In re Coinmint, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

In re COINMINT, LLC. ) C.A. No. 2019-0983-MTZ

OPINION
Date Submitted: April 15, 2021
Date Decided: May 10, 2021
Date Issued: August 12, 2021

Evan O. Williford, THE WILLIFORD FIRM LLC, Wilmington, Delaware, Attorney
for Petitioner Mintvest Capital Ltd.

Kenneth J. Nachbar and Elizabeth A. Mullin, MORRIS, NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, Delaware, Attorneys for Respondent Coinmint Living
Trust.

ZURN, Vice Chancellor.
 This case presents an oft-repeated fact pattern with a legal wrinkle. Two

friends together developed a successful enterprise: from the outset, they agreed that

they would be equal partners, with one providing labor and know-how, and the other

providing funds. The sweat equity partner acknowledged his interest in the company

would likely be diluted as the financial partner contributed capital. They

memorialized this understanding in the limited liability company’s operating

agreement, which outlined procedures to effectuate dilution via capital contribution,

among other things. Each partner held his respective membership interest through

an investment vehicle and each was represented on the company’s board of

managers. The company flourished, but the friendship fractured, and litigation

followed.

In this iteration of this fact pattern, the enterprise is a bitcoin mining firm. In

2016, the company dove into the fast-paced business of bitcoin mining. The sweat

equity partner requested rapid and frequent cash infusions from the financial

member, who provided those funds upon request. They conducted the company’s

business informally, disregarding the operating agreement’s formalities. As a result,

the financial member’s cash infusions did not follow the operating agreement’s

strictures for dilutive capital contributions, but the sweat equity member never

objected. Instead, in 2017, the sweat equity member agreed it had been diluted

below five percent, and negotiated to have its equity increased and fixed at roughly

1
eighteen percent. To preserve that percentage, the financial member agreed that its

future cash infusions would be categorized as nondilutive loans. The parties

proceeded with the mutual understanding that the financial member controlled over

eighty percent of the company.

As the company grew, the friends strategized to redomesticate the company

in Puerto Rico. They converted the company to a Puerto Rican limited liability

company in 2018. Consistent with the members’ history of ignoring the operating

agreement’s formalities, they did not conduct a formal vote or solicit written

consents to effectuate that conversion. Nonetheless, the sweat equity partner

championed this plan, and he affirmed his consent to it as recently as 2019.

The friends’ relationship thereafter unraveled, and the financial member

leveraged its majority interest to unilaterally amend the operating agreement and

remove the sweat equity partner from his managerial role. The sweat equity member

now challenges its dilution, the conversion, and the partner’s removal from

management, and requests an order dissolving the company. This post-trial opinion

concludes that the sweat equity member waived the operating agreement’s

formalities for dilution and conversion; acquiesced in that dilution and the

company’s conversion; and is estopped from asserting that he controls half of the

company’s equity and from challenging the conversion.

2
 Because of the conversion and the company’s 2018 redomestication in Puerto

Rico, the sweat equity member’s challenge to the partner’s removal and request for

dissolution present an issue of first impression: whether the Court of Chancery has

subject matter jurisdiction to dissolve or to declare the proper managers of a foreign

entity. This opinion concludes that (1) the company’s conversion to a Puerto Rican

entity stripped this Court of statutory jurisdiction to declare the company’s present

managers and to order judicial dissolution under the Delaware Limited Liability

Company Act, as those statutory grants are cabined to domestic entities; and (2) this

Court is without subject matter jurisdiction to work an equitable dissolution of a

Puerto Rican entity.

Accordingly, judgment is entered in favor of the financial member as to the

company’s conversion, and the sweat equity member’s requests to declare the Puerto

Rican entity’s proper managers and order dissolution are dismissed.

I. BACKGROUND1

Having weighed the evidence and evaluated the credibility of the witnesses, I

find that the following facts were proven by the preponderance of the evidence

presented at trial.

1
Citations in the form of “Am. Compl. —” refer to the Amended Complaint, available at
Docket Item (“D.I.”) 16. Citations in the form of “PTO —” refer to the Joint Pre-Trial
Stipulation and Order, available at D.I. 207. Citations in the form of “Last Name Tr. —”
refer to the trial testimony of the identified witness, available at D.I. 235 and D.I. 236.
Citations in the form of “JX —” refer to joint exhibits in the trial record. And citations in

3
 Nominal Respondent Coinmint, LLC (“Coinmint” or the “Company”) is a

private bitcoin mining firm that operates one of the largest digital currency centers

in the world.2 It was founded by two childhood friends, nonparties Prieur Leary and

Ashton Soniat.3 Leary and Soniat formed Coinmint as a Delaware limited liability

company in August 2016.4 Leary and Soniat hold their interests in Coinmint via

their respective entities: Petitioner Mintvest Capital Ltd. (“Mintvest”) and

Respondent Coinmint Living Trust (“CLT”).5 Leary is president of Mintvest, a

Delaware corporation.6 Soniat is the owner and controller of CLT, a Puerto Rican

entity.7 Mintvest and CLT are and always have been Coinmint’s only Members,8

and at all relevant times, those entities acted by and through their human

decisionmakers, Soniat and Leary.

At the time of formation, the parties agreed Leary would run Coinmint’s day-

to-day operations, contributing labor and know-how, while Soniat would fund those

the form of “Op. Agr. —” refer to Coinmint’s Limited Liability Company Agreement dated
November 21, 2016, available at JX 11.
2
See Leary Tr. 10; JX 60 at COINMINT_157338, -157357.
3
PTO ¶ 12.
4
Id. ¶¶ 9, 13.
5
Id. ¶ 16.
6
Id. ¶¶ 7, 10.
7
Id. ¶¶ 8, 11.
8
Id. ¶ 9.

4
operations.9 Leary and Soniat agreed that Mintvest and CLT would be Coinmint’s

50% owners,10 that the friends would “work together agreeing on all material

decisions and expenditures,” and that Soniat would eventually contribute more

capital and Leary would be diluted.11 For example, Leary stated to Soniat,

At some point, given your financial resources are great[er] than mine,
it is contemplated you will contribute more. It is agreed that I accept
equity dilution as this happens, in a manner that is directly related to
the capital put in. Long story short, it is my hope that this is a big
success and I am a minority interest holder here.12

Mintvest and CLT memorialized their 50-50 equity split and dilution mechanisms

in Coinmint’s Limited Liability Company Agreement dated November 21, 2016

(the “Operating Agreement”).13

As agreed, Leary operated Coinmint and Soniat bankrolled those operations

via CLT. The parties now dispute how certain of CLT’s cash infusions should be

9
Id. ¶ 20; JX 4.
10
PTO ¶ 16; JX 4 at COINMINT071041; JX 7 at COINMINT_157136.
11
JX 4 at COINMINT071042.
12
Id.; see also Leary Tr. 77; JX 5 at COINMINT065914 (“We are equal as long as our
contributions are equal. If one contributes more, then the other will have the option to
match it. If no match, then dilution will occur. My suggestion is to have meetings at least
quarterly (or more often by request) to effect dilution, meet strategically on company
direction, and decide distributions.”); JX 7 at COINMINT_157137 (“Mintvest will be
matching the contribution that Ashton made, to the extent that it can. After that point, it
will face dilution, pursuant to the agreement.”).
13
See Op. Agr.; PTO ¶ 14; see also JX 7 at COINMINT_157137 (“Mintvest will be
matching the contribution that Ashton made, to the extent that it can. After that point, it
will face dilution pursuant to the agreement.” (emphasis added)).

5
classified (i.e., whether they are capital contributions or loans under the Operating

Agreement) and whether those cash infusions diluted Mintvest’s stake in the

Company.14 Leary maintains that Mintvest was never diluted, but instead

maintained its 50% equity interest notwithstanding CLT’s nearly continuous

funding.15 CLT contends that Mintvest was significantly diluted to the point that its

interest in the Company was under 5%, but then Leary and Soniat renegotiated and

increased Mintvest’s stake to 18.2%. The facts presented at trial support CLT’s

position.

A. The Parties Memorialize Their Understanding In The
Operating Agreement, But Eschew Its Formalities.

Under the Operating Agreement, Coinmint is manager-managed with a Board

of Managers (the “Board”), and all Company actions and decisions flow through the

Board.16 While Members retain the right to vote on certain major decisions, like

effectuating a merger,17 they have no “authority or power to act for or on behalf of

the Company.”18 Section 4.3(f) of the Operating Agreement states that “any Board

action shall require the approval of a Majority of the Managers then serving on the

14
PTO ¶ 27.
15
See Am. Compl. ¶¶ 102, 111, 123.
16
See PTO ¶ 15; Op. Agr. §§ 3.9, 4.3.
17
See Op. Agr. § 4.6.
18
Id. § 3.9.

6
Board.”19 Sections 4.3 through 4.6 of the Operating Agreement describe (1) how

the Managers may take action on the Company’s behalf, including at a formal

meeting or by written consent, and (2) what vote is required to take such action,

including when majority Board approval and majority Member approval are

needed.20

Under Section 4.1(b), Mintvest appointed Leary to serve as a Manager and its

Board designee; CLT appointed itself to serve as a Manager and Board designee.21

Under Section 4.2(a), those Managers could be removed “with or without cause,

only by the Member who designated such Manager to serve on the Board.”22

Each Manager’s voting power is determined by its appointing Member’s

respective equity stake:23

Each Manager shall have the voting power equivalent to the Sharing
Ratio of the Member that appointed such Manager and, unless
otherwise expressly stated in this Agreement, all actions by or requiring
the consent or approval of the Board shall require the consent or
approval of a Majority of the Board.24

19
Id. § 4.3(f).
20
See id. §§ 4.3, 4.4, 4.5, 4.6.
21
Id. § 4.1(b); PTO ¶¶ 17, 18.
22
Op. Agr. § 4.2(a).
23
See id. §§ 3.6, 3.7, 10.5 & Sched. 1.
24
Id. § 4.3(e).

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The Member’s Sharing Ratio, or equity interest, and its correlating voting power

may be increased or diluted via cash infusion.25 The Operating Agreement

contemplates that cash infusions may take the form of either a loan or capital

contribution.26 Cash infusions in the form of loans are not contributions; they cannot

increase a Member’s equity stake, and do not have dilutive effect.27 Capital

contributions affect voting power of the Members and their appointed Managers.28

The Operating Agreement prescribes certain formalities to effectuate a capital

contribution and adjustment; the parties do not meaningfully dispute those

formalities. Section 3.2(a) of the Operating Agreement contemplates that if there

are “insufficient Available Funds to cover operating deficits or other capital needs

of the Company, the Board shall notify the Members in writing of such deficits and

other cash needs,” after which each Member is required to make an additional capital

contribution to the Company.29 In other words, the Board must determine that a

capital call is required, vote to make the capital call, and approve written notice to

25
See id. § 3.6. The “Sharing Ratio” refers to Mintvest and CLT’s respective ownership
percentages, as reflected in each Member’s Capital Account, in accordance with Section
3.7 of the Operating Agreement, which “may change from time to time as provided in th[e]
[Operating] Agreement.” Id. § 1(rrr); see also id. § 3.6 & Sched. I. The Sharing Ratio is
subject to Section 3.2, which governs dilution. See id. §§ 3.2, 3.6, 3.7.
26
See id. §§ 3.2, 3.5, 3.6.
27
See id. §§ 3.5, 3.6(f).
28
See id. §§ 3.2, 3.6, 4.3(e).
29
See id. § 3.2(a).

8
the Members.30 The Board must do so in compliance with the Operating

Agreement’s procedural requirements.31 Thereafter, the Board must send advance

written notice of the call to the Members.32

Each Member has the right to match its counterpart’s capital contributions to

avoid dilutive effect. If a Member fails to make a required capital contribution, the

other Member may make that contribution, and the parties’ respective equity

percentages will be immediately adjusted to reflect the disparate contributions.33

Such adjustments shall be “effective as of the date the amount requested under

[Section 3.2(a)] was due,” and “shall be made by the Board in good faith.” 34 The

Board should provide notice of any adjustment to the diluted Member, but failure to

do so does not nullify the dilution.35

The parties did not follow the Operating Agreement’s formalities, and instead

mutually pursued a fast-and-loose course of operations and documentation.36 As

30
See id.
31
See id. § 4.4 (stating that Board action must be taken at a meeting or by written consent).
32
See id. § 3.2(a).
33
See id. § 3.2(a)(1)–(2) (discussing the consequences of a Member’s failure to make any
required additional capital contribution, namely a “Failed Contribution”).
34
Id. § 3.2(a)(2).
35
See id.
36
See, e.g., JX 28 at 1 (stating with respect to Mintvest’s dilution that “[Leary] [did not]
think we would actually need any further paperwork on this,” as he was “not aware of
either Ashton or [him]self wanting to change what it is now,” and that this was “[j]ust
[Leary’s] 2 cents for minimizing documentation, and as we are working on the big
enchilada now, there is a very likely chance that within 30 days, we will need to make

9
Leary explained, “our meetings were . . . like this[:] Ashton and I would get together

and agree on certain things and then do them.”37 Soniat corroborated this statement:

changes again,” and questioning “[w]hy paper something now that has been as it is for
months, and then do it again shortly?”); JX 79 at MINTVEST00001945 (stating that Leary
thought “it would have been much easier to have one doc that says the monies sent in from
Dorado would be treated as a loan, unless there was an agreement to the contrary” because
that “[w]ould avoid all of this paperwork,” with Soniat responding that he believed “we
need a clean history of loans”); Leary Tr. 110 (conceding that the Company did not adhere
to formalities); id. 120 (“She asked me to sign loan documents. She asked me to sign all
kinds of documents. And usually it wasn’t frequent, which is why I answered the other
question like I did. It was more infrequent. Like, a few times a year I was given a pile of
papers or a pile of documents to sign, and just instructed to sign these, don’t worry about
them. And, again, Ashton was my friend. I just trusted Kathleen was doing everything
right.”); Soniat Tr. 236–37 (referring to Leary’s comments regarding minimizing
paperwork in JX 28, and stating: “I would say that summarizes the way Leary liked to do
business. He did not like to document things, he did not like to sign things, and liked to do
it very, very casually. And when, whether it was Kathleen or Mr. Carlton tried to, you
know, have him sit down, have a meeting, get things documented, it was always pushed
back, and that he’s too busy running around the world, working. He’s working 16 hours a
day. He doesn’t have time for this, to sign these things or go over these housekeeping
issues. So that’s a pretty good summary of the way the business was run.”); Carlton Tr.
335 (“Mr. Soniat was being more of a passive investor, I would say, who was simply
funding things. Mr. Soniat wanted things done right, but was largely deferring to Mr. Leary
to kind of set the priorities for me and others. Contrary to kind of how I would normally
like to do things, Mr. Leary hated formalities, and it was almost impossible to get focused
on administrative matters. He’d schedule calls with us and other attorneys and not show
up. Overall, he was extremely resistant to prioritizing internal items and structural items.
Whether it was him being overwhelmed or something more nefarious, it was almost
impossible to get him to sign or respond to things on those fronts. He’d actively push us
to demote, avoid, delay, or not prioritize such items. Mr. Soniat was a little easier to get in
touch with, but was also hard to chase down at times.”); id. 336 (“We seemed like we were
always trying to catch up and trying to document things after the fact simply because we
weren’t getting the information ahead of time. And given the personalities involved, trying
to document things even after the fact proved very difficult.”); Schneider Tr. 406 (stating
that Leary’s unwillingness to formally document Company actions was “typical”).
37
Leary Tr. 110.

10
 I think it’s pretty clear how things were run. It was run casually. And
we had to act very quickly, as displayed in the WhatsApp messages,
where he was on the ground, either in China or Upstate New York, and
would tell me that, you know, “we need money fast. Sorry for the last
notice, but, you know, I can buy $500,000, a million dollars’ worth of
machines, but if we don’t wire the money tomorrow they may not be
there.”

And so it was a very fluid process, quick, where we had to act. And, as
I said, we were on the phone hours and hours per day. So I mean, if he
ever wanted to have an official meeting, I would probably find that
bizarre, but I would have agreed, for sure.38

Leary never complained about Coinmint’s internal lack of formal process, and

instead advocated for eschewing formalities and praised the outcomes.39 It is

undisputed that the Company has had no formal Board meetings where minutes were

created.40 And except for written consents executed in November and December

2019 (the validity of which Mintvest disputes), the Board never executed a written

consent in lieu of a meeting to authorize Company action.41

38
Soniat Tr. 276.
39
See, e.g., id. 276–77.
40
PTO ¶ 28.
41
Id. ¶ 29.

11
 B. CLT Dilutes Mintvest; Leary Negotiates To Increase Mintvest’s
Diluted Position To 18.2 Percent.

As contemplated at formation, Leary requested from Soniat, and Soniat

provided, funds to support the Company’s operations;42 neither Mintvest nor Leary

provided funds aside from an initial contribution.43 Some of the funds Soniat

provided on CLT’s behalf were loans, and others were treated as capital

contributions.44

By the end of 2016, Soniat’s capital contributions diluted Mintvest’s interest

to 5.5%.45 By early 2017, it was reduced even further.46 But consistent with the

Company’s internal practice of disavowing formal procedures, Coinmint does not

have any Board minutes reflecting a capital call vote; any written consent

authorizing a capital call; or any capital call notice sent to Members.47 Leary never

objected on Mintvest’s behalf to characterizing Soniat’s cash infusions as CLT

capital contributions—until he filed this suit.48

42
See, e.g., id. ¶ 26; JX 1 at 1386, 1390, 1397, 1398, 1420, 1425, 1426, 1437, 1465, 1473,
1504, 1534, 1542; Leary Tr. 95–97, 107–08; Soniat Tr. 211–12, 217, 290.
43
See Leary Tr. 77; Soniat Tr. 211–12.
44
See Soniat Tr. 293, Leary Tr. 47.
45
See JX 15 at COINMINT_157205; JX 64A at COINMINT_157468.
46
See JX 124 at 2.
47
See PTO ¶¶ 28–29.
48
See Soniat Tr. 215, 230, 241, 275–78, 289–92, 307; Leary Tr. 202.

12
 Throughout 2017, Leary and Soniat negotiated Mintvest’s equity stake.49

Leary did not contest that Mintvest was diluted by Soniat’s cash contributions, but

felt that Mintvest should not have been diluted so significantly because Leary had

contributed significant “sweat equity.”50 Soniat agreed, and the parties discussed an

adjustment over the next several months.51

In October 2017, the parties agreed to “peg” Mintvest’s interest at a higher

percentage.52 Soniat proposed to “suspend the rebalancing of equity and peg

ownership at 85/15.”53 Leary pointed out that the last equity statement he received

showed Mintvest’s equity “at 18.x%” and that he “reviewed it and it seemed

accurate.”54 Leary stated that “if it is accurate, I would prefer 18% to 15%.”55 Leary

was “fine with the concept of pegging equity permanently,” but the parties “just

need[ed] to finalize the amount.”56 Thereafter, Leary and Soniat agreed to peg

49
See Leary Tr. 118.
50
Soniat Tr. 223; see also Leary Tr. 118; Carlton Tr. 336–37.
51
See, e.g., Soniat Tr. 223; Leary Tr. 118; Carlton Tr. 336–38.
52
See JX 27 at COINMINT155291 (“We are going to suspend the rebalancing of equity
and peg ownership at 85/15.”); JX 28 at 1–4 (reflecting that the parties extensively
discussed pegging equity at 85/15).
53
JX 28 at 3; JX 27 at COINMINT155291; see also Carlton Tr. 340–41, 343–44.
54
JX 28 at 1.
55
Id.
56
Id. at 4.

13
Mintvest’s equity stake at 18.2%,57 and Soniat agreed that he would only fund the

Company with loans going forward, so as to avoid Mintvest’s further dilution.58

Leary was satisfied with their agreement and repeatedly expressed that to Soniat.59

In keeping with his general distaste for paperwork, Leary said that the agreement did

not need to be documented.60

Nonetheless, the parties memorialized this agreed-to equity split in a

Statement of Changes in Partners’ Equity backdated to August 31, 2017

(the “October 2017 Agreement”).61 Leary signed the October 2017 Agreement, and

did not suggest or demand that a Board meeting was required to make the 18.2%

57
See, e.g., JX 25; JX 32; Leary Tr. 135–36; Soniat Tr. 222–24, 232, 235–36; Schneider
Tr. 406–07.
58
See Soniat Tr. 227–28.
59
See id. 223–24, 231, 228–29, 277–78; JX 1 at MINTVEST00001473 (Leary stating that
Soniat’s lending money to the Company “is really invaluable”).
60
JX 28 at 1 (“I don’t think we would actually need any further paperwork on this. . . . Just
my 2 cents for minimizing documentation . . . . Why paper something now that has been
as it is for months, and then do it again shortly?”); see also Carlton Tr. 345–46 (referring
to JX 28 and stating that it “show[s] that Mr. Leary didn’t feel it needed to be documented
at all,” which “was consistent with his general approach that things could be done
informally, documentation was a waste of time, et cetera,” and further explaining that “[a]t
the time, we all knew that Coinmint was likely going to be redomesticated as a Puerto
Rican entity, and there was discussion about cleaning up the equity structure and related
matters as a part of that domestication process” and “[t]here was a bit of on-again, off-
again with regard to this” because “[o]n the one hand, it made sense to wait and do
everything at once, especially considering how hard it had been to get signatures and
attention on these matters,” and “[o]n the other, the redomestication kept dragging out
because we were struggling to get a large law firm or CPA to write opinion letters”).
61
See JX 25; see also JX 32; Schneider Tr. 406–07.

14
equity split official.62 Thus, as with every other Company decision, the October

2017 Agreement was not effectuated through any formal board meeting or written

consent.63

62
See Leary Tr. 115 (admitting that he never requested a formal Board meeting with
Soniat); id. 120–22 (admitting that he felt “Ms. Schneider was a bit of a pain in the ass”
because she was asking him to sign documents); id. 135–36 (admitting that he signed the
documents reflecting Mintvest’s 18.2% ownership and never requested a Board meeting to
make it “official”); Soniat Tr. 275 (explaining that “the word ‘board meeting’ was never
mentioned until he sued me in Delaware”); see also Carlton Tr. 335 (explaining that “Leary
hated formalities”); Schneider Tr. 406 (stating that it was “very normal” for Leary to forego
formalities).
63
At trial, Leary maintained that he pressed the Company to contemporaneously document
transactions and follow formalities, and that he never agreed to dilution. See Leary Tr. 54–
56 (claiming that he objected to executing documents after the fact because he “always
thought it wasn’t right,” but merely “trusted Ashton” and thought “we’re doing things
right,” while he “put [his] head down” to “make money for the company”); id. 77–78
(“Q. . . . [I]n fact, Mr. Leary, Mr. Soniat has contributed far more capital to Coinmint than
you have. Isn’t that true? A. Correct. Q. But, yet, you don’t accept any dilution, do you?
A. No. Q. . . . Is it true that you do not accept any dilution? A. Yes. We wouldn’t be
here today if I was accepting some type of dilution. Q. Right. So despite what you
communicated to Mr. Soniat in August of 2016, and despite your never having
communicated anything different, you’re still claiming in this action that Mr. Soniat owns
50 percent of Coinmint and you own 50 percent of Coinmint; correct? A. Yeah, obviously.
That’s why we’re here.”); id. 103–04 (“[M]y understanding with Mr. Soniat was at no time
would I be diluted . . . .”); id. 202 (“Q. Mr. Leary, you were questioned during cross about
the fact that you never objected to being diluted down to 18.2 percent prior to this lawsuit.
Why is Mintvest objecting now, when it didn’t object at the time you signed this document?
A. I thought everything was being done correctly. I trusted Ashton. He was my friend. I
trusted he had the professionals that were doing everything as they should. And the bottom
line is I just wanted to work. I didn’t want to fight. Never wanted to fight.”).
In view of the preponderance of the evidence presented, I do not find Leary’s
testimony on those points to be credible. “The side on which the greater weight of the
evidence is found is the side on which the preponderance of the evidence exists.”
Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967). “[T]he relative weight given to any
particular piece of evidence, and particularly witness testimony, is a matter for the court to
determine as the trier of fact.” Hockessin Cmty. Ctr., Inc. v. Swift, 59 A.3d 437, 453 (Del.
Ch. 2012) (quoting In re IAC/InterActive Corp., 948 A.2d 471, 493 (Del. Ch. 2008)).
Accordingly, I may “determine the weight and credibility to be accorded any witness,” and

15
 A series of documents executed after the October 2017 Agreement reflect the

agreed-to 81.8% to 18.2% equity split.64 Leary admits he received these documents

and did not protest Mintvest’s equity pegged at 18.2%. 65 Mintvest’s 18.2%

ownership was also confirmed through the Company’s 2018 financial statements.

In performing an audit, the Company’s accountants realized that Mintvest never

made a particular equity contribution of 14.001 bitcoins with a market value of

am “responsible for resolving conflicts in the evidence.” Johnson v. Wagner, 2003 WL
1870365, at *4 (quoting Jones v. Lang, 591 A.2d 185, 188 (Del. 1990)). “The rule is that
in determining the weight and the credibility of the testimony, the apparent fairness, interest
or bias of the witnesses, their opportunity to see and know of the circumstances, their
recollections connected therewith, and all other facts and circumstances that go to test the
accuracy of their testimony, are to be considered.” Matter of Langmeier, 466 A.2d 386,
405 (Del. Ch. 1983) (citing Benson v. Wilm. City Ry. Co., 75 A. 793 (Del. Super. Ct. 1910)).
At trial, I had ample opportunity to observe Leary and Soniat and to assess their
credibility. After listening to Soniat’s testimony, which is consistent with that of multiple
corroborating witnesses and contemporaneous documents, I find him to be credible
concerning the parties’ history of eschewing formalities and his course of injecting cash in
the form of capital contributions without Leary’s objection. See Johnson, 2003 WL
1870365, at *4; see also, e.g., Soniat Tr. 216 (testifying that he and Leary would be “50-
50 equity owners” and that Leary “would be diluted pro rata” if he did not match a
contribution, consistent with the Operating Agreement); id. 218 (testifying that Leary
would have the opportunity to match Soniat’s contributions and remain a 50% Member, or
forego a match and be diluted); id. 223–24 (testifying that they “tracked” and “discussed”
Member equity and that “there was nothing hidden or nefarious going on,” as Soniat “was
putting the money in and, per our agreement,” and Leary “was getting diluted, which he
never told [Soniat] was an issue” but expressed “that he’d be happy to have a small percent
of a successful company and to draw a salary”); Carlton Tr. 348 (testifying that Leary did
not “just sign” documents when they were presented to him, but “questioned everything”
and was “very suspicious”). Consequently, I place more weight on Soniat’s testimony
when it conflicts with Leary’s.
64
See JX 30; JX 31; JX 59; JX 64A; JX 97; JX 301; JX 302.
65
E.g., Leary Tr. 137–40, 146–48.

16
$155,143.68.66 Without that contribution, Mintvest’s equity would be further diluted

to approximately 10.69%.67 The accountants asked Leary about the “[e]quity

question” to complete the audit.68 Leary responded on May 2, 2019: “With regards

to the equity, it is the same as the spreadsheet that Kathleen prepared, that I sent you

a few days ago (18.2% for Mintvest, the rest in Ashton’s entity).”69 The referenced

“spreadsheet” was a version of the October 2017 Agreement.70 The accountants

adjusted the Company’s books to support Mintvest’s 18.2% ownership. 71

On August 9, 2019, Leary once more confirmed that he was “100%

comfortable with” Mintvest’s equity pegged at 18.2%.72 He also recognized that,

compared to CLT, Mintvest “do[es]n’t have as much skin in the game, in terms of

capital value . . . (in terms of percentages),” and that “there can be only one boss,

and that is [Soniat].”73 Twelve days later, Leary once more recognized Mintvest’s

66
See JX 85 at COINMINT_158126.
67
See JX 124 at 2.
68
JX 88 at COINMINT000025; JX 85 at COINMINT_158126.
69
JX 88 at COINMINT000024; see also JX 87.
70
Leary Tr. 147–48 (discussing JX 87 and JX 88). JX 87 reflects that Leary forwarded
Kathleen Schneider’s October 18, 2017 email containing the October 2017 Agreement to
the auditors on April 29, 2019, four days after they inquired about Leary’s equity
contributions. Compare JX 87 at COINMINT_158101, with JX 85 at
COINMINT_158126.
71
See JX 88 at COINMINT000020–000023.
72
JX 99 at COINMINT011920; see also Leary Tr. 155 (testifying that, as of early August
2019, he believed that Mintvest held 18.2% and was content with that percentage).
73
JX 99 at COINMINT011920.

17
18.2% stake and attempted to use it as leverage: after further discussions, Leary

proposed that he be given an option to exit his position as “a minority equity

holder.”74 Yet, in this litigation Mintvest seeks equitable relief in this Court based

on the assertion that Mintvest continues to hold 50% of the Company.75

As promised, Soniat funded the Company’s ongoing operations via loans so

that Mintvest would not be further diluted. As Soniat testified at trial and as

corroborated by the paper record, after October 2017, he loaned tens of millions of

dollars to the Company to help keep it afloat, even when it was extremely risky to

do so and collapse of bitcoin prices otherwise would have resulted in a bankruptcy.76

By 2019, he had loaned over $20 million to the Company on CLT’s behalf, but had

not received any interest payments on those loans.77 Soniat credibly testified that he

would never have put this capital at risk if Leary had not agreed with him that CLT

was the 81.8% owner of the Company.78 CLT does not contend any of these loan

infusions were or are dilutive.79

74
JX 101 at COINMINT130734.
75
See Am. Compl. ¶¶ 102, 111, 123.
76
See Soniat Tr. 264–65, 267, 278, 294–95, 315; Carlton Tr. 362; JX 102 at
COINMINT000031.
77
See JX 102 at COINMINT000031.
78
Soniat Tr. 278–29.
79
Soniat’s commitment to fund Coinmint only through nondilutive loans faltered once
Mintvest filed this litigation, in violation of the status quo order entered in this action,

18
 C. Coinmint Is Converted To A Puerto Rican Entity.

On or about January 19, 2018, the Company filed a Certificate of Conversion

with the Delaware Secretary of State and the Secretary of State (the “Conversion”).80

On January 25, Coinmint domesticated in Puerto Rico.81 As of that date, Coinmint

became and was thereafter operated as a Puerto Rican entity.82 Mintvest contests

the Conversion, pushing that Leary was unaware of the Conversion until September

2019 and that the Conversion is invalid because, with purportedly undiluted voting

power, Leary never authorized it on Mintvest’s behalf.83 The record demonstrates

that although the Managers did not formally authorize the Conversion via vote or

written consent, Leary was fully aware of the Conversion, supported it, and

participated in it on Mintvest’s behalf, alongside CLT.84

available at D.I. 67 [hereinafter “SQO”]. In the end, Soniat maintained that all
contributions after October 2017 were loans. See D.I. 141; D.I. 146; D.I. 147; D.I. 148.
80
PTO ¶ 30; JX 48.
81
PTO ¶ 30; JX 49.
82
See JX 48; JX 49.
83
See PTO ¶ 30 (“Petitioner contests whether the Conversion was properly authorized.”);
Leary Tr. 58 (“Q. . . . Are you aware, sir, currently, that in January 2018, Coinmint was
converted from a Delaware LLC to a Puerto Rican LLC? A. I am now. Q. When did you
first become aware of that? A. I’m not exactly sure of the time. I believe it was around
September of 2019 when I started kind of questioning a lot of the things that were going
on in the company.”); Am. Compl. ¶ 103 (“Neither Mr. Leary nor any other representative
of Mintvest ever authorized the conversion.”).
84
See, e.g., Leary Tr. 58–59 (“Q. Were there discussions in 2017 about having Coinmint
take advantage of certain Puerto Rico tax laws? A. Yes.”); id. 192–93 (confirming Leary
had received documents evidencing the Conversion prior to September 2019, and
conceding that he never protested in any way Coinmint’s redomestication as a Puerto Rican

19
 As early as February 2017, Leary was engaging with Puerto Rican tax

counsel.85 Thereafter, Leary was actively involved in the Company’s efforts to gain

Puerto Rican tax protections.86 In conjunction with those tax efforts, the Company

considered redomestication as a Puerto Rican entity; Leary was actively involved in

that process, participating in numerous discussions with the accountants and

lawyers.87

Leary participated in April and May 2018 discussions with tax professionals,

which explicitly acknowledged that “based on Coinmint’s facts, as they stand today,

the Puerto Rican company has a US trade or business, meaning that any income from

its business operations would be subject to US income taxation,”88 and that

entity before filing this action); Schneider Tr. 412 (“A. When I look back, it was always
known that Coinmint was going to eventually move to Puerto Rico. Whether it was going
to be an Act 20 company or not was not decided initially. I think there was a lot of tax
reviews done by external consultants. But, officially, it did become clear that they decided
to move forward with it, and the final decision came in around December or November
2017. And then it actually officially happened in January of 2018. Q. Who was
spearheading the efforts for the Puerto Rican conversion? A. Back early on, I was doing
a lot of legwork with it, as far as getting the external tax advisors organized. And then the
actual conversion, Mr. Leary took over the lead, and I just was the support background.”).
This record undermines Leary’s position that he was unaware of Coinmint’s
Conversion and redomestication in Puerto Rico until September 2019. I do not find Leary’s
testimony credible as his knowledge of the Conversion.
85
See JX 20; Leary Tr. 58–59, 162–63.
86
E.g., JX 38; JX 40; JX 41; JX 53; JX 56; JX 57; JX 59; JX 61; JX 68; JX 69; JX 71.
87
See, e.g., Carlton Tr. 339–40, 349.
88
JX 56 at COINMINT_157229 (identifying Coinmint as a Puerto Rican entity in April
2018); id. at COINMINT_156296 (showing that Leary responded to the email identifying
Coinmint as redomesticated); see also JX 53 at COINMINT_158462 (stating in a March

20
“Coinmint Puerto Rico filed an election to be taxed as a partnership for US tax

purposes.”89 And in June 2018, Leary received a memorandum from the Company’s

tax advisors that reiterated the 81.8%-18.2% equity split and contained an extensive

discussion about “Coinmint’s Re-domiciliation to Puerto Rico.”90

Throughout 2018 and 2019, Leary spearheaded the preparation of an Offering

Memo, or “White Paper,” to be used in conjunction with a proposed offering of

bitcoin tokens.91 The White Paper, dated August 2018, expressly states under the

heading “Corporate Structure & Ownership” that “Coinmint, LLC was formed as a

Delaware limited liability company in 2016 and reorganized as a Puerto Rico limited

liability company in early 2018.”92

Further, in spring 2018, Leary negotiated a collaboration agreement for the

Company.93 Both the draft agreement and the final version Leary signed state that

Coinmint is a Puerto Rican limited liability company.94 And in November 2018,

Leary received an email from an attorney representing the Company.95 That email

2018 email delivered to Leary that “tax counsel told us that going from one jurisdiction
(DE) to another (PR), did not require a new EIN”).
89
JX 57 at COINMINT_157305; accord JX 59 at COINMINT_157313, -157315.
90
JX 59 at COINMINT_157312, -157317–157328; see also Leary Tr. 170–71.
91
See JX 60; Leary Tr. 170–72; Soniat Tr. 245.
92
JX 60 at COINMINT_157348; see also Leary Tr. 172.
93
See Leary Tr. 182.
94
See JX 303 at COINMINT118537; JX 304 at COINMINT145499.
95
See JX 73; Leary Tr. 189–90.

21
asked whether Leary “originally organize[d] Coinmint as a Delaware LLC,” and

went on to explain, “That is what the contract says and also the PR certificate of

incorporation is dated as of January 2018, so I guess you converted to a PR entity.

If that is so, please confirm and send me a copy of the conversion documents.”96

Leary thereafter confirmed the Conversion, asking the Company’s controller to

forward a copy of the requested conversion documents; she did, copying Leary.97

Finally, in July 2019, Leary, acting and signing as President of Coinmint,

caused the Company to file a Form D with the Securities and Exchange Commission

in connection with a proposed exempt offering of securities.98 The Form D provides

that the “Jurisdiction of Incorporation/Organization of Coinmint, LLC” is

“PUERTO RICO.”99 Based on these facts, Coinmint has been a Puerto Rican entity

since January 2018.

D. Leary And Soniat’s Relationship Deteriorates.

Leary and Soniat’s relationship deteriorated over time, taking its toll on

Coinmint. By 2019, Leary and Soniat disagreed as to how the Company should be

run and managed.100 Soniat believed Leary was struggling to keep things afloat and

96
JX 73 at COINMINT000056.
97
See id.
98
See JX 97 at 1, 2, 5.
99
Id. at 1.
100
See Soniat Tr. 249–51.

22
therefore installed a CFO and COO.101 Leary did not respond well to these

changes.102 At the same time, Soniat learned about other problems related to

Coinmint’s business and management, including, inter alia, that Leary had been

hiding the Company’s bills from management and others.103

Accordingly, on December 2, 2019, CLT, as Coinmint’s 81.8% Manager and

81.8% Member,104 approved resolutions (i) amending the Operating Agreement to

provide that “[a] majority of the members shall determine the composition of the

Board, and that “[a]ny Manager may be removed from the Board with or without

cause by a Majority Vote of the Members”;105 (ii) removing Leary from the Board

under those amended terms;106 and (iii) designating CLT as Coinmint’s sole

Manager.107 CLT and Mintvest, via Leary and Soniat, are not able to continue

working together on day-to-day tasks going forward.108

101
See id.
102
See id.
103
See id. 251–52, 269–70, 272–73; see also JX 99 at COINMINT011920; JX 101 at
COINMINT130734; JX 102 at COINMINT000030–000031.
104
See JX 108 at COINMINT_157544 (indicating that CLT effectuated the resolution with
“81.8% Voting Rights”); JX 109 at COINMINT_157545 (same); JX 110 at 1 (same).
105
JX 109 at COINMINT_157545.
106
JX 108 at COINMINT_157544; PTO ¶ 31.
107
JX 110 at 1; PTO ¶ 31.
108
PTO ¶¶ 32, 33.

23
 E. This Action Follows.

Mintvest filed this action against CLT in December 2019.109 On March 2,

2020, Mintvest filed the operative Amended Complaint.110 Count I seeks to nullify

the Conversion.111 Count II seeks dissolution pursuant to 6 Del. C. § 18-802, or

alternatively, equitable dissolution.112 Count III seeks a declaration of the

Company’s proper managers pursuant to 6 Del. C. § 18-110.113 Mintvest alleged

that “[t]his Court has subject matter jurisdiction over this case under Sections

18-110, 18-111, and 18-802 of the [Delaware Limited Liability Company] Act,”114

as “Delaware courts have a significant interest in adjudicating disputes implicating

the internal affairs, conversion (a form of cancellation), and dissolution of Delaware

entities”115 and “[r]egardless of whether Coinmint is a Delaware LLC or a Puerto

Rican LLC, the Operating Agreement provides that Delaware law controls.”116

On March 17, CLT moved to dismiss, asserting in part under Court of

Chancery Rule 12(b)(1) that this Court lacked subject matter jurisdiction over

109
See D.I. 1.
110
See generally Am. Compl.
111
See id. ¶¶ 100–06.
112
See id. ¶¶ 107–17.
113
See id. ¶¶ 118–28.
114
Id. ¶ 21.
115
Id. ¶ 22.
116
Id. ¶ 26.

24
Counts II and III because Coinmint was converted to a Puerto Rican entity.117 I

cautiously denied CLT’s motion, pointing out that “the factual and legal findings

and ruling on the conversion claim and the related ownership claim are the

gatekeepers for whether the alternative claim seeking dissolution of a Puerto Rican

entity is even reached,” and that “it would be inappropriate for me to dismiss that

claim when it’s possible that the gatekeeping claims will be found to result in a

Delaware entity over which this court does have subject matter jurisdiction.”118

On May 6, CLT answered the Amended Complaint, asserting several

affirmative defenses, including that Mintvest’s claims are barred by unclean hands,

waiver, and estoppel; and that the Court lacks jurisdiction over the Company.119

Thereafter, the parties proceeded through discovery.

On May 19, I entered a status quo order (the “SQO”). Throughout the action’s

pendency, both parties filed several motions to enforce the SQO.120 Many motions

were well-founded; Soniat struggled to observe corporate formalities in funding the

Company’s operations, and Leary divulged confidential Company information and

117
See D.I. 20; D.I. 34.
118
See D.I. 55 at 57–58.
119
See D.I. 46 at 52–53.
120
E.g., D.I. 299; D.I. 297; D.I. 292; D.I. 293; D.I. 274; D.I. 261; D.I. 232; D.I. 231;
D.I. 214; D.I. 212; D.I. 209; D.I. 206; D.I. 200; D.I. 195; D.I. 177; D.I. 176; D.I. 174;
D.I. 165; D.I. 155; D.I. 148; D.I. 146; D.I. 141; D.I. 140; D.I. 134; D.I. 131; D.I. 128;
D.I. 123; D.I. 116; D.I. 108; D.I. 103; D.I. 102; D.I. 93; D.I. 88; D.I. 81.

25
interfered with Company operations in an attempt to steer the Company in his

preferred direction.

I held trial in this matter on February 2 and 3, 2021.121 Thereafter, as the

parties completed post-trial briefing and through post-trial argument on April 20,122

the parties continued to spar over alleged SQO violations.123

On May 18, I issued an order establishing that Coinmint was converted to a

Puerto Rican entity and vacating the status quo order (the “Order”).124 The Order

concluded that the preponderance of the evidence presented at trial established that

(1) Mintvest was diluted to an 18.2% minority Member in October 2017; (2) while

the parties did not adhere to the Operating Agreement’s formalities in effectuating

that dilution, Leary actively waived Mintvest’s right to avail itself of those

protections; (3) Leary was an active participant in executing the redomestication

plan, the Conversion was valid, and Coinmint became a Puerto Rican entity; and

(4) Mintvest failed to establish a basis to support the extreme remedy of

121
See D.I. 235; D.I. 236.
122
See D.I. 270; D.I. 278; D.I. 282; D.I. 283; D.I. 298; D.I. 304.
123
See, e.g., D.I. 261; D.I. 274.
124
D.I. 305 [hereinafter “Order”].

26
dissolution.125 As promised in the Order, a fuller explication of those conclusions

follows.126

II. ANALYSIS

The parties have the burden of proving their respective claims by a

preponderance of the evidence presented at trial.127 “Proof by a preponderance of

the evidence means proof that something is more likely than not.”128 This “means

that certain evidence, when compared to the evidence opposed to it, has the more

convincing force and makes you believe that something is more likely true than not.

By implication, the preponderance of the evidence standard also means that if the

evidence is in equipoise” the party carrying the burden will lose.129

125
Id. ¶ 1. The Order also concluded that, as a result of Mintvest’s minority status, CLT
had the authority to amend the Operating Agreement, remove Leary as Manager, and install
CLT as Coinmint’s sole Manager. Id. But upon further investigation, as discussed infra,
this Court’s jurisdiction cannot reach the Company’s post-Conversion management. The
Order is vacated to the extent it addressed any post-Conversion amendments of the
Operating Agreement, removal of Leary as Manager, and appointment of CLT as the
Company’s sole Manager. To the extent this Opinion conflicts or is inconsistent with the
Order, this Opinion governs.
126
Id. ¶ 1.
127
Martin v. Med-Dev Corp., 2015 WL 6472597, at *10 (Del. Ch. Oct. 27, 2015).
128
Id. (quoting Agilent Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch.
Feb. 18, 2010)).
129
Id. (internal quotation marks and footnotes omitted) (quoting Agilent Techs., Inc., 2010
WL 610725, at *13, and then quoting OptimisCorp v. Waite, 2015 WL 5147038, at *55
(Del. Ch. Aug. 26, 2015)).

27
 When CLT and Mintvest executed the Operating Agreement, they mutually

understood that they would be Coinmint’s equal equity holders, and that either could

be diluted by the other’s capital contribution. This “shared expectation[]” at the time

of contracting is reflected in the four corners of the Operating Agreement,130 which

identifies Mintvest as Coinmint’s 50% owner and provides that dilution via capital

contribution could alter a Member’s equity interest, or “Sharing Ratio” reflected on

Schedule I, “from time to time” in accordance with Section 3.2 of the Operating

Agreement.131 That section prescribed certain formalities to effectuate dilution via

capital contribution, including giving Members written notice of a capital call. CLT

and Mintvest do not dispute that these procedures were never followed.

Mintvest maintains that it was not properly diluted because CLT’s cash

infusions did not adhere to Section 3.2’s formalities for facilitating dilution via

capital contribution and Leary did not agree to dilution, so CLT’s cash infusions

should therefore be treated as loans. Specifically, Mintvest argues that the Court

must enforce the Operating Agreement’s terms as written because (1) it provides that

130
Exelon Generation Acqs., LLC v. Deere & Co., 176 A.3d 1262, 1267 (Del. 2017); see
GMG Cap. Invs., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)
(“When interpreting a contract, the Court will give priority to the parties’ intentions as
reflected in the four corners of the agreement.”); Base Optics Inc. v. Liu, 2015 WL
3491495, at *15 (Del. Ch. May 29, 2015) (“[T]he Court must give effect to the parties’
intentions and is to attempt to determine those intentions first by looking to the four corners
of the contract.”).
131
See Op. Agr. § 1(rrr).

28
Mintvest owns 50% of Coinmint, (2) Mintvest bargained for its protections against

dilution, and (3) CLT cannot excuse its failure to comply with the Operating

Agreement’s formalities, as the Operating Agreement contains integration and “no

waiver” provisions.132 As a result, Mintvest maintains that Leary’s removal as

Manager and the Company’s Conversion are invalid, and the Company should be

dissolved.

CLT maintains that Mintvest was diluted notwithstanding the Operating

Agreement’s terms because Leary and Mintvest set those terms aside through

waiver, estoppel, and acquiescence. CLT asserts Leary not only agreed that

Mintvest would be an 18.2% owner, but also advocated for it and confirmed it on

multiple occasions. On that basis, CLT presses that the Court should treat the

October 2017 Agreement as a written amendment to the Sharing Ratios set forth on

Schedule I of the Operating Agreement. CLT also relies on the equitable defenses

of quasi-estoppel and laches.

The parties do not dispute the Operating Agreement’s meaning and mandate,

nor that they did not follow it. This matter hinges on whether CLT has carried its

burden on its affirmative defenses to determine whether Mintvest was diluted to a

minority position. I am satisfied that the greater weight of the evidence rests on

CLT’s side of the scale. Under the doctrines of waiver, estoppel, and acquiescence,

132
See D.I. 278 at 16–30; D.I. 283 at 9–21.

29
I conclude that CLT’s cash infusions were capital contributions, and that Mintvest

agreed to dilution notwithstanding the Operating Agreement’s requirements and is

therefore an 18.2% Member. Under those same doctrines, and in view of CLT’s

majority voting power, Mintvest’s claim that the Conversion was invalid because it

was effectuated without its vote or consent also fails.

These determinations resolve Count I in CLT’s favor. But as discussed below,

my ability to adjudicate Counts II and III depends on whether this Court’s

jurisdictional reach confers the power to dissolve a Puerto Rican entity and declare

its managers. Based on my mandate to police subject matter jurisdiction, I

sua sponte revisit the issue raised in CLT’s Motion to Dismiss and determine that

principles of statutory interpretation, equity, and comity foreclose this Court from

deciding Counts II and III; those claims must be adjudicated in the Puerto Rican

Courts, and are dismissed.

A. Based On Its Equitable Defenses, CLT Has Demonstrated That
Mintvest Was Diluted To 18.2% And Coinmint Was Converted
To A Puerto Rican Entity.

Limited liability companies are creatures of contract.133 The Delaware

Limited Liability Company Act (the “Act”) rests on the fundamental policy of

133
E.g., Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 880 (Del. Ch. 2009) (“Limited
liability companies are creatures of contract, and the parties have broad discretion to use
an LLC agreement to define the character of the company and the rights and obligations of
its members.”).

30
freedom of contract.134 As an enabling statute, “[t]he Act is replete with fundamental

provisions made subject to modification in the [a]greement,”135 and therefore “leaves

latitude for substantial private ordering,” provided that statutory and judicially

imposed parameters are honored.136 The Act contains relatively few mandates, and

it explicitly assures that contractual arrangements will be given effect to the fullest

permissible extent.137

Although the Act provides default and gap-filling provisions,138 the limited

liability company agreement serves as the primary source of rules governing the

134
See 6 Del. C. § 18-1101(b) (“It is the policy of this chapter to give the maximum effect
to the principle of freedom of contract and to the enforceability of limited liability company
agreements.”).
135
Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 291 (Del. 1999).
136
Salzberg v. Sciabacucchi, 227 A.3d 102, 116 (Del. 2020) (“At its core, the [the Act, like
the DGCL] is a broad enabling act which leaves latitude for substantial private ordering,
provided the statutory parameters and judicially imposed principles of fiduciary duty are
honored.” (quoting Williams v. Geier, 671 A.2d 1368, 1381 (Del. 1996))); see Achaian,
Inc. v. Leemon Fam. LLC, 25 A.3d 800, 802 (Del. Ch. 2011) (stating that “the Delaware
Limited Liability Company Act, an enabling statute whose primary function is to fill gaps,
if any, in a limited liability company agreement”).
137
Robert L. Symonds, Jr. & Matthew J. O’Toole, Delaware Limited Liability Companies
§ 1.03[A][1], at 1-14 (2d ed. 2019).
138
See id. § 1.03[A][1][b] & [A][2], at 1-14 to 1-15; Huatuco v. Satellite Healthcare, 2013
WL 6460898, at *1 (Del. Ch. Dec. 9, 2013) (“Delaware law with regard to limited liability
companies is contractarian; individuals may create an organization that reflects their
perception of the appropriate relationships among the parties, most conducive to their
interests, as represented by their mutual agreement. Chapter 18 of Title 6 of the Delaware
Code provides default provisions applicable to Delaware LLCs where the parties’
agreement is silent; where they have provided otherwise, with limited exceptions, such
agreements will be honored by a reviewing court.” (footnote omitted)), aff’d, 93 A.3d 654
(Del. 2014).

31
“affairs of a limited liability company and the conduct of its business.”139 “[S]uch

agreements operate to displace otherwise applicable default provisions in [the]

Act.”140 Delaware’s LLC law is therefore “explicitly contractarian,”141 and

fundamentally regards and enforces the limited liability company agreement as a

contract.142 Our Courts construe such agreements as any other contract, by

“effectuat[ing] the parties’ intent based on the parties’ words and the plain meaning

of those words.”143

Actions that do not comport with an operating agreement’s terms may be void

or voidable.

Void acts are those the entity itself has no implicit or explicit authority
to undertake or those acts that are fundamentally contrary to public
policy. Stated differently, they are acts that the entity lacks the power
or capacity to effectuate. Voidable acts are within the power or capacity
of an entity, but were not properly authorized or effectuated by the
representatives of the entity.144
139
6 Del. C. § 18-101(9).
140
RED Cap. Inv. L.P. v. RED Parent LLC, 2016 WL 612772, at *2 (Del. Ch.
Feb. 11, 2016).
141
Touch of Italy Salumeria & Pasticceria, LLC v. Bascio, 2014 WL 108895, at *1 (Del.
Ch. Jan. 13, 2014) (“Delaware’s law with respect to LLCs, as this Court has repeatedly
noted, is explicitly contractarian; it allows those associating under this business format to
structure their relationship in the way they believe best suits them and their business.”).
142
See, e.g., Zimmerman v. Crothall, 62 A.3d 676, 690–91 (Del. Ch. 2013).
143
Id. at 690.
144
CompoSecure, L.L.C. v. CardUX, LLC (CompoSecure I), 2018 WL 660178, at *26 (Del.
Ch. Feb. 1, 2018) (footnotes and internal quotation marks omitted) (quoting Solomon v.
Armstrong, 747 A.2d 1098, 1114 (Del. Ch. 1999), aff’d, 746 A.2d 277 (Del. 2000)), aff’d
in part, rev’d in part on other grounds, CompoSecure, L.L.C. v. CardUX, LLC
(CompoSecure II), 206 A.3d 807 (Del. 2018).

32
As explained in the corporate context, “[t]he common law rule is that void acts

are ultra vires and generally cannot be ratified, but voidable acts are acts falling

within the power of a corporation, though not properly authorized, and are subject

to equitable defenses.”145 Action that is otherwise permissible, but fails to adhere to

provisions of a limited liability company agreement, is voidable, not void,146 and so

can be “validated in equity.”147 “[V]oidable acts are ratifiable because the [entity]

145
CompoSecure II, 206 A.3d at 816–17; see Michelson v. Duncan, 407 A.2d 211, 218–19
(Del. 1979) (“The essential distinction between voidable and void acts is that the former
are those which may be found to have been performed in the interest of the corporation but
beyond the authority of management, as distinguished from acts which are [u]ltra vires,
fraudulent or gifts or waste of corporate assets.”); Solomon , 747 A.2d at 1114 (“Void acts
are those acts that the board, or more generally the corporation, has no implicit or explicit
authority to undertake or those acts that are fundamentally contrary to public policy. As
defined by decisional law, void acts are those acts that are not performed in the interest of
the corporation, irrespective of whether or not they are authorized by a corporation's
certificate of incorporation. The list of void acts, while not exclusive, is nonetheless very
restricted. Void acts include fraud, gift, waste, or ultra vires acts.”).
146
See CompoSecure II, 206 A.3d at 816–17; Klaassen v. Allegro Dev. Corp. (Klaassen II),
106 A.3d 1035, 1046–47 (Del. 2014).
147
Klaassen v. Allegro Dev. Corp. (Klaassen I), 2013 WL 5739680, at *15 (Del. Ch.
Oct. 11, 2013) (“Void acts contrast with voidable acts, which can be ratified or validated
in equity.”), aff’d, Klaassen II, 106 A.3d 1035; see also In re Oxbow Carbon LLC
Unitholder Litig., 2018 WL 818760, at *48 (Del. Ch. Feb. 12, 2018) (“There is no dispute
that Oxbow had the power as an entity to issue units and admit new members. Oxbow could
have issued units to the Small Holders and admitted them as members, if the parties had
adhered to the procedures specified in the LLC Agreement. Consequently, assuming for
the sake of analysis that the parties failed to follow the requisite procedures, the issuance
of units to the Small Holders and their admission as members would be voidable, not
void.”), aff’d in part, rev’d in part on other grounds sub nom. Oxbow Carbon & Mins.
Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 202 A.3d 482 (Del. 2019).

33
can lawfully accomplish them if it does so in the appropriate manner.” 148 Where

“disputed corporate actions . . . lawfully could have been accomplished by the

Defendants had they done them in the appropriate manner, i.e., had they given proper

notice of the [action],” and where those “actions were in the interest of [the

corporation] and did not constitute ultra vires acts, fraud or corporate waste,” they

are “voidable actions susceptible to cure by” equitable defenses.149 Drafters of

operating agreements are also free to use their flexibility in contracting to agree that

failure to follow certain procedures means an otherwise voidable action is void.150

“[T]he contractual imposition of voidness trumps the common law.”151

148
Nevins v. Bryan, 885 A.2d 233, 245 (Del. Ch.) (“Void acts are not ratifiable because the
corporation cannot, in any case, lawfully accomplish them. Void acts are illegal acts or
acts beyond the authority of the corporation. In contrast, voidable acts are ratifiable
because the corporation can lawfully accomplish them if it does so in the appropriate
manner.” (footnotes and internal quotation marks omitted) (quoting Harbor Fin. P’rs v.
Huizenga, 751 A.2d 879, 896 (Del. Ch. 1999))), aff’d, 884 A.2d 512 (Del. 2005).
149
Id. at 246; see also Lofland v. DiSabatino, 1991 WL 138505, at *1 (Del. Ch.
July 25, 1991) (holding that defective notice of annual meeting rendered director election
voidable, not void).
150
E.g., CompoSecure II, 206 A.3d at 817 (“Ordinarily, the Sales Agreement would be
voidable for failure to comply with the Restricted Activities Provision. But, given the plain
language of the Restricted Activities Provision—‘void and of no force or effect
whatsoever’—its application would trump the common law rule and render the Sales
Agreement void and incapable of being ratified.” (footnote omitted)); Absalom Absalom
Tr. v. Saint Gervais LLC, 2019 WL 2655787, at *4 (Del. Ch. June 27, 2019) (“Although
CompoSecure addressed the defense of ratification, its logic extends to other equitable
defenses as well. At common law Anne’s transfer of her membership interest to Absalom
would be likely be voidable, not void. The reasoning in CompoSecure, however, mandates
that the contractual language—‘void’—trumps the common law, rendering the assignment
ineffective and invulnerable to equitable defenses.”).
151
Absalom, 2019 WL 2655787, at *6.

34
 Thus, where (1) the Act enables the entity or its representatives to take certain

action as distilled in the operating agreement; (2) the operating agreement

implements that grant of authority and prescribes certain approvals for effectuating

it; and (3) the operating agreement does not expressly deem the action void for

failure to obtain those approvals, that action will be “voidable, not void,” as the entity

and its representatives could have carried out the action had “the proper approvals

had been obtained.”152 Such voidable breaches of LLC agreements are subject to

equitable defenses, including waiver, estoppel, and laches.153

“Any one may forego a right intended for his own benefit in the absence of

some rule of public policy.”154 “[I]naction or silence on the part of a plaintiff, in

certain circumstances, can bar a plaintiff from relief both equitable and legal.”155

Delaware has implemented this umbrella rule through the doctrines of waiver,

estoppel, and acquiescence. While these are “related” doctrines that invoke similar

152
CompoSecure I, 2018 WL 660178, at *27.
153
See, e.g., id. at *26 (“Voidable acts can be validated by equitable defenses, such as
ratification and acquiescence.”); Eureka VIII LLC v. Niagara Falls Hldgs. LLC, 899 A.2d
95, 113 n.38 (Del. Ch. 2006) (considering and applying the equitable defense of laches
under an LLC agreement).
154
Nathan Miller, Inc. v. N. Ins. Co. of N.Y., 39 A.2d 23, 25 (Del. Super. Ct. 1944).
155
Lehman Bros. Hldgs. Inc. v. Spanish Broad. Sys., Inc., 2014 WL 718430, at *10 (Del.
Ch. Feb. 25, 2014), aff’d, 105 A.3d 989 (Del. 2014); see In re PNC Del. v. Berg, 1997 WL
720705, at *4 (Del. Super. Oct. 22, 1997) (“[H]owever one characterizes the behavior of
the Bank, whether it be in terms of waiver, acquiescence, estoppel, abandonment, or
novation, the evidence is overwhelming that the Bank forewent its claim on the contract
rights connected with the files that went to the Tighe firm.”).

35
analyses, they are “not coterminous”156 and “may not be invoked to make a new

contract, or to change radically the terms of the policy to cover additional subject

matter.”157

1. Mintvest Was Diluted To 18.2%.

The Company’s Delaware Operating Agreement is a contract governed by the

Act. The drafters included certain terms governing capital contributions and their

dilutive effect: the Board must notify Members in writing of cash needs, each

Member’s share, and the date the capital contribution is due; a nonpaying Member

is deemed non-contributing; and the Board adjusts the Sharing Ratios accordingly.158

In turn, Board action requires the approval of a majority of the Managers, and all

Board action is to be taken at a minuted meeting or by written consent.159 The

Operating Agreement does not specify that bilateral noncompliance with those terms

156
Roam-Tel P’rs v. AT&T Mobility Wireless Operations Hldgs., Inc., 2010 WL 5276991,
at *9 (Del. Ch. Dec. 17, 2010) (quoting St. Jones River Gravel Co. v. Hartford Fire Ins.
Co., 1980 WL 308672, at *3 (Del. Super. July 7, 1980)); see Kahn v. Household Acq.
Corp., 591 A.2d 166, 176 (Del. 1991) (“Estoppel and acquiescence are related doctrines of
equity.”); Seokoh, Inc. v. Lard-PT, LLC, 2021 WL 1197593, at *14 n.180 (Del. Ch.
Mar. 30, 2021) (relying on waiver principles in concluding that a party acquiesced in a
breach); Vila v. BVWebTies LLC, 2010 WL 3866098, at *9 n.68 (Del. Ch. Oct. 1, 2010)
(acknowledging the similarities between waiver and acquiescence).
157
St. Jones River Gravel, 1980 WL 308672, at *2.
158
Op. Agr. § 3.2.
159
Id. §§ 4.3(f), 4.4.

36
would void any action, although a Manager acting unilaterally has no power or

authority to bind the Company.160

Mintvest claims that CLT and Mintvest failed to adhere to those terms in

diluting Mintvest’s Sharing Ratio (and ultimately leveraging Mintvest’s diluted

position to cause the Conversion). This series of actions was a voidable breach of

the Operating Agreement. CLT does not dispute that it and Mintvest failed to adhere

to the Operating Agreement, but asserts that failure is excused under well-

established equitable defenses. Thus, I consider the parties’ conduct after executing

the Operating Agreement through that lens.

a. Mintvest Waived The Operating Agreement’s
Dilution Requirements.

“It is well settled in Delaware that contractual requirements or conditions may

be waived.”161 Delaware’s standard for proving waiver is “quite exacting.”162

“Waiver is the voluntary and intentional relinquishment of a known right” either

conferred by statute or secured by contract.163 “It implies knowledge of all material

160
Id. § 4.5.
161
AeroGlobal Cap. Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 444 (Del. 2005)
(citing Pepsi-Cola Bottling Co. v. Pepsico, Inc., 297 A.2d 28, 33 (Del. 1972)).
162
Id. (quoting Am. Fam. Mortg. Corp. v. Acierno, 640 A.2d 655 (Del. 1994)); accord
Amirsaleh v. Bd. of Trade of City of N.Y., Inc., 27 A.3d 522, 529–30 (Del. 2011).
163
AeroGlobal, 871 A.2d at 444; (quoting Realty Growth Invs. v. Council of Unit Owners,
453 A.2d 450, 456 (Del. 1982)); see Components, Inc. v. W. Elec. Co., 267 A.2d 579, 582
(Del. 1970) (acknowledging that party can waive contractual or statutory rights).

37
facts and an intent to waive, together with a willingness to refrain from enforcing

those contractual rights.164 “Waiver is a unilateral action and depends on what one

party intended to do, rather than upon what he induced his adversary to do, as in

estoppel.”165 “Unlike estoppel, waiver does not necessarily imply that one party to

the controversy has been misled to his detriment in reliance on the conduct of the

other party.”166

A party asserting waiver must demonstrate that (1) there is a requirement or

condition to be waived; (2) the waiving party knew of the requirement or condition;

and (3) the waiving party intended to waive that requirement or condition.167 “The

facts relied upon to prove waiver must be unequivocal.”168 If a waiver occurs, “[a]

waiving party typically is prohibited from retracting its waiver if the non-waiving

party has suffered prejudice or has relied to his detriment on the waiver.”169

164
AeroGlobal, 871 A.2d at 444.
165
Roam-Tel P’rs, 2010 WL 5276991, at *9 (internal quotation marks omitted) (quoting
Nathan Miller, 39 A.2d at 25); see George v. Frank A. Robbino, Inc., 334 A.2d 223, 224
(Del. 1975) (“Intention forms the foundation of the doctrine of waiver, and it must clearly
appear from the evidence.”).
166
Roam-Tel P’rs, 2010 WL 5276991, at *9 (internal quotation marks omitted) (quoting
(quoting Nathan Miller, 39 A.2d at 25).
167
E.g., AeroGlobal, 871 A.2d at 444.
168
Id.; accord Amirsaleh, 27 A.3d at 529 (“[T]he facts relied upon to demonstrate waiver
must be unequivocal.”); Realty Growth Invs., 453 A.2d at 456 (“The facts relied upon for
proof [of waiver] must be unequivocal in character.”).
169
Amirsaleh, 27 A.3d at 529–30.

38
 This exacting standard has been met here. Section 3.2 includes requirements

or conditions that must be satisfied for a dilutive capital contribution. Leary was

aware of Mintvest’s right to invoke those provisions; nothing in the credible record

indicates that he was unaware of Section 3.2’s mandate. Nonetheless, the

preponderance of the evidence supports the conclusion that Leary unequivocally

waived Section 3.2’s requirements by negotiating for and agreeing to “peg” his

ownership interest at 18.2% in view of CLT’s capital contributions.

Between 2016 and 2017, Leary repeatedly and informally requested capital

from CLT, and CLT provided that capital without insisting on formalities. Leary

acknowledged that Mintvest’s ownership interest had been significantly diluted to

below 5%. Believing Mintvest deserved a greater stake in the Company because of

Leary’s “sweat equity,” Leary requested and Soniat agreed to increase and “peg”

Mintvest’s interest at 18.2%.170 Leary never objected that CLT’s capital

contributions did not follow Section 3.2’s requirements and should therefore be

treated as non-dilutive loans. This was consistent with Leary’s insistence that Soniat

forego formal processes, Soniat’s agreement, and the resultant lack of formal board

meetings, written consents, or any similar processes.

In fact, after pegging Mintvest’s equity at 18.2%, Leary again tried to avoid

formalities, saying that the new 18.2% interest agreement did not need to be

170
See JX 27 at COINMINT155291; JX 28 at 1–4.

39
documented. But Soniat insisted, and the parties memorialized the agreed-to equity

split in the October 2017 Agreement, which Leary executed without suggesting or

demanding that a Board meeting was required to make the 18.2% equity split

official.171 And a series of documents Leary received and executed without protest

after the October 2017 Agreement reflects the agreed-to 81.8% to 18.2% equity

split.172 In fact, on May 2, 2019, Leary informed the Company’s accountants that

Mintvest’s equity “is the same as the spreadsheet that Kathleen prepared, that I sent

you a few days ago (18.2% for Mintvest, the rest in Ashton’s entity).” 173 On

August 9, Leary once more confirmed that he was “100% comfortable with”

Mintvest’s equity pegged at 18.2%.174 Twelve days later, Leary again recognized

Mintvest’s 18.2% stake attempting to use it as leverage to support that he be given

an option to exit his position as “a minority equity holder.”175 The preponderance

of the evidence demonstrates that Mintvest unequivocally waived the formalities set

forth in Section 3.2.

171
See JX 25; JX 32; Leary Tr. 115, 120–22, 135–36; Soniat Tr. 275; Carlton Tr. 335;
Schneider Tr. 406–07.
172
See JX 30; JX 31; JX 59; JX 64A; JX 97; JX 301; JX 302; Leary Tr. 137–40, 146–48.
173
JX 88 at COINMINT000024; see also JX 87; Leary Tr. 147–48.
174
JX 99 at COINMINT011920; see also Leary Tr. 155.
175
JX 101 at COINMINT130734.

40
 b. Mintvest Is Estopped From Invoking The
Operating Agreement’s Dilution
Requirements.

Unlike waiver, “[e]stoppel depends on what a party caused another to do, and

involves an element of reliance.”176 “Estoppel is the effect of the voluntary conduct

of a party whereby he is absolutely precluded from asserting rights which might

perhaps have otherwise existed, as against another person, who has in good faith

relied upon such conduct, and has been led thereby to change his position for the

worse.”177 Thus, “[t]he doctrine of equitable estoppel arises when, by its conduct, a

party intentionally or unintentionally leads another, in reliance on that conduct, to

change position to his detriment,”178 and will only be found where “one who has

been induced to alter his line of conduct, with respect to the subject matter in

controversy, so as to have subjected himself to some liability, he would not

otherwise have incurred, or to have foregone some right or remedy which he

otherwise would have taken.”179

As with waiver, the preponderance of the evidence supports a finding of

estoppel, as Leary’s repeated failure to invoke Section 3.2’s protections caused CLT

176
Roam-Tel P’rs, 2010 WL 5276991, at *9.
177
Kahn, 591 A.2d at 176 (alterations and internal quotation marks omitted) (quoting
3 J. Pomeroy, Equity Jurisprudence § 804, at 189 (1941)).
178
Roam-Tel P’rs, 2010 WL 5276991, at *9.
179
Id. (quoting Wilds v. Attix, 4 Del. Ch. 253, 262–63 (1871)).

41
to act to its detriment. Leary represented to Soniat that he would accept dilution in

view of CLT’s capital contributions, and CLT, through no negligence of its own,

acted or changed its position to its detriment. CLT’s detriment is twofold.

First, because Leary regularly contested formalities, Soniat did not invoke

Section 3.2’s procedures despite his preference for documentation and bookkeeping.

Rather, he followed Leary’s lead, providing capital when Leary requested it to fund

Coinmint’s operations, but testified that he would have held formal meetings and

solicited formal consents.180

Second, Soniat infused the Company with significant funds from CLT. 181

Consistent with their early understanding as consummated in the Operating

Agreement that CLT would provide capital and Mintvest could consequently be

diluted, and as a result of Leary’s failure to object or demand otherwise, Soniat

continued to fund Coinmint’s operations while believing that those funds were

categorized as dilutive capital contributions and that CLT was accruing a greater

equity stake in the Company.182

180
Soniat Tr. 276.
181
See JX 15 at COINMINT_157205; JX 64A at COINMINT_157468.
182
See JX 4 at COINMINT071042; JX 5 at COINMINT065914; JX 7 at
COINMINT157137; JX 15 at COINMINT_157205; JX 64A at COINMINT_157468;
Leary Tr. 77.

42
 Soniat’s belief was affirmed and reinforced by his negotiations with Leary

and their mutual acknowledgement that CLT’s contributions were, in fact, dilutive.

Throughout 2017, Leary was aware of and acted on Soniat’s belief that dilution was

mutually accepted. When Leary agreed that Mintvest had been diluted and pressed

his belief that it should be diluted no further than 18.2%, notwithstanding CLT’s

significant contributions, Soniat agreed that Mintvest’s equity would be pegged at

that percentage. CLT therefore agreed to categorize all future cash infusions as loans

in order to preserve Mintvest’s equity, and relied on Mintvest’s agreement to the

81.8%-18.2% equity split in advancing tens of millions of dollars to Coinmint in the

form of loans. As Soniat testified without contradiction or cross-examination, he

never would have done that had there not been agreement that CLT was the 81.8%

owner of Coinmint (as opposed to 50%), nor would it have made economic sense

for him to do so. Accordingly, all of the elements of estoppel have been met.

c. Mintvest Acquiesced In Being Diluted To
18.2%, Despite Section 3.2’s Protections.

As recognized by Vice Chancellor Glasscock, “[t]he doctrine of acquiescence

effectively works an estoppel: where a plaintiff has remained silent with knowledge

of her rights, and the defendant has knowledge of the plaintiff’s silence and relies on

that silence to the defendant’s detriment, the plaintiff will be estopped from seeking

43
protection of those rights.”183 In order to prevail on an acquiescence defense, a

defendant must show that (1) the plaintiff remained silent (2) with knowledge of her

rights (3) and with the knowledge or expectation that the defendant would likely rely

on her silence, (4) the defendant knew of the plaintiff’s silence, and (5) the defendant

in fact relied to her detriment on the plaintiff’s silence.184

For similar reasons discussed above, these elements are satisfied here.

Mintvest concedes as much, contesting only one element: that Mintvest had

knowledge of its rights. Specifically, Mintvest contends that it “did not have

knowledge of its rights because it did not realize that a wrong had been committed,”

because “[a]s Leary testified, he was relying on CLT and his friend to make sure

everything was done appropriately and accurately.”185 But as noted above, Leary

was aware of the Operating Agreement’s terms, and nothing indicates that Soniat or

183
Lehman Bros., 2014 WL 718430, at *9; see Kahn, 591 A.2d at 176 (“Acquiescence in
the wrongful conduct of another by which one’s rights are invaded may often operate, upon
the principles of and in analogy to estoppel, to preclude the injured party from obtaining
many distinctively equitable remedies to which he would otherwise be entitled.” (alteration
omitted) (quoting 3 J. Pomeroy, Equity Jurisprudence § 817, at 245 (1941))).
184
Lehman Bros., 2014 WL 718430, at *10; see Klaassen, 2013 WL 5739680, at *20
(stating acquiescence is found where a party “has full knowledge of his rights and the
material facts and (1) remains inactive for a considerable time; or (2) freely does what
amounts to recognition of the complained of act; or (3) acts in a manner inconsistent with
the subsequent repudiation, which leads the other party to believe the act has been
approved,” and “[a]s the disjunctive framing indicates, a defendant need only establish one
of the bases for acquiescence” (emphasis in original) (quoting NTC Gp., Inc. v. W. Point-
Pepperell, Inc., 1990 WL 143842, at *5 (Del. Ch. Sept. 26, 1990))).
185
D.I. 278 at 29 (citing Leary Tr. 54–55).

44
CLT acted to obscure Leary’s right to invoke its protections. Instead, Leary actively

solicited Soniat’s funds, with objecting to their form or injection process, to quickly

purchase equipment Leary ordered and believed was necessary for Coinmint’s

business. Leary knew that Mintvest had been diluted down to around 5.5% by the

end of 2016, signing a capital statement reflecting that dilution.186 Leary then

negotiated for a larger stake, eventually agreeing to the 18.2% stake reflected in the

October 2017 Agreement. Mintvest does not identify a single fact of which it was

unaware, and therefore its sole defense to the application of the doctrine of

acquiescence—that Mintvest did not have knowledge of its rights because it did not

realize that the wrong had been committed—fails.

d. The Operating Agreement’s Anti-Waiver And
Integration Provisions Do Not Change This
Outcome.

Mintvest argues that the Operating Agreement’s integration and anti-waiver

provisions preclude CLT’s defensive theories. Delaware law recognizes the

important policy considerations underlying integration and anti-waiver provisions,

and enforces both.187 But when applied to post-contract behavior, these principles

186
See JX 25.
187
Rehoboth Mall Ltd. P’ship v. NPC Int’l, Inc., 953 A.2d 702, 704–05 (Del. 2008)
(“Generally, no waiver provisions give a contracting party some assurance that its failure
to require the other party’s strict adherence to a contract term will not result in a complete
and unintended loss of its contract rights if it later decides that strict performance is
desirable.” (alterations and internal quotation marks omitted) (quoting Viking Pump, Inc.
v. Liberty Mut. Ins. Co., 2007 WL 1207107, at *27 (Del. Ch. Apr. 2, 2007))); Viking Pump,

45
do not prohibit the Court’s consideration of subsequent promises, communications,

or modifications to the express agreement.188

Section 11.11 of the Operating Agreement includes a standard integration

clause:

Entire Agreement. This Agreement and the schedules and exhibits
hereto, if any, contain all of the understandings and agreements of
whatsoever kind and nature existing between the Members with respect
to the subject matter hereof and thereof and supersede all prior
agreements and undertakings with respect thereto.189

2007 WL 1207107, at *27 (“Non-waiver clauses serve an important purpose in contract
law, which is generally to ensure that a party to a contract is given an opportunity to make
a thoughtful and informed decision about whether or not to enforce a particular contract
right. They give a contracting party some assurance that its failure to require the other
party’s strict adherence to a contract term during the hectic course of day-to-day business
will not result in a complete and unintended loss of its contract rights if it later decides that
strict performance is desirable.”); Abry P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032,
1058 (Del. Ch. 2006) (stating integration clauses “minimize[] the risk of erroneous
litigation outcomes by reducing doubts about what was promised and said, especially
because the contracting parties have defined that in writing in their contract”).
188
See Pepsi-Cola, 297 A.2d at 33 (considering the parties’ post-contract behavior and
concluded it modified the written agreement, notwithstanding anti-waiver language);
Good v. Moyer, 2012 WL 4857367, at *5 (Del. Super. Ct. Oct. 10, 2012) (“[T]he
integration clause itself does nothing to prevent the Court’s consideration of subsequent
promises, communications, or modifications to the express agreement.”). Binding
precedent has recently cited both Pepsi-Cola and Good. See, e.g., AeroGlobal, 871 A.2d
at 444; CLP Toxicology, Inc. v. Casla Bio Hldgs. LLC, 2021 WL 2588905, at *12 (Del.
Ch. June 14, 2021); Weik, Nitsche & Dougherty, LLC v. Pratcher, 2020 WL 5036096, at
*4 (Del. Ch. Aug. 26, 2020); Walsh v. White House Post Prods., LLC, 2020 WL 1492543,
at *8 (Del. Ch. Mar. 25, 2020); Peco Logistics, LLC v. Walnut Inv. P’rs, L.P., 2015 WL
9488249, at *7 (Del. Ch. Dec. 30, 2015).
189
Op. Agr. § 11.11.

46
Mintvest contends that “CLT’s arguments rely on a characterization of capital

provided prior to the [Operating] Agreement, dated November 21, 2016, as reducing

the Sharing Ratios,” and that “[t]his violates the Integration Provision.”190

While integration clauses proscribe the Court’s consideration of all oral and

written communications and agreements that occurred prior to the agreement when

interpreting it, they do nothing to prevent the Court’s consideration of subsequent

promises, communications, or modifications to the express agreement and therefore

do not bar a finding of waiver, estoppel, or acquiescence.191

Here, the Operating Agreement’s integration provision does not foreclose the

Court from considering the emails and documents CLT relies on to reinforce that

Mintvest agreed to dilution. Mintvest misconstrues CLT’s argument and reliance

on “various emails from August and October of 2016”192 and “characterization of

capital provided prior to the LLC Agreement” to support the conclusion that “by

year-end 2016, Leary’s equity interest had been diluted to approximately 5.5%.”193

CLT does not use the information reflected in those documents in a manner that is

190
D.I. 283 at 22; see also D.I. 278 at 25–26.
191
See Good, 2012 WL 4857367, at *5.
192
D.I. 278 at 25.
193
D.I. 283 at 22.

47
“contrary” to the Operating Agreement’s terms, as Mintvest argues.194 Nor does

CLT invoke those documents to color or interpret the Operating Agreement.

Instead, CLT points out that those pre-execution communications evidence

Leary’s understanding that while Mintvest would initially be Coinmint’s 50%

member, Mintvest would be diluted over time if it failed to match CLT’s capital

contributions. CLT’s use of those documents therefore corroborates the Operating

Agreement’s function, which CLT does not dispute. And as to those documents that

premise Mintvest’s dilution, at least in part, on CLT’s pre-November 2016 cash

infusions, CLT relies on them as evidence of waiver. After executing the Operating

Agreement, Leary agreed Soniat’s infusions between August 31, 2016 and

December 31, 2016 should be characterized as capital contributions diluting

Mintvest’s stake.195 The integration provision does not bar the Court from

considering such post-Operating Agreement documents.196

194
D.I. 278 at 26.
195
See JX 15.
196
See Good, 2012 WL 4857367, at *5–6 (“To the extent that any of Moyer’s alleged
representations that EPX was funding the purchase price, or that Moyer was signing as
purchaser solely as a convenience to EPX occurred prior to the written agreement’s
effectuation, the integration clause bars their consideration. However, to the extent any
representations occurred after the contract’s effectuation, the representations may be
considered.” (footnotes omitted) (emphasis in original)).

48
 Turning to Section 11.13’s anti-waiver provision, it reads:

No Waiver. No waiver, express or implied, by any Member of any
breach or default by any other Member in the performance by the other
Member of its obligations hereunder shall be deemed or construed to
be a waiver of any other breach or default under this Agreement.
Failure on the part of any Member to complain of any act or omission
of any other Member, or to declare such other Member in default
irrespective of how long such failure continues, shall not constitute a
waiver hereunder. No notice to or demand on a defaulting Member
shall entitle such defaulting Member to any other or further notice or
demand in similar or other circumstances.197

Mintvest maintains that the anti-waiver provision “specifically agrees that,

regardless of any past failure to compl[ain] about violations of Section 3.2, Mintvest

has a contractual entitlement to resist adjustments to the Sharing Ratios before this

Court,”198 and that “the second sentence of the No Waiver Provision legally bars

CLT’s equitable doctrines.”199 By Mintvest’s reading, the anti-waiver provision

precludes future waivers and allows Mintvest to require strict performance of past

defaults.200

Mintvest overestimates Section 11.13’s scope. The provision’s first sentence

operates prospectively: “No waiver, express or implied, by any Member of any

breach or default by any other Member in the performance by the other Member of

197
Op. Agr. § 11.13.
198
D.I. 283 at 12.
199
D.I. 278 at 23 (alteration and internal quotation marks omitted) (quoting PTO ¶ 49).
200
See Rehoboth Mall, 953 A.2d at 704–05.

49
its obligations hereunder shall be deemed or construed to be a waiver of any other

breach or default under this Agreement.”201 This sentence addresses the effect of a

past waiver on subsequent waivers; it does not preclude those past waivers.

Mintvest also misreads the provision’s second sentence. It mandates that

“[f]ailure on the part of any Member to complain of any act or omission of any other

Member, or to declare such other Member in default irrespective of how long such

failure continues, shall not constitute a waiver hereunder.”202 This sentence is

inapplicable to the facts presented here. Leary did not sit idly by and “fail[] to

complain” about the parties’ noncompliance with the Operating Agreement’s terms.

To the contrary, he was an active participant in shirking those terms and spearheaded

the intra-Company campaign for capital contributions without formalities. And he

negotiated for Mintvest’s 18.2% interest and repeatedly confirmed his satisfaction

with it. Based on those assurances, Soniat proceeded with the understanding that

Mintvest’s equity would be pegged and his future contributions would be

categorized as loans. Leary’s active assurances waived the Operating Agreement’s

dilution protocols, which is not precluded by Section 11.13’s limited prohibitions.203

201
Op. Agr. § 11.13.
202
Id.
203
Good, 2012 WL 4857367, at *5–6 (“Despite paragraph 9.9’s provision proscribing oral
modifications, Plaintiff’s assertion that EPX subsequently modified the written agreement
by providing part performance is sufficient conceivably to demonstrate a modification
based on conduct. Furthermore, if Defendant Moyer provided subsequent assurances that
EPX would fund the purchase price or that his purchaser status was merely a convenience

50
 And, even if Section 11.13 had the broad scope Mintvest presses, “the law is

clear that non-waiver clauses are not iron-clad protections that preclude courts from

holding [a party] responsible for their post-contracting behavior,” and therefore

Section 11.13 does not “have the unfettered power in all circumstances to supersede

the doctrines of waiver and estoppel.”204 This is best illustrated by the Delaware

Supreme Court’s decision in Pepsi-Cola Bottling Co. of Asbury Park v.

to EPX, those subsequent assurances could similarly modify the written agreement. As it
is entirely conceivable at this posture that EPX’s conduct waived or modified contract
provisions, Defendant’s Motion to Dismiss Count II of the Complaint is DENIED.”
(footnote omitted)).
204
Viking Pump, 2007 WL 1207107, at *28 (quoting Tiedke v. Fid. & Cas. Co. of N.Y., 222
So.2d 206, 210 (Fla. 1969)); see also Good, 2012 WL 4857367, at *5 (“A non-waiver
clause in a contract may itself be waived through knowledge, coupled with silence and
conduct inconsistent with the terms of the contract.” (quoting Mergenthaler v.
Hollingsworth Oil Co., 1995 WL 108883, at *2 (Del. Super. Feb. 22, 1995))); 46 C.J.S.
Insurance § 1230 (“A nonwaiver agreement, whether contained in the policy or existing
separately, may be waived itself by express agreement or by acts or conduct.”); 13 Williston
on Contracts § 39:36 (4th ed.) (“The general view is that a party to a written contract can
waive a provision of that contract by conduct despite the existence of a so-called antiwaiver
or failure to enforce clause in the contract. . . . This general rule, that a party to a written
contract may waive a provision despite the existence of an antiwaiver or failure to enforce
clause, is based on the view that the nonwaiver provision itself, like any other term in the
contract, is subject to waiver by agreement or conduct during performance. Some courts
also support this general rule on principles of freedom to contract.”); id. § 39:26 (“It is well
settled that a party to a written contract may orally, or by implication from conduct, waive
performance of a contract term or condition inserted in the contract for its benefit and that
the waiver does not require a writing.”); 3A Corbin on Contracts § 763, at 531 (“An express
provision in a written contract that no rescission or variation shall be valid unless it too is
in writing is ineffective to invalidate a subsequent oral agreement to the contrary. In like
manner, a provision that an express condition or a promise or promises in the contract
cannot be eliminated by waiver, or by conduct constituting an estoppel, is wholly
ineffective. The promisor still has the power to waive the condition . . . .”).

51
Pepsico, Inc.205 There, the Court analyzed conduct-based modifications and waivers

against the backdrop of contractual clauses prohibiting modification. The Court

concluded that those clauses did not prohibit modification or waiver of the

agreement’s written terms:

[A] written agreement between contracting parties, despite its terms, is
not necessarily only to be amended by formal written agreement. . . .
[A] written agreement does not necessarily govern all conduct between
contracting parties until it is renounced in so many words. The reason
for this is that the parties have a right to renounce or amend the
agreement in any way they see fit and by any mode of expression they
see fit. They may, by their conduct, substitute a new oral contract
without a formal abrogation of the written agreement. We think the
existence of [a joint integration and no-oral modification clause] does
not prohibit the modification of making of a new agreement by conduct
of the parties, despite a prohibition [] against any change except by
written bilateral agreement.206

The Court stressed that these blanket principles applied no matter the analytical

vehicle; whether couched in terms of waiver, acquiescence, or other fact-specific

inquiry, the outcome would be the same.207 Section 11.13 cannot preclude CLT’s

defenses of waiver, estoppel, and acquiescence.

205
297 A.2d 28, 33 (Del. 1972).
206
Id.
207
Id. at 33–34.

52
 2. The Conversion Was Valid, And Coinmint Is A
Puerto Rican Entity.

Mintvest challenges the Conversion on the basis that it “took place with

neither the formal vote nor written consent of Mintvest, as a Member and 50% owner

of Coinmint, nor Leary as Mintvest’s designee.”208 But Mintvest was diluted to an

18.2% Member, such that CLT’s majority consent and correlating majority Manager

vote could have effectuated the Conversion even over Mintvest’s formal

objection.209 Accordingly, the Conversion is a voidable act, and the same equitable

principles that foreclose Mintvest from contesting its dilution also foreclose it from

challenging the Conversion on the basis that it was not conducted in accordance with

the Operating Agreement’s procedural requirements.

a. The Conversion Is Voidable And Can Be Cured
In Equity.

“The first step when analyzing a case involving the internal affairs of an LLC

is . . . to examine the LLC agreement to determine whether it addresses the issue.”210

If the agreement covers the issue, the agreement controls unless it violates one of the

208
D.I. 278 at 33.
209
Section 4.5’s prohibition on CLT acting individually on behalf of the Company would
arguably render a unilateral and procedurally noncompliant conversion by CLT void as
exceeding CLT’s authority. Because the procedurally noncompliant Conversion was done
with Leary’s participation, I need not reach this issue.
210
Godden v. Franco, 2018 WL 3998431, at *7 (Del. Ch. Aug. 21, 2018).

53
Act’s mandatory provisions.211 If the agreement is silent, then the Court must look

to the Act to see if one of its default provisions apply.212 If neither the agreement

nor the Act addresses the matter, “the rules of law and equity shall govern.”213

Coinmint’s Operating Agreement does not specify a manner of authorizing a

conversion, so I turn to the Act.214 Section 18-216 of the Act governs conversion of

a Delaware limited liability company. Section 18-216(b) supplies a default rule that

is subject to contractual variation, not a mandatory rule.215 It provides:

If the limited liability company agreement specifies the manner of
authorizing a conversion of the limited liability company, the
conversion shall be authorized as specified in the limited liability
company agreement. If the limited liability company agreement does
not specify the manner of authorizing a conversion of the limited
liability company and does not prohibit a conversion of the limited
liability company, the conversion shall be authorized in the same
manner as is specified in the limited liability company agreement for
authorizing a merger or consolidation that involves the limited liability
company as a constituent party to the merger or consolidation.216

Section 18-216’s default rule, which defers to the operating agreement, “arise[s]”

from “deference to the principle of freedom of contract, recognition of the novelty

of the conversion concept at the time of its introduction into the [] Act, due regard

211
See id.
212
See id.
213
Id. (alteration omitted) (quoting 6 Del. C. § 18-1104).
214
See generally Op. Agr.
215
See Symonds & O’Toole, supra note 137, § 4.07, at 4-51 to 4-52.
216
6 Del. C. § 18-216(b) (emphasis added).

54
for the significant consequences of such a transaction, and acknowledgement of the

similar results that may arise from conversion, on the one hand, and merger and

consolidation transactions, on the other.”217 Further, “[i]t is theoretically possible,

under the limited liability company agreement or the [] Act’s applicable default rule,

that the members (and/or other having voting rights) would approve the conversion

of a Delaware limited liability company without reference to any specific terms.”218

“The statute does not mandate that the company’s conversion must be implemented

pursuant to an agreement,” and “[t]he omission of such a directive, and the

concurrent absence of any statutory requirements . . . provide flexibility.”219

Here, the parties availed themselves of Section 18-216’s flexibility by

subjecting conversion to the Operating Agreement’s merger provisions. The

Operating Agreement’s relevant terms require two steps: majority Member consent

under Section 4.6, followed by formal Board approval via meeting or written

consent, under Sections 4.3(f) and 4.4. It is undisputed that the Managers did not

approve the Conversion at a board meeting or secure written consents. But in view

of CLT’s majority stake and the interplay of Sections 4.3(f), 4.4, and 4.6, that failure

renders the Conversion voidable under the Operating Agreement, rather than void.

217
Symonds & O’Toole, supra note 137, § 14.05[B][3], at 14-46.
218
Id.
219
Id. at 14-46 to 14-47.

55
 Section 4.6 conditions the Board’s power to effectuate a conversion on the

consent of a “Majority of Members” who “in the aggregate, own more than fifty

percent (50%) of the Sharing Ratios owned by all of the Members:”220

Notwithstanding anything to the contrary contained in this Agreement,
without the consent of Majority of Members, neither the Board nor any
Manager or Officer shall have the power or authority . . . . [t]o effect a
merger or plan of exchange of the Company . . . .221

Failure to obtain that majority consent strips the Board and any Manager of its power

to effectuate a merger, or, in this case, the Conversion.222 If a conversion were

completed without the consent of the Majority of Members, then it would be void

ab initio, not voidable.

Indeed, Mintvest’s basis for voiding the Conversion is its unfounded position

that it owned 50% of the Company in January 2018, and that CLT effectuated the

Conversion without Leary’s consent. But as stated, Mintvest was diluted to 18.2%,

and CLT held 81.8%. CLT alone “own[ed] more than fifty percent (50%) of the

Sharing Ratios owned by all of the Members,”223 so CLT alone could give consent

of the “Majority of Members.” CLT did so. As a result, the Board retained the

power to authorize the Conversion.

220
Op. Agr. § 1(mm).
221
Id. § 4.6(c).
222
Id.
223
Id. § 1(mm).

56
 With majority Member consent, conversion must then follow Section 4.4,

which provides that “all actions of the Board provided for here in shall be taken

either at a meeting and evidenced by written minutes thereof . . . or by written

consent without a meeting.”224 And actions taken at a meeting or by written consent

must comply with Section 4.3(f), which provides that “any Board action shall require

the approval of a Majority of the Managers then serving on the Board,”225 as keyed

to the appointing Member’s Sharing Ratio.226 Sections 4.3(f) and 4.4 do not include

voiding language.227 If a conversion is challenged because the Board did not

formally authorize it under Sections 4.3(f) and 4.4, that failure is voidable and

subject to equitable defenses. CLT and Mintvest’s failure to comply with Section

4.3 and 4.4’s formalities on Coinmint’s behalf is ratifiable because the Company

could lawfully accomplish it “if it d[id] so in the appropriate manner.”228

224
Op. Agr. § 4.4.
225
Id. § 4.3(f).
226
See id. § 4.3(e).
227
Compare id. § 4.3(f), and id. § 4.4, with id. § 4.6.
228
Nevins, 885 A.2d at 245.

57
 b. Mintvest Is Equitably Barred From
Challenging The Conversion.

Mintvest’s challenge to the Conversion as improperly authorized under

Sections 4.3(f) and 4.4 is barred by the same equitable defenses that foreclosed its

claim to 50% of Mintvest.

Despite Mintvest’s claim that CLT caused the Conversion without Leary’s

knowledge, the record shows Leary was intimately involved in pursuing

redomestication in Puerto Rico and invoked that decision in several Company

initiatives. Between 2017 and 2019, Leary championed the redomestication effort,

and helped kick off that plan by contacting attorneys in Puerto Rico to seek tax

services on the Company’s behalf and completing the Company’s Puerto Rican tax

applications.229 When the Conversion occurred in January 2018, Leary was aware

of it and requested that the related documents be forwarded to Coinmint’s Puerto

Rican counsel.230

Nothing in the record indicates that Leary objected to the Conversion as it was

taking place or after.231 To the contrary, after the Conversion was complete, Leary

received multiple communications discussing “Coinmint’s Re-Domestication to

229
See JX 20.
230
See JX 73.
231
See Schneider Tr. 412–14; Leary Tr. 192–93.

58
Puerto Rico”232 and did not contest such statements or object to the Conversion on

the basis that it was completed without Mintvest’s vote or written consent under the

Operating Agreement.233 Indeed, throughout 2019, Leary leveraged the Conversion

in his own initiative to launch a public offering of bitcoin tokens. The offering

memorandum that Leary spearheaded expressly stated, under the heading

“Corporate Structure & Ownership” that “Coinmint, LLC was formed as a Delaware

limited liability company in 2016 and reorganized as a Puerto Rico limited liability

company in early 2018.”234 And in July 2019, Leary caused Coinmint to file a Form

D with the Securities and Exchange Commission in connection with a proposed

exempt offering of securities.235 That document, signed by Leary as the President

of Coinmint, LLC, prominently stated that the “Jurisdiction of

Incorporation/Organization of Coinmint, LLC” is “PUERTO RICO.”236

Thus, as with Mintvest’s dilution, the record reflects that Leary participated

in the Conversion and did not object to it on Mintvest’s behalf until filing this action.

Leary was aware of the Operating Agreement’s terms and knew they required the

Conversion to be effectuated by Board vote or written consent. Nonetheless,

232
E.g., JX 59 at 9.
233
See JX 53; JX 56; JX 57; JX 60; JX 73; JX 303; JX 304.
234
JX 60 at 20.
235
JX 97; Leary Tr. 173.
236
JX 97.

59
consistent with his inclination to avoid formalities and focus on the task at hand, he

did not object when the Conversion came and went without formal Board action and

approval. Instead, he confirmed it on multiple occasions, thereby waiving the

Operating Agreement’s Board vote and consent requirements.237 And so, Mintvest

had “full knowledge of [its] rights and the material facts,” “freely d[id] what amounts

to recognition of the complained of act,” remained “inactive for a considerable

time,” and instead “act[ed] in a manner inconsistent with the subsequent repudiation,

which le[d] [CLT] to believe the act has been approved.”238 Accordingly, Mintvest

is equitably barred from challenging the Conversion.

*****

Because Mintvest waived Section 3.2’s requirements, acquiesced in its

dilution, and is estopped from asserting otherwise, I conclude that CLT’s cash

infusions were dilutive capital contributions, and that Mintvest’s Sharing Ratio was

pegged at 18.2% as of October 2017. With its voting power diluted, Mintvest also

acquiesced to and is estopped from challenging the Conversion, which Mintvest

participated in and CLT effectuated with its majority voting power, albeit without

approving it by holding a formal vote or acting by written consent. Judgment is

entered in CLT’s favor on Count I.

237
See, e.g., AeroGlobal, 871 A.2d at 444–45.
238
Klaassen, 2013 WL 539680, at *20 (quoting NTC Gp., Inc., 1990 WL 143842, at *5).

60
 B. Coinmint Became A Puerto Rican Entity In January 2018, And
Therefore This Court Lacks Jurisdiction Over Counts II
And III.

Mintvest also challenges CLT’s post-Conversion actions to (i) amend the

Operating Agreement to provide that “[a] majority of the members shall determine

the composition of the Board,” and that “[a]ny Manager may be removed from the

Board with or without cause by a Majority Vote of the Members”;239 (ii) remove

Leary from the Board under those amended terms;240 and (iii) designate CLT as

Coinmint’s sole Manager.241 Count II of the Amended Complaint asks this Court to

undo CLT’s actions and declare that CLT improperly removed Leary as Coinmint’s

Manager. And in view of Leary’s purported improper removal and the parties’

insurmountable differences, Count III requests that this Court dissolve Coinmint,

either equitably or statutorily under Section 18-802 of the Act.

But in view of my conclusion that Coinmint was properly converted to a

Puerto Rican entity in 2018, I am compelled to consider whether this Court has

subject matter jurisdiction to adjudicate Counts II and III, which address the internal

affairs of a Puerto Rican entity. CLT raised this issue during the pleading stage, but

I was compelled to accept the Amended Complaint’s allegations as true and allow

239
JX 109 at COINMINT_157545; see JX 108 at COINMINT_157544; JX 110 at 1.
240
JX 108 at COINMINT_157544; PTO ¶ 31.
241
JX 110 at 1; PTO ¶ 31.

61
Mintvest’s claims to proceed. Now, with the benefit of the record demonstrating

Mintvest was diluted to a minority position and Coinmint was validly converted,

CLT’s early jurisdictional concerns under Rule 12(b)(1) are given new life. “[I]n

the absence of subject matter jurisdiction, a decision in this proceeding would be a

nullity.”242 This Court must decide the jurisdictional question.243

“The Court of Chancery is proudly a court of limited jurisdiction.”244

Therefore, the Court has a duty to determine whether it has subject matter

jurisdiction over a plaintiff’s claims and can raise the issue sua sponte.245 Indeed,

“[t]he issue of subject matter jurisdiction is so crucial that it may be raised at any

time before final judgment.”246 “The Court of Chancery can exercise subject matter

242
Bruno v. W. Pac. R. Co., 498 A.2d 171, 172 (Del. Ch. 1985), aff’d, 508 A.2d 72 (Del.
1986).
243
See id.
244
Perlman v. Vox Media, Inc., 2019 WL 2647520, at *4 (Del. Ch. June 27, 2019).
245
See, e.g., Ct. Ch. R. 12(h)(3) (“Whenever it appears by suggestion of the parties or
otherwise that the Court lacks jurisdiction of the subject matter, the Court shall dismiss the
action.”); Envo, Inc. v. Walters, 2009 WL 5173807, at *4 n.10 (Del. Ch. Dec. 30, 2009)
(“The issue of subject matter jurisdiction is so crucial that it may be raised . . . by the court
sua sponte.”), aff’d, 2013 WL 1283533 (Del. Mar. 28, 2013) (TABLE); Int’l Bus. Machs.
Corp. v. Comdisco, Inc., 602 A.2d 74, 77 n.5 (Del. Ch. 1991) (“[U]nlike many jurisdictions,
judges in the Delaware Court of Chancery are obligated to decide whether a matter comes
within the equitable jurisdiction of this Court regardless of whether the issue has been
raised by the parties.”).
246
Envo, 2009 WL 5173807, at *4 n.10.

62
jurisdiction only when a case falls into one of three buckets,” including cases in

which “a plaintiff states an equitable claim” or “jurisdiction exists by statute.”247

Whenever it appears by suggestion of the parties or otherwise that the action does

not fall within one of these categories, “the Court shall dismiss the action.”248

Here, Mintvest asserts statutory subject matter jurisdiction over Count I under

Section 18-111 of the Act; over Count II under Section 18-802 of the Act; and Count

III under Section 18-110 of the Act. Under the plain language of the Act and general

principles that this Court has applied when considering foreign Courts’ authority

over Delaware entities, I conclude this Court has statutory authority to hear Count I,

regarding the pre-Conversion dilution and the propriety of the Conversion. The

conclusion that Coinmint was converted into a Puerto Rican LLC obviates

jurisdiction over Counts II and III.

1. This Court Has Jurisdiction Over Count I Under
Section 18-111 Of The Act.

The Act carefully distinguishes between Delaware and non-Delaware limited

liability companies. Its references to “limited liability company” and “domestic

limited liability company” mean “a limited liability company formed under the laws

247
Delawareans for Educ. Opportunity v. Carney, 2018 WL 4849935, at *5 (Del. Ch.
Oct. 5, 2018); see also Candlewood Timber Gp., LLC v. Pan Am. Energy, LLC, 859 A.2d
989, 997 (Del. 2004) (identifying the three ways the “Court of Chancery can acquire
subject matter jurisdiction”).
248
Ct. Ch. R. 12(h)(3).

63
of the State of Delaware,”249 so references to a “limited liability company

agreement” refer to the operating agreement of a Delaware entity.250

Section 18-216 contemplates that “a domestic limited liability company may

convert to . . . a foreign limited liability company.”251 Upon conversion to a foreign

limited liability company, “the limited liability company shall cease to exist as a

limited liability company of the State of Delaware.”252 Consistent with this logic,

the Act treats non-Delaware entities as separate creatures from Delaware LLCs:

“Foreign limited liability company” means a limited liability company
formed under the laws of any state or under the laws of any foreign
country or other foreign jurisdiction. When used in this title in
reference to a foreign limited liability company, the terms “limited
liability company agreement,” “limited liability company interest,”
“manager” or “member” shall mean a limited liability company
agreement, limited liability company interest, manager or member,
respectively, under the laws of the state or foreign country or other
foreign jurisdiction under which the foreign limited liability company
is formed.253

249
6 Del. C. § 18-101(8).
250
Id. § 18-101(9).
251
Id. § 18-216(a).
252
Id. § 18-216(f). When a domestic limited liability company converts to a foreign entity,
under Section 18-216, the entity agrees it may be served with process in the State of
Delaware for “any action, suit or proceeding for enforcement of any obligation of the
limited liability company arising while it was a limited liability company of the State of
Delaware.” Id. § 18-216(e)(6).
253
Id. § 18-101(6); see also 2 Larry E. Ribstein & Robert R. Keatinge, Ribstein and
Keatinge on Limited Liability Companies, § 16:3 (discussing potential ways to resolve the
“uncertainty” between domestic and foreign limited liability companies, and stating that
“second approach is to attempt more explicitly to define ‘foreign limited liability
company’” in legislation).

64
Under Subchapter IX of the Act, “[s]ubject to the Constitution of the State of

Delaware,” “[t]he laws of the state, territory, possession, or other jurisdiction or

country under which a foreign limited liability company is organized govern its

organization and internal affairs and the liability of its members and managers.”254

But conversion does not “affect any obligations or liabilities of the limited liability

company incurred prior to such conversion or the personal liability of any person

incurred prior to such conversion, nor shall it be deemed to affect the choice of law

applicable to the limited liability company with respect to matters arising prior to

such conversion.”255

For domestic LLCs, Section 18-111 gives the Court of Chancery jurisdiction

to hear “[a]ny action to interpret, apply or enforce the provisions of a limited liability

company agreement . . . or any provision of this chapter, or any other instrument,

document, agreement or certificate contemplated by any provision of this

chapter.”256 I conclude that section grants this Court jurisdiction to construe the

Company’s Operating Agreement that governed while it was domiciled in Delaware.

In view of Section 18-216(g), I see no basis in the Act to conclude that conversion

254
6 Del. C. § 18-901(a)(1); see also Ribstein & Keatinge, supra note 253, § 16:3 (“Most
LLC statutes provide that the law of a formation jurisdiction governs the organization,
internal affairs, and member liability of a foreign LLC.”).
255
6 Del. C. § 18-216(g).
256
Id. § 18-111.

65
divested this Court of that jurisdiction. Section 18-111 confers subject matter

jurisdiction over Count I, as it requires this Court to adjudicate the Operating

Agreement’s construction and the parties’ performance under it before the Company

converted.257

2. The Plain Language Of Sections 18-110 And 18-802
Foreclose This Court From Adjudicating Counts II
and III Under The Act.

Mintvest presses that this Court has the power to adjudicate Counts II and III

because “[r]egardless of Coinmint’s domicile, the LLC Agreement provides that

Delaware law controls.”258 “There is, of course, a distinction between choice of law

questions and questions of personal jurisdiction, and it is the case that a choice of

law provision, without more, will not create a sufficient contact to support personal

jurisdiction in the state whose law is chosen to govern the relationship.”259 “Parties

may agree to submit their persons to the jurisdiction of any given court but may not

confer subject matter jurisdiction which is otherwise absent.”260 And Delaware

257
See id.
258
D.I. 278 at 37; see Op. Agr. § 11.4 (“This Agreement and the application and
interpretation hereof, shall be governed exclusively by the laws of the State of Delaware,
specifically the Act.”).
259
E.g., In re USACafes, L.P. Litig., 600 A.2d 43, 51 (Del. Ch. 1991).
260
Chrysler Cap. Corp. v. Suresky, 1987 WL 10531, at *1 (Del. Super. Ct. Apr. 29, 1987);
accord Butler v. Grant, 714 A.2d 747, 749–50 (Del. 1998) (“It is, however, well-
established Delaware law that parties cannot confer subject matter jurisdiction upon a
court.”); Seokoh, Inc., 2021 WL 1197593, at *9 (“Although the Court generally will respect
the parties’ choice of forum, the parties cannot contract for jurisdiction where it otherwise
is unavailable.” (quoting Sun Life Assurance Co. of Can. – U.S. Operations Hldgs., Inc. v.

66
recognizes that I must determine whether this Court has subject matter jurisdiction

over Counts II and III under Sections 18-110 and 18-802 of the Act, notwithstanding

the Operating Agreement’s choice of law provision.

Delaware has not directly answered the question of whether this Court may

statutorily dissolve, or declare the proper managers of, a foreign limited liability

company, even one that was previously a Delaware entity. My reading of the plain

language of the Act compels the conclusion that this Court has no such power. As

explained, the Act explicitly distinguishes between domestic and foreign limited

liability companies. By their terms, both Section 18-110 and 18-802 apply only to

“limited liability compan[ies],” defined under the Act as Delaware LLCs.261 They

cannot be invoked to confer upon this Court power over a Puerto Rican entity.262

Neither Section grants jurisdiction over Counts II or III.

And “Delaware Courts will not exercise subject matter jurisdiction over a

dispute that is predicated on foreign law where the foreign state has vested

Gp. One Thousand One, LLC, 206 A.3d 261, 263 (Del. Super. 2019))); Bruno, 498 A.2d at
172 (stating that “[t]he parties to an action may not confer subject matter jurisdiction by
agreement,” nor can the Court “acquire jurisdiction by estoppel”).
261
See 6 Del. C. §§ 18-110(a), 18-802.
262
Cf. In re Carlisle Etcetera LLC, 114 A.3d 592, 597 (Del. Ch. 2015) (“Section 18-802
of the LLC Act addresses dissolution. . . . By its terms, this language limits the right to seek
statutory dissolution under Section 18-802 to members and managers of an LLC.”).

67
jurisdiction exclusively in its own courts.”263 The territory of Puerto Rico appears

to have vested jurisdiction over the judicial dissolution of a Puerto Rican LLC, and

contested matters relating to managers as well, in its Court of First Instance.264

Under established Supreme Court precedent, this Court lacks subject matter

jurisdiction to afford relief that Puerto Rico has vested in its own court.

263
Candlewood Timber Gp., 859 A.2d at 1004; accord Taylor v. LSI Logic Corp., 715 A.2d
837 (Del. 1998) (holding the Court of Chancery lacked subject matter jurisdiction to
adjudicate a dispute under a Canadian statute because the “exclusive equitable remedy
under Section 241 of the Canada Business Corporations Act for oppressive corporate acts
lies in the courts of Canada as defined in Section 2 of the Canadian Act”), overruled on
other grounds by Martinez v. E.I. DuPont de Nemours & Co., 86 A.3d 1102 (Del. 2014)
(“To the extent that prior cases like Taylor v. LSI Logic Corp. . . . have indicated that such
defendants must have a prior action pending in another jurisdiction in order to invoke
principles of comity for our Courts to consider their interest in receiving an authoritative
ruling from the court whose law is at issue, they are overruled.”); see Ison v. E.I. DuPont
de Nemours & Co., Inc., 729 A.2d 832, 838, n.14 (Del. 1999) (stating that in Taylor v. LSI
Logic Corp., “[t]his Court affirmed the dismissal . . . finding that the Canadian law at issue
actually required adjudication in a Canadian Court, leaving the Court of Chancery with no
subject matter jurisdiction” (emphasis in original)).
264
See 14 L.P.R.A. § 3998 (“On application by a member or manager the Court of First
Instance may decree dissolution of an LLC whenever it is not reasonably practicable to
carry on the business in conformity with an LLCA.”); id. § 3960(a) (“Upon application of
any member or manager, the Court of First Instance may hear and determine the validity
of any admission, election, appointment, removal or resignation of a manager of a limited
liability company, and the right of any person to become or continue to be a manager of a
limited liability company . . . .”); id. § 3960(b) (“Upon application of any member or
manager, the Court of First Instance may hear and determine the result of any vote of
members or managers upon matters as to which the members or managers of the limited
liability company, or any class or group of members or managers, have the right to vote
pursuant to the limited liability company agreement . . . .”); see D.R.E. 202(a)(1) (“Every
court in this State may take judicial notice of the common law, case law and statutes of the
United States and every state, territory and jurisdiction of the United States.”).

68
 3. Well-Established Principles Support This Court’s
Lack Of Subject Matter Jurisdiction Over
Equitable Dissolution Of A Foreign Entity.

Mintvest also asks this Court for equitable dissolution of Coinmint, and

asserts this Court needs no statutory jurisdictional grant to dissolve it as a Puerto

Rican entity. Mintvest is correct that for Delaware entities, equitable dissolution is

available even where statutory dissolution is not.265 But as explained in In re

Carlisle Etcetera LLC, this Court’s power to effectuate an equitable dissolution is

sourced in the State of Delaware’s “interest in having the Court of Chancery

available, when equity demands, to hear a petition to dissolve a [Delaware] LLC.”266

Where the entity is not a Delaware entity, I believe the principles delineating a

sovereign’s interest in its native entities compel the conclusion that this Court lacks

265
Carlisle, 114 A.3d at 605 (“This court has held that the parties to an LLC agreement
can waive by contract the right to seek statutory dissolution under Section 18–802. In my
view, the ability to waive dissolution under Section 18–802 does not extend to a party’s
standing to seek dissolution in equity.” (citations omitted)); see, e.g., In re Interstate Gen.
Media Hldgs., LLC, 2014 WL 1697030, at *8 (Del. Ch. Apr. 25, 2014) (“It is well-settled
under Delaware law that LLCs are creatures of contract rather than statute, and that those
who form LLCs are given great latitude in defining their rights and obligations by mutual
agreement. Based on that freedom, the parties to the LLC Agreement were free to craft
whatever procedure they wished to govern [the company]’s dissolution. That freedom
included the ability to proscribe the use of judicial dissolution altogether as a means to
dissolve the Company.”).
266
114 A.3d at 606 (citing In re Revlon, Inc. S’holders Litig., 990 A.2d 940, 960 n.8 (Del.
Ch. 2010) (noting possibility of including a forum selection clause in an entity’s
constitutive agreement, but envisioning that “the Delaware courts would retain some
measure of inherent residual authority so that entities created under the authority of
Delaware law could not wholly exempt themselves from Delaware oversight”)).

69
subject matter jurisdiction to equitably dissolve that entity. Delaware has guarded

its jurisdiction over the internal affairs of Delaware entities, and other courts have

declined to dissolve Delaware entities. Applying these principles together, I

conclude this Court cannot dissolve foreign entities.

Actions to dissolve an entity implicate the internal affairs doctrine and the

interest of the sovereign.267 “The internal affairs doctrine requires that the law of the

state of incorporation should determine issues relating to internal corporate

affairs.”268

267
See Terramar Retail Ctrs. LLC v. Marion #2-Seaport Tr. U/A/D/ June 21, 2002, 2017
WL 3575712, at *11 (Del. Ch. Aug. 18, 2017) (“Dissolution both implicates the internal
affairs of a Delaware entity and is an inherently Delaware-centric act which requires the
filing of a certificate of cancellation with the Delaware Secretary of State.”), aff’d, 184
A.3d 1290 (Del. 2018); Carlisle, 114 A.3d at 605–06 (“To my mind, when a sovereign
makes available an entity with attributes that contracting parties cannot grant themselves
by agreement, the entity is not purely contractual. Because the entity has taken advantage
of benefits that the sovereign has provided, the sovereign retains an interest in that entity.
That interest in turn calls for preserving the ability of the sovereign’s courts to oversee and,
if necessary, dissolve the entity. Put more directly, an LLC agreement is not an exclusively
private contract among its members precisely because the LLC has powers that only the
State of Delaware can confer.”).
268
McDermott Inc. v. Lewis, 531 A.2d 206, 215 (Del. 1987) (“The traditional conflicts rule
developed by courts has been that internal corporate relationships are governed by the laws
of the forum of incorporation.”); see VantagePoint Venture P’rs 1996 v. Examen, Inc., 871
A.2d 1108, 1112 (Del. 2005) (“The internal affairs doctrine is a long-standing choice of
law principle which recognizes that only one state should have the authority to regulate a
corporation’s internal affairs—the state of incorporation.”); cf. Aveta Inc. v. Cavallieri, 23
A.3d 157, 168 (Del. Ch. 2010) (stating that “[t]he implementation and effectiveness of a
merger between two corporations from the same jurisdiction is an internal corporate matter
to be governed by the law of that jurisdiction,” and applying the internal affairs doctrine to
conclude that “law of Puerto Rico governs the corporate mechanics of the merger” between
two Puerto Rican corporations); TC Invs., Corp. v. Becker, 2010 WL 2593525, at *11

70
 It has long been settled doctrine that a court—state or federal—sitting
in one State will as a general rule, decline to interfere with, or control
by injunction or otherwise the management of the internal affairs of a
corporation organized under the laws of another state but will leave
controversies as to such matters to the courts of the state of the
domicile.269

“[T]he authority to regulate a corporation’s internal affairs should not rest

with multiple jurisdictions.”270 It “is an accepted part of the business landscape in

this country for States to create corporations, to prescribe their powers, and to define

the rights that are acquired by purchasing their shares,” as “[a] State has an interest

in promoting stable relationships among parties involved in the corporations it

charters, as well as in ensuring that investors in such corporations have an effective

voice in corporate affairs.”271 As such, this Court has recognized that “Delaware has

a strong interest in resolving issues concerning the internal affairs of a Delaware

corporation promptly and efficiently.”272 As explained in Carlisle, the Delaware

General Assembly amended the Act in 2013 to reassert Delaware’s sovereign

jurisdiction over internal affairs of Delaware entities, including specifically for

(D.P.R. June 28, 2010) (following internal affairs doctrine and applying Delaware law to
Delaware limited liability company).
269
Rogers v. Guar. Tr. Co. of N.Y., 288 U.S. 123, 130 (1933).
270
See VantagePoint Venture P’rs, 871 A.2d at 1112–13.
271
CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 91 (1987).
272
McElroy v. Schornstein, 2012 WL 2428343, at *1 (Del. Ch. June 20, 2012).

71
dissolution proceedings.273 This Court has staked its paramount role in deciding

dissolution under Section 18-802, while deferring to a foreign court’s power to

adjudicate and resolve preliminary or additional issues.274

Delaware’s sister courts have declined to extend their jurisdiction to dissolve

Delaware entities. Seokoh, Inc. v. Lard-PT, LLC explained that under “well-settled”

New York law, New York courts “lack[] jurisdiction to issue a decree of judicial

dissolution for [a Delaware limited liability company].”275 New York does not stand

273
114 A.3d at 605 (“[T]he General Assembly in 2013 adopted an amendment to the LLC
Act inconsistent with the purely contractarian view. Of particular relevance to dissolution,
the purely contractarian view discounts core attributes of the LLC that only the sovereign
can authorize, such as its separate legal existence, potentially perpetual life, and limited
liability for its members.” (footnote omitted) (citing 6 Del. C. §§ 18-201, 18-303)); see
Willie Gary LLC v. James & Jackson LLC, 2006 WL 75309, at *10 (Del. Ch. Jan. 10, 2006)
(concluding that judicial dissolution trumps an arbitration clause, finding “it impossible to
conclude that Willie Gary must press a claim for dissolution before an arbitrator in the first
instance, when the Agreement itself expressly refers to a ‘judicial determination’ of
whether grounds for dissolution exist, and when the dissolution provisions of the
Agreement then go on to refer to the involvement of a ‘court of competent jurisdiction’”),
aff’d, 906 A.2d 76 (Del. 2006).
274
See, e.g., In re Data Processing Consultants, Ltd., 1987 WL 25360, at *5 (Del. Ch.
Nov. 25, 1987); Xpress Mgmt., Inc. v. Hot Wings Int’l, Inc., 2007 WL 1660741, at *5–6
(Del. Ch. May 30, 2007); McElroy, 2012 WL 2428343, at *1–2.
275
2021 WL 1197593, at *9 (citing Raharney Cap., LLC v. Cap. Stack LLC, 25 N.Y.S.3d
217, 217–18 (N.Y. App. Div. 2016)); see MHS Venture Mgmt. Corp. v. Utilisave, LLC,
881 N.Y.S.2d 452, 454 (N.Y. App. Div. 2009) (“A claim for dissolution of a foreign limited
liability company is one over which the New York courts lack subject matter
jurisdiction.”); Rimawi v. Atkins, 840 N.Y.S.2d 217 (N.Y. App. Div. 2007) (“A limited
liability company is a hybrid entity and is, in all respects pertinent here, most like a
corporation. Thus, unlike the derivative claim involving the internal affairs of a foreign
corporation, plaintiffs’ claim for dissolution and an ancillary accounting is one over which
the New York courts lack subject matter jurisdiction.” (citations omitted)).

72
alone.276 Courts in other jurisdictions have adopted this approach: “Courts other

than those of the State creating it, and in which it has its habitat, have no visitorial

powers over such corporation, have no authority to remove its officers, or to punish

276
See Restatement (First) of Conflict of Laws § 157 (stating that a corporation may only
be dissolved by state of domicile); Restatement (Second) of Conflict of Laws § 300
(recognizing right of a state to forbid a foreign business entity to do business within its
territory, but not to dissolve said foreign entity); 19 Am. Jur. 2d Corporations § 2335
(“Since a corporation is a creature of the state by which it is chartered, the right to dissolve
the corporation without its consent belongs exclusively to the state. The existence of a
corporation cannot be terminated except by some act of the sovereign power by which it
was created.”); 19 A.L.R.3d 1279, §3[a] (“In many of the cases discussing the jurisdiction
of a court, whether state or federal, to dissolve or wind up the affairs of a corporation
domiciled in another state, the view has been taken that the court does not have jurisdiction
over such actions. Such decisions are evidently based in most instances on the theory that
since the corporation is a creature of the state creating it, that state alone should terminate
its legal existence. In any event, see the following cases generally recognizing that a court
ordinarily does not have jurisdiction of the dissolution or winding up of a foreign
corporation.”); 17A Fletcher Cyc. Corp. § 8579 (“Courts applying the general rule have
held that any attempt of the courts in a particular state or country to dissolve a foreign
corporation would be so palpably an attempt to usurp the powers of a foreign jurisdiction
without color of authority as to be a nullity, even when called to the court’s attention in a
collateral proceeding.” (footnotes omitted)); Ribstein & Keatinge, supra note 253, § 14:18
(“Generally speaking, only the courts of the jurisdiction under whose law the LLC was
organized have the capacity to order its judicial dissolution.”); Peter B. Ladig & Kyle
Evans Gay, Judicial Dissolution: Are the Courts of the State that Brought You In the Only
Courts that Can Take You Out?, 70 BUS. LAW. 1059, 1082 (2015) (concluding
persuasively that dissolution should be left to the state of formation because “the act of
dissolution is essentially different than other statutory claims” because it “severs the tie
between the parties and the state of formation[,]” “terminates the special powers given to
the entity that only the state of formation can give[,]” and “also ends the life of the entity
in not just the forum state, but in any other state”); Michael V. Caracappa, “Exclusive”
Jurisdiction in Delaware’s General Corporation Law: Why States Lack the Power to Strip
Jurisdiction from Their Sister States and the Federal Courts, 49 Seton Hall L. Rev. 1091,
1119–20 (2019) (“Today, courts other than those within the state of incorporation lack the
practical power to dissolve foreign corporations, though this has not stopped some courts
from attempting to fashion remedies in lieu of dissolution. Many courts that have
considered that issue accept that the internal affairs doctrine limits their ability to dissolve
foreign corporations.” (footnotes omitted)).

73
them for misconduct committed in the State which created it, nor to enforce a

forfeiture of its charter.”277 “[W]herever a corporation may go, its existence as a

corporation is referable to the laws of the state of its creation,” and “[c]onsequently,

a foreign corporation is controlled, as to its dissolution, by the laws of its

domicile.”278

277
Valone v. Valone, 2010 WL 7373698, at *2 (Va. Cir. Ct. Jan. 20, 2010) (quoting
Taylor v. Mut. Reserve Fund Life Assoc., 33 S.E. 385, 388 (Va. 1899)); see also, e.g.,
Lillard v. Lonergan, 72 F.2d 865, 870 (10th Cir. 1934) (“A corporation can be dissolved
and its affairs closed and its franchises seized or withdrawn only by the sovereignty that
created it and in the way it provides.”); Spurlock v. Santa Fe Pac. R.R. Co., 694 P.2d 299,
312 (Az. Ct. App. 1984) (“[N]o court can declare a forfeiture of a franchise or a dissolution
of a corporation except the courts of the jurisdiction which created it.”); Miller v. Hawkeye
Gold Dredging Co. Ltd., 137 N.W. 507, 512 (Iowa 1912) (holding suit to wind up affairs
of a corporation must be brought in the jurisdiction where the corporation was organized);
de Nunez v. Bartels, 684 So.2d 1008, 1011 (La. Ct. App. 1996) (“The courts of one state
or country have no jurisdiction or power to dissolve a corporation created by another state
or country. The fact that the foreign corporation does business or owns property in the
state where the action to dissolve is brought does not give the court the power to dissolve
it.”); Mills v. Anderson, 214 N.W. 221, 223 (Mich. 1927) (“It is text-book law that the
courts of one state cannot dissolve a corporation created by another state. . . . As a legal
entity it could only be dissolved by the courts of that state, regardless of what business it
did in other states.”); State v. Dyer, 200 S.W.2d 813, 816 (Tex. 1947) (“One state has no
power to dissolve a corporation created by the laws of another state.”); Young v. JCR
Petroleum, Inc., 423 S.E.2d 889, 892 (W.Va. 1992) (concluding that there was no statutory
power granted to West Virginia courts to dissolve a foreign corporation, and that the Full
Faith and Credit Clause of the United States Constitution requires each state to respect the
sovereign acts of the other states, and that the creation and dissolution of a corporation is
one such act).
278
17A Fletcher Cyc. Corp. § 8579 (“The general rule is that neither through its legislature
nor its courts can one state declare the forfeiture of the charter of a corporation of another
state or country or otherwise dissolve the corporation, regardless of the amount of business
done by the corporation in that state or the amount of property it may have in that state.”
(footnotes omitted)).

74
 While Delaware has adopted the rule that it governs the dissolution of its own

entities, it has not yet joined its sister courts in explicitly stating that it cannot

dissolve foreign entities. But Delaware decisions support doing so. As early as

1886, Delaware jurists recognized the importance of deferring to the state of

formation. In Swift v. Richardson,279 the Delaware Superior Court considered

whether it had “jurisdiction by mandamus over a foreign corporation, its officers or

agents, to enforce the performance of a corporate duty not imposed by any law of

this state.”280 “A careful investigation of the theory upon which corporations both

public and private are created” compelled the dissent’s conclusion that the Court had

no such power.281 The dissent reasoned that “[t]he power to confer corporate

franchises and privileges always has been considered as vested in the sovereign

authority of the state. The creation of a corporation, whether public or private, is an

act of sovereignty, whereby a portion of the sovereign powers is conferred upon the

corporators.”282 “It is therefore manifest, since such corporation and the state

creating it are the only parties to this obligation, that the duty to fulfill it is due solely

to that state, and that the right to superintend and enforce its fulfillment belongs to

279
32 A. 143, 144 (Del. Super. Ct. 1886) (Grubb, J., dissenting); see also Swift v. State,
6 A. 856 (1886) (issuing Swift v. Richardson majority opinion).
280
Richardson, 32 A. at 144.
281
Id.
282
Id.

75
that particular sovereignty alone.”283 Because the Court’s authority was asked to

“remedy the abuse of franchises conferred by sovereignty,” the dissent concluded,

[I]t can only be issued, when invoked against a private corporation, in
the name and by the authority of the state which created the corporation,
and to which state is exclusively due its obligation to duly exercise its
powers and functions so as to promote primarily the public good of the
people of that state in fulfillment of the design which that particular
sovereignty had in creating such corporation; and this is true whether
the writ be invoked by the legal officer of the state, to enforce the
obligation in behalf of the public generally, or sought by a stockholder
of the corporation, to compel the performance of a corporate duty which
may result from this obligation to the state, and so inure to his private
benefit.284

Over seventy years later, in 1959, the Delaware Supreme Court observed a

related jurisdictional boundary by concluding that once stock is converted into that

of a foreign corporation by operation of a merger, Delaware no longer has

jurisdiction to sequester those shares. In Union Chemical & Materials Corp. v.

Cannon, the plaintiff filed a derivative suit against certain individual defendants.285

To compel their appearance, the individual defendant’s stock was validly seized

under Delaware’s sequestration statute.286 But very shortly thereafter, the nominal

defendant company merged with a New Jersey corporation, and so the individual

defendants’ stock automatically converted into shares of the New Jersey

283
Id. at 147.
284
Id.
285
148 A.2d 348, 349–50 (Del. 1959).
286
Id.

76
corporation.287 The Delaware Supreme Court observed that by virtue of both the

sequestration and the merger, “[t]he certificates of [the company] now constitute

property subject to the jurisdiction of the courts of the several states in which they

are located.”288 The Court concluded that the merger divested the Court of Chancery

of jurisdiction over the shares.289

Other Delaware Supreme Court decisions have stressed the importance of

comity, the “recognition of the legislative, executive, or judicial acts of another

nation in due regard both to international duty and convenience, and to the rights of

its own citizens or of other persons who are under the protection of its laws.”290

“[T]he Court is mindful of the important interest of affording comity to foreign

business law governing the internal affairs of a foreign corporation.”291 “If we

287
Id.
288
Id. at 351.
289
Id. at 351–52. This was true notwithstanding “the general principle that jurisdiction
once acquired is not defeated by subsequent events, and that where jurisdiction of the
person or res has once attached it is not defeated by the removal of the person or the res
beyond the jurisdiction of the court.” Id. at 352. As the Court observed, that principle
applied “to cases involving loss of jurisdiction over the res but retention of personal
jurisdiction,” and was not applicable there. Id.
290
Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A., 34 A.3d 1074, 1083
(Del. 2011) (alterations and internal quotation marks omitted) (quoting Taylor, 715 A.2d
at 842).
291
Id.; see also Ison v. E.I. DuPont de Nemours & Co., 729 A.2d 832, 844 (Del. 1999)
(noting that “home countries have a significant interest” in setting the safety standards that
apply in their own country); Third Ave. Tr. v. MBIA Ins. Corp., 2009 WL 3465985, at *5
(Del. Ch. Oct. 28, 2009) (“Because of the importance of this question to New York public
policy, and the absence of any legitimate interest Delaware has in the question, I believe
that an appropriate regard for comity requires this court to abstain and allow the courts of

77
expect that other sovereigns will respect our state’s overriding interest in the

interpretation and enforcement of our entity laws, we must show reciprocal

respect.”292

In my view, Delaware’s approach is consistent with the general rule advanced

in other state and federal courts that only the courts of the jurisdiction under whose

law the limited liability company is organized have the capacity to order its

dissolution.293 This Court’s protectionist approach over its entities formed under this

State’s laws compels a similar respect for the interests of other sovereigns in

overseeing the life and death of their entities.

Coinmint no longer exists under Delaware law, and is no longer “tak[ing]

advantage of benefits that the State of Delaware provides,” so Delaware no longer

“retains an interest in that entity” such that it may compel dissolution.294 I conclude

New York to speak on the collateral effect to be given to the determinations of the
Superintendent of the New York Insurance Department.”); Diedenhofen–Lennartz v.
Diedenhofen, 931 A.2d 439, 451 (Del. Ch. 2007) (“Delaware has a related and equally
important interest in affording comity to the courts of other jurisdictions when a dispute
arises under foreign business law.”); Tex. Instruments Inc. v. Cyrix Corp., 1994 WL 96983,
at *4 n.5 (Del. Ch. Mar. 22, 1994) (“A state’s interest in applying its own law is a factor
deserving of recognition and weight.”).
292
Diedenhofen, 931 A.2d at 452 (“That means giving more respect to the shared
expectations of the owners and managers of a business entity that their internal affairs
should governed by expert determinations made by jurists in the domicile of the entity, and
much less to the desires of a plaintiff who for tactical reasons seeks to have a Delaware
judge make a determination of foreign law.”).
293
See, e.g., Ribstein & Keatinge, supra note 253, § 14:18.
294
Carlisle, 114 A.3d at 605–06.

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that when the Conversion was completed in 2018 and Coinmint ceased to exist as a

Delaware entity, this Court was divested of its power to equitably dissolve Coinmint.

III. CONCLUSION

Judgment is entered in favor of CLT on Count I. Counts II and III are

dismissed for lack of subject matter jurisdiction. The parties shall submit a final

order and judgment within twenty days of this decision.

79