Pazuniak Law Office LLC v. Pi-Net International, Inc.

Superior Court of Delaware·Decided August 25, 2017·No. N14C-12-259 EMD·Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

PAZUNIAK LAW OFFICE LLC and )

GEORGE PAZUNIAK, )

)

Plaintiffs, )

) C.A. No. N14C-12-259 EMD v. )

)

PI-NET INTERNATIONAL, INC. and )

LAKSHMI ARUNACHALAM, )

)

Defendants. )

)

LAKSHMI ARUNACHALAM, )

)

Counterclaim Plaintiff )

and Third-Party Plaintiff, )

)

v. )

)

PAZUNIAK LAW OFFICE LLC and )

GEORGE PAZUNIAK, )

)

Counterclaim Defendants, )

)

and )

)

O’KELLY AND ERNST, LLC )

)

Third-Party Defendant. )

Upon Defendant Lakshmi-Arunachalam Ph.D.’s Renewed Motion in 14-Point Font for Summary Judgment to Dismiss Counts I and II of Plaintiffs’ Second Amended Complaint and to Vacate Default Judment against Pi-Net as Plaintiffs Got That by Fraud on the Court and Perjury DENIED

Dr. Lakshmi Arunachalam, Menlo Park, California, Defendant Pro Se

George Pazuniak, Esquire, Pazuniak Law Office, LLC, Wilmington, Delaware, Attorney for Plaintiffs/Counterclaim Defendants Pazuniak Law Office LLC and George Pazuniak

Ryan M. Ernst, Esquire, Sean T. O’Kelly, Esquire, O’Kelly & Ernst, LLC, Wilmington, Delaware, Attorneys for Third-Party Defendant O’Kelly and Ernst, LLC.

I. INTRODUCTION

This is a declaratory judgment action brought by Plaintiffs Pazuniak Law Office LLC and George Pazuniak (collectively, “Pazuniak Law”) against Defendants Pi-Net International, Inc. (“Pi-Net”) and Lakshmi Arunachalam, Ph.D. Through the Second Amended Complaint, Pazuniak Law seeks a declaration regarding the distribution of certain funds held in an IOLTA trust account. Pazuniak Law also seeks a declaration as to its right to recover costs for providing files to Pi-Net upon the termination of Pazuniak Law’s services to Pi-Net and Dr. Arunachalam. Dr. Arunachalam answered the Second Amended Complaint (the “Answer”) and counterclaimed against Pazuniak Law and a new third party, O’Kelly and Ernst, LLC (the “O’Kelly Firm”). Pi- Net never filed an answer and the Court entered default judgment against Pi-Net on February 21, 2017.

Dr. Arunachalam now seeks summary judgment on Counts I and II of the Second Amended Complaint. Dr. Arunachalam also seeks to vacate the default judgment entered against Pi-Net. On April 11, 2017, Dr. Arunachalam filed Defendant Lakshmi Arunachalam, Ph.D.’s Renewed Motion in 14-Point Font for Summary Judgment to Dismiss Counts I and II of Plaintiffs’ Second Amended Complaint and to Vacate Default Judment against Pi-Net as Plaintiffs got that by Fraud on the Court and Perjury (the “Motion”). Pazuniak Law responded to the Motion with the Answering Brief in Opposition to Motions for Summary Judgment and to Vacate Default Judgment Filed by Defendant Arunachalam; and Cross Motion for Summary Judgment (the “Opposition”). Pazuniak Law filed the Opposition on May 2, 2017.1 Dr. Arunachalam replied on May 15, 2017 with Defendant Lakshmi Arunachalam, Ph.D.’s Reply

1 Pazuniak Law titles its Opposition “Cross Motion for Summary Judgment,” but Pazuniak Law does not actually move for summary judgment or provide any facts in support of summary judgment in the Opposition. Therefore, the Court is treating the Opposition as an answer to the Motion, and not as a motion for summary judgment by Pazuniak Law.

Brief to Plaintiffs’ Opposition to Defendant’s Motions for Summary Judgment and to Vacate Default Judgment; Opposition to Plaintiffs’ Cross Motion for Summary Judgment; Defendant’s Motion to Intervene Pursuant to Rules 17, 19, and 24; and Motion to Substitute Parties Pursuant to Rules 17 and 25(c) (the “Reply”).

Upon review, the Court has determined that no hearing on the issues and arguments raised in the Motion, the Opposition and the Reply is necessary. This is the Court’s decision on the Motion. For the reasons set forth below, the Court DENIES the Motion.

II. RELEVANT FACTS

Pazuniak Law Office LLC is a law firm organized under the laws of the State of Delaware with its principal place of business in Wilmington, Delaware.2 George Pazuniak is an attorney licensed to practice law in the State of Delaware and is the owner of Pazuniak Law Office LLC.3 Pi-Net International, Inc., a California corporation, is the assignee of certain patents invented by Lakshmi Arunachalam.4 Lakshmi Arunachalam, a California resident, is the principal owner and chief executive officer of Pi-Net and a related entity, WebXchange, Inc. (“WebX”).5 A. PAZUNIAK LAW REPRESENTS PI-NET AND DR. ARUNACHALAM On January 25, 2012, Pazuniak Law entered into a retainer agreement (the “Retainer Agreement”) with Dr. Arunachalam, Pi-Net, and WebX.6 Dr. Arunachalam hired Pazuniak Law

2 Pls.’ Second Am. Compl. ¶ 1. 3 Id. ¶ 2. 4 Id. ¶ 3. As discussed more fully below, Dr. Arunachalam has indicated that Pi-Net has been dissolved and no longer exists. However, Dr. Arunachalam has not provided the Court with any documentation confirming Pi-Net’s corporate dissolution. 5 Id. ¶ 4. 6 Dr. Arunachalam, Pi-Net and WebX are collectively defined as the “Client” in the Retainer Agreement. Id. ¶ 5; see also Def.’s Answer, Ex. A, Retainer Agreement. Exhibit A to the Answer will be cited as “Agreement § __” or “Agreement p. __” if no section is specified.

to litigate a series of WebX and Pi-Net patent infringement cases in the United States District Court for the District of Delaware (the “Delaware District Court”).7 Pursuant to the Retainer Agreement, recoveries for alleged patent infringement obtained by Pazuniak Law on behalf of Pi-Net and Dr. Arunachalam would be placed into Pazuniak Law’s IOLTA escrow trust account.8 Thereafter, a portion of the recoveries would be retained in escrow and the remainder distributed to Pi-Net, Dr. Arunachalam, and Pazuniak Law in accordance with the terms of the Retainer Agreement’s contingent fee schedule.9 Over the next two years, Pazuniak Law represented Dr. Arunachalam and Pi-Net in a series of patent infringement cases in the Delaware District Court.10 After a series of disagreements, however, Pi-Net and Dr. Arunachalam terminated Pazuniak Law as counsel on August 12, 2014.11 After the termination, Pazuniak Law attempted to make a final distribution of the funds in the IOLTA trust account.12 Pi-Net and Dr. Arunachalam contested and ultimately rejected Pazuniak Law’s accounting of the funds.13 Thereafter, Pi-Net and Dr. Arunachalam filed a series of complaints with the Delaware Office of Disciplinary Counsel (“DODC”). The DODC did not find any error in Pazuniak Law’s legal representation of Dr. Arunachalam and Pi-Net. However, DODC advised Pazuniak Law to clear the trust account, even if it required filing an interpleader action.

7 Agreement § 1. 8 Id. §§ 3(c), 4. 9 Id. § 3(f). 10 See e.g., Pi-Net Int’l, Inc. v. JPMorgan Chase & Co., C.A. No. 12-282, 2014 WL 1370038, at *1 (D. Del. Apr. 7, 2014). 11 Second Am. Compl. ¶ 9. 12 Id. ¶¶ 11, 16. 13 Id.

B. PAZUNIAK LAW SEEKS DECLARATORY JUDGMENT AS TO THE FUNDS IN ITS IOLTA TRUST ACCOUNT

On September 19, 2014, Pazuniak Law filed an action in the Court of Common Pleas seeking a declaratory judgment regarding the distribution of the trust funds (the “Initial Complaint”). The Initial Complaint sought declaratory judgment against Pi-Net only, as Dr. Arunachalam disputed only those expenses related to Pi-Net patent litigations.

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Pazuniak Law Office LLC v. Pi-Net International, Inc., (Del. Ct. App. 2017).

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