Court Opinion

ID: 4663704
Source: CourtListenerOpinion
Date Created: 2021-03-01 13:02:24.707+00
Date Added: 2024-06-11T08:02:30.847236
License: Public Domain

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

                      Final Report:     March 1, 2021
                      Date Submitted:   November 23, 2020

Dean A. Campbell, Esquire
Law Office of Dean A. Campbell, P.A
110 West Pine Street
P.O. Box 568
Georgetown, Delaware 19947

Daniel F. McAllister, Esquire
Tarabicos Grosso, LLP
100 Commons Blvd.
Suite 415
New Castle, Delaware 19720

RE:      Kirk Owen Phillips v. Kelly Lee Phillips and Kevin Joseph Phillips
         C.A. No. 2019-0218 PWG

Dear Counsel:

         This dispute centers around a deed of property and whether a mother had

capacity, or was unduly influenced by two of her sons, who were remaindermen,

when she executed a deed eliminating a third son’s remainder interest in the

property. Pending before me are three motions: motion to stay, motion to dismiss,

and motion for default judgment. I recommend that the Court deny all of the

motions. This is my final report.
Kirk Owen Phillips v. Kelly Lee Phillips and Kevin Joseph Phillips
C.A. No. 2019-0218-PWG
March 1, 2021

I.        Background

          On February 28, 1986 Ronald Hiltz and Adelaide Hiltz (“Adelaide”)

executed a deed conveying property located at Lot Number 2, Rogers Haver,

Ocean View, Sussex County, Delaware (“Property”) to Adelaide, as a life tenant,

and to their sons, Plaintiff Kirk O. Phillips (“Plaintiff”), and Defendants Kelly L.

Phillips (“Kelly”) and Kevin J. Phillips (“Kevin”) (together “Defendants”), as

remaindermen.1 On September 13, 2017, Adelaide executed a deed (“Delaware

Deed”) retaining her life interest and Defendants’ remainder interest in the

Property, but eliminating Plaintiff as a remainderman. 2 Adelaide died on June 15,

2018. 3

          On March 20, 2019, Plaintiff filed a complaint in this Court (“Delaware

Action”) against Defendants for rescission of the Delaware Deed, claiming that

Adelaide lacked capacity to execute the Delaware Deed and that Defendants

exercised undue influence over Adelaide “to deprive and dispossess Plaintiff of

1
  Docket Item (“D.I.”) 1, Ex. A. The 1986 deed provided that Adelaide retained full
powers and authority to sell, or otherwise dispose, of “an absolute interest” in the
Property during her lifetime (except by Will). Id. Although the 1986 deed referred to the
Property as in “Rogers Haver,” the September 17, 2017 deed referenced the same plot as
in the 1986 deed, but as “Rogers Haven.” Id., Exs. A, B. I use first names in pursuit of
clarity and intend no familiarity or disrespect.
2
Id., Ex. B.
3
 Id., ¶ 6.

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any right, title, or interest in the Property.” 4 On April 17, 2019, Defendants filed

their answer, and a counterclaim alleging malicious prosecution and bad faith by

Plaintiff. 5 Plaintiff filed a motion to dismiss the counterclaim on May 21, 2019.6

On June 3, 2019, Defendants filed an amended counterclaim (“Amended

Counterclaim”), asserting abuse of process, bad faith and malicious prosecution by

Plaintiff. 7

          On March 10, 2020, Plaintiff filed a motion for protective order to quash the

deposition of Marianne Phillips (“Marianne”), Plaintiff’s wife, scheduled for

March 12, 2020, for health reasons.8                         Defendants opposed the motion for

protective order.9 At a March 11, 2020 hearing, the Court granted the motion for

protective order related to the March 12, 2020 deposition date and ordered that

status updates be submitted to the Court every 30 days until Marianne’s deposition

was taken. 10        Plaintiff’s counsel provided a status update on May 4, 2020.11

4
  D.I. 1, ¶¶ 19-23. Plaintiff also seeks to quiet title to the Property, removing any cloud
from Plaintiff’s title to the Property. Id., ¶¶ 27-30.
5
    D.I. 8.
6
    D.I. 9.
7
    D.I. 10.
8
    D.I. 15.
9
    D.I. 16.
10
     D.I. 18.
11
  D.I. 21. On April 17, 2020, Plaintiff sought an extension to file the update, which was
granted on April 21, 2020. D.I. 19; D.I. 20.

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Receiving no additional update, on October 6, 2020, the Court sent a letter to the

parties’ counsel indicating that, consistent with the Court’s March 11, 2020 Order,

a status report should be filed within 10 days.12

         On October 19, 2020, Defendants moved to dismiss the lawsuit pursuant to

Court of Chancery Rule 41(e) for failure to prosecute, and to enter default

judgment under Court of Chancery Rule 55(b) on their Amended Counterclaim.13

On November 18, 2020, Plaintiff filed his response to the motions to dismiss and

for default judgment, and a motion to stay the proceedings based on a previously

filed lawsuit in Maryland.14                   On November 23, 2020, Defendants filed a

consolidated opposition to the motion to stay and a reply to Plaintiff’s answer to

the motions to dismiss and for default judgment.15

II.      Analysis

         A.      Should this action be stayed pending the Maryland action on
                 forum non conveniens grounds?

         The first issue is whether this action should be stayed on forum non

conveniens grounds because of a pending action in Maryland. Plaintiff argues that,

under the McWane doctrine, the Delaware Action should be stayed pending

12
     D.I. 22.
13
     D.I. 23. They also seek an award of attorneys’ fees and costs. Id., ¶ 17.
14
     D.I. 25; D.I. 26.
15
     D.I. 27.

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judgment in the Maryland action, while Defendants oppose a stay of the Delaware

Action.

        A forum non conveniens motion is addressed to the trial court’s sound

discretion. 16 “The doctrine of forum non conveniens is not a vehicle for the Court

to determine which forum would be most convenient for the parties.”17 The

Court’s forum non conveniens analysis “must be informed by the underlying

principles of comity and the orderly and efficient administration of justice.”18

Historically, if a dispute is first-filed in Delaware, a Delaware court decided to stay

or dismiss the Delaware action in favor of a similar action pending in another

jurisdiction, based upon whether the defendant established overwhelming hardship

under the “Cryo-Maid factors.”19 Cryo-Maid factors include “(1) the relative ease

of access to proof; (2) the availability of compulsory process for witnesses; (3) the

possibility of the view of the premises; (4) whether the controversy is dependent

upon the application of Delaware law which Delaware courts more properly should

16
  Cf. Martinez v. E.I. DuPont de Nemours & Co., 86 A.3d 1102, 1104 (Del. 2014), as
revised (Mar. 4, 2014); Warburg, Pincus Ventures, LP v. Schrapper, 774 A.2d 264, 269
(Del. 2001).
17
   Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Crosstex Energy Servs., LP, 2013 WL
6598736, at *1 (Del. Super. Dec. 13, 2013); see also Mar-Land Indus. Contractors, Inc.
v. Caribbean Petroleum Ref., LP, 777 A.2d 774, 779 (Del. 2001).
18
  Adirondack GP, Inc. v. Am. Power Corp., 1996 WL 684376, at *6 (Del. Ch. Nov. 13,
1996); see also Transamerica Corp. v. Reliance Ins. Co. of Illinois, 1995 WL 1312656, at
*6 (Del. Super. Aug. 30, 1995).

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decide than those of another jurisdiction; (5) the pendency or nonpendency of a

similar action or actions in another jurisdiction; and (6) all other practical problems

that would make the trial of the case easy, expeditious and inexpensive.” 20 If the

Delaware action was second-filed, however, McWane Cast Iron Pipe Corp. v.

McDowell-Wellman Engineering Co. (“McWane”)21 looked at whether “there is a

prior action pending elsewhere, in a court capable of providing prompt and

complete justice, involving the same parties and issues.”22 McWane favored

litigating disputes in the forum in which the first action was filed because “a

defendant should not be permitted to defeat the plaintiff’s choice of forum in a

pending suit by commencing litigation involving the same cause of action in

another jurisdiction of its own choosing.”23

         “More recent decisions, however, combine the Cryo-Maid and McWane tests

and apply different presumptions depending on a case’s procedural posture. Now,

Delaware         courts       apply       the      Cryo-Maid factors   to   all   forum   non

conveniens motions, irrespective of whether there is another pending action and

19
  Gramercy Emerging Markets Fund v. Allied Irish Banks, PLC, [hereinafter Gramercy],
173 A.3d 1033, 1037 (Del. 2017); Martinez, 86 A.3d at 1104.
20
  Mar-Land Indus. Contractors, Inc., 777 A.2d at 778; see also Gramercy, 173 A.3d at
1036-37 (citing Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681, 684 (Del. 1964)).
21
     263 A.2d 281 (Del. 1970).
22
  Nokia Sols. & Networks Oy v. Collision Commc’ns, Inc. [hereinafter Nokia], 2020 WL
2095829, at *3 (Del. Super. Apr. 30, 2020).

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which action was filed first.”24 “What changes is the strength of the presumptions

applied. . . . Under Cryo-Maid, defendants must establish overwhelming hardship

for Delaware courts to grant dismissal. Under McWane, Delaware courts have

greater discretion in determining whether a stay or dismissal is proper.”25 When

actions were filed contemporaneously, “this Court evaluates a motion to dismiss or

stay      under      the      established forum              non     conveniens framework,   without

applying McWane’s preference for one action over the other.”26

         The first Cryo-Maid (and McWane) factor I consider is whether, in this

instance, there is a pending similar action in another jurisdiction. “Under McWane,

an action is a ‘prior pending’ action when 1) the two actions involve similar claims

and similar parties, and 2) the first action is in a court capable of doing prompt and

complete justice.”27 “In order to determine whether an action is first-filed, the

Court must consider the circumstances surrounding both filings.” 28

23
     McWane, 263 A.2d at 283.
24
  Progressive Cas. Ins. Co. v. Bowman Trailer Leasing, LLC, 2018 WL 3853875, at *3
(Del. Super. Aug. 13, 2018); see also Aranda v. Philip Morris USA Inc., 183 A.3d 1245,
1250-51 (Del. 2018) (“As explained in Gramercy: McWane draws on Cryo-Maid’s
factors because both tests are rooted in forum non conveniens doctrine.”).
25
  Aranda, 183 A.3d at 1250-51 (Del. 2018) (citing Gramercy, 173 A.3d 1033, 1038 (Del.
2017).
26
     Nokia, 2020 WL 2095829, at *3 (Del. Super. Apr. 30, 2020).
27
  Progressive Cas. Ins. Co. v. Bowman Trailer Leasing, LLC, 2018 WL 3853875, at *3
(Del. Super. Aug. 13, 2018).
28
     Nokia, 2020 WL 2095829, at *4.

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          On January 16, 2019, Plaintiff filed a petition (“Estate Petition”) in the

Orphan’s Court for Baltimore County seeking to remove Kelly as the personal

representative of Adelaide’s estate in Maryland.29 On March 8, 2019, Plaintiff

filed a complaint (“Maryland Complaint”) in the Circuit Court for Baltimore

County, seeking to have a deed (“Maryland Deed”) executed by Adelaide on

August 16, 2017 declared null and void because she lacked capacity and was

unduly influenced by Defendants.30 The Maryland Deed eliminated Plaintiff as a

remainderman of property (“Maryland Property”) located at 5208 Wilkins Avenue,

Baltimore, Maryland. 31             On July 24, 2019, the Estate Petition and Maryland

Complaint (together “Maryland Action”) were consolidated.32 On March 20, 2019,

Plaintiff filed the Delaware Action.33 The Delaware Action was filed seven weeks

after the Estate Petition and 12 days after the Maryland Complaint, and is second-

filed.

29
  D.I. 26, Exs. A, B. The Estate Petition also objects to Adelaide’s estate’s designation
as a small estate, and claims that Kelly failed to disclose all of Adelaide’s property when
he filed the small estate petition for administration in Maryland. Id., Ex. A, ¶¶ 1, 2. It
further alleges that Kelly failed to disclose the circumstances concerning Adelaide’s
execution of Maryland and Delaware deeds. Id., ¶ 3.
30
     D.I. 26, ¶¶ 14, 21, 22, Exs. C, D.
31
Id., Ex. C.
32
Id., Ex. B.
33
     D.I. 1.

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          Plaintiff argues that the Delaware Action involves the same parties and

identical claims related to deeds that, although conveying different properties (one

in Maryland and one in Delaware), were executed by Adelaide in the same time

period and ended in the same result – the termination of Plaintiff’s remainder

interests in the properties.34 He claims that “the risk of inconsistent decisions is a

real possibility.”35 Defendants respond that the Delaware Property addressed in

the Delaware Action is unique, different from the Maryland Property and tied up

with a lis pendens. 36

          Delaware courts “have recognized that all claims arising from a common

nucleus of operative facts should be brought in the same court at the same time

whenever possible.”37 There does not have to be an absolute identity of parties and

issues in both actions, but the parties and claims should be sufficiently similar so

that the other lawsuit “will substantially adjudicate the claims of the parties.” 38

34
     D.I. 26, ¶¶ 11-14.
35
Id., ¶ 17.
36
     D.I. 27, ¶ 11.
37
   Transamerica Corp. v. Reliance Ins. Co. of Illinois, 1995 WL 1312656, at *5 (Del.
Super. Aug. 30, 1995); see also EnVen Energy Corp. v. Dunwoody, 2020 WL 2770609,
at *5 (Del. Ch. May 28, 2020) (citations omitted).
38
     Transamerica Corp., 1995 WL 1312656, at *5.

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         Here, the parties in the Maryland Action and the Delaware Action are

similar.39 However, I do not find that those actions arise out of a common nucleus

of operative facts or are sufficiently similar so that the Maryland Action will

adjudicate the claims in the Delaware Action. Both actions allege that Defendants

unduly influenced Adelaide to convey Plaintiff’s remainder interests in properties

to them, and that Adelaide lacked the capacity to deed the properties. The actions,

however, involve different properties and the timing and details about the deeds by

which Adelaide transferred interests in each property are not similar.                The

Delaware Deed was executed by Adelaide on September 13, 2017 and appears to

have been prepared by a Delaware attorney, while the Maryland Deed was

executed by Adelaide on August 16, 2017 and allegedly prepared by Adelaide.40

Although some evidence may overlap, the factual circumstances surrounding the

preparation and execution of the Delaware Deed are key to determining the claims

of incapacity and undue influence in the Delaware Action and are distinct from the

circumstances pertaining to the Maryland Deed, which occurred more than one

month earlier.41           Since the claims are fact-specific, the risk of inconsistent

39
   While the other actions involve all three brothers, the Estate Petition involves only
Plaintiff and Kelly, not Kevin. See D.I. 1; D.I. 26, Exs. A, C.
40
     D.I. 1, Ex. B; D.I. 26, Ex. C, ¶ 18.
41
   Under Delaware law, a person lacks capacity to transfer property if, at the time that he
is conveying the property, “by reason of mental illness or defect (a) he is unable to
understand in a reasonable manner the nature and consequences of the transaction, or (b)
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decisions, if both actions proceed at the same time, is not significant.                The

Maryland court cannot do complete justice because the Maryland Action does not

seek the same relief, or address the same claims, as the Delaware Action.42 In my

view, the Maryland Action does not constitute a prior pending action under the

McWane standard.

         Next, I consider the other Cryo-Maid factors. Defendants assert that this

situation differs from McWane, because Defendants are not seeking the stay and

are ready, willing and able to litigate in Delaware; there are case dispositive

motions pending in this case; Plaintiff waited too long before seeking the stay;

Defendants are working with Maryland counsel to prevent duplication of efforts;

and it is easier to depose Marianne, a Delaware resident, in Delaware.43 Plaintiff

he is unable to act in a reasonable manner in relation to the transaction and the other party
has reason to know his condition.” Barrows v. Bowen, 1994 WL 198724, at *4 (Del. Ch.
May 10, 1994) (citation omitted); see also Townsend v. Townsend, 137 A.2d 381, 382
(Del. Ch. 1957) (“the capacity to transfer property must necessarily be evaluated as of the
time of the transaction under attack”). In addition, to prove undue influence when
executing a deed, the evidence must show: “(1) a susceptible grantor; (2) the opportunity
to exert influence; (3) a disposition to do so for an improper purpose; (4) the actual
exertion of such influence; and (5) a result demonstrating its effect.” Scott v. Scott, 2013
WL 5298462, at *4 (Del. Ch. Sept. 13, 2013).
42
  A determination that Adelaide lacked capacity or was unduly influenced to execute the
Maryland Deed does not necessarily mean she lacked capacity or was unduly influenced
when executing the Delaware Deed. And, unlike the Delaware Action, the Maryland
Action includes a claim that Adelaide, who was not an attorney, improperly prepared the
Maryland Deed. D.I. 26, Ex. C, ¶ 18. In addition, there is an outstanding counterclaim in
the Delaware Action, alleging malicious prosecution, bad faith and abuse of power by
Plaintiff. D.I. 8.
43
     D.I. 27, ¶¶ 9, 11-13.
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argues that the parties in this case have engaged in a de facto stay, and moving

forward in both cases would be duplicative and wasteful.44

          Looking at the Cryo-Maid factors of relative ease of access to proof,

availability of compulsory process for witnesses, and the possibility of the view of

the premises, I find that they weigh against granting the stay, since the Delaware

Property is located in Delaware, and two of the three parties reside in Delaware

and are subject to compulsory process in Delaware.45 In addition, Defendants are

seeking to depose Marianne, who is a Delaware resident.46 Although some of the

witnesses may be in Maryland and their testimony relevant in both actions, efforts

can be made to prevent duplicative discovery.47 The Cryo-Maid factor examining

whether the controversy is dependent upon the application of Delaware law also

favors denial of the motion to stay, since Delaware law applies in this case.48

          The final Cryo-Maid factor “weighs other practical considerations ‘that

would serve to make the trial easy, expeditious, and inexpensive.’” 49 As discussed

44
     D.I. 26, ¶¶ 16, 17.
45
     D.I. 1. ¶¶ 1-4.
46
     D.I. 12; D.I. 13; D.I. 14.
47
     D.I. 27, ¶ 4.
48
  “It is well established that the law of the situs of real property determines the effect of
actions involving its ownership.” Hill v. Hill, 262 A.2d 661, 663 (Del. Ch.
1970), aff’d, 269 A.2d 212 (Del. 1970).
49
  Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Crosstex Energy Servs., LP, 2013 WL
6598736, at *10 (Del. Super. Dec. 13, 2013) (citation omitted).

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above, because the factual issues connected with the claims in both actions are

distinct, the risk of a significant waste of judicial resources and the inconsistent

resolution of the issues is minimal. The cost of litigating in Delaware is not

cumbersome or extraordinarily expensive, recognizing that Plaintiff chose to

litigate in Delaware, and the parties already have Delaware attorneys and are not

geographically distant from Delaware. 50

          Finally, an important purpose behind forum non conveniens considerations is

to prevent a plaintiff’s choice of forum being defeated by the other party’s

subsequent filing of an action in another forum. Here, Plaintiff filed separate

actions in Maryland and in Delaware. He intentionally filed the Delaware case

after the Maryland case “by design.”51 He is also the party seeking to stay the

Delaware action. This is not a situation where the parties filed competing actions

in different jurisdictions – Plaintiff chose both forums, so his choice of forum is

being respected. Almost two years after commencing the litigation in Delaware,

he now argues that the Delaware Action should not move forward. 52

50
 Kevin is located in Catonsville, Maryland. D.I. 1, ¶ 3. Since Adelaide resided in the
Maryland Property and the Delaware Deed’s notary was from Baltimore County,
Maryland it appears likely that most witnesses will be located in either Delaware or
Maryland. See D.I. 1, ¶¶ 11, 12, Ex. B.
51
     D.I. 26, ¶ 4.
52
   The only justification for a stay offered by Plaintiff that he would not have known at
the time he filed the Delaware Action was his assertion that the parties have engaged in a
de facto stay. Id., ¶ 16. Defendants respond that the lack of activity reflects Plaintiff’s
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         In summary, I find that the forum non conveniens factors weigh against

granting a stay of the Delaware Action and recommend that the Court deny

Plaintiff’s motion to stay.

         B.      Should Plaintiff’s complaint be dismissed for failure to prosecute?

         Defendants seek dismissal of this case under Rule 41(e) and attorneys’ fees

and costs, arguing that Plaintiff “filed this action one and a half years ago and has

taken no substantial steps whatsoever to prosecute this case,” while Defendants

have incurred substantial costs and the Property has remained encumbered by the

lis pendens.53 Plaintiff responds that there has been an “informal, unspoken, stay

of this action since its initiation,” and he has “avoided running-up attorneys’ fees

and costs for both sides while the exact same issues are litigated in [Maryland].”54

         Rule 41(e) provides that the Court may, upon its own motion or that of any

party, and after reasonable notice, dismiss a case where “no action has been taken

for a period of 1 year,” “unless good reason for the inaction is given.” 55 “Delaware

“year-long effort to avoid [Marianne] giving a deposition.” D.I. 27, ¶ 4. I do not consider
the inaction in this case as a de facto stay, considering the Court’s pending order that
monthly status reports should be filed “until [Marianne’s] deposition is taken.” D.I. 18.
53
     D.I. 23, ¶¶ 1, 2.
54
     D.I. 25, ¶¶ 3, 4.
55
     Ct. Ch. R. 41(e).

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trial courts have inherent power to control their dockets,”56 and Rule 41(e) serves

the purpose of ensuring the “orderly administration of the business of [the]

Court.”57 If a plaintiff fails to take action to prosecute within a one-year period,

then they run “the risk of a dismissal under the Rule” unless good reason for

inaction is shown.58 “In deciding what constitutes ‘good reason’ the court should

balance the reasons for, and length of the delay, against the policy in favor of

deciding cases on the merits.”59 The decision to dismiss for failure to prosecute

rests in the discretion of the Court.60

         In this case, Plaintiff has not provided a strong explanation of his activities

related to this case in the year and one-half preceding Defendants’ filing of their

motion to dismiss. During that time, however, Plaintiff did conduct activities in

this case (in opposition to Marianne’s deposition). And, it appears the Maryland

Action is proceeding and that there is some coordination of discovery in both

56
  Solow v. Aspect Res., LLC, 46 A.3d 1074, 1075 (Del. 2012), as corrected (Mar. 19,
2012).
57
     Michaels v. Lesser, 275 A.2d 797, 799 (Del. Ch. 1971).
58
  Id.; see also Strougo v. Carroll, 1991 WL 9978, at *2 (Del. Ch. Jan. 29, 1991) (“Rule
41(e) is a permissive rule and is not intended to bring about dismissal when good reason
for the inaction is given.”).
59
     Solow, 46 A.3d at 1076.
60
  Cf. George X v. Brittingham, 2017 WL 2670754, at *1 (Del. Ch. June 21, 2017),
adopted (Del. Ch. July 10, 2017); Tooley v. AXA Financial, Inc., 2009 WL 1220624, at
*2 (Del. Ch. Apr. 29, 2009).

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cases. 61      Plaintiff’s argument that there was an “informal stay” in this case,

because of the Maryland Action, is unpersuasive and controverted by Defendants’

on-going efforts to depose Marianne. 62 However, balancing those considerations

and the length of delay against the policy in support of resolving cases on the

merits, I find the circumstances do not warrant dismissing this action under Rule

41(e) and recommend that the Defendants’ motion to dismiss be denied.63            With

the resolution of these motions, the parties are expected to move forward diligently

with discovery and other preparation for trial. To minimize further delay, within

30 days from the date this report is approved by the Court, the parties shall make

every reasonable effort to conduct Marianne’s deposition, and to submit a

proposed pretrial joint scheduling order that provides for trial as soon as schedules

permit.

         C.      Should default judgment be entered on Defendants’ Amended
                 Counterclaim?

61
  Defendants confirm that they are “working in conjunction with Maryland counsel in
order not to reduplicate discovery efforts [between the Maryland Action and the
Delaware Action].” D.I. 27, ¶¶ 4, 12.
62
     See n. 52 supra.
63
  Defendants rely on Michaels v. Lessner, to support dismissal under Rule 41(e). D.I. 23,
¶ 15 (citing Michaels, 275 A.2d 797, 799 (Del. Ch. 1971)). Michaels is distinguishable,
however. In Michaels, after repeated contact by the Court requesting action in the case
over a number of years, the Court concluded that there was “undue delay” by the
plaintiffs, without good reason shown, and dismissed the case. Michaels, 275 A.2d at
798-99.

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         Defendants ask the Court to enter default judgment on the Amended

Counterclaim, under Rule 55(b), due to Plaintiff’s failure to file an answer.64 Rule

55(b) permits the Court to enter a default judgment when a defendant has failed to

appear, plead or otherwise defend as provided by the Court’s Rules. 65 The entry of

a default judgment under Rule 55(b) is permissive, and the Court has discretion to

decide whether to enter a default judgment based on the particular set of facts

before it. 66      It is an “extreme remedy,” requiring the defendant’s “willful or

conscious disregard for the rules of the Court,” or when the defendant “blatantly

fails to appear or plead for a prolonged period of time.”67             Factors to be

considering in determining whether to grant a default judgment include: (1)

“whether culpable conduct of the defendant led to the default; (2) whether the

defendant has a meritorious defense; and (3) whether the plaintiffs will be

prejudiced.” 68

64
     D.I. 23, ¶¶ 4, 14.
65
  Ct. Ch. R. 55(b); see also Tabb v. Bank of New York Mellon, 2017 WL 2570020, at *1
(Del. Ch. June 14, 2017); New Castle Shopping, LLC v. Penn Mart Disc. Liquors, Ltd.,
2009 WL 5197189, at *2 (Del. Ch. Oct. 27, 2009).
66
   Cf. New Castle Shopping, LLC, 2009 WL 5197189, at *2; Greystone Digital Tech., Inc.
v. Alvarez, 2007 WL 2088859, at *2 (Del. Ch. July 20, 2007).
67
     New Castle Shopping, LLC, 2009 WL 5197189, at *2 (citations omitted).
68
  Newsom v. Biden, 2011 WL 835135, at *3 (Del. Ch. Feb. 28, 2011); see also
Apartment Communities Corp. v. Martinelli, 859 A.2d 67, 69-70 (Del. 2004).

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          Here, Plaintiff filed a motion to dismiss Defendants’ original counterclaim

alleging malicious prosecution and bad faith by Plaintiff. 69                              Defendants

subsequently filed the Amended Counterclaim, which added an abuse of process

claim. 70 Plaintiff has not filed an answer to the original or Amended Counterclaim.

He asserts that he does not need to respond because the Defendants were required,

under Court of Chancery Rule 15(a), to obtain his consent or “leave of Court”

before filing the Amended Counterclaim.71 His argument is unpersuasive. Under

Rule 15(a), a party may amend a pleading “once as a matter of course at any time

before a responsive pleading is served.” 72                          Plaintiff’s motion to dismiss the

counterclaim did not serve as a responsive pleading, so Defendants filed the

Amended Counterclaim before any responsive pleading had been filed. 73 Plaintiff

needs to file a response to the Amended Counterclaim. However, Defendants have

not shown prejudice that has resulted from Plaintiff’s failure to respond to the

Amended Counterclaim.                 Although Plaintiff has been remiss in his failure to

respond to the Amended Counterclaim, I consider that his motion to dismiss the

original counterclaim remains pending, and rely on the general preference for

69
     D.I. 9.
70
     D.I. 10.
71
     D.I. 25, ¶¶ 10, 11.
72
     Ct. Ch. R. 15(a).

                                                        18
Kirk Owen Phillips v. Kelly Lee Phillips and Kevin Joseph Phillips
C.A. No. 2019-0218-PWG
March 1, 2021

resolving cases on the merits, in declining to impose the “extreme remedy” of

default judgment, at this juncture. I recommend that the Court deny Defendants’

motion for default judgment on the Amended Counterclaim.                             Plaintiff shall

respond to the Amended Counterclaim within 15 days of the date this report is

approved by the Court.

III.    Conclusion

        For the reasons set forth above, I recommend that the Court deny Plaintiff’s

motion to stay this action pending judgment in a Maryland action on forum non

conveniens grounds. I also recommend that the Court deny Defendants’ motions to

dismiss under Rule 41(e) and for default judgment under Rule 55(b). Within 30

days from the date this report is approved by the Court, the parties shall make

every reasonable effort to conduct Marianne’s deposition and to submit a proposed

pretrial joint scheduling order that provides for trial as soon as schedules permit.

In addition, Plaintiff shall respond to the Amended Counterclaim within 15 days of

the date this report is approved by the Court. This is a final report and exceptions

may be taken under Court of Chancery Rule 144.

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

73
  See R. Keating & Sons, Inc. v. Huber, 2020 WL 975435, at *3 (Del. Super. Feb. 27,
2020); Stoppel v. Henry, 2011 WL 55911, at *3 (Del. Super. Jan. 4, 2011).

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