Court Opinion

ID: 4374584
Source: CourtListenerOpinion
Date Created: 2019-03-06 23:02:23.881722+00
Date Added: 2024-06-11T14:22:19.739114
License: Public Domain

COURT OF CHANCERY
                                   OF THE
                             STATE OF DELAWARE

                                                                     417 S. State Street
JOSEPH R. SLIGHTS III                                              Dover, Delaware 19901
 VICE CHANCELLOR                                                 Telephone: (302) 739-4397
                                                                 Facsimile: (302) 739-6179

                         Date Submitted: February 15, 2019
                           Date Decided: March 6, 2019

William R. Firth, III, Esquire                 Michael L. Vild, Esquire
CKR LAW, LLP                                   Cross & Simon, LLC
1000 N. West Street                            1105 North Market Street
Suite 1200                                     Suite 901
Wilmington, DE 19801                           Wilmington, DE 19801

       Re:    Tratado de Libre Commercio, LLC v. Splitcast Technology, LLC
              C.A. No. 2019-0014-JRS

Dear Counsel:

       I have reviewed Plaintiffs/Petitioners’ (“Plaintiffs”) Motion to Perfect Service

and Defendants/Respondents’ (“Defendants”) separate correspondence on service.

After reviewing these submissions, I am satisfied that Plaintiffs have not yet

perfected service of process on the dissolved entity, Splitcast Technology LLC

(“Splitcast”). Plaintiffs may, however, perfect service upon Splitcast by publication

and certified mail as explained below. Upon perfection of service, I will consider
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March 6, 2019
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an application to appoint a trustee for Splitcast for the purpose of defending this

action.

         In their Complaint, Plaintiffs seek to: (a) nullify the certificate of cancellation

of Splitcast, a Delaware limited liability company that allegedly caused damages to

Plaintiffs; (b) return assets to Splitcast so that the assets can be used to satisfy

Plaintiffs’ claim against Splitcast; and (c) appoint either Hugo Neira, Felipe

Arredondo or another member of Splitcast as a trustee for Splitcast for the purpose

of defending Plaintiffs’ claims against it, including, as necessary or proper, broad

power to “do all other acts which might be done by the [LLC], if in being, that may

be necessary for the final settlement of unfinished business of the [LLC].”1

         According to Defendants, Splitcast was properly dissolved in October 2015

and cannot, therefore, be served with process through traditional means available for

service upon a viable legal entity. I agree. The entity no longer has a registered

agent or active senior officers upon whom personal service could be perfected.

Nevertheless, for reasons explained below, I am satisfied that service may be

1
    Compl. ¶ 1.
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perfected upon Splitcast by publication and certified mail under Court of Chancery

Rule 4(d)(7).

       This court previously has determined that service of process can be made upon

a defunct corporation under Chancery Rule 4(d)(7) and 8 Del. C. § 279

(“Section 279”).2     While decided in the context of efforts to serve a corporation,

Krafft is persuasive authority in the alternative entity context given the lack of on-

point authority in that space.3 Having reviewed 6 Del. C. § 18-805 (“Section 18-

805”), I am satisfied that, like Section 279, Section 18-805 authorizes service to be

made on a dissolved limited liability company. The question is how to perfect such

service. In this case, Plaintiffs have sent notice of the suit by regular mail to counsel

2
  In re Krafft-Murphy Co., Inc., 2011 WL 5420808, at *3–4 (Del. Ch. Nov. 9, 2011).
See Ct. Ch. R. 4(d)(7) (“An order directing another or an additional mode of service of a
summons in a special case may be made by the Court.”); 8 Del. C. § 279 (“When any
corporation organized under this chapter shall be dissolved in any manner whatever, the
Court of Chancery, on application of any . . . person who shows good cause therefor, at
any time, may appoint 1 or more of the directors of the corporation to be trustees . . . with
power to prosecute and defend, in the name of the corporation . . . all such suits as may be
necessary or proper for the purposes aforesaid.”).
3
  Matthew v. Laudamiel, 2012 WL 605589, at *21–22 (Del. Ch. Nov. 1, 2011) (“Since the
wording and context of these two statutory provisions are essentially identical, authorities
interpreting § 279 are persuasive when interpreting § 18-805.”).
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March 6, 2019
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for the former members of Splitcast. In my view, more is required to perfect service

of process on the dissolved entity.4

          In Krafft, the Court found that Chancery Rule 4(d)(7) and Section 279

authorize the Court to fashion a method to perfect service on a dissolved corporation

that was a necessary party to litigation even though the three-year statutory winding

up period had expired.5 The court ordered that, to perfect service, the petitioners

were required to publish notice in newspapers published in Delaware and Virginia

(the residence of the dissolved entity’s former senior officers) and provide additional

written notice to an attorney associated with the respondent corporation.6 A similar

approach is justified here.

4
  In re Krafft-Murphy Co., Inc., 2011 WL 5420808, at *3 (“Although [counsel] admittedly
is authorized to accept service on behalf of the Company for tort claims . . . Respondent
denies ever having made him a general agent for service of process on it or authorizing him
to accept service in this action, which does not involve a tort claim”).
5
    Id.
6
  Id. at *3–4, 10–12; see also Mathias v. Angola Neck Park Property Owners Assoc., Inc.,
2014 WL 6478844, at *2 (Del. Ch. Nov. 20, 2014) (holding that service of process may be
perfected on a dissolved corporation by publishing notice of the complaint and petition in
a Delaware newspaper for three consecutive weeks and by mailing notice to each property
owner previously associated with the dissolved entity as well as the Sussex County
Council).
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         As noted, Plaintiffs seek an order nullifying the certificate of cancellation of

Splitcast and an order directing that the members return assets to the entity so that it

can satisfy obligations allegedly owed to Plaintiffs. Given these claims, Splitcast is

a necessary party to this litigation. The entity is fully dissolved and well past its

winding up period. Accordingly, it is necessary for the Court to invoke its broad

authority under Rule 4(d)(7) to “direct another or additional . . . mode of service” to

accommodate this “special case.”7 With this in mind, service of process upon

Splitcast shall be effected as follows: (1) Plaintiffs shall publish notice of this action

in a widely-circulated Delaware newspaper daily for two consecutive weeks8;

(2) Plaintiffs shall mail copies of the summons, verified complaint/petition and this

letter by certified mail to both Defendants/Respondents Hugo Neira and Felipe

Arredondo, as former senior officers of Splitcast, at their last known addresses,

including Chilean addresses, and separately to their counsel9; and (3) Plaintiffs’

7
    Ct. Ch. R. 4(d)(7).
8
  Pursuant to Chancery Rule 4(d)(7), the first condition is fashioned after 10 Del. C.
§ 3111(b).
9
 Pursuant to Chancery Rule 4(d)(7), the second condition is fashioned after Chancery
Rule 4(da) Service by Publication, which pertains to compelling appearance pursuant to
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counsel shall file an affidavit of compliance with the Court outlining the steps taken

to comply with the Court’s directions and attaching the service documents as

exhibits.

         As for the timing of Plaintiffs’ petition to appoint a trustee, Section 18-805

provides that on application of any creditor, member, or any other person showing

good cause “at any time,” the Court of Chancery may appoint a trustee if it is

necessary to settle the canceled limited liability company’s unfinished business.10

I agree with Plaintiffs that, contrary to Defendants’ position, the fact Splitcast has

been dissolved for more than three years does not change the application of

Section 18-805. “Any time” means just that; the application may be filed at any

time. Moreover, even if I was inclined to be guided by a statutory winding-up

window when assessing the timeliness of a petition to appoint a trustee, I note that

the Delaware Limited Liability Company Act does not contain a three-year wind up

10 Del. C. § 365, but offers guidance on service by certified mail to a defendant’s address
outside Delaware.
10
     6 Del. C. § 18-805.
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March 6, 2019
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provision comparable to 8 Del. C. § 278.11 Thus, I see no basis to apply that temporal

limitation here, particularly in this procedural context.

           Notwithstanding that parties with good cause may petition the Court to

appoint a trustee at any time, the petition may not be considered by the Court until

service has been perfected upon the dissolved entity. 12 Plaintiffs must also be

mindful of Chancery Rule 150, which prohibits a nonresident from serving as the

“sole receiver”13 for a corporation, association, or partnership.14 Consistent with

Rule 150, if Plaintiffs’ proposed trustee is a nonresident of Delaware, Plaintiffs shall

propose a member of the Delaware bar to serve as co-trustee with the proposed

11
     Id.
12
  Mathias, 2014 WL 6478844, at *1–2 (explaining that plaintiffs were entitled to petition
the Court to appoint a receiver, but that perfection of service on the defunct corporation
was a separate procedural requirement, which could only be satisfied by publication and
mail, not through service upon a proposed receiver).
13
  Ct. Ch. R. 150 (“No person shall be appointed sole receiver who does not at the time of
appointment reside in the State of Delaware”).
14
  Ct. Ch. R. 148 (“Rules 149 to 168 shall apply to all cases in which receivers are appointed
for any person, partnership, association or corporation, existing or dissolved, and in all
cases in which trustees are appointed for a dissolved corporation, whether such
receivers or trustees are appointed pursuant to a statute of the State of Delaware or pursuant
to the inherent authority of the Court”) (emphasis supplied).
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March 6, 2019
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nonresident. Alternatively, Plaintiffs should explain to the Court why Rule 150

should be waived in this circumstance.15 Plaintiffs shall amend their Petition for

Appointment of Trustee pursuant to Section 18-805 to reflect the constraints of

Rule 150 and identify specifically the proposed trustee(s). The Court is not inclined

to select which of the former Splitcast managing members should be appointed as

trustee.

       Based on the foregoing, Plaintiffs’ Motion to Perfect Service is DENIED.

Plaintiffs shall follow the directions set forth herein to perfect service upon the

dissolve entity.

       IT IS SO ORDERED.

                                        Very truly yours,

                                        /s/ Joseph R. Slights III

15
  See, e.g., Recker v. Ou, 2014 WL 2042431, at *1 (Del. Ch. May 16, 2014) (holding that
Chancery Court Rule 150 required plaintiff to propose a member of the Delaware bar to
serve as co-receiver with the proposed nonresident receiver or to persuade the Court to
waive Rule 150).