IMO: The Estate of Lawrence E. Mergenthaler

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
September 4, 2024
Jason C. Powell, Esquire John A. Sergovic, Jr., Esquire
The Powell Firm, LLC Sergovic Carmean Weidman McCartney & Owens, P.A.
1813 North Franklin Street 25 Chestnut Street
Wilmington, DE 19802 Georgetown, Delaware 19947
John S. Malik, Esquire Thomas A. Uebler, Esquire
John S. Malik Law Office McCollom D’Emilio Smith Uebler LLC
100 East 14th Street 2751 Centerville Road, Suite 401
Wilmington, DE 19801 Wilmington, DE 19808
Via U.S. Mail Via U.S. Mail
Cynthia L. Conners Gwen Thornton
18 Rankin Road 1720 Bennington Drive
Newark, DE 19711 Harrisburg , PA 17112
Via U.S. Mail
Judith L. Salecki
3 Saratoga Drive
Wilmington, DE 19808
Dear Counsel and Parties:
This letter addresses the motion to dismiss for lack of personal jurisdiction
and for failure to state a claim filed by respondent Cheryl T. Patterson (“Respondent”
or “Cheryl”). Cheryl’s jurisdictional motion is denied; her motion for failure to state
a claim is granted in part and denied in part.
IMO: Estate of Lawrence E. Mergenthaler & The Lawrence E. Mergenthaler Revocable Trust,
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I. BACKGROUND
The potential heirs of Lawrence Mergenthaler (“Decedent” or “Lawrence”)
have come to this Court seeking to sort through the disposition of his property.1
Lawrence passed away on July 31, 2020. Upon his death, Lawrence’s substantial
estate fell into limbo due to a mess of incomplete, contradictory, and questionable
documents and a crowd of potential heirs. According to the operative petition,
Lawrence’s three surviving children, Cynthia L. Connors, Gwen Thornton, and Judy
Sulecki, are the primary beneficiaries of his estate. Petitioner Devon Hamilton
(“Petitioner” or “Devon”), as Cynthia’s attorney-in-fact, asserts several people
unduly influenced Lawrence into transferring assets to them and changing his will
and trust to favor them. Respondents Cheryl, Louise Lamborn (“Louise”), her son
Josiah Lamborn (“Josiah”), Frederick Mergenthaler, and Tammy Quig (together
with Cheryl, “Respondents”) are accused of misappropriating Lawrence’s assets in
various ways. Louise is presently the fiduciary for Lawrence’s trust and estate.
1
In this family dispute, in which many actors share the same surname, I use first names in
pursuit of clarity. I intend no familiarity or disrespect. Relevant facts are drawn from the
operative Third Amended Petition (the “TAP”), available at docket item (“D.I.”) 109.
Citations in the form of “OB” refer to Respondent Cheryl Patterson’s Opening Brief In
Support Of Her Motion To Dismiss Third Amended Petition, available at D.I. 168.
Citations in the form of “AB” refer to Petitioner’s Answering Brief And Opposition To
Respondent, Cheryl Patterson’s Motion To Dismiss Third Amended Petition, available at
D.I. 172. Citations in the form of “RB” refer to Respondent Cheryl Patterson’s Reply In
Support Of Her Motion To Dismiss Third Amended Petition, available at D.I. 176.
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Devon brought this action to determine which documents properly dispose of
Lawrence’s property, who should administer his trust and estate, and who his heirs
are and what they should receive.
This action has presented a myriad of issues on a multitude of fronts. This
letter addresses only the claims against Cheryl. Cheryl is a Maryland resident and
the daughter of Lawrence’s spouse from a marriage that ended in divorce in 1995.2
After her mother’s death, Cheryl initiated multiple lawsuits against Lawrence.3
Cheryl and Lawrence were estranged until the funds Cheryl received from those
lawsuits dried up, at which time Cheryl “reinitiated contact with Decedent in
Delaware.”4 Devon alleges Decedent suffered from cognitive impairment after a
stroke in 2012, as well as anxiety, consistent memory loss, and dementia, and that
as his health declined, Cheryl took advantage of him.5 Devon alleges Cheryl conned
Lawrence into sending her over $350,000 in two months, purporting to offer
Lawrence a business investment opportunity, but then using the money to purchase
real estate for herself in Maryland.6 Lawrence paid her by “cash withdrawals and
2
TAP ¶ 9.
3
Id. ¶ 38.
4
Id. ¶¶ 38–39.
5
Id. ¶¶ 32–33, 39.
6
Id. ¶ 39.
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checks . . . written to sham businesses or to cash only to be ultimately possessed by
Cheryl in her accounts in Maryland.”7 Devon also alleges Lawrence was induced to
revise beneficiary designations to Louise, Josiah, and Cheryl.8 Devon includes those
funds sent to Cheryl, and altered beneficiary designations, in a broader category she
calls “Challenged Distributions.”9 Devon also alleges the Respondents, as a group,
withheld Lawrence’s testamentary documents when it suited them to do so, and
prepared or manipulated the so-called “2012 and 2013 Amendments” to Lawrence’s
trust, which added Cheryl as a beneficiary.10
Devon’s first petition, filed on September 21, 2020, did not name Cheryl as a
respondent.11 On January 8, 2021, Devon amended her petition and added Cheryl.12
The other Respondents answered the amended petition.13 Devon then filed a motion
for judgment on the pleadings on a count seeking a declaration under a no-contest
7
Id.
8
Id. ¶ 36.
9
Id.
10
Id. ¶¶ 28, 29, 31.
11
D.I. 1. At that time, Cheryl was known as Cheryl T. Bell. TAP ¶ 9.
12
D.I. 19.
13
D.I. 25.
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provision,14 followed by motions for interim injunctive relief and expedition.15
Before being served with a summons, Cheryl’s counsel filed an entry of appearance
on June 1, 2021, without noting any reservation of rights as to personal jurisdiction.16
A hearing on the motion for a temporary restraining order was held on June 17, 2021,
and Cheryl’s counsel appeared.17
On July 30, 2021, Devon moved for leave to file a second amended petition.18
While that motion was pending, Devon filed a notice of service of discovery directed
to Cheryl on January 13, 2022.19 With leave, Devon filed her second amended
petition on February 25; a summons was issued for Cheryl on March 3 and returned
March 31.20 On March 28, Cheryl filed a motion to dismiss under Rules 12(b)(2)
and 12(b)(6), followed by an opening brief.21 On March 16, Louise filed a motion
for instructions as to how to administer Lawrence’s estate while this suit was
14
D.I. 30; D.I. 19 ¶¶ 47–52.
15
D.I. 32; D.I. 33; D.I. 34.
16
D.I. 46.
17
D.I. 54; D.I. 55.
18
D.I. 61.
19
D.I. 77.
20
D.I. 79; D.I. 80; D.I. 83; D.I. 97.
21
D.I. 95; D.I. 104.
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pending.22 On May 26, Devon filed a third amended petition (the “TAP”).23 The
TAP invokes several legal theories against Respondents. Devon agrees Counts I, II,
III, V, and VI do not apply to Cheryl.24 I read Count IV to assert a claim for breach
of fiduciary duty against Cheryl. Count VI seeks a caveat against the allowance of
a codicil, review of proof of a will, and removal of Louise as executrix; that count
pleads Respondents as a group exercised undue influence to cause Lawrence to
execute the specified codicil and will. Count VII asserts that the Challenged
Distributions as well as the 2012 and 2013 Amendments are the product of undue
influence by Respondents and should be rescinded. Count VIII asserts a claim for
unjust enrichment against all Respondents. Count IX seeks a resulting trust, and
Count X seeks a constructive trust. Count XI asserts Respondents “tortiously
interfered with the Petitioner’s inheritance and/or economic rights” when they
“fraudulently interfered with the Decedent’s true wishes by influencing him to
execute estate documents and in making distributions contrary to his wishes and
intent.”25 Count XII seeks books and records from Louise, and an accounting from
22
D.I. 92.
23
TAP.
24
AB 39.
25
TAP ¶¶ 101, 102.
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Respondents. And Count XIII seeks damages from Respondents’ failure to deliver
Lawrence’s will to the Register of Wills.
After the TAP was filed, the parties, including Cheryl, engaged in mediation
on my order.26 They agreed on a term sheet, but no final resolution.27 Upon return
to litigation in early 2023, the Respondents other than Cheryl moved to strike
Devon’s TAP.28 Devon issued a summons to Cheryl.29 Cheryl filed a response in
support of Louise’ motion for instructions.30 In that response, Cheryl stated her
intention to refile her motion to dismiss if the motion to strike was denied, but that
the delay of litigation compelled her to speak up as to the petition for instructions.31
Devon filed a reply to Cheryl’s response and added a cross-motion to enforce the
term sheet.32 Cheryl responded to that cross-motion.33 Then Cheryl moved to strike
Devon’s reply to Cheryl’s response to the cross-motion.34 I denied both the motion
26
D.I. 114.
27
D.I. 117; D.I. 163.
28
D.I. 118.
29
D.I. 110; D.I. 131.
30
D.I. 141.
31
Id. at 5 n.3. Devon interprets Cheryl’s response as seeking a different outcome on
Louise’s motion. AB at 9.
32
D.I. 144.
33
D.I. 151.
34
D.I. 157.
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to strike the reply35 and the motion to strike the TAP.36 I granted in part the motion
for instructions and denied the cross-motion to enforce the settlement.37
In December 2023, Cheryl filed a motion to dismiss the TAP’s counts against
her under Rules 12(b)(2) and 12(b)(6), followed by a January motion to stay
discovery against her.38 The parties briefed those motions.39 I denied the motion to
stay discovery40 and took the motion to dismiss under advisement on February 6,
2024.41
Motion practice continued, but, like the years of motion practice to date, failed
to meaningfully advance the action. In July, I referred the matter to mandatory
mediation but retained Cheryl’s motion to dismiss.42
35
D.I. 161.
36
D.I. 162.
37
D.I. 163.
38
D.I. 165; D.I. 171.
39
D.I. 171; D.I. 174; D.I. 184.
40
D.I. 185.
41
D.I. 186.
42
D.I. 202.
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II. ANALYSIS
I address personal jurisdiction first, as substantive review requires
jurisdiction.43 I find that Cheryl may have waived her right to assert a jurisdictional
defense, but in any event, on a plaintiff-friendly reading of the TAP, Devon has
established a prima facie case of personal jurisdiction over Cheryl. Cheryl’s motion
for failure to state a claim secures dismissal of the counts for breach of fiduciary
duty and tortious interference with inheritance, but not the rest.
A. Personal Jurisdiction
I must first address Devon’s contention that Cheryl waived her right to the
defense by participating in this litigation. If she did not, the traditional personal
jurisdiction analysis would follow.
1. Waiver of Personal Jurisdiction Defense
Devon asserts Cheryl waived her right to a personal jurisdiction defense by
not filing a timely motion and by actively participating in the litigation. “The
personal jurisdiction defense may be lost by failure to assert it seasonably, by formal
43
Branson v. Exide Elecs. Corp., 625 A.2d 267, 269 (Del. 1993) (“A court without personal
jurisdiction has no power to dismiss a complaint for failure to state a claim.”).
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submission in a cause, or by submission through conduct.”44 Devon contends Cheryl
consented to this Court’s jurisdiction through her actions.
First, before Cheryl was served, Cheryl’s counsel filed an entry of appearance
without objecting to jurisdiction in a Rule 12(b) motion or any other way.45 Court
of Chancery Rule 5 in its form at the time stated that “a defendant may appear though
a summons had not been served upon the defendant. Appearance may be made by
the service and filing of notice thereof, or by the service or filing of any motion or
pleading purporting to be responsive to or affecting the complaint.”46 Court of
Chancery Rule 12(h) provides that a personal jurisdiction defense is waived if not
raised either by motion before any responsive pleading, in a responsive pleading, or
in a permitted amendment to the responsive pleading. 47 Modern Rules 5 and 12
were designed to do away with the archaic requirement that a defendant make a
redundant, and unnecessary, special appearance for the purposes of pursuing a
service or jurisdictional defense.48 Defenses to jurisdiction can be asserted with a
44
In re Asbestos Litig., 2015 WL 556434, at *4 (Del. Super. Jan. 30, 2015).
45
D.I. 46.
46
Ct. Ch. R. 5(aa) (2015) (amended 2024). Rule 5 was revised, effective July 12, 2024, to
align its language with the federal rule and to conform to current practice. Similar language
now appears in Ct. Ch. R. 5(i).
47
Ct. Ch. R. 12(h)(2).
48
Canaday v. Superior Court, 119 A.2d 347, 351, 353 (Del. 1956); Quinn v. Keinicke, 700
A.2d 147, 150–51 (Del. Super. 1996) (relating the abolishment of the distinction between
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timely Rule 12(b) motion, in lieu of a special appearance.49 But just because a
special appearance is not required to preserve a jurisdictional defense does not mean
a general appearance cannot waive the defense. When a party enters her appearance
before being served, and without reserving any rights to contest jurisdiction or filing
a timely Rule 12(b) motion, that entry of appearance “may act as a waiver of claims
under Rule 12.”50 Such an entry of appearance “could be reasonably viewed as a
waiver of personal jurisdiction.”51
The parties offered no case law on this issue. The only cases I could find
considering an entry of appearance filed before service and unaccompanied by any
reservation of rights or Rule 12(b) motion declined to find a waiver of personal
jurisdiction given the complicated context in which the entry of appearance was
general and special appearances, and explaining, “[t]oday, the proper method for raising
defects in jurisdiction is either to file a motion or to include the affirmative defense in the
answer”).
49
Canaday, 119 A.2d at 353; Quinn, 700 A.2d at 150–51.
50
Nally’s Auto Plaza, Inc. v. Wilson, 2024 WL 1110948, at *3 (Del. Com. Pl. Mar. 14,
2024); accord Quinn, 700 A.2d at 151 (concluding a general appearance filed before
service is complete, unaccompanied by a Rule 12 motion, admits personal jurisdiction);
First Union Nat’l Bank v. Harman, 1996 WL 769343, at *5–6 (Del. Super. Dec. 31, 1996)
(cautioning that an entry of appearance unaccompanied by a motion to dismiss risked
waiver of jurisdictional defenses).
51
Nally’s Auto Plaza, 2024 WL 1110948, at *4.
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filed.52 This case was not so complicated: Cheryl simply entered her appearance
before she was served, without any reservation of rights or Rule 12(b) motion. But,
given this Court’s preference for resolving disputes on the merits and the lack of any
precedent I could find concluding such an appearance constitutes waiver, and
because a plaintiff-friendly reading of the TAP establishes a prima facie case for
personal jurisdiction, I will deny Cheryl’s motion to dismiss on that basis rather than
one of waiver.
Cheryl’s other litigation conduct does not present any risk of waiver. A
party’s challenge to jurisdiction should be the “first defensive move.”53 At bottom,
the question of waiver is “whether the defendant has abandoned a solely defensive
posture and become an actor in the cause.”54 Minimal participation in the litigation
52
Id. (concluding counsel’s entry of an appearance after a failed service attempt, without
any reservation of rights, was a “false start” that was offset by a delay of game in a late
notice of appeal as well as fumbled service, and so the parties should “replay the down”);
Harman, 1996 WL 769343, at *6 (declining to conclude an appearance reserving rights
that was followed by a motion waived the right to object to the sufficiency of process due
to the recency of Quinn, 700 A.2d 147, and the practice at the time of filing an entry of
appearance reserving all rights in lieu of a Rule 12(b) motion); see also Quinn, 700 A.2d
at 151 (deciding to construe an appearance reserving rights as a motion, not as a general
appearance that would admit jurisdiction).
53
Ross Hldg. & Mgmt. Co. v. Advance Realty Grp., LLC, 2010 WL 1838608, at *11 (Del.
Ch. Apr. 28, 2010) (quoting Hornberger Mgmt. Co. v. Haws & Tingle Gen. Contrs., Inc.,
768 A.2d 983, 987–88 (Del. Super. 2000)).
54
Bigelow/Diversified Secondary P’ship Fund 1990 v. Damson/Birtcher P’rs, 2001 WL
1641239, at *6 (Del. Ch. Dec. 4, 2001).
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does not necessarily constitute waiver.55 Before Cheryl was served, she
communicated, through counsel, with Devon on a number of matters including
extension requests, stipulations, and other matters.56 Cheryl’s first defensive move
in this matter was a motion to dismiss under Rule 12(b)(2).57 While Cheryl’s motion
to dismiss was pending, she participated in mediation and weighed in on ancillary
matters: the interim administration of Lawrence’s estate, whether a settlement
agreement had been reached, and the propriety of another party’s filing with regard
to the settlement agreement.58 Certainly, a mediation does not waive a jurisdictional
defense. Cheryl’s litigation participation occurred in sideshows that did not address
the claims against Cheryl. And Cheryl reiterated her jurisdictional defense as she
weighed in on those matters.59 Her participation does not rise to the level of active
55
CelestialRX Invs., LLC v. Krivulka, 2019 WL 1396764, at *17 (Del. Ch. Mar. 27, 2019)
(concluding that acceding to being deposed before being added as a party did not waive a
personal jurisdiction defense); Ross Hldg., 2010 WL 1838608, at *5, *12 (finding a
defendant did not become an active actor for purposes of waiver despite having “actively
participated as a party in this case, including filing an answer, defending against and filing
motions, and serving and responding to discovery”); In re Asbestos Litig., 2015 WL
556434, at *5 (finding a defendant who raised a personal jurisdiction defense in its answer,
served and responded to discovery, and filed motions related to personal jurisdiction was
not an active actor).
56
AB 8–9.
57
D.I. 95; D.I. 104.
58
D.I. 115; D.I. 141; D.I. 151; D.I. 157.
59
D.I. 141 at 5 n.3.
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involvement that would constitute waiver of her personal jurisdiction defense, which
she preserved throughout.
2. Statutory Jurisdiction
A plaintiff does not bear the initial burden of establishing the Court’s personal
jurisdiction over the defendant.60 But once a defendant moves to dismiss under Rule
12(b)(2), if the Court does not hold an evidentiary hearing, then a plaintiff “need
only make a prima facie showing, in the allegations of the complaint, of personal
jurisdiction and the record is construed in the light most favorable to the plaintiff.”61
The Court need not “credit conclusory allegations that are not supported by specific
facts, or draw unreasonable inferences in the plaintiff’s favor.”62 “The court must
first determine that service of process is authorized by statute and then must
determine that the exercise of jurisdiction over the nonresident defendant comports
with traditional due process notions of fair play and substantial justice.”63 Courts
construe the statute “broadly . . . to confer jurisdiction to the maximum extent
60
Harris v. Harris, 289 A.3d 277, 295 (Del. Ch. 2023).
61
Id. at 296 (internal quotation omitted); see id. (“If the court takes that approach, then the
jurisdictional question technically remains open until trial, when the plaintiff must prove
the jurisdictional facts by a preponderance of the evidence.”).
62
Norton v. K-Sea Transp. P’rs L.P., 67 A.3d 354, 360 (Del. 2013).
63
Ryan v. Gifford, 935 A.2d 258, 265 (Del. Ch. 2007).
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possible under the Due Process Clause.”64 For statutory authorization, Devon looks
to 10 Del. C. §§ 3104(c)(1) and (c)(3).65
Sections (c)(1) and (c)(3) are “single act” statutes that require a forum-related
act or omission within Delaware.66 For those sections, “[t]he dual reference to
‘within the State’ indicates that the draftsman intended that there be two separate
events, each within the State.”67 “Literally, Delaware law requires both a tortious act
within the State and an act or omission within this State.”68 “Alleging a tortious
injury occurred in Delaware is not enough to satisfy [Section 3104](c)(3). Delaware
law requires plaintiffs also to establish that the out-of-state defendant committed an
act or omission in Delaware.”69 Because Sections (c)(1) and (c)(3) confer specific
64
Hercules Inc. v. Leu Tr. & Banking (Bahamas) Ltd., 611 A.2d 476, 480 (Del. 1992).
65
AB at 11–15; 10 Del. C. § 3104(c)(1) (affording statutory jurisdiction over one who
“transacts any business or performs any character of work or service in” Delaware); id. §
3104(c)(3) (affording statutory jurisdiction over one who “causes tortious injury in the
State by an act or omission in” Delaware).
66
SDF Funding LLC v. Fry, 2022 WL 1521309, at *2 (Del. Ch. May 13, 2022).
67
Ramada Inns, Inc. v. Drinkhall, 1984 WL 247023, at *2 (Del. Super. May 17, 1984).
68
Id.69
Rotblut v. Terrapinn, Inc., 2016 WL 5539884, at *6 (Del. Super. Sept. 30, 2016); accord
Hartsel v. Vanguard Grp, Inc., 2011 WL 2421003, at *14 (Del. Ch. June 15, 2011)
(requiring, “consistent with notions of due process, a factual showing that a tangible act or
omission actually took place in Delaware” even if plaintiffs prove a Delaware situs of
injury).
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jurisdiction, there must be a link between the cause of action and the defendant’s
conduct.70 The act or omission in the state must cause the injury in the state.71
Devon has plainly pled Cheryl caused an injury in Delaware. “[A]s a result
of [Respondents’] undue influence,”72 the TAP pleads Lawrence made the
Challenged Distributions, withdrew cash, and executed the suspicious testamentary
documents from his location in Delaware.73 Devon argues that those improper
distributions and documents “represent[] offensive conduct in Delaware” that
injured Lawrence, his Delaware estate, and his Delaware trust.74
The question is whether Devon has established a prima facie case that Cheryl
committed an act within Delaware. Answering this question requires resolving how
the TAP should be read. Cheryl insists the TAP does not plead that Cheryl, a
Maryland resident, was ever physically present in Delaware when committing the
tortious conduct. Devon responded, “Not so.”75 Devon contends the TAP pleads
that Cheryl influenced Lawrence to execute the 2012 and 2013 Amendments in
70
Rotblut, 2016 WL 5539884, at *4.
71
Donaldson v. Progressive Advanced Ins. Co., 2022 WL 951260, at *2 (Del. Super. Mar.
29, 2022).
72
TAP ¶ 36; accord id. ¶ 39.
73
Id. ¶ 39.
74
AB 13.
75
Id. at 12.
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Delaware, and that while “assisting Lawrence in Delaware,” Cheryl caused certain
Challenged Distributions.76 Devon is entitled to a plaintiff-friendly reading of her
complaint and to the resolution of any factual disputes in her favor. 77 At this stage,
I must construe the TAP as alleging that Cheryl conducted those acts in Delaware.
On that basis, Devon has established a prima facie case that Section 3104(c)(3) is
satisfied. She will be put to her proof of personal jurisdiction at trial.78
3. Constitutional Due Process
Even though the long arm statute is satisfied, constitutional requirements of
the due process clause must be met.79 The long-established due process test for
personal jurisdiction requires “sufficient minimum contacts between the defendant
and Delaware such that the exercise of personal jurisdiction ‘does not offend
traditional notions of fair play and substantial justice.’”80
Neither Devon nor Cheryl seriously engaged with the constitutional element
of personal jurisdiction.81 If Cheryl came to Delaware to unduly influence a
76
Id. at 13 (citing TAP ¶ 39).
77
Harris, 289 A.3d at 296.
78
Id.
79
Id. at 297.
80
Id. (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
81
OB 10; AB 18.
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Delaware citizen and cause him to change his testamentary documents, and defraud
him of substantial assets in his final years, she should reasonably anticipate being
haled into a Delaware court. The due process element is satisfied.
B. Failure To State A Claim
Satisfied with Devon’s prima facie case that this Court has personal
jurisdiction over Cheryl, I turn to Cheryl’s arguments that the TAP fails to state a
claim.
First, the parties would benefit from clarity as to which counts actually assert
causes of action against Cheryl. Devon has clarified that she is not asserting counts
seeking to establish which documents and persons control Lawrence’s trust and
estate against Cheryl.82 Counts IX, X, XII, and XIII seek remedies and are not
standalone causes of action; I do not consider their propriety today.83
The TAP asserts four causes of action against Cheryl. Count IV asserts Cheryl
has breached her fiduciary duties and seeks a surcharge “for the monetary amount
of funds misappropriated from the Decedent,” which I read to be the funds taken
82
AB 39 (addressing Counts I, II, III, V, and VI).
83
MCG Cap. Corp. v. Maginn, 2010 WL 1782271, at *25 (Del. Ch. May 5, 2010) (“So
long as the underlying cause of action is well plead, requested relief styled as a claim will
not be stricken from the complaint.”).
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from him while he was alive.84 Count VII seeks rescission of those Challenged
Distributions, as well as the 2012 and 2013 Amendments and any transfers pursuant
to those documents, on the grounds that they are the product of Cheryl’s undue
influence. Count VIII is a claim for unjust enrichment based on both the Challenged
Distributions and the 2012 and 2013 Amendments. Count XI is a count for tortious
interference with prospective inheritance based on the Challenged Distributions and
Lawrence’s “estate documents.”85 And Count XIII asserts all the Respondents
withheld Lawrence’s 2016 will in violation of 12 Del. C. § 1301, and seeks damages.
1. Laches
Cheryl argues Counts IV, VII, VIII, and XI should be barred by laches because
Petitioner delayed unreasonably in bringing a claim against her by not including her
in the first petition and bringing suit against her before the three-year presumptive
statute of limitations in 10 Del. C. § 8106 ran on the 2017 Challenged Distributions.
Devon responds that Section 8106 was tolled by 10 Del. C. § 8116 because Lawrence
was suffering from incompetency of mind, so the limitations period did not begin to
run until Lawrence’s death, and that in any event Cheryl suffered no prejudice from
the delay between the September 21, 2020 first petition and the January 8, 2021
84
TAP ¶ 72.
85
Id. ¶ 102.
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second petition, which named her as a Respondent. Cheryl contends Section 8116
does not apply to Devon’s claims.
Laches is an equitable defense meant to protect defendants against prejudice
from the unreasonable delay of a plaintiff in bringing an action.86 Generally, the
defense of laches requires that (1) plaintiff knew of a legal claim, (2) delayed
unreasonably in bringing the claim, and (3) caused the defendant to suffer prejudice
as a result of that delay.87 When considering equitable claims or equitable relief,
this court of equity focuses on prejudice from delay more than the mechanical
passage of time: statutes of limitation are not binding in courts of equity.88 “[T]he
laches inquiry is principally whether it is inequitable to permit a claim to be enforced,
the touchstone of which is inexcusable delay leading to an adverse change in the
condition or relations of the property or the parties.”89
Cheryl does not even pretend to have suffered any prejudice from the one-
hundred-and-nine day period between Devon’s first petition and the second, when
86
Deputy v. Deputy, 2020 WL 1018554, at *47 (Del. Ch. Mar. 2, 2020), aff’d, 281 A.3d
566, 2022 WL 2813779 (Del. July 18, 2022) (TABLE).
87
Id.88
Reid v. Spazio, 970 A.2d 176, 183 (Del. 2009).
89
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she added Cheryl as a Respondent.90 In the absence of any argument whatsoever
that Cheryl has suffered any prejudice from this slight delay, I deny her motion on
the basis of laches.
2. Merits
Cheryl propounds several arguments as to why the TAP does not state a claim
against her. One theme is that Devon (as attorney-in-fact for a beneficiary of
Lawrence’s trust and estate) is the wrong plaintiff to bring claims to recoup
Lawrence’s property, as Louise is the trustee and executor. From there, Cheryl
argues the TAP fails to adequately plead the merits of the claims against her.
a. Standing
Devon brings her claims against Cheryl in her capacity as the attorney-in-fact
of Cynthia, a beneficiary of Lawrence’s estate. In so many words, the claims assert
that by causing Lawrence to make the Challenged Amendments and Challenged
Distributions, Cheryl deprived Cynthia of her rightful portion of Lawrence’s
property. The executor of Lawrence’s estate has standing to bring claims Lawrence
could have brought while he was alive,91 and neither Devon nor Cynthia is
Lawrence’s executor; Louise is. But the question is not whether Cynthia can bring
90
OB 13–14; RB 9–10.
91
10 Del. C. § 3701.
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claims that belonged to Lawrence; the question is whether Cynthia has standing to
bring her own claims.92 As an heir and beneficiary, Cynthia plainly has standing to
challenge Lawrence’s testamentary and trust documents, including against Cheryl
as framed in Counts VII, VIII, and XI.93 She would also have had standing by statute
if Cheryl had acted for Lawrence under a power of attorney.94 But Cheryl challenges
Cynthia’s standing to bring (1) claims asserting the Challenged Distributions are the
product of undue influence, and (2) claims asserting Cheryl breached any fiduciary
duties she owed Lawrence.
“[W]here the issue of standing is related to the merits, a motion to dismiss is
properly considered under Rule 12(b)(6) rather than Rule 12(b)(1).”95 Under Court
of Chancery Rule 12(b)(6), the Court first must determine whether the petitioner has
pled facts from which it may reasonably be inferred that she has demonstrated a
threat of a tangible injury.96 The plaintiff must have
92
With this focus, I do not reach Devon’s argument that with Louise, a wrongdoer, as
executor, somebody besides Louise must bring this claim against Louise and her
confederate Cheryl. AB 31–32.
93
E.g., Scholl v. Murphy, 2001 WL 576224, at *5 (Del. Ch. May 7, 2001) (“Plaintiff’s
status as an intestate heir to the [decedent] is sufficient to make him an interested party.”).
94
12 Del. C. § 49A-116(b).
95
Appriva S’holder Litig. Co., LLC v. EV3, Inc., 937 A.2d 1275, 1280 (Del. 2007).
96
Calagione v. City of Lewes Planning Comm’n, 2007 WL 4054668, at *2 (Del. Ch. Nov.
13, 2007); see also Dover Hist. Soc’y v. City of Dover Plan. Comm’n, 838 A.2d 1103, 1109–
10 (Del. 2003) (“The degree and manner of evidence that is required to establish standing
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suffered an injury in fact—an invasion of a legally protected interest
which is (a) concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical; (2) there must be a causal connection
between the injury and the conduct complained of—the injury has to be
fairly traceable to the challenged action of the defendant and not the
result of the independent action of some third party not before the court;
and (3) it must be likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.97
When assessing the pleadings to determine whether the petitioner has sufficiently
alleged standing, “I construe all facts in favor of the petitioner.”98
This Court has over the past couple decades built a library of precedent
addressing standing to bring claims that a fiduciary misappropriated a decedent’s
assets while the decedent was alive. While statutory claims against one acting under
a power of attorney may be brought only by those with statutory standing,99 anyone
varies as the successive stages of any litigation proceeds. At the pleading stage, general
allegations of injury are sufficient to withstand a motion to dismiss because it is
“presume[d] that general allegations embrace those specific facts that are necessary to
support the claim.” (alteration in original) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555,
561 (1992))).
97
Dover Hist. Soc’y, 838 A.2d at 1110 (quoting Soc’y Hill Towers Owners’ Ass’n v. Rendell,
210 F.3d 168, 175–76 (3d Cir. 2000), while noting “state courts apply the concept of
standing as a matter of self-restraint to avoid the rendering of advisory opinions at the
behest of parties who are ‘mere intermeddlers’”, quoting Stuart Kingston, Inc. v. Robinson,
596 A.2d 1378, 1382 (Del. 1991)).
98
Calagione, 2007 WL 4054668, at *2.
99
In re Burke Est., 2016 WL 4217752, at *4, *5 (Del. Ch. Aug. 10, 2016) (applying both
classic principles of injury and 12 Del. C. § 49A-116); Rambo v. Fischer, 2022 WL
4180890, at *6 (Del. Ch. Sept. 13, 2022) (applying 12 Del. C. § 49A-116); see Rende v.
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with standing to challenge a will or who has pled they should have that standing has
standing to bring common law breach of fiduciary duty claims.100 Cynthia has
standing to bring a breach of fiduciary duty claim against Cheryl.
From there, Devon urges the Court to expand a beneficiary’s standing to sue
not just fiduciaries, but any person who misappropriated assets “while the decedent
lacked capacity or was being unduly influenced.”101 This argument is consistent
with the underpinnings of standing for fiduciary claims, which are based on whether
the plaintiff has suffered an injury, not on the capacity in which the defendant
acted.102 Cynthia has standing to bring claims against Cheryl for misappropriating
Lawrence’s estate while he was alive.
Rende, 2023 WL 2180572, at *15 n.175 (Del. Ch. Feb. 23, 2023) (distinguishing the
“power-of-attorney context” from the common law context).
100
Scholl, 2001 WL 576224 (resolving whether an intestate heir had standing to seek
review of a will, and making no independent analysis of standing to pursue claims that a
fiduciary breached his duties to the decedent when the decedent was alive); In re Corbett
v. Corbett, 2019 WL 6841432, at *5–6 (Del. Ch. Dec. 12, 2019) (concluding “[a] petitioner
has standing to challenge a fiduciary’s actions taken to the detriment of a decedent’s estate
where the petitioner has standing to challenge the decedent’s will”); Hill v. Myers, 2020
WL 3171372, at *3 (Del. Ch. June 15, 2020); Cecil v. Cecil, 2024 WL 1138030, at *2 (Del.
Ch. Mar. 15, 2024) (distinguishing a statutory claim challenging an action under a power
of attorney).
101
AB at 32.
102
Dover Hist. Soc’y, 838 A.2d at 1110.
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b. Elements
From there, Cheryl asserts the TAP fails to state a claim. When considering
a motion to dismiss under Court of Chancery Rule 12(b)(6), the Court should accept
all well-pled factual allegations as true, accept even vague allegations if they provide
the defendant notice of the claim, draw all reasonable inferences in favor of the
plaintiff, and deny the motion unless the plaintiff could not recover under any
reasonably conceivable set of circumstances susceptible of proof.103 If the well-pled
allegations of the complaint would entitle the plaintiff to relief under a reasonably
conceivable set of circumstances, the court must deny the motion to dismiss.104
First, Cheryl contends Count IV fails to plead she was ever Lawrence’s
fiduciary. Cheryl acknowledges the TAP’s allegation that she “acted in a fiduciary
capacity for Decedent due to the confidential relationship between the parties,”105
but describes that allegation as conclusory. Cheryl also points out Lawrence had a
fiduciary: Louise, who held his power of attorney. In opposition, Devon asserts the
TAP has pled Cheryl “was actively providing care for him in a manner that gives
103
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs, LLC, 27 A.3d 531, 536 (Del.
2011).
104
Id.105
OB 23 (quoting TAP ¶ 71)
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rise to fiduciary obligations.”106 That sentence, equating caregiving with being a
fiduciary, does not rescue the TAP from being conclusory. I conclude Devon “has
not pled facts supporting her conclusory allegation and suspicion that a fiduciary
relationship existed between [Cheryl] and [Lawrence].”107 Count IV is dismissed.
Next, Cheryl contends the TAP fails to plead Cheryl secured assets from
Lawrence, and the 2012 and 2013 Amendments, by exerting undue influence over
him.
An undue influence claim must be supported by well-pleaded facts as
to the following elements: “(1) a susceptible testator; (2) the
opportunity to exert influence; (3) a disposition to do so for an improper
purpose; (4) the actual exertion of such influence; and, (5) a result
demonstrating its effect.”108
The petitioner must “plead facts meeting each and every element of the claim.”109
Where the undue influence is alleged to have altered testamentary documents, the
106
AB 31 (citing TAP ¶¶ 35–39, 62, 71). As explained, I gave the TAP a plaintiff-friendly
read to infer Cheryl had conducted at least one act in Delaware. It would go too far to infer
Cheryl’s contact with Lawrence put her in a position of such trust as to make her a fiduciary.
Devon also argues Cheryl was “actively working with Louise.” AB 31. Fiduciary status
is not contagious: working with a fiduciary does not make one a fiduciary. That is the
foundation of the idea of aiding and abetting.
107
See Glass v. Baker, 2021 WL 4073448, at *2 (Del. Ch. Apr. 13, 2021).
108
Sweeney v. Sweeney, 2021 WL 5858688, at *4 (Del. Ch. Nov. 30, 2021) (quoting In re
Estate of West, 522 A.2d 1256, 1264 (Del. 1987)).
109
In re LW&T of Hurley, 2014 WL 1088913, at *5 (Del. Ch. Mar. 20, 2014).
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allegations must overcome the presumption that a testator had sufficient
testamentary capacity.110 The TAP’s allegations have done so.
The TAP alleges Lawrence was a susceptible testator. “There is no single
definition or defining feature of susceptibility, but the analysis is informed by the
subject’s capacity. Evidence of a testator’s dependence on another, or a particular
predisposition to accede to the demands of another person, may be sufficient to show
susceptibility.”111 The TAP pleads that Lawrence’s health and cognition declined
substantially in the last decade of his life due to a series of strokes, anxiety disorder,
memory loss, and dementia;112 and that as a result, he was at constant risk of those
looking to take advantage of him, relied on Respondents for assistance, could not
discern the motives and influence of designing persons, and was easily persuaded to
engage in transactions that benefitted others at his own expense, which he never
would have conducted but for his cognitive impairments and outside pressure.113
110
Id. at *4.
111
See Hurley, 2014 WL 1088913, at *6 (internal citations omitted); accord Ray v.
Williams, 2020 WL 1542028, at *32 (Del. Ch. Mar. 31, 2020).
112
TAP ¶¶ 32–33.
113
Id. ¶¶ 10, 11, 34–35.
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The TAP alleges Cheryl had the opportunity to exert influence, actually did
so, and a result demonstrating that effect.114 It alleges that Respondents isolated
Lawrence, and that after a period of estrangement, Cheryl reinitiated contact with
Lawrence; that she assisted him, and he became reliant on her and her assistance;
and that she caused Lawrence to remit funds to her by misrepresenting that he was
investing in a business.115 The TAP alleges Cheryl obtained at least $350,000.00
from Lawrence in September and October 2017.116
And the TAP alleges Cheryl had the disposition to exert influence for an
improper purpose. That element “may be satisfied where the alleged influencer
stood to benefit financially from such action under circumstances in which the
alleged influencer’s continued ability to support himself was dependent on the
challenged transaction.”117 The TAP alleges that for a time, Cheryl received funds
from lawsuits she had initiated against Lawrence, but that when those dried up, she
114
See West, 522 A.2d at 1264–65 (noting the element of actual exertion requires more than
a mere opportunity to influence and motive); Ray, 2020 WL 1542028, at *32 (“Actual
exertion cannot be satisfied where the action is consistent with the individual’s intent.”).
115
TAP ¶¶ 37–40. Here, as in the personal jurisdiction analysis, I am reading the TAP with
a plaintiff-friendly eye as to Cheryl’s engagement with Lawrence.
116
Id. ¶ 39.
117
Ray, 2020 WL 1542028, at *32 (cleaned up).
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approached him to reconcile and began securing the Challenged Distributions, which
she needed to live.118
Cheryl also asserts Devon failed to plead a claim for unjust enrichment. To
support a standalone claim for unjust enrichment, a plaintiff must plead: (1) an
enrichment, (2) an impoverishment, (3) a relation between the enrichment and
impoverishment, and (4) the absence of justification for the benefit.119 “Technically,
[impoverishment] is not a necessary element.”120 “A person who is unjustly enriched
at the expense of another is subject to liability in restitution.”121 “The claim is about
unjust enrichment, not impoverishment.”122 Devon pled Cheryl exercised undue
influence to secure the Challenged Distributions from Lawrence and be named as an
additional beneficiary under his trust. She has pled an unjustified enrichment.
Finally, Cheryl points to Count XI, for tortious interference with prospective
inheritance, and observes that no Delaware court has recognized that cause of
118
TAP ¶¶ 38–39.
State ex rel. Jennings v. Monsanto Co., 299 A.3d 372, 390–91 (Del. 2023) (citing
119
Garfield ex rel. ODP Corp. v. Allen, 277 A.3d 296, 351 (Del. Ch. 2022)).
Principal Growth Strategies, LLC v. AGH Parent, LLC, 2024 WL 274246, at *12 (Del.
120
Ch. Jan. 25, 2024).
121
Restatement (Third) of Restitution and Unjust Enrichment § 1 (Am. L. Inst.), Westlaw
(database updated Oct. 2023).
122
Principal Growth Strategies, 2024 WL 274246, at *12.
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action.123 Devon does not dispute that this is the law, but suggests this Court should
either adopt the cause of action now, or permit the cause of action to proceed through
discovery and consider its viability after trial.124 Even if Delaware were to recognize
that cause of action, Delaware precedent indicates it would not do so for
diminishment of the size of an expectancy; the “frontier” of the tort ends at the
deprivation of “an expected right to any specific devise, bequest or legacy that
[plaintiff] would have otherwise received.”125 Count XI is for a diminishment of the
size of Cynthia’s expectancy. It is beyond the frontier of the tort, even if Delaware
recognized it. It is dismissed.
III. Conclusion
Cheryl’s motion to dismiss for lack of personal jurisdiction is DENIED. Her
motion to dismiss for failure to state a claim is GRANTED as to Counts IV and XI,
but DENIED as to the rest. I hope that this guidance is helpful to the other parties
as they continue to mediate this longrunning, yet barely advanced, dispute.
123
Ray, 2020 WL 1542028, at *35; Mitchell v. Reynolds, 2009 WL 132881, at *13 (Del.
Ch. Jan. 6, 2009); Chambers v. Kane, 424 A.2d 311, 315 (Del. Ch. 1980), aff’d in part,
rev’d in part on other grounds, 437 A.2d 163, 164 (Del. 1981).
124
AB 37–38.
125
Chambers, 424 A.2d at 315.
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Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress