Case Update (27 June 2024): De Suarez D’Aulan v. De Suarez D’Aulan & McCann; Ex-Wife’s case to enforce an English divorce order in Delaware to sell a Delaware corporation dismissed

The parties were spouses who divorced in London. The Plaintiff Ex-Wife continues to reside in London. The Defendant Ex-Husband “may be living in France or perhaps Morocco.” The parties’ primary marital asset was their 50/50 interest in a Delaware corporation, Alastar Corporation, that owns wine making operations and vineyards in Argentina. The English court ordered the sale of Alastar, set a sale price, and put the Ex-Wife in charge of the same. More specifically, this order was based on an agreement between the now Ex-Spouses that “contemplated the ‘[s]ale of the Alastor company, or its assets or some of them.’ It also provided that [Ex-Husband] ‘will allocate for the benefit of [the parties’] children’ £2 million from the sale of Alastor ‘to assist [Ex-Wife] in buying a home."

The Ex-Husband was to contribute a portion of his sale profits to the Ex-Wife, but, before the sale process began, “he announced that he had transferred his Alastor shares to a Uruguayan entity called Turnal.” The Ex-Wife sought to join Turnal to the English divorce proceedings, and the English court granted her request, “though Turnal never appeared and both personal jurisdiction over and service of process on Turnal were questionable.” The English court also “entered an order deeming void the [Ex-Husband’s] share transfer to Turnal.” The Ex-Husband disregarded the English court orders, and the Ex-Wife turned to the Delaware courts, asking that the Delaware courts “recognize and enforce the English family court’s judgments under common law principles of international comity.” She specifically asked that the Delaware court order the Ex-Husband to transfer his Alastor shares to her and cause Alastor to record the transfer and issue the shares in her name.

The nominal defendants in this particular case filed, seeking dismissal of the Ex-Wife’s suit, on two grounds. First, they argued that she failed to join an indispensable party (Turnal). Second, they argued that she failed to state a claim on which relief can be granted. The Delaware Court of Chancery, in an unpublished opinion, concluded that Turnal is a “necessary party that cannot feasibly be joined.” The court also concluded it cannot consider whether the Ex-Wife’s complaint “states a reasonably conceivable claim concerning the other portions of the English Judgment. Until Turnal’s interests are resolved, however, [the court] cannot fairly recognize and enforce the English Court’s orders regarding the sale of Alastor. Dismissal of the Complaint without prejudice is warranted.”

The lawsuit regarded a Delaware corporation, and Turnal has an interest in that corporation, therefore “there is a substantial risk that the court cannot accord complete relief in the [missing parties’] absence.” The Ex-Wife argued that the English court “set aside the transfer” of the Ex-Husband’s stock to Turnal. But, in reality, the Alastor stock ledger still lists Turnal as the owner of the stock, and Turnal holds certificates for the shares. The shares are not in the Ex-Husband’s possession. The shares are not the Ex-Husband’s, and the Delaware court cannot seize his shares. The relief that the Ex-Wife is seeking really involves Turnal’s interests. The Ex-Wife argued that Turnal could have addressed the matter in the English court, where Turnal was named as a party. But, the Delaware court concluded that Turnal never appeared in that action, and questioned the English court’s jurisdiction over Turnal. Further, it is not feasible to join the necessary party Turnal. It is a Uruguayan entity, and its only connection to Delaware are the stocks it owns in a Delaware corporation. “It is ‘well settled that ownership of stock in a Delaware corporation is, standing alone, insufficient to subject any individual to service of process, unless the action is relating directly to the legal existence of stock or its characteristics or attributes.’” Turnal has not consented to service of process in this case, or the Delaware court’s personal jurisdiction over it.

Finally, equity and good conscience require this case be dismissed. “This action directly implicates a foreign order to which Turnal was a party.” “Proceeding without Turnal would be prejudicial not only to it but also to the parties to this case since a judgment here would not bind Turnal.” Further, Turnal is unlikely to intervene. It has insufficient links to Delaware, and the agreement between it and the Ex-Husband “provides for alternative dispute resolution under Argentinian arbitral rules concerning the transfer.” Additionally, the Ex-Wife has access to alternative forums. She could seek contempt in the English court that opted to exercise jurisdiction over Turnal. She could seek relief in Uruguay where Turnal is located. She may even be able to proceed in Argentina. While the Ex-Wife seeks leave to amend her complaint to add Turnal as a Defendant, the court concluded that, since Turnal cannot feasibly be joined and is outside of the court’s process, it must deny her request.

Note, there were several English court orders that came from their divorce proceeding, in several sequential proceedings related to the corporate sale. The Ex-Wife sought enforcement of all of them based on principles of comity. She was unable to avail herself of the Uniform Foreign-Country Money Judgments Recognition Act, because that specifically excludes judgments resulting from foreign divorce proceedings. The court took umbrage with some of the English court orders. The court concluded at least some of the judgments appear inconsistent with Delaware law, which governs the internal affairs of a Delaware corporation, overseen by a Board of Directors, including the sole director, who was not a party to the English divorce proceedings who would be stripped of discretion over the sale.