Delaware Business Litigation Report

Chancery Rules That Moving Situs of Trust to Delaware Supports Personal Jurisdiction Under the State’s Long-Arm Statute

Harris v. Harris, C.A. No. 2019-0736-JTL (Del. Ch. Jan. 12, 2023)
Three children filed suit against their mother and her associates, alleging they had seized control of a family-owned corporation and engaged in self-dealing, including via self-serving withdrawals from a family trust. Plaintiffs asserted claims for breaches of fiduciary duty, aiding and abetting those breaches, breach of a trust agreement, and tortious interference with the trust agreement. The general counsel of the company moved to dismiss the tortious interference claim against him, including for lack of personal jurisdiction.

The Court of Chancery first rejected the plaintiffs’ argument that their merger-related claim was a basis for ancillary jurisdiction over the general counsel for their claim of tortious interference with a trust instrument. Though the Court had ruled plaintiffs had standing to assert a direct disclosure claim regarding the merger, the merger was not factually related to the alleged breach of the trust agreement and thus could not be a basis for ancillary jurisdiction. The Court, however, did find personal jurisdiction after addressing the novel issue of whether moving the situs of a trust to Delaware is sufficiently analogous to the formation of a Delaware entity to support service under the Delaware Long-Arm Statute. The Court determined that moving a situs involves engaging in Delaware-directed activity, purposefully availing oneself of Delaware’s laws, and engaging in business within the state. Given the well-pled facts sufficient to support an inference that the general counsel played a leading role in that trust relocation and that the relocation was sufficiently connected to the alleged self-serving withdrawals from the trust, the Court concluded he could be served under the Long-Arm Statute consistent with due process.

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