In re Côte D'Azur Estate Corp.
| Decision Date | 18 November 2022 |
| Docket Number | C.A. No. 2017-0290-JTL |
| Citation | 286 A.3d 504 |
| Parties | IN RE CÔTE D'AZUR ESTATE CORPORATION |
| Court | Court of Chancery of Delaware |
Jeremy D. Anderson, FISH & RICHARDSON P.C., Wilmington, Delaware; Counsel for plaintiff Lilly Lea Perry.
Steven L. Caponi, K&L GATES, LLP, Wilmington, Delaware; Counsel for defendant the BGO Foundation and for nominal party Côte d'Azur Estate Corporation.
Dieter Walter Neupert; Defendant pro se.
LASTER, V.C.
Plaintiff Lilly Lea Perry has moved for the issuance of a letter of request to obtain the assistance of the central authority in Switzerland to facilitate discovery. Lilly seeks international assistance to obtain electronic data that Swiss investigators seized from the law office of Dieter Neupert, a defendant in this case, while investigating whether Neupert falsified evidence in a civil proceeding in Switzerland. A Swiss court determined that the investigators had reasonable cause to obtain the materials and that the investigators acted properly by only seizing evidence that was directly relevant to their investigation. The resulting evidence consists primarily of emails sent or received by Neupert and one of his assistants covering the period from May 1, 2015, through March 1, 2017 (the "Discovery Materials").
To obtain a letter of request, the movant must show initially that production would be ordered if the materials sought were subject to the court's jurisdiction. In one of her proposals, Lilly seeks all of the Discovery Materials. In an alternative proposal, Lilly only seeks the Discovery Materials to the extent that they touch on particular issues relevant to this proceeding. The court adopts the latter proposal which makes the materials sought plainly relevant. If the Discovery Materials were subject to this court's jurisdiction, the court would order them produced.
Whenever discovery involves a lawyer, there will be concerns about privilege. Here, those concerns are likely to be limited, because the investigators conducted a focused investigation and have stated that the Discovery Materials primarily implicate Neupert and his assistant, rather than clients. Additionally, privilege issues are unlikely to be of concern because of the crime/fraud exception. This court has previously ruled that the actions Neupert took that form the basis for this case bear sufficient hallmarks of fraud to invoke the crime/fraud exception. The Discovery Materials were also seized as part of an investigation into a crime.
A party seeking a letter of request also must convince the issuing court to ask a foreign court for assistance, taking into account the burden that such a request necessarily imposes on the judicial system of another nation. Lilly has met her burden on that issue by showing that the letter of request is targeted and appropriate. The Discovery Materials have already been collected and are easily identifiable. Under Swiss law, a private plaintiff can obtain the Discovery Materials, and Lilly has shown that investigators have provided similar information to a private plaintiff in the past.
Although not required to secure the issuance of a letter of request, Lilly has shown that it will be difficult, if not impossible, to obtain the information through other means. To be sure, Neupert is a party to this case and ostensibly subject to compulsory process. But since April 2017, Neupert has failed to participate meaningfully in this proceeding. He is a foreign national who previously refused to be deposed, despite his status as a defendant. Because of his non-participation in an earlier phase of this case, the court drew an inference that any evidence that Neupert could have provided would be favorable to Lilly. Another powerful indicator of Neupert's non-participation is his failure to respond to Lilly's motion. Only the BGO Foundation has raised objections to the letter of request.
Lilly has made a convincing showing that Neupert would not produce the Discovery Materials if he had them, and the record suggests that he may no longer have them. The investigators reported that they seized the Discovery Materials, not that they made copies of them. It is reasonable to infer that the only source is the investigators’ files.
Lilly's motion is granted. The letter of request will issue.
Non-party Israel Igo Perry died on March 18, 2015. He was survived by Lilly, his widow, and their two daughters, Tamar and Yael.1 Mr. Perry's last will and testament named Neupert as the executor of his estate. Neupert is Swiss lawyer who was Mr. Perry's longtime advisor and confidant.2 Neupert also was the architect of Mr. Perry's estate plan, which involved a complex network of entities called the "Structure." Louis Oehri & Partner Trust reg. ("LOPAG"), a Liechtenstein commercial trust company, formed and controlled all of the entities in the Structure. Neupert and Louis Oehri co-founded LOPAG in 1989, and they worked hand in hand to create the Structure and advise Mr. Perry.
Neupert and representatives of LOPAG told Lilly that when Mr. Perry died, he was the sole member of Côte d'Azur Estate LLC ("Côte d'Azur" or the "LLC"), a Delaware limited liability company. The LLC owned La Treille, a villa in the south of France (the "Villa"). Neupert and representatives of LOPAG told Lilly that the member interest in the LLC passed to Mr. Perry's estate and that she was the sole heir of the estate.
After Lilly, Tamar, and Yael disagreed about the disposition of Mr. Perry's wealth, Neupert and LOPAG tried to broker a settlement of those disputes. By June 2016, however, it was clear that the family members could not agree. The family divided into two factions, with Lilly and Tamar on one side and Yael on the other.
Neupert and LOPAG sought to force the family members back to the table by pressuring Lilly. To achieve that goal, they reversed their position about the ownership of the LLC, and they asserted that before his death, Mr. Perry transferred his member interest to the BGO Foundation (the "Foundation"), one of the entities in the Structure. As evidence of the transfer, they relied on a Deed of Assignment dated May 1, 2013. If the Foundation controlled the LLC, then Neupert and LOPAG could deny Lilly access to the Villa.
In June 2016, in an effort to bolster their new position about the ownership of the LLC, Neupert and LOPAG engaged in self-help. Neupert caused a Delaware registered agent to file a certificate of conversion with the Delaware Secretary of State that converted Côte d'Azur Estate Corporation ("Côte d'Azur" or the "Corporation").3 Neupert also caused the registered agent to file a certificate of incorporation that authorized the issuance of 10,000 shares of common stock. There are documents which Neupert and LOPAG created later that purport to issue all of the Corporation's shares to the Foundation.
Starting in the second half of 2016, litigation broke out in various jurisdictions. In April 2017, Lilly filed this action. She contends that (i) the Deed of Assignment did not effectuate an immediate transfer of Mr. Perry's member interest in the LLC to the Foundation and (ii) Mr. Perry subsequently decided not to carry out the transfer because of adverse tax consequences in France. She maintains that Mr. Perry remained the sole member of the LLC when he died. Consequently, Neupert and LOPAG had no authority to convert the LLC into the Corporation or to issue shares of stock to the Foundation.
One of the early battles in the case concerned whether Lilly could name the Foundation as a defendant. When the Foundation moved to dismiss for lack of personal jurisdiction, the court held that Lilly had made a sufficient showing to conduct jurisdictional discovery. During jurisdictional discovery, the Foundation stipulated that Mr. Perry never executed any additional documents to implement the Deed of Assignment, and Dominik Naeff, a principal of both LOPAG and the Foundation, testified that the Deed of Assignment was never implemented. The discovery record included contemporaneous documents in which Naeff and Neupert acknowledged that the Deed of Assignment was never implemented. The Perry family and their advisors, including Neupert and Naeff, also represented to the French tax authorities that Lilly was the ultimate beneficial owner of the Villa. That only could have been true if the Deed of Assignment was never implemented and if Lilly stood to inherit the Villa as the sole beneficiary of Mr. Perry's will.
The court held a two-day evidentiary hearing to determine whether personal jurisdiction existed over the Foundation. The court then issued an opinion which concluded that the court could exercise personal jurisdiction over the Foundation because the Foundation had conspired with Neupert to commit torts that had a sufficient nexus to Delaware. Perry v. Neupert (Jurisdictional Decision) , 2019 WL 719000, at *37 (Del. Ch. Feb. 15, 2019).
In reaching this conclusion, the court made findings of fact based on what the evidentiary record showed at that stage by a preponderance of the evidence. The court's factual findings included the following:
• Mr. Perry never executed the documents necessary to implement the Deed of Assignment. Id. at *7.
• Mr. Perry decided not to complete the transfer to avoid adverse tax consequences in France. Id. at *8.
• On March 28, 2015, Naeff wrote to the Perry family's advisors, including Neupert, that the Deed of Assignment "was never executed." Id. At the evidentiary hearing, Naeff testified that by "never executed" he meant "that this transfer has not been completed or finalized." Naeff Tr. 53.
• In August 2015, Neupert wanted to claim that the LLC had been transferred into the Structure. He and Naeff discussed whether they could use the Deed of Assignment to make such a claim, but they agreed that it had never been implemented. Jurisdictional Decision , 2019 WL 719000, at *25.
• In August 2016, Neupert and Naeff claimed to have...
To continue reading
Request your trial