Wolf Investments Fund, LLC v. Capital Source 2000, Inc., and William Bromley

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

WOLF INVESTMENTS FUND, LLC, )
)
Plaintiff, )
)
v. )
) C.A. No. N24C-02-210 CLS
CAPTIAL SOURCE 2000, INC., )
CS2K, LLC, AND WILLIAM )
BROMLEY, )
)
Defendants. )
)

Date Submitted: November 4, 2024
Date Decided: February 3, 2025

Upon Defendants Motion to Dismiss Plaintiffs Amended Complaint. DENIED.

ORDER

Julia B. Klein, Esquire, Klein LLC, Wilmington, Delaware 19801. Attorney for
Plaintiff.
Maura L. Burke, Esquire, Pierson Ferdinand LLP, Wilmington, Delaware, 19801.
Attorney for Defendants CS2k LLC and William Bromley.
Bradley P. Lehman, Esquire, Gellert Seitz Busenkell & Brown LLC, Wilmington
Delaware, 19801. Attorney for Capital Source 2000, Inc.

SCOTT, J.

1
INTRODUCTION
Before this Court is Plaintiff Wolf Investment Fund, LLC (“WIF”) action

arising from a securities transaction where WIF asserts that William Bromley

(“Bromley”), through his various companies, Capital Source 2000, LLC and

CS2K, LLC, fraudulently misrepresented and made material omissions when

selling certain securities, thus violating the Pennsylvania Securities Act of 1972.

CS2K, LLC and Bromley (“Moving Defendants”) have filled a Motion to Dismiss

pursuant to Rule 12(b)(6). Capital Source 2000, Inc. filed a Motion to Join Moving

Defendants Motion to Dismiss. Capital Source 2000, Inc., CS2K, LLC, and

William Bromley are henceforth referred to as “Collective Defendants.” This Court

requested both parties submit a supplemental letter to the Court clarifying the

Courts ability to exercise personal jurisdiction over Collective Defendants. Upon

reviewing the supplemental letters from both parties, the Court has determined it

has personal jurisdiction over the present case.

STATEMENT OF FACTS
WIF is a Delaware limited liability company with its principle place of

business in Pennsylvania. Capital Source 2000, Inc., is a corporation organized

under the laws of the State of Delaware with its principle place of business in

Conshohocken, Pennsylvania. CS2K, LLC is a Delaware Limited Liability

company with its registered agent located in Wilmington, Delaware. William

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Bromley is the founder, president, and chief executive officer of Capital Source

2000, Inc.

On May 30, 2019, WIF entered into a securities agreement (“Agreement”)

with Capital Source 2000 Inc., for the value of $400,000. Both parties signed a

Non-Negotiable Term Promissory Note (“400K Note”) on May 30, 2019,

memorizing their agreement. On February 6, 2020, WIF entered into an additional

securities agreement with Capital Source 2000, Inc. for the value of $375,000 and

both parties signed a Non-Negotiable Term Promissory Note (“$375 Note,”). In

both Notes Capital Source 2000 Inc., was named the Maker and promised to pay

WIF who was identified as the Payee.

On July 24, 2020, the Securities Exchange Commission filed a Complaint

alleging securities fraud in the United States District Court for the Southern

District of Florida, naming among others, Joe Cole and Par Funding as defendants

(“Par Funding Action”). The Par Funding Action contained no allegations against

Defendant William Bromley or Defendant Capital Source 2000, Inc.

On August 27, 2020, a Preliminary Injunction Order was entered in the Par

Funding Action that froze all the assets of Joe Cole and companies in which he

held an interest including Capital Source 2000 Inc. A receiver was appointed in the

Par Funding Action and included Capital Source 2000 Inc. as part of the

3
receivership estate. The receivership froze any collection activities by WIF on

account of the Notes.

On February 21, 2024, WIF filed a complaint against Collective Defendants

asserting violations of Section 501 of the Pennsylvania Securities Act. On April

30, 2024, Defendants CS2K, LLC and William Bromley filed a Motion to Dismiss.

Subsequently, WIF filed an Amended Complaint asserting (Count I) Capital

Source 2000, Inc., violated the Pennsylvania Securities Act of 1972 and (Count II)

CS2K LLC and William Bromley violated the Pennsylvania Securities Act of

1972.

CS2K Inc. and William Bromley filed a Motion to Dismiss the Amended

Complaint because it does not comport with the statute of limitations pursuant to

70 Pa. Stat. Ann. § 1-504. Capital Source 2000, Inc., filed a Motion for Joinder of

Moving Defendants Motion to Dismiss. WIF filed a response.

Before the Court can decide the merits of the Motion to Dismiss, this Court

requested both parties address the Courts ability to exercise personal jurisdiction

over the case.

PARTIES CONTENTIONS
Wolf Investment Fund LLC Contends:
Wolf Investment Fund LLC argues public filings in the State of Delaware

automatically confer this Court to have specific jurisdiction over the claims
4
because a filing counts as a transaction. Specifically, Plaintiffs contend that the

choice to form a Delaware entity creates a significant contact with Delaware which

confers specific jurisdiction.

Capital Source 2000, Inc., CS2K, LLC, and William Bromley Contends:

Collective Defendants contend the Court lacks both general and specific

jurisdiction over collective Defendants because the events of the transaction and

the law that governs the transaction occurred and are subject to Pennsylvania

jurisdiction.

STANDARD OF REVIEW

Jurisdiction exists by way of general jurisdiction or specific jurisdiction.1

General jurisdiction exists when a defendant is “essentially at home” in the forum

state.2 To meet this standard, “a defendant's contacts with the forum state are ...

‘continuous and systematic that they are essentially at home in the forum state.’”3

Specific jurisdiction over a defendant exists when a case “arises out of or relates to

1
Dunfee v. KGL Holdings Riverfront, LLC, 2017 WL 6000495, at *4 (Del. Super.
Ct.).
2
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).
3
Dunfee v. KGL Holdings Riverfront, LLC, 2017 WL 6000495, at *4 (Del. Super.
Ct.) (quoting Goodyear, 564 U.S. at 919; citing Genuine Parts v. Cepec, 137 A.3d
123, 130 (Del. 2016)).
5
the defendant's contacts with the forum.”4 To determine whether this standard is

met, Delaware courts must determine whether Delaware’s long-arm statute, 10

Del. C. § 3104(c), is applicable and whether subjecting the nonresident to

jurisdiction in Delaware violates the Due Process Clause of the Fourteenth

Amendment.5

“Generally, a plaintiff does not have the burden to plead in its complaint

facts establishing a court’s personal jurisdiction over defendant.”6 The Plaintiff

does bear the burden of establishing personal jurisdiction if it is contested in a

Motion to Dismiss.7 However, the requirement of personal jurisdiction is a

waivable right.8 “Because the personal jurisdiction requirement is a waivable right,

the litigant may give ‘express or implied consent to the personal jurisdiction of the

court.’”9

4
Dunfee, 2017 WL 6000495, at *4 (quoting Daimler AG v. Bauman, 571 U.S. 117,
119, 134 S. Ct. 746, 750, 187 L. Ed. 2d 624 (2014)); citing Genuine Parts, 137
A.3d at 130; Bristol–Myers Squibb Co. v. Superior Court of California, San
Francisco Cty., 137 S.Ct. 1773, 1780 (2017); Burger King Corp. v. Rudzewicz, 471
U.S. 462, 464 (1985)).
5
White v. Sharabati, 2019 WL 2897913, at *1 (Del. Super. Ct.) (citing Herman,
2015 WL 1733805, at *3)); See 10 Del. C. § 3104(c).
6
Harris v. Harris, 289 A.3d 310, 326 (Del. Ch. 2023) quoting Benerofe v. Cha,
1996 WL 535405, at *3 (Del. Ch.).
7
Superior Court Civil Rule 12(b)(2).
8
Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703,
102 S.Ct. 2099, 72 L.Ed.2d 492 (1982).
9
Burger King, 471 U.S. at 472 n. 14, 105 S.Ct. 2174 (citing Ins. Corp. of Ireland,
456 U.S. at 703, 102 S.Ct. 2099).
6
DISCUSSION

Collective Defendants filed a Motion to Dismiss WIF’s Amended Complaint

for time bar limitations pursuant to 70 PA. Stat. Ann. § 1-504. Collective

Defendants did not raise an issue of personal jurisdiction in its Motion to Dismiss,

nor can the Court dismiss a case sua sponte where it finds personal jurisdiction is

lacking.10 However, the Court requested both parties to clarify the merits of its

ability to exercise personal jurisdiction over Collective Defendants.

The Court finds that it has general jurisdiction over Capital Source, 2000

inc., and CS2K, LLC. The Court, further, has jurisdiction over William Bromley

through the Delaware LLC Act. In Goodyear Dunlop Tires Operations, S.A. v.

Brown, the Supreme Court of the United States of America noted that “the

paradigm fora for general jurisdiction over a corporation are its place of

incorporation and its principle place of business because those affiliations are

“unique” and “easily ascertainable.”11 Here, Capital Source 2000, Inc. and CS2K,

LLC are both Delaware entities. Capital Source 2000, Inc. is incorporated in the
10
Genuine Parts Co. v. Cepec, 137 A.3d 123 (Del. 2016) (See generally Personal
jurisdiction is a waivable right and a litigant may give express or implied consent
to the personal jurisdiction of the court.).
11
Genuine Parts Co. v. Cepec, 137 A.3d 123, 135 (Del. 2016) (quoting Goodyear
Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S. Ct. 2846, 180 L. Ed.
2d 796 (2011)).

7
State of Delaware and CS2K, LLCs registered in Delaware. Thus, because both

entities are “at home” in Delaware the Court can exercise general jurisdiction over

the entities.

Additionally, this Court can exercise jurisdiction over William Bromley

through the Delaware LLC Act’s implied consent statute 6 Del. C. § 18-109.12

Section 18-109(a) permits service of process on an LLC's manager:

in all civil actions or proceedings brought in the State of Delaware
involving or relating to the business of the limited liability
company or a violation by the manager ... of a duty to the limited
liability company or any member of the limited liability company,
whether or not the manager ... is a manager ... at the time suit is
commenced.13
The Statute creates a two-prong test in which the defendant must be a manager

pursuant to the definition of managers14 in the statute and the claim must “involve

or relate to” the business of the LLC.15 In determining if the claim against William

Bromley “involves or relates to” the business of the LLC the Court will analyze if:

12
6 Del. C. § 18-109
13
6 Del. C. § 18-109(a).
14
Lone Pine Res., LP v. Dickey, 2021 WL 2311954, at *7 (Del. Ch. June 7, 2021)(
See generally Section 18-109(a) provides that two types of managers may be
served under the consent statute: (1) a person formally named as a manager
pursuant to the governing LLC agreement and, (2) a person not formally named as
a manager pursuant to the governing LLC agreement but who nevertheless
“participates materially in the management of the liability of the company.”).
15
Id.
8
(1) the allegations against the manager focus centrally on his rights,
duties and obligations as a manager of a Delaware LLC; (2) the
resolution of the matter is inextricably bound up in Delaware law;
and (3) Delaware has a strong interest in providing a forum for
disputes relating to the ability of managers of an LLC formed under
its law to properly discharge their respective managerial
functions.16
Here it is clear that Bromley was acting in his capacity as a manager of

Capital Source 2000, Inc., that would avail him to the jurisdictional reach of

Delaware. William Bromley was, pursuant to Section 18-109(a), acting in his

capacity as a manager of Capital Source 2000, Inc., because he “participates

materially in the management of the limited liability company,”17 by acting in his

capacity as president to bind the company in various transactions. Moreover, the

present action is directly related to his duties and obligations of the Delaware LLC.

Thus, through his fiduciary relationship with Capital Source, 2000 Inc., he

consented to personal jurisdiction in this Court for claims relating to Capital

Source, 2000 Inc. and CS2K, LLC.18

CONCLUSION

Based on the forgoing reasons, this Court has jurisdiction over Collective

Defendants in the present action.

16
Lone Pine Res., LP v. Dickey, 2021 WL 2311954, at *8 (Del. Ch.).
17
6 Del. C. § 18-109.
18
Lone Pine Res., LP v. Dickey, 2021 WL 2311954, at *7 (Del. Ch.).

9
IT IS SO ORDERED.

/s/ Calvin L. Scott
Judge Calvin L. Scott, Jr.

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