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).
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).
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”).
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).
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):
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.”