Fraudulent Transfer Complaint Dismissed For Lack Of Personal Jurisdiction
Astropower Liquidating Trust v. Xantrex Tech (In re Astropower Liquidating Trust), Case No. 04-10322 (MFW), Adv. Pro. No. 05-50867, 2006 WL 2850110 (Bankr. D. Del. Oct. 2, 2006) (Judge Mary F. Walrath)
Defendants Merrill Lynch Asset Management and Merrill Lynch Investment Managers Limited moved to dismiss a fraudulent transfer complaint for lack of personal jurisdiction. Finding that the minimum contacts requirement for personal jurisdiction was not met, the Court dismissed the complaint.
On May 11, 2005, plaintiff Astropower Liquidating Trust filed an eleven-count complaint against various defendants, asserting claims arising from the debtor’s pre-petition sale of its Xantrex Tech stock, with the help of the Merrill Lynch defendants, for a price substantially less than the release price of Xantrex stock just two months later in an initial public offering. The complaint was subsequently amended to add the Merrill Lynch defendants, the third-party purchasers of the Xantrex stock, as additional defendants. The Merrill Lynch defendants thereafter filed a motion to dismiss the amended complaint for lack of personal jurisdiction.Neither of the Merrill Lynch Defendants were registered to do business in the United States, and neither filed proofs of claim in the bankruptcy case. Their contact with the Debtor was solely as third-party purchaser of stock of Xantrex Technology, Inc. that the Debtor sold pre-petition. Also, the Merrill Lynch Defendants did not seek out the Debtor; instead it was the Debtors, through an intermediary, who reached out to the Merrill Lynch Defendants in Europe. Thus they did not purposely avail themselves of any business dealings in the United States or specifically direct any action to the Debtor in the United States. Under Supreme Court personal jurisdiction jurisprudence, the facts were insufficient to establish personal jurisdiction over the Merrill Lynch Defendants.
The Court also held that, in the absence of such continuous and systematic contacts between the Merrill Lynch Defendants and the United States, there also was no basis to assert jurisdiction for discovery purposes.
For these reasons, the Court dismissed the complaint.
