Title: Hazout v. Ting
Citation: N/A
Docket Number: 353, 2015
State: Delaware
Issuer: Delaware Supreme Court
Date: February 26, 2016

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
 
 
 
MARC HAZOUT,  
§ 
 
 
 
§ 
 
 
Defendant Below-Appellant, 
§ 
No. 353, 2015  
 
  
§ 
 
           v.  
§ 
Court Below:  Superior Court 
 
 
§  
 of the State of Delaware 
TSANG MUN TING, 
§ 
 
 
§ 
C.A. No. N14C-12-067 
 
Plaintiff Below-Appellee. 
 
§ 
  
 
Submitted:   January 20, 2016 
Decided:   February 26, 2016 
 
Before STRINE, Chief Justice; HOLLAND and SEITZ, Justices.  
 
Upon appeal from the Superior Court.  AFFIRMED. 
 
David L. Finger, Esquire (Argued), Finger & Slanina, LLC, Wilmington, 
Delaware, for Appellant. 
 
M. Duncan Grant, Esquire (Argued), Christopher B. Chuff, Esquire, Pepper 
Hamilton LLP, Wilmington, Delaware; Alan Howard, Esquire, Jared Levine, 
Esquire, Crowell & Moring LLP, New York, New York, for Appellee.  
 
 
STRINE, Chief Justice: 
1 
 
I. 
INTRODUCTION 
 
The plain language of § 3114(b) of Title 10 states that a nonresident officer 
of a Delaware corporation, by virtue of accepting and holding office, has consented 
to the exercise of personal jurisdiction over him in the Delaware courts in two 
classes of cases:  (i) ―all civil actions or proceedings brought in this State, by or on 
behalf of, or against such corporation, in which such officer is a necessary or 
proper party‖; or (ii) ―any action or proceeding against such officer for violation of 
a duty in such capacity.‖1  This case involves a straightforward application of that 
language.   
 
Here, Marc Hazout—a Canadian resident who is the President, CEO, 
Principal Financial and Accounting Officer, and a director of a Delaware 
corporation, Silver Dragon Resources, Inc.—has been sued for acts taken in his 
official capacity on behalf of a Delaware corporation based in Canada.  As alleged 
in the complaint, Hazout was the lead negotiator for Silver Dragon in negotiating a 
capital infusion from a group of affiliated investors including Tsang Mun Ting and 
other residents of Hong Kong (the ―Investor Group‖).  That capital infusion when 
consummated would have required a change of control of Silver Dragon from 
Hazout and certain others to Tsang and his fellow investors, who would have 
achieved the right to control Silver Dragon‘s board.  The capital infusion was to be 
                                                          
 
1 10 Del. C. § 3114(b). 
2 
 
consummated by way of a series of agreements, four of which specified that 
Delaware law was to govern their terms, with one of those four agreements further 
providing that any dispute over it was to be litigated in Delaware.  We shall refer to 
the interrelated set of agreements as the ―Change of Control Agreements.‖  The 
primary agreement provided that the Investor Group would lend Silver Dragon 
$3.4 million, subject to certain conditions, including a security interest in all of 
Silver Dragon‘s assets and the resignation of four directors.  We will call that 
agreement the ―Loan and Board Replacement Agreement.‖  When all terms were 
negotiated and the Change of Control Agreements were ready to be inked, Tsang 
pushed send on the first $1 million of the $3.4 million in capital to be infused, 
based on his assurance that Hazout and the other directors of Silver Dragon would 
soon execute the Loan and Board Replacement Agreement.  Hazout and two other 
Silver Dragon directors did sign the Loan and Board Replacement Agreement, but 
a fourth refused.  Rather than return the $1 million to Tsang, however, Hazout not 
only caused Silver Dragon to keep it, but also had Silver Dragon send $750,000 of 
it to Travellers International, Inc., a corporation that Hazout controlled. 
 
Tsang therefore brought this suit in the Superior Court of Delaware against 
Silver Dragon, Hazout, and Travellers for unjust enrichment, fraud, and fraudulent 
transfer in violation of the Delaware Uniform Fraudulent Transfer Act.  Hazout 
moved to dismiss on the ground that there was no basis for the exercise of personal 
3 
 
jurisdiction over him in Delaware because Tsang was not suing Hazout as a 
stockholder of Silver Dragon for breach of any fiduciary or other duty owed to 
Silver Dragon as an entity or Tsang as a stockholder.  The Superior Court 
disagreed and found that § 3114(b) provided a proper basis for personal 
jurisdiction.2  We accepted a certified interlocutory appeal on the personal 
jurisdiction question from the Superior Court. 
 
In this decision, we affirm.  Under the clear language of § 3114(b), this is a 
―civil action[]‖ against the Delaware corporation of which Hazout was an officer 
and director, and Hazout is a ―proper party‖ to that action because he has a legal 
interest in the dispute that is separate from Silver Dragon‘s interest, and because 
Tsang‘s claims against him arise out of the same facts and occurrences as the 
claims against Silver Dragon and it serves judicial economy to consider those 
claims together.3  Here, as the Superior Court found, all of the claims against 
Hazout arise out of actions taken in his official capacity, and they include using his 
authority as a Silver Dragon fiduciary to cause funds paid to Silver Dragon by 
Tsang to be not only retained by it, but also to be transferred to Hazout‘s own 
affiliated company.  Thus, there is no rational argument that the terms of § 3114(b) 
are not satisfied.   
                                                          
 
2 Tsang Mun Ting v. Silver Dragon Res., Inc., 2015 WL 3551871, at *4 (Del. Super. June 3, 
2015). 
3 See 10 Del. C. § 3114(b); 67A C.J.S. Parties § 2 (2015); Party, BLACK‘S LAW DICTIONARY 
(10th ed. 2014). 
4 
 
 
Hazout, however, argues that the provision of § 3114 that applies to civil 
actions brought in this state against a corporation in which such director and officer 
is a necessary or proper party (the ―Necessary or Proper Party Provision‖) was read 
out of the statute by the Court of Chancery in Hana Ranch, Inc. v. Lent,4 and that 
the only operative provision of § 3114 is the one dealing with actions against a 
director and officer ―for violation of a duty in such capacity‖5 (the ―Internal Affairs 
Claim Provision‖).  Because Hazout is not being sued by Tsang for breach of a 
fiduciary or statutory duty owed to Sliver Dragon or Tsang as a stockholder, 
Hazout says that there is no basis for this state to exercise personal jurisdiction 
over him. 
 
We disagree with that argument.  Contrary to Hazout, we do not believe that 
it is a proper role for the Judiciary to excise a clear category set forth in § 3114(b), 
simply because there might be cases where it is susceptible to an overly broad 
reach.  We understand that a decision of the Court of Chancery issued many years 
ago took that approach, but this Court has never ruled on that approach and we do 
not embrace it.  Rather, under settled principles of statutory interpretation, it is our 
obligation to give effect to the plain language of statutes to the extent we can do so 
without offending any supervening constitutional limits.  As both Chancellor 
                                                          
 
4 424 A.2d 28 (Del. Ch. 1980). 
5 10 Del. C. § 3114. 
5 
 
Allen6 and Chancellor Chandler7 pointed out, that can be done in the case of 
§ 3114 by ensuring that any exercise of personal jurisdiction under the statute is 
also consistent with due process, by applying the established minimum contacts 
test from International Shoe and its progeny.8   
 
Here, that test is easily satisfied because the issues at the heart of this case 
involve Hazout‘s conduct in retaining and then diverting $1 million that Silver 
Dragon obtained control over in the course of negotiating and coming to 
near-closure on the Change of Control Agreements, which included four 
agreements that provided for the application of Delaware law, one of which also 
stated that ―[a]ny dispute or cause of action arising hereunder shall be litigated in 
the State or Federal courts situated in the State of Delaware‖9 and that involved a 
contract that would have transferred control of a Delaware corporation from its 
current controllers to the Investor Group.  The geography of where Hazout, as the 
lead operative for Silver Dragon, and Tsang, as the lead investor, were located 
when they negotiated the transaction, was not the focus of their shared interaction.  
                                                          
 
6 See In re USACafes, L.P. Litig., 600 A.2d 43, 53 (Del. Ch. 1991) (―An alternative approach [to 
reading the ‗necessary or proper‘ provision of § 3114 out of the statute] might have been to give 
the legislature‘s word its ordinary meaning, but to protect against unconstitutional use of the 
statute on a case-by-case basis—employing the test of the International Shoe line of cases to do 
so.‖). 
7 See Ryan v. Gifford, 935 A.2d 258, 269 n.24 (Del. Ch. 2007) (agreeing with the approach 
suggested by Chancellor Allen in In re USACafes). 
8 See Int’l Shoe Co. v. Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310 
(1945); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); World-Wide Volkswagen 
Corp. v. Woodson, 444 U.S. 286 (1980); McGee v. Int’l Life Ins. Co., 355 U.S. 220 (1957). 
9 App. to Answering Br. at 47 (Line of Credit Loan Agreement at 7 (Section 9 (Governing 
Law))). 
6 
 
Rather, the key expectancies for all concerned were focused on Delaware, both as 
reflected in the precise terms of the Agreements they were negotiating, and the 
main focus of the Loan and Board Replacement Agreement, under which control 
over the governance of a Delaware corporation would pass in return for a major 
capital infusion.  Because of these facts and the reality that all of Hazout‘s actions 
relevant to the suit could not have been accomplished without the power of his 
offices in a Delaware corporation, there is no due process problem in exercising 
personal jurisdiction over Hazout.   
Furthermore, we also recognize that in crafting § 3114, the General 
Assembly included a safeguard against overreaching, because a nonresident officer 
and director can only be served in a case in which the corporation itself is a party, 
and in which the officer and director is a necessary or proper party to that suit.  By 
that means, the statute requires that there be a close nexus between the claims 
against the corporation and those against the officer and director, and that the 
claims against the officer and director involve conduct taken in his official 
corporate capacity.  In other words, this safeguard ensures that the implied consent 
mechanism of § 3114 only applies when a director or officer faces claims that arise 
out of his exercise of his corporate powers.   
Finally, we note that the ability of a defendant to move for dismissal on 
forum non conveniens grounds provides an additional tool to ensure that officers 
7 
 
and directors are not subjected to suit in Delaware in a way that is unduly 
burdensome.  Our precedent makes clear that even Delaware corporations can 
avoid facing suit in Delaware, where the connection between the claims at issue 
and Delaware are attenuated and the defendant corporation faces an undue 
burden.10  That avenue for relief is also open to nonresident officers and directors. 
 
Accordingly, we affirm the Superior Court‘s judgment denying Hazout‘s 
motion to dismiss claims against him for lack of personal jurisdiction. 
II. 
THE BUSINESS DEALINGS THAT FRAME THE PERSONAL 
JURISDICTION QUESTION11 
 
As the introduction makes clear, this appeal turns on the interpretation of a 
statute, and whether personal jurisdiction can be exercised over Hazout, either 
because he: (i) is a ―necessary or proper party‖ to an action against the corporation; 
or (ii) violated a statutory or fiduciary duty in his capacity as a director and 
officer.12  And as we shall further see, the reason this appeal has been certified 
from our Superior Court is because the claims against Hazout, although arising 
entirely out of acts he took in his corporate capacity as the President and CEO, and 
a director of a Delaware corporation, are commercial in nature and brought by an 
arm‘s-length bargaining partner, Tsang.  Although Tsang was a stockholder of the 
                                                          
 
10 See, e.g., Martinez v. E.I. DuPont de Nemours & Co., Inc., 86 A.3d 1102 (Del. 2014). 
11 Because of the procedural posture, we principally rely on the version of events set forth in 
Tsang‘s complaint and therefore relied upon by the Superior Court in addressing the motion to 
dismiss for lack of personal jurisdiction.  
12 10 Del. C. § 3114. 
8 
 
Delaware corporation, the claims he seeks to press do not involve claims for 
breach of fiduciary duty for harm done to the corporation and therefore indirectly 
to him as a stockholder.  Rather, Tsang plainly alleges that Hazout and Silver 
Dragon itself defrauded him, stole his funds, and will not return them. 
Because this is a personal jurisdiction case, geography remains germane, 
despite its waning relevance in many aspects of commerce.  The 
defendant-appellant, Hazout, resides in Toronto, Canada.  He serves as a director 
and as the President, CEO, and Principal Financial and Accounting Officer of 
Silver Dragon.  For its part, Silver Dragon is a Delaware corporation whose 
principal place of business is in Toronto.  Silver Dragon is a public mining and 
metals company that focuses on the acquisition, exploration, development, and 
operation of silver mines.  At the time of the negotiations that gave rise to this 
dispute, Silver Dragon‘s shares were not traded on a stock exchange or on the pink 
sheets.13  
Hazout is also the sole owner of one of Silver Dragon‘s creditors and largest 
stockholders, Travellers, a private investment bank incorporated in Ontario that 
also has its principal place of business in Toronto.  Hazout is Travellers‘s President 
                                                          
 
13 See Silver Dragon Res., Inc., Annual Report (Form 10-K), at 39 (Mar. 31, 2014) [hereinafter 
Silver Dragon 2013 Form 10-K] (―Our Common Stock is quoted on the Over-the-Counter Grey 
market.‖).  As of July 21, 2014, Silver Dragon‘s common stock began trading on OTC Market 
Group‘s OTCQB marketplace, which is for companies that are in their development stage.  See 
Silver Dragon Res., Inc., Annual Report (Form 10-K), at 23 (Mar. 27, 2015).  We take judicial 
notice of Silver Dragon‘s public filings. 
9 
 
and CEO.  Silver Dragon and Travellers were also named as defendants in this 
action, but are not parties to this appeal.  There are different reasons for that.  
Because Silver Dragon is a Delaware corporation, it had no basis to contest 
jurisdiction in Delaware.  By contrast, Travellers is a Canadian corporation and 
Tsang was unable to identify any act in Delaware relevant to the case that would 
justify the exercise of personal jurisdiction over Travellers in Delaware under our 
state‘s long-arm statute, 10 Del. C. § 3104.  For that reason, Travellers‘s motion to 
dismiss for lack of personal jurisdiction was granted. 
The plaintiff-appellee, Tsang, resides in Hong Kong and specializes in 
global investments and financial transactions.  The other members of the Investor 
Group also reside in Hong Kong. 
 
The unusual last acts that gave rise to this lawsuit arose out of a fairly 
common situation in the life cycle of a corporation.  It appears that in 2012, Silver 
Dragon was having trouble meeting its financial obligations and moving forward 
with its business plans because of a lack of cash.14  Negotiations therefore ensued 
between Hazout, on behalf of Silver Dragon and its board, and Tsang and the 
Investor Group, over the terms under which the Investor Group would make a 
substantial capital infusion into Silver Dragon.  Although Silver Dragon is 
                                                          
 
14 See Silver Dragon Res., Inc., Annual Report (Form 10-K), at 47 (Apr. 26, 2013) (―Our current 
level of cash is significantly insufficient to satisfy our current debt obligations and to fund our 
business as currently planned for 12 months.  We will need significant additional funds to satisfy 
such obligations and to continue operations, which we may not be able to obtain.‖).  
10 
 
putatively a public corporation, it had a less-than-Godzilla enterprise value more 
characteristic of a very early stage business.15  The parties therefore were 
discussing an infusion of millions of dollars, but deemed that level of contribution 
so material that the infusion would result in a transfer of corporate control to the 
Investor Group. 
By late December 2013, the parties memorialized the terms of the Change of 
Control Agreements in which the Investor Group would lend Silver Dragon 
$3,417,265, and receive a security interest in all of Silver Dragon‘s assets.  This 
recapitalization would allow Silver Dragon to pay its existing creditors and move 
forward with its business plans.  But, in exchange for this infusion, the Investor 
Group would secure control over Silver Dragon‘s board, because four of the five 
members of Silver Dragon‘s board, including Hazout, were required to resign, and 
be replaced by designees chosen by the Investor Group.  Hazout was also required 
to give up his position as an officer of Silver Dragon.  The terms of the Change of 
Control Agreements were negotiated and finalized.  These Agreements included: 
(a) the Loan and Board Replacement Agreement; (b) a Line of Credit Loan 
Agreement; (c) a Secured Line of Credit Note; (d) an Equity Interest Pledge and 
All Asset Security and Agreement; and (e) a Warrant for the Purchase of Shares of 
Common Stock of Silver Dragon.  At least four of these five contracts contained a 
                                                          
 
15 See Silver Dragon 2013 Form 10-K, at F-3. 
11 
 
Delaware choice-of-law provision.16  The Line of Credit Loan Agreement further 
provided that any disputes arising under the agreement would be litigated in 
Delaware courts.17  By year-end 2013, the Change of Control Agreements‘ terms 
were finalized and ready for execution.   
Consistent with that, Hazout allegedly represented to Tsang and the Investor 
Group that the then-current directors would all sign the Loan and Board 
Replacement Agreement and resign on New Year‘s Eve, and that the deal would 
close that day.  Violating a fundamental playground rule of Yankee commerce, 
Tsang did not wait until all of the signed Agreements were in hand to send the 
                                                          
 
16 App. to Answering Br. at 31 (Loan and Board Replacement Agreement at 9 (Section 5.6)): 
Governing Law.  This Agreement shall be governed by and construed and 
enforced in accordance with the laws of the State of Delaware. 
Id. at 47 (Line of Credit Loan Agreement at 7 (Section 9)): 
Governing Law.  The validity, interpretation and performance of this Agreement 
shall be governed and construed in accordance with the laws of the State of 
Delaware without regard to any conflict of law provisions or rule that would 
cause the application of the laws of any jurisdiction other than the State of 
Delaware.   
Id. at 52 (Form of Secured Line of Credit Note at 3): 
This Credit Note is executed as a sealed instrument and shall be governed by and 
construed in accordance with the internal laws of the State of Delaware applicable 
to contracts to be performed wholly within such State. 
Id. at 62 (Equity Interest Pledge and All Asset Security and Agreement at 8 (Section 7(g))): 
Choice of Law.  This Pledge Agreement shall be governed by and construed and 
enforced in accordance with the laws of the state of Delaware, except to the extent 
that the validity or perfection of the security interests hereunder, or remedies 
hereunder, in respect of any particular Collateral are governed by the laws of a 
jurisdiction other than the state of Delaware. 
The Warrant for the Purchase of Shares of Common Stock of Silver Dragon was not provided in 
the record. 
17 See id. at 47 (Line of Credit Loan Agreement at 7 (Section 9)) (―Governing Law.  . . . Any 
dispute or cause of action arising hereunder shall be litigated in the State or Federal courts 
situated in the State of Delaware.‖). 
12 
 
money.  Instead, in alleged reliance on Hazout‘s assurances that all the necessary 
Silver Dragon signatures were forthcoming, Tsang caused the first installment of 
$1,014,140 under the Agreements to be wired to Silver Dragon on December 30, 
2013.   
The next day, Hazout forwarded to the Investor Group an email chain among 
Silver Dragon‘s board members, which indicated that the company had ―received 
the first tranche of funds‖ and that it had ―signed the attached Line of Credit 
Agreement, Line of Credit Note, and Equity Pledge.‖18  The written 
correspondence further provided that Silver Dragon ―has also received approval 
from [directors] Glen MacMullin, Charles McAlpine and Marc Hazout‖ and that 
―[u]pon approval from Manuel Chan today and his funds advanced the transaction 
will close and all resignations will take effect as of this day December 31, 2013.‖19 
Later that day, Silver Dragon‘s attorney informed the Investor Group‘s 
counsel that the company was still awaiting director Chan‘s signature.  At the same 
time, Silver Dragon‘s attorney sent over Hazout‘s signatures to all of the 
Agreements on behalf of Silver Dragon, and Hazout‘s signatures on behalf of 
Travellers and another associated entity of Silver Dragon of which he is the 
President.  Silver Dragon‘s attorney also sent over signatures to the Loan and 
                                                          
 
18 App. to Opening Br. at 15 (Compl. ¶ 28) (internal quotation marks omitted). 
19 Id. (Compl. ¶ 29). 
13 
 
Board Replacement Agreement from three of the company‘s directors, including 
Hazout. 
But then things went pear-shaped.  Hazout and Silver Dragon told the 
Investor Group that Chan would not sign.  But Hazout and Silver Dragon did not 
send back the Investor Group‘s money.  Rather, on April Fools‘ Day 2014, they 
told Tsang that Silver Dragon had already spent a quarter of the million dollars to 
pay off debts, and they weren‘t joking. 
Three days later, the defendants further informed Tsang that Hazout and 
Silver Dragon transferred approximately $750,000 of the payment to Travellers.  
Between April and August of 2014, Tsang repeatedly asked Silver Dragon to give 
back the money, but Silver Dragon, Hazout, and his affiliate refused to return it.   
 
To get the Investor Group‘s money back, Tsang filed a complaint in the 
Court of Chancery against Silver Dragon, Travellers, and Hazout.  For purposes of 
understanding the current appeal, it is important to understand what claims Tsang 
made and did not make.  In his complaint, Tsang alleged that Hazout and Silver 
Dragon (i) committed fraud against him and the Investor Group; (ii) were unjustly 
enriched by the Investor Group‘s $1,014,140 payment; and (iii) fraudulently 
transferred that payment to Hazout‘s affiliate in violation of the Delaware Uniform 
Fraudulent Transfer Act.  
14 
 
 
Notably absent from the complaint was any claim against Hazout for breach 
of fiduciary duty.  The reason for that is rather plain: Tsang was not suing to 
protect Silver Dragon, or his stockholder investment in it.  Tsang was suing 
Hazout, Silver Dragon, and Travellers to get the Investor Group‘s money back.  
Although it is conceivable that another Silver Dragon investor could sue Hazout 
over this alleged course of action,20 Tsang did not do so, and his and the Investor 
Group‘s interests were adverse to Silver Dragon and make them unsuitable 
derivative plaintiffs.  Consistent with Tsang‘s failure to allege a breach of fiduciary 
                                                          
 
20 As the Superior Court noted, if the course of conduct Hazout engaged in transpired as Tsang 
alleges, his behavior would have serious fiduciary implications.  See Tsang, 2015 WL 3551871, 
at *4.  If, for example, he exposed Silver Dragon to liability to Tsang in order to facilitate 
improper payments to his own affiliates, such as Travellers, a claim by Silver Dragon to require 
Hazout to make it whole for any liability it incurred could be stated.  Likewise, under Delaware 
law, a corporation cannot seek profit by using illegal means, and if Hazout knowingly did so and 
exposed Silver Dragon to liability, that would form a basis for a potential fiduciary duty claim by 
a derivative plaintiff whose interests were aligned with that of Silver Dragon.  See, e.g., In re 
Walt Disney Co. Derivative Litig., 906 A.2d 27, 67 (Del. 2006) (―‗A failure to act in good faith 
may be shown, for instance, where the fiduciary intentionally acts with a purpose other than that 
of advancing the best interests of the corporation, [or] where the fiduciary acts with the intent to 
violate applicable positive law . . . .‘‖) (internal citation omitted); In re Am. Int’l Grp., Inc., 
Consol. Derivative Litig., 976 A.2d 872, 889 (Del. Ch. 2009), aff’d sub nom. Teachers’ Ret. Sys. 
of La. v. Gen. Re Corp., 11 A.3d 228, 2010 WL 5394004 (Del. 2010) (Table) (―[I]t is generally 
accepted that a derivative suit may be asserted by an innocent stockholder on behalf of a 
corporation against corporate fiduciaries who knowingly caused the corporation to commit 
illegal acts and, as a result, caused the corporation to suffer harm.‖); Desimone v. Barrows, 924 
A.2d 908, 934–35 (Del. Ch. 2007) (―Delaware corporate law has long been clear on [the] 
notion [] that it is utterly inconsistent with one‘s duty of fidelity to the corporation to consciously 
cause the corporation to act unlawfully.  The knowing use of illegal means to pursue profit for 
the corporation is director misconduct.‖); see also 8 Del. C. § 102(b)(7)(ii) (providing that an 
exculpatory charter provision cannot limit a director‘s personal monetary liability ―for acts or 
omissions not in good faith or which involve intentional misconduct or a knowing violation of 
law‖). 
15 
 
duty claim, Tsang transferred his case to the Superior Court because it otherwise 
faced dismissal for lack of equity jurisdiction.  
On January 7, 2015, Hazout and Travellers moved to dismiss the claims 
against them in the Superior Court for lack of personal jurisdiction.  The Superior 
Court issued its opinion on June 3, 2015.  In that opinion, the trial court granted 
Travellers‘s motion but denied Hazout‘s motion based on its finding that although 
Hazout was not subject to its jurisdiction under Delaware‘s long-arm statute,21 
jurisdiction over Hazout was proper under the officer consent statute.22   
In its analysis, the Superior Court acknowledged the effect Hana Ranch had 
of limiting the application of § 3114 to suits that involve claims of breach of a 
corporate fiduciary‘s duty.23  Being mindful of that constraint, the Superior Court 
strained to find jurisdiction over Hazout under the Internal Affairs Claim 
Provision.24  Even though the trial court acknowledged that Tsang did not allege 
that Hazout breached a duty that he owed in his official capacity, it determined that 
―the alleged misconduct would be adverse to Hazout‘s fiduciary duty to Silver 
                                                          
 
21 See 10 Del. C. § 3104.   
22 Tsang, 2015 WL 3551871, at *2–3. 
23 Id. at *3 (quoting In re USACafes, 600 A.2d at 52 (citing Pestolite, Inc. v. Cordura Corp., 449 
A.2d 269 (Del. Super. 1982); Hana Ranch, 424 A.2d 28)) (―It is true that earlier cases of 
Delaware courts have implied that it ‗would be unconstitutional for Delaware to attempt to 
compel the appearance of directors here to litigate any claims other than claims for breach of 
their fiduciary duty to the corporation . . . .‘‖).  
24 Id. at *4. 
16 
 
Dragon.‖25  The Superior Court also observed that ―Hazout acted in his corporate 
capacity as Silver Dragon‘s Director, President, CEO and Principal Financial and 
Accounting Officer when he transferred the money to his company, Travellers.‖26  
On those grounds, the trial court determined that the Internal Affairs Claim 
Provision could be used to exercise jurisdiction over Hazout.27   
In addressing whether its exercise of jurisdiction over Hazout comported 
with his rights to due process, the Superior Court adhered to established 
constitutional principles and determined that jurisdiction was constitutionally 
proper based on Hazout‘s contacts with Delaware.  In doing so, the Superior Court 
noted that ―Hazout accepted certain duties under Delaware law‖28 when he 
accepted a position as Silver Dragon‘s fiduciary and that ―this State has a public 
interest in enforcing these duties.‖29  It also observed that Tsang‘s claims arise out 
of alleged misconduct by Hazout in his capacity as a fiduciary of Silver Dragon, 
and concluded that it ―is in keeping with traditional notions of fairness and 
substantial justice‖30 to require him to defend claims that arose out of his 
―management of the corporation.‖31 
                                                          
 
25 Id.  
26 Id. 
27 Id. 
28 Id. 
29 Id.  
30 Id. (citing Shaffer v. Heitner, 433 U.S. 186, 222–24 (1977) (Brennan, J., concurring in part and 
dissenting in part)). 
31 Id. 
17 
 
After issuing its decision, the Superior Court certified Hazout‘s interlocutory 
appeal to this Court, which we accepted.  
III. 
ANALYSIS 
 
We review the Superior Court‘s denial of Hazout‘s motion to dismiss the 
claims against him for lack of personal jurisdiction de novo.32  We also conduct a 
de novo review of the Superior Court‘s interpretation of § 3114.33 
 
At one level, this case is a rather simple one.  As we shall discuss, this is 
plainly a suit in which Hazout is a ―necessary or proper party‖ to a ―civil 
action[] . . . brought in this State . . . against [the] corporation‖ of which he is an 
officer and director.34  Not only that, we believe that given that Hazout was on 
notice that he had consented to suit in Delaware for certain classes of suits by 
virtue of his service as an officer and director of a Delaware corporation, the reality 
that the dealings that gave rise to this suit were focused on the change of control of 
that Delaware corporation, and that the parties to those dealings were clearly using 
Delaware law as their common language of commerce, Hazout has no basis to 
complain that his due process rights would be offended by Delaware‘s exercise of 
personal jurisdiction over him. 
                                                          
 
32 See AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 437 (Del. 2005). 
33 Del. Bay Surgical Servs., P.C. v. Swier, 900 A.2d 646, 652 (Del. 2006) (―Questions of 
statutory interpretation are questions of law reviewed de novo.‖). 
34 10 Del. C. § 3114. 
18 
 
 
But, there is another level on which this suit is complex.  In Hana Ranch, 
more than a generation ago, Chancellor Marvel essentially read the Necessary or 
Proper Party Provision out of the consent statute.35  The former Chancellor did so 
on the ground that if he gave effect to that provision, it could be susceptible to an 
overbroad reach that could endanger the constitutionality of § 3114.36  This fear 
was an understandable one, given the importance of § 3114 and its inspiration by 
Shaffer v. Heitner, a case that struck down the previous method that had been used 
to secure personal jurisdiction in Delaware over nonresident fiduciaries of 
Delaware corporations.37 
 
On this appeal, Hazout‘s primary argument is that Hana Ranch is a sound 
interpretation of § 3114 and that it should be adopted by this Court.  Although 
Hazout acknowledges that this Court has never had occasion to address whether 
Hana Ranch was correct, he notes that the Court of Chancery has adhered to it for 
years, despite the reality that two Chancellors have noted their view that it was not 
correctly decided.38  In stressing Hana Ranch, Hazout acts consistently with his 
arguments below, where the shadow of that decision loomed over the Superior 
Court.  The Superior Court rationalized its decision below as implicating the 
                                                          
 
35 See Hana Ranch, 424 A.2d at 30–31. 
36 See id.; see also DONALD J. WOLFE & MICHAEL A. PITTENGER, CORPORATE & COMMERCIAL 
PRACTICE IN THE COURT OF CHANCERY  § 3.04[a][2], at 3-55 (2013) (citing Hana Ranch, 424 
A.2d at 30–31) (noting that ―[t]he Chancellor [was] apparently fearful of the potential for 
unconstitutional application of the statute if read so broadly‖).  
37 See 433 U.S. at 216–17. 
38 See supra notes 6–7.  
19 
 
Internal Affairs Claim Provision on the grounds that although Hazout was not 
being accused in this suit of breaching duties he owed to Silver Dragon or its 
investors as a fiduciary, his conduct was taken in his official capacity and that 
allegations of the complaint could form the basis for a claim for breach of fiduciary 
duty by a disinterested Silver Dragon stockholder. 
 
Hazout also emphasizes that Hana Ranch was preceded by this Court‘s 
decision in Armstrong v. Pomerance, which says: ―[Section] 3114 authorizes 
jurisdiction only in actions which are inextricably bound up in Delaware law and 
where Delaware has a strong interest in providing a forum for redress of injuries 
inflicted upon or by a Delaware domiciliary, i.e., the Delaware corporation.‖39  He 
argues that this language—which was dictum because the case dealt with a 
garden-variety fiduciary duty claim that is grist for the mill of the Internal Affairs 
Claim Provision—somehow read the Necessary or Proper Party Provision out of 
the statute, at least as to claims not formally governed by Delaware law. 
 
In addressing Hazout‘s arguments, Tsang counters that Hana Ranch is an 
erroneous interpretation of § 3114, which this Court has never had occasion to 
address.  Pointing to the plain language of § 3114, Tsang argues that Hana Ranch 
involved a judicial determination to excise a plain provision of a carefully crafted 
statute, a determination that goes beyond the proper judicial role.  Not only that, 
                                                          
 
39 423 A.2d 174, 176 n.5 (Del. 1980). 
20 
 
Tsang contends that it is unnecessary to strike any provision of § 3114 to preserve 
its constitutionality because § 3114 alone cannot serve as an ultimate basis for the 
exercise of personal jurisdiction.  Rather, in each case where § 3114 is used, it 
must also be consistent with principles of due process, as measured by the 
minimum contacts test of the International Shoe line of cases, to exercise personal 
jurisdiction over the nonresident defendant in Delaware.  Alternatively, Tsang 
strains to contend that this is a suit that implicates the Internal Affairs Claim 
Provision, if we conclude that we should adopt the approach taken by Hana Ranch. 
We approach the parties‘ contending arguments by focusing first on their 
primary clash, which is over whether the Necessary or Proper Party Provision is 
still viable.  Settled principles of statutory determination are critical to our 
resolution of that dust-up and, to our mind, compel the conclusion we reach. 
 
In interpreting any statute, we ―ascertain and give effect to the intent of the 
legislature.‖40  Where the statute is unambiguous, we must adhere to the plain 
meaning of the statutory language.41  Of special relevance to this case are the 
principles that guide courts in addressing statutes that may be susceptible to 
                                                          
 
40 Swier, 900 A.2d at 652 (quoting Coastal Barge Corp. v. Coastal Zone Indus. Control Bd., 492 
A.2d 1242, 1246 (Del. 1985)) (internal quotation marks omitted); see also Eliason v. Englehart, 
733 A.2d 944, 946 (Del. 1999) (citing Street v. State, 669 A.2d 9, 13 (Del. 1995)) (―The goal of 
statutory construction is to determine and give effect to legislative intent.‖).  
41 Eliason, 733 A.2d at 946 (―If a statute is unambiguous, there is no need for judicial 
interpretation, and the plain meaning of the statutory language controls.‖) (internal citation 
omitted); Coastal Barge Corp., 492 A.2d at 1245–46 (―If the statute as a whole is unambiguous, 
there is no reasonable doubt as to the meaning of the words used and the Court‘s role is then 
limited to an application of the literal meaning of the words.‖). 
21 
 
unconstitutional application.  In those cases, courts should avoid interpretations 
that would render a statute unconstitutional, if that can be done without impairing 
the legislature‘s purpose.42  But, courts are not authorized to strike provisions of a 
statute simply because that will make it easier for the Judiciary to apply the statute 
in the future without challenges to its constitutionality, as applied in particular 
cases.43  As-applied challenges are well-understood, and striking a provision by 
                                                          
 
42 See Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 841 (1986) (quoting 
Aptheker v. Sec’y of State, 378 U.S. 500, 515 (1964)) (noting that although a court ―will often 
strain to construe legislation so as to save it against constitutional attack, it must not and will not 
carry this to the point of perverting the purpose of a statute . . . or judicially rewriting it‖) 
(internal quotation marks omitted); United States v. Locke, 471 U.S. 84, 96 (1985) (quoting 
Moore Ice Cream Co. v. Rose, 289 U.S. 373, 379 (1933)) (―We cannot press statutory 
construction ‗to the point of disingenuous evasion‘ even to avoid a constitutional question.‖); 
Wash. Mkt. Co. v. Hoffman, 101 U.S. 112, 115–16 (1879) (―We are not at liberty to construe any 
statute so as to deny effect to any part of its language.  It is a cardinal rule of statutory 
construction that significance and effect shall, if possible, be accorded to every word. . . . ‗[A] 
statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, 
or word shall be superfluous, void, or insignificant.‘  This rule has been repeated innumerable 
times.‖); Richardson v. Wile, 535 A.2d 1346, 1350 (Del. 1988) (citing Atlantis I Condo. Ass’n v. 
Bryson, 403 A.2d 711 (Del. 1979)) (―[W]here a possible infringement of a constitutional 
guarantee exists, the interpreting court should strive to construe the legislative intent so as to 
avoid unnecessary constitutional infirmities.‖); Sturgill v. M & M, Inc., 329 A.2d 360, 362 (Del. 
1974) (―Our duty is to read statutory language so as to avoid constitutional questionability and 
patent absurdity and to give the language a reasonable and suitable meaning.‖) (internal citation 
omitted); State v. Baker, 679 A.2d 1002, 1007 (Del. Super. 1996) (citing Snell v. Eng’d Sys. & 
Designs, Inc., 669 A.2d 13, 20 (Del. 1995)) (―If possible to do so, statutes must be construed to 
achieve a common sense result, a result which is in harmony with constitutional principles, and 
to avoid a construction which would lead to unreasonable or absurd results.‖); see also 82 C.J.S. 
Statutes § 395 (2009) (internal citations omitted) (―The primary duty of a court in interpreting a 
statute is to ascertain and give effect to the intention and purpose of the legislature.  The 
fundamental rule of statutory construction to which all other rules are subordinate is that the 
court must ascertain and implement the legislative intent, as expressed in the statute, unless it is 
in conflict with constitutional provisions.‖). 
43 See, e.g., Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449–50 (2008) 
(―In determining whether a law is facially invalid, we must be careful not to go beyond the 
statute‘s facial requirements and speculate about ‗hypothetical‘ or ‗imaginary‘ cases.‖) (internal 
citation omitted); United States v. Raines, 362 U.S. 17, 22 (1960) (―The delicate power of 
22 
 
judicial fiat is something that should result from a facial challenge to the validity of 
a statute.  Consistent with this principle, it is also understood that blanket judicial 
invalidation of a statute‘s words should not ensue if the statute can be applied 
constitutionally in a wide class of cases, but might operate overbroadly in some 
more limited class of cases.44   
 
These established principles of jurisprudence lead us to conclude that we 
cannot embrace the approach taken by Hana Ranch.  We recognize the 
high-minded motivation that impelled that ruling, but we cannot square it with 
                                                                                                                                                                                           
pronouncing [a legislative act] unconstitutional is not to be exercised with reference to 
hypothetical cases thus imagined. . . .  [A] limiting construction could be given to the statute by 
the court responsible for its construction if an application of doubtful constitutionality were in 
fact concretely presented.  We might add that application of this rule frees the Court not only 
from unnecessary pronouncement on constitutional issues, but also from premature 
interpretations of statutes in areas where their constitutional application might be cloudy.‖); see 
also Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d 934, 948–49 (Del. Ch. 2013) 
(―The plaintiffs‘ burden on this motion [for judgment on the pleadings] challenging the facial 
statutory and contractual validity of the bylaws is a difficult one: they must show that the bylaws 
cannot operate lawfully or equitably under any circumstances. . . .  The plaintiffs voluntarily 
assumed this burden by making a facial validity challenge, and cannot satisfy it by pointing to 
some future hypothetical application of the bylaws that might be impermissible.  The answer to 
the possibility that a statutorily and contractually valid bylaw may operate inequitably in a 
particular scenario is for the party facing a concrete situation to challenge the case-specific 
application of the bylaw . . . .‖) (internal citations omitted) (emphasis in original); 16 C.J.S. 
Constitutional Law § 163 (2015), Westlaw (updated December 2015) (―In an as-applied 
challenge to the constitutionality of a law, a court assesses the merits of the challenge by 
considering the facts of the particular case, not hypothetical facts in other situations; under such a 
challenge, the challenger must show that his or her constitutional rights were actually 
violated. . . .  On a facial challenge to the constitutionality of a law, the court must be careful not 
to go beyond the statute‘s facial requirements and speculate about hypothetical or imaginary 
cases.‖). 
44 See, e.g., United States v. Salerno, 481 U.S. 739, 745 (1987) (―The fact that [an act] might 
operate unconstitutionally under some conceivable set of circumstances is insufficient to render 
it wholly invalid, since we have not recognized an ‗overbreadth‘ doctrine outside the limited 
context of the First Amendment.‖) (internal citation omitted); Parker v. Levy, 417 U.S. 733, 760 
(1974) (―This Court has . . . repeatedly expressed its reluctance to strike down a statute on its 
face where there were a substantial number of situations to which it might be validly applied.‖). 
23 
 
what we understand to be our duty in giving effect to our General Assembly‘s 
enactments.  When confronting Hana Ranch as precedent in In re USACafes, L.P. 
Litigation, Chancellor Allen recognized the problematic nature of Hana Ranch‘s 
approach.45  In that decision, Chancellor Allen noted that the possible 
unconstitutional application of the Necessary or Proper Party Provision could be 
dealt with by the requirement to ensure that any exercise of personal jurisdiction 
under a Delaware service of process statute—be it § 3114 or the long-arm statute—
be consistent with constitutional principles of due process.46  Feeling bound as a 
trial judge to adhere to the precedent of his own court,47 Chancellor Allen did not 
depart from Hana Ranch, and instead concluded that jurisdiction was proper under 
the Internal Affairs Claim Provision because the defendant directors violated the 
duty of loyalty that they owed to the partnership and its limited partners in their 
capacity as corporate fiduciaries.48  In a later case, Chancellor Chandler also 
adhered to Hana Ranch,49 but signaled his agreement with Chancellor Allen that 
the better approach to interpretation was to give effect to the Necessary or Proper 
                                                          
 
45 See 600 A.2d at 53. 
46 See supra note 6.  
47 See In re USACafes, 600 A.2d at 53 (noting that ―[t]he doctrine of stare decisis‖ removed the 
option of hewing to the plain language of the Necessary and Proper Party Provision and applying 
the minimum contacts analysis to guard against unconstitutional application of that provision).  
48 See id.  
49 Gifford, 935 A.2d at 269 (―I am duty bound to follow the law as it is currently 
interpreted . . . .‖). 
24 
 
Party Provision, and to use the minimum contacts test to police any overbreadth.50  
Candor requires us to acknowledge that Hazout is correct in pointing out that the 
Court of Chancery has adhered to Hana Ranch,51 although Hazout is unable to 
identify a case when the Court of Chancery was actually faced with the precise 
argument that Tsang now makes and where resolution of the jurisdictional question 
turned on whether the Necessary or Proper Party Provision was still viable. 
As important, Hazout admits that this Court has never been presented with 
this question before.  In our prior decisions involving § 3114, we assumed that the 
General Assembly intended there to be two categories of cases to which directors 
and officers had consented to service.52  We did that for the obvious reason that the 
                                                          
 
50 See id. at 269 n.24. 
51 See, e.g., Corp. Prop. Assocs. 14 Inc. v. CHR Holding Corp., 2008 WL 963048, at *10 (Del. 
Ch. Apr. 10, 2008) (internal citations omitted): 
Section 3114, despite its broad language, has been interpreted over the last 
quarter-century to be limited to granting personal jurisdiction only for claims 
against directors in their capacity as directors.  Moreover, case law has interpreted 
§ 3114 as applying only in suits brought by a stockholder directly or by or on 
behalf of the corporation itself involving violations of the Delaware General 
Corporation Law (the ―DGCL‖), the corporate charter and bylaws, and breaches 
of the fiduciary duties owed to the corporation and its stockholders (i.e., 
―Corporate Claims‖).  Those interpretations of the director consent subsection of 
§ 3114 also apply to the officer consent subsection of § 3114.   
But, the argument in Corporate Property Associates was not based on the Necessary or Proper 
Party Provision but rather on the argument that ―if a complaint contained a plausible, but still 
dismissable, Corporate Claim against a director served under § 3114, other claims related to the 
facts giving rise to the unsuccessful Corporate Claim, if viable, could be prosecuted against the 
director in this court.‖  Id. (internal citation omitted). 
52 See, e.g., Istituto Bancario Italiano SpA v. Hunter Eng’g Co., 449 A.2d 210, 227–28 (Del. 
1982) (―Service on a director pursuant to [§ 3114] is only contemplated in actions ‗in which such 
director, trustee or member is a necessary or proper party, or in any action or proceeding against 
such director, trustee or member for violation of his duty in such capacity, whether or not he 
continues to serve as such director, trustee or member at the time suit is commenced.‘‖) (internal 
25 
 
Necessary or Proper Party Provision and the Internal Affairs Claim Provision are 
separated by the word ―or‖ and that there is no other reasonable reading that can be 
given to the statute.53  In none of our cases did we assume that the Necessary or 
Proper Party Provision was invalid.   
In noting that we have never decided the question before us, we do not 
ignore Hazout‘s citation to dictum in Armstrong.  But that dictum is just that, and 
its focus is on precisely the kind of factors that properly are taken into account in 
the application of the minimum contacts test.  In this case, as we discuss, the 
conduct underlying all the claims was in fact Delaware-focused and involved 
parties using Delaware law as their language of commerce in negotiating the 
change of control of a Delaware corporation.  We need not make a choice-of-law 
analysis at this juncture to conclude that this is a case in which Delaware has a 
legitimate interest in providing a forum for efficient redress of claims against a 
Delaware corporation and the fiduciary whose actions are at the heart of those 
claims.   
 
Additionally, we are unable to find any proper basis now for determining 
that the Necessary or Proper Party Provision is facially invalid, as Hazout would 
                                                                                                                                                                                           
citations omitted) (emphasis added); Armstrong, 423 A.2d at 176 n.5 (―We emphasize here that 
[§] 3114 authorizes service only in actions where directors, trustees or members of the governing 
body of a Delaware corporation are necessary or proper parties or where the cause of action is 
grounded on such individuals‘ breach of the fiduciary duties owed to the corporation and its 
owners.‖) (emphasis added). 
53 See 10 Del. C. § 3114. 
26 
 
have us declare.54  Starting with the language of the Necessary or Proper Party 
Provision, we note that the provision contains its own safeguards against 
overbreadth.  By its plain terms, the Necessary or Proper Party Provision limits the 
exercise of jurisdiction over a nonresident director or officer to cases in which the 
corporation is a named party, and to which the corporate fiduciary is also a 
―necessary or proper party.‖55  Through this means, the General Assembly 
therefore required that there be a close nexus between the claims involving the 
corporation which made it a party to the suit, and the conduct of the nonresident 
fiduciary. 
 
As a result, only claims that involve conduct by the nonresident fiduciary 
using his corporate power will make him a necessary or proper party.  In choosing 
the words ―necessary or proper party,‖ the General Assembly did not invent new 
terms.  Rather, they used terms that had a lineage in our tradition of law.  Courts 
have historically identified and included ―necessary‖ parties to a suit on the ground 
that those parties have ―rights which must be ascertained and settled before the 
rights of the parties to the suit can be determined.‖56  And ―proper‖ parties appear 
                                                          
 
54 See, e.g., Wash. State Grange, 552 U.S. at 449 (―[A] facial challenge must fail where the 
statute has a ‗plainly legitimate sweep.‘‖) (internal citation omitted). 
55 10 Del. C. § 3114. 
56 67A C.J.S Parties § 3 (internal citations omitted); see also id. (―It is generally held that the 
necessary parties to a proceeding, regardless of its nature, that is, whether it is in rem, at law, or 
in equity, are those, and those only, who have an interest in the subject matter of the suit and 
whose rights may be materially affected or concluded by the judgment, and without whom the 
court will not proceed to a final determination of the controversy, even as between parties 
27 
 
before a court because they have a separable legal interest in the suit.57  We must 
give effect to the terms carefully selected by the General Assembly and presume 
that they intended to reflect the established meaning of those terms.58 
 
Furthermore, by authorizing jurisdiction over corporate fiduciaries who use 
their position to commit wrongs on behalf of the corporation in actions where the 
corporation is properly before the court, the General Assembly could be thought to 
                                                                                                                                                                                           
properly before the court.‖) (internal citations omitted); Party, BLACK‘S LAW DICTIONARY 
(defining a ―necessary party‖ as ―[a] party who, being closely connected to a lawsuit, should be 
included in the case if feasible, but whose absence will not require dismissal of the 
proceedings‖). 
57 See, e.g., 67A C.J.S Parties § 2 (―A proper party to an action or proceeding is a party who has 
an interest in the controversy or subject matter which is separable from the interest of the other 
parties before the court so that it will not necessarily be affected by a decree which does 
complete justice between the other parties. . . .  A proper party is not the same as a necessary or 
indispensable party.  The term includes those without whom a substantial decree or judgment 
may be made but not a decree or judgment which will completely settle all the questions 
involved and conclude the rights of all persons who have any interest in the subject matter of the 
litigation.‖) (internal citations omitted); 59 AM. JUR. 2d Parties § 8 (2012) (―In every civil case, 
there must be a proper party plaintiff and a proper party defendant.  A ‗proper party‘ is one 
whose interest may be affected by a judgment but whose presence is not essential for the 
adjudication of an action.  Only those persons who are legally affected are proper parties to a 
lawsuit.  A party is ‗legally affected‘ by a cause of action, so as to be a proper party to the action, 
if the party has a legal interest in rights that are the subject matter of the cause of action.  All 
those having an interest in the subject matter of the litigation that may be conveniently settled 
therein are proper parties.‖) (internal citations omitted); Party, BLACK‘S LAW DICTIONARY 
(defining a ―proper party‖ as ―[a] party who may be joined in a case for reasons of judicial 
economy but whose presence is not essential to the proceeding‖). 
58 See, e.g., Morissette v. United States, 342 U.S. 246, 263 (1952) (―[W]here [the legislature] 
borrows terms of art in which are accumulated the legal tradition and meaning of centuries of 
practice, it presumably knows and adopts the cluster of ideas that were attached to each 
borrowed word in the body of learning from which it was taken and the meaning its use will 
convey to the judicial mind unless otherwise instructed.  In such case, absence of contrary 
direction may be taken as satisfaction with widely accepted definitions, not as a departure from 
them.‖); 82 C.J.S. Statutes § 385 (―Courts presume that the legislature understood the meaning of 
the words that it used and that it intended to use them. . . .  [C]ourts presume that the words in a 
statute have been used . . . in their legal sense, if they have a well-settled legal meaning.‖) 
(internal citations omitted). 
28 
 
have had an interest in conserving litigant and judicial resources by enabling 
plaintiffs to seek redress against the corporation and the fiduciary for injuries in 
one, rather than multiple forums, for claims arising out of the same facts or 
occurrences.  And because of the nexus requirement in the Necessary or Proper 
Party Provision, the General Assembly could easily have deemed it reasonable for 
nonresident fiduciaries to have consented to subjecting themselves to jurisdiction 
in the chartering states in cases where their conduct in their official corporate 
capacity renders them a necessary or proper party in a case to which the 
corporation is also a defendant.  Moreover, § 3114 provided explicit notice to 
Hazout that, by accepting a position as a director and officer of a Delaware 
corporation, he consented to appear in this state to defend claims that fall under 
either the Necessary or Proper Party Provision or the Internal Affairs Claim 
Provision.59   
 
Most important, although one can conceive of cases where applying the 
plain terms of the Necessary or Proper Party Provision might compromise a 
                                                          
 
59 See, e.g., Armstrong, 423 A.2d at 176 (―[The defendants‘] status as directors and their power 
to act in that capacity arise exclusively under the Delaware corporation statutes.  The defendants 
accepted their directorships with explicit statutory notice, via [§] 3114, that they could be haled 
into the Delaware Courts to answer for alleged breaches of the duties imposed on them by the 
very laws which empowered them to act in their corporate capacities.‖); HMG/Courtland Props., 
Inc. v. Gray, 729 A.2d 300, 306 (Del. Ch. 1999) (―[Section] 3114 is in the Delaware Code and 
provides clear notice to any reasonably informed director that accepting service as a director of a 
Delaware corporation brings with it an obligation to defend official capacity suits here.  This fact 
is the underpinning of § 3114‘s constitutionality.‖). 
29 
 
nonresident fiduciary‘s due process rights,60 it is equally easy to conceive of cases, 
such as this one, where Delaware‘s exercise of personal jurisdiction under the 
Necessary or Proper Party Provision would pose no constitutional difficulty.  And, 
as Chancellors Allen and Chandler pointed out, the way to police that concern is to 
apply the method we do when implementing our state‘s long-arm statute, which is 
to give effect to its terms, and to use the minimum contacts analysis required by 
International Shoe to ensure that the statute is not used in a situationally 
inappropriate manner.61   
 
Nor are principles of personal jurisdiction the only way to address the 
burden to nonresident fiduciaries of addressing litigation in our state.  As we have 
recently pointed out, the doctrine of forum non conveniens remains a viable tool 
for even Delaware residents, including corporations, when sued on claims that 
have little connection to Delaware, where Delaware law is not at stake, and where 
                                                          
 
60 For example, if plaintiffs attempted to drag corporate officers and directors into Delaware by 
naming them as defendants in a products liability case where the products had been designed and 
distributed from a state other than Delaware to diverse consumers, most of whom were in states 
other than Delaware, the minimum contacts test would provide substantial protection.  It would 
be constitutionally questionable, to say the least, for Delaware to exercise personal jurisdiction 
when Delaware‘s status as the state of incorporation had no rational connection to the cause of 
action, where the conduct is governed by the laws of other states, and where there is no reason 
why a corporate fiduciary should expect to be named as a party at all, much less in a suit where 
the underlying conduct and claims have no rational connection to Delaware and provide no 
rational basis for Delaware to apply its own law.  Not only that, the traditional protections of the 
corporate shield are unaffected by this decision, and there are serious limits on the ability of 
plaintiffs to use veil-piercing to hold corporate fiduciaries or stockholders financially responsible 
for actions of the corporation itself. 
61 See supra notes 6–8. 
30 
 
the burdens of defending the suit in Delaware are substantial and not justified by 
any legitimate interest of the plaintiff in suing in Delaware.62   
 
Finally, we also note the value of following regular order in the 
interpretation of § 3114.  That can be illustrated by the dilemma faced by our 
Superior Court in this case.  Facing the uncertainty posed by Hana Ranch, the 
Superior Court purported to base its recommendation on the Internal Affairs Claim 
Provision, but in a case that did not involve any claim against Hazout involving a 
breach of a duty he owed to Silver Dragon or its stockholders as a fiduciary.  
Rather, the Superior Court posited that Hazout‘s conduct, if as alleged, could 
constitute not only a tort against Tsang and the Investor Group, but also a fiduciary 
breach against Silver Dragon and its stockholders (if a suit of that kind were 
brought by Silver Dragon or one of its disinterested stockholders later).  To our 
minds, it is counterproductive to embrace Hana Ranch and then create an incentive 
to read the Internal Affairs Claim Provision overbroadly.  Rather, the historical 
view of the Court of Chancery that the Internal Affairs Claim Provision addressed 
only claims against nonresident fiduciaries of Delaware corporations for internal 
affairs claims involving an argument that they breached statutory or fiduciary 
                                                          
 
62 See Martinez, 86 A.3d at 1108–11 (affirming the Superior Court‘s dismissal of a foreign 
plaintiff‘s complaint based on the doctrine of forum non conveniens because the defendant 
corporation faced overwhelming hardship and inconvenience in having to defend a suit that 
involved complex and unsettled issues of foreign tort law where the plaintiff was not a Delaware 
resident and was not injured in Delaware, and the fact that the defendant corporation was 
incorporated in Delaware had no rational connection to the cause of action). 
31 
 
duties they owed to the corporation or its stockholders is the correct one dictated 
by the language of that provision.63  In this case, Hazout is not being sued for 
having breached any duty he owed to Silver Dragon or its stockholders.  He is 
being sued by Tsang for torts he allegedly committed against Tsang and the 
Investor Group in the course of negotiating on behalf of Silver Dragon and by 
using his powers at Silver Dragon to divert their funds to his affiliate. 
 
If there is jurisdiction over Hazout under § 3114, it is under the Necessary or 
Proper Party Provision.  Under the clear terms of that provision, Hazout is subject 
to service of process.  Although he is not a necessary party to the case against 
Silver Dragon because the Superior Court can proceed to a final determination of 
the action with Silver Dragon alone,64 Hazout is obviously a proper party because 
he has a tangible legal interest in the matter that is separate from Silver Dragon‘s 
interest, and because the claims against him arise out of the same facts and 
occurrences as the claims against Silver Dragon—alleged wrongs that Hazout 
                                                          
 
63 It has long been the case, of course, that once a nonresident director or officer is properly 
subject to personal jurisdiction in Delaware for a claim for breach of fiduciary duty under the 
Internal Affairs Claim Provision, the trial court may also subject that fiduciary to personal 
jurisdiction for claims that are ―sufficiently related‖ or ―[not] distantly related‖ to the breach of 
fiduciary duty claim.  See, e.g., In re USACafes, 600 A.2d at 54 (observing that the court could 
exercise personal jurisdiction over ―claims [that] arose from the same acts or transactions as 
[breach of fiduciary duty] claims between the same parties over which the court did have 
personal and subject matter jurisdiction,‖ including claims that are not ―distantly related to the 
alleged breach of fiduciary duty‖); N. Am. Catholic Educ. Programming Found., Inc. v. 
Gheewalla, 2006 WL 2588971, at *1 (Del. Ch. Sept. 1, 2006), aff’d, 930 A.2d 92 (Del. 2007) 
(explaining that a plaintiff may also succeed in obtaining jurisdiction over ―claims [that] are 
adequately alleged to be ‗sufficiently related‘ to a viable fiduciary duty claim‖). 
64 See supra note 56. 
32 
 
committed in his capacity as the company‘s President and CEO.65  Because that is 
so and because we decline to excise the Necessary or Proper Party Provision from 
the statute, § 3114 provides a proper statutory basis for the Superior Court to 
exercise personal jurisdiction over him. 
 
As we have indicated, that determination is not enough to affirm.  Rather, 
we must examine whether the exercise of personal jurisdiction over Hazout in this 
case is consistent with his constitutional expectations of due process.  As we have 
noted, in this case, that is not in our view a close question.  By becoming a director 
and officer of a Delaware corporation, Hazout purposefully availed himself of 
certain duties and protections under our law.66  More important, the claims against 
Hazout involve his actions in his official capacity of negotiating contracts that 
involved the change of control of a Delaware public corporation.  By their plain 
terms—which Hazout represented as final and which Hazout himself executed—
the Agreements reflected the parties‘ choice to use the law of Delaware as their 
common language of commerce, and their understanding that litigation over later 
                                                          
 
65 See supra note 57. 
66 See Sternberg v. O’Neil, 550 A.2d 1105, 1120 (Del. 1988) (citing Burger King, 471 U.S. at 
475–76)) (―[T]he minimum contacts which are necessary to establish jurisdiction must relate to 
some act by which the defendant has deliberately created continuing obligations between 
himself [] and the forum.  Consequently, his [] activities are shielded by the benefits and 
protection of the forum‘s laws and it is not unreasonable to require him [] to submit to the 
forum‘s jurisdiction.‖); Armstrong, 423 A.2d at 176 (―[T]he defendants, by purposefully availing 
themselves of the privilege of becoming directors of a Delaware corporation, have thereby 
accepted significant benefits and protections under the laws of this State.‖).   
33 
 
contractual differences could ensue in Delaware.67  As to the claims in this case, 
therefore, there is a strong argument that all sides to the matter understood that as 
to the course of their respective actions relevant to this case, the jurisdiction that 
was their focus was the home of the fried oyster sandwich, and not the home of 
poutine or dim sum.  That Tsang happened to be in Hong Kong and Hazout in 
Canada was a matter of geography having little bearing on what was a cross-border 
transaction involving a change of control of a Delaware corporation and involving 
the negotiations of agreements using the language of Delaware.68  For these 
                                                          
 
67 Burger King, 471 U.S. at 482 (observing that ―[a]lthough [a choice-of-law] provision standing 
alone would be insufficient to confer jurisdiction,‖ when combined with other meaningful 
contacts, ―it reinforce[s] deliberate affiliation with the forum State and the reasonable 
foreseeability of possible litigation there‖); World-Wide Volkswagen, 444 U.S. at 297 (―[T]he 
foreseeability that is critical to due process analysis is . . . that the defendant‘s conduct and 
connection with the forum State are such that he should reasonably anticipate being haled into 
court there.‖) (internal citations omitted); Canadian Commercial Workers Indus. Pension Plan v. 
Alden, 2006 WL 456786, at *12 (Del. Ch. Feb. 22, 2006) (―‗The touchstone of this minimum 
contacts analysis is foreseeability—whether the defendant‘s conduct and connection with the 
forum State are such that he should reasonably anticipate being haled into court there.‘‖) 
(internal citation omitted). 
68 In this regard, Hazout assumes with confidence that the tort claims at issue in this case are 
necessarily governed by either the law of Canada or the law of Hong Kong.  We do not believe 
that the Superior Court has ruled on that issue nor do we believe that Tsang has conceded that 
argument.  Under our law, the Superior Court will be bound to apply the most significant 
relationship test of the Restatement (Second) of Conflict of Laws.  Given the realities of the 
subject matter of the parties‘ discussions over the Change of Control Agreements and their 
choice of Delaware law as their common language of commerce, there is a non-trivial argument 
that Delaware has a greater interest in the application of its law to this case than either Canada or 
Hong Kong.  See RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 6(2)(c) (1971) (providing 
that ―the relevant policies of other interested states and the relative interests of those states in the 
determination of the particular issue‖ are relevant to the choice-of-law analysis); id. § 145(1) 
(providing that certain contacts such as ―(a) the place where the injury occurred, (b) the place 
where the conduct causing the injury occurred, (c) the domicil, residence, nationality, place of 
incorporation and place of business of the parties, and (d) the place where the relationship, if 
any, between the parties is centered . . . are to be evaluated according to their relative importance 
with respect to the particular issue.‖); id. § 6(2) cmt. f (―The forum should [] appraise the relative 
34 
 
reasons, Hazout cannot fairly say he did not foresee that he would be subject to 
litigation in Delaware over his conduct in connection with negotiating the Change 
of Control Agreements.  Accordingly, requiring Hazout to defend Tsang‘s lawsuit 
in this state does not ―offend traditional notions of fair play and substantial 
justice.‖69   
IV. 
CONCLUSION 
 
Therefore, because § 3114 provides a statutory basis for personal jurisdiction 
over Hazout in Delaware, and because exercising that jurisdiction is consistent 
with Hazout‘s constitutional rights, we affirm the Superior Court‘s denial of 
Hazout‘s motion to dismiss.  
                                                                                                                                                                                           
interests of the states involved in the determination of the particular issue.‖); § 145 cmt. f (noting 
that ―the place of injury is less significant in the case of fraudulent misrepresentations‖); ABRY 
Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1049–50 (Del. Ch. 2006) (noting the 
diminished importance of a sophisticated buyer‘s physical location in determining choice of law 
as to a claim of intentional misrepresentations made by the seller in a negotiated agreement 
between the parties, ―particularly when those relationships involve interstate commerce and do 
not center in any material manner on the geography of any particular party‘s operational 
headquarters‖); see also id. at 1048 (―Parties operating in interstate and international commerce 
seek, by a choice of law provision, certainty as to the rules that govern their relationship.  To 
hold that their choice is only effective as to the determination of contract claims, but not as to 
tort claims seeking to rescind the contract on grounds of misrepresentation, would create 
uncertainty of precisely the kind that the parties‘ choice of law provision sought to avoid. . . .  To 
layer the tort law of one state on the contract law of another state compounds that complexity 
and makes the outcome of disputes less predictable, the type of eventuality that a sound 
commercial law should not seek to promote.‖).  But that matter is not before us, and is one to be 
determined in the first instance by the Superior Court upon briefing by the parties. 
69 Int’l Shoe, 325 U.S. at 316 (citing Milliken v. Meyer, 311 U.S. 457, 463 (1940)).