BRIDEV ONE, L.L.C. d/b/a/ PIREES PIRI PIRI GRILL, JAY PATEL, & MEGHA PATEL Judgment Debtors,
v.
REGENCY CENTERS, L.P., Judgment Creditor.
Richard L. Abbot, Richard S. Gebelein, David J. Soldo,
Esquire.
OPINION
Diane
Clarke Streett, Judge.
This
26th day of March, 2018, upon consideration of
Defendant's five Motions for Charging Orders,
Debtors' Response in Opposition to the five Motions for
Charging Orders, the Commissioner's Report and
Recommendation, and the record in this case, Defendant's
five Motions for Charging Orders are
GRANTED.
This
action stems from a contract dispute.[1] On April 24, 2013, Regency
Centers, L.P. ("Regency") and Bridev One, L.L.C.
("Bridev") executed a commercial lease agreement
for Bridev's restaurant. Jay Patel and Megha Patel (the
"Patels" and collectively with Bridev,
"Debtors") personally guaranteed Bridev's
performance of the Lease by executing a guaranty agreement.
Bridev stopped making the required payments to Regency under
the lease and subsequently filed a complaint in this Court
for Breach of Contract, Breach of Implied Covenant of Good
Faith and Fair Dealings, and Common Law Fraud. Regency filed
a counterclaim against Bridev that alleged Breach of Lease
and Breach of Guaranty.[2]
At the
conclusion of a three-day bench trial, the Court issued its
Decision After Trial and held that "there was a
contract, Regency did not breach the Lease, and that Regency
did not breach the implied covenant of good faith and fair
dealing. The Court also finds that Bridev breached the Lease
and that [the Patels] breached their personal
guaranty."[3]
On
August 1, 2017, after a hearing, a Superior Court
Commissioner issued a report and recommendation to enter
judgment in favor of Regency in the amount of $807, 879.96
plus interest. The Court issued an opinion on December 1,
2017 that adopted the report and recommendation and imposed
that judgment.[4]
On
January 11, 2018, Regency subsequently filed five Motions for
Charging Orders (the "Motions"), pursuant to 6
Del. C. § 18-703, against any limited liability
company ("LLC") membership interest of Jay Patel.
Debtors opposed the Motions.
A
hearing before the same Commissioner was held on February 5,
2018. Debtors argued, in part, that the Chancery Court had
exclusive jurisdiction over charging orders pursuant to
§ 18-703(f)[5] and Hanna v. Baier, a December
2017 Superior Court case which held that the Court of
Chancery had exclusive jurisdiction concerning
charging orders.[6] On February 9, 2018, based on review of
legislative history, the Commissioner issued her Report and
Recommendation that the Court grant the
Motions.[7] For the reasons stated below, the Court
adopts the Commissioner's Report and Recommendation in
its entirety and grants Regency's Motions.
Prior
to 2005, § 18-703 provided that a charging order was the
exclusive remedy to collect a judgment from a judgment
debtor's interest in a LLC.[8]Furthermore, in 1986, the Court of
Chancery held that the Chancery Court "lacked subject
matter jurisdiction with respect to [charging orders] and
that jurisdiction resided with the Superior
Court."[9] As such, prior to 2005, charging orders
were issued by the Superior Court.
In
2005, the General Assembly amended 6 Del. C. §
18-703. It added subsection (f) which states that "[t]he
Court of Chancery shall have jurisdiction to hear and
determine any matter relating to any such charging
order."[10]
After
the 2005 amendment and addition of subsection (f), the
Superior Court continued to issue charging
orders.[11] At least three charging orders were
issued by this Court in 2017 prior to
Hanna[12] (including one issued by the Hanna
judge eleven months ago[13]). Those (pre-Hanna)
orders are in conformity with the Court's practice,
relied upon for decades, and its recognition of the doctrine
of stare decisis.
Under
the doctrine of stare decisis, "settled law is
overruled only for urgent reasons and upon clear
manifestation of error."[14] The law is clear that
stare decisis is important to the administration of
justice and should be followed unless there is a compelling
reason to reject it.[15] Stare decisis "compel[s]
[] adherence to [] precedent"[16] and "means that when
a point has been once settled by decision it forms a
precedent which is not afterwards to be departed from or
lightly overruled or set aside. . ."[17] It is
"the preferred course because it promotes the
evenhanded, predictable, and consistent development of legal
principles, fosters reliance on judicial decisions, and
contributes to the actual and perceived integrity of the
judicial process."[18]
In
State v. Barnes, a 2005 case involving sentencing,
the Delaware Supreme Court unambiguously stated, "we
must take seriously the longstanding interpretation of a
statute held by our Superior Court."[19] The Delaware
Supreme Court explained that "[t]he doctrine of
stare decisis exists to protect the settled
expectations of citizens because elementary considerations of
fairness dictate that individuals should have an opportunity
to know what the law is and to conform their conduct
accordingly."[20]
Furthermore,
if the meaning of a statute is in dispute, the Delaware
Supreme Court has accepted the traditional interpretation of
that statute as a reflection of legislative
intent.[21] In Barnes, the Court found that
"[r]eading the Code to continue parole eligibility [] is
not only plausible, it [is] the interpretation that has been
held by the Superior Court and the Board of Parole ... for
the entire period since DUIs were made felonies in
1995."[22]
Barnes
noted that "[w]hen a statute is susceptible to two
different interpretations, as it is here, the court is
required to interpret the statute based on available,
relevant information and evidence."[23] In Vegso
v. Board of Trustees, [24] the Superior Court stated that
where a statute is "doubtful or ambiguous in its terms,
a practical administrative interpretation over a period of
time, if founded upon plausibility, will be accepted by the
courts as indicative of the legislative
intent."[25]In Harvey v. City of Newark,
[26]
the Court of Chancery explained that "it would seem rare
indeed to discover that a practical construction that had
been relied upon for many years was based on an entirely
implausible reading of the text at issue."[27]
In the
instant case, the Commissioner's Report and
Recommendation considered the issue of legislative intent and
also analyzed cases (unrelated to the issue of charging
orders) that concerned the Court of Chancery's
jurisdiction. Glanding v. Industrial Trust
Company[28] and In re
Arzuaga-Guevara[29] provide guidance and reject divestment
of jurisdiction when a new (or amended statute) is
subsequently promulgated.
Glanding
involved decrees of distribution for decedent estates where a
new statute vested the newly-formed Orphans Court with
jurisdiction to enter those decrees. The Glanding
decision held that "concurrent jurisdiction will be
found to exist in many cases where the legal remedy afforded
is adequate and complete in all respects"[30] and
"[t]he jurisdiction conferred [] is but a permissive or
conditional jurisdiction and in no respect is it exclusive or
absolute."[31] So too, In re Arzuaga-Guevara
held that the Court of Chancery and the Family Court had
concurrent jurisdiction to appoint an interim guardian for a
child because a family court remedy did not exclude Court of
Chancery jurisdiction. The Court found that 10 Del.
C. § 925, [32] which gave the Family Court jurisdiction
over petitions for minor guardianships, did not divest the
Court of Chancery of its concurrent jurisdiction to appoint
guardianship. In re Arzuaga-Guevara also noted that
10 Del C. § 925 was a response to (and repeal
of)[33] a prior Supreme Court case[34] which had
given the Court of Chancery exclusive jurisdiction over
guardianship.[35]
Consistent
with the approaches in those cases, the § 18-703
charging order statute does not explicitly divest this Court
of its jurisdiction to enter charging orders. Additionally,
§ 18-703 (as amended) does not state that the Court of
Chancery has exclusive jurisdiction.[36] Moreover, 10
Del. C. § 562 gives this Court the authority to
"frame and issue all remedial writs, including writs of
habeas corpus and certiorari, or other process, necessary for
bringing the actions in that Court to trial and for
carrying the judgments of the Court into
execution.'"[37] As such, "we must give
effect to the legislature's intent by ascertaining the
plain meaning of the language used."[38]Thus, the
General Assembly, aware of § 562 when it amended §
18-703 in 2005, did not expressly divest the Superior Court
of its jurisdiction to issue charging orders and it did not
"purport to vest"[39] the Court of Chancery with
exclusive jurisdiction. The Delaware Supreme Court has noted
that "repeal by implication is not favored" and
that "unless it is expressly so provided, one act does
not ordinarily repeal another, if both, in whole or in part,
can be construed together."[40]
In the
instant case, the Court does not find "compelling
justification"[41] for departure from the doctrine of
stare decisis.[42] Here, there was a Delaware judgment
arising from a Delaware trial (and hearing to determine the
amount of the judgment). As such, the Court in this case will
follow the longstanding practice[43] of issuing § 18-703
charging orders.[44] In contrast, the facts m Hanna
were more complex. Hanna involved a judgment
creditor's efforts to obtain Delaware discovery in aid of
execution of a Maryland charging order that survived a
Maryland discharge in Bankruptcy from a Massachusetts
judgment.
Furthermore,
post-Hanna, another 2018 Superior Court case also
concerned charging order jurisdiction. In that other case, a
different Superior Court Commissioner, on March 5, 2018,
issued a report and recommendation and similarly concluded
that the Superior Court had jurisdiction to issue charging
orders.[45]Clearly, pre- and post- Hanna,
the Superior Court continues to follow the prevailing
interpretation that the Superior Court has jurisdiction to
issue charging orders.
As to
the issue of proof of a debtor's limited liability
company interest, Debtors also argued that the Motions fail
to prove that Jay Patel had any current membership interest
in any of the identified limited liability companies and that
Regency's requested scope of recovery was too broad.
Given the length of this litigation, the Court finds that
Regency's reliance on testimony and documentation from
2014 to 2016 is sufficient for the Court to grant the Motions
to the extent allowable under 6 Del. C. §
18-703(a).[46]
Accordingly,
upon de novo review, the Court adopts the
Commissioner's February 9, 2018 Report and Recommendation
in its entirety. Regency's Motions for Charging Orders
are GRANTED.
IT
IS SO ORDERED.
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