Court Opinion

ID: 2787781
Source: CourtListenerOpinion
Date Created: 2015-03-20 04:01:56.063469+00
Date Added: 2024-06-11T11:28:43.694593
License: Public Domain

IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY

MAPLE HILL HOMEOWNERS )
ASSOCIATION, a Delaware non-proﬁt )
corporation, )
)
Plaintiff, )
l
) CA. No: CPU4~12~003085
V- )
)
NANCY A. NEW'I‘ON, CHIQUITA L. )
BRADLEY, KENNETH E. I-IOLBERT and )
JOANNE M. I-IOLBERT, PETER MEYER, )
ONJONET MOORE TORRY, MELAYA )
MOORE, MICHAEL D. BANTUM and )
CAROLINE P BANTUM, )
)
Defendants. )
Submitted: February 23, 2015
Decided: March 9, 2015
Revised: March 10, 2015
Richard L. Abbott, Esq. N. ChristOpher Grifﬁths
Abbott Law Firm Connolly Gallagher, LLP
724 Yorklyn Road, Suite 240 267 East Main Street
Hockessin, DE 19707 Newark, DE 19711
At‘torneyﬁw Plaintiff Al'lorneyfor Defendants Kenneth E.

Holbert, Joanne M. Holberz‘, &
Nancy A. Newton

Chiquita L. Bradley

9 Marlborough Court

New Castle, DE 19720
SelﬁRepresenred Defendant

MEMORANDUM OPINION AND ORDER ON PLAINTIFF MAPLE HILL’S

MOTION FOR RE-ARGUMENT, MOTION TO AMEND AND APPLICATION

FOR ATTORNEYS’ FEES AND DEF ENDANTS NANCY NEWTON’S AND KENNETH
AND JOANNE HOLBERT’S MOTION FOR ATTORNEYS’ FEES BASED ON BAD
FAITH

RENNIE, J.

BACKGROUND

On July 24, 2014, this Court held trial on plaintiff Maple Hill Homeowner’s
Association’s (“Maple Hill”) breach of contract action which arose from the alleged non-
payment of homeowner’s assessment fees by Defendants Nancy A. Newton (“Newton”),
Chiquita Bradley (“Bradley”), and Kenneth and Joanne Holbert (“the Holberts”) (collectively,

“Defendants”). l

The Court took the matter under advisement and issued a written opinion on September
19, 2014 (“the Opinion”).2 In the Opinion, the Court held in favor of the Holberts and found that
they did not breach their obligation to pay Homeowner’s Association (“l-10A”) fees to Maple Hill.
Speciﬁcally, the Court found that as a result of Maple Hill’s improper refusal to accept the Holbeit’s
payments, the Holberts were forced to hire an attorney and defend this lawsuit. Separately, the Court
found in favor of Maple Hill against Newton, but held that Maple Hill prematurely ﬁled a lien
against Newton’s property. As a result, Newton was found not liable for late fees or lien fees
assessed prior to the premature ﬁling of the lien. The Court, however, found that Newton’s failure to
pay HOA fees after the filing of the lien was not justiﬁed and found her liable for those payments.
Finally, the Court held in favor of Maple Hill against Bradley. The Court found Bradley responsible
for all of her HOA fees because she had not made any payments since she purchased her home.
Notably, the Court limited the damages against each of the liable defendants to the amounts sought in

the Complaint.

As a result of this limitation on damages, Maple Hill filed a Motion for Re-Argument,

Motion to Amend the Pleadings and an accompanying Application for Attorneys’ fees.3 Defendants

l The parties submitted post-trial written summations on August 2i, 2014.

2 Maple Hill Homeowners Association v. Newton, 2014 WL 4662382 (Del. Com. Pl. Sept. 19, 20l 4).
3 Maple Hill requested attorneys’ fees as part of its pretrial pleadings in this action. The Court, in its
September 19, 2014 Opinion, requested an affidavit from Maple Hill in support of its fees and

2

Newton, as a resident and homeowner, has a continuing obligation to the other residents of
Maple Hill to pay her share of HOA fees. Her failure to pay the assessments causes harm to the
Homeowner’s Association as a whole, and Newton is not absolved of the obligation to pay the
assessments.25 Under those circumstances, the Court ﬁnds that Douglas” action in prematurely
ﬁling the lien, coupled with Newton’s failure to make any payments after that point, does not rise

to the level of bad faith which requires the shifting of fees.

As to the Holberts, the Court found that Douglas deliberately and improperly refused to
accept or acknowledge HOA payments from the Holberts since 2007, despite their numerous
efforts to pay by various different means. Apart from the various unclaimed certiﬁed mailings of
payments by the Holberts, Douglas acknowledged at trial that she received an envelope that was
taped to her door, via special process server, on behalf of the Holberts, which contained payment
of their fees. Douglas testiﬁed at trial that she refused to open the envelope and instead
physically returned it to the Holberts’ attorneys’ ofﬁce. Douglas’ repeated intentional refusal to
accept the Holberts’ payments artiﬁcially placed them in arrears, and Douglas improperly placed
liens against their property. In addition, despite knowing that the Holberts were attempting to
make payments, Douglas maligned them in public letters to the community as “deadbeats” and
“freeloaders.” Moreover, Douglas caused Maple Hill to bring this action against the Holberts to

collect fees, thereby forcing them to incur the expense of hiring counsel to defend them at trial.

25 See Park Centre Condominium Council v. Epps, 1997 WL 817875 (Del.Super. May 16, 1997)
(holding that the obiigation to pay assessments of the condominium association is not dependent
upon the fulﬁilment of any obligation which the association may owe to the homeowner).

11

These, in the Court’s view, are the types of facts that require the shifting of fees under the bad

faith exception to the American Rule. 26

In response to the Holbert’s and Newton’s application for attorneys’ fees due to bad faith,
Maple Hill makes several arguments. The summary of its arguments are as follows: 1) There
was no ﬁnding of bad faith by this Court in the Opinion; 2) The Court in its ﬁnding of facts
ignored Maple Hill’s countervailing points of fact related to bad faith; 3)The grant of the Motion
for Ric-argument precludes any ﬁnding of bad faith; 4) No claim for bad faith was pled pre-trial
by Defendants and thus, such a claim is precluded; and 5) As a non—proﬁt Delaware Corporation
without any assets, any judgment against Maple Hill will be uncollectable. The Court addresses

Maple Hill’s several arguments seriatum.

1. The Court’s Opinion Did Detail Actions By Maple Hill In Bringing This
Action That Constitute Bad Faith.

As detailed above, the Court did ﬁnd that Douglas refused to accept Newton’s HOA
payments, labeled them as delinquents, and then ﬁled suit against them for being delinquent on
their payments, knowing that she improperly refused their attempted payments. Simply because
the Court did not use the particular phrase “bad faith” in its Opinion, does not mean that it did
not make factual ﬁndings demonstrating that Douglas acted in bad faith. To be sure, Douglas”

actions, as detailed in the Opinion, constitute bad faith.

2. Maple Hill’s Purported Countervailing Facts Do Not Negate A Finding Of
Bad Faith.

Distilled to its essence, Maple Hill’s argument on this point is that the Holbert’s had

personal animus against Douglas and never intended to pay the assessments. Maple Hill further

26 See Design —A— Drape Inc, 2008 WL 3413329 at * 2 (granting attorneys’ fees under the bad faith
exception to the American Rule where Plaintiff could not have reasonably thought that Defendant
would have been responsibie for alleged debt).

12

argues that the Holberts should have attempted alternate means to have the checks delivered. In
addition, Maple Hill argues that the cheeks tendered by the Holberts did not include
progressively mounting payments and thus, this evidences a lack of true desire to pay the entire
HOA bill. These arguments are unavailing. They don’t even begin to address the true issue
regarding Douglas” bad faith against the Holberts. It is incredible to suggest that clear evidence
of Douglas’ bad faith is negated by the Holberts’ purported animus against her, particularly when
the record demonstrates that the Holberts sent timely checks over a five year period to the
location designated by Maple Hill. Equally incredible is Maple Hill’s argument that the Holberts
should have utilized alternative means to tender their HOA payments and should have increased
the amount of their checks progressively with each payment. This argument ignores the factual
ﬁndings made by the Court and established in the record that (l) the Holbert’s did mail their
checks to the place designated for payment, (2) they wanted to ensure receipt of their payment,
hence the certified mail; and (3) they eventually attempted to make a payment via special process
server which included all of the past attempted payments, and which was blatantly refused by
Douglas. Accepting Maple Hill’s position is akin to clipping the wings on a bird and then
condemning it for not being able to fly. None of Maple Hill’s so called countervailing facts
sanitizes the egregious actions taken by Douglas in unjustiﬁably refusing payment from the

Holberts and then suing them for delinquency.27

3. The Court’s Granting Of Maple Hill’s Motion For Re-argument Does Not
Preclude A Finding Of Bad Faith Against Maple Hill.

The Court granted Maple Hill’s Motion For Re-argument and ruled on amounts owed by

27 “{A] party [who] has ‘some evidence’ to support his claims, may still be found to have acted in bad
faith where that evidence is trivial in comparison to the evidence against him.” ASB Allegiance Real
Estate Fund v. Scion Breckenridge Managing Member, LLC, 2013 WL 5152295 at * 10 (Del. Ch.

Sept. 16, 2013).

13

the Defendants for non—payment of their HOA fees. As to the Holberts, however, the Court
found that the non—payments were justiﬁed under the circumstances, speciﬁcally due to Douglas’

bad faith actions. Therefore, Maple Hill cannot avoid a ﬁnding of bad faith on this basis.

4. The Timing Of The l—Iolbert’s Request For Attorneys” Fees Due To Bad Faith
Was Proper.

Maple Hill contends that a request for attorneys’ fees under the bad faith exception to the
American Rule requires that such a request be asserted as a compulsory counterclaim. Not
surprisingly, Maple Hill fails to cite to any legal authority for this alleged requirement. it is
customary for a paity after proceeding well into trial and often at the conclusion of trial, to make
an application for attorneys’ fees due to another party’s bad faith conduct. This is the case
because often the determination of bad faith is not made by the Court or discovered by the
affected party until after the trial. So long as there is a proper mechanism by which the non—
moving party receives a fair opportunity to challenge such a motion and be heard, a ﬁnding of

bad faith by a Court will not offend the notions of due process.

After the Court issued its Opinion, in which it made ﬁndings of fact that detailed
Douglas’ bad faith conduct, counsel for the Holberts ﬁled a detailed motion requesting that the
Court order Maple Hill to pay their legal fees due to Douglas’ bad faith. Maple Hill had the
opportunity to and did in fact, respond to the Holberts’ application for fees. Moreover, the Court
held oral argument on the application, and Maple Hill presented numerous arguments against the
Holbeit’s application for fees. Thus, Maple Hill’s characterization of the Holbert’s motion for

attorneys’ fees as “trial by ambush” is unfounded.

14

5. A Judgment Entered Against A Non—Proﬁt Corporation Is Not Necessarily
Uncoliectable.

Maple Hill argues that it would be futile to enter a judgment for fees against it because its
status as a non~proﬁt entity would make such a judgment uncollectable. This argument is
without merit. The mere fact that an entity has been ascribed non—profit status, does not make it
judgment proof. It is well established that non—profit entities in Delaware have separate legal
identities and can sue and be sued—hence judgments can be entered against them. So long as
there is a valid legal basis to enter a judgment against a wrongdoer, this Court wilI not concern
itself with the collectabiiity of the judgment that it imposes. The execution upon a judgment is

commenced through a different process and in a separate proceeding.

The Court ﬁnds that after considering the Holberts’ application for attorneys” fees due to
bad faith and Maple Hill’s arguments against the Holberts’ request for attorneys” fees, the
I-Ioiberts have met their burden of establishing by clear and convincing evidence that Maple Hill
brought this action against them in bad faith. Accordingly, Maple Hill is required to pay a

portion of the legal fees that the Holberts incurred in defending this action.

6. The Reasonableness of The Fees Sought By The Holberts
Counsel for the I-Iolberts, N. Christopher Grifﬁths, Esquire, submitted an afﬁdavit and
detailed time records that set forth the fees incurred in defending the Holberts and Newton in this
action. According to the time records, the I-iolberts and Newton incurred $43,204.09 in
attorneys’ fees.28 Mr. Griffiths afﬁrms that 80% of the time was spent on the Holberts’ defense
and 20% on Newton’s defense. According to this time allocation, the Holberts’ attorneys” fees

in defending this action is $34,563.27. After deducting fees that the Court felt were not

28 The Court began its calculation of the Holberts’ attorneys” fees from the period after the ﬁling of
the Complaint.

15

necessary to the defense of the Holberts’ in this matter, including time spent relating to issues at
the Attorney General’s Ofﬁce, and corporate governance issues, the Court finds that the
reasonable and necessary fees incurred by the Holberts in defending this action is $8,500.29

Accordingly, Maple Hill is responsible to pay that amount to the Holberts.

CONCLUSION

IT 13. HEREBY ORDERED that Maple Hill’s Motion to Amend the Pleadings and
Motion for Re—argument are Granted in Part and Denied in Part. The amended amount due from
Chiquita Bradley for I-‘Iomeowners’ Assessment Fees and Expenses is $3,606.73. The amended
amount due from Nancy Newton for Homeowners’ Assessment Fees and Expenses is $1,683.79.
The amended amount due from Kenneth and Joanne Holbert for Homeowners’ Assessment Fees
is $2,360.

IT IS FURTHER ORDERED that Maple Hill’s Motion for Attorneys’ Fees is granted
against defendant Nancy Newton in the amount of $5,529.59, plus post—judgment interest at the
rate of 6% per year until paid in full, and defendant Chiquita Bradley in the amount of $3,858.95,
plus post—judgment interest at the rate of 6% per year until paid in full. Maple Hill’s Motion for
Attorneys’ Fees is denied as to defendants Kenneth and Joanne Holbert.

IT IS FURTHER ORDERED that defendants Kenneth and Joanne Holbert’s Motion for
Attorneys’ Fees Due to Bad Faith is granted; Maple Hill shall pay the Holberts’ attorneys’ fees
and expenses in the amount of $8,500(), plus post—judgment interest at the legal rate per year until

paid in full. Defendant Nancy Newton’s Motion for Attorneys’ Fees Due to Bad Faith is denied.

29 In making this determination, the Court applied the factors set forth in case law and the Delaware
Rules of Professional Conduct 1.5 (a), to assess the reasonableness of the attorneys” fees incurred by
the Holberts. See also Dixon, 2009 WL 54555 37 at *4.

16

IT IS FURTHER ORDERED that Maple Hill shall, within ten (10) days of payment by a

defendant, rescind all liens against that defendant’s property. 

I

IT IS SO ORDERED this 10th day of Ma ch, 2015.

 

 

17

ﬁled responses to Maple Hill’s motions and Newton and the Holberts ﬁled a Motion for
Attorneys‘ Fees due to Maple Hill’s bad faith.
DISCUSSION
A. Maple Hill’s Motion for Rte—argument
A motion for re—argument is limited to “reconsideration by the trial court of its ﬁndings
of fact, conclusions of law, or judgment.”4 “A motion for re—argument is granted only if ‘the
Court has overlooked a controlling precedent or legal principles, or the Court has

misapprehended the law or facts such as would have changed the outcome of the underlying

3135

decision.

Maple Hill’s motion for re~argument is based primarily on the decision by the Court to

6

limit the damages awarded against Defendants to the HOA fees sought in the Complaint. In

support of its position, Maple Hill makes three arguments. First, it contends that the Court’s
decision to not consider evidence of amounts due and owing that was not requested in the
Complaint constitutes unfair surprise to Maple Hill. On that point, Maple Hill posits that as of
the date of trial, no one had questioned whether it could pursue HOA fees not requested in the
Complaint. Second, Maple Hill argues that Defendants stipulated to its exhibits, which reference
amounts due and owing as of January 2014, as well as its intent to have its main witness testify
about the running tally of past due assessments as of the date of trial.7 Third, Maple Hill argues

that it will be unduly prejudiced by the Court’s refusal to consider the damages not referenced in

responses from Defendants to the request.

4 Hessler, Inc. v. Farrell, 260 A.2d 701, 702 (Del. 1969).

5 Slate Farm Fire & Gas. Co. v. Middleby Corp, 201 l WL 2462661, at *2 (Del. Super June l5,
201 1)(quoting Kennedy v. Invacare Corp, 2006 WL 488590, at *1 (Del. Super. Jan. 31, 2006)).

6 Maple Hill also requests that the Court specify in its order a sum certain due from the Holberts for

the period of time Maple Hill refused their payments.
T See Pl.’s Ex. 15, 16, 17. See also Defs.’ Ex. 24. Maple Hill refers to invoices for Newton, the

l-Iolberts and Bradley showing unpaid assessments through January 2014.

3

the Complaint, because it will require Maple Hill to instigate new litigation to collect these
assessments.

Alter considering the arguments advanced by the parties in their motions and at oral
argument, the Court will amend the Opinion to include applicable damages for amounts sought
beyond the Complaint. in doing so, however, the Court notes that it does not find most of Maple
Hill’s arguments on this point particularly compelling. In fact, the only reason the Court is
allowing the damages sought beyond the period of the Complaint is because the record reflects
that there was some scant testimony at trial by Maple Hill’s representative, Yutta Douglas
(“Douglas”), about bills allegedly due and owing through January 2014 for each of the
Defendants. Admittedly, this testimony was overlooked by the Court as tangential and not
germane to the damages sought in the Complaint, particularly, because there was no statement by
any party prior to trial that amounts beyond the ﬁling of the Complaint would be at issue.8
Additionally, the parties’ conduct and the direction in which the trial proceeded, lead to the
Court’s understanding. The vigor with which Defendants challenged the HOA fees allegedly
due through the period of the ﬁling of the Complaint, was incongruent with their failure to make
such arguments for HOA fees testified to beyond the Complaint. Thus, it appeared to the Court
that Defendants understood that those HOA fees were not at issue at trial. Nonetheless, the
record reﬂects that there was sufﬁcient testimony on the issue such that the Defendants had a fair
opportunity to refute and defend the amounts sought beyond the period of the Complaint.
Therefore, in accordance with Court of Common Pleas Civil Rule 15(b), the Court will deem the

Complaint to be amended to reﬂect the damages sought and testiﬁed to at trial.

8 Maple Hill had ample opportunity but failed to allege an ongoing violation as part of the relief
sought in the Complaint as is customary in these types of collection cases.

4

This was not a text book example of how a case should be tried, but after considering the
totality of the circumstances, the relative lack of prejudice to each of the parties, and the judicial
efﬁciency in avoiding a subsequent trial on amounts admittedly not paid, the Court wiil amend

the Opinion to include amounts due beyond the Complaint.

1. Chiquita Bradley
In the Opinion, the Court held that Bradley was responsible for $1,935.44 in HOA fees,
late fees and lien fees through the period of the Complaint. At the hearing on the Motion for Re—
argument, Bradley admitted that she is responsible for nonpayment of fees. As a result, the
Court adds $1,671.29 to her amount through and including January of 2014, which represents
HOA fees, late fees and lien fees. Accordingly, Bradley is responsible for a total of $3,606.73 in
HOA fees and expenses through January 2014.

2. Nancy Newton

in the Opinion, the Court held that Newton owed $791.18 in HOA fees, late fees and lien
fees through the period of the Complaint. Because Newton did not posit a justiﬁable defense for
nonpayment through January 2014, the Court ﬁnds that she owes an additional $892.61 which
represents HOA fees, late fees and lien fees from the Complaint to January 2014. Accordingly,
Newton owes a total of $ 1 ,683.79 in HOA fees and expenses through January 2014.

3. Kenneth and Joanne Holbert

With respect to the Holberts, the Court, in the Opinion, held that they were not
responsible for payment of any late or lien fees in connection with the HOA fees. As detailed in
the Opinion, the Holberts had made numerous attempts to pay their HOA fees, but Douglas

improperly refused to accept these payments. The Holberts mailed their payments via certiﬁed

mail, return receipt, to the location designated by Maple Hill for payment of fees. This was
done over a period of 5 years and each time Douglas refused to accept or acknowledge the
mailing. As a result, the checks were returned to the I—Iolberts as either “refused” or
“unclaimed”. The Holberts even took the extra step to have all of the payments that had been
refused by Douglas consolidated into one check and hand delivered by special process server to
Douglas at her apartment. Notably, Douglas admitted at trial that she received the payment but,
when she saw that it was from the Holberts, she refused to accept it. Instead, she returned it to
the I—Iolherts’ attorney’s ofﬁce. The Court viewed this action by Douglas as improper, calculated
and in furtherance of her effort to continue to malign the Holberts to the other Maple Hill
homeowners as “deadbeats” and “freeloaders”. In addition, knowing full well that her refusal to
accept their payments would artiﬁcially place the Holberts in arrears, Douglas, acting on behalf
of Maple Hill, brought suit against the Holberts for failure to pay HOA fees. This forced the
Holberts to then hire and pay competent counsel to defend this baseless claim.

As a result of this egregious behavior, this Court ruled that the Holberts were not liable
for any late fees or lien fees assessed by Maple Hill that was the subject of this action. The
Court did, however, rule that the I-Iolberts were required to submit the HOA payments that they
attempted to make to Douglas from 2007 through the ﬁling of the Complaint. That amount was
$1,540.

As to payments due by the I-Iolberts after the ﬁling of the Complaint, the Court holds that
they must pay their HOA fees through January 2014, however, without any late fees or lien fees.
Although Maple Hill homeowners have an obligation to pay homeowrrer’s fees, the unique
circumstances present in this case require that late fees for non-payment by the I‘lolberts not be

assessed. Because of Douglas’ history of non-acceptance of the Holberts’ payments, it was

reasonable under these unusual circumstances that the Holberts ceased their attempts of payment,
particularly after suit was ﬁled by Maple Hill. Short of a Court ruling, it would be an exercise in
futility to continue to send money to the address designated by Maple Hill knowing that those
payments would be ignored or refused. Accordingly, the Court ﬁnds that the Holberts must
make HOA payments in the amount of $2,360 to Maple Hill for the period from 2007 to January
2014.
B. Maple Hill’s Application for Attorneys’ Fees

Delaware adheres to what is known as the American Rule, where each party in litigation
must bear its own costs and attorneys’ fees, unless there is a contractual or statutory basis for the
award of attorneys’ fees.9 Thus, with a few exceptions, a court may not order court costs and
attorneys’ fees to be paid by the losing party unless such payment is authorized by some
provision of statute or contract.10 Further, the determination of whether attorneys’ fees requested
in a particular case are reasonable is within the discretion of the Court]1

Prior to its Motion for Re—argument, Maple Hill sought attorneys’ fees in the amount of
$1-€l,974.l2.12 Maple Hill subsequently amended that amount to include fees in the amount
$19,968.50 that were incurred in bringing its motions and responding to the Holberts’ and
Newton’s request for attorneys’ fees based on bad faith. Based on the Court’s judgment in favor

of Maple Hill against Defendants Newton and Bradley, Maple Hill allocates the pro rara share of

9 Dixon v. Council quliﬂHouse Condominium, 2009 WL 5455537 at *3 (Del. Com. Pl. Dec. 8,
2009).
m Id. The Hampton Green Maintenance Declaration authorizes Maple Hill to collect “reasonable

attorneys’ fees” when prosecuting assessment actions. See Pl.’s Trial Ex. 2.

'1 Dixon, 2009 WL 5455537 at *4.
'2 See H’s Second Amended Application for attorneys’ fees. T he original application for attorneys’
fees called for damages in the amount of$7,724. 12; however, Maple Hill amended this amount to

$14,974.12 due to an accounting error.

attorneys” fees as twenty—nine percent for Newton and seventy-one percent for Bradley.l3 Thus,
under Maple Hill’s allocation of the $19,968.50 sought, Newton would be responsible for
$5,790.86 and Bradley would be responsible for the remaining $14,177.635.

The Court does not ﬁnd this allocation of fees to be appropriate under the circumstances.
This case started out with several additional defendants.l4 According to the time records
submitted by Maple Hill in connection with its request for attorneys” fees, many of the entries
reﬂect common tasks attributable to all or multiple of the defendants and, thus, should be
allocated accordingly. Further, the tasks that were speciﬁc to any of the liable Defendants
should be allocated to his/her obligation for attorneys’ fees. Accordingly, the Court will divide
the share of the responsibility for legal fees among the liable Defendants on that basis. 15

1. Services Attributable to the Litigation of All Remaining
Defendants

The Court ﬁnds that the total cost of services necessarily generated by Maple Hill in the
litigation against the remaining Defendants in this action is $l6,l83.13.l6 The Court looked at the
tasks that were performed to generate those fees, and ascribed the three remaining Defendants their

proper pro rat-a portion, as applicable. Thus, the pro rata portion of those common fees attributable

'3 See Pl.’s Application for Attorneys’ Fees, Ex. A

M As the caption indicates, there were seven defendants in this action. Kenneth and Joanne Holbert
and Michael and Caroline Bantum were each counted as two separate defendants.

15The Court went through each of Maple Hill’s time entries from June 2012 through January 2015
(the time period for which it sought fees) and allocated fees for services rendered that pertained to
each of the Holberts, Bradley and Newton. Those fees and time entries were set forth in Exhibit A to
Plaintist reply to certain Defendants’ Response to Application for Attorneys’ Fees. T he fees for
those tasks that were generally applicable to the litigation such as preparation of the Complaint or
preparation of exhibit binders were divided among the number of defendants involved in the case at
that particular time. In its aliocation of the time entries, the Court did not include any time
attributable to issues involving the Attorney General’s office, corporate governance, or matters
speciﬁc to defendants that did not proceed to trial.

is Task entries that fit within this category were either divided among Bradley, Newton and the
Holberts; Newton and the Holberts; or all of the defendants that were named in the Complaint (Le.

the preparation of the Complaint).

to the remaining Defendants is as follows: Newton $5,254.59, Bradley $3,748.95 and the Holberts

$6,794.59.

2. Services Attributable to the Litigation of Remaining Individual
Defendants

The Court ﬁnds that fees attributable solely to the prosecution of Nancy Newton total
$275.” When that amount is added to her share of the common legal expenses, she is
responsible for $5,529. As to the Chiquita Bradley, the Court finds that fees attributable solely
to her total $110.18 When that amount is added to her share of the common legal expenses, she is
responsible for $3,858.95. Based on the Court’s ruling in the Opinion and in this Memorandum
Opinion, the Holberts are not responsible for any attorneys’ fees generated by Maple Hill in this
litigation. Accordingly, when the Holbert’s fees are excised from the total fees, defendant
Newton is responsible for attorneys” fees in the amount of $5,529.59 and defendant Bradley is
responsible for attorneys’ fees in the amount of $3,858.95.

C. Holberts’ and Newton’s Motion for Attorneys’ Fees Due to Bad Faith

Defendants Newton and the Holberts seek attorneys” fees against Maple Hill due to bad
faith.'9 in determining whether to shift attorneys’ fees due to bad faith, the moving party must
establish bad faith by clear and convincing evidence. 20 The purpose behind this exception is not

to shift fees to the prevailing party at trial but rather to “deter abusive litigation in the future,

17 The charges included in this calculation reflect entries from Maple Hill’s counsel’s attorneys’ fee
invoices dated: Nov. 8, 2012, April 13, 2013, May 4, 2013, June 11, 2013 and June 10, 2014.

'8 The charges included in this calcuiation reflect entries from Maple Hill’s counsel’s attorneys” fee
invoices dated February 1 l, 2014, March 11, 2014 and August 14, 2014.

’9 Outside of statutory authority or a contractual provision, shifting of fees are typically not awarded
by Courts of law. However, where equitable principles are ancillary but intimately related to the
issue underlying the shifting of fees, a court of iaw “has jurisdiction to award attorneys’ fees even if
no contract or statute requires it.” Citizens Bank v. Design~A Drape, 1110,2008 WL 3413329 at *2
(Del. Super. 2008), qﬂ’o’, 966 A.2d 347 (Del. 2009). See also Ciappa Construction, Inc. v. Innovative
Property Resources, LLC, 2007 WL 914640 at *2 (Del. Super. March 2, 2007).

2" Arbilrium (Cayman Islands) Handel’s AG v. Johnston, 705 A.2d 225, 231 (Del. Ch. 1997),
qff'dJZO A.2d 542 (Del. 1998).

”21 Hence, the

thereby avoiding harassment and protecting the integrity of the judiciai process.
Court does not take the shifting of fees under this exception lightly.

Moreover, even where the requirements of the bad faith exception are met, the Court is still

required to grant only those fees that are reasonable.22

As discussed above, Delaware Courts follow the American Rule for payment of
attorneys” fees, which states that “litigants are normally responsible for paying their own
litigation costs.”23 An exception to the American Rule vests discretion in Couits to shift fees in

the event of conduct that rises to the level of bad faith. As the Delaware Court of Chancery

recognized in Back:

The bad faith exception to the American Rule applies in cases
where the court ﬁnds litigation to have been brought in bad faith or
ﬁnds that a party conducted the litigation process itself in bad faith,
thereby unjustiﬁany increasing the costs of litigatiOn. There is no
single standard of bad faith that warrants an award of attorneys’
fees in such situations; rather, bad faith is assessed on the basis of

the facts presented in the case.24

Newton and the Holberts base their motion on certain factual ﬁndings made by the Court
in the Opinion. Speciﬁcally, in the Opinion the Court found that the president of Maple Hill,
Jutta Douglas, ﬁled a lien against Newton’s property for hen-payment of i-‘IOA fees, despite
reaching a payment arrangement with Newton to pay her HOA fees in the spring of each year.
As a result, the Court rescinded all late fees and lien fees assessed against Newton prior to the
ﬁling of the premature lien. The Court, however, found Newton liable for the HOA fees after the

premature lien filing because she simply failed, without justiﬁcation, to make those payments.

2' Brice v. Department ofCorrection, 704 A.2d 1 E76, 1 179 (Del. 1998).

22 Johnston v. Arbitrium (Cayman Islands) HandelsAG, 720 A.2d 542, 546-47 (Del. 1998).
23 SIGA Technologies v. PharmAlhene, Ine, 67 A.3d 330, 352 (Del. 2013).

2“ Beck v. A11. Coast PLC, 868 A.2d 840, 850—51 (Del. Ch. 2005).

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