Opinion
C.A. No. 01C-10-029 WLW
Submitted: August 27, 2002
Decided: October 16, 2002
Upon Plaintiff's Motion for Relief from Judgment and Transfer to the Court of Chancery. Granted.
Sandra W. Dean, Esquire of Camden, Delaware, attorney for the Plaintiff.
Michael W. Arrington, Esquire of Parkowski Guerke, P.A., Dover, Delaware, attorneys for the Defendant.
ORDER
I. Introduction
Upon consideration of Plaintiff's Motion for Relief from the Judgment and Transfer to the Court of Chancery, and the response of Defendant, it appears to this Court that based on a review of the case file and the applicable law, the motion for relief from judgment should be granted, and the cause of action shall be transferred to the Chancery Court. In addition, Defendant's request for costs shall also be granted.
II. Background
In October, 2001 the Lost Creek Land and Cattle Company, Inc. (Plaintiff) filed an action against Richard Wilson (Defendant) in Superior Court demanding payment of a debt. The amount of the debt that Plaintiff alleged Defendant owed was $78,237.74. Since the amount in controversy was under $100,000 this Court sent the case to mandatory arbitration under Superior Court Civil Rule 16. On April 5, 2002, all the parties appeared and participated in a mandatory arbitration hearing. On April 9, 2002, the Arbitrator's Order granting judgment in favor of the Defendant was filed with the Kent County Prothonotary.
Subsequent to the arbitration, on April 12, 2002, the Plaintiff made a Motion to Dismiss without prejudice. On April 18, 2002 the case was dismissed without prejudice. Plaintiff then filed a similar action in the Court of Chancery. On April 29th, after the dismissal of the case, Plaintiff's time to appeal the arbitrators decision under Superior Court Rule 16 expired. On April 30th, Defendant filed an objection to the dismissal. Defendant's response asserts that the voluntary dismissal of the case was improper. Under Rule 41(a)(1), voluntary dismissal by the Plaintiff can be accomplished if filed prior to service of the answer, or by filing a stipulation of dismissal signed by all parties. Therefore, the unilateral "Request for Dismissal" was impermissible because not only had an Answer to the Complaint been filed but mandatory arbitration had already resulted in a conclusion. On June 7, 2002, this Court vacated the dismissal.
There seems to be a discrepancy as to which rule the Plaintiff utilized to file the "Request to Dismiss". In a June 3rd letter, Plaintiff's attorney claims that she filed the motion pursuant to Superior Court Civil Rule 12(h)(3) based on a conversation she had with the arbitrator. Plaintiff claims that at the conclusion of arbitration there was a conversation between Plaintiff and the arbitrator in which the arbitrator informed Plaintiff that she did not think there was subject matter jurisdiction over this claim. In the letter, the Plaintiff then expresses agreement that jurisdiction was proper in Chancery Court and not in this Court and thus requested the motion to dismiss. The Request to Dismiss filed by the Plaintiff with this Court does not list a rule. However, the Defendant in his response to the motion, and in a letter to this Court states that the Plaintiff requested a voluntary dismissal pursuant to Superior Court Rule 41, and explained why, under the rule, a voluntary dismissal was inappropriate at this time in the litigation without both parties' signatures.
On April 30, 2002, the Defendant also requested this Court enter an order of judgment pursuant to the arbitrator's order based on Superior Court Rule 16.1(i). Rule 16.1(h)(1) provides that "a demand for a trial de novo shall be the sole remedy of any party in a case subject to this Rule." Under this rule, the demand for a trial de novo must be filed and served within 20 days after the filing of the arbitrator's order. Rule 16.1(i) provides that in the event that no such request is filed, the assigned judge upon motion may enter an order of judgment. Based on Defendant's motion, this Court confirmed the arbitrator's order and entered judgment in favor of the Defendant.
On August 26, 2002, the current Motion for Relief from Judgment and Transfer to the Court of Chancery was filed.
III. Analysis A. Motion for Relief From Judgment
Superior Court can relieve a party from a judgment or an order providing the requirements of Superior Court Civil Rule 60(b) are met. Rule 60(b) provides in pertinent part: "On motion and upon such terms as are just, the Court may relieve a party . . . from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect . . . or (6) any other reason justifying relief from operation of the judgment." When determining whether a party's actions, or lack thereof, constitutes excusable neglect all of the surrounding circumstances should be considered. "A mere showing of negligence or carelessness without a valid reason may be deemed insufficient." Rather, excusable neglect has been described as "that neglect which might have been the act of a reasonable prudent person under the circumstances." In addition, this Court will only relieve judgment under Superior Court Rule 60(b)(1) if the moving party establishes "(1) the possibility of a meritorious defense and (2) no substantial prejudice to the non-moving party."
Cohen v. Brandywine Raceway Assoc., 238 A.2d 320, 325 (Del.Super. 1968) (holding there was no excusable neglect when an office manger misplaced and forgot papers for several weeks which he admits he knew were legal in nature and were important).
Id.
Id.
Keith v. Melvin L. Joseph Construction Co., 451 A.2d 842, 846 (Del.Super. 1982) (explaining that in exercising its discretion as to whether to grant relief from judgment under Rule 60(b) the court generally favors such motions upon any reasonable excuse especially when dealing with a motion to relief a default judgment under Rule 60(b)).
In this case, through a series of procedural mishaps, Plaintiff neglected to file an appeal from the Arbitrator's Order within the statutorily proscribed period of twenty days. The procedural chain of events that lead to the arguably unjust result began on April 12, 2002 when Plaintiff filed a Request to Dismiss without explaining why dismissal was appropriate. This motion was filed three days after mandatory arbitration which had resulted in an Arbitration Order in favor of the Defendant; however, the Plaintiff did not bring this to the Court's attention when the motion was filed. Due to the form of the motion and the lack of legal analysis, this Court treated the motion as a voluntary dismissal by the Plaintiff and inadvertently processed the dismissal. Consequently, on April 29th, the day that the Plaintiff was required to file the appeal of the Arbitrator's Order, this case had already been dismissed so the Plaintiff failed to file the appeal. On April 30th the day after the Plaintiff's deadline to file an appeal, the Defendant submitted both a response to the motion to dismiss and a request that this Court confirm the Arbitrator's Order. The Defendant in its response to the request to dismiss, also treated Plaintiff's motion as a voluntary dismissal, and convinced this Court that a grant of voluntary dismissal under Superior Court Rule 42 was inappropriate in this case. Therefore, on June 7th following oral argument, this Court vacated the dismissal and confirmed the Arbitrator's Order. Shortly, thereafter the Plaintiff filed this motion seeking relief from the judgment claiming excusable neglect.
In retrospect, it appears to this Court that the Plaintiff was attempting to have this case dismissed because of lack of subject matter jurisdiction under Rule 12(h)(3). However, the Plaintiff did not explain this in its motion to dismiss, and the first time this reason for dismissal was mentioned by the Plaintiff was in a June 3rd letter concerning the feasability of a continuance. If this issue had been fully explained in the Plaintiff's April 12th motion to dismiss, then this chain of procedural mishaps could have been broken.
Under Superior Court Rule 16.1, an appeal de novo within the statutory required time frame is Plaintiff's sole remedy for an adverse Arbitrator's Order.
This is the second time the chain of procedural events could have been broken. If the Defendant had brought it to either the Plaintiff's or the Court's attention that they were contesting the dismissal, this issue could have been resolved in time for the Plaintiff to register an appeal if it was desired. As it stands, the Defendant waited two weeks after this Court entered the dismissal to file its response and conveniently the Defendant waited until the day after the appeal deadline.
It appears as though Plaintiff thought that it was at "safe harbor" when Plaintiff failed to file an appeal within the statutorily mandated time period because the case was in fact dismissed from this Court at that time. In addition, the Plaintiff relied upon this dismissal and refiled a similar cause of action in the Chancery Court. Next, this Court must determine if there is substantial prejudice to the Defendant if the Plaintiff's motion is granted. While the Defendant will have to defend its case in court, there is no greater detriment than if the Plaintiff had filed a timely appeal. The Defendant's case has not been prejudiced by the slight time delay, especially given the fact that the Plaintiff timely refiled the case in Chancery Court and the Defendant has been filing motions and otherwise defending its case before that court. Given the tormented procedural background of this case, this Court in its discretion will grant the Plaintiff's motion to vacate the judgment.
B. Motion to Transfer to Court of Chancery
This Court has the authority and obligation to transfer causes of action for which it lacks jurisdiction to the court which would have proper subject matter jurisdiction. 10 Del. C. § 1902 provides that:
"No civil action, suit or other proceeding brought in any court of this State shall be dismissed solely on the ground that such court is without jurisdiction of the subject matter, either in the original proceeding or on appeal. Such proceeding may be transferred to an appropriate court for hearing and determination, provided that the party otherwise adversely affected, within 60 days after the order denying the jurisdiction of the first court has become final, files in that court a written election of transfer, discharges all costs accrued in the first court, and makes the usual deposit for costs in the second court. . . . This section shall be liberally construed to permit and facilitate transfer of proceedings between the courts of this State in the interests of justice."
In order to determine if this case should be transferred, this Court must first ascertain if jurisdiction is proper in this Court, or if it should properly be before the Court of Chancery. "The general rule is that Chancery Court, not Superior Court, has jurisdiction over litigation of matters arising out of partnership affairs. Superior Court does have jurisdiction once there has been an accounting or settlement of the partnership affairs." In this case, Plaintiff and Defendant entered into a partnership concerning a joint potato venture. Since this case represents obligations of the partners in the joint venture, jurisdiction is proper in the Chancery Court. Consequently, this Court will transfer this cause of action to the Court of Chancery.
Boone v. Howard, 1989 Del. Super. LEXIS 406, *16.
From the parties' motion and response, this Court understands that a similar cause of action is currently pending in the Chancery Court. Therefore, in the discretion of the Chancellor, this cause of action may be properly merged with the prior cause of action.
IV. Defendant's Motion for Attorney's Fees and Cost
In the event that excusable neglect is found, the Defendant requests that this Court award fees incurred in litigating the excusable neglect. Superior Court Civil Rule 60(b) states that "this rule does not limit the power of a Court to entertain an independent action to relieve a party from judgment, order or proceeding, or to grant any relief provided by statute." The rules of the Superior Court "shall be construed and administered to secure the just . . . determination of every proceeding." When granting an order, this Court has the authority to impose such terms as to prevent injustice. Specifically, when granting relief under Superior Court Rule 60(b), this Court has authority to grant costs to reimburse the adversely affected party. Therefore, this Court will order an award of attorney's fees and costs sufficient to reimburse Defendant for the manifest injustice that resulted from litigating Plaintiff's neglect.V. Conclusion
The Plaintiff's motion for relief from the judgment and motion to transfer are both GRANTED. Furthermore, the Plaintiff shall pay the Defendant $750.00 in court costs and legal expense in defending against the alleged excusable neglect.
IT IS SO ORDERED.