Chancery Dismisses Claim against Member of L.P. for Lack of Personal Jurisdiction

Chancery Dismisses Claim against Member of L.P. for Lack of Personal Jurisdiction

Picard v. Wood, C.A. No. 6526-VCG (Del. Ch. July 12, 2012).

Issue Presented

Whether a member of a limited partnership is subject to personal jurisdiction in Delaware based on that status alone.

Short Answer: No.

Brief Overview

This short letter ruling granted a motion to dismiss for lack of personal jurisdiction, for claims against the member of a Delaware limited partnership who allegedly was the recipient of funds, as a limited partner, of a so-called "feeder fund" that allegedly played a role in the epic ponzi scheme of Bernard Madoff.

Analysis
The Court emphasized the well-settled Delaware law that:  "Mere membership in a Delaware limited partnership, absent additional considerations, is insufficient to confer personal jurisdiction."  See footnote 5 and cases cited therein.  The Court explained that the plaintiffs did not allege or provide evidence that the defendant either managed or controlled or exerted influence over the limited partnership, and therefore, there was no jurisdiction on the basis of his membership alone in the Delaware limited partnership.

The Court conducted the usual analysis in connection with a motion to dismiss for lack of personal jurisdiction, including the two-part inquiry:  (1) Whether jurisdiction is proper under one or more provisions of the Delaware long arm statute, see 10 Del. C. Section 3104(c)(1); and also (2) Whether the exercise of jurisdiction would comport with the requirements of constitutional due process.

In sum, there were insufficient allegations to meet the first prong of the inquiry, and therefore, there was no need to address the second prong.

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.

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