Court Opinion

ID: 4391294
Source: CourtListenerOpinion
Date Created: 2019-04-26 17:02:43.620294+00
Date Added: 2024-06-11T14:51:53.101191
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

FLOYD WHITE,
Plaintiff,

v. C.A. No. N18C-04-225 DCS
PREFERRED INVESTMENT
SERVICES, INC., EDWIN J. SWAN,
ANNE C. SWAN, AND

MARQUEIT JONES,

\/VV\/\JVV\/VV\/

Defendants.
Submitted: March 27, 2019
Decided: April 26, 2019

Motion to Dismiss
DENIED

The Case is STAYED.

OPINION

Floyd White; Pro Se Plaintiff (With EdWard J. Fornias, III, Esq. as Counsel re: Rule
to ShoW Cause)
E. Calvin Harmon, Jr., Esquire; Attorney for Defendant

STREETT, J.

The issue before the Court concerns Whether the Instant Case (a fraudulent
transfer action; “Case #3” or the “Instant Case”) should proceed simultaneously With
T & H Baz`l Bonds, et al. v. Preferred lnvestment Services, Inc. (a judgment action;
“Case 1!¢2”).l Although 10 Del.C. § 50312 does not appear to prohibit a party from
simultaneously proceeding in a fraudulent transfer action While a
judgment/gamishment action is ongoing, the parties’ roles in Case #2 have created
an unusual situation in relation to Case #3 Which prompts this Court to Temporarily
Stay the Instant Case pending resolution of issues in Case #2.

Mr. Floyd White (“White”) is Plaintiff in the Instant Case. He is also the
assigned Plaintiff and garnishor in Case #2. Attorney E. Calvin Harmon, Jr., Esq.
(“Harmon”) represents Defendants Preferred lnvestment Services, Inc. (“PISI”),

Edwin J. SWan (“SWan”),3 Anne C. SWan, and Marqueit Jones in the Instant Case.

 

1 T & H Baz'l Bonds, Ted L. Prz'dgen, Robert Lubach, Joanne M. Lubach, Melissa M Matarese,
Jerzy Wz'rth and Wirth Financial Services, LLC. v. Preferred lnvestment Servz'ces, Inc. - C.A. No.
Nl4J-01761.

2 10 Del. C. § 5031. Execution Attachment:

The plaintiff in any judgment in a court of record, or any person for such plaintiff
lawfully authorized, may cause an attachment, as Well as any other execution, to be
issued thereon, containing an order for the summoning of garnishees, to be
proceeded upon and returned as in cases of foreign attachment, The attachment,
condemnation, or judgment thereon, shall be pleadable in bar by the garnishee in
any action against the garnishee at the suit of the defendant in the attachment
Goods Which are perishable, or Will create a charge by keeping, may be sold on the
order of a judge as in cases of foreign attachment

3 Mr. SWan Was the owner and principal of PISI and also appears to be a garnishee in Case #2 and
the client of Harrnon in both cases.

Harmon also represents PISI, Swan, and some of the other gamishees in Case #2.
This has created a tangled interplay of responsibilities which has generated conflict
of interest issues; threatens to prejudice the due process rights of White, PISI, the
other defendants in the Instant Case and the garnishees in Case #2; undermines
Delaware public policy; causes significant confusion among the parties; has resulted
in extensive litigation; could result in increased litigation; and could unnecessarily
expend resources.4 The Court concludes that under the particular and distinct

circumstances of both cases,5 a temporary stay of the Instant Case, until issues in

 

4 White and Harmon have each contributed to the complications in Case #2 which significantly
impact Case #3. White wants to control the representation of PISI and the garnishees. PISI has
twice been found to have committed fraud on the Court, once in Chancery Court (Case #l) and
again later in the Superior Court (Case #2).

5 The Commissioner assigned to Case #2 has characterized Case #2 as being “in a category by
itself.” As such, the Commissioner allowed White to issue subpoenas to obtain information
relating to PISI that the Commissioner felt might go too far in an ordinary case. The Commissioner
stated:

Now, in your run-of-the mill case, that might be different. But this case is in a
category by itself. l mean, it really is. ln my career, I have never seen a Chancery
Court do what they did [awarding $307,254.76 in fees and expenses against PISI
who was the plaintiff in the Chancery Court case]. And then for your [Harmon’s]
client [PISI/Swan] to have done the exact same thing that he did in Chancery Court
and got caught, and has - - and had a huge judgment issued against him there where
he was the plaintiff, to have done the exact same thing there that he did here in the
Superior Court later, is just mind-boggling, and, frankly, insulting to the Court. So
Mr. White, in the run-of-the-mill case, l might agree that [White’s] subpoenas are
- - go too far. But, in this case, I don’t see that, because the history of this case
dictates that [White’s] requests are reasonable, in light of the efforts that
[PlSI/Swan] has made in the past to hide assets and to change things.

Motion to Quash Subpoena, Hearing (June 14, 2018) Transcript at 20-21.

Case #2 are resolved, is in the interest of justice and an effective safeguard of the
parties’ rights. It is less severe than dismissal.
Introduction

ln 2010, Preferred lnvestment Services, Inc. (“PISI”), through its attorney,
Harmon, brought a breach of contract action in Chancery Court against several bail
bond companies (Case #l).6 In 2014, the Defendants successfully defended the
lawsuit. The Chancery Court determined that PISI owed more than $3 00,000.00 to
T & H and the other bail bond companies.7 T & H Bail Bonds, et al. became the
“Original Judgment Creditors.”

In 2014, the Original Judgment Creditors filed a judgment action against PISI

(Case #2) to collect on the debt created by the Chancery Court decision (Case #1).

 

6 Preferred lnvestment Servz`ces Inc. v. T & H Bail bonds Inc., Ted L. Prl'dgen, Robert Lubach,
Joanne M. Lubach, Melissa M. Matarese, Jerzy Wirth and Wirth Fz`nancz'al Servz'ces, LLC. - No.
5886-VCP (Case #1).

The Chancery Court issued various Opinions in Case #1: Preferred lnvestment Services, Inc. v.
T&H Bail Bonds, Inc., et al., 2013 WL 3934992 (Del. Ch. July 24, 2013) (finding for the plaintiff
on some counts and for the defendants on some counts); Preferred lnvestment Services, Inc. v.
T&H Bail Bona's, Inc., et al., 2013 WL 6123176 (Del. Ch. Nov. 21, 2013) (denying motion for
reargument and request for attorney’s fees); Preferred lnvestment Services, Inc. v. T&H Bail
Bonds, Inc., et al., 2014 WL 1292362 (Del. Ch. Mar. 25, 2014) (awarding attorney’s fees);
Preferred lnvestment Servz'ces, Inc. v. T&H Bail Bonds, Inc., et al., 2014 WL 1650941 (Del. Ch.
Apr. 23, 2014) (awarding expert fees).

7 The current amount that PlSl owes appears to be approximately $340,000.00 because, in 2015, a
Superior Court Commissioner in Case #2 awarded the Original Judgment Creditors an additional
$1,250.00 in attorney’s fees and imposed sanctions of $30,700.00 on PISI for failure to respond to
Court Orders and Plaintiff’ s valid discovery request.

Discovery issues in Case #2 were referred to a Superior Court Commissioner.8
Plaintiffs in Case #2 (the Original Judgment Creditors) were represented by Neil
Lapinski, Esq. Defendant PISI continued to be represented by Harmon. ln 2014 and
2015, Plaintiffs filed writs of Fieri Facias Garnishment against various bail bond
companies, as the purported third party debtors of PISI, in an effort to collect on the
judgment.9 In 2014, Mr. Lapinski also filed writs of Attachment against the
Prothonotaries for New Castle, Kent, and Sussex Counties.10

On July 8, 2015, three of the Original Judgment Creditors assigned their rights
to pursue collection of the judgment to Mr. Jerzy Wirth and Wirth Financial Services
(“Wirth” and “WFS”).H On January 25, 2017, Wirth and WFS assigned all of their

rights to White.12

 

8 All references to “Commissioner” in this Opinion concern Case #2.

9 Attorney Lapinski appears to have represented all of the Original Judgment Creditors until he
withdrew on September 27, 2016. lt is not clear how Mr. Lapinski identified or selected the entities
upon which he filed writs.

10 The writs were served on the Prothonotaries to attach refundable cash bails purportedly owed to
PISI. On September 1, 2015, the Commissioner held that the Court is without authority to issue
the writs of Attachment against the Prothonotaries.

ll Robert Lubach, Joanne M. Lubach, and Melissa M. Matarese assigned their rights, titles, and
interests in and to the Chancery Court judgment to Jerzy Wirth and Wirth Financial Services, LLC.
The parties assigned their interests to Jerzy Wirth and Wirth Financial Services to avoid paying
their share of the unpaid attorney’s fees.

‘2 There is no indication that T & H Bail Bonds and/or Ted L. Pridgen assigned their interests to
the Lubachs, Matarese, Wirth, WFS, Floyd White, or to anyone else.

Since that time, White, as a pro se litigant, has vigorously pursued the ongoing
garnishment actions and sought judgment against several of the garnishees.13
Harmon, in addition to representing PISI, also represents some of the garnishees
(including Swan).14

On September 18, 2018, White, who in some respects stands in the shoes of
PISI in seeking garnishment, filed a Motion to Disqualify Harmon, White contended

that it is a conflict of interest for Harmon to represent both PISI and PISI’s purported

 

13 In February of 2018, White filed a writ of attachment fi. fa. on Attorney Lapinski, presumably
seeking documents related to Mr. Lapinski’s former representation of the Original Judgment
Creditors. Mr. Lapinski’s office handed over one box of documents to White. Mr. Lapinski (who
was not present when the box was handed over to White) claimed to not know the exact contents
of the box but said that the documents in the box were related to Case #1. This has been the subject
of litigation.

Also, in March of 201 8, White filed Notices of Subpoena upon several banks seeking information
pertaining to PISl. On June 19, 2018, the Commissioner upheld the subpoenas and on October 30,
2018, the Delaware Superior Court affirmed that decision. T & H Bail Bonds v. Preferred
lnvestment Services, Inc. 2018 WL 5619703, at *2 (Del. Super. Oct. 30, 2018).

Additionally, beginning on August 20, 2018, White filed approximately 22 Motions for Judgment
Against Garnishees (the Motions sought default judgment against the third party garnishees based
on the writs that Attorney Lapinski had filed in 2014 and 2015) alleging that they owed money to
PISI or were in possession of property belonging to PISI. On December 6, 2018, the
Commissioner held a hearing and several of the purported third party garnishees claimed that they
had not been properly served. On December 11, 2018, the Commissioner denied the Motions for
Judgment and ordered the purported third party garnishees to answer the writs of Fieri Facias
Garnishment Most of the purported third party garnishees have denied that they are in possession
of assets or property belonging to PISI. As of this date, there has not been a decision concerning
whether the writs are enforceable.

'4 On October 4, 2018, Harrnon stated that PISI and some of the garnishees consented in writing
to Harmon’s joint representation. Garnishee’s Response to Motion to Disqualify Counsel, at 4.

debtors.15 On December 11, 2018, the Commissioner ordered that “[t]he parties are
to discuss the potential conflicts of interest and if the matter is unable to be resolved
consensually, the Court will schedule a further hearing as appropriate.”16 On
September 25, 2017, White filed a Motion for Relief from Fraudulent Transfer [by
PISI].17 The Commissioner suggested that this should be a separate action.

Presently, Harmon continues to represent PISI and several garnishees
(including Swan) in Case #2 while White, who possesses the rights of (some of) the
Original Judgment Creditors to pursue the judgment against PISI, seeks to determine
who should represent PISI and/or some of the garnishees in Case f)f2.18

As of this date, litigation involving White, PISI (represented by Harmon),
some of the purported garnishees including Swan (also represented by Harmon), and
other garnishees (some represented by other attorneys) has been complicated Over
the course of approximately five (5) years, Case #2 has involved numerous motions,

a considerable number of court hearings, several attorneys,19 and approximately 350

 

15 In the Order on Motion to Disqualify Counsel, the Commissioner wrote that White filed a
Motion to Disqualify Harmon as “counsel to both PISI, as well as some of the garnishees.”

16 Order on Motion to Disqualify Counsel, at 2 (emphasis added).
17 White claims that PISI transferred property to avoid paying the judgment debt.

18 Motion to Disqualify, at 3 (White appears to be asserting that he (White) can deny PISI’s and
third party garnishees’ right to waive Harmon’s alleged conflict of interest).

19 Various garnishees appear to be represented by Douglas A. Shachtman, Esq., Dale Bowers, Esq.,
Brian Jordan, Esq., or Jonathan Layton, Esq. Other bail bond company garnishees appear to be
unrepresented (and whether they can proceed pro se is to be determined).

7

transactions Despite extensive litigation, many issues remain unresolved in Case
#2.

On April 23, 2018, per the Commissioner’s suggestion, White filed the instant
fraudulent transfer claim as a separate lawsuit and named PISI, Swan, Anne C. Swan,
and Marqueit J ones as the Defendants (the “lnstant Case” or “Case #3”). As of this
date, litigation in Case #3, concerning PlSl’s Motion to Dismiss and discovery issues
which overlap Case #2, has been delayed due to the unresolved issues in Case #2.

Based on White’s stance in Case #2 that only he (White) could waive any
conflict of interest concerning PISI and its garnishees20 and his apparent assertion
that he is entitled to privileged communications between PISI and its attorney
(Harmon) and possibly the privileged communications between garnishees and
Harmon in Case #2,21 unresolved discovery issues remain in Case #2. Those

unresolved issues potentially impact Case #3. As such, this Court (in Case #3)

 

20 White wrote that “[He] White stands in every respect in the same position of defendant PISI in
regards to PlSl’s right to recover from the [third party] garnishees, accordingly, it is White who
must give permission to Harmon to represent the [third party] garnishees. To which he denies the
right.” Motion to Disqualify, at 3.

21 White claimed that PISI “has withheld key information from [White]” and that “Harmon’s
knowledge of PlSl’s accounts receivables, confidential business and lending records and practices
will unfairly advance garnishees position to [White’s] harm.” Motion to Disqualify, at 4-5. White
further contended that “Harmon’s intimate knowledge of . .. PISI previous lending practices gives
garnishees unfair insider information that would otherwise not be available to [White]” and that
PISI provided Harmon with access to the “playbook” and “modis operandi” of PISI in business
and lending matters and “access to records unaltered or withheld from [White].” Motion to
Disqualify, at 5-6.

directed the parties to submit supplemental briefs addressing whether there is a
conflict of interest issue concerning White that would merit dismissal of Case #3.22

On February l, 2019, White submitted a supplemental brief wherein he
acknowledged that he is a lay person and does not represent PISI. PISI submitted
its supplemental brief moving the Court to dismiss Case #3 “on account ofPlaintiff’ s
concurrent conflict of interest in the present matter.”23

On February 18, 2019, this Court (Case #3) filed a Rule 41(e) notice and
scheduled a Rule to Show Cause Hearing as to why Case #3 should not be dismissed

for Conflict of Interest. On March 6, 2019, White filed his Response and, five days

later, Edward J. Fornias, lll, Esq. filed an Entry of Appearance on behalf of White.

 

22 Delaware Superior Court Civil Rule 41(e):

The Court may order an action dismissed, sua sponte, upon notice of the Court, for
failure of a party diligently to prosecute the action, for failure to comply with any
rule, statute, or order of the Court, or for any other reason deemed by the Court to
be appropriate ln the event that the Court shall conclude, sua sponte, that dismissal
upon any of the foregoing grounds appears appropriate, the procedure for such
dismissal shall be as follows: The Prothonotary shall forward to the party a notice
directing that the party show cause why the action should not be dismissed for the
reasons stated in the notice. The notice shall direct the party to respond within
fifteen (15) days from the date of the notice. After consideration of such response,
the Court shall enter an order dismissing the action or maintaining jurisdiction of
the case. If a response is not filed within the time allowed, the dismissal shall be
deemed to be unopposed. If the Court is satisfied that the action should be
dismissed, it shall enter an order of dismissal Upon entry of any order of dismissal,
the Court shall specify the terms thereof including provision for payment of costs.

23 Defendant’s Response to the Court’s Letter.

On March 27, 2019, the Hearing to Show Cause was held and the Court

reserved decision. The Court’s Opinion follows.
Parties’ Contentions

PISI writes that White’s “dual participation in the Garnishment Action [Case
#2] and the Fraudulent Transfer Action [Case #3] is a concurrent conflict of interest
under Delaware law.”24 PISI submits that the Delaware Rules of Professional
Conduct’s prohibition against conflicts of interest apply to White and that “...
conflict of interest rules are to protect the client from having confidential information
used against him/her in adverse proceedings and to maintain public confidence in
the integrity of the justice system.”25

PISI elaborates that “[White’s] participation in [Case #2] will provide [White]
with confidential information pertaining to PISI that will materially advance
[White’s interests in Case #3], since both actions include PlSl’s accounting,

transactional, and business activities.”26 PISI suggests that “[i]t is also very likely

that [White] is [now] using the Garnishment Action [in Case #2] to obtain

 

24 Id
25 Id

26 Id

10

information in support of [White’s] burden of proof in [Case #3], specifically

concerning insolvency, fraudulent transfers, and proof of assets.”27

In reply, White writes that he “does not represent PISI or any garnishee.”28
However, White concedes that he has, “in effect, elected to place himself in the
debtor’s [PISI’s] shoes vis-a-vis the garnishees [in Case #2]”29 because “the
judgment creditor [White] takes the place and stands in the shoes of the judgment
debtor [PISI].”3O Moreover, White maintains that “any claim, defense or new matter
such as a conflict of interest of garnishee’s counsel [Harmon] that PISI [the judgment
debtor] could have asserted can be made by the garnishor [White].”31

At the Hearing to Show Cause, White, through his counsel, argued that the
Court should simultaneously proceed with both cases. White asserted that although
White ‘stands in the position of PISI’, White could only obtain PlSl’s information
through discovery. As to White’s claim that he controls PlSl’s rights and decisions

in Case #2, White’s counsel stated that White “overtalked” himself and White did

not mean that he (White) represents PISI. However, under questioning from the

 

27 Id

28 Plaintiff’s Brief, at 6.
29 Ia'. at 8.
30 ld. at 10.

3‘1¢1.3111.

11

Court, White’s counsel stated that he is prepared to stand on all of the papers that
White filed.

At the hearing, PISI argued that White has not withdrawn his motion to
disqualify Harmon in Case #2, that White is asserting that PISI and third party
garnishees must use White’s choice of counsel in Case #2, that White can paralyze
PISI in Case #2 by asserting control over PISI, and that White will be able to obtain
any information from PISI that he wants in Case #2 and use it to White’s advantage
in Case #3.

Standard of Review

The law is well settled that “the Superior Court has the power to grant a
stay.”32 The Court’s authority to stay an action is “incident to the inherent power of
a court to exercise its discretion to control the disposition of actions on its docket in
order to promote economies of time and effort for the court, litigants, and counsel”33

and the Court may stay an action sua sponte.34 The question of whether to stay an

action “falls squarely within the province of the trial court’s discretion and is to be

 

32 Miller v. Falconetti, 1988 WL 116412, at *1 (Del. Super. Oct. 21, 1988).

33 Department of Natural Resources & Environmental Control v. Mountaz're Farms of Delaware,
Inc., 2019 WL 1430620, at *5 (Del. Super. Mar. 29, 2019).

34 Cummings v. Estate ofLewis, 2013 WL 979417, at *10 (Del. Ch. Mar. 14, 2013) (The Chancery
Court held that it can stay an action sua sponte).

12

determined in light of all the facts and circumstances and in the interest of

expeditious and economic administration of justice.”35
Discussion

Generally, a creditor may pursue a collection action and also seek other

remedies against a debtor in separate litigation. However, Case #1 and Case #2 are

not ordinary and are “in a category by itself.”36 There are several issues that need to

be resolved in Case #2 in order for Case #3 to go forward. As such, proceeding in

 

35 Pestolite, Inc. v. Cora’ura Corp., 456 A.2d 1235, 1237 (Del. Super. Nov. 29, 1982).

See al.s'o, Boston VLCC Tankers, Inc. II v. Bethlehern Steel Corp., 415 A.2d 492, 494 (Del. Super.
May 7, 1980) where the Delaware Superior Court has held that “[t]he factors to be considered in
determining whether to stay an action are essentially the same as those considered in determining
whether to grant a dismissal under the forum non conveniens doctrine”:

1) Applicability of Delaware law:

2) Relative ease of access to proof;

3) Availability of compulsory process for witnesses;

4) The pendency or nonpendency of a similar action or actions in another
jurisdiction; and

5) All other practical considerations which would make the trial easy, expeditious
and inexpensive

In the Instant Case, which does not involve jurisdictional or forum non conveniens issues, factors
l, 3, and 4 appear to be inapplicable (because they appear to be the same for Case #2 and Case #3
and there are no actions in another jurisdiction). However, factor 2 (access to proof through
discovery) is an issue, and under factor 5, the Court in Case #3 is able to consider other practical
considerations which would make the trial easy, expeditious and inexpensive See Miller v.
Falconetti, 1988 WL 116412, at *1 (Del. Super. Oct. 21, 1988) (the Delaware Superior Court
stayed an action pending the resolution of a related Delaware Family Court action because, under
factor five, the Court found that “there will be duplication of time, energy, or resources if both
actions go forward. Furthermore, it appears that the outcome of the Family Court action may bear
directly upon the issue of damages in this case.”).

36 See f.n. 5.

13

simultaneous actions has created difficulties of proof, delay, and additional
expenses.

The behavior of PlSI (and its owner Swan) has been the source of much
litigation in Case #2. The Commissioner wrote that there “is ample evidence”37 that
PlSl has acted in a deceptive manner in Case #2 and that “PlSl has delayed and
obfuscated at every turn in the proceedings in [Case #2].”38 In addition, the
Commissioner stated that PlSl has committed fraud upon the Court twice, once in
the Chancery Court case (Case #1) and once in Case #2. As such, the Commissioner
imposed sanctions on PlSl in the amount of 5530,700.0039 and has allowed White to
issue subpoenas for PlSl’s information that might not be allowed in an ordinary
case.40

White has also added to the confusion. In the Instant Case, White’s status as

an unrepresented litigant is murky;41 White has argued in Case #2 that he (White)

 

37 The Commissioner noted that PISI violated a discovery order and intentionally converted Excel
data into hard copy documents to hide relevant information relating to PlSl’s bail proceeds.

38 Commissioner’s Order on Plaintiff s Motion for Writ of Fieri Facias Garnishment and Sanctions.

39 The Commissioner held that the Court could not sanction Swan directly because it lacks the
equitable remedy of piercing the corporate veil.

40 The Commissioner stated that “in the run-of-the-mill case, I might agree that [White’s]
subpoenas go too far.” Motion to Quash Subpoena, Hearing (June 14, 2018) Transcript at 20.

41 lt is unclear whether the attorney who made an appearance in Case #3 on White’s behalf at the
Hearing to Show Cause continues as White’s attorney in Case #3. Mr. Fornias stated that there
had been no discussion regarding whether he would represent White in Case #3 beyond his

14

should have ultimate authority to decide who should represent PISI (which is
represented by Harmon); and, even more confusingly, that he (White) should have
ultimate authority to decide whether Harmon or a replacement should represent
some of the purported third party garnishees, including Swan.

Also, whether some of the purported garnishees were properly served, whether
White is the proper party to pursue the garnishment action, and the scope of
discovery are currently unresolved issues that have contributed to the protracted

litigation in Case #2.42 Moreover, Case #2 is further complicated by the fact that the

 

appearance at the hearing. However, as of this date, Mr. Fornias has not filed a motion to
withdraw.

42 Some of the litigation in Case #2 involved White’s issuance of a writ of attachment fi. fa. in
2018 upon the original judgment creditor’s attorney seeking information on Case #1. PlSl filed a
Motion to Quash and Contempt contending that this was a violation of a Protective Order by the
Chancery Court and Superior Court deeming certain document ‘attorney eyes only.’ On June 19,
2018, the Commissioner denied the Motion and ordered White to not disseminate the documents
to third parties beyond what is reasonably necessary to assist in the collection of the judgment
debt.

Also, in 2018, in Case #2, White filed Notices of Subpoena upon several banks seeking information
pertaining to PISI. On March 16, 2018, PISI filed a Motion to Quash White’s subpoenas (and, on
March 27, 2018, PISI filed a Supplemental Motion to Quash) contending that the subpoenas
exceeded the scope of discovery and were not reasonably calculated to lead to PlSl’s assets. On
June 19, 2018, the Commissioner denied the Motion to Quash. On October 30, 2018, the Delaware
Superior Court denied PlSl’s l\/lotion to Reconsider the Commissioner’s Order. T & HBail Bonds
v. Preferred lnvestment Services, Inc., 2018 WL 5619703, at *2 (Del. Super. Oct. 30, 2018)
(“While seemingly broad in scope, all of the targets are apparently connected to Judgment Debtor's
business and financial dealings.”).

ln addition, at the December 6, 2018 hearing before the Commissioner in Case #2, it was also
brought to the Commissioner’s attention that White had not produced certain documents (the
record does not indicate the nature of these documents) because White claimed that the documents
were the subject of a protective order (presumably White was referring to the protective order
issued by the Chancery Court and Superior Court making certain financial and bank records
confidential and for attorneys eyes only). The Commissioner held that Harmon may review the

15

judgment debtor’s attorney also represents some of the third party garnishees and
White’s Motion to Disqualify must be finally resolved.

As such, until there is clarification (and resolution) of some of those ongoing
issues which have been litigated for nearly five (5) years and continue to be litigated,
there is uncertainty as to the parties’ specific roles, the possibility of shifting
responsibilities, and difficulty in establishing discovery parameters These
unresolved issues have a direct impact on dispositive motions and discovery in Case
#3. Those unresolved issues in Case #2 have already impeded the expeditious and
economic administration of justice in the simultaneous advancement of the Instant
Case (Case #3) which is interconnected

Furthermore, although Mr. Fornias’s non-committal response as to his role in
Case #3 implies that White continues pro se (in Case #3), Case #2 has already shown

that this pro se Plaintiff requires careful oversight. White is not an inexperienced

 

documents in compliance with the protective order as “attorneys eyes only” and that White is to
produce any documents that he believes are relevant to the case for Harmon to review. See also
f.n. 7.

16

litigator,43 and the law is clear that the Court “will accommodate pro se litigants only
to the extent that such leniency does not affect the substantive rights of the parties.”44

If White were an attorney, then his assertions in Case #2 that he controls PlSl’s
rights (beyond traditional discovery and collection) means that he is, in effect_,
asserting authority and control over all of PlSl’s communications, records, etc. in

general and in relation to Harmon’s clients - PISI and some of the garnishees

(including Swan) - in Case #2 while simultaneously proceeding in direct opposition

 

43 ln addition to Case #2 and Case #3, White was a pro se plaintiff in the following cases that
involve bail bonds companies: JDT Jerzy Wirth v. Top Bail Surety Inc., et al. - Nl4C-02-137;
Jerzy Wirth and F loyd White v. T & H Bail Bond, Inc., - N14C-10-028.

White was also a pro se plaintiff in the following cases: Floyd White v. Theodorick A. Sparks -
N16J-02207; White, Floyd et al. v. Burnbrae Condoml'niurn Association et al. - 309-VCN; Floyd
White v. Flora J. Sutalo - SN07J-12-478.

White was a pro se defendant and pro se counterclaim plaintiff in Burnbrae Maz'ntenance
Association v. F loyd White, et al. - Nl 1C-05~161 ((lnterestingly, Attorney Fornias (who made an
appearance for White in Case #3) represented Burnbrae and opposed White)).

Additionally, White was made assignee of judgment (after the judgments) in the following cases.'
Jerzy Wirth v. Matt Spino, Nuno Araujo, and EP2, Inc. - NllC-12-259; Jerzy Wirth v. Jerry
McGonogle, Jr. - Nl 1C-12-260; Jerzy Wirth v. Michael A. Azeglz`o - NllC-12-254; Jerzy Wirth
v. Geojj‘l Hasler - N12J-03762.

Also, White filed a Motion to lntervene in Jerzy Wirth v. John R. Sez`tz, et al. - N14C-07-13, which
was denied.

44 Damzani v. Gill, 2015 WL 4351507, ar *1 (Del. July 14, 2015) (“[r]here is no different ser Of
rules for pro se plaintiffs, and the trial court should not sacrifice the orderly and efficient
administration of justice to accommodate the unrepresented plaintiff.”); Matter of Elzufon, 1991
WL 89811, at *6 (Del. Super. May 7, 1991) (“[i]t is beyond dispute that the courts of this State
have the inherent power to regulate the conduct of those who appear before it.”).

17

to PlSl and garnishee Swan, represented by Harmon, in Case #3. The Delaware
Lawyer’s Rules of Professional Conduct would prohibit such a result.

Under Delaware Lawyer’s Rules of Professional Conduct, a concurrent
conflict of interest exists if:

(1`) the representation of one client will be directly adverse to another

client; or

(2) there is a significant risk that the representation of one or more

clients will be materially limited by the lawyer's responsibilities to

another client, a former client or a third person or by a personal interest

of the lawyer.45
Thus, unless informed consent is obtained, “a lawyer may not act as an advocate in
one matter against a person the lawyer represents in some other matter ...”46 When
the conflict of interest involves former representation, “disqualification [of a lawyer]
is proper when the similarity in the two representations is enough to raise a common-
sense inference that what the lawyer learned from his former client will prove useful
in his representation of another client whose interests are adverse to those of the
former client.”47

White’s pro se status should not exempt him from the same professional

conduct rules that would apply to attorneys. Otherwise, the highly protected rights

 

45 Delaware Lawyer’s Rules of Professional Conduct, Rule 1.7(a)(1)-(2).
46 Delaware Lawyer’s Rules of Professional Conduct, Rule 1.7, Comment 6.

47 Madukwe v. Delaware State University, 552 F. Supp. 2d 452, 458 (Del. D. May 5, 2008).

18

of parties would be eviscerated by a party appearing (at random stages in a case) on
his or her own behalf. White’s dual roles are competing roles that could adversely
affect White’s, PlSl’s, and PlSl’s debtor’s rights in Case #2, prejudice PlSl’s and
the other Defendants’ due process right to a fair trial in Case #3, and undermine
Delaware public policy goals to protect attorney-client communications and
preserve public confidence in the judicial system. Although this case does not
present a typical conflict of interest because White is not an attorney, the risk could
be the same _ unfair prejudice to PISI and third party garnishees in Case #2 and
unfair prejudice to PISI and Swan in Case #3.48 lndeed, the Court in Case #2 has
already undertaken examining the potential conflict arising from Harmon’s dual
representation.49 Thus, allowing the Instant Case (Case #3) to proceed at this time
could cause potential conflicts in Case #2 to spill over and impact the orderly

progress of Case #3. Moreover, although conflict issues remain undecided in Case

 

48 Although White (and Mr. Fomias) have not clarified White’s pro se status, ultimately that status
has little impact on the Court’s determination that a stay is appropriate. “Lawyers play a vital role
in the preservation of society. The fulfillment of this role requires an understanding by lawyers of
their relationship to our legal system. The Rules of Professional Conduct, when properly applied,
serve to define that relationship.”); Id. at para. 20 (“The rules are designed to provide guidance to
lawyers and to provide a structure for regulating conduct through disciplinary agencies.” Delaware
Rules of Professional Conduct, Preamble, at para. 13.

49 Despite the Commissioner’s order that the parties “discuss the potential conflicts of interest,”

there is no indication that the parties have resolved any potential conflicts of interest in Case #2
and the issue continues to complicate discovery in Case #3.

19

#2, the advancement of the litigation in that case makes it better suited to resolve the
issues and forestall possible inconsistent rulings.50

In addition, White’s standing in these matters has not yet been finally
determined White purchased some of the interests of the Original Judgment
Creditors, but may not have purchased the entire judgment Additionally, while
White is correct that a judgment creditor stands in the shoes of its debtor to collect
from any purported third party garnishees, White’s attempts to control who can
represent PISI and/or SWan and other purported third party garnishees (in Case #2)
goes beyond that commonly accepted practice.51

Furthermore, White’s concurrent participation in Case #3 creates a situation

of divided loyalties.52 So too, White’s simultaneous participation in both cases

 

50 Harmon represents PISI in Cases #2 and #3. Harrnon also represents several third party
garnishees in Case #2. lt is difficult for PISI, the third party garnishees, and White to effectively
plan or respond because of the apparently contradictory roles of White and Harmon. This situation
has been the source of and generated five years of litigation (including involving third party
purported garnishees) without providing clarification for either party (or the third party garnishees
in Case #2).

51 This is particularly so when PlSl and the purported third party garnishees (including Swan)
provided consent for Harmon’s joint representation Another instance involves White obtaining
documents from the Original Judgment Creditors’ former attorney, l\/Ir. Lapinski, by filing a writ
of garnishment on Mr. Lapinski. The Commissioner, noting (at a June 14, 2018 hearing) that PISI
has a history of hiding assets, allowed White to retain the documents but ordered White to not
disseminate the information turned over to him to third parties “beyond what is reasonably
necessary to assist in the collection of the judgment. . .” Commissioner’s June 19, 2018 Order.

52 White, arguably, might not fully assert PlSl’s or Swan’s rights or act in PlSl’s or Swan’s best
interests in Case #2 if those interests are in conflict with White’s interests in Case #3 while
preventing PISI, PlSl’s attorney, Swan, and other garnishees from being able to effectively litigate
in Case #2. As such, PISI and/or garnishees may be prejudiced in Case #2.

20

provides an incentive for White to attempt to control PlSl’s and its representation of
purported third party garnishees, litigation, and relationship in Case #2 in order to
elicit confidential information from those parties to which he might not ordinarily
be entitled that would be helpful to White and adverse to PISI in Case #3.33 Along
these same lines, Harmon’s dual representation of PlSl and (some of) PlSl’s
purported debtors in Case #2 (including Swan) in addition to representing PISI,
Swan, and the other Defendants in Case #3 may potentially hinder White’s ability to
obtain a true picture of PlSl’s finances in both cases The Delaware Lawyer’s Rules
of Professional Conduct were intended to prevent this type of manipulation and
prejudice to parties

The Delaware Supreme Court has held that the U.S. Constitution “imposes on

the States the standards necessary to ensure that judicial proceedings are

 

33 lt is possible that White could gain access to PlSl’s attorney’s work product and attorney/client
communications lf White controls PlSl’s rights in Case #2, he would be expected to assert those
rights to protect PlSl’s interests Thus, it may be necessary for White to examine PlSl’s
confidential information in order to determine PlSl’s interests As such, White could gain access
in Case #2 to PlSl’s private information such as financial records, attorney-client communications
attorney work product, and PlSl’s litigation “playbook’ and modis operandi and then use that
information against PISI in Case #3 without having to strictly follow the rules of discovery in Case
#3 (particularly since White would not face attorney sanctions). Hence, PlSl`s confidential
information might not be protected by the rules of discovery in Case #3 thereby jeopardizing the
due process rights of PlSl and Swan in Case #3.

21

fundamentally fair.”54 “A fair trial in a fair tribunal is a basic requirement of due
process.”55 This requirement applies to Delaware Courts.56

Here, simultaneous litigation potentially jeopardizes both parties’ due process
rights in Case #3. PlSl, Swan, and the other Defendants are in danger of losing
important protections that are necessary to achieving fair and effective litigation
(including the attorney client privilege and the attorney work product privilege) in
Case #3. The attorney-client privilege must be protected because it “promote[s]

”57 and extends “to all

freedom of consultation of legal advisers by clients
communications, whether written or oral, made for the purpose of facilitating the
rendition of professional legal services.”58 The work product doctrine is equally
important because it “protect[s] the privacy of lawyers in their work and
encourag[es] the freedom of lawyers from interference in the task of preparing their

clients' cases for trial.”59

 

54 Orville v. Division ofFamily Services, 759 A.2d 595, 598 (Del. Mar. 30, 2000).

55 Sullz`van v. Mayor ofTown of Elsrnere, 23 A.3d 128, 135 (Del. June 17, 2011) (“A fair trial in a
fair tribunal is a basic requirement of due process that applies to administrative agencies as well
as to courts.”) (_ internal quotation marks removed).

56 Id

57 Brett v. Berkowz'tz, 706 A.2d 509, 513 (Del. Feb. 27, 1998).

58 Id

39 Hoechst Celanese Corp. v. Natz'onal Unl'on Fire Insurance C0. of Pl`ttsburgh Pennsylvania, 623
A.2d 1118, 1126 (Del. Super. Feb. 21, 1992).

22

Because Case #2 and Case #3 are closely related (both involve PlSl’s assets,
receivables, and outflows), arise from the same Chancery Court decision (Case #1),
and PlSl’s attorney represents PISI (and the interests of Swan) in all three cases and
represents some of the other purported garnishees in Case #2, it is not unrealistic to
believe that many of PlSl’s and gamishees’ (including Swan’s) communications
with Harmon in Case #2 would relate to the same issues in Case #3, and that White
could inappropriately obtain and inappropriately seek to use the contents of those
communications in Case #3.

Furthermore, because White is asserting (and Mr. Fornias “stands by” that
assertion) that White is the only party who holds the right to waive a conflict of
interest in Case #2, it is possible that White will be allowed access to PlSl’s and
Swan’s attorney’s strategy and preparation in Case #2 to determine whether PlSl’s
and Swan’s interests in both cases are harmed by Harmon’s alleged conflict of
interest. As such, because PlSl’s attorney’s work product in Case #2 and Case #3
are potentially related and intertwined, the work product privilege might not be able
to protect PlSl’s attorney’s work product relating to Case #3. Moreover, this
privilege may prejudice White’s ability to obtain a fair and accurate accounting of
PlSl’s and Swan’s finances which would be needed in Case #3.

Additionally, allowing Case #3 to proceed concurrently with Case #2

undermines Delaware public policy goals of protecting attorney-client

23

communication and public confidence in the judicial system.60 ln this particular and
convoluted case, public confidence in the judicial system could be damaged if both
cases proceed simultaneously. Moreover, White’s dual litigation has the potential
to weaken the protections afforded clients simply because a party is acting pro se
and believes himself beyond the Delaware Lawyer’s Rules of Professional
Conduct.61

Furthermore, White’s and Harmon’s potentially conflicting assertions and
positions in the two cases have already created confusion among the parties
(including statute of limitations issues and discovery) in Case #3 that could burden
the resources of the Court and increase expenses for the parties Increased use of
court resources, additional hearings, and increased litigation to deal with the tangle
that now exists are readily foreseeable. lndeed, the Court in the lnstant Case (Case
#3) has already been impacted because the unresolved issues in Case #2 have

delayed discovery (and resolution of a dispositive motion) in the Instant Case.62

 

60 lt is evident that protecting attorney-client communications is a Delaware public policy goal
from the fact that the attorney-client privilege has been codified in Rule 502 of the Delaware Rules
of Evidence. See also In re Quest Software Inc. Shareholders Litigation, 2013 WL 3346034, at *3
(Del. Ch. July 3, 2013) (Protecting attorneys’ communication with their clients is “necessary to
the effective functioning of the legal system as a whole.”).

61 State v. Robinson, 2018 WL 2085066, at *7 (Del. Super. May 1, 2018) (The purpose of the
attorney client privilege is “to encourage full and frank communication between attorneys and
their clients and thereby promote broader public interests in the observance of law and
administration of justice.”).

62 ln addition, in the Instant Case, PlSl, Swan, and the other Defendants have filed a Motion to
Dismiss based on statute of limitations grounds The Court in Case #3 has not been able to resolve

24

Lastly, the third party garnishees are entitled to timely resolution of the issues
pending in Case #2. The writs of garnishment were purportedly served in 2015 and
White’s attempts to obtain default judgment re-ignited the disputes Continuing to
proceed with Case #3 and its tangle of discovery issues will impact Case #2. Staying
Case #3 will allow Case #2 to move forward with less confusion and litigation to
eventually reach closure.

Here, the Court concludes that staying Case #3, pending resolution of issues
in Case #2, is the most appropriate action,63 Resolution of the issues in Case #2 will
help to eventually guide, resolve, or clarify the issues in the Instant Case (Case #3).
A stay will allow the Court and the parties to understand the implications of White’s
assertions and Harmon’s responsibilities in Case #2 before further litigation takes
place in Case #3, reduce confusion among the parties regarding White’s and
Harmon’s contradictory positions, preserve resources that would otherwise be spent
on attempts to clarify the confusion emanating from concurrent litigation, and

provide an opportunity for the Court in Case #3 to determine what measures to take

 

the statute of limitations issue because the unresolved disputes in Case #2 hinder the Court in Case
#3 from finding out relevant and germane dates of PlSl’s financial transactions

63 lt is appropriate to stay Case #3 rather than Case #2 because Case #2 has a longer history, is
more developed, involves more parties (at least 22 third party garnishees), and there has been
extensive, continuous litigation. lts litigation has already generated over 350 transactions filed as
of this date. ln addition, Case #2 is in the discovery stage and before a Commissioner who is
extremely familiar with the issues and facts of the case. Contrastingly, Case #3 is more recent. lt
commenced on April 23, 2018 and has significantly fewer (42) transactions filed as of this date.

25

to protect both parties’ rights and to preserve Delaware public policy goals during
and after resolution of Case #2.64

A stay in Case #3 will accomplish the goals of protecting White’s, PlSl’s, and
Swan’s rights in both cases, preserving Delaware public policy goals, and potentially
reducing confusion. White, who is a not an attorney, cannot be sanctioned for
violating the Delaware Lawyer’s Rules of Professional Conduct. As such, there may
be no effective process to proactively prevent White from access to or inappropriate
use of any confidential information that he obtains in Case #2 against PlSl in Case
#3. Furthermore, the representation of White by an attorney (if he has retained one
for the duration of Case #3) would not resolve the situation because White, who is
the Plaintiff here, has created the situation.

White’s and Harmon’s positions and the ensuing obfuscations have rendered
concurrent litigation in Case #2 and Case #3 to be conflicting, tethered to
uncertainties (in Case #2), and unusually convoluted These simultaneous cases
potentially abrogate the parties’ due process rights, potentially hinder rather than
assist White in pursuing his fraudulent transfer claim, possibly generate duplicative

processes, and will spawn additional litigation due to the need to establish

 

64 Moreover, neither party will be unfairly prejudiced by a stay. The stay will not unfairly prejudice
PlSl, Swan, or the other Defendants because it will protect their rights The stay will not unfairly
prejudice White because, if these are true garnishees in Case #2, White could first collect on the
debt, have a better understanding as to the flow of PlSl’s money, and PlSl’s assets will be
preserved because the Court will order that PlSl and Swan must preserve assets and not divest
assets

26

parameters on the parties’ roles and responsibilities A temporary stay of the Instant
Case (Case #3) (rather than dismissal) will protect the litigants’ rights
Conclusion

F or the foregoing reasons, this Court temporarily stays the lnstant Action
pending resolution of issues in Case # N14J-01761. Additionally, this Court orders
PlSl, Swan, and all other Defendants in the lnstant Case to preserve and not to divest
themselves of any asset that has been owned by PlSl or is connected or traceable to
PlSl during the pendency of this stay without specific order of the Court.

IT IS SO ORDERED.

wA/;.t;{'°_*

Diane Clarke Streetf, Judge

 

27