Wilson & Wilson Holdings LLC v. DTH, LLC

Background

Wilson & Wilson Holdings LLC sued DTH, LLC, Tomer Dicturel, and Ryan Hickman over its purchase of certain assets from DTH under a Technology Assets Purchase Agreement. Wilson & Wilson alleges that the assets were ultimately worthless and that Dicturel and Hickman wrongfully induced it to enter the agreement. Its claims include breach of contract, breach of express warranty, negligent misrepresentation, fraudulent inducement, unjust enrichment, and promissory estoppel.

Dicturel had requested permission to file a motion to dismiss based on lack of personal jurisdiction and failure to state a claim. Because Dicturel took the position that he did not have to participate in discovery before the court resolved personal jurisdiction, Wilson & Wilson moved to compel discovery. It also moved for discovery specifically directed to the jurisdiction question. DTH and Dicturel cross-moved for a protective order, which is a court order limiting or preventing discovery, to stop discovery from Dicturel before his anticipated motion to dismiss was decided.

Personal-Jurisdiction Discovery

The court ruled that Wilson & Wilson had made a sufficient start toward showing that New York might have personal jurisdiction over Dicturel. Although Dicturel resides in New Jersey and focused on his lack of physical presence in New York, the court noted evidence that he had regularly done business in New York. The evidence included public sources, including Dicturel’s website, which listed a New York business address.

The court explained that physical presence in New York is not required for personal-jurisdiction analysis. It found at least some evidence that Dicturel had engaged in a continuous and systematic course of business in New York, even though he may not have been physically present there for most of the time since September 2019. The court also acknowledged that Wilson & Wilson might still be unable to establish personal jurisdiction after discovery, but held that its position was not frivolous and justified limited jurisdictional discovery.

Scope of Discovery

The court allowed Wilson & Wilson to seek information about Dicturel’s business in New York and his contacts with New York. To keep the discovery relevant and proportional, Wilson & Wilson could serve up to 10 targeted document requests and take Dicturel’s deposition for no more than four hours.

The court denied discovery concerning Wilson & Wilson’s theory that it could disregard DTH’s separate corporate status and treat Dicturel as personally responsible through veil piercing. The court found that Wilson & Wilson had not plausibly alleged a basis for piercing DTH’s corporate veil under either Delaware or New York law. In particular, the court stated that the applicable law required more than the premise alleged by Wilson & Wilson that fraud need not be shown.

Disposition

The court granted in part and denied in part Wilson & Wilson’s motion to compel and its motion for jurisdictional discovery. It also granted in part and denied in part DTH and Dicturel’s cross-motion for a protective order. Wilson & Wilson could serve the permitted document requests by May 24, 2023; Dicturel had to produce responsive documents by June 14, 2023; and his deposition had to be completed by June 30, 2023. The opinion did not decide Dicturel’s anticipated motion to dismiss.