Wirth v. Avondale IQ., LLC ( 2018 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JERZY WIRTH )
Plaintiff, §
v. § C.A. No.: N10J-03776
AVONDALE IQ., LLC, §
Defendant. §
Argued: April 19, 2018
Deci_ded: May 25, 2018
COMMI SI_ONER’S ORDER ON DEFE DA T’ M TlO TO VACATE
CONFESSED .!HDGMENT
Jerzy Wirth, Plaintiff, Judgment Creditor, pro se.
Brian T.N. Jordan, Esquire, Attorney at LaW, 704 N. King St., Suite 600,
Wilmington, DE 19801. Attorney for Defendant.
MANNING, Commissioner:
Before the Court is Defendant’s Motion to Vacate a confessed judgment (the
“Motion”) pursuant to Superior Court Civil Rule 60(b). Following submission of
Plaintiff’s Response, argument and an evidentiary hearing Were held before the
undersigned commissioner on April 19, 2018. Because the Motion is not case-
dispositive, l am issuing my decision in the form of an Order pursuant to Superior
Court Civil Rule 132(a)(3). For the following reasons, the Motion is Denied:
Facts and Procedural Background
On November 9, 2010, Plaintiff (hereinafter also “Mr. Wirth”) filed
documents With the Prothonotary of the Superior Court to obtain a Confessed
Judgment against Defendant pursuant to Superior Court Civil Rule 58.1. Plaintiff
alleged that Defendant had defaulted on a Promissory Note and Business Loan. A
tentative judgment Was entered by the Prothonotary and the matter Was scheduled
for a hearing. On December 17, 2010, Defendant failed to appear for the hearing to
contest the matter and a default judgment Was entered by the Court. On February
15, 2018, Defendant filed the instant Motion. Defendant claims that he never
received notice of the hearing for the confessed judgment in 2010, and only recently
learned of the judgment itself during bankruptcy proceedings
Defendant’s Arguments
Defendant argues in his Motion that: (l) the judgment is void because it Was
never served notice of the confessed judgment hearing, (2) the judgment is also void
because Defendant did not authorize Plaintiff, specifically Mr. Wirth, to confess
judgment on its behalf, and (3) Defendant moves the Court to reexamine the amount
of the judgment under Rule 60(b)(6), specifically the award of “collection and
Attorneys Fees” of $32,846.85.
Analysis
Before addressing Defendant’s argument, it is necessary to review the law and
procedure used to obtain a confessed judgment in the Superior Court. Pursuant to
Rule 58.1, a party files the necessary documents with the Prothonotary who then
enters a “tentative judgment” and schedules the matter for a hearing. The party
moving for the judgment is required to provide the original document evidencing the
agreement and authorizing the confession of judgment with copies ready for certified
mailing in a pre-paid and self-addressed envelope. Court staff then docket and mail
the documents directly to the defendant, with the certified mail “green cards” being
returned directly to the plaintiff once service has been completed.
Improper Service
In this case, Defendant argues that the process outlined in Rule 58.1 was not
followed, and consequently, that Defendant never received notice of the 2010
hearing whereby he could move to challenge the motion to confess judgment At
the heart of Defendant’s argument is docket entry #2, that states “PRO SE WILL
SEND OUT CERTIFIED NOTICE PACKAGE 11-9-2010.” Defendant argues that
this docket entry evidences the fact that Rule 58.1 was not followed and that the
Prothonotary allowed Plaintiff to mail (or not mail as Defendant intimates) the
documents himself_as opposed to Prothonotary staff doing it. Defendant argues
that under the rule, the Prothonotary is required to mail the documents due to the use
of the term “shall” within Rule 58.1. Defendant also argued during the hearing that
notice was inadequate because it was only sent to the registered agent and not also
mailed to Defendant’s home address.
Plaintiff disputes Defendant’s contentions and avers that the rule was properly
followed because he provided the necessary documents to the Prothonotary who then
mailed them, per the rule, on his behalf. Defendant subsequently filed with the Court
the certified mailing return receipt showing that delivery was made to Christiana
Incorporators, 508 Main Street, c/o Ralph Estep, Wilmington, DE, 19804, who was
the registered agent for Defendant at the time. Plaintiff contends that the docket
entry indicating that he would mail the documents is wrong, and was made in error.
At the hearing, the Court heard testimony from Kathy Zeccola. Ms. Zeccola
is a supervisor in the Superior Court Prothonotary’s Office. Ms. Zeccola testified as
to the usual procedure that is followed under Rule 58.1 to initiate a confession of
judgment Ms. Zeccola testified that she was alerted to the issue with the docket in
this case by Mr. Wirth after he received Defendant’s Motion. Ms. Zeccola testified
that it has always been the practice within the Prothonotary to send out the certified
mailings. Ms. Zeccola testified that docket entry #2 was made in error by a new
clerk who was in the process of being trained and who no longer works for the
Court.l
Based on the record before me, I am convinced that the docket entry in
question was made in error by Prothonotary staff. I am satisfied that Plaintiff has
established by a preponderance of the evidence that service was properly made by
certified mailing pursuant to Rule 58.1 on Defendant’s registered agent.2 Moreover,
no evidence was presented by Defendant to show that it had revoked the authority
of its registered agent to receive service at the time the motion was served. l find
the fact that Plaintiff did not also personally serve defendant at his home address as
unavailing Every Limited Liability Corporation (LLC) in Delaware is required to
have a registered agent to receive service of process for the corporation Service
directly upon the owners of the LLC is not legally necessary if the registered agent
is properly served.3 Accordingly, Defendant’s argument as to lack of service is
without merit.
1 Ms. Zeccola also sent an email to the undersigned commissioner on February 2, 2018,
explaining this process and her belief that the docket entry was made in error. That email was
shared with the parties and is now part of the record.
2 See also PNC Bank v. Sz'lls, 2006 WL 3587242 (November, 30, 2006, Johnston, J.) (holding
that service of a motion to confess judgement by certified mail delivered to the receptionist at
defendant’s business satisfied the notice requirements of Rule 58.1).
3 See 18 Del. C. §10-105 (a) Service of legal process upon any domestic limited liability
company or any series thereof established pursuant to § 18-215(b) of this title shall be made by
delivering a copy personally to any manager of the limited liability company in the State of
5
Authoritv to Confess Judgment
Defendant’s second argument is admittedly unique. Defendant argues that the
language contained in the Promissory Note does not authorize Plaintiff_and more
specifically Mr. Wirth himself_ to move for a confession of judgment.
The language in the agreement states:
The borrowers do hereby authorize and empower any Court of
competent jurisdiction, without process, in the event of Default, to enter
judgment, or any Clerk, Prothonotary or Attomey of any Court of
Record in Delaware, or elsewhere, without process, to appear for them
and confess judgment in the Superior Court of the State of Delaware or
in any other Court of Record in Delaware or elsewhere on the above
obligation with legal interest[. . .].4
Defendant’s argument, although novel, is misplaced and unsupported by any
authority whatsoever. The provision in question authorizes judgment to be entered
against the borrower in the event of default without initiation of a formal lawsuit for
breach of contract by Plaintiff. Unlike Defendant, I read this provision as a
delegation of the inherent authority any maker to a contract has to pursue legal
remedies in the event of default. The language in this provision is not a limitation
on the Plaintiff’ s ability to move for a confessed judgment, rather, it is a list of
Delaware, or the registered agent of the limited liability company in the State of Delaware. ..
(emphasis added). See also Thompson v. Colonial Court Apartments, LLC, 2006 WL 3174767
(November 1, 2006, Cooch, RJ. (denying a motion to vacate a default judgment when service
was properly made upon the registered agent and the defendant failed to file a responsive
pleading).
4 Defendant’s Motion, EX. A, p. 1.
individuals or organizations that may move for a confession of judgment on behalf
of the borrower in the event of default. Although it is the Court that actually enters
the judgment by confession, someone must initiate the process by filing the
necessary documents with the Prothonotary, and logic dictates that person could
always be the maker of the contract. Moreover, Rule 58.1 provides the necessary
procedural safeguards to ensure that the borrower’s due process rights to notice and
an opportunity to be heard are respected before any judgment is entered.
Accordingly, Defendant’s argument is without merit.
Costs and Fees
Finally, during argument before the Court, Plaintiff agreed to waive its
“collection and Attorneys Fees,” and will only seek to collect on the original
principal and accrued interest, thus rendering Defendant’s final argument moot.
MSM
F or the reasons stated herein, Defendant’s Motion to Vacate the confessed
judgment is Denied.
IT IS SO ORDERED.
_A¢‘Wj/’%f§ y E '
Bradley V. manning
Commissioner
Original to Prothonotary
cc: Parties via first class mail and File & Serve