Phoenix Management Trust v. WinSouth Credit Union Phoenix Management Trust v. Compass/BBVA

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
PHOENIX MANAGEMENT TRUST )
(PRIVATE IRREVOCABLE TRUST )
SECURE PARTY: BETHLEHEM )
MANAGEMENT TRUST (PRIVATE )
IRREVOCABLE TRUST) )
OPERATING BUSINESS TRUST ) C.A. No.: 2018-0192-MTZ
Plaintiff, )
)
v. )
)
WINSOUTH CREDIT UNION )
Defendant. )
AND
PHOENIX MANAGEMENT TRUST )
(PRIVATE IRREVOCABLE TRUST )
SECURE PARTY: BETHLEHEM )
MANAGEMENT TRUST (PRIVATE )
IRREVOCABLE TRUST) )
OPERATING BUSINESS TRUST ) C.A. No.: 2018-0194-MTZ
Plaintiff, )
)
v. )
)
COMPASS/BBVA )
Defendant. )
MASTER’S REPORT
Submitted: May 28, 2018
Draft Report: June 1, 2018
Final Report: June 19, 2018
Ahmose Amexem El, pro se.
ZURN, Master
A purported Delaware trust filed two actions seeking to discharge debts
owed to two Alabama corporations. After not receiving a response from the
defendants, the trust moved for summary judgment and judgment by default. For
the reasons that follow, I recommend that the Court deny the pending motions.
I. Background
Plaintiff Phoenix Management Trust (“Phoenix”) purports to be a private
trust within the State of Delaware. 1 Ahmose Amexem El (“El”) is purportedly
Phoenix’s trustee or representative. 2 On March 19, 2018, Phoenix filed two
separate complaints, one against WinSouth Community Credit Union
(“WinSouth”) and another against Compass Bank/BBVA ( “Compass”;
collectively, “Defendants”). The two complaints are nearly identical, save for the
specific information about each defendant.3 Phoenix asks this Court to “set-
off/discharge any alleged debt” regarding its accounts with Defendants, as well as
to “Return [sic] clear title.” 4 I infer from these pro se allegations that Phoenix
and/or El owe debts to Defendants, that those debts are secured by property owned
by Phoenix and/or El, and that Phoenix and/or El are seeking those debts be
discharged. The complaints do not allege any basis for discharge.
1
Compass Compl. 1; WinSouth Compl. 1.
2
Compass Verification to Compl. 1.
3
Compare Compass Compl. 1-4 with WinSouth Compl. 1-4.
4
Compass Compl. 4; WinSouth Compl. 1.
Each complaint alleges the defendant is an Alabama entity. The Compass
complaint alleges Compass is a corporation “operating within the jurisdiction of
the State of Alabama” 5 and that Compass’s registered address is in Birmingham,
Alabama. 6 The WinSouth complaint similarly alleges WinSouth operates in
Alabama, from an address in Gadsden, Alabama. 7 In each case, Phoenix alleges
the defendant is diverse from Phoenix, a purported Delaware trust. 8
On March 20, 2018, the Register in Chancery issued a summons, along with
a letter instructing Plaintiff to provide proof of service under Title 10, Section 3104
of the Delaware Code. 9 On April 27, 2018, Plaintiff filed affidavits of service
stating that it “caused copies of the Summons…and Verified [sic] complaint to be
sent by United States Postal Service” to Defendants. 10 To support this assertion,
Plaintiff provided two screenshots of the USPS tracking website, which indicated
that the items were delivered to cities in Alabama on April 5 and 6.11 Plaintiff
provided no proof of service signed by any defendant. 12
5
Compass Compl. 2.
6
Id.
7
WinSouth Compl. 2. I read Plaintiff’s pro se complaint to plead that WinSouth is an Alabama
corporation.
8
Compass Compl. 1; WinSouth Compl. 1-2.
9
Compass Letter to Pl. 1, Mar. 20, 2018; WinSouth Letter to Pl. 1, Mar. 20, 2018.
10
Compass Aff. Serv. ¶ 2; WinSouth Aff. Serv. ¶ 2.
11
Compass Aff. Serv. Attach. (Ex. 2); WinSouth Aff. Serv. Attach. (Ex. 2).
12
Compass Aff. Serv. Attach. (Ex. 2); WinSouth Aff. Serv. Attach. (Ex. 2).
2
On May 23, 2018, Phoenix filed essentially identical motions for summary
judgment in each case. On May 28, 2018, Phoenix filed essentially identical
motions for default judgment in each case. According to the certificates of service
for these motions, Phoenix served them on Defendants via US Mail. 13 As of this
report, Defendants have not responded to the complaints or motions. On June 1,
2018, I issued a draft report on the two motions for summary judgment and two
motions for default judgment. No exceptions were taken. This is my final report.
II. Analysis
Phoenix’s motions for judgment by default and for summary judgment all
rely on the fact that Defendants have failed to appear or answer the complaints
against them. 14 Before entering judgment for failure to appear, the Court must be
satisfied that the Defendants were properly served.15 I conclude Phoenix has failed
to supply sufficient proof of service and therefore recommend the Court deny
Phoenix’s motions.
According to the complaints, both Defendants are out-of-state entities.
Service upon them is governed by 10 Del. C. § 3104. “The statutory mandates of
DEL. STAT. ANN. tit. 10, § 3104 are jurisdictional and cannot be relaxed by the
13
Compass Mot. Summ. J. 5; WinSouth Mot. Summ. J. 5.
14
Compass Mot. Summ. J. 1; WinSouth Mot. Summ. J. 1; Compass Mot. Default J. 2; WinSouth
Mot. Default J. 2.
15
See Ct. Ch. R. 12(a) (requiring the defendant to serve an answer only upon “service of the
summons and complaint upon the defendant”).
3
Court.”16 Under that section, a plaintiff must serve process on a defendant “in a
manner reasonably calculated to give actual notice.”17 Delaware law allows out-
of-state defendants to be served by “any form of mail addressed to the person to be
served and requiring a signed receipt.”18 When service is made using this method,
a plaintiff must provide proof of service, including “a receipt signed by the
addressee or other evidence of personal delivery to the addressee satisfactory to the
court.”19
Phoenix has not provided sufficient proof of service. Phoenix’s affidavit of
service included two USPS tracking printouts, which indicate delivery to
unspecified addresses in Gadsden and Birmingham, Alabama. Neither tracking
page indicates that the summons was sent by a form of mail requiring a signed
receipt. 20 Indeed, neither is accompanied by a signature of any defendant or its
agent.21 Moreover, the tracking page in the Compass case indicates that delivery
was made to a mail room, rather than to an actual person. 22 Phoenix has failed to
provide satisfactory evidence of personal delivery to either Defendant. Phoenix’s
proof of service is insufficient under § 3104. 23
16
Allen v. Reddish, 2006 WL 1688121, at *2 (Del. Super. Ct. June 20, 2006).
17
10 Del. C. § 3104(d).
18
Id. at § 3104(d)(3).
19
Id. at § 3104(e).
20
Compass Aff. Serv. Attach. (Ex. 2); WinSouth Aff. Serv. Attach. (Ex. 2).
21
See Compass Aff. Serv. Attach. (Ex. 2); WinSouth Aff. Serv. Attach. (Ex. 2).
22
Compass Aff. Serv. Attach. (Ex. 2).
23
10 Del. C. § 3104(d).
4
In the absence of sufficient proof of service, I cannot conclude that either
Defendant failed to timely appear after being served. Phoenix’s motion for
summary judgment also fails to meet its burden of demonstrating its entitlement to
judgment as a matter of law.24 Summary judgment will not be granted “if it seems
desirable to inquire more thoroughly into the facts in order to clarify the
application of law to the circumstances.”25 Phoenix has failed to allege or show
any basis for discharging the debts owed to Defendants. I recommend the Court
deny Phoenix’s motions for default judgment and for summary judgment.
Finally, I note that Phoenix mailed two large packets of materials to the
Register in Chancery in May 2018. Those materials were not accompanied by a
filing fee, and they do not appear relevant to the issue of whether Defendants were
properly served. They are being returned to Phoenix under separate cover and are
not part of the docket in either case.
24
Ct. Ch. R. 56(c).
25
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962).
5
III. Conclusion
For the foregoing reasons, I recommend the Court deny Phoenix’s motions
for summary judgment and for default judgment. Exceptions to this final report
may be taken pursuant to Court of Chancery Rule 144.
Respectfully,
/s/ Morgan T. Zurn
Master in Chancery
6