Delaware Business Lawyer Blog

Here’s how the conspiracy theory works. The plaintiff tries to show that there was a conspiracy, and that one of the conspirators transacted business in Delaware. The theory is that the transaction of business in Delaware by the conspirator is attributable to the non-resident defendant. The Court considers a co-conspirator to be an agent of the non-resident conspirator.

The Delaware Supreme Court has established a 5-part test for applying the conspiracy theory of personal jurisdiction over non-residents. The Court said:
“We therefore hold that a conspirator who is absent from the forum state is subject to the jurisdiction of the court, assuming he is properly served under state law, if the plaintiff can make a factual showing that:
(1) a conspiracy to defraud existed;
(2) the defendant was a member of that conspiracy;
(3) a substantial act or substantial effect in furtherance of the conspiracy occurred in the forum state;
(4) the defendant knew or had reason to know of the act in the forum state or that acts outside the forum state would have an effect in the forum state; and
(5) the action, or effect on, the forum state was a direct and foreseeable result of the conduct in furtherance of the conspiracy.”

In cases where the negotiations do not progress promptly to a conclusion, but, after considerable delay, are finally satisfactorily concluded between the principal and the purchaser, close questions arise. In such cases, the courts have evolved a subsidiary rule that in order for the broker to be the procuring cause of the sale, it must appear that there was no substantial break in the negotiations. Whether there was a substantial break in the negotiations depends not so much on lapse of time as upon the chain of circumstances.

A principal has the privilege of taking over the negotiations from his agent, after introduction of the prospect, and acting on his own behalf in the consummation of the transaction. Such substitution by the principal of himself for his agent, per se, does not amount to a dismissal of the broker. And the action of the principal in so doing does not become an intervening or predominant cause such as will constitute a break in the chain of causation that, otherwise, would "lead directly" from introduction to consummation and constitute procuring cause.

There are two exceptions to the general rule.

(1) if, after producing the prospect, the broker was dismissed by his principal in bad faith as a device to avoid the commission.

The easiest and least expensive way to get the problem resolved is for the attorney to write a letter to the sellers describing what’s wrong and asking for money. If the sellers refuse, the next step is to decide who to sue and what to ask for.

WHO TO FILE A LAWSUIT AGAINST
The obvious answer is the sellers. However, depending on the facts, it sometimes is appropriate to include the real estate agents and the buyer’s home inspector in the lawsuit.

WHAT TO ASK FOR
In most cases, the purpose of the lawsuit is to recover enough money so the buyers can pay to get the problem repaired. In some cases, however, money is not an adequate remedy, and so the buyers ask for rescission. If rescission is ordered by the Court, the buyers give the house back to the sellers, and the sellers return to the buyers the money the buyers paid for the house.

CLAIMS OF FRAUD
Fraud can arise from fraudulent concealment or fraudulent misrepresentation.

To prove fraudulent concealment, the buyer has to show that the seller took action intended to prevent (and which actually did prevent) the buyer from discovering the damage. This can occur when the seller takes action to conceal the defect. However, it can also occur when the seller takes action to dissuade or prevent the buyer from making an investigation that a buyer would have made and which would have disclosed the defect.

To prove fraudulent misrepresentation, the buyers must show the following 5 things:
(1) the seller made a substantial, material misrepresentation
(2) the representation was false
(3) the seller must have known it was false
(4) the seller made the representation with the intention of inducing the buyer to act upon it
(5) the buyer did act in reliance on the statement and was harmed as a result.

The Delaware Courts apply a two-prong test in determining if personal jurisdiction exists over a nonresident. The first prong is statutory, where the Court must decide whether Delaware’s Long Arm Statute applies. The second prong is constitutional, and the Court must decide whether subjecting the nonresident to jurisdiction in Delaware violates the Due Process Clause of The Fourteenth Amendment (this is commonly referred to as the so-called “minium contacts requirement.”

To satisfy the first “prong” of the test relating to the Long Arm Statute, the plaintiff must show that the Court has either specific jurisdiction or general jurisdiction.

SPECIFIC JURISDICTION
For the Court to have specific jurisdiction, the plaintiff must show that (1) the defendant engaged in conduct that falls within at least one of the activities described below, and (2) that the plaintiff’s cause of action arises from defendant’s acts or omissions that took place in Delaware. The activities in question are:
(A) transacted any business or performed any character of work or service in Delaware;
(B) contracted to supply services or things in Delaware
(C) was present in Delaware when tortious acts or omissions occurred;
(D) had an interest in, used or possessed real property in Delaware; or
(E) contracted to insure or act as surety for, or on, any person, property, risk, contract, obligation or agreement located, executed or to be performed within Delaware.

GENERAL JURISDICTION
For the Court to exercise general jurisdiction, the plaintiff must show that:
(A) defendant engaged in tortious conduct outside of Delaware which caused injury in Delaware, and that defendant regularly does business or solicits business in Delaware;
(B) engages in any other persistent course of conduct in Delaware; or
(C) derives substantial revenues from the services or products used or consumed in Delaware.

Even if the plaintiff is able to establish that the Long Arm Statute applies to the defendant, that doesn’t end the inquiry because the Court must then determine whether exercising its jurisdiction over the defendant would violate the minimum contacts requirements of the Due Process Clause of the Fourteenth Amendment.

(1) A school district in Sussex County refused to allow a student to enroll in a local high school. The parents sued for a Court order requiring the school district to enroll their child.

(2) A restaurant sued New Castle Count seeking an order requiring the Count to issue a certificate of occupancy.

(3) A homeowners association sued the owner of a house who they say built an encroachment in a common area. The Association asked for an order requiring him to remove it.

(4) A company sought injunctive relief against someone who obtained trade secrets by improper means.

(5) A widow sued several government officials seeking an injunction preventing them from publicly releasing the results of her husband’s autopsy report which would reveal the circumstances and cause of her husband’s death.

(6) An employer sues a former employee to obtain an order preventing him from soliciting the employer’s customers in violation of a contract.

“Irreparable injury” exists where the injury can’t be adequately compensated by money damages and that to refuse the injunction would be a denial of justice.

Each of these 5 elements has been the subject of litigation, and the Court has had to look at these items based on the facts of each particular case because what might be open and notorious, for example, in one case might not be in another.

In the above example, actual possession could be found to exist when the neighbor actually used the land on his side of the fence as his own property and as a typical property owner would. Mowing the grass, gardening, storing fire wood, etc. are the kind of uses that establish actual ownership.

The same person does not have to use the property in question for 20 years in order for adverse possession to be continuous for 20 years. Instead, the Court allows tacking on between successive owners. What this means is that if the neighbor sells his property to another person who continues to use the property on his side of the fence in the same way that the previous owner did, the chain is not broken.

(1) unpaid wages of $624.16
(2) liquidated damages of $624.16
(3) court costs of $584.50
(4) interest

AND, the kicker, (5) attorney’s fees of $6,100.00!

For example, once your lawsuit is filed, a summons and complaint have to be served upon the individual or company you’re suing. Usually, service is made by the Sheriff’s office. However, if the defendant has not been served within 120 days after your lawsuit was filed, the case will be dismissed.

Once the defendant is served, he has 20 days within which to file an Answer to The Complaint. Failure to file an Answer by this deadline can result in the entry of a judgment in favor of the plaintiff.

Another rule has to do with keeping the case moving once it’s filed. Let’s say the lawsuit is filed, some discovery is taken, and then no other documents are filed with the Court for 6 months. Even if the attorneys are having discussions and are exchanging letters, the rule provides that if nothing has actually been filed with the Court for 6 months, the clerk of the Court will send out a letter warning that if no action is taken within the next 30 days, the case will be dismissed “for want of prosecution.”

If one of the parties files a motion with the Court, it will be scheduled to be heard on a certain date. If the other party wishes to oppose the motion, a written response must be filed no later than 3 days before the motion is heard.

Once a case is assigned to a judge, a Scheduling Order is issued. This Order establishes deadlines for the identification of expert witnesses, the date by which discovery must be completed, due dates for status reports to the judge, and more.

As a Delaware business attorney, I've found that there are defenses you can raise if you’re sued for defamation. The most absolute defense is truth. In other words, if a statement is true, you can tell as many people as you like even though the statement ruins a person’s reputation.

The average businessman is not the only one who becomes involved in a defamation lawsuit. Consider the following headlines you may have seen:

JERRY SEINFELD AND WIFE SUED FOR DEFAMATION

ROGER CLEMENS FILES DEFAMATION LAWSUIT OVER ALLEGATIONS OF USE OF PERFORMANCE ENHANCING DRUGS

WITNESS IN OJ SIMPSON TRIAL SUES DR PHIL FOR DEFAMATION

OPRAH SUED FOR DEFAMATION BY FORMER HEAD OF SCHOOL IN SOUTH AFRICA

DAN RATHER SUES CBS FOR DEFAMATION

In order for there to be defamation, the statement has to be made to someone other than the person the statement is about. In the law, this is known as "publication."

The person claiming that he was defamed has to prove that the statement he’s complaining about was in fact defamatory. However, there are 4 categories of statements that are automatically considered to be defamatory. They are statements that (1) malign someone in a trade, business or profession, (2) impute a crime, (3) imply that a person has a “loathsome” disease, and (4) impute the unchastity of a woman.

I mentioned earlier that truth is an absolute defense. There are also conditional privileges or defenses even if the statement turns out not to be true. For example, if you communicate to the police a suspected crime, that’s allowed. A statement that’s made in the course of the defamed person’s employment and it’s made on behalf of the employer, it’s considered privileged. Statements made by witnesses in a courtroom setting and the legal arguments made by attorneys in court are also privileged.