The Freeman Foundation Charitable Lead Annuity Trust v. Richard N. Stutz and Linda M. Stutz ( 2014 )

IN THE COURT OF COMMON PLEAS OF THE STATE OF DELAWARE
IN AND FOR SUSSEX COUNTY
THE FREEMAN FOUNDATION )
CHARITABLE LEAD )
ANNUITY TRUST )
)
Plaintiff, )
v. ) C.A. No. CPU6-13-000662
)
)
RICHARD N. STUTZ and )
LINDA M. STUTZ )
)
Defendant, )
Submitted March 18, 2014
Decided April 25, 2014
Neal J. Levitsky, Esquire, Attorney for Plaintiff
Defendant Richard N. Stutz, self-represented
Defendant Linda M. Stutz, self-represented
DECISION ON APPEAL FROM COMMISSIONER’S RECOMMENDATION
For the reasons discussed below, the Plaintiff’s Appeal from the Commissioner’s
Findings of Fact and Recommendation is GRANTED.
Procedural History
On July 1, 2013, Plaintiff, The Freeman Foundation Charitable Lead Annuity
Trust filed this debt action against Defendants Richard and Linda Stutz seeking
$2,025.00 in unpaid ground rent for their condominium unit at Sea Colony West in
Bethany Beach, Delaware. After certified mailings of the summons and complaint in
accordance with 10 Del. C. § 3104 to Defendant’s Tennessee and Delaware residences,
Plaintiff filed a Motion for Default Judgment, which was heard by the Commissioner on
September 30, 2013. On November 5, 2013, the Commissioner issued a Report
recommending that Plaintiff’s Motion be denied, essentially finding that Plaintiff had
failed to serve actual notice of the action upon Defendants. On November 14, 2013,
Defendant filed an appeal of the Commissioner’s recommendation.
Standard of Review
Default judgment is a case-dispositive determination. When reviewing a
Commissioner’s decision on a case-dispositive determination, the judge of the Court
reviews the decision de novo. A judge may accept, reject, or modify in whole or in part
the findings or recommendations made by the Commissioner.1
Discussion
Plaintiff contends that it is entitled to default judgment because Defendants have
been adequately served under 10 Del. C. § 3104, and have failed to timely file a response
to the Complaint. Under Civil Rule 55, default judgment is appropriate when, “a party
against whom a judgment for affirmative relief is sought, has failed to appear, plead or
otherwise defend as provided by [the] Rules.”2 Under such circumstances, the Court
may enter default judgment upon application of the party entitled to a default
judgment.3 If Plaintiff effected service of process upon the Defendants, it is entitled to
default judgment under Rule 55 because Defendants have failed to enter any
appearance or file any pleading in this matter to date.
In 2008, the General Assembly amended 10 Del. C. §3104 in an effort to simplify,
modernize and harmonize our non-resident service statute with the model rule and the
service rules of other states. The goals of the amendment included the dampening of
1
Ct. Com. Pl. Civ. R. 112(A)(4)(iv).
2
Ct. Com. Pl. Civ. R. 55(a).
3
Ct. Com. Pl. Civ. R. 55(b).
continual motion filings related to service, the conservation of judicial resources and the
reduction of litigation costs.4 The current service statute provides, in pertinent part:
(d) When the law of this State authorizes service of process
outside the State, the service, when reasonably calculated to
give actual notice, may be made:
(1) By personal delivery in the manner proscribed for
service within this State.
(2) In the manner provided or prescribed by the law of
the place in which the service is made for service in that
place in an action in any of its courts of general jurisdiction.
(3) By any form of mail addressed to the person to be
served and requiring a signed receipt.
(4) As directed by a court.
(e) Proof of service outside this State may be made by
affidavit of the individual who made the service or in the
manner provided or prescribed by the law of this State, the
order pursuant to which the service is made, or the law of
the place in which the service is made for proof of service in
an action in any of its courts of general jurisdiction. When
service is made by mail, proof of service shall include a
receipt signed by the addressee or other evidence of personal
delivery to the addressee satisfactory to the court.5
“[D]ue process requires [a party] to provide ‘notice reasonably calculated, under
all circumstances to apprise the interested parties of the pendency of the action and
afford them an opportunity to present their objections.’”6 Accordingly, “‘when an
attempted notice letter [is] returned unclaimed, and there was more that reasonably
could have been done’, it is the responsibility of the party sending notice to take
additional steps to ensure proper service.”7
In its signed Affidavit of Non-Receipt dated September 10, 2013, Plaintiff’s
attorney details the attempts to serve Defendant. On July 8, 2013, Plaintiff sent a copy of
the Complaint, Summons and Notice of Service by certified mail, return receipt
4
See Synopsis of 10 Del. C. §3104; See also Maldonado v. Matthews, 2010 WL 663723 (Del. Super. 2010).
5
10 Del. C. §3104. (emphasis added).
6
Maldonado, supra, quoting Jones v. Flowers, 547 U.S. 220, 221, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2008).
7
Id.requested to Defendants’ record address in Tennessee. This notice was returned as
“unclaimed.” Then again, on August 7, 2013, Plaintiff sent a copy of the initial filings to
Defendants’ record address. This second notice was returned as “unclaimed.” At the
September 30, 2013 motion hearing, Plaintiff’s attorney stated that he also sent notices
to Defendants’ P.O. Box in Delaware, as well as regular mailings to their record address.
In an attempt to provide the full story to the bench, Plaintiff’s attorney also noted that
this is the third action8 by Plaintiff against Defendants for unpaid ground rent, the
residence is currently in the process of foreclosure and the lien holders have the same
addresses for service of Defendants as Plaintiff. Moreover, Plaintiff’s attorney advised
the Court that the Defendants are required to update their address with Plaintiff
pursuant to the ground lease.9
The Commissioner held that, since the certified mailings were returned as
“unclaimed” and not “refused,” there was no presumptive notice under the language of §
3104 (h) (2). However, even though subsection (h)(2)gives an automatic presumption of
notice only to “refused” un-receipted mailings, it does not mandate that the Court
require “refusal” as the only proof of notice when a mailing lacks a signed return
receipt. Section (h)(1) plainly provides that “[p]roof of . . . the mailing and receipt or
refusal of the notice shall be made in such manner as the court, by rule or otherwise,
shall direct.” (Emphasis added.) Further, § 3104 (e) provides “[w]hen service is made by
mail, proof of service shall include a receipt signed by the addressee or other evidence of
personal delivery to the address satisfactory to the court.” (Emphasis added.) In
8
See CPU6-12-000923 and CPU6-11-002406.
9
Plaintiff’s counsel, as an officer of the Court, represented that the lease agreement requires Defendants notify
Plaintiffs of their current address, and mailing was made to that last provided address. Plaintiff offered to provide
the Court with a copy of the lease agreement; however, at the motion hearing, the bench determined that such a
filing was unnecessary. The Court accepts this uncontested representation of an officer of the Court.
Maldonado v. Matthews,10 the Superior Court held that certified mailings returned as
unclaimed may be sufficient proof of notice. In Maldonado, as here, the Plaintiff “took
additional steps beyond just sending one mailing,”11 sent multiple mailings both to the
address of record, and to another potential address through which Defendants might
receive notice, and filed proof of non-receipt with the Court. The Court in Maldonado
found that “these additional steps demonstrate that Plaintiff took all steps that
‘reasonably could be done.’”12
Upon a de novo review of the record in the present case, the Court finds
Plaintiff’s evidence of service by mailing satisfactory. The amendments to 10 Del. C.
§3104 were enacted to create a less, not more, cumbersome service method on out-of-
state parties. “Although the statute provides a framework that parties can use when
attempting service, it does not provide guidance for every possible situation, and the
General Assembly appropriately gave the Court discretion to determine whether service
was proper.”13 The record demonstrates that Plaintiff reviewed the records of the
lienholders to confirm the proper address for service upon Defendants, which matched
the address Defendants had given, and were contractually obligated to provide Plaintiff.
Then, multiple mailings were made to two separate addresses provided by Defendants
for service. The certified mailings were returned as “unclaimed,” not for an insufficient
or improper address. Counsel for Plaintiff represented to the Court that the certified
mailings were also sent to the same addresses by regular mail. There is no indication in
the record that the service sent by regular mail was returned to Plaintiff for any inability
to deliver them. I find these efforts reasonably calculated to give actual notice sufficient
10
Id. at 4.
11
Id.
12
Id. (Citing Jones v. Flowers, op. cit., at 238.)
13
Maldonado v. Matthews, supra at 4.
to meet the requirements of 10 Del. C. §3104, and satisfactory evidence of personal
delivery.
Despite this service of notice, Defendants have failed to respond to the Complaint
mailed on July 8, 2013, or to any pleading mailed since that time, and have failed to
otherwise appear. Plaintiff’s motion for default judgment otherwise complies with all of
the requirements of Rule 55, and seeks judgment on a sum certain verified by affidavit.
Accordingly, Plaintiff’s Appeal from Commissioner’s Findings of Fact and
Recommendation is GRANTED, and the Commissioner’s November 5, 2013 Report is
REJECTED.
Judgment is entered in favor of the Plaintiff, The Freeman Foundation Charitable
Lead Annuity Trust, and against the Defendants, Richard N. Stutz and Linda M. Stutz
jointly and severally in the principal amount of $2,025.00, with pre-judgment and post-
judgment interest at the legal rate, plus costs of suit. Inasmuch as Plaintiff’s Complaint
neither alleges contractual language entitling it to attorneys’ fees, nor includes a
contract as an exhibit, the Court declines to award attorneys’ fees.
IT IS SO ORDERED this _____ day of April, 2014.
_____________________________________
Kenneth S. Clark, Jr., Judge