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

• Court: Court of Chancery of Delaware
• Decided: April 9, 2020
• Docket: CA No. 2018-0649-SG
• Status: Published

Opinion

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

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