Court Opinion

ID: 2765967
Source: CourtListenerOpinion
Date Created: 2014-12-31 19:02:37.022774+00
Date Added: 2024-06-11T11:26:21.167511
License: Public Domain

COURT OF CHANCERY
                                         OF THE
                                   STATE OF DELAWARE

 JOHN W. NOBLE                                                417 SOUTH STATE STREET
VICE CHANCELLOR                                               DOVER, DELAWARE 19901
                                                             TELEPHONE: (302) 739-4397
                                                             FACSIMILE: (302) 739-6179

                                     December 31, 2014

John W. Paradee, Esquire                        Joseph C. Handlon, Esquire
Prickett, Jones & Elliott, P.A.                 Scott W. Perkins, Esquire
11 North State Street                           Department of Justice
Dover, DE 19901                                 820 North French Street
                                                Wilmington, DE 19801

         Re:   Ridgewood Manor II, Inc. v. The Delaware Manufactured
               Home Relocation Authority
               C.A. No. 8528-VCN
               Date Submitted: July 22, 2014

Dear Counsel:

         Plaintiffs, landlords and tenants of manufactured home communities

throughout Delaware, filed this action seeking declaratory relief, injunctive relief,

and disgorgement of monthly assessments collected under the Manufactured Home

Owners and Community Owners Act1 by Defendants from February 1, 2006,

1
    25 Del. C. ch. 70, subch. I.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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through April 8, 2014.2 The parties have stipulated that there is no dispute of

material fact and have filed cross-motions for summary judgment. For the reasons

that follow, Plaintiffs’ motion for summary judgment is generally denied, except to

the extent that the Court concludes that certain assessments were collected

unlawfully and leaves open the possibility of recovery.

                               I. BACKGROUND

      Defendant the Delaware Manufactured Home Relocation Authority (the

“Authority” or “DMHRA”) has collected a monthly assessment of $3 per rented

manufactured home lot in Delaware pursuant to a resolution adopted by its board

(the “Board”) on February 19, 2004.3 The assessments have been deposited in the

Delaware Manufactured Home Relocation Trust Fund (the “Trust Fund”), an

account maintained by Defendant the Division of Revenue of the Delaware

Department of Finance (the “Division of Revenue,” and collectively with

2
  Verified Class Action Compl. (“Compl.” or the “Complaint”) ¶¶ A-F. Plaintiffs
appear to have narrowed their request after a legislative amendment of April 8,
2014, discussed infra.
3
  Stipulation of Facts (“Stip.”) ¶¶ 1, 8 (Dec. 31, 2013). Collection began as of
April 1, 2004. Landlords and tenants have split the $3 assessment equally.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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DMHRA, the “Defendants”).4 Plaintiffs are landlords and tenants who have paid

the monthly assessments.5

      The General Assembly established DMHRA in 2003 “to provide financial

assistance to tenants and landlords in manufactured home communities who may

be required to relocate, abandon, or remove manufactured homes under a variety of

circumstances.”6 This financial assistance comes from the assessments Defendants

collect and hold in the Trust Fund. The parties do not dispute that, at least before

February 1, 2006, 25 Del. C. § 7012(f)(1) gave DMHRA the power to collect and

change the amount of the monthly assessments:

      The board of directors of the Authority shall set a $3.00 monthly
      assessment for deposit in the Trust Fund for each rented lot in a
      manufactured home community. The board may adjust, eliminate or
      reinstate the assessment, and shall notify landlords and tenants of each
      adjustment, elimination or reinstatement [pursuant to board

4
  Stip. ¶ 1. For convenience, the Court focuses its discussion on collection by
DMHRA, although it acknowledges Plaintiffs’ argument that the Division of
Revenue is involved by holding these monies.
5
  See Stip. ¶¶ 2-5. This action seeks relief for a class consisting of landlords and
tenants, but the Court does not address class certification issues here.
6
  Stip. ¶ 1. Plaintiffs contend that it is difficult for landlords and tenants to obtain
these benefits. See Pls.’ Answering Br. in Resp. to Defs.’ Mot. for Summ. J.
(“Pls.’ Answering Br.”) 2 & n.2.
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Home Relocation Authority
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      regulations]. If the board does not adopt an adjusted assessment on or
      before January 31, 2006, the board shall eliminate the fee in its
      entirety.7

      The Board established the $3 assessment at a meeting on February 19,

2004.8 At all times relevant to the litigation, the nine-member Board9 needed a

75% majority of votes to “‘adjust, eliminate, or reinstate the Trust Fund

assessment.’”10 The implementing legislation provided that the Authority and the

Board may “[s]ue or be sued,”11 but also granted them immunity from a “civil

cause of action of any nature . . . for any act or omission in the performance of

powers and duties under this subchapter unless the act or omission complained of

was done in bad faith or with gross or wanton negligence.”12

7
   Stip. ¶ 10 (quoting 25 Del. C. § 7012(f)(1) as it existed before an April 2014
amendment). The language in brackets is missing from the Stipulation of Facts but
appears in Defendants’ briefs and the current Delaware Code.
8
  Public notice was given for this meeting. See Stipulated Rs. Exs. (“Stip. R.”) Ex.
A, at DMHRA-1.
9
  Stip. ¶ 9.
10
   Stip. ¶ 11 (quoting 25 Del. C. § 7011(c)(3)). An October 11, 2011, amendment
of the statute reduced the number of board members from nine to five and required
a three of five majority to take these actions. Stip. ¶ 11 & n.2.
11
   25 Del. C. § 7011(d)(1).
12
   25 Del. C. § 7011(b)(3).
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Home Relocation Authority
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December 31, 2014
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      DMHRA has consistently collected the $3 assessment. It has also made

various expenditures, including relocation benefits and administrative costs.13 As

of January 31, 2006, the Trust Fund reported a balance of $843,057.17.14 At

1:19 p.m. on the same day, DMHRA’s administrative assistant, Leslie Bird, sent an

email to the members of the Board asking each to “‘respond as a vote wether [sic]

you approve the reinstatement of the fee.’”15 By 2:33 p.m., five members of the

Board had voted by email to approve.16 The last of the nine approvals came in at

5:15 p.m.17 The parties agree that all nine members of the Board voted in favor of

reinstating the fee on January 31, 2006.18 They also agree that, with respect to the

January 31 vote, there was no public notice of a meeting, no public meeting, no

record in the form of minutes, and no subsequent notice of the contested Board

13
   See, e.g., Pls.’ Opening Br. in Supp. of Pls.’ Mot. for Summ. J. (“Pls.’ Opening
Br.”) Ex. A, at 4.
14
   Stip. R. Ex. K, at DMHRA-511.
15
   Stip. ¶ 12 (quoting Bird’s email). The email is attached at Exhibit D to the
Stipulation of Facts.
16
   Stip. ¶ 15.
17
   Stip. ¶ 19.
18
   Stip. ¶ 24 & n.3. Plaintiffs attempt to challenge the evidence of this vote, Pls.’
Answering Br. 11, but the Court will abide by the stipulation.
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Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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actions to any landlords or tenants.19 The extent of deliberation involved in the

Board’s vote is unclear.   Meeting minutes show that the Board had hired an

actuarial consultant in the months before the vote.20 Yet while the Board’s Actuary

Committee had “no report” at the January 11, 2006, meeting,21 the Board

considered holding “an informal meeting to discuss increasing the collected fee to

19
   Stip. ¶¶ 20-23.
20
   See Stip. R. Ex. J, at DMHRA-13-14 (noting suggested changes in a contract
with TowersPerrin and concern that “maximum payout amounts could change over
time because fewer relocations means a higher cap rate”); DMHRA-25 (“[Actuary]
Committee Chairman Bill Reed reported that he has spoken with a professor at the
University of Delaware regarding the actuarial analysis. Mr. Reed wants to meet
with the other members of the committee . . . before presenting a report to the
Authority.”); DMHRA-26 (indicating distribution of a Trust Fund account
summary, review of a financial report, and review of benefit requests); DMHRA-
40-41 (recording a vote for an actuarial consultant); DMHRA-44 (indicating
approval of a letter agreement to hire the actuarial consultant); DMHRA-51-52
(reflecting concerns with the actuarial consultant’s report and contact with a
second professional for an independent report); DMHRA-55 (noting a request for
feedback on the actuarial consultant’s revised report and that “payment should be
withheld until such a time the Board feels the [actuarial consultant’s] work has
been satisfactorily completed”); DMHRA-58 (“[The actuarial consultant] was
present to answer questions regarding his report.”).
21
   Id. at DMHRA-60 (“There was no report of the Actuary Committee.”).
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Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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$5 or $6 over time” at its meeting held shortly after the email vote.22 The Board

officially mustered the requisite votes to recommend increasing the assessment to

$4 at a June 2008 meeting,23 but neither the General Assembly nor the Board has

actually changed the assessment from the original $3 amount.24

      The Trust Fund had a balance of $6,093,948.57 and had paid out

$572,714.59 in relocation benefits and $940,615.98 in administration and overhead

costs as of October 2013.25    Financial summaries indicate that no relocation

benefits have been paid since 2009,26 but the Trust Fund provides insurance value

and has been authorized to cover some arbitration fees since June 2013.27 In July

2013, the General Assembly voted to (1) raise the cap on the Trust Fund from $10

22
   The directors planned to hold the informal meeting in late March, after which
they hoped to finalize a recommendation by May 31 and subsequently schedule a
public hearing “with proper notice.” Id. at DMHRA-62.
23
   Id. at DMHRA-156-57 (June 10, 2008 minutes).
24
   See, e.g., Pls.’ Opening Br. 7; Defs.’ Answering Br. in Opp’n to Pls.’ Mot. for
Summ. J. (“Defs.’ Answering Br.”) 12.
25
   Pls.’ Opening Br. Ex. A, at 1.
26
   See Stip. R. Ex. K, at DMHRA-1216, 1502, 1773; Pls.’ Opening Br. Ex. A, at 1.
27
   The provision about arbitration payments can be found at 25 Del. C. § 7043(c)
and is currently in effect. See Supplemental Transmittal Aff. of Scott W. Perkins
(“Supplemental Perkins Aff.”) Ex. E, at 5-6 (discussing arbitration invoices).
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Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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million to $15 million and (2) extend the Trust Fund’s term from July 1, 2014, to

July 1, 2019.28 Pursuant to an April 8, 2014, amendment, 25 Del. C. § 7012(f)(1)’s

final sentence (regarding elimination of the fee absent an adjusted assessment) was

removed.29 The synopsis of the amending bill states that the General Assembly

removed the sentence because “[t]he Authority having complied with the

requirement, the sentence is no longer relevant.”30

      Plaintiffs filed this action on May 6, 2013.          There is no evidence that

Plaintiffs complained about the assessments before then.31 To promote efficient

resolution, the parties agreed “to bifurcate the substantive merits of the claims

stated by the Plaintiffs’ Complaint . . . from the issues of class certification . . . and

what remedies are available to the class,” if applicable.32           The parties have

28
    Transmittal Aff. of Scott W. Perkins (“Perkins Aff.”) Ex. D (showing
amendments to 25 Del. C. § 7012, approved July 31, 2013).
29
   Supplemental Perkins Aff. Ex. F (showing the amendment and approval date).
Plaintiffs do not ask for the assessments collected after this date, presumably
because the legislation authorized collection of those assessments.
30
   Id. Ex. G (synopsis of House Bill 233). The synopsis presumably refers to the
Board’s voting effort of January 31, 2006.
31
   Stip. ¶ 25.
32
   Stipulation and Order ¶ 1 (Nov. 13, 2013).
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Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
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submitted a stipulated record and cross-motions for summary judgment on the

merits of the claims. In addition, Plaintiffs have filed a motion in limine to exclude

certain evidence on the grounds of relevance, confusion, and undue prejudice.33

                                II. CONTENTIONS

      Plaintiffs contend that Defendants’ continued collection of the monthly

assessments from February 1, 2006, to April 8, 2014, fell beyond their statutory

mandate and that the money should be returned.34 They argue that the Board acted

unlawfully, not only by maintaining the dollar amount of the assessment without

meaningful analysis, but also by disregarding the Freedom of Information Act

(“FOIA”) requirements for public bodies and the requirement for notice of fee-

related actions in 25 Del. C. § 7012(f)(1). They read the implementing legislation

to mean that DMHRA would lose the power to collect any assessments in the

33
   Specifically, Plaintiffs object to “correspondence from Glasgow Court
Enterprises . . . relating to a potential, not actual, change-in-use” of a portion of its
manufactured housing community, invoking Delaware Uniform Rules of Evidence,
Rules 401, 402, and 403. Pls.’ Mot. in Limine ¶¶ 1-3.
34
   Pls.’ Answering Br. 23-24.
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future35 unless the Board changed the monthly assessment to an amount other than

$3 before February 1, 2006.36 They ask for strict construction of DMHRA’s

statutory authority and claim that theirs is the clear and unambiguous

interpretation, giving effect to all parts of the statute and its mandatory language.

They further allege unjust enrichment and seek a constructive trust for the disputed

amounts collected.37

      Defendants, on the other hand, argue that the Board complied with 25 Del.
C. § 7012(f)(1) on January 31, 2006, because the Board made a reasoned decision

to maintain the level of the assessment under the then-present circumstances.38

They explain that their interpretation of the requirement to adopt an adjusted

assessment (and the consequences of failing to do so) is correct by invoking the

plain language of the statute, legislative intent, a holistic reading, and subsequent

35
   Id. at 17-20.
36
   Pls.’ Opening Br. 13.
37
   Id. at 16. The Court will not decide the issue of remedies at this time.
38
   Defs.’ Answering Br. 17-18.
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legislative acts.39 They also argue that Plaintiffs’ real complaint lies in the acts (or

lack thereof) taken on or around January 31, 2006.40 As such, immunity, the three-

year statute of limitations prescribed by 10 Del C. § 8106(a), the six-month statute

of limitations for FOIA violations set by 29 Del. C. § 10005(a), and laches bar

Plaintiffs’ claims.41

      In response to Defendants’ affirmative defenses of immunity and statutes of

limitations,42 Plaintiffs attempt to frame the dispute as one about continuing,

unlawful collections.43 Plaintiffs assert that immunity does not prevent recovery

39
   Defs.’ Opening Br. in Supp. of Their Mot. for Summ. J. (“Defs.’ Opening Br.”)
18-22.
40
   Defs.’ Reply Br. in Further Supp. of Their Mot. for Summ. J. (“Defs.’ Reply
Br.”) 21 n.8 (“To the extent a harm occurred, it happened within a reasonable time
after January 31, 2006, when the Authority allegedly failed to eliminate the
assessment.”).
41
   While their arguments focus on DMHRA, Defendants note that the Division of
Revenue should not be liable, either, as it only holds the deposited funds. Defs.’
Opening Br. 12 n.4.
42
   Defendants observe that Plaintiffs do not address the laches defense. Defs.’
Reply Br. 17. Perhaps the laches arguments fall within the realm of Plaintiffs’
contentions of running accounts and continuing collection, but the Court does not
reach this issue. See infra note 82.
43
   See, e.g., Pls.’ Answering Br. 23-24 (“The ‘act or omission’ for which the
Plaintiffs seek relief here is not whatever action the Authority’s Board may have
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C.A. No. 8528-VCN
December 31, 2014
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because they are only asking for disgorgement rather than seeking to hold

DMHRA and its Board liable for damages, Defendants were not acting within their

authority granted by the statute, and the Board acted with bad faith or gross or

wanton negligence.44 Plaintiffs further explain that their seven-year delay is not a

bar because the violation is continued unlawful collection,45 they more recently

became aware of the injustices in collection and use of the assessments,46 they

cannot be penalized for the Board’s concealment of its wrongdoing, 47 and a mutual

running account is not subject to the three-year statute of limitations.48 “At the

very worst,” Plaintiffs ask the Court to grant relief extending back to three years

before the date the Complaint was filed.49

taken or failed to take on January 31, 2006, but rather, the Defendants’ continuing
collection of Trust Fund assessments after January 31, 2006.”).
44
   Id. at 22-28.
45
   See Pls.’ Reply Br. in Supp. of Their Mot. for Summ. J. (“Pls.’ Reply Br.”) 17.
46
   Pls.’ Answering Br. 8.
47
   Id. at 29-30.
48
   See id. at 31 (invoking 10 Del. C. § 8108).
49
   Id. at 32 n.60.
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                                  III. ANALYSIS

A. The Summary Judgment Standard

      To succeed on a motion for summary judgment, the moving party bears the

burden of showing, through “the pleadings, depositions, answers to interrogatories

and admissions on file, together with the affidavits, if any, . . . that there is no

genuine issue as to any material fact and that [it] is entitled to a judgment as a

matter of law.”50 The Court views the evidence, presented in compliance with

Rule 56, in the light most favorable to the non-moving party.51 When the parties

agree to present cross-motions for summary judgment based on an absence of

dispute over any fact material to either motion,52 “the Court shall deem the motions

50
   Ct. Ch. R. 56(c).
51
   Graven v. Lucero, 2013 WL 6797566, at *2 (Del. Ch. Dec. 20, 2013).
52
    While the parties disagree on various facts and inferences, both maintain that
the matter can be resolved on summary judgment. See, e.g., Pls.’ Reply Br. 8
(“The Plaintiffs respectfully submit that . . . there is no genuine issue as to any
material fact . . . .”); Defs.’ Reply Br. 9 (“Plaintiffs do not contend that there are
any disputes of material fact that would preclude the Court from ruling on
Defendants’ Motion for Summary Judgment.”).
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to be the equivalent of a stipulation for decision on the merits based on the record

submitted with the motions.”53

B. Statutory Construction and the Nature of the Alleged Wrong

      The threshold question for the Court is what 25 Del. C. § 7012(f)(1) required

of DMHRA and the Board. Plaintiffs assert that Defendants acted outside their

powers because they continued to collect assessments after the Board did not

adjust or eliminate the assessment (or provide relevant notice of any adjusted

assessment) as required under a plain-meaning interpretation of the statute and

supported by a debate in the House of Representatives.54 Defendants emphasize

legislative intent and reasonableness in support of their theory that the Board did

53
  Ct. Ch. R. 56(h).
54
  See Pls.’ Reply Br. Ex. A (excerpted transcript of the May 8, 2003, House Floor
Debate). The debate suggests that the General Assembly intended a literal reading
of the adjustment requirement:
        Representative Greg Lavelle: “So they could adjust it to $2.99, and it
        could live on?”
        Representative Donna Stone: “Yes.”
        Representative Greg Lavelle: “But if they leave it at $3.00 it goes
        away? You’re forcing them, essentially this is an important issue,
        which I don’t deny it is, you’re forcing them to adjust it.”
        Representative Donna Stone: “Yes.”
Id. at 2.
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adopt an adjusted assessment on January 31, 2006 (or at least could have lawfully

continued to collect future assessments). The Court’s job is to “determine and give

effect to legislative intent” when interpreting statutes.55 Under Delaware law, “[i]t

is well settled that statutory language is to be given its plain meaning and that

when a statute is clear and unambiguous there is no need for statutory

interpretation.”56   If there is ambiguity in the text itself, however, the Court

interprets the statute in a manner “that will promote its apparent purpose and

harmonize with other statutes.”57

      Here, the Court’s statutory construction exercise begins and ends with a

plain-meaning analysis. The statute stated that “[i]f the board does not adopt an

adjusted assessment . . . , the board shall eliminate the fee.” The Court finds the

language clear for the purposes of this dispute.58 Defendants observe that “[h]ad

55
   Eliason v. Englehart, 733 A.2d 944, 946 (Del. 1999).
56
   See State v. Skinner, 632 A.2d 82, 85 (Del. 1993); see also 2A Norman Singer &
Shambie Singer, Sutherland Statutory Construction § 45:2 (7th ed. 2014).
57
   Eliason, 733 A.2d at 946.
58
   Plaintiffs’ motion in limine directed at excluding evidence about a potential
change in use of part of a manufactured home community, thus, is mooted to the
extent that the Court interprets the statute by its plain meaning and does not reach
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the General Assembly intended to divest the Authority of the power to take some

act, it knew how to do so in clear and unequivocal language.”59 The Court agrees.

The statute was not self-cancelling and did not strip the Board of continued power

to act. In fact, the Board had a duty to eliminate the fee (in other words, act) if it

did not adopt an adjusted assessment before or on January 31. Failure to do both

would constitute a breach of duty by the Board and result in unlawful action by

Defendants.60

      The next question is whether the Board complied with its statutory mandate.

Plaintiffs argue that the Board failed to adopt an adjusted assessment because it did

not (1) change or minimally evaluate the assessment amount, (2) officially act

pursuant to FOIA, and (3) send notice of any adjusted assessment to affected

the issue of sufficiency of benefits. Correspondence from 2014 indicating that a
specific entity intends to make changes triggering eligibility for benefits does not
factor into the Court’s analysis of the Board’s statutory responsibilities or unjust
enrichment.
59
   Defs.’ Answering Br. 20.
60
   This plain language construction is not inconsistent with the language in 25 Del.
C. § 7001(a) that “[t]his subchapter must be liberally construed and applied to
promote its underlying purposes and policies.” Furthermore, the Court does not
look to recent legislative acts affecting the Trust Fund and the Board to construe
the statute as it existed during the time of the contested actions.
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parties. The Board could adopt an adjusted assessment by a 75% majority vote

according to 25 Del. C. § 7011(c)(3). Implicit in this provision is that directors

must consider their positions and come to an agreement representing the official

decision of the Board.61 Furthermore, DMHRA is a public body subject to FOIA.62

Thus, generally speaking, the Board needs to hold public meetings,63 for which

advance notice is given to the public64 and minutes are maintained.65

61
   Cf. Liberis v Europa Cruises Corp., 1996 WL 73567, at *6 (Del. Ch. Feb. 8,
1996) (“[P]olling board members does not constitute a valid meeting or effective
corporate action.”), supplemented, 1997 33177194 (Del. Ch. Aug. 20, 1997), aff’d,
702 A.2d 926 (Del. 1997) (TABLE); Cellular Info. Sys., Inc. v. Broz, 663 A.2d
1180, 1186 (Del. Ch. 1995) (“[I]t is an old rule that boards may act with legal
effect only at duly convened meetings at which a quorum is present.” (citing
Robert C. Clark, Corporate Law 110-12 (1986))), rev’d on other grounds, 673
A.2d 148 (Del. 1996).
62
   See 25 Del. C. § 7011(b)(4) (“Meetings of the board of directors of the Authority
are subject to the provisions of the Freedom of Information Act, Chapter 100 of
Title 29.”).
63
   See 29 Del. C. § 10004 (requiring that, excluding certain statutory exceptions,
“every meeting of all public bodies . . . be open to the public”); see also 29 Del. C.
§ 10001 (“It is vital in a democratic society that public business be performed in an
open and public manner so that our citizens shall have the opportunity to observe
the performance of public officials and to monitor the decisions that are made by
such officials . . . .”).
64
   29 Del. C. § 10004(e).
65
   29 Del. C. § 10004(f).
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      The parties do not dispute that FOIA applies to meetings of the Board and

that the Board did not hold a formal public meeting on January 31, 2006.

However, FOIA claims are barred by a six-month statute of limitations, and the

Court cannot void the Board’s actions on those grounds.66 Yet even independently

of FOIA, the Board did not meet the statutory mandate to adopt an adjusted

assessment.   The Court does not decide whether the Board needed to gather

physically and vote,67 but it observes that there was no meaningful opportunity for

the members of the Board to exchange opinions on the specific topic of whether

each “approve[d] the reinstatement of the fee” prior to the individual votes.

Defendants offer no basis to conclude that the unanimous email vote met the

requirements for a meeting and board act other than the unavailing assertion that

“the Authority repeatedly and extensively considered the issue, in public, and with

66
  See 29 Del. C. § 10005(a).
67
   See 25 Del. C. § 7011(b)(4) (“All meetings must be conducted at a central
location in the State, unless agreed to for a given meeting by at least 3 of the 5
board members.”). As of January 2006, the statute required agreement by 75% of
the members.
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the assistance of appropriate experts” before that day.68 Thus, the Board did not

effectively act to adopt an adjusted assessment on or before January 31, 2006.69

Whether the statutory language required the Board to change the assessment to an

amount other than $3 or merely to adopt an assessment appropriate to the

circumstances is inconsequential.     Plaintiffs have shown that the Board did

neither.70

       There is also no evidence that the Board officially acted to eliminate the $3

assessment on or around February 1, 2006.71 The General Assembly could have

drafted 25 Del. C. § 7012(f)(1) to say that the power to collect assessments would

automatically end absent an adjustment on or before January 31, but it did not.

Instead, the statute required the Board to eliminate the assessment. The underlying

wrong may have been the Board’s breach of duty by failing to eliminate the

68
   Defs.’ Reply Br. 5.
69
   Evidence of deliberation after January 31 is not helpful in assessing the Board’s
actions through this date.
70
   Accordingly, the Court need not reach the arguments about lack of subsequent
notice.
71
   It follows that there is no evidence that the Board officially reinstated an
eliminated assessment.
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assessment shortly after the statutory deadline, but each subsequent collection

without Board action to eliminate the fee separately violated 25 Del. C.

§ 7012(f)(1). Plaintiffs have thus shown that Defendants did not rightfully collect

the assessments between February 1, 2006, and April 8, 2014.

C. Affirmative Defenses

      Because the Board did not perform the acts with which it was charged by

statute, the next question for the Court is whether any of Defendants’ affirmative

defenses bars Plaintiffs’ recovery. Defendants focus on the affirmative defenses of

immunity, statutes of limitations, and laches in their briefs.72

      Defendants first contend that Plaintiffs cannot recover any damages because

this is a civil suit against DMHRA for acts within the scope of the Board’s duties,

and Defendants have the benefit of statutory immunity. While DMHRA and its

board may be sued under 25 Del. C. § 7011(d)(1), Subsection (b)(3) protects them

from civil liability and civil causes of action “of any nature . . . for any act or

72
  Defendants raised additional affirmative defenses in their answer to the
Complaint, but did not focus on these defenses in their briefing on the pending
motion.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 21

omission in the performance of powers and duties under this subchapter unless the

act or omission complained of was done in bad faith or with gross or wanton

negligence.”73 Bad faith, analogizing from the corporate law context, includes “not

only an intent to harm but also intentional dereliction of duty.”74 Gross negligence

requires “‘an extreme departure from the ordinary standard of care,’”75 and wanton

behavior requires “‘conscious indifference’ or [an] ‘I-don’t-care’ attitude.”76

      Plaintiffs, in their answering brief, explain that immunity does not apply

because (1) this is an action seeking disgorgement of Plaintiffs’ money to Plaintiffs

rather than seeking to hold the Authority or the Board liable for damages,

(2) Defendants’ continued collection was not “in the performance of powers and

duties” under the statute, and (3) the Board at least knowingly violated its statutory

73
   25 Del. C. § 7011(b)(3). Plaintiffs observe that 25 Del. C. § 7011(b)(3) does not
give the Division of Revenue immunity, Pls.’ Answering Br. 22 n.39, but the Court
will not require the Division of Revenue to disgorge monies that it finds no basis to
require DMHRA to return.
74
   Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 240 (Del. 2009).
75
   Browne v. Robb, 583 A.2d 949, 953 (Del. 1990) (quoting W. Prosser, Handbook
of the Law of Torts 150 (2d ed. 1955)).
76
   Foster v. Shropshire, 375 A.2d 458, 461 (Del. 1977) (citing McHugh v. Brown,
125 A.2d 583, 586 (Del. 1956)).
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 22

mandate by arranging a hasty email vote and withholding subsequent notice from

Plaintiffs.77 To begin, the statutory grant of immunity is worded broadly. The

Court, therefore, cannot meaningfully separate a suit seeking return of monies

collected by DMHRA and one seeking recovery against DMHRA for illegal

assessments, both of which would be paid from the Trust Fund pool.78 In other

words, this is at heart a civil cause of action against DMHRA to recover money.

77
   See Pls.’ Answering Br. 22-28. Defendants emphasize that Plaintiffs failed to
address the immunity arguments in an amended complaint, Defs.’ Opening Br. 13
n.5, or even their opening brief. Defs.’ Answering Br. 15 & n.5 (observing that
“[t]he words ‘bad,’ ‘faith,’ ‘gross,’ ‘wanton’ or ‘negligence’ do not appear in
Plaintiffs’ Opening Brief”). Plaintiffs’ responses might not have been prompt, but
Defendants should have known that such answers were necessary, and the Court
considered them at oral argument.
78
   This is not a case of a plaintiff who seeks return of her own property from an
account holding that property for her in trust. Cf. Taylor v. Westly, 402 F.3d 924,
932 (9th Cir. 2005) (“The State of California’s sovereign immunity applies to the
state’s money. Money that the state holds in custody for the benefit of private
individuals is not the state’s money, any more than towed cars are the state’s
cars.”). While 25 Del. C. § 7012 collects money for the class and requires its
return, the money is being held in state coffers primarily for public use. No
individual is entitled to the precise amount that she contributed to the trust fund,
and the likelihood of such matching is extremely low. See 25 Del. C. § 7012(e)
(distributing the funds, “[i]f the Trust Fund ceases to exist,” to landlords and
tenants who have rented or occupied qualifying lots “for at least the 12 months
immediately prior to the time of the dissolution”).
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 23

Secondly, as discussed above, the Board violated its duties through an (ongoing)

failure to eliminate the assessment—an omission in the performance of its statutory

duties.   Because the assessments were not self-eliminating, Defendants were

technically acting within their powers under the law by continuing to collect them.

      Plaintiffs lastly contend that Defendants’ conduct demonstrated bad faith or

gross or wanton negligence.      Generally speaking, the record shows that the

members of the Board, serving without pay79 and holding regular meetings before

January 31, 2006,80 attempted to comply (and appear to have believed that they had

complied) with their duties by responding promptly to Leslie Bird’s

correspondence.81 They were mistaken, but the record does not contain evidence

of their improper motives or extreme lack of care in so believing—at least until

Plaintiffs filed the Complaint. Once the Complaint focused Defendants’ attention

on deficiencies in the Board’s conduct, the alleged shortcomings might have been

79
   25 Del. C. § 7011(b)(2).
80
   See, e.g., Stip. R. Ex. J, at DMHRA-51, 55, 58, 60.
81
   This does not appear to be the first time email votes occurred. See id. at
DMHRA 46-48. Additionally, the Court does not find that the Board knowingly or
intentionally concealed information and records related to the January 31, 2006
vote.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 24

so clear that continuing to collect the assessment in normal course qualified as

conscious indifference.    In fact, because immunity generally applies to bar

recovery of damages from Defendants, Plaintiffs’ primary recourse was to file suit

to compel the Board to eliminate the assessment. However, the parties did not

anticipate that the case would evolve in this manner and did not address this line of

reasoning in their briefs. The Court did not raise the potential difference between

the pre- and post-filing periods during oral argument, either. The parties should

address the issue to make briefing complete, and the Court declines to resolve the

immunity defense without providing the parties fair opportunity to present their

arguments.82

82
   Because immunity is potentially dispositive, the Court does not analyze the
remaining affirmative defenses of laches and the three-year statute of limitations
(including arguments related to a February 19, 2014, mandatory injunction order,
Del. Manufactured Home Relocation Auth. v. N. Chesapeake Mgmt., LLC, C.A.
No. 8449 (Del. Ch. Feb. 19, 2014) (ORDER)) at this point.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 25

D. Unjust Enrichment

      Plaintiffs assert that DMHRA has been unjustly enriched by collecting

assessments unlawfully and using them to fund administrative expenses.

Defendants argue that Plaintiffs have not established the elements for an unjust

enrichment claim, for one because the assessments are held in trust for Plaintiffs’

benefit.83 To establish a claim for unjust enrichment, one must show “(1) an

enrichment, (2) an impoverishment, (3) a relation between the enrichment and

impoverishment, (4) the absence of justification, and (5) the absence of a remedy

provided by law.”84 With respect to the first prong, Plaintiffs allege that the

Authority has been enriched by collecting more than it can legitimately (and

actually does) spend to benefit landlords and tenants.85 However, even if the

Authority’s financial reports paint a somewhat bleak picture, the General

Assembly created the Trust Fund to assist landlords and tenants; the money in the

83
   See, e.g., Defs.’ Answering Br. 27. Plaintiffs do not explain how they meet each
element until their Reply Brief. Compare Pls.’ Reply Br. 19-22, with Pls.’
Opening Br. 15-16, and Pls.’ Answering Br. 23 n.40, 31 n.59. The Court includes
this analysis for thoroughness.
84
   Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).
85
   Pls.’ Reply Br. 20-21.
Ridgewood Manor II, Inc. v. The Delaware Manufactured
Home Relocation Authority
C.A. No. 8528-VCN
December 31, 2014
Page 26

Trust Fund ultimately will be returned to landlords and tenants as classes (or

support the seemingly inevitable cost of administration);86 and Plaintiffs have not

shown evidence of abusive spending. Thus, Defendants have not been unjustly

enriched.

                               IV. CONCLUSION

         For the reasons stated above, Defendants’ motion for summary judgment is

granted except for the possibility that Plaintiffs are entitled to some measure of

recovery for the assessments collected between the date they filed the

Complaint and April 8, 2014. Plaintiffs’ motion for summary judgment is granted

as to the failure of the Board “to adopt an adjusted assessment on or before

January 31, 2006,” or eliminate the fee, but it is otherwise denied.

         IT IS SO ORDERED.
                                       Very truly yours,

                                       /s/ John W. Noble
JWN/cap
cc: Register in Chancery-K

86
     25 Del. C. § 7012(e).