Papadopoulos v. WBCMT 2006-C29 NC Office, LLC

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
NICOLE PAPADOPOULOS, )
)
Plaintiff, )
)
v. )
) C.A. No. N17C-12-209 CLS
WBCMT 2006-C29 NC OFFICE, )
LLC, )
LANARD & AXILBUND, LLC )
d/b/a COLLIERS )
INTERNATIONAL, COLLIERS )
INTERNATIONAL USA, LLC, )
15 READ’S WAY LLC, THE )
COMMONWEALTH GROUP )
LTD and ELITE CLEANING )
CO., INC. d/b/a ELITE )
BUILDING SERVICES, )
Defendants.
Date Submitted: June, 26 2018
Date Decided: October 1, 2018
On WBCMT, LLC’s Motion to Dismiss.
Granted.
OPINION
Ryan S. Zavodnick, Esquire, Zavodnick, Zavodnick, and Lasky, LLC, 1201 N.
Orange Street, Suite 7252, Wilmington, Delaware, 19801. Attorney for Plaintiff.
Matthew G. Summers, Esquire, Ballard Spahr LLP, 919 North Market Street, 11th
Floor, Wilmington, Delaware, 19801. Attorney for Defendant WBCMT.
Sarah B. Cole, Esquire, Marshall Dennehey Warner Coleman & Goggin, 1007 N.
Orange Street, Suite 600, Wilmington, Delaware, 19899. Attorney for Defendants
Read’s, LLC and The Commonwealth Group, LLC.
Scott, J.
Background
Delaware common law holds individuals in occupation and control of land
liable for harm caused to invitees by known dangers upon the property. Plaintiff
was injured on a commercial property that was in foreclosure where a receiver
pendente lite had been appointed by the Court of Chancery for the benefit of the
lender.
Defendant WBCMT was the mortgage holder of the commercial property
located at 11, 13, & 15 Reads Way prior to December 2013 when it filed a complaint
in Scire Facias Sur Mortgage against co-Defendant to the immediate action, Reads,
LLC (Reads). In July 2015, prior to a final judgment in the mortgage action
WBCMT filed a complaint for appointment of a Receiver Pendente Lite against
Read’s in the Court of Chancery. The Court of Chancery granted WBCMT and
Read’s stipulated and proposed order for the appointment of a receiver on December
17, 2015.
On January 8, 2016 Plaintiff was allegedly injured when an aerosol can
ejected from a wall mounted aerosol dispenser in the women’s restroom of the
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property known as 11 Reads Way. Plaintiff filed this action against the various
defendants in December 2017.
Defendants Read’s, LLC and The Commonwealth Group, LLC’s cross
claimed for contribution and/or indemnification from the other named Defendants.
Defendant WBCMT filed this motion to dismiss on March 8, 2018. Defendants
Read’s and The Commonwealth Group oppose the motion.
Parties Assertions
WBCMT argues several theories that they argue prevent a finding of liability
on their part. WBCMT argues they did not own, possess, manage, or operate the
property, and the “for the benefit of the lender” language in the Order does not
impose liability for the receiver’s actions. WBCMT states any interpretation of the
Receivership Order falls within the exclusive jurisdiction of the Court of Chancery.
Additionally, WBCMT asserts they cannot be sued as the entity has been wrapped
up and no longer exists and that there was no contractual relationship between the
receiver and WBCMT at the time of the incident that would impose liability.
Commonwealth argues dismissal is premature and further discovery is needed
to determine the level of possession and control WBCMT exerted over the property
in question. Commonwealth states the Receivership Order grants some possession
and control to WBCMT while displacing Commonwealth from that distinction.
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Next, Commonwealth states the Delaware LLC Act permits a dissolved LLC to be
held liable when obligations are known to the LLC at the time of dissolution.
Furthermore, Commonwealth argues the Order requires the written consent of
WBCMT prior to the receiver executing managerial activities.
Commonwealth additionally argues that the Court of Chancery need not be
called upon to interpret the Receivership Order at this time. Commonwealth
proposes that Plaintiff has pleaded sufficient facts which if true would support a
claim for which relief may be granted.
Standard of Review
The test for dismissal under Superior Court Rule 12(b)(6) is whether the
Plaintiff may recover under any reasonably conceivable set of circumstances
susceptible of proof under the complaint.1 In making its determination, the Court
must accept all well-pleaded allegations in the complaint as true and draw all
reasonable factual inferences in favor of the non-moving party.2 Therefore, if the
1
Spence v. Funk, 396 A.2d 967, 968 (1978); see Cambium Ltd. v. Trilantic Capital
Partners III L.P., 2012 WL 172844, at *1 (Del. Jan. 20, 2012) (citing Cent. Mortg.
Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 537 (Del. 2011)).
2
Ramunno v. Cawley, 705 A.2d 1029, 1034-36 (Del.1998); Nix v. Sawyer, 466 A.2d
407, 410 (Del. Super. Ct.1983).
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plaintiff can recover under any conceivable set of facts inferable from the pleadings,
the motion to dismiss will not be granted.3
Analysis
The primary issue in this case is whether WBCMT possessed or controlled
the subject property at the time of the alleged incident. Delaware has adopted the
rule set forth in the Restatement of Torts to establish premises liability wherein a
possessor of land is subject to liability for physical harm caused to his invitees by
known dangerous conditions on the land. 4
Delaware also accepts the Restatement’s definition of a possessor of land.
Generally; a possessor of land is a person who is, or has been, in occupation of land
with intent to control it, or a person who is entitled to immediate occupation of the
land if no person is in possession.5
Both WBCMT and Commonwealth point to the Restatement definition to
support their argument. However, Commonwealth argues that the Receivership
Order grants WBCMT sufficient control over the property so as to support a finding
that WBCMT was in possession of the property at the time of the incident.
3
Ramunno, 705 A.2d at 1034; see Cambium, 2012 WL 172844, at *1 (citing Cent.
Mortg., 27 A.3d at 537).
4
Ward v. Shoney's, Inc., 817 A.2d 799, 802 (Del. 2003).
5
Restatement (Second) of Torts § 328E (1965).
5
A properly executed mortgage creates a lien under Delaware law. A
lienholder holds an interest in the property that the lien secures. That interest is the
lender’s ability to bring an action in Scire Facias before the Superior Court to have
the property taken in execution for payment of the mortgage. It is not a possessory
interest.
Creditors of an insolvent corporation possess a statutory right to apply for the
appointment of a receiver under 8 Del. C. § 291.6 Upon application, the Court of
Chancery possesses the jurisdiction to take possession of the assets of a corporation,
through a receiver pendente lite, in order to prevent loss to those with an interest in
preserving the value of those assets.7 The appointment of a receiver for the benefit
of a creditor takes the assets of the company as a trustee and as a representative of
the insolvent.8 “[T]he appointment of a receiver does not in itself change the title to
the property or determine any rights therein.”9 A receiver is appointed “as arms of
the Court of Chancery” whose powers “are limited to the powers spelled out in the
order appointing them, and do not extend beyond that.”10
WBCMT states the Court of Chancery retained exclusive jurisdiction in
interpreting or implementing the Receivership Order. However, the Order is
6
8 Del. C. § 291.
7
Whitmer v. William Whitmer & Sons, 99 A. 428, 430 (Del. Ch. 1916).
8
Greif v. James H. Wright Co., 91 A. 205, 206 (Del. Ch. 1914).
9
75 C.J.S. Receivers § 89.
10
Clark v. State, 269 A.2d 59, 61–62 (Del. 1970).
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unambiguous as to conferring possession and control to the receiver. WBCMT as
lender on the property possessed the statutory right to apply for the appointment of
a receiver. The receiver upon appointment stepped into the shoes of Commonwealth
as possessor and manager of the property, subject to the Court of Chancery’s Order.
The Chancery Court’s Order ordered the receiver to “take immediate possession of
the property, and to hold, protect, insure, manage, operate the business and control
the property” without further consent from either the Court or WBCMT. 11 The
Order does not authorize the Receiver to transfer possession and control to any other
parties. That the receiver was required to seek consent from WBCMT for certain
expenditures such as entering into contracts with a value greater than $5,000, does
not place WBCMT in possession or control.
As WBCMT cannot be found to be a possessor of land, the parties’ other
arguments related to the Delaware LLC Act, or contractual agreements need not be
addressed.
Conclusion
Commonwealth’s argument that the “for the benefit” language in the
receivership order grants control to WBCMT is not compelling. WBCMT cannot
be considered a possessor of land based on the appointment of a receiver by the
Court of Chancery. The Receiver was appointed pending payment in full of the debt
11
Pl. Ex. B at 3. (emphasis added)
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secured by the property, private sale, or foreclosure. The Receivership Order did
not grant possession and control to WBCMT, nor did the Order grant the receiver
authority to transfer possession and control to WBCMT.
WBCMT was not an owner, possessor, or occupier at the time of Plaintiff’s injuries,
and therefore cannot be held liable for her injuries. For the foregoing reasons, Defendant
WBCMT’s Motion to Dismiss is GRANTED.
IT IS SO ORDERED.
/s/ Calvin L. Scott
Judge Calvin L. Scott, Jr.
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