Court Opinion

ID: 9927681
Source: CourtListenerOpinion
Date Created: 2024-01-29 19:03:24.767847+00
Date Added: 2024-06-11T09:24:14.410549
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

1205 COASTAL, LLC, a Delaware )
limited liability company,    )
                              )
Plaintiff,                    )
                              )
                              )           C.A. No. S22C-07-002 CAK
    v.                        )
                              )
                              )
COVE OWNERS ASSOCIATION, )
INC., a Delaware corporation, )
                              )
       Defendant.             )

                         Submitted: January 10, 2024
                          Decided: January 29, 2024

                  Upon Cross-Motions for Summary Judgment

   DEFENDANT’S MOTION FOR SUMMARY JUDGMENT GRANTED
    PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT DENIED

                 MEMORANDUM OPINION AND ORDER
Richard E. Berl, Jr., Esquire, Hudson Jones Jaywork & Fisher, LLC, 34382
Carpenter’s Way, Suite 3, Lewes, DE 19958, Attorney for Plaintiff.

Aaron E. Moore, Esquire and M. Claire McCudden, Esquire, Marshall Dennehey,
P.C., 1007 North Orange Street, Suite 600, P.O. Box 8888, Wilmington, DE 19899-
8888, Attorneys for Defendant.

KARSNITZ, R. J.
    I.       FACTS AND COURT OF COMMON PLEAS LITIGATION

         Plaintiff 1205 Coastal, LLC, a Delaware limited liability company (“Plaintiff”

or “1205 Coastal”) is the former owner of Unit 300 (the “Property”) in the Cove

Condominium in Dewey Beach, Delaware (the “Cove”). Defendant Cove Owners’

Association, Inc., a Delaware corporation (“Defendant” or “Cove Owners”) is the

condominium association for the Cove. On January 25, 2019, Cove Owners filed a

complaint against 1205 Coastal in the Court of Common Pleas seeking unpaid

assessments arising from 2017 capital improvements and 1205 Coastal’ s share of flood

insurance premiums.1 Trial was held on December 3, 2021. On February 24, 2022,

the Court of Common Pleas decided in favor of Cove Owners and awarded past due

assessments plus interest.2 In its Opinion, the Court stated as follows:

             [Cove Owners] has established by a preponderance of the
             evidence that [1205 Coastal] owes [Cove Owners]
             $32,016.00 as its unpaid proportionate share of the capital
             improvement, plus late fees of $950.00, and interest thereon
             from the original date of assessment.3

                                         ***

             The Court finds from the evidence that [1205 Coastal] has
             failed to pay [Cove Owners] $23,452.92 in flood insurance
             premiums and late fees accrued thereon.4

1
  Cove Owners Association, Inc. v. 1205 Coastal, LLC, No. CPU6-19-000104.
2
  See Decision After Trial dated February 24, 2022 at p. 2.
3
  Id. at p. 5.
4
  Id. at p. 7
                                            2
                                             ***

                 [Cove Owners] is entitled to reasonable attorneys’ fees
                 incurred in the obtainment and collection of this judgment.5

                                             ***

                 Judgment is entered in favor of [Cove Owners] and against
                 [1205 Coastal] in the amount of $56,418.92, plus pre-
                 judgment and post-judgment interest at the legal rate from
                 October 1, 2018, plus reasonable attorneys’ fees to be
                 determined by the Court. [Cove Owners] shall submit an
                 affidavit of reasonable attorneys’ fees within twenty-one
                 (21) days of this Order; [1205 Coastal] shall have fourteen
                 (14) days to file any response to the affidavit.6

         1205 Coastal had asserted a counterclaim against Cove Owners. Regarding

this counterclaim, the Court concluded as follows:

                 Inasmuch as [Cove Owners] has clearly established its claims
                 regarding the loan and flood insurance assessments, and
                 [1205 Coastal] has offered no evidence of any other alleged
                 over-charged assessments, the Court finds against [1205
                 Coastal] on its Counterclaim.7

         On March 17, 2022, counsel for Cove Owners filed an Affidavit of Attorneys’

Fees which stated in part as follows:

                 During the three (3) years in bringing this matter to trial to
                 collect on the overdue assessments and insurance premiums
                 owed by [1205 Coastal], [Cove Owners] incurred $495.85
                 in costs, expenses and filing fees, $25,019.50 in attorneys’
                 fees and an additional $3,940.00 in professional staff fees,

5
  Id. at p. 8.
6
  Id.
7
  Id.
                                                3
             totaling $29,455.35, as of March 17, 2022.8

    The principal amount claimed to be due by Cove Owners, including the award of the

    Court and attorneys’ fees and costs as of that date, was $85,874.27. That amount,

    however, did not include interest awarded by the court and as accrued after trial.

         1205 Coastal sought to sell the Property to Skarda Dewey, LLC (“Skarda”),

so it requested a payoff letter from Cove Owners. On May 9, 2022, counsel for Cove

Owners sent counsel for 1205 Coastal a letter reflecting an updated payoff amount

for the Property, including amounts awarded by the Court of Common Pleas, interest

accrued to date, and attorneys’ fees and costs to date. The amount of attorneys’ fees

and costs as reflected in the letter was $30,743.59. The total amount owed reflected

in the letter was $103,024.56.9

         On May 16, 2022, 1205 Coastal sold the Property to Skarda. On that date,

    1205 Coastal sent Cove Owners a check in the amount of $72,280.97. The check

    stub included the comment: “Assessment Lien Payoff.” Three days later, counsel

    for Cove Owners returned the check to counsel for 1205 Coastal, because “it [did]

    not represent the full payoff amount sent to [counsel for 1205 Coastal].”10

        On May 23, 2022, counsel for 1205 Coastal sent counsel for Cove Owners a

8
  See Affidavit of Attorneys’ Fees filed by Robert J. Valihura, Jr., Esquire, a t ¶ 5 .
9
 See letter from Robert J. Valihura, Esquire dated May 9, 2022.
10
   See letter from Robert J. Valihura, Esquire, dated May 19, 2022.
                                                4
letter claiming that 1205 Coastal was only required to pay amounts owed to Cove

Owners that were expressly set forth in liens recorded with the Recorder of Deeds

by Cove Owners.11 Counsel for 1205 sought to exclude amounts owed pursuant to

Cove Owner’s statutory lien, including amounts awarded by the Court of Common

Pleas.12

      The Settlement Statement for the Sale, at line 508, reflects the escrow of funds

for “Attorneys’ Fees for Association” in the amount of $38,429.49.

      Although it claimed a statutory lien for all amounts owed, on June 1, 2022, as

“belt and suspenders,” Cove Owners recorded a “Notice of Statement of Lien for

Unpaid Maintenance Fees and Assessments” against the Property in the amount of

$103,269.56 with the Recorder of Deeds, reflecting amounts claimed by Cove

Owners to be owed by 1205 Coastal as of May 24, 2022.

       On June 8, 2022, counsel for Cove Owners sent counsel for 1205 Coastal a

 letter demanding the amount set forth in his letter of May 9, 2022, plus $490.00 for

 recording and satisfying the lien against Unit 300, totaling $103,514.56.13 On June

 14, 2022, counsel for 1205 Coastal sent Cove Owners a check in that exact amount.

 On June 15, 2022, counsel for Cove Owners released the two recorded liens against

11
    See letter from Richard Berl, Esquire, dated May 23, 2022.
12
    Pursuant to 25 Del. C. § 81-316(a).
13
   See letter from Robert J. Valihura, Esquire, dated June 8, 2022.
                                                  5
the Property.

     Although the Court of Common Pleas determined that Cove Owners was

entitled to recover its reasonable attorneys’ fees when it issued its decision on

February 24, 2022, it did not determine the amount owed until October 4, 2022,

when it determined that Cove Owners was entitled to $24,486.10 in attorneys’ fees

and costs,22 which was $6,257.49 less than claimed by Cove Owners. Accordingly,

on August 29, 2023, Cove Owners refunded the $6,257.49 overpayment to 1205

Coastal.

     1205 Coastal did not appeal the decision of the Court of Common Pleas.

    II.    PROCEDURAL HISTORY OF THIS CASE

      Plaintiff filed a Complaint against Defendant in this Court on July 5, 2022.

The Complaint seeks four (4) types of relief.

      The first is for Declaratory Judgment. Plaintiff argues that it was entitled to

the satisfaction of the first and only recorded lien at the time it sold the Property to

Skarda. This argument does not take into account the statutory lien or interest

subsequently accrued thereon and legal fees. Under that argument, the amount

forwarded to Defendant’s attorney was more than sufficient from the sworn

statements in the lien itself to constitute complete and full satisfaction. Indeed, to the

extent the payment exceeded the amount of the lien, Defendant was obligated to

                                            6
refund the difference to Plaintiff. Therefore, Plaintiff seeks a declaration from the Court

that that Defendant should have accepted and deposited the $72,280.97 check and

thereafter should have issued a refund to Plaintiff in the amount of $34,660.57, the

difference between the check amount and the $37,620.40 recorded lien.

       The second is for damages for Defendant’s failure to mark its lien against

the Property “satisfied” upon Defendant’s receipt of the $72,280.97 check, which

was rejected by Defendant. Plaintiff claims that it is entitled to damages under 10

Del. C. §4754 as measured by the additional sums paid by Plaintiff over and above

that necessary to satisfy the lien, plus statutory penalties, and its attorneys’ fees.

Again, this argument does not take into account the statutory lien.

       The third is an equitable claim for unjust enrichment against Defendant.

Plaintiff claims that Defendant received payments over and above what was

necessary to satisfy the recorded lien and was thereby unjustly enriched without

justification. Again, this argument does not take into account the statutory lien.

       The fourth is a claim sounding in bad faith. Plaintiff argues that Defendant’s

demands, separately and through its attorneys, for additional sums beyond what was

necessary to satisfy the [recorded lien], constitute demands made in bad faith and

without any factual or legal basis. Again, this argument does not take into account the

statutory lien.

                                             7
       This case was stayed on September 2, 2022, pending the outcome of the

related case in the Court of Common Pleas, discussed above. That matter concluded

on October 4, 2022, when the Court of Common Pleas awarded legal fees and costs

to Cove Owners for successfully prosecuting that action. Defendant filed its Answer

to the Complaint in this action on November 22, 2022. Discovery concluded on July

31, 2023. Plaintiff and Defendant each filed a Motion for Summary Judgment with

Opening Briefs on August 31, 2023. On September 29, 2023, Plaintiff and Defendant

each filed an Answering Brief in opposition to the other’s Motion. On October 6,

2023, Defendant filed its Reply Brief in Support of its Motion. On October 30, 2023,

Plaintiff filed its Reply Brief in Support of its Motion. On January 4, 2024, I held

oral argument on the Motions for Summary Judgment. At oral argument I asked

counsel to address the issue of the applicability of the Delaware Uniform Common

Interest Ownership Act (“DUCIOA”)14 under 25 Del. C. § 81-122. Plaintiff and

Defendant responded by letter on January 9 and 10, respectively.15 This is my ruling

on the Motions for Summary Judgment.

14
   25 Del. C. § 81-101 et seq., specifically § 81-316.
15
   Counsel for both parties agreed that DUCIOA is applicable to this case, so I do not address that
issue herein.
                                                8
     III.   LEGAL STANDARD AND BURDEN OF PROOF

       Summary judgment is appropriate where “the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.”16 A genuine issue of material fact exists

when “the parties are in disagreement concerning the factual predicate for the legal

principles they advance.”17 The moving party bears the burden of demonstrating that

no material issues of fact are in dispute and that it is entitled to judgment as a matter

of law.18

       Once the non-moving party has been afforded the opportunity to show a

genuine issue of material fact in dispute, the burden returns to the moving party to

demonstrate the absence of such disputes.19 Disputes regarding immaterial issues of

fact will not preclude summary judgment.20 If the disputed facts could have no

bearing on the analysis or resolution of the parties' claims, then any such disputed

facts are immaterial.21 The party opposing summary judgment is “both entitled, and

16
   Super. Ct. Civ. R. 56(c).
17
   Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del.1992).
18
   Sterling v. Beneficial Nat'l Bank, N.A., Del. Super., C.A. No. 91C-12-005, Ridgely,
P.J. (Apr. 13, 1994) (Mem. Op.).
19
   Super. Ct. Civ. R. 56(e); Mann v. Oppenheimer & Co., 517 A.2d 1056, 1060 (Del. 1986).
20
   Brzoska v. Olson, 668 A.2d 1355, 1365 (Del. 1995) citing State Farm Mut. Auto. Co. v. Mundorf,
659 A.2d 215, 217 (Del.1995).
21
   See e.g., Mundorf, 659 A.2d at 217.
                                               9
expected, to come forward with admissible evidence showing the existence of a

genuine issue of material fact.”22 The Court must view the record in a light most

favorable to the non-moving party.23 However, the opposing party may not merely

assert the existence of a disputed issue of fact; the opponent of a motion for summary

judgment “must do more than simply show that there is some metaphysical doubt as

to material facts.”24 Ultimately, a motion for summary judgment “must be decided

on the record presented, and not on evidence potentially possible.”25

       The fact that there are Cross-Motions for Summary Judgment in this case does

not alter the standard of review nor do the Cross-Motions act as a per se concession

that there is an absence of factual disputes.26 The mere filing of Cross-Motions for

Summary Judgment does not serve as a waiver of a movant’s right to assert the

existence of a factual dispute as to the other party’s motion.27

       In my view, and for the reasons discussed below, the record reflects that

Defendant has borne its burden of demonstrating that there are no material issues of

22
   Mann, 517 A.2d at 1060.
23
   Hammond v. Colt Ind. Op. Corp., 565 A.2d 558, 560 (Del.Super.1989).
24
   Brzoska, 668 A.2d at 1364 quoting Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986).
25
   Rochester v. Katalan, 320 A.2d 704, 708 n. 7 (Del.1974).
26 Total Care Physicians, P.A. v. O'Hara, 798 A.2d 1043, 1050 (Del. Super. Ct. 2001).
27
   Riad v. Brandywine Valley SPCA, 2023 WL 4140774 (Del. Super. June 22, 2023).

                                             10
fact in dispute, and that it is entitled to judgment as a matter of law, with respect to

the two claims for Damages for Failure to Release Liens and Bad Faith. Plaintiff has

not demonstrated that there are genuine issues of material fact in dispute with respect

to these two claims. The other two claims, for Declaratory Judgment and Unjust

Enrichment, are dismissed for the reasons discussed below.

    IV.    ANALYSIS

      This case, at its core, pits the traditional practice of filing liens on real property

with the Recorder of Deeds against the more modern practice of creating liens on

certain types of real property (condominiums) by statute. Plaintiff seems to suggest

that, where recorded, liens on real property create in rem liability, whereas, where

statutory, liens on real property only create in personam liability. Thus, a recorded

lien could be satisfied by an action against the real property, whereas a statutory lien

would require a lawsuit against the obligor. As discussed more fully below, I find

that the statutory liens which apply to the Property in this case create both in rem

and in personam liability, and govern the outcome of the case.

           A. Declaratory Judgment

      Under Delaware’s Declaratory Judgment Act, parties to a contract can seek

declaratory judgment to determine “any question of construction or validity” and can
                                            11
seek a declaration of “rights, status or other legal relations thereunder.”28 The

Declaratory Judgment Act enables the courts to advance the stage at which a matter

traditionally would have been justiciable, allowing for the construction of a contract

before or after a breach has occurred.29 Declaratory relief is in the discretion of the

Court and not available as a matter of right.30

       Although declaratory judgment can be sought before or after a breach, it “is

intended to provide a remedy where no other remedy is available under

circumstances where an impending injury has not as yet occurred.”31 “The principal

purpose of the statute is to provide preventive justice … If, therefore, another

adequate remedy is immediately available, no purpose is served by the use of the

declaratory judgment procedure and the other remedy should be followed.”32

       Here, Plaintiff cannot seek declaratory relief because another adequate

remedy – monetary relief -- is available. Indeed, Plaintiff’s cause of action for

Damages for Failure to Release Liens is such a claim. If declaratory relief is

unavailable, I cannot render an advisory opinion on the issues raised by Plaintiff

28
   10 Del. C. § 6502.
29
   Rollins Int'l, Inc. v. Int'l Hydronics Corp., 303 A.2d 660, 662 (Del.1973); 10 Del. C. § 6503.
30
   10 Del. C. § 6506.
31
   Hampson v. State ex rel. Buckson, 233 A.2d 155, 156 (Del. 1967).
32
   Id.

                                                 12
under the Declaratory Judgment claim.

          Accordingly, I dismiss Plaintiff’s Declaratory Judgment claim.

              B. Damages for Failure to Release Lien

          Plaintiff argues that Defendant should be held liable for damages for failing

to satisfy the recorded lien. Delaware law provides:

                  (a) Every person to whom a sum is due by judgment, who
                  receives satisfaction of the same, shall forthwith cause
                  such satisfaction to be entered upon the record of the
                  judgment.
                  (b) Whoever being the holder of a judgment wilfully fails
                  to satisfy a judgment upon the record as required by
                  subsection (a) of this section, shall be fined not more than
                  $500 for each such failure.

                  (c) The Superior Court shall have jurisdiction of offenses
                  under this section.33

 Plaintiff seeks damages as measured by the additional sums paid by Plaintiff over

 and above that necessary to satisfy the recorded lien, plus statutory penalties, and

 its attorneys’ fees.34

          DUCIOA provides in pertinent part:

                  The association has a statutory lien on a unit for any
                  assessment levied against that unit or fines imposed
                  against its unit owner. Unless the declaration otherwise

33
     10 Del. C. § 4751.
34
     10 Del. C. §4754.
                                              13
               provides, fees, charges, late charges, fines, and interest
               charged … and any other sums due the association under
               the declaration, this chapter or as a result of an
               administrative or judicial decision, together with court
               costs and reasonable attorneys' fees incurred in
               attempting collection of the same, are enforceable in the
               same manner as unpaid assessments under this section.35
                                           ***
               Recording of the declaration constitutes record notice and
               perfection of the lien. No further recordation of any claim
               of lien for assessment under this section is required.36

       The Delaware Unit Property Act provides in pertinent part:

               Upon the voluntary sale or conveyance of a unit, the
               grantee shall be jointly and severally liable with the
               grantor for all unpaid assessments for common expenses
               which are a charge against the unit as of the date of the
               sale or conveyance, but such joint and several liability
               shall be without prejudice to the grantee’s right to recover
               from the grantor the amount of any such unpaid
               assessments which the grantee may pay, and until any such
               assessments are paid, they shall continue to be a charge
               against the unit which may be enforced in the manner set
               forth in § 2234 of this title. Provided, however, that any
               person who shall have entered into a written agreement to
               purchase a unit shall be entitled to obtain a written
               statement from the treasurer setting forth the amount of
               unpaid assessments charged against the unit and its
               owners and, if such statement does not reveal the full

35
   25 Del. C. § 81-316(a). See also, Bank of Am., N.A. v. Yarborough, 2020 WL 2511430, at *3
(Del. Super. Ct. May 15, 2020) (DUCIOA Section 81-316(a) gives Common Interest
Communities (“CIC”) . . . a statutorily created lien for unpaid assessments or condominium fees.).
36
   25 Del. C. § 81-316(d).

                                               14
               amount of the unpaid assessments as of the date it is
               rendered, neither the purchaser nor the unit shall be liable
               for the payment of an amount in excess of the unpaid
               assessments shown thereon. Any such excess which
               cannot be promptly collected from the former unit owner
               may be reassessed by the council as a common expense to
               be collected from all of the unit owners including the
               purchaser, the former unit owner’s heirs, personal
               representatives, successors and assigns.”37

 The Act also states that “all sums properly assessed against a unit shall constitute a

 charge against that unit and that the unit owner is personally liable for any

 assessment due ‘together with interest thereon not to exceed 18% per annum.”38

       The decision of the Court of Common Pleas expressly stated that Cove

 Owners was entitled to reasonable attorneys’ fees, although those attorneys’ fees

 were not awarded until a later date by the Court. Indeed, under the statute, the award

 of attorneys’ fees to Defendant was mandatory: “A judgment or decree in any

 action brought under this section must include costs and reasonable attorneys’ fees

 for the prevailing party.”39 Therefore, the $72, 280.97 check proffered by Plaintiff was

 properly rejected by Defendant, because, contrary to the note on the check stub, the

 payment did not constitute a full “Assessment Lien Payoff.” Rather, the assessment

37
    25 Del. C. § 2237.
38
   25 Del. C. § 2233; see One Virginia Ave. Condo. Ass'n of Owners v. Reed, 2005 WL 1924195, at
*14 (Del. Ch. Aug. 8, 2005), citing § 2233.
39
    25 Del. § 81-316(g) (emphasis added); see Bragdon v. Bayshore Prop. Owners Ass'n, Inc., 251
A.3d 661, 689 (Del. Ch. 2021).
                                              15
lien payoff amount was $103,514.56, the amount set forth in Defendant’s counsel’s

letter of May 9, 2022, which was provided to Plaintiff upon request in order to

facilitate the sale of the Property. DUCIOA §316(a) does not require that a

judgment from a court be obtained in order to create the statutory lien. The amount

of the statutory lien as of May 9, 2022 was the amount set forth in the May 9, 2022

payoff letter, even though the Court of Common Pleas had not yet determined the

amount of attorneys’ fees. When the Court of Common Pleas determined the lower

amount of attorneys’ fees of $24,486.10 in October, 2023, it reduced Defendant’s

statutory lien for attorneys’ fees by $6,257.49, which amount Defendant returned to

Plaintiff.

      Plaintiff argues that because Defendant did not record a lien for amounts

accrued under the DUCIOA statute after the January 2019 lien was recorded, it was

not required to pay those amounts when it closed on the sale of the Property.

Plaintiff argues that the additional amounts owed under the statute only gave rise to

an in personam claim against Plaintiff which it would have had to pursue in court

(and might well have been uncollectible), and would only give rise to an in rem claim

on the Property, payable upon closing on the sale of the Property, if a lien for the

additional amounts were recorded. This ignores the clear and unambiguous language of

DUCIOA that recordation of a lien is not required to constitute notice to third parties

                                          16
 (including Plaintiff) and perfection of the lien.40

           Moreover, §§ 2233 and 2237 of the Unit Property Act provide that

 assessments constitute charges on the unit. This further indicates that they are in

 rem. Indeed, § 2233 expressly provides “all sums properly assessed against a unit

 shall constitute a charge against that unit and that the unit owner is personally liable

 for any assessment due.” Thus, amounts owed by Plaintiff to Defendant with

 respect to the Property give rise to both in rem and in personam claims. Although

 § 2237 provides that Cove Owners debts “may be enforced in the manner set forth

 in § 2234” (providing for a civil action for enforcement), there is no requirement

 that a civil action be prosecuted in order for the debt to attach to the Property.

           As discussed above, Defendant held both a recorded lien and a statutory lien

 for amounts owed by Plaintiff for past due assessments, interest, attorneys’ fees, and

 costs. As of May 9, 2022, that amount was $103,514.56. Plaintiff’s proffered May

 16, 2022 payment of $72,280.97 was therefore insufficient to satisfy Defendant’s lien.

 Defendant had no legal obligation to mark the lien as satisfied until it was fully

 satisfied. Once the full amount was received by Defendant, it released the recorded

 liens. In my view, Defendant has borne its burden of demonstrating that there are

 no material issues of fact on the record, and that it is entitled to judgment as a matter

40
     25 Del. C. § 81-316(d).
                                            17
 of law. Plaintiff has not demonstrated that there are genuine issues of material facts

 in dispute on the record with respect to this claim.

       Accordingly, I grant summary judgment on this claim for Damages for Failure

to Release Liens to Defendant.

            C. Unjust Enrichment

       Plaintiff posits an equitable claim of Unjust Enrichment against Defendant.

However, our Supreme Court has stated that the Cove Declaration constitutes a

contract between the parties,41 and “Delaware courts have consistently refused to

permit a claim for unjust enrichment when the alleged wrong arises from a

relationship governed by contract.”42

       Accordingly, I dismiss Plaintiff’s Unjust Enrichment claim.

            D. Bad Faith

       Plaintiff argues that Defendant’s demand, separately and through its attorneys,

for amounts over and above what was necessary to satisfy the recorded lien constituted

a demand made in bad faith and without any factual or legal basis. In the Complaint,

Plaintiff asks the Court to order Defendant to pay a sum representing punitive

41
   “A condominium declaration and its accompanying code of regulations together form no more
than an ordinary contract between the unit owners (and, initially, the developer), created under the
statutory framework of the Unit Properties Act.” Council of Dorset Condo. Apartments v. Gordon,
801 A.2d 1, 5 (Del. 2002).
42
    Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (internal citation omitted).
                                                18
damages for its “fraudulent conduct and extortion of funds from the Plaintiff.”

       Since I am aware of no freestanding claim for bad faith that is cognizable by

this Court on these facts, I am going to treat this as a claim for breach of the implied

covenant of good faith and fair dealing, which our Chancery Court has described as

follows:

           The implied covenant is inherent in all contracts and is used
           to infer contract terms to handle developments or contractual
           gaps that neither party anticipated. It applies when the party
           asserting the implied covenant proves that the other party has
           acted arbitrarily or unreasonably, thereby frustrating the
           fruits of the bargain that the asserting party reasonably
           expected. The reasonable expectations of the contracting
           parties are assessed at the time of contracting. To prevail on
           an implied covenant claim, a plaintiff must prove a specific
           implied contractual obligation, a breach of that obligation by
           the defendant, and resulting damage to the plaintiff.43

       Plaintiff has not identified any “gaps” in its contract with Defendant, the Cove

Declaration. The record does not indicate that Defendant breached an implied term

of the Declaration. Nor does the record indicate that Plaintiff sustained any damages,

as discussed above. Defendant received from Plaintiff exactly what it was owed, no

more and no less, whereupon it released the liens on the Property. In my view,

43
  Am. Healthcare Admin. Servs., Inc. v. Aizen, 285 A.3d 461, 478 (Del. Ch.) (internal citations
omitted).

                                              19
Defendant has borne its burden of demonstrating that there are no material issues of

fact in dispute on the record with respect to the Bad Faith Claim, and that it is entitled

to judgment as a matter of law. Plaintiff has not demonstrated that there are material

issues of fact in dispute on the record with respect to this claim.

      Accordingly, I grant summary judgment on the Bad Faith claim to Defendant.

           E. Attorneys’ Fees and Costs

     Each party asks that I award it attorneys’ fees and costs against the other.

     Specifically, Plaintiff requests such relief under two statutory provisions of

DUCIOA. The first is 25 Del. C. §81-417(a), which provides that if a “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 of persons 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.” Defendant argues that the Court

of Common Pleas had already ruled in its favor on the statutory lien in an amount

well above the amount of the recorded lien, yet Plaintiff commenced this lawsuit in

Superior Court solely on the basis of the recorded lien, in an attempt to avoid its

obligations under the statutory lien, even though the decision of the Court of

Common Pleas on attorneys’ fees was still pending. Defendant claims that it is a

person adversely affected by Plaintiff’s failure under DUCIOA to comply with its

                                           20
obligations under the Cove Declaration and that is was harmed by Plaintiff’s

prosecution of this lawsuit.

       The second is 25 Del. C. § 81-316(a), which provides that, in its efforts under

DUCIOA to collect the amounts due to it under the statutory lien, Defendant is entitled

to, inter alia, “court costs and reasonable attorneys' fees incurred in attempting

collection of the same.” In defending this action, Defendant was compelled to further

litigate – beyond the Court of Common Pleas -- the issue of whether it was entitled

to past due assessments and charges. T he statute does not provide that only a

prevailing plaintiff can recover legal fees and costs. It provides for recovery by

Defendant “as a result of an administrative or judicial decision.”44

       In Delaware the general rule is that each party bears its attorneys’ fees and

expenses of litigation unless there is a “contractual or statutory basis for liability.”45

A provision for personal liability for attorneys’ fees contained in the Cove

Declaration or DUCIOA is an enforceable contractual obligation against a record

owner of a condominium unit.46 I may order payment of reasonable attorneys’ fees

and costs so long as such payment is authorized by some provision of statute or

44
   25 Del. C. § 81-316(a).
45
    Casson v. Nationwide Ins. Co., 455 A.2d 361, 370 (Del. Super. 1982).
46
    Id.
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contract.47 Both the Cove Declaration and DUCIOA entitle Defendant to reasonable

attorneys’ fees and costs incurred in the obtaining and collection of this summary

judgment.

           Nonetheless, I am reluctant to award attorneys’ fees unless there is a clear case

for doing so. I have dismissed two of Plaintiff’s four causes of action (Declaratory

Judgment and Unjust Enrichment). I have granted Defendant Summary Judgment

on the other two causes of action (Damages for Failure to Release Liens and Bad

Faith) because there are no material facts of record to support them. Once the Court

of Common Pleas awarded attorneys’ fees and the procedures of DUCIOA were

followed, all monies were allocated to the persons entitled thereto, and the liens on

the Property were released. 1205 Coastal could have appealed the Court of Common

Please decision but chose instead to file this case in Superior Court. Allowing for

inartful drafting and without ascribing any ulterior motives to counsel for Plaintiff,

this necessarily resulted in further delay and the expenditure of additional sums for

legal fees and costs by Defendant after it had prevailed in the Court of Common

Pleas. I do not think these fees and costs should be borne pari pasu by a pass-through

to the remaining unit owners at the Cove in the form of increased dues or

47
     Id.

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assessments, but rather by Plaintiff.

       I therefore award attorneys’ fees and costs to Defendant.      Counsel for

Defendant shall file for my review an Affidavit of Attorneys’ Fees within twenty-

one (21) days of this Order. Counsel for Plaintiff shall file any response to the

Affidavit of Attorneys’ Fees within fourteen (14) days thereafter.

      V.   CONCLUSION

       For the reasons discussed above, Defendant’s Motion for Summary Judgment

is GRANTED. Plaintiff’s Motion for Summary Judgment is DENIED.

       I award Attorneys’ Fees and Costs to Defendant.

           IT IS SO ORDERED.

                                              /s/ Craig A. Karsnitz

cc:    Prothonotary

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