United States District Court, D. South Carolina, Charleston Division
ORDER AND OPINION
Richard MarKGergel United States District Judge.
matter is before the Court on two motions to dismiss, one
filed by Defendants HMB Ventures, LLC and Halsey Minor and a
second filed by Defendant Robert Prioleau. (Dkt. Nos. 15,
16.) Plaintiffs have filed a combined response in opposition
to both motions to dismiss, and defendants have filed
replies. (Dkt. Nos. 19, 22, 23.) For the reasons set forth
below, the Court finds that jurisdictional discovery is
warranted. The parties shall complete jurisdictional
discovery by September 19, 2017 and file supplemental briefs
with the Court on or before October 3, 2017.
Bitreserve, Ltd. and Related Entities
matter involves a contract dispute over a Stock Purchase,
Transfer, and Voting Agreement for shares of a privately-held
company called "Bitreserve, Ltd." The parties'
briefings have not been helpful to the Court, so the Court
has relied substantially on publicly available records from
the Secretaries of State in California, South Carolina, and
Washington, which reveal the following about Bitreserve, Ltd.
and its related entities.
• "Bitreserve, Inc." is an entity that was
incorporated in the state of Washington on January 13, 2014.
It has been licensed to do business in California since May
2014. The entity changed its name to "Uphold, Inc."
in February 2017, several months after this lawsuit was
• "Bitreserve HQ, Inc." is an entity that was
incorporated in South Carolina on March 31, 2014. It has been
licensed to do business in California since December 2014.
The entity changed its name to "Uphold HQ, Inc." in
March 2016. Minor has conceded that Bitreserve, Ltd.
"operates" through this "HQ" entity that
is incorporated in South Carolina. (Dkt. No. 23 at 2.)
• "Bitreserve, Ltd., " whose stock is the
subject of this litigation is, according to Defendant Halsey
Minor, a Cayman Islands corporation with its principal place
of business in California. (Id. at 3.) Minor asserts
that Bitreserve, Ltd. has "always maintained its
headquarters in California." (Id. at 6.) Minor,
who resides in California, is the founder and former CEO of
Bitreserve, Ltd. (Dkt. No. 12.) Plaintiffs allege that
Bitreserve, Ltd. was "previously headquartered in South
Carolina and is registered to do business in this
state." (Id. at 1.) The Court has not found any
record of Bitreserve, Ltd. being incorporated or registered
to do business in South Carolina. Although Bitreserve HQ and
Bitreserve, Inc. are both licensed to do business in
California, this Court has not been able to identify any
publicly available record showing that an entity named
"Bitreserve, Ltd." is licensed to do business in
California. For this reason, the Court cannot readily accept
Defendants' assertion that Bitreserve, Ltd.'s
principal place of business is California.
Because the parties' briefings reveal that Plaintiffs
have not had access to the information needed to properly
brief arguments about jurisdiction and venue, and because the
Court is not confident that Defendants' representations
about the various Bitreserve entities are accurate,
jurisdictional discovery is warranted. The parties will
have until September 19, 2017 to complete jurisdictional
discovery and until October 3, 2017 to file supplemental
briefs on these issues. To guide the parties during this
period of jurisdictional discovery, the Court sets forth
below its preliminary understanding of the facts and relevant
Minor creates HMB Ventures, LLC and appoints Prioleau as
allege that, in 2015, Minor transferred his 30, 000, 000
shares of Bitreserve, Ltd. to HMB Ventures, LLC
("HMB"), a limited liability company incorporated
in Delaware. (Dkt. No. 12 at 3-4.) Minor is the sole
member of HMB. (Dkt. Nos. 12 at 4; 15-2 at 1.) The details of
this transaction are set forth in HMB's Limited Liability
Company Agreement ("LLC Agreement"). (Dkt. No. 15-2
at 13-20.) The purported purpose of the LLC Agreement, signed
on September 24, 2015, was to allow Minor to
"relinquish any right to vote [his] Bitreserve Shares
and any right to exercise control or influence over the
voting of his Bitreserve Shares." (Id. at 13.)
The LLC Agreement names Robert Prioleau as Manager and vests
him with the "sole, complete and unrestricted right to
vote the Bitreserve Shares and all rights to exercise control
and influence over the voting of the Bitreserve Shares."
(Id. at 15.)
The Parties Execute a Stock Purchase, Transfer, and Voting
Laggner is an individual who resides in Texas. (Dkt. No. 12
at 3.) Plaintiff Outpost Capital Management, LLC is a limited
liability company incorporated in Delaware with its principal
place of business in Connecticut. (Id.) Outpost has
only two members, and both are residents of Connecticut.
allege that they entered a Stock Purchase, Transfer, and
Voting Agreement ("Stock Agreement") with
Defendants on June 26, 2016 in which each Plaintiff agreed to
purchase 4, 843, 890 shares of stock in Bitreserve, Ltd.
(Id. at 1.) Under the terms of the Stock Agreement,
the seller agreed to transfer and assign the shares to
Plaintiffs after Bitreserve, Ltd.'s "Board approves
such company's next financing." (Dkt. No. 19-9 at
Stock Agreement includes a voting provision under which the
"seller agrees to vote his and any of his
affiliate[s'] remaining shares . . . according to the
vote recommended by the majority of the Board of Directors of
Bitreserve, Ltd. until such time as Bitreserve has completed
a financing." (Dkt. No. 15-2 at 6.) At the time the
parties entered the Stock Agreement, only Prioleau, as
Manager of HMB, had the ability to vote Bitreserve, Ltd.
shares. (Id. at 15.) Prioleau is not listed as a
party to the Stock Agreement, but he signed the Agreement and
wrote under his signature "I have reviewed this
Agreement and agree to fulfill its terms as to the Shares and
[Minor] in my capacity as trustee and acknowledge full
receipt of the consideration paid for said shares."
(Id. at 8.)
The Condition Precedent of the Stock Agreement is Allegedly
Met and Defendants ...