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Hailey v. Race Proven Motorsports

Court of Common Pleas of Delaware, New Castle

October 23, 2017

BERNELL HAILEY, Plaintiff,
v.
RACE PROVEN MOTORSPORTS, FRAN SCHATZ, and BILL SCHATZ, Defendants.

          Submitted: September 19, 2017

          Brian T.N. Jordan Attorney for Plaintiff.

          Douglas A. Shachtman Attorney for Defendants.

          MEMORANDUM OPINION AND ORDER ON DEFENDANTS' MOTION TO DISMISS

          John K. Welch, Judge.

          This case involves the alleged unauthorized repair by Defendants Race Proven Motorsports, Fran Schatz, and Bill Schatz (collectively "Defendants") of a 2006 Pontiac GTO owned by Plaintiff Bernell Hailey ("Plaintiff). On June 30, 2017, the Court heard Defendants' Motion to Dismiss Plaintiffs Complaint under res judicata and failure to state a claim, reserving its decision on the motion. Subsequent to the hearing, the Court directed counsel to submit supplemental briefing. This is the Court's Decision on the Motion after consideration of the pleadings, oral argument, and supplemental briefing.

         PROCEDURE AND FACTS

         At this phase of the proceedings, the Court will briefly summarize the procedure and facts relevant to the determination of this motion.

         In 2014, Plaintiff contracted with Race Proven Motorsports ("RPM") for repairs to Mr. Hailey's 2006 Pontiac GTO (the "vehicle"). RPM made certain repairs and Plaintiff made payments to RPM-totaling $15, 150.00. After the two parties exchanged communications on the repairs that Plaintiff desired, totaling $13, 305.00, Plaintiff claimed certain repairs were improperly performed and refused to make further payments on his account. At this time, RPM began charging Plaintiff for storage of the vehicle.

         On June 20, 2016, after receiving no further payments, Defendants filed an Application to Conduct a Lien Sale on the vehicle in JP Court, seeking permission to sell the vehicle. The grounds for the claim were "Repairs, storage."[1] On August 19, 2016, the JP Court issued service by certified mail, which was returned. Defendants subsequently gave public notice and filed an affidavit attesting to service by publication.

         The JP Court granted the Authorization for a Lienholder's Sale on September 26, 2016.[2]RPM filed confirmation of advertising of the sale. According to the Disposition of Proceeds from Defendants filed with the Court, the car was sold at auction on September 29, 2016 and the JP Court sent Plaintiff notice of the sale.[3]

         On February 27, 2017, Plaintiff filed a Complaint in the Court of Common Pleas against Defendants, alleging that they unlawfully modified the vehicle, which resulted in damage to the vehicle's engine. Plaintiff asserts that he paid $15, 150.00 prior to Defendants completing the modification of the vehicle. Because Defendants allegedly made modifications that Plaintiff did not agree to, and those modifications "caused catastrophic damage" to his vehicle's engine, Plaintiff refused to pay Defendants the remaining balance for the vehicle. Plaintiff seeks $46, 208.13 in damages for Defendants' violation of the Auto Repair Fraud Prevention Act.

         On April 12, 2017, Defendants filed the instant Motion to Dismiss pursuant to Rule 12(b)(6), arguing that Plaintiffs action is barred inter alia by res judicata and failure to state a claim. On June 15, 2017, Plaintiff filed his response to Defendants' Motion to Dismiss. On June 30, 2017, a hearing was convened on Defendants' Motion to Dismiss. Following the hearing, the Court requested supplemental briefing. Plaintiff submitted his Opening Brief on July 20, 2017.[4]Defendants filed their Answering Brief on August 7, 2017.[5] Plaintiff then filed his Reply Brief on September 19, 2017.[6]

         PARTIES' CONTENTIONS

         Defendants assert that Plaintiffs claim is barred by res judicata because (1) the JP Court had jurisdiction over the prior claim, (2) Plaintiff and RPM were both parties to the prior action and the additional Defendants are in privity with the parties, (3) the cause of action is the same, (4) the prior issues in the JP Court Action were decided adversely against Plaintiff, and (5) the prior adjudication was final. Moreover, Defendants argue that any claims Plaintiff brings regarding the exercise of the garage keepers' lien, or contesting the amount of the repair or storage charge upon which the lien was based, are also barred because res judicata extends to all claims a party could have asserted in the prior proceeding. Finally, Defendants argue that Plaintiff cannot sue Defendants Bill Schatz and Fran Schatz because agents of corporations are not personally liable, and the Complaint fails to distinguish their actions from RPM's actions. Defendants note that only the Court of Chancery has jurisdiction to pierce the corporate veil and seek judgment against shareholders or officers of a corporation.

         Plaintiff retorts that res judicata does not apply because his claim was greater than the $15, 000 jurisdiction limit of the JP Court, and 10 Del. C. § 9536(b) does not require a defendant to file a counterclaim that exceeds $15, 000 in JP Court. Plaintiff further asserts that RPM's corporate status does not shield Defendants Bill Schatz and Fran Schatz from liability because Plaintiffs claims are tortious, and the Personal Participation Doctrine does not allow corporate officers to be shielded from tort claims if the Plaintiff shows that the officer "directed, ordered, ratified, approved, or consented to the tortious act."

         LEGAL STANDARD

         On a motion to dismiss, the Court '"must determine whether it appears with reasonable certainty that, under any set of facts which could be proven to support the claim, the plaintiffs would be entitled to relief.'"[7] In making this determination, the Court is limited to consider only facts contained within the four corners of the complaint, and must accept all well-pled allegations as true.[8] In applying this standard, the Court will draw every reasonable factual inference in favor of the non-moving party.[9] While the Court "is required to accept only those 'reasonable inferences that logically flow from the face of the complaint, ' [it] 'is not required to accept every strained interpretation of the allegations proposed by plaintiff.'"[10] Ultimately, "[d]ismissal is warranted only when 'under no reasonable interpretation of the facts alleged could the complaint state a claim for which relief might be granted.'"[11]

         DISCUSSION

         I. Delaware Law Allows Plaintiff to Proceed with His Claims in the Court of Common Pleas.

         Pursuant to Delaware law, Plaintiff is permitted to file his tort claims, seeking damages that exceed JP Court's civil monetary jurisdictional limit, in this Court as a new claim.

         A. Res judiciata does not bar Plaintiffs tort claims based on a violation of the Auto Repair Fraud Prevention Act

         Plaintiff is not barred from litigating his present claims before this Court based on the doctrine of res judicata. Attempting to prevent repetitive litigation, the doctrine of res judicata asks:

(1) did the court making the prior adjudication have jurisdiction over the subject matter of the suit and the parties to it; (2) are the parties to the second action parties or privies of parties to the first action; (3) is the present cause of action the same as the prior case or were the issues necessarily decided in the prior action the same as those raised in the pending case; (4) were the issues in the prior action decided adversely to the contentions of the plaintiffs in the pending case; and (5) is the prior judgment a final personal judgment in favor of the defendant.[12]

Res judicata is intended to '"provide a definite end to litigation, prevent vexatious litigation and promote judicial economy.'"[13] The doctrine is transactional in nature; that is, it applies to claims that were raised below "or should have been raised in a court of competent jurisdiction."[14]The Superior Court has found res judicata preventative in cases where JP Court litigants seek a second bite at the apple in Delaware courts.[15]

         Plaintiff is not seeking a second bite of the apple. Plaintiffs claims in his pro se Complaint that Defendants "made unauthorized changes to the engine, " these modifications "caused catastrophic damage to the engine, " and that Defendants "were unable to produce printed reports of engine settings, " which are claims under Delaware's Auto Repair Fraud Prevention Act, 6 Del. C. § 4901A et al.[16] While these claims concern the vehicle, these tort claims are not duplicative of matters addressed below. Thus, Defendant's contention that Plaintiffs action amounts to a collateral attack of the underlying JP Order is unfounded.[17]

         Defendants are essentially asserting that Plaintiffs claims are barred by res judicata because the tortious claims could have been raised in the JP Court as a defense.[18] However, this Court has allowed claims that "arise out of same set of facts" to proceed.[19] In McManus v. East Pointe Apartments, the Superior Court held that a personal injury claim filed in the Court of Common Pleas based on the same insect infestation incident that was the basis for a retaliation counterclaim in JP Court was not barred by res judicata.[20] The Court specifically addressed Defendants' argument in the present case:

Even though McManus' counterclaim arises out of the same set of facts and circumstances as those which gave rise to East Pointe's summary possession claims against her, her personal injury claim is not barred by res judicata because McManus was the defendant in the summary possession cases and the JP Court does not have jurisdiction over personal injury claims.[21]

McManus is patently applicable. Not only does JP Court not have civil jurisdiction over the amount or substance of Plaintiff s tortious claims in the present case, Plaintiff did not choose the JP Court as his forum in the former action.[22]

         As the JP Court also has exclusive jurisdiction over summary possession actions, a comparison to summary possession cases in JP Court is instructive.[23] In summary possession cases, despite the JP Court's exclusive jurisdiction, the Superior Court has held that a litigant in JP Court can "split his or her cause of action and pursue the summary possession action in the JP Court while maintaining 'a plenary action between the same parties over the same lease in another court.'"[24] That is, JP Court's exclusive jurisdiction over certain claims stemming from factual circumstances does not prevent other claims stemming from those same circumstances. For instance, in Newark Shopping Center Owner, LLC v. Pizza University of Delaware, Inc., Newark Shopping Center Owner, LLC ("NSC") filed an action for summary possession of the commercial property it leased and damages against Pizza University of Delaware, Inc. ("Pizza University") for failing to remain open, as required under Section 8.3 of the commercial lease agreement ("Lease").[25 ...


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