Submitted: September 21, 2017
Defendant's Motion for Protective Order,
Gutierrez de Cos, Esq., Attorney for the Plaintiffs.
A. Griffith, Esq., Attorney for the Defendant.
JANE BRADY SUPERIOR COURT JUDGE.
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.
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"
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."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.
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."
argue they are permitted to request discovery from
any person per the test of Fed. R. Civ. Pro.
69 (a)(2). 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
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."
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." Plaintiffs assert that a charging order is
a form of execution permitting a judgment creditor to divert
a flow of payments from judgment debtor. ...