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White v. Sharabati

Superior Court of Delaware

July 2, 2019

ELIZABETH WHITE, Plaintiff,
v.
FADI SHARABATI, Defendant.

          Submitted: June 11, 2019

         Defendant's Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction- GRANTED

         Defendant's Motion for Return or Escrow of Funds Garnished Under the Vacated Default Judgment - STAYED

          John A. Sensing, Esquire (Argued); Jesse L. Noa, Esquire; Potter Anderson & Corroon LLP, Attorneys for Plaintiff.

          Richard A. Forsten, Esquire (Argued); Elizabeth S. Fenton, Esquire; Saul Ewing Arnstein & Lehr LLP, Attorneys for Defendant.

          MEMORANDUM OPINION

          WILLIAM C. CARPENTER, JR. JUDGE.

         Before the Court is Fadi Sharabati's ("Defendant" or "Mr. Sharabati") Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction, as well as his Motion for Return or Escrow of Funds Garnished Under the Vacated Default Judgment. For the reasons set forth in this Opinion, Defendant's Motion to Dismiss is GRANTED, and the dismissal is effective forty-five days after this decision. The Motion for Return or Escrow of Funds is STAYED.

         I. FACTUAL & PROCEDURAL BACKGROUND

         Plaintiff Elizabeth White ("Plaintiff or "Ms. White") initiated this litigation to recover cryptocurrency assets purportedly stolen from her through a fraudulent scheme.[1] Ms. White is a resident of New York and "conducts business through the White Company, a Delaware entity."[2] Defendant Mr. Sharabati is a Palestinian National who resides in Morocco.[3]

         On December 27, 2017, Plaintiff was allegedly contacted by Defendant and asked "to enter into a cryptocurrency transaction, in which [she] would sell 484, 000 Ripple to [Mr. Sharabati] in exchange for 46.5 Bitcoin using a certain online escrow platform."[4] Ms. White used an "agreed-upon sequence" to transfer her Ripple, but never received the 46.5 Bitcoin from Mr. Sharabati in return.[5] Plaintiff eventually traced the 484, 000 Ripple to Defendant's account on a cryptocurrency exchange platform operated by Bittrex, a Delaware corporation that is headquartered in Seattle, Washington.[6]

         Ms. White filed the instant lawsuit against John Doe on February 23, 2018, prior to learning the identity of the Bittrex account holder. Plaintiff subsequently amended her Complaint to name Mr. Sharabati as Defendant on April 3, 2018. Approximately one month later, on May 1, 2018, the Superior Court Prothonotary entered default judgment against Defendant for failure to appear, plead, or otherwise defend.[7] After the entry of default judgment, Plaintiff "moved to garnish certain crypto-currencies held by Mr. Sharabati on several internet-based electronic trading platforms, including [Bittrex] and [Poloniex]."[8] Bittrex subsequently turned over approximately $455, 010.79 in cryptocurrency to Plaintiff, while Poloniex gave her about $30, 000.[9]

         Defendant filed a Motion to Vacate the Default Judgment on November 19, 2018, and the Court granted Defendant's Motion on December 17, 2018.[10] Mr, Sharabati subsequently filed the instant Motion to Dismiss for Lack of Personal Jurisdiction and Motion for Return or Escrow of Funds Garnished Under the Vacated Default Judgment. This is the Court's decision on the pending Motions.

         II. DISCUSSION

         A. Motion to Dismiss for Lack of Personal Jurisdiction

         On a motion to dismiss for lack of personal jurisdiction, the plaintiff has the burden of showing a basis for the trial court's exercise of jurisdiction over a nonresident defendant.[11] In Delaware, "courts will apply a two-prong analysis to the issue of personal jurisdiction over a nonresident."[12] First, the court must determine whether Delaware's long arm statute, 10 Del. C. § 3104(c), is applicable.[13] It then must consider whether subjecting the nonresident to jurisdiction in Delaware violates the Due Process Clause of the Fourteenth Amendment.[14] The Due Process Clause requires the defendant to have minimum contacts with the forum state, and "it must be 'fair and reasonable' for the court to exercise jurisdiction over the nonresident party."[15]

         Delaware's long arm statute states that "a court may exercise personal jurisdiction over any nonresident ... who in person or through an agent:

(1) Transacts any business or performs any character of work or service in the State.. ."[16]

         For the Court to exercise jurisdiction under 10 Del. C. § 3104(c)(1), "'some act must actually ...


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