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Hanna v. Baier

Superior Court of Delaware

December 19, 2017

Wagih Hanna, and Bothina Hanna, Plaintiffs
v.
Dieter A. Baier, Defendant.

          Submitted: September 21, 2017

         Upon Defendant's Motion for Protective Order, GRANTED.

          Andres Gutierrez de Cos, Esq., Attorney for the Plaintiffs.

          Daniel A. Griffith, Esq., Attorney for the Defendant.

          ORDER

          M. JANE BRADY SUPERIOR COURT JUDGE.

         PROCEDURAL BACKGROUND

         In August 2011, the Massachusetts Superior Court of Worchester County entered a money judgment in the amount of $521, 610.31 against the Defendant. On March 9, 2012, a Foreign Judgment in the above amount was filed in this Court. On June 7, 2012, the Circuit Court for Talbot County Maryland issued a Charging Order against Defendant's interest in Cabinetry Unlimited, LLC ("CU, LLC"). Defendant filed a Petition for Bankruptcy in the United States Bankruptcy Court for the District of Maryland on August 23, 2013. Consequently, the Bankruptcy Court entered a Discharge Order, discharging the judgment Plaintiffs obtained against the Defendant. The Charging Order against Defendant's interest in CU, LLC survived the Bankruptcy discharge. In July 2017, Plaintiffs served Notices of Depositions to Defendant, CU, LLC, Park Street Investments, LLC, and PKS & Company; seeking Discovery in Aid of Execution. On July 27, 2017, Plaintiffs filed a Petition to Issue a Rule to Show Cause as to why Plaintiffs should not be allowed to execute on the judgment. Defendant filed this Motion for Protective Order on August 7, 2017 and this Court held a hearing on the matter on September 1, 2017. The Court allowed Plaintiffs to file supplemental submissions to address the issue of whether jurisdiction in Superior Court is appropriate. Plaintiffs filed a Memorandum of Law on Proper Jurisdiction on September 10, 2017. On September 21, 2017, Defendant filed a Response. This is the Court's decision.

         PARTIES' CONTENTIONS

         Defendant contends that §18-703 of the Delaware Limited Liability Company Act ("Act") governs the Charging Order at issue. Defendant argues the Act provides, in summary, that (1) the Charging Order is a lien on Defendant's interest in CU, LLC; (2) the Charging Order is Plaintiffs exclusive remedy; and (3) "attachment, garnishment, foreclosure or other legal or equitable remedies are not available to" the Plaintiffs.[1]

         Plaintiffs contends that 6 Del. C. §18-703 does not bar post-judgment discovery because it "is not 'a legal remedy, ' but only a supplement to execution per the language of the Rule."[2]Plaintiffs argue granting the protective order would prevent the Plaintiffs from knowing whether the Charging Order is being followed, or from determining how much is owed at this point.

         Defendant contends that such discovery is prohibited by 6 Del. C. §18-703(d), and is in violation of the Bankruptcy Code even if the Act does not prohibit the discovery. Defendant argues that the judgment Plaintiffs seek to execute was discharged by the Bankruptcy Court for the District of Maryland, and the only remedy retained by the Plaintiffs is the Charging Order, which is a lien upon the Defendant's interest in CU, LLC and cannot be executed upon. Defendant avers that the nature of Plaintiff s discovery request is of "post-judgment discovery on a routine money judgment."[3]

         Plaintiffs argue they are permitted to request discovery from any person per the test of Fed. R. Civ. Pro. 69 (a)(2).[4] Plaintiffs also rely on Delaware Superior Court Rules of Civil Procedure Rule 69(aa) in establishing their right to discovery. That Rule provides, "the judgment creditor or judgment creditor's successor in interest when that interest appears of record, may take discovery by deposition, interrogatories and requests for production, in aid of the judgment or execution."[5]

         Lastly, Defendant contends this Court lacks jurisdiction over this matter. Defendant asserts that a Charging Order on an LLC member's interest is governed by the Act and the Act "makes clear that jurisdiction for this action lies with the Court of Chancery."[6]

         Plaintiffs contends this Court has exclusive jurisdiction because 10 Del. C. §3512 provides "the Superior Court may make all necessary rules respecting the form of process... [of] all other matters relating to attachment proceedings."[7] Plaintiffs assert that a charging order is a form of execution permitting a judgment creditor to divert a flow of payments from judgment debtor.[8] ...


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