SUPERIOR COURT
OF THE
STATE OF DELAWARE
PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
(302) 255-0660
Date Submitted: April 4, 2022
Date Decided: April 4, 2022
Kenneth J. Nachbar, Esq. J. Matthew Belger, Esq.
Elizabeth A. Mullin, Esq. Clarissa R. Chenoweth-Shook, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP Charles R. Hallinan, Esq.
1201 North Market Street POTTER ANDERSON & CORROON LLP
Suite 1200 Hercules Plaza, Sixth Floor
Wilmington, Delaware 19801 Wilmington, Delaware 19801 `
Greg Shinall, Esq. Maria Aprile Sawczuk, Esq.
SPERLING & SLATER, P.C. GOLDSTEIN & MCCLINTOCK, LLLP
55 West Monroe Street, Suite 3200 501 Silverside Road, Suite 65
Chicago, Illinois 60603 Wilmington, Delaware 19801
Marc E. Rosenthal, Esq. B. Lane Hasler, Esq.
PROSKAUER ROSE LLP 33 North Dearborn, Suite 2330
70 West Madison, Suite 3800 Chicago, Illinois 60602
Chicago, Illinois 60602
RE: Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
Third-Party Defendant, Thomas A. DePasquale Management Trust’s
Motion to Intervene and Motion to Stay Interpleader Order
Dear Counsel:
This Letter Order resolves a few pending applications in this matter, the last
of which were heard by the Court today. There is no short version of these parties’
saga—at bottom, it’s a pitched priority fight among judgment creditors emanating
from litigation that’s been travelling back and forth between Illinois and Delaware.
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 2 of 16
I. FACTUAL AND PROCEDURAL BACKGROUND1
A. THE PARTIES AND THEIR PREVIOUS LITIGATION
To properly determine each party’s priority and rights in the funds disputed in
this case, a detailed history of the parties’ long-battled and still ongoing litigation in
Illinois is critical.
The Plaintiff, Sperling & Slater, P.C. (“Sperling”) is a Chicago, Illinois-based
law firm.2 Andrew Filipowski is Sperling’s longtime client.3 Defendant SilkRoad
Equity, LLC (“SRE”) is a Delaware limited liability company4 of which
Mr. Filipowski is a founder, member and manager.5
Third-Party Defendant/Proposed Intervenor, the Thomas A. Depasquale
Management Trust (“Trust”) is a judgment creditor of Mr. Filipowski. In a
consolidated creditors’ claims action in the Circuit Court of Cook County, Illinois,
the Trust purchased and was substituted lien holder of various judicial liens and
1
Much of this factual and procedural history has been drawn from the parties’ exhibits rather
than their pleadings. The Court was forced to do so because it found each party, when telling its
own story, either omitted key facts or would drift to distracting, irrelevant points. Below, the Court
imposes a solution to that problem for here on.
2
Compl. ¶ 2, Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC, C.A. No. N21C-
11-152-PRW CCLD (Nov. 17, 2021) (D.I. 1).
3
Trust’s Mot. to Stay Interpleader Order, Ex. B at 1 (Sperling’s Amended Verified Notice of
Adverse Claims, filed in the Circuit Court of Cook County, Illinois, Case Nos. 14 L 050833 and
15 L 050280 (hereinafter “Sperling’s Adverse Claims”)), Sperling & Slater v. SilkRoad, Inc. and
SilkRoad Equity, LLC, C.A. No. N21C-11-152-PRW CCLD (Mar. 15, 2022) (D.I. 19).
4
Compl. ¶ 4.
5
Id. ¶ 9; Mr. Filipowski has also been joined as a Third-Party Defendant by SRI. See Order
Granting SRI’s Motion for Interpleader, Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity,
LLC, C.A. No. N21C-11-152-PRW CCLD (Feb. 16, 2022) (D.I. 12).
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 3 of 16
charging orders against Mr. Filipowski personally.6
1. Sperling’s Representation of Mr. Filipowski and the First Set of Funds
In 2010, Sperling represented Mr. Filipowski on a contingent-fee basis to
pursue claims against BDO, USA.7 That action settled in August 2012, with BDO
paying Mr. Filipowski $13M in four annual installments of $3.25M.8 In September
2012, Sperling perfected an Illinois statutory lien in the proceeds—43% of the total
settlement—for its legal fees in the matter.9 Sperling received the first three
installments from BDO, covering a portion of its own bill from each installment
before turning over the remainder to Mr. Filipowsi.10
In 2014, Sperling again represented Mr. Filipowski, as well as SRE and SRE
members against Defendant SilkRoad, Inc. (“SRI”) in our Court of Chancery.11 That
litigation resolved in 2015 by way of Settlement Agreement, whereby SRI issued a
Promissory Note to SRE.12 The principal amount of the SRI Note is $2.4 million,
payable, subject to other terms and conditions, in ten years or upon a change in
control of SRI.13
6
Trust’s Mot. to Stay ¶¶ 1-14.
7
Id., Ex. B, Sperling’s Adverse Claims at 1-2.
8
Id. at 2.
9
Id. The statutory lien was entered pursuant to the Illinois Attorneys’ Lien Act, 770 ILCS 5/1.
10
Id.
11
Compl. ¶ 5. That litigation is captioned Andrew J. Filipowski, et al. v. SilkRoad, Inc., et al.,
C.A. No. 9890-VCL (Del. Ch.). SRI is a Delaware corporation. Id. ¶ 4.
12
Id. ¶ 6.
13
Id.
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C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 4 of 16
Important here, however, is that Sperling only agreed to represent
Mr. Filipowski in the Chancery litigation (and in other suits) based on Mr.
Filipowski’s agreement to pay the firm’s fees from the BDO settlement
distributions.14 Sperling’s fees for its representation in the Chancery litigation, as
well as for other, unrelated litigation, was covered by the second and third $3.25M
BDO annual payments.15
2. The 2016 Distribution Agreement Between Sperling and the Trust
Between 2013 and 2015, judgment creditors of Mr. Filipowski—creditors’
interests now owned by the Trust—sought to impose judicial liens on the fourth and
final installment of the BDO funds sitting in Sperling’s escrow account.16 Sperling
responded by filing a Notice of Adverse Claims in the Cook County Circuit Court
asserting a lien on Mr. Filipowski’s assets.17 The Trust objected to Sperling’s
action.18
In 2016, Sperling and the Trust ultimately settled Sperling’s claims, agreeing
to distribute the fourth BDO payment held in Sperling’s escrow account.19 Under
14
See Sperling’s Adverse Claims at 1-2, 8 (“Without the promise of payment from a specific and
identifiable source, Sperling would not have [continued] additional work for Filipowski.”).
15
Id. at 8.
16
Id. at 5.
17
Trust’s Mot. to Stay ¶ 15; see also id., Ex. B, Sperling’s Adverse Claims.
18
Trust’s Mot. to Stay ¶ 16.
19
Compl. ¶ 10; see also id., Ex. 4 at ¶ 1(d) (Distribution Agreement); Trust’s Mot. to Stay, Ex.
C (Order Dismissing Sperling Adverse Claims pursuant to a “Distribution Agreement,” Wells
Fargo Bank v. Andrew Filipowski, Circuit Court of Cook County, Illinois, Case No. 14 L 050758).
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 5 of 16
their “Distribution Agreement,” Sperling received a total of $2.2M that satisfied
Mr. Filipowski’s outstanding attorney’s fees related to the BDO representation as
well as for other matters.20 After covering those fees, $372,395 remained, and
Sperling applied those funds to the still outstanding attorney’s fees from legal
services rendered in the SRI litigation.21
The Distribution Agreement “expressly preserved all parties’ rights to the SRI
Note proceeds . . . because at the time the parties did not know if there would be any
proceeds from the SRI Note” when it became payable.22 The specific provision
preserving the parties’ rights related to the SRI-Delaware litigation provides, in its
entirety, as follows:
The SilkRoad, Inc. Delaware Settlement. The Parties agree that the
SilkRoad, Inc. Delaware Settlement and any proceeds therefrom remain
subject to all liens and claims by the DePasquale Trust, Wells Fargo
and BankFinancial, and liens and claims by Sperling on account of the
Sperling SilkRoad, Inc. Liens and any other liens and claims that
Sperling has or may have with respect to the amounts owed to SRE
and/or the other beneficiaries of the SilkRoad, Inc. Delaware
Settlement, limited to an amount not to exceed $729,914 (after the
distribution of the BDO Escrow contemplated in paragraph 1.a. herein).
Subject to the terms set forth in Section 2.a. below, Sperling will waive
and release all liens upon and claims to any portion of the SilkRoad,
Inc. Delaware Settlement exceeding its claim of $729,914 (after the
distribution of the BDO Escrow contemplated in paragraph 1.a. herein)
for unpaid attorneys’ fees and unreimbursed expenses incurred relating
to the SilkRoad, Inc. Delaware Litigation. The DePasquale Trust, Wells
Fargo and BankFinancial do not release any liens upon or claims to
20
Compl. ¶ 11.
21
Id. After that payment was applied, Sperling’s accounts receivable for its attorney’s fees in
the SRI litigation was reduced to $729,914.
22
Trust’s Mot. to Stay ¶ 17.
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 6 of 16
the SilkRoad Inc. Delaware Settlement, including with respect to any
proceeds Filipowski, SRE or any others are to receive from the
settlement, and reserve all rights to object to and oppose any Sperling
claim for a lien or right to payment of any kind or nature of attorneys’
fees and expenses as set forth above related to the SilkRoad Inc.
Delaware Settlement and the Sperling SilkRoad, Inc. Liens and any
other liens and claims that Sperling has or may have with respect to the
amounts owed to SRE and/or the other beneficiaries of the SilkRoad,
Inc. Delaware Settlement.23
Upon entry of the Illinois Circuit Court’s Order related to the Distribution
Agreement, Sperling again, under the Illinois Attorneys’ Lien Act, 770 ILCS 5/1,
obtained an attorney’s lien on any recovery due SRE from the SRI Note, in the
amount of $729,914.24
3. The SRI Note Becomes Payable
In September 2021, SRI notified SRE, Sperling, the Trust, and other
potentially interested parties that a change of control of SRI had occurred, thus
triggering distribution of the SRI Note.25 All parties were provided with an escrow
agreement related to the change of control transaction and the proceeds of the Note.26
Sperling notified SRI of its lien on the Note Proceeds, to which the Trust
objected because the competing interests among creditors in the Note had yet to be
determined.27 The parties again engaged in negotiations to resolve the dispute in the
23
Compl., Ex. 4 ¶ 1(d) (emphasis added).
24
Compl. ¶¶ 15-16.
25
Id. ¶ 20; see also Trust’s Mot. to Stay ¶ 18.
26
Compl. ¶ 20; see also id. at Ex. 8 (Escrow Agreement). The Escrow Agent is a Delaware
corporation. Id.
27
Trust’s Mot. to Stay ¶¶ 19-20.
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 7 of 16
Cook County Circuit Court, with Sperling requesting additional time to respond.28
Instead of responding to the ongoing negotiations, Sperling initiated this
instant lawsuit in Delaware, omitting the Trust as a named, interested party.29
B. BACKGROUND AND PROCEDURAL HISTORY OF THE INSTANT LITIGATION
1. Sperling v. SRI and SRE
On November 17, 2021, Sperling filed its Complaint, petitioning to enforce
its Illinois-based attorney’s lien against the proceeds of the SRI Note.30 Sperling
avers it’s entitled to all proceeds of the Note that are directly or indirectly payable
to Mr. Filipowski because he pledged to Sperling all of his rights therein.31
SRI filed its Motion and Suggestion on the Record for Interpleader on January
26, 2022.32 It requests Interpleader “to avoid the potential of multiple liability”
related to the competing creditors’ claims in the Note.33 In addition to Sperling, the
Trust and Mr. Filipowski have claims to the SRI Note.34 Thus, adjudication of
Sperling’s claim without the involvement of these parties has the potential to create
inconsistent obligations for SRI.35
28
Id. ¶ 21.
29
Id. ¶¶ 22-24.
30
See generally Compl.
31
Id. ¶ 19.
32
SRI’s Mot. and Suggestion for Interpleader, Sperling & Slater v. SilkRoad, Inc. and SilkRoad
Equity, LLC, C.A. No. N21C-11-152-PRW CCLD (Jan. 26, 2022) (D.I. 5).
33
Id. at 3.
34
Id.
35
Id. at 4-5.
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C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 8 of 16
SRI acknowledges its readiness and willingness to distribute the Note
proceeds but cannot do so until a determination is made with respect to creditor
priority. It has offered to deposit the funds with the Court until such a determination
can be made.36
SRI also filed its Response and Counterclaim to the Complaint on January 27,
2022.37 As a preliminary matter, SRI asserts three defenses: (1) Sperling failed to
join necessary parties under Superior Court Civil Rule 19; (2) Sperling has failed to
state a claim upon which relief can be granted; and (3) interpleader is required to
avoid inconsistent or multiple liability related to the Note proceeds.38 SRI placed
the Note proceeds, totaling $3,038,760.47, in escrow pending resolution of the
competing interests between SRE, Sperling, Mr. Filipowski, and the Trust.39
Sperling responded to the Interpleader suggestion on February 10, 2022.40 It
does not oppose SRI’s motion; however, it does dispute that Mr. Filipowski and the
Trust have claims to any portion of the Note proceeds.41 Sperling contends the
Trust’s and Mr. Filipowski’s putative claims arise indirectly via SRE rather than
36
Id.
37
SRI’s Resp. to Compl. and Countercl., Cross-cl., and Third-Party Claims for Interpleader,
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC, C.A. No. N21C-11-152-PRW
CCLD (Jan. 27, 2022) (D.I. 6).
38
Id. at 12-14.
39
Id. at 18.
40
Sperling’s Resp. to SRI’s Suggestion for Interpleader, Sperling & Slater v. SilkRoad, Inc. and
SilkRoad Equity, LLC, C.A. No. N21C-11-152-PRW CCLD (Feb. 10, 2022) (D.I. 9).
41
Id. ¶ 3.
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 9 of 16
directly against the proceeds to be paid by SRI.42 Sperling agrees interpleader is
appropriate “to determine entitlement to those funds efficiently in a single forum.”43
Sperling docketed its Response to SRI’s Counterclaim, Cross-Claim, and
Third-Party Interpleader Claims on February 17, 2022.44
The Court granted the Interpleader on February 16, 2022, with the parties to
submit a proposed order.45
2. The Trust Enters the Litigation
On February 24, 2022, a Notice of Competing Action was filed by the Trust.46
It informs the Court that it filed a TRO against Sperling in the Circuit Court of Cook
County, Illinois, and a mediation related to the TRO was scheduled.47 In light of the
mediation that was scheduled for March 9, 2022, the parties asked this Court for an
extension to submit a proposed Order for Interpleader.48
The extension was granted by the Court’s Order on March 4, 2022.49
On March 15, 2022, the Trust docketed its Motion to Intervene50 and its
42
Id.
43
Id. ¶ 4.
44
D.I. 13.
45
D.I. 12.
46
D.I. 15.
47
Id.
48
D.I. 16.
49
D.I. 17.
50
D.I. 18.
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C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 10 of 16
Motion to Stay Interpleader Order or Alternatively, to Reconsider Entry of Order.51
The identical Motions detail the parties’ lengthy history, the Illinois litigation, and
the independent attempts to settle the priority dispute of the SRI Note. 52 The Trust
claims it only became aware of this litigation when SRI filed its Interpleader
motion.53 That filing prompted the Illinois TRO and the later mediation in Illinois.54
The Trust was unable to file a timely response to SRI’s motion because it received
notice after the Order granting the same had already been entered.55
The Trust asks the Court to allow intervention56, or in the alternative, stay the
proceedings until the Court can hold a hearing to determine proper venue, or rescind
its order granting the Interpleader Motion until further argument can be heard.57
SRI Responded to the Trust’s two motions on March 30, 2022.58 It does not
oppose intervention and agrees the Trust should be joined.59 It also takes no position
51
D.I. 19.
52
See generally Mot. to Stay. The minor differences between the two motions are the forms of
relief requested and the referenced exhibits therein are only appended to the Motion to Stay.
53
Id. ¶¶ 23-26.
54
Id. ¶ 26.
55
Id.
56
Mot. to Intervene ¶¶ 30-32.
57
Mot. to Stay ¶¶ 30-32.
58
SRI’s Resp. to Trust’s Mots. to Stay and Intervene, Sperling & Slater v. SilkRoad, Inc. and
SilkRoad Equity, LLC, C.A. No. N21C-11-152-PRW CCLD (Mar. 30, 2022) (D.I. 21).
59
Id. ¶ 1.
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 11 of 16
concerning which court is the proper venue for this dispute.60 Should litigation
continue in Delaware, however, SRI posits interpleader is appropriate.61
Sperling’s Response to the Trust’s two motions was filed on March 30,
2022.62 Sperling urges the Court to deny the Trust’s motions because:
1) Intervention is unnecessary as SRI named the Trust as a defendant to
its third-party claim for interpleader and Sperling did not object.
2) The Trust’s Motion to Stay cites no supporting law, nor can it satisfy
the factors for a stay.
3) Sperling denies that there is a competing action or even a prior action
involving the same parties and subject matter.
4) There is no basis to transfer this action to Illinois as the Trust says it
will request.
5) And, the Trust doesn’t have a direct interest in the proceeds of the SRI
Note, and thus, doesn’t have standing to object to Sperling’s lien on the
proceeds of the Note.63
In short, Sperling argues the Trust has no valid claim to the SRI Note because
SRI’s only obligation under the Note is to pay SRE. Thus, it is SRE’s obligation to
pay Mr. Filipowski and the other plaintiffs in the SRI Action. And since the Trust
is only a creditor of Mr. Filipowski personally, Delaware law precludes the Trust
from collecting from SRE by way of Mr. Filipowski’s status as a member of the
60
Id. ¶ 3.
61
Id.
62
Sperling’s Resp. to Trust’s Mots. to Stay and Intervene, Sperling & Slater v. SilkRoad, Inc.
and SilkRoad Equity, LLC, C.A. No. N21C-11-152-PRW CCLD (Mar. 30, 2022) (D.I. 22).
63
Id. ¶ 1.
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April 4, 2022
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LLC.64 And even if the Trust could collect, Sperling’s lien prevails because of its
representation of SRE in connection with the SRI litigation.65
II. APPLICABLE LEGAL STANDARDS
A. DELAWARE SUPERIOR COURT CIVIL RULE 22 – INTERPLEADER
Under Superior Court Civil Rule 22, parties are “required to interplead when
their claims are such that the plaintiff is or may be exposed to double or multiple
liability.”66 “Double or multiple liability” has been interpreted to mean “exposure
to double or multiple liability for a single liability.”67
The rule also provides:
It is not ground for objection to the joinder that the claims of the several
claimants or the titles on which their claims depend do not have a
common origin or are not identical but are adverse to and independent
of one another, or that the plaintiff avers that the plaintiff is not liable
in whole or in part to any or all of the claimants. A defendant exposed
to similar liability may obtain such interpleader by way of cross-claim
or counterclaim.68
64
Id. ¶¶ 18-19.
65
Id. ¶ 19.
66
Del. Super. Ct. Civ. R. 22(1).
67
United Servs. Auto. Ass’n Prop. & Cas. Ins. v. Lacy, 1991 WL 68905, at *2 (Del. Super. Ct.
Apr. 11, 1991) (citing Graham v. Nat’l Bank of Smyrna, 118 A. 325, 326 (Del. Super. Ct. 1922)
(“The office of interpleader is not to protect a party against a double liability but against a double
vexation for the same liability.”)).
68
Del. Super. Ct. Civ. R. 22(1).
Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC
C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 13 of 16
Too, this Court has emphasized that the rule is not so strict to require that the
party seeking impleader must be facing double liability, but it’s enough that it
might.69
B. DELAWARE SUPERIOR COURT CIVIL RULE 24 – INTERVENTION
Superior Court Civil Rule 24 permits a party to intervene into a pending matter
either by right or permission upon a timely application. Intervention as a matter of
right permits a party to intervene when (1) an unconditional right is granted by
statute; or, particularly relevant here, (2) “when an applicant claims an interest
relating to the property or transaction which is the subject matter of the action and
applicant is so situated that the disposition of the action may as a practical matter
impair or impede the applicant’s ability to protect that interest, unless the applicant’s
interest is adequately represented by existing parties.”70
In analyzing a motion to intervene under Rule 24(a), “the Court must focus
on the particular factors and procedural posture of the application.”71 The third-party
applicant “must have: (a) timely moved to intervene, (b) in order to protect a property
interest at issue in this case, (c) that would be impaired by the disposition of this
action, (d) under circumstances where their interests are not adequately represented
by Defendants.”72
69
Eastern Com. Realty Corp. v. Fusco, 1989 WL 63965, at *2 (Del. Super. Ct. May 24, 1989).
70
Del. Super. Ct. Civ. R. 24(a).
71
Wilmington Trust Co. v. Lucks, 1999 WL 743255, at *6 (Del. Super. Ct. June 18, 1999).
72
Carlyle Inv. Mgmt., LLC v. Moonmouth Co. S.A., 2015 WL 778846, at *3 (Del. Ch. Feb. 24,
2015).
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April 4, 2022
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III. DISCUSSION
A. INTERPLEADER AND INTERVENTION OF THE SAME PARTY CAN CO-EXIST
The Court’s earlier Order Granting Interpleader does not moot the Trust’s
Motion to Intervene. Arguably, a claimant may have different rights and obligations
as an intervening and interpleaded party.
1. Interpleader is Proper and the Court’s February 16 Order Will Not be
Disturbed.
Regardless of the merits of the competing claims, interpleader is appropriate
when a stakeholder “legitimately fears multiple liability directed against a single
fund.”73 SRI’s is thus the precise situation contemplated by this Court’s Interpleader
Rule. SRI faces the possibility of, and is legitimately wary of, some additional
liability because if it incorrectly distributes the Note to Sperling or the Trust—
depleting the funds to the other party’s detriment—it might likely be liable to the
rightful recipient for damages.
So, interpleader is proper here. Because this Court has already granted SRI’s
interpleader request, the need to consider whether to dismiss the case or rescind its
earlier Order is unnecessary. Nor does the Court find that any of the usual criteria
that might counsel a stay of a matter have been met. All parties are now properly
before this Court and they seems little to gained by further delay. That said, with
the newest developments in this matter, the parties should provide the Court with an
amended form of Interpleader Order.
73
John v. Sotheby’s, Inc., 141 F.R.D. 29, 33 (S.D.N.Y. 1992).
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2. Interpleader Does Not Moot the Trust’s Request to Intervene Because
the Existing Parties Do Not Adequately Protect the Trust’s Interests.
“[A] traditional basis for intervention [as of right] derives from interpleader
practice; when a number of persons possess claims to a fund which are or may be
mutually exclusive, intervention is allowed a claimant.”74 As all parties agree—
while it may seem somewhat redundant because SRI has been permitted to institute
interpleader of the Trust—the Trust, as a potential claimant of Note proceeds, may
also intervene as a matter of right in this action.
The Trust meets the Rule 24 intervention requirements. Its motion was
docketed within one week of receiving notice of SRI’s Interpleader submission.75 It
is therefore timely. Its proper interest in the SRI Note proceeds is the sole subject
matter of this litigation. Indeed, without the Trust’s participation, its ability to
protect its interest in those proceeds will be impaired or impeded as neither SRI nor
Sperling adequately represent the Trust’s purported interest in the Note proceeds.
Though SRI disclaims any direct interest either way, Sperling’s interests are
directly adverse to the Trust’s. And, at very least, it’s fair to question why the Trust
was not made a party to this lawsuit given the years-long priority fight over the
Note—including simultaneous negotiations over the same claim in Illinois. No
doubt, the Trust meets the threshold requirements of Rule 24.76
74
Id. at 34 (quoting Cascade Nat. Gas Corp. v. El Paso Nat. Gas Co., 386 U.S. 129, 146 (1967)).
75
Del. Super. Ct. Civ. R. 24(a); see also Carlyle Inv. Management, LLC, 2015 WL 778846, at
*3.
76
Del. Super. Ct. Civ. R. 24(a).
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C.A. No. N21C-11-152-PRW (CCLD)
April 4, 2022
Page 16 of 16
IV. CONCLUSION
The Trust’s Motion to Intervene is GRANTED and the Trust’s Motion to Stay
or Rescind the Interpleader Order is DENIED. The parties shall provide the Court
an amended Interpleader Order on or before April 11, 2022.
To the extent Sperling has requested via its responses that the Court now issue
judgment with respect to its rights and Attorney’s Lien in the SRI Note, that must be
DENIED. The Court can reach no decision on the merits at this point in the
litigation.
Given the seemingly still-active, somehow related Illinois litigation, there is
little doubt the Court will be called upon soon to determine whether this case should
be dismissed or stayed under the forum non conveniens doctrine (or some other
basis) in lieu of litigation in the Cook County Circuit Court.
To that end, the parties shall submit on or before April 25, 2022, a stipulated
factual and procedural history of their prior litigation, negotiations, settlements,
distributions and/or entry of statutory liens. Such a stipulated history of the facts
and prior litigation in no way disadvantages any one party but gives all a mutual
starting point and will significantly assist the Court to efficiently adjudicate the
questions expected to be posed in this case.
Upon docketing of that stipulated history, the deadlines for any required
answers, responses, preliminary motions, or objections shall begin to run.
IT IS SO ORDERED.
_______________________
Paul R. Wallace, Judge
cc: All Counsel via File and Serve