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Dunfee v. KGL Holdings Riverfront, LLC

Superior Court of Delaware

November 29, 2017

SAMANTHA A. DUNFEE, and CHRISTINA M. DUNFEE, Administrators of the Estate of CARL TIMOTHY DUNFEE, Plaintiffs,
KGL HOLDINGS RIVERFRONT, LLC, d/b/a EVERGREEN APARTMENTS RIVERFRONT HEIGHTS, a Delaware Limited Liability Company, EVERGREEN PROPERTIES MANAGEMENT, INC., a Delaware Corporation, and EVERGREEN APARTMENT GROUP, INC, a Delaware corporation, Defendants/Third Party Plaintiffs,
ANTHONY FRAGALE, CONTINENTAL CASUALTY COMPANY, a foreign corporation, VILLAGE OF WINDHOVER, L.L.C., a Delaware limited liability company, and GLOBAL REALTY SERVICES GROUP, LLC a/k/a GRS GROUP / CORTEQ, a foreign corporation, Defendants/Third Party Defendants.)

          Submitted: September 8, 2017

         On Defendant Global Realty Services Group, LLC's Motion to Dismiss.

          Gary S. Nitsche, Esquire and Joel H. Fredericks, Esquire, Weik, Nitsche & Dougherty, Wilmington, Delaware, Attorney for Plaintiffs Samantha Dunfee and Christina Dunfee.

          Mary E. Sherlock, Esquire, Weber Gallagher Simpson Stapleton Fires & Newby LLP, Dover, Delaware, Attorney for Defendant/Third Party Plaintiff KGL Holdings Riverfront LLC d/b/a Evergreen Apartments at Riverfront Heights.

          Michael J. Logullo, Esquire and Laura Bower Braunsberg, Esquire, Rawle & Henderson LLP, Wilmington, Delaware, Attorneys for Movant Defendant Global Realty Services Group, LLC a/k/a GRS Group/CORTEQ.

          Paul Cottrell, Esquire and Patrick M. McGory, Esquire, Tighe & Cottrell, PA, Wilmington, Delaware, Attorneys for Third Party Defendants Continental Casualty Co. & Anthony Fragale.

          Paul D. Sunshine, Esquire, McGivney & Kluger, PC, Wilmington, Delaware, Attorney for Third Party Defendant Village of Windover.


          RICHARD R. COOCH, R.J.


         Before this Court is the Motion to Dismiss of Defendant Global Realty Services Group, LLC a/k/a GRS Group/CORTEQ's ("Global").[1] This motion arises from the death of Carl Timothy Dunfee ("Mr. Dunfee") as a result of alleged carbon monoxide exposure on March 25, 2016 while visiting a friend at Evergreen Apartments in Wilmington, Delaware. Plaintiffs Samantha Dunfee and Christina Dunfee bring this action on behalf of the deceased claiming negligence on the parts of the current and previous apartment owners, the property managers, the insurance company and its employee, and Global. Plaintiffs allege that due to a defective boiler system in the apartment that he was visiting, Mr. Dunfee died from carbon monoxide exposure. Global had been hired by the apartment owner's mortgagee and lender, Keybank National Association ("Keybank"), to conduct a property valuation assessment-in which no recommendation as to the inadequacy of the boiler system was made.

         In its motion to dismiss filed pursuant to Superior Court Rule 12(b)(2), Global contends that Plaintiffs have failed to assert a proper basis of personal jurisdiction to subject Global to jurisdiction in Delaware. Global claims that, in light of the United States Supreme Court decisions in Daimler AG v. Bauman[2] and Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County[3] and also the Delaware Supreme Court decision in Genuine Parts Co. v. Cepec[4], Delaware may not exercise personal jurisdiction over Global. Global's essential argument is that, because it is neither incorporated in Delaware, nor has its principal place of business in Delaware, it is not subject to Delaware jurisdiction simply by "doing business" here.

         This Court agrees with all parties that this Court lacks general personal jurisdiction over Global. However, Global's conduct in securing a property valuation assessment was sufficient to subject it to specific jurisdiction in Delaware. In keeping with both Daimler and Genuine Parts, and as explained infra, the securing by Global of an assessment of the apartments was conduct that "arises out of or relates to" Plaintiffs' negligence claims.[5]

         Global's conduct was targeted at Delaware because the property was located in the state. Global nonetheless argues that it is not subject to personal jurisdiction in Delaware by virtue of the property valuation assessment because the property valuation assessment was not conducted by a Global employee, but a third party, SAV Engineers ("SAV"). Global asserts that SAV is not an agent of Global, but rather an independent contractor, which, Global argues, precludes a finding that Global is subject to jurisdiction in Delaware for SAV's conduct.

         This Court finds at this juncture that Delaware has specific jurisdiction over Global. The Court DENIES Global's motion to dismiss.


         Plaintiffs, Samantha Dunfee and Christina Dunfee, brought this action on behalf of their decedent, Mr. Dunfee. On March 25, 2016, while visiting a friend who resided in the Evergreen Apartments at Riverfront Heights ("Evergreen Apartments"), Mr. Dunfee allegedly died from carbon monoxide exposure. Defendant Evergreen owned the apartment complex. The management companies of the apartment complex were Evergreen Properties Management, Inc. and Evergreen Apartment Group, Inc., also named as Defendants.

         On March 12, 2015, prior to Evergreen's purchase of Evergreen Apartments, Global Realty Services Group a/k/a GRS Group/CORTEQ ("Global")-a company that is both incorporated and maintains its principal place of business in California- apparently engaged SAV to conduct a valuation assessment of the property on behalf of Evergreen's lender and mortgagee, Keybank.[6] The assessment included an inspection of the boiler system.[7] The assessment yielded no sign of a defective boiler system and Evergreen received no recommendation to replace the boiler or to install carbon monoxide detectors.[8]

         Plaintiffs have alleged that, due to the negligence of the Defendants, the pipes of the boiler system that were intended to exhaust poisonous fumes out of the apartment failed to do so, which resulted in the death of Mr. Dunfee. Plaintiffs have also asserted that the Defendants allowed the boiler system in the apartment building to rust, deteriorate, and fall into a state of disrepair.

         Plaintiffs brought suit against six defendants. Plaintiffs first filed suit against the Evergreen entities on various negligence theories.[9] Plaintiffs also brought suit against Anthony Fragale, who conducted the inspection on behalf of Continental Casualty Company, and against Continental Casualty Company, on the theory of respondeat superior.[10] Plaintiffs sued Village of Windhover, L.L.C., who was the previous owner of Evergreen Apartments for failure to have properly inspected the boiler system, failure to warn, failure to arrange for re-inspection, and various other negligence claims.[11] Finally, Plaintiffs brought suit against Global claiming that Global failed to recommend that Evergreen install carbon monoxide detectors in the apartment, failed to properly inspect the boiler system, failed to warn of any defects in the boiler system, and failed to recommend that the boiler system be repaired or replaced.[12]

         Defendant Evergreen filed a third party complaint against Global seeking indemnity in the event that Evergreen is found negligent alleging essentially the same claims against Global as Plaintiffs had alleged.[13] Global then filed a motion to dismiss pursuant to Superior Court Civil Rule 12(b)(2) Evergreen's third party complaint and Plaintiffs complaint for lack of personal jurisdiction.[14]


         A. Global's Contentions

         Global seeks dismissal of the Dunfee Plaintiffs' amended complaint and Evergreen's third party complaint "for lack of personal jurisdiction"[15] over it because "a mere allegation of doing business in the State of Delaware or registration to conduct business are insufficient to permit the exercise of general jurisdiction."[16] Global argues that, because Global is neither incorporated nor has its principal place of business in Delaware, it is not subject to general jurisdiction here.[17] Global further asserts that "no act or omission by [Global] occurred in Delaware" with the exception of bank valuation assessments on Delaware properties that were conducted by what it characterizes as independent contractors, SAV.[18] Global asserts that it "is not susceptible to general [] personal jurisdiction in the State of Delaware" as it "is a California corporation with its principal place of business in California."[19]

         B. Evergreen's Contentions

         Evergreen opposes Global's motion to dismiss and argues in response that, irrespective of the general jurisdiction analysis, Delaware has "specific personal long-arm jurisdiction over [Global]" because Global did business and provided a service in Delaware.[20] Evergreen contends that because Global "purposefully directed its activities at residents of [Delaware] and the action arises from or is directly related to [Global's] actions within [Delaware]" it is subject to specific jurisdiction here.[21] Evergreen asserts that the assessment was conducted by a Global employee named Stephen A. Varitokias, who "presented himself... as being there on behalf of [Global]."[22] Evergreen contends that as a result of the assessment, the allegedly faulty boiler systems were not replaced, thus resulting in the release of carbon monoxide.[23]

         C. Plaintiff's' Contentions

         Plaintiffs also oppose Global's motion to dismiss and argue that Delaware has specific jurisdiction over Global because "[Global] contracted to perform a property assessment of a property located in Delaware ... in a negligent manner which resulted in the death of Mr. Dunfee[.]"[24] Plaintiffs recognize that it is the plaintiffs burden to show a basis for jurisdiction.[25] However, Plaintiffs argue that they have a lower burden in establishing when a motion is decided without an evidentiary hearing.[26] Plaintiffs contend that because there is at least some evidence to suggest that SAV was acting as Global's agent, Global's assertion that SAV was an independent contractor is "irrelevant."[27]


         "When reviewing a motion to dismiss, the Court must view the record in a light most favorable to the nonmoving party. The allegations of the complaint are assumed to be true, and all reasonable inferences must be construed most strongly in favor of the plaintiff."[28] When personal jurisdiction is contested and no evidentiary hearing is held, the plaintiff need only establish a prima facie case with the record viewed in the light most favorable to the plaintiff.[29] While plaintiffs carry the burden of demonstrating a basis for jurisdiction, they have a lower burden when a motion is decided without an evidentiary hearing.[30]

         V. DISCUSSION

         Delaware May Exercise Specific Jurisdiction Over Global Because Plaintiffs' Claim Arises Out of ...

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