Free Reply Brief - District Court of Delaware - Delaware

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 1 of 34

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ROBERT D. CHRIST, Plaintiff, v. BRETT J. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC, ELAN SUISSE (PTY) LTD., NICOGEL LTD., JOHN WALTERS, DIANNE MARSHALL and MERCARI FINANCIAL SERVICES (PTY) LTD., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 06-275-GMS

DEFENDANTS' REPLY BRIEF IN SUPPORT OF THEIR MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND FAILURE TO STATE A CLAIM, OR, IN THE ALTERNATIVE, TO STAY PENDING RESOLUTION OF A PRIOR-FILED ACTION IN SOUTH AFRICA, AND FOR SANCTIONS

David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766 Attorney for defendants Brett J. Cormick, Elan Suisse International Holdings (USA) LLC, Elan Suisse (Pty) Ltd., Nicogel Ltd., John Walters, Dianne Marshall and Mercari Financial Services (Pty) Ltd.

Dated: April 10, 2007

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 2 of 34

TABLE OF CONTENTS

ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. THERE IS NO BASIS TO ASSERT PERSONAL JURISDICTION OVER DR. CORMICK, ELAN SUISSE, NICOGEL, DR. WALTERS, DR.. MARSHALL OR MERCARI FINANCIAL SERVICES (PTY) LTD.. . . . . . . . . . . . . . . . . . . . . . . . 1 A. DR. CORMICK IS NOT SUBJECT TO JURISDICTION PURSUANT TO 6 DEL. C. §18-109(a) OF THE DELAWARE LIMITED LIABILITY COMPANY ACT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 DR. CORMICK IS NOT SUBJECT TO JURISDICTION PURSUANT TO 10 DEL. C. §3104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 THERE IS NO BASIS FOR JURISDICTION OVER THE REMAINING DEFENDANTS UNDER A CONSPIRACY THEORY. . . . . . . . . . . . . . 10 THE COURT SHOULD NOT PERMIT JURISDICTIONAL DISCOVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B.

C.

D.

II. III.

THE COMPLAINT FAILS TO STATE A CLAIM FOR CONSPIRACY. . . . . . 19 THE FRAUD AND CONSPIRACY CLAIMS ARE BARRED BY THE STATUTE OF LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 THE COURT SHOULD STAY THIS ACTION PENDING RESOLUTION OF PRIOR-FILED PARALLEL LITIGATION INSTIGATED BY MR. CHRIST IN SOUTH AFRICA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 THE COURT SHOULD SANCTION MR. CHRIST FOR HIS UNJUSTIFIED ACTIONS DESIGNED TO HARASS AND INCREASE EXPENSE. . . . . . . . . 26

IV.

VI.

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

i

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 3 of 34

TABLE OF AUTHORITIES Cases Aeroglobal Capital Mgmt., LLC v. Cirrus Industries, Inc., 871 A.2d 428 (Del. 2005).7 Albert v. Alex. Brown Mgmt. Services, C.A. No. 762-N & 763-N, 2005 WL 2130607, Lamb, V.C. (Del. Ch. Aug. 26, 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 15 Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F.Supp. 1458 (D. Del. 1991).. . . 6, 10 Arnold v. Soc'y for Sav. Bancorp, Inc., C.A. No. 12883, 1003 WL 526781, Chandler, V.C. (Del. Ch. Dec. 17, 1993), aff'd in part, rev'd in part, 650 A.2d 1270 (Del. 1994). . 8 Assist Stock Management L.L.C. v. Rosheim, 753 A.2d 974 (Del. Ch. 2000). . . . . . . . 2 Cairns v. Gelmon, C.A. No. 16062, 1998 WL 276226, Jacobs, V.C. (Del. Ch. May 21, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Chandler v. Ciccorocco, C.A. No. 19842-NC, 2003 WL 21040185, Strine, V.C. (Del. Ch. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Clark v. Tabin, 400 F.Supp.2d 1290 (N.D. Okla. 2005). . . . . . . . . . . . . . . . . . . . . . . . . 11 Commw. of Pa. ex rel. Zimmerman v. Pepsico, Inc., 836 F.3d 173, 181(3rd Cir. 1988) 3 Computer People, Inc. v. Best International Group, Inc., C.A. No. 16648, 1999 WL 288119, Jacobs, V.C. (April 27, 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11 Cornerstone Technologies, LLC v. Conrad, C.A. No. 19712-NC, 2003 WL 1787959, Strine, V.C. (Del. Ch. Mar. 31, 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Crescent/Mach I Partners, L.P. v. Turner, 846 A.2d 963 (Del. Ch. 2000).. . . . . . . . . 10 Goudis v. American Currency Trading Corp., 233 F.Supp.2d 330 (D. Conn. 2002).. . 4 Haft v. Dart Group, Inc., C.A. No. 14685, 1996 WL 255899, WL Op. at *203, Steele, V.C. (Del. Ch. April 26, 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Harris v. Carter, 582 A.2d 222 (1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Hercules, Inc. v. Leu Bank & Trust (Bahamas) Ltd., 611 A.2d 476 (Del. 1992), cert. dismissed, 507 U.S. 1025 (1993).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ii

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 4 of 34

Hirshman v. Vendamerica, Inc., C.A. No. 90C-AP-40-1CV, 1992 WL 52141, Toliver, J. (Del. Super. Mar. 9, 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 HMG/Courtland Props., Inc. v. Gray, 729 A.2d 300 (Del. Ch.1999). . . . . . . . . . . . . . 16 Instituto Bancario Italiano SpA v. Hunter Engineering Company, Inc., 449 A.2d 210 (Del. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 15 Iotex Communications, Inc. v. Defries, C.A. No. 15817, 1998 WL 914265, Lamb, V.C. (Del. Ch. Dec. 21, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 14 Joint Stock Soc. v. Heublein, Inc., 936 F.Supp. 177 (D. Del. 1996). . . . . . . . . . . . . . . . 9 Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020 (D.C. Cir.1997). 11 Kalmanovitz v. G. Heilman Brewing Co., Inc., 595 F.Supp. 1385 (D. Del. 1984). . . . 11 Kohler Co. v. Kohler Intern., Ltd., 196 F.Supp.2d 690 (N.D. Ill. 2002). . . . . . . . . . . . 11 Marketing Products Management, LLC v. Healthandbeautydirect.com, Inc., C.A. No. 02C-04-256 CLS, 2004 WL 249581, Scott, J. (Del. Super. Jan. 28, 2004).. . . . . . . . . . . 10 Palmer v. Moffat, C.A. No. 01C-03-113-JEB, 2001 WL 1221749, Babiarz, J. (Del. Super. Oct. 10, 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 RJ Associates v. Health Payors Org. L.P., C.A. No. 16873, 1999 WL 550550, Jacobs., V.C. (Del. Ch. May 21, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Rose v. Bartle, 871 F.2d 331 (3rd Cir. 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Sears, Roebuck & Co. v. Sears, plc, 744 F.Supp. 1289 (D. Del. 1990). . . . . . . . . . . . . 10 Shamrock Holdings of California, Inc. v. Arenson, 421 F.Supp.2d 800 (D. Del. 2006).7 Szabo v. CGU Intern. Ins. Co., 199 F.Supp.2d 715 (S.D. Ohio 2002). . . . . . . . . . . . . . 24 Toys `R' Us, Inc .v. Step Two, S.A., 318 F.3d 446 (3rd Cir. 2003). . . . . . . . . . . . . 16, 18 United Phosphorus Ltd. v. Angus Chemical Co., 43 F.Supp.2d 904 (N.D. Ill. 1999). 16 Werner v. Miller Technology Management, L.P., 831 A.2d 318 (Del. Ch. 2003). . 8, 11

iii

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 5 of 34

Other authorities 10 Del. C. §3114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 10 Del. C. §3104(c)(1).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 16 10 Del. C. §3104(c)(3).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 16 6 Del. C. §18-109(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 3 Fed. R. Civ. P. 9(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 6, 22

iv

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 6 of 34

ARGUMENT I. THERE IS NO BASIS TO ASSERT PERSONAL JURISDICTION OVER THE DEFENDANTS. A. DR. CORMICK IS NOT SUBJECT TO JURISDICTION PURSUANT TO 6 DEL. C. §18-109(a) OF THE DELAWARE LIMITED LIABILITY COMPANY ACT.

In the opening brief at pp. 7-10, Dr. Cormick demonstrated that 6 Del. C. §18-109(a) may not be used to establish personal jurisdiction over him, even though he is a manager of Elan Suisse USA, a Delaware limited liability company, because: · As the alleged misrepresentations which allegedly induced Mr. Christ to pay

money to Dr. Cormick occurred prior to the formation of Elan Suisse USA, Dr. Cormick's actions cannot be said to have been "involving or relating to the business of the limited liability company." See Instituto Bancario Italiano SpA v. Hunter Engineering

Company, Inc., 449 A.2d 210, 227-28 (Del. 1982) (director consent statute could not be invoked to assert jurisdiction where alleged wrongdoing occurred prior to individual assuming directorship); · The act of selling an equity interest in Elan Suisse USA does not implicate

managerial duties such as would trigger Section 18-109(a), as it is more akin to the acts of a promoter. See Harris v. Carter, 582 A.2d 222, 232 (1990) ("[m]erely selling shares of stock in a company on whose board one sits is not a directorial act within the meaning of the [corporate director consent] statute"); and · Under Assist Stock Management L.L.C. v. Rosheim, 753 A.2d 974, 980

(Del. Ch. 2000), the claims in this action do not properly invoke Section 18-109(a) because

1

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 7 of 34

(i) the claims do not involve or relate to any Delaware statutory or common law duties of managers of Delaware entities (or any duties under any LLC operating agreement), (ii) the claims do not arise from the operation of Elan Suisse USA, (iii) Delaware law does not apply to the claims, and (iv) Delaware has no interest in claims which involve events occurring out of state, causing no injury in Delaware or to a Delaware entity or resident, do not involve issues of Delaware law and are solely between non-residents. Mr. Christ begins by arguing that analogy to 10 Del. C. §3114, the director consent statute, is inapt because Section 18-109(a) is more broadly drafted. (CAB 13-141). However, in Palmer v. Moffat, C.A. No. 01C-03-113-JEB, 2001 WL 1221749, WL Op. at *3, Babiarz, J. (Del. Super. Oct. 10, 2001), the Superior Court held that "the same principle that governs jurisdiction over corporate directors under 10 Del. C. § 3114 applies to 6 Del. C. 18-109: it is the `rights, duties and obligations which have to do with service as a director of a Delaware corporation which make a director subject to personal service in Delaware.'" Thus, the analogy remains apt. Mr. Christ attempts to distinguish Moffatt by suggesting that the Court did not address the scope of Section 18-109 or limit it to breaches of fiduciary duty. (CAB 14 n.5). This misses the point. As Mr. Christ concedes, Section 18-109(a) must still satisfy due process. Due process is satisfied under Section 3114 only to the extent that the claim arises from the duties imposed by law on those who voluntarily assume duties as directors of Delaware corporations. Assertion of personal jurisdiction over a non-resident director for
1

Mr. Christ's answering brief is cited to herein as "CAB ___." Dr. Cormick's opening brief is cited to herein as "COB ___." 2

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 8 of 34

any claim unrelated to those duties violates due process. See, e.g., Haft v. Dart Group, Inc., C.A. No. 14685, 1996 WL 255899, WL Op. at *203, Steele, V.C. (Del. Ch. April 26, 1996); Hirshman v. Vendamerica, Inc., C.A. No. 90C-AP-40-1CV, 1992 WL 52141, WL Op. at *3, Toliver, J. (Del. Super. Mar. 9, 1992). Applying these principles to the limited liability company context, the Delaware Legislature cannot extend the scope of constitutional due process simply by adding statutory language. Therefore, for the Court to assert jurisdiction properly under Section 18-109(a) and under principles of due process, the claims must arise from or relate to Dr. Cormick's violation of any duties he owes as a manager2 of Elan Suisse USA under Delaware statutory or common law, or under the LLC operating agreement. It does not, and Mr. Christ has not identified any such applicable duties. Mr. Christ argues that Elan Suisse USA was "formed by Cormick for the sole purpose of inducing plaintiff to transfer $250,000 to Cormick in exchange for the illusory prospect of owning equity shares of Elan Suisse USA." (CAB 15). Even if this had been pleaded in the Complaint (which it was not3), it misses the point and mis-states the facts. The alleged misrepresentations occurred in January and February, 2004, and so preceded formation of the LLC on March 15, 2004. (Am. Compl. ¶¶17-19). So how can the LLC have been formed
2

Mr. Christ states that an operating agreement for the LLC has never been filed with the Delaware Secretary of State. (CAB 14 n.6). This statement is odd, since there is no law requiring such filing, and it is not the practice to publicly file such documents.
3

Mr. Christ may not rely on allegations made in a brief to compensate for deficiencies in his Amended Complaint (particular since he recently amended his complaint with knowledge of the arguments defendants made in the original briefing). See Commw. of Pa. ex rel. Zimmerman v. Pepsico, Inc., 836 F.3d 173, 181(3rd Cir. 1988). 3

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 9 of 34

to induce the payment if the payment occurred before the LLC was formed? In any event, until an LLC is formed, there is no manager. Only after formation is completed did Dr. Cormick assume the mantle of manager, and the statute can be invoked only for conduct occurring thereafter relating to his duties as manager. Instituto Bancario Italiano, SpA, 449 A.2d at 227-28. Mr. Christ attempts to get around this by arguing that, even if the alleged misrepresentations occurred prior to the formation of Elan Suisse USA, he made the second payment after its formation, and Dr. Cormick supposedly continued to make alleged misrepresentations after the formation of the LLC. (CAB 15 n.7). The Complaint, which Mr. Christ amended with full knowledge of these arguments, does not allege any postformation misrepresentations, nor does it allege that Mr. Christ relied on any post-formation representations, nor does it allege that Mr. Christ suffered any injury as a result of any alleged post-formation fraud, as required under Fed. R. Civ. P. 9(b). As such, Mr. Christ's claim is limited to the pre-formation statements alleged, and he may not rely on unpleaded or inadequately pleaded post-formation fraud claims as a predicate for the assertion of personal jurisdiction under Section 18-109(a). See Goudis v. American Currency Trading Corp., 233 F.Supp.2d 330, 333 (D. Conn. 2002) ("claims of tortious conduct must be properly pled to serve as a basis for jurisdiction..."). Mr. Christ then tortures logic by claiming (again without the benefit of pleaded facts) that his being defrauded was pursuant to the "business" of the LLC, because "the only `business' of Elan Suisse USA was to provide Cormick with a straw man through which he could defraud plaintiff." (CAB 15). Again, the LLC was formed after the alleged fraud, and 4

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 10 of 34

the funds went directly to Dr. Cormick, not to Elan Suisse. So how exactly did Elan Suisse USA defraud Mr. Christ? Finally, Mr. Christ argues that Dr. Cormick used Elan Suisse USA as "the entity through which he perpetrated his fraudulent scheme...." (CAB 16).4 Like an ostrich with its head in the sand, Mr. Christ continues to ignore his own pleaded facts. At the time of the alleged representations, Elan Suisse USA did not exist. Moreover, Mr. Christ made payment directly to Dr. Cormick personally, and not to Elan Suisse USA. (Am. Compl. ¶19). As such, the action arises from a proposed business transaction outside of Delaware between two individuals outside of Delaware, which transaction was done prior to the formation of a Delaware entity, and not relating to the duties or obligations of the manager of an LLC or the business of that LLC, or the involvement or application of Delaware law. The assertion of personal jurisdiction under these circumstances violates due process.5

4

Mr. Christ takes a cheap shot at Dr. Cormick, claiming (falsely, and without the benefit of any supporting facts) that Dr. Cormick has defrauded other people with other investment vehicles chartered in other countries. (CAB 16). Such reckless and gratuitous statements have no place in a brief submitted by a Delaware lawyer, and should not be countenanced by the Court.
5

Mr. Christ's citation to Cornerstone Technologies, LLC v. Conrad, C.A. No. 19712-NC, 2003 WL 1787959, Strine, V.C. (Del. Ch. Mar. 31, 2003), is inapt, because in that case the cause of action arose from post-formation actions that the defendant took in connection with his running of the business of the LLC which created confusion about the parties' respective ownership interests. WL Op. at *12. In the present action, by contrast, Mr. Christ does not claim that he ever had any ownership in Elan Suisse USA. To the contrary, he alleges that he never received any equity interest in Elan Suisse USA due to alleged fraud and breach of contract that occurred prior to the formation of Elan Suisse USA. Further, the present action does not involve the management or operation of the business of the LLC. 5

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 11 of 34

B.

DR. CORMICK IS NOT SUBJECT TO JURISDICTION PURSUANT TO 10 DEL. C. §3104.

Mr. Christ argues, in the alternative, that Dr. Cormick is subject to jurisdiction pursuant to 10 Del. C. §§3104(c)(1) and 3104(c)(3), because, by forming an LLC in Delaware, he transacted business in Delaware and/or committed a tortious act in Delaware. Section 3104(c)(1) permits the exercise of jurisdiction over a non-resident who "[t]ransacts any business" in Delaware. Section 3104(c)(1) is a "specific jurisdiction" statute, meaning that the cause of action must arise from the transaction of business that forms the basis for the exercise of jurisdiction. Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F.Supp. 1458, 1466 (D. Del. 1991). Thus, the question becomes whether the claims for fraud and breach of contract arose from the act of filing of a certificate of formation in Delaware. Obviously, they did not. Initially, defendants reiterate that the claimed misrepresentations are alleged to have been made prior to the formation of Elan Suisse USA. A cause of action cannot arise from the transaction of business in the forum state occurring after the events giving rise to the cause of action occurred.6 Apart from that, the claims did not "arise from" the formation of Elan Suisse USA. The act of forming Elan Suisse USA did not constitute or cause a fraudulent act. Similarly,

6

Although Mr. Christ insinuates that "Mr. Cormick's misrepresentations and fraudulent activities continued well into the Summer of 2004" (Christ Aff. ¶7), he fails to provide specificity, including identifying the substance of the alleged misrepresentations, the date(s) of such statements, the claimed reliance and any additional damage caused thereby, as required by Federal Rule of Civil Procedure 9(b). As such, any reliance on alleged fraudulent statements made after Mr. Christ sent his money may not be considered. 6

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 12 of 34

the act of forming Elan Suisse USA did not constitute a breach of any agreement with Mr. Christ. Moreover, Mr. Christ does not allege that he was defrauded or misled by the act of filing a certificate of formation in Delaware.7 He does not allege that he relied on the filing of the certificate of formation in sending his money to Dr. Cormick. He does not allege that filing a certificate of formation in Delaware was a material term of the parties' agreement. Nor is there any allegation or evidence that the formation of Elan Suisse USA caused any injury to Mr. Christ or that it was necessary to cause any alleged injury to Mr. Christ. The cases cited by Mr. Christ are inapposite as they involve circumstances where either the cause of action arose from the affirmative post-formation conduct of the corporation or it related to the internal affairs and management of the corporation, and all arose under Delaware law. For example, in Shamrock Holdings of California, Inc. v. Arenson, 421 F.Supp.2d 800 (D. Del. 2006), although not clearly indicated in the opinion, the causes of action related to alleged breaches of fiduciary duty and breaches of an Operating Agreement. See C.A. No. 1:04-cv-01339-SLR, D.I. 37, appended hereto as Exhibit A). Alleged breaches of fiduciary duty and an operating agreement clearly go to the management and operation of an entity. Such allegations are not present here. Aeroglobal Capital Mgmt., LLC v. Cirrus Industries, Inc., 871 A.2d 428 (Del. 2005), did not involve the mere formation of a Delaware entity. Rather, the Court held that

7

Mr. Christ identifies the alleged misrepresentations which form the basis of his claim at paragraph 30 of his Amended Complaint. There is no reference to Elan Suisse USA. Indeed, he did not supplement the allegations in filing his Amended Complaint, thereby implicitly conceding that he has no basis to claim that he was defrauded or misled by the act of forming a Delaware LLC. 7

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 13 of 34

ownership of an entity, plus use of that entity to engage in stock transactions, including transactions in Delaware, implicating Delaware law, justified jurisdiction in Delaware. By contrast here, there is neither allegation nor evidence that Elan Suisse USA transacted any business, much less business in Delaware, giving rise to a cause of action. In Arnold v. Soc'y for Sav. Bancorp, Inc., C.A. No. 12883, 1993 WL 526781, WL Op. at *3-4, Chandler, V.C. (Del. Ch. Dec. 17, 1993), aff'd in part, rev'd in part, 650 A.2d 1270 (Del. 1994), the defendant did not merely incorporate in Delaware, but did so to facilitate a merger under Delaware law, which merger was challenged as wrongful. In Albert v. Alex. Brown Mgmt. Services, C.A. No. 762-N & 763-N, 2005 WL 2130607, Lamb, V.C. (Del. Ch. Aug. 26, 2005), and RJ Associates v. Health Payors Org. L.P., C.A. No. 16873, 1999 WL 550350, Jacobs., V.C. (Del. Ch. May 21, 1998), the defendants actively managed the Delaware entity on a day-to-day basis, and utilized the entity and their positions as managers to injure the plaintiffs. There is no such claim here. Finally, in Cairns v. Gelmon, C.A. No. 16062, 1998 WL 276226, Jacobs, V.C. (Del. Ch. May 21, 1998), the defendants did not merely incorporate in Delaware, but then used that corporation to engage in a licensing transaction with a third party which injured the plaintiffs. By contrast here, the challenged transaction occurred before the LLC was formed, and the LLC, after formation, did not engage in any activity whatsoever. By contrast, where, as here, there is only a claim of formation of a Delaware entity, without any allegations that the Delaware entity undertook any action, or in any way caused injury to the plaintiff, and Delaware law is not involved, the claim is insufficient to establish jurisdiction under Section 3104(c)(1). See Werner v. Miller Technology Management, 8

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 14 of 34

L.P., 831 A.2d 318, 329 (Del. Ch. 2003) (formation of partnership insufficient, distinguishing RJ Associates). There are no allegations in the Complaint that Dr. Cormick utilized Elan Suisse USA in any way or caused Elan Suisse USA to engage in any transactions to the detriment of Mr. Christ. Elan Suisse USA did not make the alleged misrepresentations. Elan Suisse USA was not a party to any contract allegedly breached. There is no allegation that Elan Suisse USA received Mr. Christ's money. There are no facts establishing that the formation of Elan Suisse USA was essential to the alleged fraud or breach of contract, or that the formation of Elan Suisse USA facilitated other misconduct by Dr. Cormick. Indeed, it was not. Mr. Christ would still be able to allege the elements of his claims (notwithstanding their lack of merit) even if Elan Suisse USA had never been formed. In other words, the formation of Elan Suisse USA neither proves nor disproves any of Mr. Christ's claims. Contrary to Mr. Christ's conclusory argument, the formation of Elan Suisse USA was not "central" to his claim, but merely tangential at best. As such, it is not sufficiently related to the cause of action to permit invocation of Section 3104(c)(1) or to meet the requirements of due process. As for Section 3104(c)(3), there is no allegation that the formation of Elan Suisse USA caused any tortious injury in Delaware, as the statute requires. Thus, Mr. Christ may not rely on Section 3104(c)(3) as a basis for asserting personal jurisdiction over Dr. Cormick. Joint Stock Soc. v. Heublein, Inc., 936 F.Supp. 177, 194 (D. Del. 1996).8
8

Mr. Christ counters that this argument "fails to recognize this Court's express holdings in Applied Biosystems and Sears." (CAB 18 n.8). It is Mr. Christ, however, that has failed to recognize the holdings of those cases, which support Defendants' argument. In (continued...) 9

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 15 of 34

C.

THERE IS NO BASIS FOR JURISDICTION OVER THE REMAINING DEFENDANTS UNDER A CONSPIRACY THEORY.

In their opening brief at pages 10-13, the defendants established that Mr. Christ may not obtain jurisdiction over them pursuant to a conspiracy theory because: · The Complaint fails to allege specific facts establishing the existence of a

conspiracy as is required under Delaware law. Crescent/Mach I Partners, L.P. v. Turner, 846 A.2d 963, 976 (Del. Ch. 2000); Marketing Products Management, LLC v. Healthandbeautydirect.com, Inc., C.A. No. 02C-04-256 CLS, 2004 WL 249581, WL Op. at *2, Scott, J. (Del. Super. Jan. 28, 2004); Computer People, Inc. v. Best International Group, Inc., C.A. No. 16648, 1999 WL 288119, WL Op. at *6, Jacobs, V.C. (April 27, 1999); and · The act of forming a Delaware entity is insufficient as a predicate act in

Delaware to utilize the conspiracy theory of jurisdiction. Iotex Communications, Inc. v. Defries, C.A. No. 15817, 1998 WL 914265, WL Op. at *7, Lamb, V.C. (Del. Ch. Dec. 21, 1998); Marketing Products Management, LLC, WL Op. at *3. Mr. Christ begins by attempting to refute the first point, citing Hercules, Inc. v. Leu Bank & Trust (Bahamas) Ltd., 611 A.2d 476, 481 (Del. 1992), cert. dismissed, 507 U.S. 1025 (1993), for the proposition that "[p]laintiff is not required to establish the substantive

(...continued) Applied Biosystems, Inc., the Court expressly held that forming a Delaware corporation could not be considered a relevant jurisdictional contact under Section 3104(c)(3) because the situs of the injury was not Delaware, as the statute requires. 772 F.Supp. at 1469. Similarly, in Sears, Roebuck & Co. v. Sears, plc, 744 F.Supp. 1289, 1294-95 (D. Del. 1990), the Court dismissed the defendant for lack of personal jurisdiction because there was no evidence of any tortious injury in Delaware. 10

8

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 16 of 34

elements of a claim for civil conspiracy...." (CAB 21). However, the Hercules opinion contains no such rule. Instead, the Delaware Supreme Court merely noted that while the trial court did not expressly find the existence of a conspiracy, such a finding was implicit from the facts in the ruling. Since Hercules, Delaware courts have held that, to satisfy the constitutional requirement of minimum contacts, the conspiracy theory should be construed strictly, requiring factual proof of each element. Werner, 831 A.2d at 330. Conclusory allegations of conspiracy are inadequate. Computer People, Inc., WL Op. at *6. This is consistent with the Third Circuit rule requiring particularized pleading of the facts establishing the existence of a conspiracy, Rose v. Bartle, 871 F.2d 331, 366 (3rd Cir. 1989); Kalmanovitz v. G. Heilman Brewing Co., Inc., 595 F.Supp. 1385, 1400-01 (D. Del. 1984), and the general rule in federal courts that, in the context of a claim of jurisdiction under the conspiracy theory, there must be specific, particularized allegations establishing a conspiracy. E.g., Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1031 (D.C. Cir.1997); Clark v. Tabin, 400 F.Supp.2d 1290, 1297 (N.D. Okla. 2005); Kohler Co. v. Kohler Intern., Ltd., 196 F.Supp.2d 690, 697 (N.D. Ill. 2002). As noted in defendants' opening brief, Mr. Christ pleaded, at best, merely conclusory statements of conspiracy. Mr. Christ attempts to bolster his allegations in paragraph 10 of his affidavit, but does not succeed.9 His new allegations all relate to events occurring in
9

In paragraph 10 of his declaration, Mr. Christ adds that the money he sent to Dr. Cormick was used to fund Nicogel. Mr. Christ does not allege that this statement is based on first-hand knowledge, nor does he offer any facts setting forth a foundation for his (continued...) 11

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 17 of 34

2005, while the alleged misrepresentations and Mr. Christ's payment of money all occurred in early 2004. Mr. Christ is unable to reconcile the time lines. As for the individual defendants, Mr. Christ does not allege any facts suggesting that they either knew of Dr. Cormick's transaction with Mr. Christ or its alleged fraudulent nature, or that, armed with such knowledge, they agreed to participate in the alleged fraud. · Nicogel. At pages 10-11 of their opening brief, defendants pointed out that

Mr. Christ pleaded (at paragraph 37 of the Complaint) that Nicogel was formed "in early 2005," and so could not have participated in either the formation of Elan Suisse USA a year earlier on March 15, 2004, or any conspiracy. Mr. Christ argues in response that Nicogel was in existence at the time under its former name, Aquacine. (Christ Aff. ¶10). The records of the Companies House, an executive agency of the U.K. Department of Trade and Industry (the equivalent of Delaware's Department of Corporations) reveal that Aquacine Limited was formed on July 27, 2004, and was re-named Nicogel on August 12, 2005. (Ex. B hereto). As such, the analysis does not differ. Nicogel/Aquacine was not in existence at the time Elan Suisse USA was formed (and so could not have been part of an alleged conspiracy at the time that action was undertaken), or at the time the alleged method of the conspiracy (alleged fraud) was acted out or the alleged goal (obtaining Mr. Christ's money) was accomplished, all of which occurred before July 27, 2004, and so cannot be deemed to be part of any imagined conspiracy subjecting it to jurisdiction in Delaware.

(...continued) statement. As such, his assertion amounts to nothing more than rank speculation, which should not be accepted or credited by this Court. 12

9

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 18 of 34

Even if Aquacine had been in existence at the relevant time, there is no allegation that the owner(s) of the corporation while it was Aquacine were or are the same owners of Nicogel. · Dr. Dianne E. Marshall. Dr. Marshall stated in her declaration that she never

met Dr. Cormick until August 2005, did not hear of Mr. Christ until December, 2005, and never heard of Elan Suisse USA until she was notified of thus lawsuit. Mr. Christ has provided no contrary evidence (and does not even respond to her declaration). He merely states that Dr. Marshall authored a power point demonstration in May, 2005 (well after the fact) promoting a product produced by Aquacine. (Christ Aff. ¶10(e)). As such, Mr. Christ has failed to establish a prima facie case that she was part of any conspiracy, or knew of or participated in the formation of Elan Suisse USA in Delaware, and so there is no basis for hauling her to Delaware. · Dr. John A Walters. Dr. Walters states in his declaration that (i) he had not

met Dr. Cormick at the time of the events giving rise to this lawsuit, and (ii) he did not play any role in the formation of Elan Suisse USA in Delaware. Mr. Christ's evidence does not contradict this (or even respond to it), but merely states that as of April, 2005 (over a year after the fact), Dr. Walters was involved with Dr. Cormick in a separate entity called "Elan Suisse Capital Biopharma." (Christ Aff. ¶10(d, f)). In the absence of some evidence establishing that in early 2004 Dr. Walters knew of and somehow participated in Dr. Cormick's business dealing with Mr. Christ, or proving that Dr. Walters participated in the formation of Elan Suisse USA, there is no basis to conclude that he is part of any conspiracy subjecting him to jurisdiction in Delaware. 13

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 19 of 34

·

Mercari Financial Services (Pty) Ltd. Mr. Christ alleges that Dr. Cormick

operated Elan Suisse (not the Delaware entity) out of Mercari's offices. There is no allegation that Mercari knew anything about Mr. Christ, or agreed to participate in a plan to defraud Mr. Christ. Mercari has denied any such suggestion. (Mercari Decl. ¶7).10 As such, Mr. Christ has not established that Mercari was a participant in a conspiracy. · Elan Suisse USA. It is difficult to imagine how Elan Suisse could have

conspired before it existed, or how it conspired thereafter. Mr. Christ's theory is "guilt by association" ­ if they had any connection with Dr. Cormick at any time, then they are automatically co-conspirators. That, however, is not the law. Before dragging citizens of foreign nations into Delaware and putting them to the expense, inconvenience and damage to their good name by being wrongly accused of fraud and conspiracy, a plaintiff is required to have a substantial basis in fact. Mr. Christ has nothing more than unjustified speculation. As to the second point, Mr. Christ attempts to factually distinguish Iotex Communications, Inc. v. Defries, C.A. No. 15817, 1998 WL 914265, Lamb, V.C. (Del. Ch. Dec. 21, 1998), the case cited for the proposition that formation of a Delaware corporation is not a "substantial act" in furtherance of the conspiracy. Mr. Christ argues that the distinguishing characteristic in this case is that Dr. Cormick caused a certificate of

10

Mr. Christ points to a memorandum from Mercari which states that Elan Suisse USA (Pty) Ltd. does not sublet offices from or pay rent to Mercari, or employ any Mercari staff. (CAB 27 n. 13 & Ex. D), Nothing in that unauthenticated memo, however, contradicts Mercari's declaration, in which it states that "Mercari briefly permitted Dr. Cormick to utilize Mercari's office as courtesy." That does not equate to subleasing or receiving rent. 14

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 20 of 34

incorporation to be filed with the Secretary of State in Delaware. (CAB 24). However, all formations of Delaware entities involve filing a certificate with the Division of Corporations, so there is no distinction. Cases where filing a certificate with the Secretary of State have been deemed to support conspiracy theory jurisdiction are those where the filing of the certificate was a necessary step to effectuating the alleged wrongdoing, and the corporation took some affirmative action related thereto. E.g., Instituto Bancario Italiano sPa, 449 A.2d at 22627 (filing certificate of amendment authorizing the issuance of shares of stock, which the corporation then issued, thereby giving rise to the claim). In this case, formation of the LLC was not necessary to any alleged fraud, and the LLC did not take any action whatsoever after its formation. Mr. Christ does not offer any precedent from any jurisdiction for the proposition that the mere formation of a Delaware corporation, which plays no affirmative role in effectuating any wrongful act or result, constitutes a "substantial act" in furtherance of the conspiracy, thereby permitting application of the "conspiracy theory" of personal jurisdiction. Nor does he explain how filing a certificate of formation is a "substantial act" in furtherance of an alleged conspiracy to defraud. Finally, there is an important point that must not be overlooked. Even if the Court were to conclude that the allegations established the existence of a conspiracy (which they do not), the mere existence of a conspiracy does not of itself afford a basis for the exercise of personal jurisdiction in Delaware. Rather, the action in Delaware by one co-conspirator must subject that co-conspirator to jurisdiction in Delaware pursuant to Delaware's Long 15

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 21 of 34

Arm statute. Chandler v. Ciccorocco, C.A. No. 19842-NC, 2003 WL 21040185, WL Op. at *8, Strine, V.C. (Del. Ch. 2003). See also HMG/Courtland Props., Inc. v. Gray, 729 A.2d 300, 307 (Del. Ch.1999) ("[t]he conspiracy theory works well in tandem with § 3104 because a conspiracy analysis is relevant to determining whether a person has committed acts satisfying § 3104 `through an agent'"). Thus, even if a conspiracy exists, the act of forming a Delaware LLC does not give rise to the assertion of personal jurisdiction under Delaware's Long Arm Statute: (1) the act of filing the certificate of formation did not give rise to Mr. Christ's claim, and so does not give rise to specific jurisdiction under 10 Del. C. §3104(c)(1); (2) the act of filing the certificate of formation was not itself tortious, and so did not constitute a tortious act in Delaware, and did not cause injury in Delaware, as required for specific jurisdiction under 10 Del. C. §3104(c)(3); and (3) Mr. Christ has never suggested that Dr. Cormick has engaged in persistent and substantial conduct in Delaware so as to permit jurisdiction under 10 Del. C. §3104(c)(4). Absent any of these aspects, the existence or not of a conspiracy is immaterial. Mr. Christ has alleged facts showing that the defendants have known each other and even have done business with Dr. Cormick at some time. Mr. Christ, however, has not pleaded any facts to suggest that the other defendants had any knowledge of Dr. Cormick's solicitation of money from Mr. Christ, or any alleged intent to defraud Mr. Christ, or that their dealings were anything other than at arms' length. See United Phosphorus Ltd. v. Angus Chemical Co., 43 F.Supp.2d 904, 914 (N.D. Ill. 1999) ("evidence of lawful relationships between alleged coconspirators is insufficient to support an inference of 16

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 22 of 34

conspiracy"). Nor has Mr. Christ cited any case law which holds that the Court may infer such knowledge merely from such relationships. Mr. Christ has not alleged any facts showing that the other defendants know of Dr. Cormick's alleged fraud, or that they agreed to participate in a scheme to defraud Mr. Christ. Therefore, the conspiracy theory fails as a matter of both fact and law. D. THE COURT DISCOVERY. SHOULD NOT PERMIT JURISDICTIONAL

In their opening brief at pages 13-14, defendants argued that, as the lack of jurisdiction is clear, the Court should not permit Mr. Christ to engage in an expensive fishing expedition involving citizens of foreign nations who clearly have no connection to Delaware. Mr. Christ responds that he has a right to discovery unless his claims are "clearly frivolous." (CAB 11 n.4). However, the right to jurisdictional discovery is not quite so broad. If the Court determines (as it should) that the filing of a certificate of formation of Elan Suisse USA is not a jurisdictionally significant act under any of the applicable statutes, then that is a legal conclusion which will not be affected by any further discovery. If the Court determines (as it should) that it is uncontradicted that Nicogel was not in existence at the time the alleged causes of action arose or at the time the alleged substantial conspiratorial act occurred in Delaware, that is a legal conclusion which will not be affected by any other discovery. If the Court determines (as it should) that it is uncontradicted that neither Dr. Walters or Dr. Marshall knew Dr. Cormick at the time the alleged causes of action arose or at the

17

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 23 of 34

time the alleged substantial conspiratorial act occurred in Delaware, that is a legal conclusion which will not be affected by any other discovery. Before granting jurisdictional discovery, particularly against foreign individuals and entities, Mr. Christ must make some factual assertions that suggest with reasonable particularity the possible existence of the requisite contacts between the defendants and Delaware. Toys `R' Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3rd Cir. 2003). Mr. Christ has not alleged any possible contacts with Delaware other than the filing of the certificate of formation of Elan Suisse USA. Thus, if the Court concludes (as it should) that such filing is insufficient to sustain jurisdiction, then there is no justification for allowing Mr. Christ to engage in a fishing expedition subjecting the defendants to additional expense in the mere hope of finding something else (particularly since there is nothing to find).

18

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 24 of 34

II.

THE COMPLAINT FAILS TO STATE A CLAIM FOR CONSPIRACY.11 In their opening brief at pages 15-17, defendants demonstrated that Mr. Christ failed

to allege a claim for civil conspiracy, as the Complaint fails to state any facts from which it can be inferred that any of the other defendants acted in knowing collaboration with Dr, Cormick. Contrary to Mr. Christ's arguments, nowhere in the Amended Complaint are there any allegations stating expressly or through reasonable inference that any of the other defendants knew anything about the alleged fraud or agreed to participate in or assist with it. Paragraph 36 of the Amended Complaint states (falsely) that Dr. Cormick used Mercari's offices and personnel to communicate with Dr. Christ, and uses this allegation to conclude that Mercari had knowledge of the alleged scheme. But the conclusion is not fairly inferred from the factual predicate. Mere acquaintance with Mr. Cormick does not equate with knowledge of his plans and actions. As such, there is no allegation from which it can be reasonably inferred that Mercari personnel had any knowledge or reason to know of the substance of the communications or the alleged falsity thereof, or of any injury to Mr. Christ. Paragraph 37 of the Amended Complaint alleges (falsely) that the money Dr. Cormick received went to capitalize Nicogel, which was founded in early 2005 (i.e., the
11

Mr. Christ finds it "notable" that the defendants "did not challenge the merits of Counts I, II or III under Rule 12(b)(6)...." (CAB 3). However, the fact that the defendants do not challenge the procedural sufficiency of the pleading by no means indicates that they accept that the claims have any merit (and they do not). All it means is that Mr. Christ has cleverly pleaded information in a selective and slanted manner, omitting that which is damaging to his claims. 19

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 25 of 34

following year). There is no allegation from which it can be reasonably inferred that Nicogel, Dr. Walters (whom Mr. Christ identifies as CEO of Nicogel at paragraph 6 of the Complaint) or Dr. Marshall (whom Mr. Christ identifies as an officer and shareholder of Nicogel at paragraph 7 of the Complaint) knew or had any reason to know of Mr. Christ, Dr. Cormick's dealings with Mr. Christ, or that any money allegedly received from Dr. Cormick came from the proceeds of his dealings with Mr. Christ.

20

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 26 of 34

III.

THE FRAUD AND CONSPIRACY CLAIMS ARE BARRED BY THE STATUTE OF LIMITATIONS. In their opening brief at pages 18-21, defendants demonstrated that Pennsylvania's

two-year statute of limitations applies to Mr. Christ's fraud and conspiracy to defraud claims, and that the statute of limitations expired in March, 2006. Defendants also demonstrated that, although Pennsylvania law tolls the statute of limitations until such time as the plaintiff learns or reasonably should have learned of the existence of a claim, Mr. Christ was obligated to plead facts demonstrating why the statute should be tolled, which he did not do. Mr. Christ does not legitimately dispute that Pennsylvania law applies. Instead, he responds that the statute should be tolled because (i) he relied on his friendship with Dr. Cormick, and (ii) the alleged fraud continued through September, 2004. (CAB 29-31). As to the first point, Mr. Christ does not offer any authority holding that the duty to investigate once one party does not receive that for which he contracted is tolled when the business contract is between friends. Mr. Christ alleges that there was a written agreement on February 15, 2004 (Am. Compl. ¶18), and that he sent $250,000 to Dr. Cormick in March, 2004. (Am. Compl. ¶19). Mr. Christ alleged that he sent the payment "in reliance upon Cormick's promise that he and plaintiff would draft and execute promptly a written agreement documenting plaintiff's investment...." (Am. Compl. ¶20, italics added). Although Mr. Christ alleges that he bargained for prompt documentation, Mr. Christ sat silent for six months before "inquiring as to the status of his investment...." (Am. Compl. ¶20). Having bargained for prompt documentation, Mr. Christ cannot now credibly claim that he stood by silently because Dr. Cormick was his friend. When documentation did not

21

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 27 of 34

come promptly as allegedly promised, Mr. Christ had a duty to investigate, a duty he ignored. As the delay in investigation was solely his own fault, and Mr. Christ does not allege any facts showing that the delay in investigation was due to actions of Dr. Cormick or some other outside source, Mr. Christ is not entitled to the benefit of Pennsylvania's "discovery" rule. Mr. Christ also tries to avoid the statute of limitations by arguing that the fraudulent misrepresentations continued through September 2004. This argument fails for two reasons. First, as noted earlier, even though he recently amended his Complaint, Mr. Christ elected not to plead the specifics of those fraud claims, i.e., what the alleged misrepresentations were, when the were made, how he relied upon those alleged misrepresentations, what he was induced to do as a result of those misrepresentations, and what injury he allegedly suffered thereby. As such, pursuant to Federal Rule of Civil Procedure 9(b), any such claims arising after March, 2004, are not sustainable irrespective of the statute of limitations. Even if the Court were to suspend Rule 9(b) and all pleading requirements and consider those claims viable, they must be deemed separate and distinct from the alleged fraud claim arising from alleged misrepresentation which allegedly induced Mr. Christ to send $250,000 to Dr. Cormick. Mr. Christ cannot logically claim that statements made after he paid the $250,000 induced him to pay the $250,000 before those statements were made. Thus, notwithstanding any fraud claim arising after March, 2004, the fraud claim which allegedly induced Mr. Christ to send $250,000 to Dr. Cormick arose in March, 2004, and is barred by the statute of limitations.

22

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 28 of 34

Finally, Mr. Christ's protestations that he had no reason to suspect anything until September 2004 and that he trusted his friend ring false in light of an e-mail Mr. Christ sent to Dr. Cormick on September 21, 2004, in which he states: Brett, I was wrong, And I apologize. I was so paranoid of being a victim that I ignored the obvious ­ which is that a close personal friend of mine wanted to being me in on the time when he is going to cash in his chips after a very successful career in international finance. But instead of coming along willingly, you're having to drag me along kicking and screaming. You are doing me a favor and I am giving you [expletive] in return. I have tried - but I have not been successful at finding anywhere that you have not been fully honest and truthful with me. I'm not sure where that leaves us - but I am pretty sure that you're pissed. [I would be]. Anyway, that needed to be communicated - sorry it had to be on e-mail. (Exhibit A Cormick Supp. Aff., appended hereto as Exhibit C). This e-mail, apart from being an admission that his entire claim is highly suspect (as is his statement in paragraphs 8-9 of his sworn affidavit), the e-mail is also an admission that, notwithstanding his friendship with Dr. Cormick, Mr. Christ had suspicions, and had been investigating those suspicions, prior to September, 2004. Thus, in the absence of allegations demonstrating that Mr. Christ was legitimately induced to sit silent, he is not entitled to the benefit of the "time of discovery" rule.

23

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 29 of 34

IV.

THE COURT SHOULD STAY THIS ACTION PENDING RESOLUTION OF PRIOR-FILED PARALLEL LITIGATION INSTIGATED BY MR. CHRIST IN SOUTH AFRICA. In their opening brief at pages 22-24, Defendants demonstrated that, in the interests

of conserving judicial and party resources, and to avoid harassment, this action, if not dismissed, should be stayed pending litigation previously filed by Mr. Christ in South Africa, which action is based on the same operative facts and seeks the same relief (recovery of $250,000). Mr. Christ first argues that this action should not be stayed as the cases are not parallel because (i) the present suit alleges causes of action not alleged in the South African action, and (ii) the present suit includes parties not present in the South African action. (CAB 32-33). As to the first point, "parallel" is not synonymous with "identical." Actions are deemed "parallel" if they are predicated on the same allegations as to the same material facts. Szabo v. CGU Intern. Ins. Co., 199 F.Supp.2d 715, 719 (S.D. Ohio 2002). The core facts relating to Mr. Christ's business dealings with Dr. Cormick are identical. Similarly, the fact that Mr. Christ included additional parties in this action does not automatically render the suits not parallel. Id. In this case, the additional parties' liability is derivative of Dr. Cormick's liability. As such, a decision in favor of Dr. Cormick in South Africa will end litigation here. Mr. Christ then amazingly argues that although he did previously file an action against Dr. Cormick in South Africa, he has stopped prosecuting it because he is concerned that Dr. Cormick's defense of lack of personal jurisdiction has merit. However, he is not 24

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 30 of 34

willing to dismiss the South Africa lawsuit for fear of forfeiting a $15,000 bond (he does not tell us what happens to the bond if Dr. Cormick wins on his jurisdictional defense).12 This is pure gamesmanship. Mr. Christ wants to keep the South African lawsuit hanging over Dr. Cormick's head, but asks this Court to treat it as non-existent so that he can open up a second front in Delaware. This Court should not sanction such conduct. Mr. Christ should be held to his decision to file suit in South Africa, and require him to resolve that action one way or another. If Mr. Christ wishes to proceed here, it should be conditioned on him dismissing the South Africa action. Otherwise, Mr. Christ should be restricted to his original forum.

12

Dr. Cormick has also challenged personal jurisdiction in this Court, yet Mr. Christ has been willing to litigate that issue here. 25

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 31 of 34

V.

THE COURT SHOULD SANCTION MR. CHRIST FOR HIS UNJUSTIFIED ACTIONS DESIGNED TO HARASS AND INCREASE EXPENSE. The pleadings and the briefing demonstrate, among other things, that: 1. Mr. Christ attempted to assert jurisdiction over Dr. Cormick utilizing

Delaware's limited liability company law for actions taken before the limited liability company was formed. 2. Mr. Christ sued Nicogel, a British company, despite the fact that public

records reveal that Nicogel was not in existence when the alleged fraud occurred and when the act upon which Mr. Christ bases jurisdiction by conspiracy occurred. 3. Mr. Christ sued Drs. Walters and Marshall, subjecting them to expense and

injury to their good name, with no basis to claim conspiracy other than they either know or have done business with Dr. Cormick. 4. Mr. Christ filed suit in this Court while simultaneously maintaining an action

against Dr. Cormick on the same claim in South Africa, and did not disclose that fact up front to the Court. These actions, along with those cited in defendants' opening brief, stretch the concept of good faith beyond its breaking point. Harassment, increased expense, false allegations in the Complaint without any good faith basis in fact ­ Mr. Christ apparently hopes that the Court has become jaded and can no longer appreciate the effects this unjustified conduct has on its victims. Defendants hope otherwise.

26

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 32 of 34

CONCLUSION This is a simple contractual dispute which Mr. Christ, through selective and slanted pleading and an over-active imagination, has turned into a "wide-ranging" international conspiracy. Mr. Christ has gone on a witch hunt, filing lawsuits in South Africa and here, suing anyone whom Mr. Christ discovers to have shaken hands with Dr. Cormick. The e-mail attached to Dr. Cormick's affidavit is but the tip of the iceburg. However, the Court is limited on the present motion to the quantity and quality of evidence it may consider. Nonetheless, the e-mail (which is properly submitted to rebut Mr. Christ's affidavit) offers a glimpse of the fact that Mr. Christ's pleading has more than a touch of Alice in Wonderland, and his arguments in opposition to the defendants' motions are more rhetoric than reality. Ultimately, however, the Court need not concern itself with that. The allegations of personal jurisdiction, all based upon the formation of a Delaware LLC after the alleged fraud occurred, are inadequate for the drastic step of dragging foreign nationals to this Court. The claim of conspiracy fails for the same reason, and, in any event, is barred, as is the fraud claim, by the statute of limitations. Even if there were a basis to keep this case here, the Court should require Mr. Christ to elect his remedy ­ either dismiss this action or dismiss the one in South Africa. He should not be allowed to hold them both over Dr. Cormick's head. WHEREFORE, for the foregoing reasons, as well as the reasons stated in their opening brief, defendants respectfully request that the Court grant their motion to dismiss and award them their costs, including reasonable attorneys' fees, incurred in this action.

27

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 33 of 34

Dated: April 10, 2007

Respectfully submitted,

/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766 Attorney for defendants Brett J. Cormick, Elan Suisse International Holdings (USA) LLC, Elan Suisse (Pty) Ltd., Nicogel Ltd., John Walters, Dianne Marshall and Mercari Financial Services (Pty) Ltd.

28

Case 1:06-cv-00275-GMS

Document 33

Filed 04/10/2007

Page 34 of 34

CERTIFICATE OF SERVICE I, David L. Finger, hereby certify that on this 10th day of April, 2007, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF which will send electronic notification to the following counsel of record:

Thad J. Bracegirdle, Esq. Reed Smith LLP 1201 Market Street, Suite 1500 Wilmington, DE 19801

/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 1 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 2 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 3 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 4 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 5 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 6 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 7 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 8 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 9 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 10 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 11 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 12 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 13 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 14 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 15 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 16 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 17 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 18 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 19 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 20 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 21 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 22 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 23 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 24 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 25 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 26 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 27 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 28 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 29 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 30 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 31 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 32 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 33 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 34 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 35 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 36 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 37 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 38 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 39 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 40 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 41 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 42 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 43 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 44 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 45 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 46 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 47 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 48 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 49 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 50 of 51

Case 1:06-cv-00275-GMS

Document 33-2

Filed 04/10/2007

Page 51 of 51

WebCHeck - Select and Access Company Information Case 1:06-cv-00275-GMS Document 33-3

Filed 04/10/2007

Page 1 of 1 Page 1 of 3

Home | About us Login Forms Press Desk

Bookmark site | Careers My Order

Links Contact us Info and guidance on Please select Tools to help you Please select

| My Account | My Download |

Company Details
The WebCHeck service is available from Monday to Saturday 7.00am to 12 Midnight UK Time Name & Registered Office: NICOGEL LIMITED UNIT 1B SAXON BUSINESS PARK A10 BYPASS LITTLEPORT ELY CAMBRIDGESHIRE CB6 1XX Company No. 05190095

Status: Active Date of Incorporation: 27/07/2004 Country of Origin: United Kingdom Company Type: Private Limited Company Nature of Business (SIC(03)): 7487 - Other business activities Accounting Reference Date: 30/11 Last Accounts Made Up To: 31/07/2005 (DORMANT) Next Accounts Due: 30/09/2007 Last Return Made Up To: 27/07/2005 Next Return Due: 24/08/2006 Last Members List: 27/07/2005 Previous Names: Date of change 08/12/2005 27/09/2004

Order information on this company

Tell Us
Are you satisfied with our service? Have you got a question?

Previous Name AQUACINE LIMITED MEAUJO (683) LIMITED

Branch Details There are no branches associated with this company. Oversea Company Info There are no Oversea Details associated with this company. System Requirements Return to search page

Top

Contact Centre : +44 (0)870 33 33 636 available 08:30 to 18:00 (UK time) house.gov.uk Disclaimer | Privacy Statement | Acceptable use statement | Use of cookies | © Crown Copyright 2003 | Website powered by Orchid Telematics

Email: enquiries@companies-

http://wck2.companieshouse.gov.uk/19e5f1c48bbc6bcafb05249e4d38d31d/compdetails 28/06/2006

About Us - Main Functions and History Case 1:06-cv-00275-GMS Document 33-3

Filed 04/10/2007

Page 1 of 2 Page 2 of 3

About us | Forms | Careers | Contact us | Press Desk | Disclaimer | Cymraeg

Home | Text only | Bookmark site | Links | Site Map About Us
Main Functions and History Companies House Board and Management Events Library Statistics & Surveys Supplying Companies House International Relations

Search

Enter Keywords

GO

Our main functions The main functions of Companies House are to: incorporate and dissolve limited companies; examine and store company information delivered under the Companies Act and related legislation; and make this information available to the public. The Registrar of Companies The Registrar of Companies for England and Wales, and Chief Executive of Companies House is Claire Clancy. Her office is based at Companies House in Cardiff. The Registrar of Companies for Scotland is Jim Henderson and his office is based in Edinburgh. There is also an Information Centre in London. Click here for details on where to Find us and Who to Contact History The United Kingdom has enjoyed a system of company registration since 1844. Today, company registration matters are dealt with in law, by the Companies Act 1985 and the updating legislation contained in the Companies Act 1989. All limited companies in the UK are registered at Companies House, an Executive Agency of the Department of Trade and Industry. There are more than 2 million limited companies

Info and Guidance on
Please select

go

Tools to help you
Please select

go

Quicklinks
Annual Report Download a PDF of the latest Companies House Annual Report Our targets Read about new performance targets set to change the way we serve you. Surveys We are interested in your opinions of the service we offer.

Have a question?
Contact us here

http://www.companies-house.gov.uk/about/functionsHistory.shtml

7/2/2006

About Us - Main Functions and History Case 1:06-cv-00275-GMS Document 33-3

Filed 04/10/2007

Page 2 of 2 Page 3 of 3

registered in Great Britain, and more than 300,000 new companies are incorporated each year.

Back

Top

Print Page

Email page

Site Map

Contact Centre : +44 (0)870 33 33 636
[email protected]

Minicom - 02920381245 08:30 to 18:00 (UK time) Mon-Fri

Email:

Privacy Statement | Acceptable use statement | Use of cookies | © Crown Copyright 2003 .

http://www.companies-house.gov.uk/about/functionsHistory.shtml

7/2/2006

Case 1:06-cv-00275-GMS

Document 33-4

Filed 04/10/2007

Page 1 of 2

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELA WARE
ROBERT D. CHRIST, Plaintiff, )
) ) ) ) ) ) ) ) ) ) ) ) )

v.
BRETT 1. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC, ELAN SUISSE (PTY) LTD., NICOGEL LTD., JOHN WALTERS, DIANNE MARSHALL and MERCARI FINANCIAL SERVICES (PTY) LTD. , Defendants.

C.A. No. 06-00275 GMS

DECLARATION OF DR. BRETT J. CORMICK

1.

My name i