Middlecap Associates, LLC v. The Town of Middletown

• Court: Superior Court of Delaware
• Decided: October 16, 2023
• Docket: N23C-03-181 CEB
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MIDDLECAP ASSOCIATES, LLC, ) ) Plaintiff, ) ) v. ) C.A. No. N23C-03-181 CEB ) THE TOWN OF MIDDLETOWN, a ) Municipal corporation of the State of ) Delaware, THE TOWN OF ) MIDDLETOWN TOWN COUNCIL, ) the governing body of the Town of ) Middletown, and KENNETH L. ) BRANNER, JR., JAMES REYNOLDS, ) AARON BLYTHE, JAMES ROYSTON, ) DREW CHAS, ROBERT MCGHEE and ) ROBERT STOUT, in their individual ) and official capacities as Members of the ) Town of Middletown Town Council, ) ) Defendants. )

Submitted: May 3, 2023 Decided: October 16, 2023

MEMORANDUM OPINION

Upon Consideration of Defendants’ Motion to Dismiss, GRANTED in part and DENIED in part.

John W. Paradee, Esquire, Brian V. DeMott, Esquire, Baird Mandalas Brockstedt & Federico, LLC, Dover, Delaware. Attorneys for Plaintiff.

Scott G. Wilcox, Esquire, Giordano, DelCollo, Werb & Gagne, LLC, Wilmington, Delaware. Attorney for Defendants.

BUTLER, R.J. 1 This certiorari review arises from a denial by the Town of Middletown Town

Council (the “Council”) of a conditional use permit to construct apartment buildings

on land owned by Plaintiff Middlecap Associates, LLC (“Middlecap”) in the Town

of Middletown, Delaware (the “Town”). At a public hearing on February 7, 2022,

the Council voted to deny Middlecap’s application. Challenging that vote,

Middlecap filed a Verified Petition in the Court of Chancery on March 11, 2022,

requesting a declaratory judgment and injunctive relief. The Court of Chancery

dismissed Middlecap’s Petition. According to the Court of Chancery, it lacked

subject matter jurisdiction. That Court did permit the dispute to be transferred to the

Superior Court pursuant 10 Del. C. § 1902. Middlecap then filed an Election of

Transfer in the Court of Chancery and a Verified Complaint in this Court, seeking a

writ of certiorari.

Before the Court is a Motion to Dismiss the certiorari Complaint. Defendants

contend that: (1) the claim is time-barred; (2) the claim is barred by Middlecap’s

failure to exhaust its administrative remedies; and (3) the individual defendants are

immune from suit. Upon consideration of the parties’ submissions, for the reasons

stated herein, the Motion to Dismiss the Complaint is DENIED and the Motion to

Dismiss the Individual Defendants is GRANTED.

2 Background and Procedural History

Middlecap owns approximately 15 acres of land along State Route 299, within

the town limits of Middletown. Middlecap wants to build an apartment complex on

its land, consisting of 8 apartment buildings with a total of 192 units.

In order to build these units, Middlecap needs a “conditional use permit” from

the Town Council. Without giving too much away, Middlecap applied, the Town

Council voted no, and Middlecap sought redress in the courts.

Middlecap filed a Verified Petition in Chancery Court, seeking an injunction

and a declaratory judgment reversing the Council’s decision, asserting that Chancery

Court had jurisdiction over the matter pursuant to 10 Del. C. § 341, 10 Del. C. §

6501-6502, and the Court’s “equitable cleanup doctrine.” The Town responded with

a motion to dismiss in Chancery Court, arguing that Middlecap did not need

declaratory relief or an injunction, but had an adequate remedy at law, to wit: a

certiorari proceeding in the Superior Court. Middlecap, citing a long line of

Chancery Court cases taking jurisdiction in conditional use permit disputes,1 argued

that Chancery does indeed have equitable jurisdiction and should keep the dispute

there.

1 Petitioner’s Ans. Br. in Opposition to Def.’s Motion to Dismiss at 14-15, Middlecap Associates, LLC v. Town of Middletown, 2023 WL 2981893 (Del. Ch. Feb. 2, 2023). 3 On February 2, 2023, the Chancery Court issued two significant decisions. In

Delta Eta v. Mayor & Council of the City of Newark,2 the Court ruled that Chancery

does not have jurisdiction over conditional use permit litigation where the plaintiff

fails to plead adequately that an injunction is needed to prevent future harm since

the law presumes government actors will comply with court orders. Further, where

a writ of certiorari is available, the plaintiff bears the burden of establishing that

certiorari is an inadequate remedy at law.

In light of the Delta Eta ruling, the Court also dismissed Middlecap’s action,

giving Middlecap the option of transferring its case to Superior Court pursuant to 10

Del. C. § 1902.3 On February 22, 2023, Middlecap filed an Election of Transfer in

the Court of Chancery.

Once in Superior Court, Middlecap filed its Complaint, essentially a copy of

its Chancery Petition. Middlecap then amended the Complaint before the Town filed

an Answer. The amendment specifically invokes this Court’s power to issue writs of

certiorari.4

On May 3, 2023, the Town filed a motion to dismiss the Superior Court

Amended Complaint. The Town’s motion is essentially a copy of its motion in

Chancery Court – that is, arguing that the case must be one in certiorari – the very

2 2023 WL 2982180, at *8 (Del. Ch. Feb. 2, 2023). 3 Middlecap Associates, LLC, 2023 WL 2981893, at *1. 4 10 Del. C. § 142. 4 writ sought by Middlecap in Superior Court. So, while other arguments concerning

the remedy are raised, suffice it to say the parties are in strident agreement on this

point: that Superior Court is the proper forum in which to resolve this dispute.

Other arguments are raised that survive the parties’ agreement on jurisdiction.

Those will be treated in the Court’s Analysis.

STANDARD OF REVIEW

A party may move to dismiss under Rule 12(b)(6) for failure to state a claim

on which relief can be granted.5 In considering a Rule 12(b)(6) motion, the Court

(1) accepts as true all well-pleaded factual allegations in the complaint; (2) credits

vague allegations if they give the opposing party notice of the claim; (3) draws all

reasonable factual inferences in favor of the non-movant; and (4) denies dismissal if

recovery on the claim is reasonably conceivable.6 Dismissal is inappropriate unless

“under no reasonable interpretation of the facts alleged could the complaint state a

claim for which relief might be granted.”7

5 Super. Ct. Civ. R. 12(b)(6). 6 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Holdings LLC, 27 A.3d 531, 535 (Del. 2011). 7 Unbound Partners Ltd. P’ship v. Invoy Holdings Inc., 251 A.3d 1016, 1023 (Del. Super. 2021) (internal quotation marks omitted). 5 Delaware’s motion to dismiss standard is “minimal.”8 It asks “whether there

is a possibility of recovery.”9 The Court, however, need not “accept conclusory

allegations unsupported by specific facts or … draw unreasonable inferences in

favor of the non-moving party.”10 The Court may reject “every strained

interpretation of the allegations proposed by the plaintiff.”11

“The complaint generally defines the universe of facts that the trial court may

consider in ruling on a Rule 12(b)(6) motion ….”12 The Court may consider matters

outside the complaint only if “the document is integral to a plaintiff’s claim and

incorporated into the complaint[.]”13 “[A] claim may be dismissed if allegations in

the complaint or in the exhibits incorporated into the complaint effectively negate

the claim as a matter of law.”14

8 Cent. Mortg., 27 A.3d at 536. 9 Garfield v. BlackRock Mortg. Ventures, LLC, 2019 WL 7168004, at *7 (Del. Ch. Dec. 20, 2019) (citing id. at 537 n.13 (“Our governing ‘conceivability’ standard is more akin to ‘possibility,’ while the federal ‘plausibility’ standard falls somewhere beyond mere ‘possibility’ but short of ‘probability.’”)). 10 Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162, 166 (Del. 2011), overruled on other grounds by Ramsey v. Ga. S. Univ. Advanced Dev. Ctr., 189 A.3d 1255, 1277 (Del. 2018). 11 Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001). 12 In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006). 13 Windsor I, LLC v. CWCap. Asset Mgmt. LLC, 238 A.3d 863, 873 (Del. 2020) (internal quotation marks omitted). 14 Malpiede, 780 A.2d at 1083. 6 ANALYSIS

There are three arguments raised in support of dismissal requiring the Court’s

consideration. First, that the claim for a writ is “time barred.” Second, that the claim

for a writ is barred by the failure of Middlecap to exhaust its administrative remedies.

Finally, there is an assertion that the individual defendants have immunity from suit.

1. The claim for a writ of certiorari is not time barred.

Unlike statutes of limitation or court rules setting forth time limits that courts

view as “jurisdictional,” admitting to no exceptions,15 the timing of a complaint for

certiorari is subject to considerations beyond the dates on a calendar. While thirty

days is “generally” the time within which to seek a writ of certiorari, that

requirement is not set in stone.16

The filing history here is at least relevant, so we will walk through it now.

The Council denied the conditional use permit on February 7, 2022. Middlecap filed

its Chancery Court Petition seeking an injunction and declaratory judgment 33 days

later, on March 11, 2022. Had this been a direct appeal from, say, a Zoning Board

15 See, e.g., Riggs v. Riggs, 539 A.2d 163, 164 (Del. 1988) (Failure to file appeal within time mandated by statute and court rule is a “jurisdictional defect” that “may not be excused in the absence of unusual circumstances” not attributable to counsel); PNC Bank, Delaware v. Hudson, 687 A.2d 915, 916 (Del. 1997) (Observing “the power of an appellate court to exercise jurisdiction rests upon the perfecting of an appeal with the time period fixed by statute.”). 16 See In the Matter of Gunn, 122 A.3d 1292, 1293 (Del. 2015). 7 of Adjustment, we may well call the appeal 3 days late.17 But it was not a direct

appeal from a zoning board.

Neither did Middlecap seek certiorari – a legal remedy available in Superior

Court – in the Court of Chancery. In March of 2022 when it filed its Verified

Petition, Chancery was the undisputed forum for conditional use permit disputes that

were headed for resolution by the courts.18 In Chancery, the Town did not argue that

Middlecap’s petition for declaratory judgment and injunction was untimely. But

now that Chancery has agreed with the Town that review must come by way of

certiorari in Superior Court, the Town would have us go back and examine the filing

date in Chancery and deny Middlecap any review at all because Middlecap did not

foresee Chancery’s ruling on jurisdiction. The Court disagrees.

A. The Exceptional Circumstance Standard

As has been said before, “[t]here appears to be no good reason, absent

exceptional circumstances, why a party should have more time to ask for the writ of

17 See, e.g., 22 Del. C. § 328(a) (30 day appeal period for review of decisions of boards of adjustment). 18 See, e.g., Moore v. Gravenor, 1978 WL 22463 (Del. Ch. Mar. 7, 1978) (setting aside Sussex County Council’s grant of a conditional use permit); Sears v. Levy Court of Kent Cnty., 1986 WL 10085, at *1 (Del. Ch. Sept. 15, 1986) (affirming Kent County Levy Court denial of a conditional use permit); Green v. Cnty. Council of Sussex Cnty., 1994 WL 469167 (Del. Ch. Aug. 11, 1994) (finding the Sussex County Council’s grant of a conditional use was invalid); Coker v. Kent Cnty. Levy Court, 2008 WL 5451337 (Del. Ch. Dec. 23, 2008) (affirming Kent County Levy Court’s denial of a conditional use permit). 8 certiorari than he would have to take an appeal or sue out a writ of error in an

ordinary case.”19 The allowance for “exceptional circumstances” requires the Court

to consider the reasons for the delay in filing and assess whether the litigant should

suffer the “extreme sanction” of dismissal because of the delay.20 How are we to

differentiate the “ordinary case” from one with an “exceptional circumstance?” We

can see from the decided cases that ambiguity in procedural rules is a prime area for

application of exceptional circumstances.

In Elcorta, Inc. v. Summit Aviation,21 the plaintiff sought review of the

execution of a garagemen’s lien on an aircraft by the J.P. Court. The law at the time

required that review of a J.P. Court decision required that a transcript be filed with

the praecipe. The transcript was not ready. The surety was not set, the recognizance

did not issue promptly, and the certiorari was filed on day 39, nine days late. Despite

the errors, the Court found the prejudice minimal, the errors understandable, and the

delay an exceptional circumstance.

In FMC Corporation v. Special Services Department, the Court held that a

Hearing Officer’s action was subject to certiorari (and not appellate) review. As to

the 30-day filing requirement for certiorari review, the Court observed that “a failure

19 Elcorta, Inc. v. Summitt Aviation, Inc., 528 A.2d 1199, 1201 (Del. Super. 1987), citing Eigner v. Geake, 192 P.2d 310, 310-311 (N.M. 1948). 20 Elcorta, Inc., 528 A.2d at 1202. 21 528 A.2d at 1200. 9 to strictly observe the technical requirements for perfecting certiorari review has

been excused where confusion regarding the proper procedure was understandable

and where there was no prejudice to the other parties by allowing the action to

proceed.”22

Just a few months ago, Superior Court heard a challenge to a decision by the

Kent County Department of Planning Services to approve a minor subdivision.23

Although that Court ruled that a motion to amend the appeal to assert a claim for

certiorari related back under Rule 15, the Court also found exceptional

circumstances sufficient to warrant a relaxation of the 30-day filing requirement.24

Here, as in the cases above, there was no prejudice to the Town, which was

an active participant in the Chancery Court dispute. Further, Chancery Court’s

reversal of its prior views on declaratory judgments and injunctions in conditional

use permit litigation was unknown to the parties until announced in a case decided

on the same day as this one. The Court therefore has little difficulty finding that the

delay in filing for certiorari qualifies as an “exceptional circumstance.” The

Defendant’s motion to dismiss the complaint for certiorari in this Court as untimely

is not well taken.

22 FMC Corporation v. Special Services Department, 2017 WL 2378002, at *4 (Del. Super. May 31, 2017). 23 Schafer v. Kent County Department of Planning Services, 2023 WL 3750390, at *1 (Del. Super. May 31, 2023). 24 Id. at *8. 10 2. Middlecap exhausted its administrative remedies.

The Town next argues that Middlecap’s “failure to appeal the denial of the

conditional use permit to the Town of Middletown Board of Adjustment before

seeking review by a court, is fatal to the claim and is a further reason that the

Amended Complaint has to be dismissed.”25 This argument proceeds from the

premise in the Town’s brief that “A party aggrieved by a decision on a conditional

use permit can appeal the decision to the Town of Middletown Board of

Adjustment.”26 Notably, however, the Board of Adjustment’s powers include only

the power to authorize variances from the zoning code or “special exceptions” to the

Code. The Board of Adjustment’s powers do not even mention conditional use

permits.

A conditional use permit is:

“A permit granted by the Town Council to allow any of the conditional uses stipulated by this code, provided that the application for permit meets the requirements of the code, the conditions for a conditional use are fulfilled and a duly advertised public hearing is held.”27

Conditional use permits are treated in the Code in section 10, entitled

“Conditional Use Permits.”28 To obtain such a permit, the applicant must request it

from the Town Council, which will hold a hearing and decide the matter. The Code

25 Def.’s Br. in Support of Motion to Dismiss 14. 26 Def.’s Br. in Support of Motion to Dismiss 13. 27 Middletown, Del., C. § 180 – 2(18). 28 Middletown, Del., C. § 180 – 10. 11 mentions that “Conditional Use Permit Applications are “reviewed” by Planning and

Zoning, then Mayor and Council.”29 There is no review of a conditional use permit

by the Board of Adjustment. There is no prescribed method for appealing a decision

of the Town Council, thus giving rise to the right to pursue a writ of certiorari, which

the Town vigorously asserts is the only avenue of relief.

And yet the Town argues here that Middlecap should have gone to the Board

of Adjustment before coming to court, defeating the very certiorari jurisdiction the

Town believes exists in this Court.30 Moreover, the Town argues that the Board of

Adjustment, a body appointed by the Mayor and Council, 31 may convene to overrule

a decision made by the Mayor and Council. Nothing in the definition of “conditional

use permits” in Section 2, the powers of the Board of Adjustment in Section 8, the

process for obtaining a conditional use permit in Section 10, or logic, suggests that

this is so. The Town’s argument that Middlecap was required to obtain review of

the Town Council’s decision by the Board of Adjustment is rejected.

3. The individual council members are immune from suit.

The final issue for determination is the Town’s motion to have the Complaint

29 Middletown, Del., C. § 180 – 10(A)(2). 30 Delta Eta Corp., 2023 WL 2982180, at *10; see In re Petition of Howell, 2007 WL 1114123, at *1 (Del. Apr. 16, 2007) (A writ of certiorari is not available if there is another remedy available). 31 Middletown, Del., C. § 180 – 8(I). 12 dismissed insofar as it names the Mayor and members of the Council in their

individual capacity.

It is quite clear that Middlecap would like the Court to overturn the decision

of the Council and feels that one or more members denied its application out of some

sense of ill will or public pressure or both. But extending liability to individual

Council members in their “individual capacity” requires that the Complaint identify

what actions the individual defendants took that was not in their official capacity

representing their constituents and the Town of Middletown. In this regard, the

Complaint is all but silent. While there are some references to the Mayor or Council

members making up their minds without considering all the evidence, that

Complaint is hardly unique. As the Third Circuit said in Dotzel v. Ashbridge,

“Although the complaint alleges that the Board members acted out of animus and other improper motivations, there is no allegation that any decision was made by any appellant other than in his capacity as a member of the Board, or that any decision was made other than through procedures established by applicable state and local law.”32

Not only are the allegations insufficient on their face to trigger potential

liability for the individual defendants, the Complaint also fails because of the limited

nature of the Court’s jurisdiction in this matter. A petition for certiorari review calls

upon the Court to review an action by government actors who are not otherwise

32 Dotzel v. Ashbridge, 438 F.3d 320, 324 (3d Cir. 2006). 13 subject to judicial review.33 Certiorari is not a tort upon which liability can be

predicated. Rather, it is a mechanism for review of government actions. No

individual defendant has been found personally liable in any administrative, quasi-

judicial or other proceeding. Thus, there is no finding against an individual

defendant for the Court to review on a writ of certiorari.

Moreover, the County and Municipal Tort Claims Act in Delaware immunizes

county and municipal employees from claims for damages for any act, legislative,

judicial or “quasi-judicial.” These are only examples of the broad scope of immunity

granted by the Act.34 There are no allegations of the Complaint that would take the

individual defendants outside the broad immunity from individual liability provided

by the Tort Claims Act.

Finally, the Court notes that Middlecap suggests in its briefing that it would

like to flesh out its suspicion that the individual defendants acted with some malice

or other ill motive through discovery. But a certiorari proceeding is limited to a

review of the record below; there is no provision for pretrial discovery. 35 The

33 Delta Eta Corp., 2023 WL 2982180, at *10 (citing Dover Historical Soc. v. City of Dover Planning Comm’n, 838 A.2d 1103, 1106) (Del. 2003) (“The common law writ of certiorari lies to review acts that are judicial or quasi-judicial in nature.”) (citations omitted). 34 10 Del. C. § 4011. 35 See, e.g., Delta Eta Corporation, 2023 WL 2982180, at *15 (“a plaintiff may not obtain discovery in challenging the approval or denial of a special use permit application in this Court. Where a plaintiff challenges a municipality's legislative 14 allegations of the Complaint do not make out a case for individual liability, and

Middlecap is procedurally barred from taking discovery to bolster its claim. For all

these reasons, the individual defendants must be dismissed from this lawsuit.

CONCLUSION

Betwixt and between their pleadings over the motion to dismiss, the parties

also discussed the merits of the decision of the Council. This leaves the Court

uncertain whether the parties believe the Court has what it needs to render a decision

on that ultimate issue, or if the parties would like another round of briefing, guided

by the Court’s conclusions herein. The Court would ask the parties to confer

regarding whether they want another round of briefing on the merits of the certiorari

claim, whether the record is sufficiently complete, and advise the Court, preferably

with a timetable, for any further briefing on the merits.

In the meantime, the Motion to Dismiss the Complaint is DENIED and the

Motion to Dismiss the Individual Defendants is GRANTED.

IT IS SO ORDERED.

/s/ Charles E. Butler Charles E. Butler, Resident Judge

zoning or rezoning decision in this Court, the Court's review is limited to the record, and that plaintiff may not obtain discovery.”) (citations omitted). 15