IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

BRIDEV ONE, L.L.C. d/b/a/ PIREES
PIRI PIRI GRILL, JAY PATEL, &
MEGHA PATEL

Judgment Debtors,
C.A. Nos. N14C-07-115(DCS)

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) N14C-09-019(DCS)
) CONSOLIDATED
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REGENCY CENTERS, L.P., )
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Judgment Creditor. )
OPINION
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.l On April 24, 2013, Regency
Centers, L.P. (“Regency”) and Bridev Gne, L.L.C. (“Bridev”) executed a

commercial lease agreement for Bridev’s restaurant J ay Patel and Megha Patel (the

 

l The history of this case is set forth in Bridev One, LLC v. Regency Centers, L.P., CA No. N14C-
07-115 DCS (Del. Super. Oct. 31, 2016) (Decision After Trial) and Brl`dev One, LLC v. Regency
Centers, L.P., CA No. Nl4C-O7-115 DCS (Del. Super. Dec. 4, 2017) (Amended Opinion and
Order) (adopting the Commissioner’s July 20, 2017 Report and Recommendation concerning the
calculation of the judgment).

“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 l, 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 l,
2017 that adopted the report and recommendation and imposed that judgment.4

On January l 1, 2018, Regency subsequently filed five Motions for Charging

Orders (the “Motions”), pursuant to 6 Del. C. § 18-703, against any limited liability

 

2 The complaint and cross-complaint were consolidated.

3 Bridev One, LLC, CA No. Nl4C-07-115 DCS at *2-3 (Decision Af`ter Trial).

4 Bridev One, LLC, CA No. Nl4C-07-115 DCS (Del. Super. Dec. 4, 2017) (December 1, 2017
opinion amended to correct typographical errors).

2

company (“LLC”) membership interest of J ay 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. Baz`er, 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

 

5 6 Del. C. § 18-703 states:

(a) On application by a judgment creditor of a member or of a
member's assignee, a court having jurisdiction may charge the
limited liability company interest of the judgment debtor to satisfy
the judgment To the extent so charged, the judgment creditor has
only the right to receive any distribution or distributions to which
the judgment debtor would otherwise have been entitled in respect
of such limited liability company interest

(b) A charging order constitutes a lien on the judgment debtor's
limited liability company interest

(c) This chapter does not deprive a member or member's assignee of
a right under exemption laws with respect to the judgment debtor's
limited liability company interest (d) The entry of a charging order
is the exclusive remedy by which a judgment creditor of a member
or a member's assignee may satisfy a judgment out of the judgment
debtor's limited liability company interest and attachment,
garnishment foreclosure or other legal or equitable remedies are not
available to the judgment creditor, whether the limited liability
company has l member or more than l member.

(e) No creditor of a member or of a member's assignee shall have
any right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, the property of the limited
liability company.

(f) The Court of Chancery shall have jurisdiction to hear and
determine any matter relating to any such charging order.

6 Hanna v. Baier, 2017 WL 6507187 (Del. Super. Dec. 19, 2017) (Emphasis supplied).
3

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 “lacl<ed

subject matter jurisdiction with respect to [charging orders] and that jurisdiction

 

7 Bridev One, LLC, 2018 WL 824976 (Del. Super. Feb. 9, 2018) (Commissioner’s Report and
Recommendation).
8 Pre 2005, § 18-703 stated, in pertinent part:

(a) On application by a judgment creditor of a member or of a
member's assignee, a court having jurisdiction may charge the
limited liability company interest of the judgment debtor to satisfy
the judgment The court may appoint a receiver of the share of the
distributions due or to become due to the judgment debtor in respect
of the limited liability company which receiver shall have only the
rights of an assignee, and the court may make all other orders,
directions, accounts and inquiries the judgment debtor might have
made or which the circumstances of the case may require.

(b) A charging order constitutes a lien on the judgment debtor's
limited liability company interest The court may order a foreclosure
of the limited liability company interest subject to the charging order
at any time. The purchaser at the foreclosure sale has only the rights
of an assignee.

(e) This section provides the exclusive remedy by which a judgment
creditor of a member or member's assignee may satisfy a judgment
out of the judgment debtor's limited liability company interest

(f) No creditor of a member shall have any right to obtain possession
of, or otherwise exercise legal or equitable remedies with respect to,
the property of the limited liability company.

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. lt 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.”l°

After the 2005 amendment and addition of subsection (f), the Superior Court
continued to issue charging orders.ll At least three charging orders were issued by
this Court in 2017 prior to Hanna12 (including one issued by the Hanna judge eleven

months agol3). 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.

 

9 Bridev One, LLC, 2018 WL 824976, at *2 (discussing MacDonala' v. MacDonald, 1986 WL 5480
(Del. Ch. May 9, 1986) (which held that, under the LLC statute at the time, the Court of Chancery
lacked subject matter jurisdiction over charging orders and that the Superior Court was a
“competent jurisdiction” under the statute because “the action necessary to reduce the foreign
judgment to a Delaware judgment is essentially an action for money damages”)).

10 See Footnote 5.

11 Charging Orders issued by several Superior Court judges since 2005 include: Fl'rst Presbyterian
Church of Smyrna v. Ballard Builders, LLC, et. al., CA No. K10C-06-016 NEP (Del. Super. Feb.
7, 2014); Chapman v. T he Baeza Grp., LLC, Nl2C-02-122 CEB (Del. Super. Oct. l, 2012);
Artisans’ Bank v. Corrozi-Fountainview, LLC, CA No. SlOJ-04-087 (Del. Super. Apr. 6, 2010);
Brya'e, P.A. v. Realty Enters., LLC, CA No. 08C-10-267 FWW (Del. Super. Mar. 23, 2009).

'2 Mfrs. & Traders Tr. C0 v. Bowers, CA No. Sl6J-09-119 (Del. Super. Jan. 6, 2017); Snajkowskz`
v. Quezada, CA No. S l 6J-12~089 (Del. Super. Jan. 6, 2017); Cly. Bank v. Parsons, CA No. N17M-
10-053 (Del. Super. Oct. 10, 2017).

13 See Snajkowski, CA No. Sl6J-12-089.

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 []

”16 and “means that when a point has been once settled by decision it forms

precedent
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

 

14 Seinfeld v. Verizon Commc ’ns, Inc., 909 A.2d 117,124 (Del. 2006) (cited in State v. Barnes,
116 A.3d 883 (De1.2015)).

15 Bank of Am. Corp. v. Ciiy of Miami, 137 S. Ct. 1296, 1299 (2017) (“Time and time again, this
Court has recognized that the doctrine of stare decisis is of fundamental importance to the rule of
law. . .[the Court] will not depart from the doctrine of stare decisis without some compelling
justification”).

16 Bank ofAm. Corp., 137 S. Ct. at 1299.

17 Oscar George, Inc. v. Potts, 115 A.2d 479, 481 (Del. 1955) (cited in Barnes, 116 A.3d 883).

18 Payne v. Tennessee, 501 U.S. 808, 827 (1991) (cited in Barnes, 116 A.3d 883).

19 Barnes, 116 A.3d at 891.

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 intent21 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

Bdrnes 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

 

20 Id

21 Watson v. Burgan, 610 A.2d 1364, 1367 (Del. 1992) (“In view of the fact that the original
regulation had remained in effect for fourteen years without legislative reaction, the practical and
plausible administrative interpretation was acceptable as indicative of legislative inten ”) (internal
quotations omitted); Council 8], Am. Fed'n of Staie, Ciy. & Mun. Emp., AFL-CIO v. State, Dep't
of F in., 293 A.2d 567, 571 (Del. 1972) (“In seeking legislative intent, we give due weight to the
practices and policies existing at the time [the statute] was enacted . . . A long-standing, practical,
and plausible administrative interpretation of a statute of doubtful meaning will be accepted by
this Court as indicative of legislative intent”) (cited in Barnes, 116 A.3d 883).

22 Barnes, 116 A.3d at 889-90, n. 25 (holding that the Truth in Sentencing Act did not preclude
felony DUI offenders from parole eligibility where “for a generation, none of the key government
stakeholders most involved in implementing the felony DUI provisions of the Code . . . believed
the enactment of the TIS Act to have deprived the Board of Parole of authority,” where “[the Board
of Parole’s] understanding [was] entitled to strong consideration,” and where “[s]uch a reading
would also be consistent with the policy goal of the TIS Act . . .”). See generally Apex Hosiery
C0. v. Leader, 310 U.S. 46, 488 (1940) (“Considerations of stare decisis are particularly forceful
in the area of statutory construction, especially when a unanimous interpretation of a statute has
been accepted as settled law for several decades”) (cited in Barnes, 116 A.3d 883).

7

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. Ciiy 0fNewczrk,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 Company28 and In re Arzuaga-Guevara29 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

 

23 Barnes, 116 A.3d at 888 (intemal citations omitted).

24 Vegso v. Bd. ofTr., 1986 WL 9019, (Del. Super. Aug. 20, 1986).

25 Id. at *4.

26 Harvey v. Cizy ofNewark, 2010 WL 4240625, (Del. Ch. oct 20, 2010).
27 Id. at *6.

28 Glanding v. Indus. Tr. C0., 45 A.2d 553 (Del. 1945).

29 In re Arzuaga-Guevara, 794 A.2d 579, 587 (Del. 2001).

8

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 case34 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

 

30 Glanding, 45 A.2d at 559.

31 Id

32 10 Del. C. § 925 provides, in pertinent part, “[t]he [Family] Court and each judge shall have
authority to: (16) [a]ppoint guardians of the person over minors under 18 years of age . . .”

33 In re Arzuaga-Guevara, 794 A.2d at 583.

34 In re Bunting, 311 A.2d 855, 857 (Del. 1973) (“Our Court of Chancery alone is vested with the
power to appoint guardians of both the person and the property of a minor”).

33 In re Arzuaga-Guevara, 794 A.2d at 587 (“It is not sufficient [] to demonstrate that a
guardianship proceeding [] is available in the Family Court. [There] must also [be a] show[ing]
that the statute creating the Family Court’s guardianship jurisdiction demonstrates a clear intent to
divest the Court of Chancery of jurisdiction over similar matters”).

9

exclusive jurisdiction36 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 ofthe Court into executz'on.”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

 

30 Bridev Orie, LLC v. Regency Centers, L.P., 2018 WL 824976, at *2 (Commissioner’s Report
and Recommendation) (finding that if the General Assembly had intended to give the Court of
Chancery exclusive jurisdiction over § 18-703 charging orders, it could have explicitly provided
so in subsection (f) just as it did in subsection (d), which provides that, “[t]he entry of a charging
order is the exclusive remedy by which a judgment creditor of a member or a member’s assignee
may satisfy a judgment . . .”(Emphasis added).

37 (Emphasis added).

38 Freeman v. X-Ray Ass 'ns, P.A., 3 A.3d 224, 227 (Del. 2010).

39 In re Arzuaga-Guevara, 794 A.2d at 583.

40 See Barries, 116 A.3d at n. 40 (noting that U.S. v. Title Irzs. Co., 265 U.S. 472, 485 (1924)
emphasized “the importance of citizens’ ability to rely on settled law, and the court’s inclination
to avoid causing ‘injurious results’ to those who have relied on that law in the event that the court
alters it”); Olson v. Halvorsen, 986 A.2d 1150, 1160 (Del. 2009) (“We must adhere to the rules of
statutory construction and, whenever possible, presume consistency between recent legislation and
pre-existing law”) (intemal quotations omitted).

10

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 practice43 of issuing §
18-703 charging orders.44 In contrast, the facts in Harma 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-Hanria, 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- Harina, the Superior Court continues to follow the prevailing

interpretation that the Superior Court has jurisdiction to issue charging orders.

 

41 Bank ofAm, Corp., 137 S. Ct. at 1299.

42 See Barnes, 116 A.3d at 892 (“A fundamental canon of statutory construction states that the
long time failure of the legislature to alter a statute after it had been judicially construed . . . is
persuasive of legislative recognition that the judicial construction is the correct one”) (intemal
citations omitted).

43 Id. at 890 (“When a statute has been applied by courts and state agencies in a consistent way for
a period of years, that is strong evidence in favor of that interpretation”).

44 Moreover, the Court of Chancery (in an unrelated matter and a different context) noted that
“. . .given the doctrine of stare decisis, any departure from this Court’s prior opinions on the
relevant issues must come from the Delaware Supreme Court” Longpoint Investmerits Trust &
Alexis Large Cap Equiiy Furid L.P., v. Prelix Therapeutics, Iric. at *4 (Del. Ch. Jan. 13, 2016).

43 See Debi Collection Servs., LLC v. Owensby, 2018 WL 1169642, at *l (Del. Super. Mar. 5,
2018):

11

As to the issue of proof of a debtor’s limited liability company interest,
Debtors also argued that the Motions fail to prove that J ay 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.

Mar./rcw

Diane Clarke rStreetf, Judge
cc: Richard L. Abbot, Esquire
Richard S. Gebelein, Esquire
David J. Soldo, Esquire

 

However, respectfully, 1 believe that [the Hanna] decision is
incorrect I believe that the proper reading of the 2005 amendment
to 6 Del. C. § 18-703(1), is that it granted concurrent jurisdiction to
the Court of Chancery and the Superior Court to hear and decide all
matters relating to charging orders.

40 § 18-703(a) provides, in pertinent part: “To the extent so charged, the judgment creditor has
only the right to receive any distribution or distributions to which the judgment debtor would have
otherwise been entitled in respect of such limited liability company interest.”

12

