Xactus, LLC v. Mark Sike and CIC Mortgage Credit, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
XACTUS, LLC, )
)
Plaintiff, )
)
v. ) C.A. No. 2024-0260-KSJM
)
MARK SIKE and CIC MORTGAGE )
CREDIT, INC., )
)
Defendants. )
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS1
1. Plaintiff Xactus, LLC provides consumer credit reports to mortgage
lenders, including large banks, non-bank mortgage originators, and credit unions.
Xactus is a Delaware entity, wholly owned by Cascade CISS Holdings LLC
(“Cascade”). Xactus’s key product is the “tri-merge credit report,” which “merges the
‘Big 3’ credit reporting agencies’ data—Equifax, Experian, and TransUnion—into a
single easily digestible report.”2 Xactus provides tailored pricing models for each
client. Preparing those models requires specialized and confidential client
information. “The process for determining each client’s pricing model is proprietary
to Xactus and has been developed over the course of Xactus’s existence.”3
2. Defendant Mark Sike was a Xactus strategic account manager. Sike
began working for Xactus’s predecessor, Credit Plus, Inc., in 2001. Credit Plus
1 The facts are drawn from the Verified Complaint for Injunctive Relief and
documents it incorporates by reference. C.A. No. 2024-0260-KSJM, Docket (“Dkt.”) 1
(“Compl.”).
2 Id. ¶ 11.
3 Id. ¶ 14.
became Xactus after a merger in October 2021. As a Xactus strategic account
manager, Sike “observed and utilized Xactus’[s] advantages over its competitors,
including, without limitation the proprietary processes behind Xactus’[s] client
specific pricing models.”4 He also gained and possessed detailed knowledge of
Xactus’s strategic clients, pricing information, and confidential business information.
In addition, Sike “was involved in sales and strategy meetings in 2021, 2022 and
2023, where he learned of Xactus’[s] future nonpublic product innovations.”5
3. Xactus offered Sike equity through the Cascade Management Holdco
LLC Equity Incentive Plan (the “Incentive Plan”) in 2022 and 2023. As part of the
Incentive Plan, Sike entered into substantively identical Equity Grant Agreements
in 2022 and 2023 (together, the “Equity Grant Agreements”).6 The Equity Grant
Agreements are governed by Delaware law.7
4. The Equity Grant Agreements contain restrictive covenants (the
“Covenant Agreements”).8 The Covenant Agreements each contain a non-solicitation
provision that prohibits a grantee from directly or indirectly soliciting the current or
potential clients of Xactus or its affiliates for twelve months.9 The Covenant
4 Id. ¶ 25.
5 Id. ¶ 27.
6 Id., Ex. A (“2022 Equity Grant Agr.”), Ex. B (“2023 Equity Grant Agr.”).
7 2022 Equity Grant Agr. § 19; 2023 Equity Grant Agr. § 19.
8 2022 Equity Grant Agr., Annex C (“2022 Covenant Agr.”); 2023 Equity Grant Agr.,
Annex C (“2023 Covenant Agr.”).
9 Compl. ¶ 31; 2022 Covenant Agr. ¶¶ 2, 4; 2023 Covenant Agr. ¶¶ 2, 4.
2
Agreements also contain non-competition and non-poaching provisions with twelve-
month terms.10
5. The Incentive Plan requires that a grantee sign a joinder to the Cascade
LLC Agreement (the “LLC Agreement”).11 Sike signed a joinder, by which he:
acknowledge[d] that he has received and reviewed a
complete copy of the [LLC Agreement] and agree[d] that
upon execution of this Joinder, [Sike] . . . shall become a
party to the [LLC Agreement] and shall be fully bound by,
and subject to, all of the representations, warranties,
covenants, terms and conditions of the [LLC Agreement] as
though an original party thereto.12
6. The Equity Grant Agreements represent that “upon signing” a grantee
“acknowledges, agrees and confirms” that the grantee is “bound by the terms,
conditions, covenants, obligations, restrictions and agreements” of both the Covenant
Agreements and the LLC Agreement.13
7. On January 5, 2024, Sike resigned from Xactus. On January 22, 2024,
Xactus found an email that led it to conclude that Sike was working for a competitor,
Defendant CIC Mortgage Credit, Inc (“CIC”), before Sike left Xactus. The email,
dated January 19, 2024, was from an employee of Equity Resources, Inc., a “long
standing and substantial Xactus client.”14 The Equity Resources employee sent the
initial email to Amanda Cottrell, the Vice President of Operations of Equity
10 Compl. ¶ 31 n.4; 2022 Covenant Agr. ¶¶ 2, 3; 2023 Covenant Agr. ¶¶ 2, 3.
11 2022 Equity Grant Agr., Annex B § 7(a); 2023 Equity Grant Agr., Annex B, § 7(a).
12 Compl., Ex. A, Annex D, (Joinder Agreement, signed by Sike Aug. 31, 2022).
13 2022 Equity Grant Agr. §§ 9, 15(a); 2023 Equity Grant Agr. §§ 9, 15(a).
14 Compl. ¶ 37.
3
Resources, to set up a virtual inspection. Cottrell then inadvertently copied Sike’s
(now former) Xactus email address (Mark.Sike@xactus.com) in her reply. Xactus
alleges that “the email implied that Sike not only now worked for CIC, but also was
actively soliciting Xactus’[s] clients” before his departure from Xactus.15 After Xactus
found this email, it discovered that Sike had “downloaded documents revealing the
prices Xactus charges to its clients, including Equity Resources.”16 Equity Resources
is now a client of CIC.
8. CIC hired Sike in January 2024. Since then, according to Xactus, Sike
has attempted to solicit numerous other Xactus clients and has used Xactus’s pricing
data in his solicitations.
9. On January 26, 2024, Xactus’s counsel wrote to Sike and CIC, accusing
Sike of violating the Equity Grant Agreements by: “(1) using Xactus’[s] confidential
information; (2) working for CIC, a direct competitor of Xactus; (3) directly soliciting
several of Xactus’[s] current clients; and (4) directly soliciting a[] Xactus employee.”17
In response, Sike and CIC took the position that the Covenant Agreements were
unenforceable.
10. Xactus filed this action against Sike and CIC (“Defendants”) on March
15, 2024, asserting three counts: (1) breach of contract against Sike; (2) tortious
15 Id. ¶ 38.
16 Id. ¶ 39.
17 Id. ¶ 54.
4
interference with contractual relationships against CIC; and (3) tortious interference
with business relationships against Sike and CIC.
11. Defendants each moved to dismiss the complaint on March 26, 2024.
The parties fully briefed the motions, and the court held oral argument on June 10,
2024.18
12. Defendants moved to dismiss the complaint under both Court of
Chancery Rule 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(6) for failure
to state a claim. Because the court lacks personal jurisdiction over Sike and CIC, this
decision does not reach the Rule 12(b)(6) arguments. The case is dismissed.
13. “When a defendant moves to dismiss a complaint pursuant to Court of
Chancery Rule 12(b)(2), the plaintiff bears the burden of showing a basis for the
court’s exercise of jurisdiction over the defendant.”19 “In ruling on a Rule 12(b)(2)
motion, the court may consider pleadings, affidavits, and any discovery of record.”20
If there is no discovery of record or evidentiary hearing, “plaintiffs need only make a
prima facie showing of personal jurisdiction and ‘the record is construed in the light
most favorable to the plaintiff.’”21
14. Typically, Delaware courts resolve questions of personal jurisdiction
using a two-step analysis, determining first whether service of process was
18 See Dkt. 18 (“CIC’s Opening Br.”); Dkt. 29 (“Sike’s Opening Br.”); Dkt. 33 (“Xactus’s
Answering Br.”); Dkt. 39; Dkt. 40.
19 Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. 2007).
20 Id.21 Id. (quoting Cornerstone Techs., LLC v. Conrad, 2003 WL 1787959, at *3 (Del. Ch.
Mar. 31, 2003)).
5
authorized by statute, and second, whether the defendant had minimum contacts
with Delaware sufficient to satisfy due process concerns.22
15. The requirement that a court have personal jurisdiction is a waivable
right.23 “A defendant can agree to [the] court’s exercise of personal jurisdiction.”24
That agreement can be express or implied.25 When a party agrees to litigate in a
forum, the party is considered to have implicitly consented to personal jurisdiction in
that forum.26 When a party has consented to jurisdiction, the court can forego the
typical two-step analysis.27
16. A person can consent to personal jurisdiction through a forum selection
clause. A person may only be bound by a forum-selection clause, however, that is
“unambiguous and willingly-drafted.”28 Parties must use “express language clearly
22 Matthew v. Fläkt Woods Gp. SA, 56 A.3d 1023, 1027 (Del. 2012) (quoting Int’l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945)).
23 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985).
24 In re Pilgrim’s Pride Corp. Deriv. Litig., 2019 WL 1224556, at *10 (Del. Ch. Mar.
15, 2019) (collecting cases).
25 Id. at *11.
26 Id. at *11–15; see also Solae, LLC v. Hershey Canada, Inc., 557 F. Supp. 2d 452,
456 (D. Del. 2008) (citing Res. Ventures, Inc. v. Res. Mgmt. Int’l, Inc., 42 F. Supp. 2d
423, 431 (D. Del. 1999)).
27 Neurvana Med., LLC v. Balt USA, LLC, 2019 WL 4464268, at *3 (Del. Ch. Sept.
18, 2019); R. Franklin Balotti & Jesse A. Finkelstein, Delaware Law of Corporations
& Business Organizations, §13.4 (4th ed., June 2024 update) (“Consent to personal
jurisdiction is considered a waiver of any objection on due process grounds and an
analysis under minimum contacts is considered unnecessary[.]” (cleaned up)).
28 Green Am. Recycling, LLC v. Clean Earth, Inc., 2021 WL 2211696, at *7 (Del. Super.
June 1, 2021).
6
indicating that the forum selection clause excludes all other courts.”29 “[I]n the
absence of a clear, mandatory, and bargained-for forum selection clause, this court
traditionally has proceeded with caution.”30
17. Xactus argues that Sike consented to Delaware courts’ exercise of
personal jurisdiction when he signed the Equity Grant Agreements.31 The Equity
Grant Agreements do not contain Delaware forum selection clauses, even though they
both contain Delaware choice of law provisions.32 The LLC Agreement, however,
contains a forum selection clause, which Xactus argues applies because the Equity
Grant Agreements incorporate the LLC Agreement by reference.33
18. Section 15(a) of the Equity Grant Agreements states:
The Grantee hereby acknowledges, agrees and confirms
that upon signing this Agreement, the Grantee is hereby
. . . bound by the terms, conditions and obligations
contained in the [LLC Agreement] attached hereto as
Annex D.34
19. The LLC Agreement’s forum selection clause provides:
The parties hereby agree that any suit, action or
proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby,
whether in contract, tort or otherwise, shall be brought in
the United States District Court for the District of
29 Scanbuy, Inc. v. NeoMedia Tech., Inc., 2014 WL 5500245, at *2 (Del. Ch. Oct. 31,
2014).
30 In re Liquid. of Freestone Ins. Co., 143 A.3d 1234, 1249 (Del. Ch. 2016).
31 Xactus’s Answering Br. at 16.
32 2022 Equity Grant Agr. §§ 9, 19.
33 Xactus’s Answering Br. at 17.
34 2022 Equity Grant Agr. § 15(a); 2023 Equity Grant Agr. § 15(a).
7
Delaware or in the Court of Chancery of the State of
Delaware (or, if such court lacks subject matter
jurisdiction, in the Superior Court of the State of Delaware)
. . . . Each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding.35
20. As a “transaction contemplated hereby,” Xactus points to Section 3.04 of
the LLC Agreement titled “Incentive Units.”36 Section 3.04 grants the Managing
Member permission (as signaled by the word “may”) to “issue a profit interest” on
“terms and conditions set forth in any applicable Award Agreements.”37 Section 3.04
further provides that the “Managing Member, in its discretion, may adopt a written
plan pursuant to which Incentive Units may be granted . . . .”38 Section 3.04 also
states that “[e]ach Award Agreement may include such terms, conditions rights and
obligations as may be determined by the Managing Member, in its sole discretion,
consistent with the terms herein.”39 Putting it together, Defendants argue that the
agreement provided for in Section 3.04 of the LLC Agreement, the Award Agreement,
is a transaction contemplated by the LLC Agreement and thus subject to the LLC
Agreement’s forum selection clause.
21. Defendants’ argument is too much of a stretch. Again, parties must use
“express language clearly indicating that the forum selection clause excludes all other
35 LLC Agr. § 15.12 (emphasis added).
36 Id. § 3.04.
37 Id. § 3.04(a).
38 Id. § 3.04(b).
39 Id.
8
courts.”40 Absent that, “this court traditionally has proceeded with caution.”41 The
Equity Grant Agreements do not contain express language clearly indicating that a
forum selection provision excludes all other courts. The “contemplated hereby”
language is not express or clear, and it is not clear that Section 3.04—which merely
authorizes other agreements—“contemplates” Award Agreements in any event.42
The forum selection provision of the LLC Agreement does not bind the parties to the
Equity Grant Agreements. Sike did not consent to jurisdiction as to claims arising
from the Equity Grant Agreements.
22. Because Sike did not consent to jurisdiction, and as to CIC generally,
Xactus must meet the traditional two-part test. To do so, Xactus argues that the
court has general jurisdiction over both Sike and CIC.43 It also argues that the court
40 Scanbuy, Inc., 2014 WL 5500245, at *2.
41 Freestone Ins., 143 A.3d at 1249.
42 See generally Newport Disc, Inc. v. Newport Elecs., Inc., 2013 WL 987936, at *5
(Del. Super. Mar. 11, 2013) (finding a forum selection clause in one agreement
unenforceable as to claims arising from other incorporated agreements). The “closely
related” test cited by Xactus does not apply here because the alleged benefit received
does not come from the agreement containing the forum selection clause. Cf.
AlixPartners, LLP v. Mori, 2019 WL 6327325, at *11–12 (Del. Ch. Nov. 26, 2019)
(applying “closely related” test to a partnership agreement that was being enforced,
not an ancillary agreement); Baker v. Impact Hldg., Inc., 2010 WL 1931032, at *4
(Del. Ch. May 13, 2010) (holding that the stockholders agreement at issue directly
benefitted the plaintiff because it gave him a “right to a seat on the board of
directors”); McWane, Inc. v. Lanier, 2015 WL 399582, at *7 (Del. Ch. Jan. 30, 2015)
(holding that stockholders received a direct benefit from the merger agreement at
issue through sale proceeds and escrow funds).
43 Xactus’s Answering Br. at 25.
9
has specific jurisdiction over Sike and CIC because they solicited Xactus clients with
operations in Delaware.44
23. General jurisdiction grants authority to a state court to “assert[]
jurisdiction over a nonresident defendant on the basis of wholly unrelated contacts
with the forum.”45 “This all-purpose jurisdiction exists where a corporation’s
‘continuous corporate operations within a state [are] so substantial and of such a
nature as to justify suit against it on causes of action arising from dealings entirely
distinct from those activities.’”46 Three forms of affiliation subject an entity
defendant to general jurisdiction: (i) it is incorporated in the forum; (ii) it has its
principal place of business in the forum; or (iii) its forum contacts “are so continuous
and systematic as to render [it] essentially at home” there.47
24. Specific jurisdiction refers to incidents where the “suit aris[es] out of or
relate[s] to the [corporation’s] contacts with the forum.”48 To establish specific
personal jurisdiction over a non-resident defendant pursuant to Sections 3104(c)(1)
and (c)(2), “the transaction of business or performance of work and contracting to
44 Id. at 21.
45 Genuine Parts Co. v. Cepec, 137 A.3d 123, 129 (Del. 2016) (quoting Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 426 (1984) (Brennan, J.,
dissenting)).
46 Id. (quoting Int’l Shoe, 326 U.S. at 318).
47 Altabef v. Neugarten, 2021 WL 5919459, at *4 (Del. Ch. Dec. 15, 2021) (citing
Daimler AG v. Bauman, 571 U.S. 117, 137 (2014)).
48 Genuine Parts, 137 A.3d at 130 (quoting Helicopteros, 466 U.S. at 414 n.8).
10
supply services or things in the State” must “have a nexus to the designated conduct”
giving rise to the cause of action.49
25. Xactus argues the court has general jurisdiction over Sike based on his
alleged solicitations of and business dealings with Xactus clients who have alleged
business operations in Delaware.50
26. This argument fails. Xactus’s general allegations that Sike solicited
some clients with a Delaware presence, without any indication that his conduct
occurred in or was directed at Delaware comes nowhere close to establishing the type
of “continuous and systematic general business contacts” that would allow Delaware
to exercise general jurisdiction over him.51 Sike lives in Pennsylvania and Xactus has
not alleged that he regularly conducts business in Delaware, derives substantial
revenue from Delaware, or has any other contacts that would make him essentially
at home here.52 The fact that certain Xactus clients Sike solicited have incorporated
in Delaware or conduct some business here does not subject Sike himself to general
jurisdiction.53 Xactus has not alleged facts showing the kind of substantial, pervasive,
and continuous Delaware contacts that would support general jurisdiction over Sike.
49 LaNuova D & B, S.p.A. v. Bowe Co., Inc., 513 A.2d 764, 768 (Del. 1986).
50 Xactus’s Answering Br. at 28 n.9.
51 Helicopteros, 466 U.S. at 416.
52 Compl. ¶ 7; Sike’s Opening Br. at 11–12.
53 See Daimler, 571 U.S. at 139 (stating defendant’s contacts must be “so continuous
and systematic as to render [it] essentially at home in the forum [s]tate” (internal
citation omitted)).
11
27. Xactus argues the court has specific jurisdiction over Sike because he
solicited Xactus clients with operations in Delaware.54 In particular, Xactus points
to Sike’s solicitation of Equity Resources, a Delaware corporation with licensed loan
originators in Delaware, and Union Home, which has a branch office and licensed
loan originators in Delaware, as sufficient contacts to establish specific jurisdiction
over Sike.55 According to Xactus, by soliciting the business of these entities, Sike was
transacting business in Delaware in a manner sufficient to establish personal
jurisdiction, even if he did not physically enter the state.56
28. This argument also fails. The mere fact that some of the clients that
Sike solicited happen to be incorporated in Delaware or have a presence here does
not show he “transacted some sort of business in the state” or that Xactus’s claims
“arose out of that specific transaction” as required to establish specific jurisdiction
under Section 3104(c)(1).57 Although Equity Resources and Union Home may have
some operations in Delaware, Xactus has not alleged that Sike’s solicitations of those
entities targeted their Delaware business or had any other connection to Delaware.
Absent allegations that Sike engaged in conduct directed at this state, the fact that
he solicited business from companies incorporated here or operating here is not
54 Xactus’s Answering Br. at 21–24.
55 Id. at 22–23.
56 Id. at 23 (citing M & L of Del., Inc. v. Wallace, 2004 WL 2370708, at *3 (D. Del. Oct.
18, 2004)).
57 EBP Lifestyle Brands Hldgs., Inc. v. Boulbain, 2017 WL 3328363, at *3 (Del. Ch.
Aug. 4, 2017).
12
enough to establish specific jurisdiction.58 Xactus’s reliance on M & L of Delaware,
Inc. v. Wallace is misplaced. The defendant in that case physically traveled to
Delaware to conduct business.59 Xactus has not alleged any similar forum-directed
conduct by Sike.
29. Xactus has failed to make a prima facie case as to Sike.
30. CIC is incorporated in Florida and headquartered in Tennessee.60
Xactus does not allege that CIC is incorporated or has its principal place of business
in Delaware. Instead, Xactus argues under Daimler that CIC’s contacts render it
“essentially at home” in Delaware.61 The standard set in Daimler, however, is “a high
bar that requires far more than doing business in the State.”62 “In most situations
where the foreign corporation does not have its principal place of business in
Delaware, that will mean that Delaware cannot exercise general jurisdiction over the
foreign corporation.”63
31. To support its “at home” argument, Xactus alleges that CIC “conducts
business or contracts to supply services in Delaware . . . [and] seeks to establish a
58 See Ross v. Earth Movers, LLC, 288 A.3d 284, 294 (Del. Super. 2023) (“Specific
jurisdiction is triggered when the plaintiff’s claims arise out of acts or omissions, by
[that] defendant, that take place in Delaware.”); Hedger v. Medline Indus., Inc., 2017
WL 396770, at *5 (Del. Super. Jan. 27, 2017) (finding specific jurisdiction argument
“frivolous” where no transaction “is alleged to have occurred in Delaware”).
59 Wallace, 2004 WL 2370708, at *1.
60 Compl. ¶ 6.
61 Daimler, 571 U.S. at 139.
62 Altabef, 2021 WL 5919459, at *5.
63 Genuine Parts, 137 A.3d at 127.
13
nationwide market for its products and services.” It claims CIC “generat[es] credit
reports for mortgage lenders, markets its products and services to mortgage lenders
throughout the country, including to mortgage lenders located and conducting
business in Delaware” and has “at least one contract” to supply services in Delaware
with “Equity Resources, a Delaware corporation with an active l[e]nder license in
Delaware.”64
32. Xactus contends that this contractual relationship with Equity
Resources represents a “persistent course of conduct [in Delaware] . . . sufficient to
justify the exercise of personal jurisdiction here.”65 Xactus relies on LaNuova D&B
S.p.A. v. Bowe Co., where the Delaware Supreme Court denied a Rule 12(b)(2) motion
to dismiss because an Italian corporation had an agreement for “the widespread
distribution” of its “warranty, along with its product,” including in Delaware.66 The
Delaware Supreme Court found this represented sufficient direct or indirect contact
to subject the foreign corporation to general jurisdiction.67
33. But LaNuova was decided before the United States Supreme Court
clarified the narrowed the scope of general jurisdiction in Daimler. 68 In Daimler, the
United States Supreme Court clarified that the “exceptional case” for subjecting a
64 Xactus’s Answering Br. at 27–28.
65 Xactus’s Answering Br. at 27.
66 LaNuova, 513 A.2d at 768.
67 Id.
68 Daimler, 571 U.S. 117; see also Genuine Parts, 137 A.3d at 129 (holding that a
defendant was not subject to general jurisdiction in Delaware where it was registered
to do business and operated its own stores in the state.).
14
foreign corporation to general jurisdiction based on contacts unrelated to the suit
requires showing the corporation’s “affiliations with the State are so continuous and
systematic as to render [it] essentially at home in the forum State.”69 This “requires
far more than doing business in the State,” as a “corporation that operates in many
places can scarcely be deemed at home in all of them. Otherwise, ‘at home’ would be
synonymous with ‘doing business’ tests framed before specific jurisdiction evolved in
the United States.”70 After Daimler, regularly advertising, soliciting business, or
engaging in some continuous course of activity in Delaware is not enough to establish
general jurisdiction over a foreign corporation.71
34. Xactus has not alleged that CIC is “at home” in Delaware under the
Daimler standard. It only asserts CIC has a contractual relationship with one
Delaware corporation that appears to have some limited ties to the state. Xactus does
not allege that CIC is registered to do business in Delaware or that it has real
presence in the state. Regardless of the extent of CIC’s alleged marketing and the
single client relationship Xactus identifies, the facts as pled do not raise a reasonable
inference that CIC’s Delaware contacts are so substantial as to render it “essentially
at home” in this state. CIC is therefore not subject to general jurisdiction in
Delaware.
69 Daimler, 571 U.S. at 139 n.19.
70 Id. at 139 n.20.
71 Genuine Parts, 137 A.3d at 148; see also Altabef v. Neugarten, 2021 WL 5919459,
at *7 (Del. Ch. Dec. 15, 2021) (finding that having numerous subsidiaries
incorporated in Delaware did not subject their foreign parent corporation to the
general jurisdiction of this court).
15
35. Xactus also argues that the court has specific jurisdiction over CIC
because Sike, on behalf of Xactus, solicited companies with “Delaware business
operations.”72 In particular, Xactus points to Equity Resources and Union Home.73
“[S]pecific jurisdiction is triggered when the plaintiff’s claims arise out of acts or
omissions, by the defendant, that take place in Delaware.”74 Xactus does not allege
that CIC committed any act in Delaware. Rather, Xactus asserts that Equity
Resources is a “Delaware corporation with Delaware licensed loan originators” and
Union Home has a branch office and Delaware-licensed loan originators.75 And
because Sike solicited them as an agent of CIC, Xactus argues that the court has
specific jurisdiction over CIC.76 This is not enough. There are a lot of Delaware
corporations that operate nationwide and may have Delaware licensed operators.
That does not mean that communications with those companies give rise to specific
jurisdiction in Delaware.77 Xactus has not established a prima facie case for specific
jurisdiction over CIC.
72 Xactus’s Answering Br. at 22.
73 Id. at 22–23.
74 Ross, 288 A.3d at 294.
75 Id. at 23.
76 Id. at 24 (citing Perry v. Neuport, 2017 WL 6033498, at *17 (Del. Ch. Dec. 6, 2017)
(“The plain language of the Long-Arm Statute recognizes that forum-directed activity
can be accomplished ‘through an agent.’” (quoting 10 Del. C. § 3104(c))).
77 See, e.g., CLP Toxicology, Inc. v. Casla Bio Hldgs. LLC, 2020 WL 3564622, at *14
(Del. Ch. June 29, 2020) (“[I]n Delaware, ‘[i]t is well established law that merely
contracting with an entity that is incorporated within a forum state does not provide
necessary connections between the contract and the forum to support a finding of
jurisdiction.’” (first alteration added) (quoting Abajian v. Kennedy, 1992 WL 8794, at
16
36. Perhaps recognizing the weakness of its jurisdictional arguments,
Xactus requests jurisdictional discovery.78 To establish a right to conduct limited
discovery on the issue of jurisdiction, a plaintiff must “establish with reasonable
particularity the possible existence of requisite contacts” within the State of
Delaware.79 A plaintiff must show that jurisdiction in Delaware is “minimally
plausible.”80 Xactus’s arguments fail to clear this threshold. Based on Xactus’s
allegations, no discovery would show that CIC was at home in Delaware, nor that
this suit arises out of actions taken in Delaware.81 This request is denied.
37. The court does not have personal jurisdiction as to CIC or Sike, and so
all claims are dismissed under Rule 12(b)(2).
/s/ Kathaleen St. J. McCormick
Chancellor
Dated: August 27, 2024
*10 (Del. Ch. Jan. 17, 1992))); Hedger, 2017 WL 396770, at *5 (finding that “[i]t would
be frivolous to argue for specific jurisdiction based on the facts alleged in the
complaint” where no pertinent transaction “is alleged to have occurred in Delaware”
and “no act or omission is alleged to have occurred in this State”).
78 Xactus’s Answering Br. at 33–34.
79 CLP Toxicology, Inc. 2020 WL 3564622, at *15.
80 300 W 22 Realty, LLC v. Strathmore Ins. Co., 2023 WL 2300628, at *4 (Del. Super.
Mar. 1, 2023), aff’d, 309 A.3d 1265 (Del. 2023) (TABLE).
81 See In re Talc Prod. Liab. Litig., 2018 WL 4340012, at *10–12 (Del. Super. Sept.
10, 2018).
17