HM Life Insurance Company v. Wilmington Savings Fund Society, FSB ( 2020 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: April 3, 2020
Date Decided: April 9, 2020
Brian M. Gottesman, Esq. Adam V. Orlacchio, Esq.
David B. Anthony, Esq. BLANK ROME LLP
BERGER HARRIS LLP 1201 N. Market Street, Suite 800
1105 N. Market St., 11th Floor Wilmington, Delaware 19801
Wilmington, Delaware 19801
Mackenzie M. Wrobel, Esq.
DUANE MORRIS LLP
222 Delaware Avenue, Suite 1600
Wilmington, Delaware 19801
Elena C. Norman, Esq.
Michael A. Laukaitis II, Esq.
YOUNG CONAWAY STARGATT &
TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Steven T. Margolin, Esq.
Samuel L. Moultrie, Esq.
GREENBERG TRAURIG, LLP
The Nemours Building
1007 North Orange Street, Suite 1200
Wilmington, Delaware 19801
Stamatios Stamoulis, Esq.
STAMOULIS & WEINBLATT LLC
800 N. West Street, Third Floor
Wilmington, Delaware 19801
Re: HM Life Insurance Company, et al. v. Wilmington Savings Fund
Society, FSB, et al., C.A. No. 2018-0649-SG
Dear Counsel:
The Plaintiffs, HM Life Insurance Company and HM Life Insurance
Company of New York, have filed this Action in connection with a series of
insurance transactions, alleging twenty-four counts against twenty-one Defendants.1
The Plaintiffs allege a “coordinated and elaborate scheme to defraud them through
a complex series of reinsurance transactions, trust agreements, and investment
vehicles.”2 The Plaintiffs further allege that a Delaware statutory trust, and its series,
were “created and used for the sole purpose to conceal from Plaintiffs unauthorized
investments in volatile hedge funds and the significant resulting losses.”3
Defendant Blue Elite Fund, Limited (“Blue Elite”) is an exempt company
organized and existing under the laws of the Cayman Islands with its principal place
of business in the Cayman Islands.4 The Plaintiffs have brought claims against Blue
Elite for aiding and abetting fraud and tortious interference with contractual
relations.
Defendant Blue II, Limited (“Blue II”) is an exempt company organized and
existing under the laws of the Cayman Islands with its principal place of business in
1
Defendant John Drake was dismissed with prejudice pursuant to Chancery Court Rule
41(a)(1)(ii). Joint Stipulation of Dismissal with Prejudice as to John Drake, D.I. 110.
2
Verified Third Amended Compl. for Breach of Trust Agreements, Breach of Fiduciary Duties,
Negligence, and Related Torts, D.I. 80, ¶ 1.
3
Id.
4
Id. ¶ 22.
2
the Cayman Islands.5 The Plaintiffs have brought claims against Blue II for aiding
and abetting fraud and tortious interference with contractual relations.
Defendant Donald Solow is an individual and resident of the State of New
Jersey and was, at all times relevant to this matter, the owner, manager, and/or person
in charge of Defendant Regatta Holdings LLC, and a director and/or owner of
Defendants Alpha Re Limited and Alpha Re Holdings (Cayman) Limited.6 The
Plaintiffs have brought claims against Solow for aiding and abetting breach of
fiduciary duty, fraud, aiding and abetting fraud, unjust enrichment, and tortious
interference with contractual relations.
Defendant Edward Brendan Lynch is an individual and a resident of Nassau,
New Providence, Bahamas and is a director and/or owner of Defendants Alpha Re
Limited, Alpha Re Holdings (Cayman) Limited, Blue Elite, Blue II, and Atlantic
Specialty Finance Limited.7 The Plaintiffs have brought claims against Lynch for
aiding and abetting breach of fiduciary duty, fraud, aiding and abetting fraud, unjust
enrichment, and tortious interference with contractual relations.
Defendant Gregory Tolaram is an individual and a resident of Bermuda and
is a director and/or owner of Defendants Alpha Re Limited, Alpha Re Holdings
5
Id. ¶ 23.
6
Id. ¶ 27.
7
Id. ¶ 29.
3
(Cayman) Limited, Blue Elite, Blue II, and Atlantic Specialty Finance Limited.8 The
Plaintiffs have brought claims against Tolaram for aiding and abetting breach of
fiduciary duty, fraud, aiding and abetting fraud, unjust enrichment, and tortious
interference with contractual relations.
Defendants Blue Elite, Blue II, Solow, Lynch, and Tolaram (together, the
“12(b)(2) Defendants”) have moved to dismiss this action for lack of personal
jurisdiction pursuant to Chancery Court Rule 12(b)(2).9
In Hart Holding Co. Inc. v. Drexel Burnham Lambert Inc.,10 this Court held
that a plaintiff “may not ordinarily be precluded from reasonable discovery in aid of
mounting [proof that a defendant is subject to the jurisdiction of the court],” and
consequently, discovery to establish personal jurisdiction is unwarranted “[o]nly
where the facts alleged in the complaint make any claim of personal jurisdiction over
defendant frivolous.”11 Here, the Plaintiffs have alleged sufficient facts to make a
non-frivolous claim to this Court’s personal jurisdiction over the 12(b)(2)
Defendants. Therefore, the Plaintiffs are permitted to undertake jurisdictional
discovery regarding the 12(b)(2) Defendants. I will hold the 12(b)(2) Defendants’
8
Id. ¶ 30.
9
Ch. Ct. R. 12(b)(2).
10
593 A.2d 535 (Del. Ch. 1991).
11
Id. at 539.
4
respective Motions to Dismiss—and all other pending Motions to Dismiss in this
matter—in abeyance for the duration of such discovery.
To the extent the foregoing requires an Order to take effect, IT IS SO
ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
5