Bridev One, L.L.C. v. Regency Centers, L.P.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE BRIDEV ONE, L.L.C. d/b/a/ PIREES PIRI PIRI GRILL, JAY PATEL, & MEGHA PATEL Judgment Debtors, C.A. Nos. N14C-07-115(DCS) ) ) ) ) ) ) ) N14C-09-019(DCS) ) CONSOLIDATED ) ) REGENCY CENTERS, L.P., ) ) Judgment Creditor. ) OPINION This 26th day of March, 2018, upon consideration of Defendant’s five Motions for Charging Orders, Debtors’ Response in Opposition to the five Motions for Charging Orders, the Commissioner’s Report and Recommendation, and the record in this case, Defendant’s five Motions for Charging Orders are GRANTED. This action stems from a contract dispute.l On April 24, 2013, Regency Centers, L.P. (“Regency”) and Bridev Gne, L.L.C. (“Bridev”) executed a commercial lease agreement for Bridev’s restaurant J ay Patel and Megha Patel (the l The history of this case is set forth in Bridev One, LLC v. Regency Centers, L.P., CA No. N14C- 07-115 DCS (Del. Super. Oct. 31, 2016) (Decision After Trial) and Brl`dev One, LLC v. Regency Centers, L.P., CA No. Nl4C-O7-115 DCS (Del. Super. Dec. 4, 2017) (Amended Opinion and Order) (adopting the Commissioner’s July 20, 2017 Report and Recommendation concerning the calculation of the judgment). “Patels” and collectively With Bridev, “Debtors”) personally guaranteed Bridev’s performance of the Lease by executing a guaranty agreement Bridev stopped making the required payments to Regency under the lease and subsequently filed a complaint in this Court for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealings, and Common LaW Fraud. Regency filed a counterclaim against Bridev that alleged Breach of Lease and Breach of Guaranty.2 At the conclusion of` a three-day bench trial, the Court issued its Decision After Trial and held that “there Was a contract, Regency did not breach the Lease, and that Regency did not breach the implied covenant of good faith and fair dealing. The Court also finds that Bridev breached the Lease and that [the Patels] breached their personal guaranty.”3 On August l, 2017, after a hearing, a Superior Court Commissioner issued a report and recommendation to enter judgment in favor of Regency in the amount of $807,879.96 plus interest. The Court issued an opinion on December l, 2017 that adopted the report and recommendation and imposed that judgment.4 On January l 1, 2018, Regency subsequently filed five Motions for Charging Orders (the “Motions”), pursuant to 6 Del. C. § 18-703, against any limited liability 2 The complaint and cross-complaint were consolidated. 3 Bridev One, LLC, CA No. Nl4C-07-115 DCS at *2-3 (Decision Af`ter Trial). 4 Bridev One, LLC, CA No. Nl4C-07-115 DCS (Del. Super. Dec. 4, 2017) (December 1, 2017 opinion amended to correct typographical errors). 2 company (“LLC”) membership interest of J ay Patel. Debtors opposed the Motions. A hearing before the same Commissioner was held on February 5, 2018. Debtors argued, in part, that the Chancery Court had exclusive jurisdiction over charging orders pursuant to § 18-703(f)5 and Hanna v. Baz`er, a December 2017 Superior Court case which held that the Court of Chancery had exclusive jurisdiction concerning charging orders.6 On February 9, 2018, based on review of legislative history, the Commissioner issued her Report and Recommendation that the Court 5 6 Del. C. § 18-703 states: (a) On application by a judgment creditor of a member or of a member's assignee, a court having jurisdiction may charge the limited liability company interest of the judgment debtor to satisfy the judgment To the extent so charged, the judgment creditor has only the right to receive any distribution or distributions to which the judgment debtor would otherwise have been entitled in respect of such limited liability company interest (b) A charging order constitutes a lien on the judgment debtor's limited liability company interest (c) This chapter does not deprive a member or member's assignee of a right under exemption laws with respect to the judgment debtor's limited liability company interest (d) The entry of a charging order is the exclusive remedy by which a judgment creditor of a member or a member's assignee may satisfy a judgment out of the judgment debtor's limited liability company interest and attachment, garnishment foreclosure or other legal or equitable remedies are not available to the judgment creditor, whether the limited liability company has l member or more than l member. (e) No creditor of a member or of a member's assignee shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company. (f) The Court of Chancery shall have jurisdiction to hear and determine any matter relating to any such charging order. 6 Hanna v. Baier, 2017 WL 6507187 (Del. Super. Dec. 19, 2017) (Emphasis supplied). 3 grant the Motions.7 For the reasons stated below, the Court adopts the Commissioner’s Report and Recommendation in its entirety and grants Regency’s Motions. Prior to 2005, § 18-703 provided that a charging order was the exclusive remedy to collect a judgment from a judgment debtor’s interest in a LLC.8 Furthermore, in 1986, the Court of Chancery held that the Chancery Court “lacl