Enrique Santos v. Allen S. Kullen ( 2017 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: November 11, 2016
Date Decided: January 9, 2017
Enrique Santos Allan S. Kullen
P.O. Box 971 7723 Groton Road
Rockville, MD 20848 Bethesda, MD 20817
Re: Enrique Santos v. Allen S. Kullen, C.A. No. 9960-MZ
Dear Litigants:
Before me are Mr. Santos’ Exceptions to the Final Report and Order of Master
Zurn together with a brief in support of those exceptions and a response by an
interested party named as a Defendant in the Complaint but apparently never served,
Allan S. Kullen. The parties are pro se, but I note that Mr. Santos is an attorney
licensed to practice in several jurisdictions. The background of this matter is as
follows:
The case was filed in July 2014 seeking equitable relief with respect to legal
fees that Mr. Santos alleged he was entitled to from named, but unserved, Defendants
Kullen and Todd Allan Printing Company, Inc. (“TAPCO”).
According to Santos’ brief, he seeks “imposition of a constructive trust (a) on
assets previously held by TAPCO which were transferred [fraudulently] to [another
entity] KCP [Communications, Inc.] and (b) [on] promissory notes and security
interests arising from these transfers.”1 Since the Summer of 2014, no meaningful
progress has been made in this matter. On June 15, 2016, Master Zurn wrote to Mr.
Santos:
This matter has been open for almost two years with
substantially no activity since the original filing in July,
2014. No proof of service on the defendants has been filed
with the Court. The Court has twice requested you
advance this matter. Please file a status update within 30
days of the date of this letter. For those defendants who
are not debtors in pending bankruptcy actions, please also
file a proof of service and a stipulated case scheduling
order showing how this matter will be moving forward.2
On July 7, Mr. Santos replied:
The Court has requested a status update in this matter. In
my previous status report I informed the Court that an
involuntary bankruptcy petition was filed on November
13, 2015 against defendant KCP Communications, Inc.—
whereupon the automatic stay in bankruptcy cases went
into effect. . . . The petitioning creditors who placed the
debtor into Chapter 11 proceedings were Allan S. Kullen
and Diane K. Kullen Revocable Trust, both also
defendants in this matter. . . . The Court has further
requested Plaintiff to file proof of service and a stipulated
case scheduling order. I am unable to do so because
service has not been made.3
On July 13, Master Zurn again wrote to Mr. Santos:
On June 15, 2016, I directed you to file proof of service
and a stipulated case scheduling order showing how this
matter will be moving forward with regard to defendants
1
Pl’s Opening Br. 5.
2
Dkt. No. 13.
3
Dkt. No. 15.
2
who are not debtors in pending bankruptcy actions. You
responded on July 7, 2016, that you could not do so
because you had not served those defendants. Allow me
to clarify: you are to advance this matter by serving those
defendants and filing proof of that service and a joint
scheduling order within 30 days. Failure to do so will be
considered failure to prosecute and failure to comply with
a court order, and will subject this case to dismissal under
Rule 41(e).4
The record does not reflect that Mr. Santos made a response to this Court’s
letter order of July 13, 2016 (the “Letter Order”). On August 19, 2016, Master Zurn
issued an order dismissing for failure to prosecute under Rule 41(e) (the “Master’s
Order”). Santos takes exception to this Order.
In his brief in support of his Exceptions, Santos mistakenly argues that the
Master abused her discretion in this matter. Unfortunately, in light of judicial
efficiency, that standard does not apply. Under our Supreme Court’s decision in
DiGiacobbe v. Sestak5 a Vice Chancellor or Chancellor of this Court must review
decisions of the Master de novo.6 I have undertaken such a review in this matter.
In his brief and Exceptions, Santos argues that the Letter Order, together with
the Master’s June 15, 2016 letter, constitute an abuse of discretion. The Letter Order
directed Santos to provide service of process on the non-bankruptcy defendants
within thirty days, and to file a form of case scheduling order. Santos argues that
4
Dkt. No. 14.
5
743 A.2d 180 (Del. 1999).
6
Id. at 184.
3
“[t]o serve six non-debtor defendants could not be accomplished in 30 days, even in
the best of circumstances. . . . But to then expect that a joint scheduling order from
all parties could be produced within the same 30 days was very highly improbable,
if not an impossibility.”7 He calls the directive in the Letter Order a “hyper-
accelerated time table” and suggests that it is abusive to him.8
I find Santos’ argument nonsensical, and note that he failed to attempt to
comply with the Letter Order; therefore, his argument as to “abuse” by the Master
rings hollow.
More substantively, Santos points out that he filed brief status reports in this
matter together with suggestions of bankruptcy, indicating some prosecution took
place; he also argues that, in his view, bankruptcy law precluded him from
complying with the Letter Order. I need not address these concerns, however.
According to Santos, at the time this matter was dismissed, a mirror image action
was pending in Maryland state court. The only relief Santos seeks on exception is
that the Master’s Order dismissing his action here be made without prejudice, so that
he can prosecute his case in the Maryland state court. The record does not indicate
that Santos made the Master aware of the pendency of this Maryland action. In
consideration of the Master’s time and busy schedule, and in light of the requirement
7
Pl’s Opening Br. 18–19.
8
Id. at 19.
4
of DiGiacobbe that I conduct a de novo review here, I decline to return this matter
to the Master for her consideration of the pendency of the Maryland action.
As Santos now acknowledges, this action should be dismissed. A dismissal
with prejudice removes the ability of the Maryland court to apply its own standards
of case management to this glacially-paced litigation. It seems to me, under the
peculiar facts here, including the Plaintiff’s belated representation that an identical
action was pending in Maryland at the time this Court considered a dismissal for
failure to prosecute, that interests of comity require a dismissal without prejudice, to
allow the Maryland court to apply whatever notions of case management it finds
appropriate. Therefore, the Exceptions are denied, but the Master’s Order is
modified to provide that the dismissal is without prejudice to the pending Maryland
action. Nothing in this Letter Opinion should be read as a finding that Santos has
appropriately litigated in Maryland; that is a matter purely for the Maryland courts.
An appropriate order accompanies this Letter Opinion.
Sincerely,
/s/ Sam Glasscock III
Vice Chancellor
5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ENRIQUE SANTOS, :
:
Plaintiff, :
:
v. : C.A. No. 9960-MZ
:
ALLAN S. KULLEN, et al., :
:
Defendants. :
DISMISSAL FOR FAILURE TO PROSECUTE
WHEREAS, Master Zurn dismissed this matter in a Final Report and Order under Rule
41(e) of the Rules of the Court of Chancery, on August 19, 2016 and,
WHEREAS, the Plaintiff has taken exception to that Report and Order; and
WHEREAS, upon de novo review, the Exceptions are DENIED but;
WHEREAS, the Plaintiff alleges that a pending action exists and existed in Maryland state
court at the time of the Court’s August 19, 2016 Order; and
WHEREAS, the interests of comity under the particular facts here make it appropriate for
the Maryland courts to apply their own case management standards to that pending Maryland
action;
NOW, THEREFORE, this matter is dismissed, without prejudice to the Plaintiff’s right to
prosecute any pending litigation.
DATED: January 9, 2017
/s/ Sam Glasscock III
Vice Chancellor
6