
statute." Id., (citing 10 Del. Code §
3104(c)). "Second, because the exercise of jurisdiction
must also comport with the Due Process Clause of the United
States Constitution, the Court must determine if an exercise
of jurisdiction violates [defendants'] constitutional
right to due process." Id. (citing
International Shoe Co. v. Washington, 326 U.S. 310
(1945)); see also IMO Industries, Inc. v. Kiekert
AG, 155 F.3d 254, 259 (3d Cir. 1998).
long arm statute, 10 Del. C. § 3104, provides in
(c) As to a cause of action brought by any person arising
from any of the acts enumerated in this section, a court may
exercise personal jurisdiction over any nonresident, or a