Court Opinion

ID: 5116459
Source: CourtListenerOpinion
Date Created: 2021-10-06 18:03:05.802811+00
Date Added: 2024-06-11T08:21:57.233763
License: Public Domain

COURT OF CHANCERY
                                     OF THE
                               STATE OF DELAWARE
PATRICIA W. GRIFFIN                                                    CHANCERY COURTHOUSE
MASTER IN CHANCERY                                                          34 The Circle
                                                                    GEORGETOWN, DELAWARE 19947

                           Date Submitted:     June 7, 2021
                           Draft Report :      September 23, 2021
                           Final Report:       October 6, 2021

Dean A. Campbell, Esquire               Via U.S. Mail
Dean A. Campbell, P.A.                  Mary M. Lipetz
P.O. Box 568                            317 East Street N.E.
110 West Pine Street                    Vienna, Virginia 22180
Georgetown, Delaware 19947

RE:      Robert Tack v. Mary M. Lipetz, Trustee of the Mary Meade Lipetz Revocable
         Trust Dated December 6, 2007, as Amended and Completely Restated on
         June 3, 2010, and The Boxwood House Condominium Association of
         Owners
         C.A. No. 2020-0576-PWG

Dear Counsel and Ms. Lipetz:

         Pending before me is the matter of damages against the defaulted defendant

in this case, and the plaintiff’s claim against that defendant for attorneys’ fees

under 25 Del. C. §81-417. Based upon the evidence presented, I find that the

defaulted defendant is liable to plaintiff for $18,707.00 in damages for lost rental

income, plus post-judgment interest at the legal rate. I deny the plaintiff’s request

for an attorneys’ fees award. This is a final report.1

1
  This report makes the same substantive findings and recommendations as my
September 23, 2021 draft report, to which no exceptions were filed.
Tack v. Lipetz, et al.
C.A. No. 2020-0576-PWG
October 6, 2021

      I. BACKGROUND2

          Robert Tack (“Tack”) filed his Complaint for Injunctive Relief and Damages

on July 14, 2020 against Mary M. Lipetz as Trustee for the Mary Meade Lipetz

Revocable Trust Dated December 6, 2007, as Amended and Completely Restated

on June 3, 2010, (the “Lipetz Trust”)3 and the Boxwood House Condominium

Association of Owners (the “Association”).4 Tack sought injunctive relief against

the Lipetz Trust and the Association, seeking to abate trespass and nuisance from a

continuing flow of leaking water and resulting money damages.5 The Association

responded on September 10, 2020.6 The Lipetz Trust was served but failed to

respond,7 and, upon Tack’s motion, I granted a default judgment against the Lipetz

Trust on November 9, 2020.8 Following that default judgment, Tack requested an

inquisition hearing to determine the amount of damages to be assessed against the

2
  I refer to the transcript from the inquisition hearing held on April 19, 2021 as “First Inq.
Tr.,” and the transcript from the supplemental inquisition hearing held on June 7, 2021 as
“Sec. Inq. Tr.” I refer to Tack’s exhibits admitted at the June 7, 2021 supplemental
inquisition hearing as “Sec. Inq. Tr. Ex.”
3
  Although Ms. Lipetz and the Lipetz Trust have both been referred to in this action’s
proceedings, the Lipetz Trust is the defendant in this litigation and Ms. Lipetz’s
involvement in this litigation is only as trustee for the Lipetz Trust.
4
    Docket Item (“D.I.”) 1.
5
    Id., at 4-6.
6
    D.I. 3.
7
    See D.I. 8.
8
    D.I. 9.

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C.A. No. 2020-0576-PWG
October 6, 2021

Lipetz Trust related to the default judgment.9 An initial inquisition hearing was

held on April 19, 2021, and a supplemental inquisition hearing was held on June 7,

2021.10 Lipetz Trust, through Ms. Lipetz as trustee, received notice but failed to

appear at both inquisition hearings.11

         On September 21, 2021, Tack and the Association stipulated to a dismissal

of Tack’s claims against the Association.12 I granted that dismissal on September

21, 2021.13

9
  D.I. 10. The default judgment order granted injunctive relief. See D.I. 9. However,
Tack later noted that the necessity for injunctive relief had become moot. See D.I. 10, at
2. Although the request for equitable relief has been resolved, this Court may retain
jurisdiction over money damages claims through its ancillary jurisdiction under the clean-
up doctrine. See Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 974 (Del. Ch. 2016).
Having acquired jurisdiction over part of a controversy, this Court may continue to
exercise jurisdiction over purely legal matters to “resolve a factual issue which must be
determined in the proceedings; to avoid a multiplicity of suits; to promote judicial
efficiency; to do full justice . . .” FirstString Research, Inc. v. JSS Medical Research Inc.,
2021 WL 2182829, at *6 (Del. Ch. May 28, 2021) (citation omitted). An unresolved
factual issue related to the default judgment is the amount of damages caused by the
Lipetz Trust. For this reason and in the interest of judicial efficiency, I retained
jurisdiction in order to determine damages against the Lipetz Trust under the default
judgment.
10
     D.I. 16; D.I. 22. Both hearings were conducted via Zoom.
11
     See D.I. 15; D.I. 17.
12
     D.I. 26.
13
  D.I. 28. Prior to this stipulation of dismissal, Tack and the Association had indicated
that they may transfer this case to the Superior Court following this decision to resolve
any remaining issues. See Sec. Inq. Tr. 10:7-12 (statement of counsel for Tack); Id.,
10:18-11:13 (statement of counsel for the Association).

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Tack v. Lipetz, et al.
C.A. No. 2020-0576-PWG
October 6, 2021

          Tack owns real property known as Unit 1-E, The Boxwood House,

Wilmington Avenue, Rehoboth Beach, Delaware (“Unit 1-E”).14 The Lipetz Trust

owns real property known as Unit 2-E, The Boxwood House, Wilmington Avenue,

Rehoboth Beach, Delaware (“Unit 2-E”).15 The Association is a homeowners

association comprised of the owners of the condominium units at the Boxwood

House in Rehoboth Beach, Delaware.16 Boxwood House was constructed circa

1969.17 Unit 1-E is directly below Unit 2-E in the Boxwood House.18

          Tack purchased Unit 1-E in February of 2019 to use primarily as an

investment property for seasonal rentals.19 At the time, it was an older property

and needed certain renovations to enhance its rental value.20 Tack engaged a local

contractor in 2019 to undertake these renovations so that Tack could offer Unit 1-E

as a seasonal rental in the 2020 season.21 During these renovations, the contractor

14
     D.I. 1, ¶ 1; First Inq. Tr. 25:19-21.
15
     D.I. 1, ¶ 2.
16
     Sec. Inq. Tr. Ex. 1, Art. I; Id., Art. III.
17
     D.I. 1, ¶ 4.
18
     Sec. Inq. Tr. 15:6-8.
19
     First Inq. Tr. 26:7-13.
20
     Id., 26:21-24.
21
     Id., 27:5-28:12; Sec. Inq. Tr. 14:2-12.

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C.A. No. 2020-0576-PWG
October 6, 2021

discovered significant water damage in the ceiling of Unit 1-E, and the completion

of the renovations was delayed.22

         The contractor determined that this water damage was “[d]ue to a leak from

above,” and indicated that the water leak was on-going.23            This stopped the

renovation work on Unit 1-E.24 The contractor at one point entered Unit 2-E and

discovered in Unit 2-E’s bathroom “a handful of items that were visibly noticeably

leaking, and obvious damage into that unit.”25 The contractor determined that the

areas of Unit 2-E in which he discovered leaks were directly above the areas of

Unit 1-E that had the worst water damage.26 He poured water on the bathroom

floor of Unit 2-E and saw that water going through to Unit 1-E.27 He testified that

proper maintenance in Unit 2-E, including caulking or flashing around the bathtub

and grout around the tile, would have prevented the water leaks.28 Before the

water damage was discovered, the contractor testified that he was on schedule to

complete the renovations by Memorial Day of 2020, in time for the tourist rental

22
     Id., 14:13-21; First Inq. Tr. 28:15-23.
23
     Sec. Inq. Tr. 14:17; First Inq. Tr. 28:17-23; Id., 41:5-9.
24
     Sec. Inq. Tr. 14:13-15.
25
   Id., 16:1-9. The leaks emanated from cracks in the tile in the bathroom and open areas
in Unit 2-E’s bathroom floor. Id., 16:12-17:12; see also Sec. Inq. Tr. Ex. 9.
26
     Sec. Inq. Tr. 21:19-24:16; Id., 33:15-18.
27
     Id., 23:13-17.
28
     Id., 36:21-37:8; id., 37:16-20.
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season.29           After the water leaks were repaired, renovation work resumed

immediately and was completed around Labor Day of 2020, which did not leave

sufficient time to market the property for rentals before the end of the 2020

season.30

          During the 2019 rental season, Unit 1-E was rented fairly consistently from

June 1 to September 21.31 In total, Unit 1-E generated $18,707.00 in rental income

for the 2019 season.32 The realtor, who handled seasonal rentals and specifically

rentals of Unit 1-E, testified that Tack was unable to rent Unit 1-E during the 2020

season.33 She also testified that, in Rehoboth Beach, Delaware, rental revenues

were higher in the 2020 season, despite the COVID-19 pandemic.34 She stated that

she “would have been able to book [Unit 1-E] very well . . . because we were

booked solid with all of our smaller properties.”35

          Tack testified that he seeks damages for lost rental income in the amount of

$18,707.00.36 He also seeks reasonable attorneys’ fees under 25 Del. C. §81-417.37

29
     Id., 40:12-20.
30
     Id., 26:5-17; id., 41:11-18; id., 43:19-44:16.
31
     First Inq. Tr. 15:2-18; id., 17:22-24; Sec. Inq. Tr. Ex. 4.
32
     First Inq. Tr. 16:6-9.
33
     Id., 18:6-8.
34
     Id., 18:19-19:2.
35
     Id., 19:6-14.
36
     Id., 58:1-7.

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C.A. No. 2020-0576-PWG
October 6, 2021

II.       ANALYSIS

               A. Damage Award Against the Lipetz Trust

          Tack seeks monetary damages resulting from a water leak emanating from

the Lipetz Trust’s property and impairing his property.38 Default judgment was

entered against the Lipetz Trust on November 9, 2020.39 Court of Chancery Rule

55(b) states in part “[i]f, in order to enable the Court to enter [default] judgment or

to carry it into effect, it is necessary to take into account or to determine the

amount of damages . . ., the Court may conduct such hearings or order such

references as it deems necessary and proper.”40 “Typically, the sole focus of

inquisition hearings is the amount of damages owed to the plaintiff, which is

determined by the trial court judge. The Court’s findings on damages are based on

a preponderance of the evidence.”41

          In my order granting default judgment against the Lipetz Trust, I necessarily

determined that water from Unit 2-E had leaked into Unit 1-E and that this conduct

37
     Id., 58:11-15; Sec. Inq. Tr. 50:23-52:13.
38
     D.I. 1, at 5.
39
     D.I. 9.
40
     Ct. Ch. R. 55(b).
41
   Jagger v. Schiavello, 93 A.3d 656, 659 (Del. Super. 2014) (citation omitted).
Preponderance of the evidence means “the side on which the greater weight of the
evidence is found.” Id. (citation omitted). Under the preponderance of the evidence
standard, “evidence that is unrebutted when presented by one side should be considered
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C.A. No. 2020-0576-PWG
October 6, 2021

was tortious.42 What was left unresolved in that order was (1) the amount of

damages and (2) any apportionment of liability for those damages between the

Lipetz Trust and the Association. The determination of liability is this report is

limited solely to the Lipetz Trust.43

         “The function of a damage award in a civil litigation is to provide just and

full compensation to a plaintiff who suffers injury or loss by reason of the conduct

of a tortfeasor.”44 Under Delaware law, “a plaintiff is entitled to compensation to

make him whole, but no more.”45 “In general, a right of action resulting from

tortious conduct encompasses all of the reasonably foreseeable consequences of

the tort.”46 A plaintiff may recover “against a tort-feasor for the loss of use of

conclusive.” Paton v. Yancy, 2014 WL 4674600, at *2 (Del. Super. Sept. 22, 2014)
(quoting Amalfitano v. Baker, 749 A.2d 575, 578 (Del. 2001)) (cleaned up).
42
     See D.I. 9.
43
  The Association’s liability is no longer at issue following the entry of the stipulation of
dismissal on September 21, 2021. See D.I. 28.
44
   Maier v. Santucci, 697 A.2d 747, 749 (Del. 1997) (citation omitted); see also Jardel
Co. v. Huges, 523 A.2d 518, 528 (Del. 1987) (“The object and purpose of an award of
compensatory damages in a civil case is to impose satisfaction for an injury done. In tort
actions that satisfaction normally takes the form of an award of monetary damages to an
injured plaintiff, with the size of the award directly related to the harm caused by the
defendant.”) (citation omitted).
45
  Stayton v. Del. Health Corp., 117 A.3d 521, 534 (Del. 2015) (internal quotation marks
and citation omitted).
46
  Gill v. Cleotex Corp., 565 A.2d 21, 23 (Del. Super. 1989); see also Adams v. Hazel,
102 A.2d 919, 920 (Del. Super. 1954) (“A tort-feasor is liable for all natural, direct and
proximate consequences of his wrongful acts or omissions; or, for all the probable
consequences of such wrongful acts or omissions.”).

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C.A. No. 2020-0576-PWG
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property provided that the use was a lawful one and the damages are established

with reasonable certainty.”47 In a trespass action, our Supreme Court has indicated

that a plaintiff may recover, as foreseeable damages, the fair market rental value of

the real property.48

         Tack presented evidence showing that the water damage to Unit 1-E was

caused by leaks originating from Unit 2-E.49 The evidence shows that the water

causing the damage was coming from Unit 2-E and not from any of the common

areas over which the Association had control, or other property.50 Therefore, I

conclude that the water damage to Tack’s property was caused only by the Lipetz

Trust.

         Tack produced evidence confirming that Unit 1-E was unable to be rented in

the 2020 season because of the water damage.51 Further, Tack produced evidence

showing that his rental income for the 2020 season would have been approximately

47
     Adams, 102 A.2d at 920.
48
     See Rohner v. Niemann, 380 A.2d 549, 554 (Del. 1977).
49
     See notes 22-27 supra and accompanying text.
50
     See Sec. Inq. Tr. 27:9-29:18; id., 34:15-24.
51
     See notes 28-29 supra and accompanying text.

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$18,707.00 and that he would have been able to rent it for the full season, had the

water leaks not occurred.52

          Therefore, I conclude that damages in the amount of $18,707.00 shall be

assessed against the Lipetz Trust, which will place Tack in the position he would

have been but for the Lipetz Trust’s tortious conduct.

          B. Attorneys’ Fees Under 25 Del. C. § 81-417

          Tack seeks reasonable attorneys’ fees under 25 Del. C. §81-417 (the

“Enforcement Provision”).53 First, I note attorneys’ fees were not awarded as a

part of the default judgment.54 Considering Tack’s fee-shifting request, I decline to

award attorneys’ fees in this case.

          Chapter 81 of Title 25 of the Delaware Code is the Delaware Uniform

Common Interest Ownership Act (the “DUCIOA”). By its terms, the DUCIOA

applies to common interest communities that were created on or after September

52
   See notes 30-34 supra and accompanying text. I consider that the real estate agent
testified that rentals during the 2020 season were “up a considerable amount from 2019 to
2020.” See First Inq. Tr. 18:23-24; see also Sec. Inq. Tr. Ex. 5. Although this suggests
that the actual rental income for 2020 might have been higher than in 2019, adjusting this
figure based upon this conclusory testimony, would be speculative. I decline to make
such an adjustment without more concrete testimony. See Adams, 102 A.2d at 920
(damages must be “established with reasonable certainty”). Further, Tack does not seek
any additional damages beyond $18,707.00. See n. 36 supra and accompanying text.
53
     Sec. Inq. Tr. 52:8-13.
54
     D.I. 9.

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30, 2009.55 If the common interest community was created before September 30,

2009, it is a “Pre-Existing Community,” and the Unit Property Act56 typically

provides the statutory framework governing those common interest communities.57

A Pre-Existing Community may choose to amend its governing documents to

comply with DUCIOA’s requirements or may select particular sections of

DUCIOA to apply to that community.58

         However,     certain   “Enumerated      Provisions”   apply   to   Pre-Existing

Communities if the community’s governing documents do not address an issue.59

One of these Enumerated Provisions is the Enforcement Provision.60                  The

Enforcement Provision states:

         If a declarant or any other person subject to this chapter fails to
         comply with any of its provisions or any provision of the declaration
         or bylaws, any person or class adversely affected by the failure to
         comply has a claim for appropriate relief. The court, in an appropriate
         case, may award court costs and reasonable attorneys’ fees.61

55
     25 Del. C. §81-116.
56
     25 Del. C. §2201 et seq.
57
  See 25 Del. C. §81-119; Bragdon v. Bayshore Property Owners Ass’n, Inc., 251 A.3d
661, 674 (Del. Ch. 2021).
58
     25 Del. C. §81-119.
59
     Id.; Bragdon, 251 A.3d at 676.
60
     25 Del. C. §81-119; 25 Del. C. §81-417; Bragdon, 251 A.3d at 676-77.
61
     25 Del. C. §81-417(a).

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Interpreting this provision, Vice Chancellor Laster, in Bragdon v. Bayshore

Property Owners Ass’n, Inc. [hereinafter “Bragdon”],62 analyzed whether the

Enforcement Provision applies in a particular case based upon three elements: (1)

whether there had been a violation of DUCIOA or a community’s declaration or

bylaws, (2) whether there was an adverse effect on the party seeking to recover

expenses under the Enforcement Provision, and (3) whether the case is an

appropriate case for expense shifting under the statute.63

         The Enforcement Provision creates a cause of action based in the common

interest community’s declaration, bylaws or in some independent provision of

DUCIOA. When Vice Chancellor Laster in Bragdon granted attorneys’ fees under

this statute, he found that the common interest community’s association had

breached both the community’s declaration and DUCIOA.64

         In my default judgment ruling, I found that the Lipetz Trust was liable for

trespass and nuisance—both common law property torts.65 I did not find that the

62
     251 A.3d 661 (Del. Ch. 2021).
63
     Id. at 677-89.
64
     Id. at 679-81.
65
   The default judgment order ordered injunctive relief “necessary to abate the flow of
leaking water” and judgment against the Lipetz Trust for reasonable damages resulting
from the leak. D.I. 9. It did not award attorneys’ fees. Id. Tack’s motion for default
judgment sought injunctive relief and judgment against the Lipetz Trust due to the water
leak emanating from its property and damaging Tack’s property. D.I. 8. It also asked for
attorneys’ fees pursuant to 25 Del. C. §81-417(a) and provisions in the Declaration and
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Lipetz Trust had violated DUCIOA or the Association’s Declaration Submitting

Real Property to Provisions of Unit Property Act 25 Del. C. §2201, et seq.

(“Declaration”),66 or its Code of Regulations.67 Tack’s Complaint only brought

claims for trespass and nuisance against the Lipetz Trust and not for any violation

of the Declaration, Code of Regulations, or DUCIOA.68 My finding of liability in

the default judgment against the Lipetz Trust was not based upon any duty arising

out of DUCIOA, the Declaration or bylaws. The Enforcement Provision provides

that a person’s right of action under that statute is contingent upon the failure of

another person or entity, who is subject to DUCIOA, to comply with DUCIOA or

the Declaration or bylaws.69 Because Tack sought only damages for common law

torts and did not make a claim against the Lipetz Trust for a violation of DUCIOA

or the Declaration, the Enforcement Provision is not applicable in this case.

Further, the Declaration or Code of Regulations do not specifically provide for fee-

shifting.70

Code of Regulations. Id. Tack’s Complaint, however, seeks only injunctive relief to
abate a continuing trespass and nuisance, resulting damages and attorneys’ fees. D.I. 1.
66
     Sec. Inq. Tr. Ex. 7.
67
     Id., Ex. 1.
68
     See D.I. 1.
69
  25 Del. C. §81-417; Bragdon v. Bayshore Property Owners Ass’n, Inc., 251 A.3d 661,
677 (Del. Ch. 2021).
70
     See Sec. Inq. Tr. Exs. 1, 7.

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         Finally, I consider whether attorneys’ fees should be awarded in this case

under the American Rule, which provides that each party is normally responsible

for their own attorneys’ fees, whatever the outcome of the litigation, absent express

statutory language to the contrary or an equitable doctrine exception, such as the

bad faith exception.71 Under the American Rule, Delaware courts have awarded

attorneys’ fees for bad faith when “parties have unnecessarily prolonged or delayed

litigation, falsified records or knowingly asserted frivolous claims.”72 “The bad

faith exception is applied in ‘extraordinary circumstances’ as a tool to deter

abusive litigation and to protect the integrity of the judicial process.”73 Here, I do

not find that the Lipetz Trust’s actions implicate the bad faith exception, and

decline to award attorneys’ fees to Tack in this case.

III.     CONCLUSION

         For the reasons stated above, I recommend that the Court order that the

Mary Meade Lipetz Revocable Trust Dated December 6, 2007, as Amended and

Completely Restated on June 3, 2010, is liable to Robert Tack for damages in the

amount of $18,707.00, plus post-judgment interest at the legal rate.               I also

71
  Tandycrafts, Inc. v. Initio Partners, 562 A.2d 1162, 1164 (Del. 1989); see also
Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 545 (Del. 1998).
72
     Kaung v. Cole Nat. Corp., 884 A.2d 500, 506 (Del. 2005) (citation omitted).
73
  Montgomery Cellular Holding Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005) (citation
omitted).
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recommend that the Court decline to award attorneys’ fees to Tack in this action.

This is a final Master’s Report, and exceptions may be taken under Court of

Chancery Rule 144.74

                                              Sincerely,

                                              /s/ Patricia W. Griffin
                                              Master Patricia W. Griffin

74
  Because all claims against the Association have been dismissed, this report, when it
becomes final, will resolve all remaining issues in this case.

                                         15