iDefense, Inc. v. Dick Tracy Group

58 Va. Cir. 138, 2002 Va. Cir. LEXIS 36
CourtVirginia Circuit Court
DecidedJanuary 9, 2002
DocketCase No. (Law) 196588
StatusPublished
Cited by1 cases

This text of 58 Va. Cir. 138 (iDefense, Inc. v. Dick Tracy Group) is published on Counsel Stack Legal Research, covering Virginia Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
iDefense, Inc. v. Dick Tracy Group, 58 Va. Cir. 138, 2002 Va. Cir. LEXIS 36 (Va. Super. Ct. 2002).

Opinion

By Judge Henry E. Hudson

This matter was before the Court on December 12,2001, on Defendant’s Plea in Bar based upon this Court’s lack of personal jurisdiction. The Court heard testimony and reviewed the transcripts of depositions. The Court heard final arguments by counsel on January 7, 2002.

Until it went bankrupt, iDefense, Inc. (“iDefense”), a Delaware corporation with its principal place of business in Virginia and a subsidiary in the United Kingdom, was a start-up security company that specialized in cyber-threat intelligence. Experiencing a “tight cash position,” iDefense sought to obtain an infusion of venture capital. To that end, it entered into negotiations in February of2001 with British entities The Dick Tracy Group, P.L.C. (“DTG”), and its financial advisor, RedStar Management, Inc. (“Red Star”), regarding the proposed acquisition of a controlling interest in iDefense’s subsidiary in the UK (hereinafter “iDefense-UK”) by DTG. The goal of the negotiations, according to iDefense, was to expand its operations in [139]*139the United Kingdom by merging with DTG, an existing security company and to obtain an immediate influx of capital to fund its parent company in the United States.

Following preliminary discussions, Colin Dobson, Chief Executive Officer of DTG, called Brian Kelly, President of iDefense, in Virginia, and expressed an interest in meeting Kelly in Virginia to discuss “an investment.” Kelly testified that, when he invited Dobson to iDefense headquarters, he stressed that Dobson should be prepared to do business.

According to the testimony, Dobson and Tony Harding of RedStar, traveled from the United Kingdom to iDefense headquarters in Fairfax, Virginia, for the sole purpose of negotiating a joint venture. Dobson described the meeting, which occurred on March 12, 2001, as a discussion of the synergy of the two companies. Harding testified that his purpose at the meeting was simply to advise DTG on whether iDefense-UK was a wise acquisition. The meeting culminated in the execution of a document entitled “Heads of Agreement” (hereinafter “HOA”), which provided that, subject to the approval of both companies’ boards, DTG would purchase a majority interest in iDefense-UK for $1.5 million to be satisfied by $750,000.00 in cash and the issuance of stock in DTG valued at $750,000.00 at the current issuance price. DTG was to make the payments according to a payment schedule specified in the HOA. The HOA also contained a stipulation that Virginia law would govern its terms.

Although Harding denied in his deposition that he was an active participant in negotiating the HOA, the preponderance of the evidence is to the contrary. Clive O’Grady, Corporate Counsel for Defense, described Harding as fully engaged in the discussions. This was corroborated by the testimony of other iDefense witnesses. Harding’s representations as to DTG’s ability to perform were central to the underlying agreement.

After the meeting in Fairfax, a series of communications in the form of letters and emails were exchanged between Kelly and Dobson regarding the status of the formulated business plan. According to Dobson’s testimony, about thirteen communications were exchanged. Andrew Peters of RedStar testified that he sent several emails to officers of iDefense concerning the availability of funds discussed at the March 12th meeting. Ultimately, the deal degenerated in its entirety without DTG making any of the payments. iDefense subsequently went bankrupt and filed the instant action alleging seven counts against the Defendants, including fraud and deceit, conspiracy to commit fraud, statutory conspiracy under Va. Code §§ 18.2-499 and 18.2-500, breach of contract, and conversion.

[140]*140In support of their plea in bar, Defendants argued that this Court could not assert personal jurisdiction over them for the purpose of adjudicating any of the counts alleged in Plaintiff s Motion for Judgment. They contend that their activities did not come within the purview of the Virginia long-arm statute, Va. Code § 8.01-328.1, and that assertion of jurisdiction by this Court would offend the Due Process Clause of the United States Constitution. The Court also notes that Defendants raised two merit-based arguments in their memoranda in support of their plea in bar, one related to the theoiy underlying the conspiracy counts and another related to the alleged invalidity of the HOA as a contract. The Court declined to hear argument on those issues and will not address them here, as they would be more properly resolved on demurrer. Norfolk and Ocean View Ry. v. Consolidated Turnpike Co., 111 Va. 131, 137 (1910).

The burden of proving personal jurisdiction rests upon the Plaintiff. Mylan Laboratories, Inc. v. Akzo, 2 F.3d 56, 60 (4th Cir. 1993). Plaintiff must prove that personal jurisdiction by the Court would be proper by a preponderance of the evidence. Id., 2 F.3d 56. Personal jurisdiction is a two-step inquiry consisting of both statutory and constitutional components.

The Court must initially determine whether jurisdiction can be assumed under the long-arm statute, the function of which “is to assert jurisdiction over nonresidents who engage in some purposeful activity in Virginia, to the extent permissible under the Due Process Clause.” Nan Ya Plastics Corp. v. DeSantis, 237 Va. 255, 259 (1989). To make that determination, the Court must consider all of the elements of the asserted cause of action in order to determine the statute’s scope. Krantz v. Air Line Pilots Association, International, 245 Va. 202 (1993). In other words, each count must have independent jurisdictional moorings.

If the statutory prong is met, the Court must then determine whether an exercise of jurisdiction over the Defendants would satisfy the Due Process Clause of the Fourteenth Amendment. Due process is satisfied where the Defendants were given fair and adequate notice of the proceedings against them, and where exercise of jurisdiction would be fair under the circumstances. The standard of fairness developed in the case law is two-fold, consisting of separate minimum contacts and reasonableness tests. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In assessing whether minimum contacts exist, the Court must consider the nature and quantity of the Defendants’ contacts with the forum state and the connection of those contacts with the cause of action. Id. at 318. Furthermore, the Court must examine the forum state’s interest in providing its citizens with a vehicle to address legal grievances. McGee v. International Life Ins. Co., 355 U.S. [141]*141220, 223 (1957). The Court must also determine whether in establishing contacts in the forum state, the Defendants purposefully availed themselves of the forum state. Hanson v. Denkla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1951). Once the Court determines that minimum contacts have been established, it must then decide whether its exercise of jurisdiction would be reasonable by assessing the burden on the Defendants of litigating in an inconvenient forum. Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 113 (1987).

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Bluebook (online)
58 Va. Cir. 138, 2002 Va. Cir. LEXIS 36, Counsel Stack Legal Research, https://law.counselstack.com/opinion/idefense-inc-v-dick-tracy-group-vacc-2002.