OPINION AND ORDER
J. HOLMES, District Judge
Plaintiff Joyce Fullington alleges that she was injured by consuming the prescription drug metoclopramide. She asserts causes of action under Arkansas law for strict products liability, negligence, gross negligence, fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, and breach of the implied warranties of merchantability and fitness for a particular purpose. This Court has jurisdiction pursuant to 28 U.S.C. § 1332. Currently before the Court is a motion for summary judgment filed by Pfizer, Wyeth, Schwarz, and Alaven. Fullington has responded, and the motion is ripe for review. For the following reasons, the defendants' motion for summary judgment is granted.
Metoclopramide is a prescription drug approved by the FDA to treat gastroesophageal reflux disease and diabetic gastroparesis. Metoclopramide is available in both brand name and generic formulations. The brand name of the drug is "Reglan." At different times, Wyeth, Schwarz, and Alaven manufactured and distributed Reglan. Pfizer, the parent company of Wyeth, never manufactured or distributed Reglan.
Wyeth manufactured and distributed Reglan from 1989 through December 2001. Schwarz acquired from Wyeth the rights to Reglan in December 2001 and manufactured and distributed it until 2008. In 2008, Alaven acquired the rights to Reglan from Schwarz, and it currently manufactures the drug.
Before marketing and distributing a brand name drug, a pharmaceutical manufacturer must obtain regulatory approval. The producer, or "innovator," of the drug must submit a New Drug Application. 21 U.S.C, § 355(a)-(i) (2010). After the New Drug Application is approved, the innovator has the exclusive right to market the drug for a certain period of time. Once the exclusivity period has expired, other drug manufacturers may market generic versions of the drug if approval has been obtained under the Food, Drug, and Cosmetic Act. Since the adoption of the Hatch-Watchman Amendments to the Act, Pub.L. No. 98-417, 98 Stat. 1585 (1984), a generic manufacturer may choose to submit only an Abbreviated New Drug Application. If this choice is made, then the generic manufacturer no longer has to submit independent evidence of safety or efficacy. Instead, it must establish that the generic drug has the same active ingredients and proposed label as the brand name drug. 21 U.S.C. § 355(j)(2)(A)(ii), (v).
Fullington ingested only generic metoclopramide; she did not ingest any metoclopramide, whether generic or brand name, that was manufactured or distributed by Wyeth, Pfizer, Schwarz, or Alaven (the "Brand Name Defendants"). However, she argues that the Brand Name Defendants are liable for her injuries because they failed adequately to warn consumers of the dangers of using metoclopramide. The Brand Name Defendants contend that they are entitled to judgment as a matter of law because they did not manufacture or distribute the metoclopramide that Fullington consumed.
The issue here has been addressed twice by the Western District of Arkansas. The Honorable Robert T. Dawson has held that:
A basic requirement of products-liability actions under Arkansas law is product identification, i.e. that the actual product manufactured or distributed by the defendant caused injury to the plaintiff.
See Chavers v. General Motors Corp., 349 Ark. 550, 563,
79 S.W.3d 361, 370 (2002) (holding plaintiff could not prevail on products-liability action where there was no proof he used defendant's product). Based on the broad definition of a "product liability action," artful pleading simply
cannot be used to circumvent this requirement. Thus, in order to prevail on her products-liability claims, Plaintiff must meet her product identification burden.
Jackson v. Anchor Packing Co., 994 F.2d 1295, 1303 (8th Cir. 1993) ("plaintiffs in Arkansas must introduce sufficient evidence to allow a jury to find that more likely than not their exposure to a particular defendant's product was a substantial factor in producing their injuries");
Lakeview Country Club, Inc. v. Superior Products, 325 Ark. 218, 226,
926 S.W.2d 428, 432 (1996) (upholding directed verdict on claims for strict liability, breach of warranty of merchantability, and breach of warranty of fitness for a particular purpose where no connection shown between defendant and product supplier).
The undisputed facts of this case demonstrate that Plaintiff did not ingest any metoclopramide, whether generic or name brand, that was either produced or distributed by Wyeth or Schwarz. Accordingly, Plaintiff has stipulated that exposure to the products of Wyeth and Schwarz did not cause her injury, and her "product liability action" must therefore fail.
See National Bank of Commerce of El Dorado, Ark. v. Dow Chemical Co., 165 F.3d 602, 606-07 (8th Cir. 1999) (holding summary judgment appropriate where plaintiff failed to establish product identification).
Fields v. Wyeth, Inc., 613 F. Supp. 2d 1056, 1060 (W.D. Ark. 2009). Following Judge Dawson, The Honorable Harry F. Barnes has held:
Although Plaintiff has brought this action under various state law theories for recovery, her claims are still product liability claims.
See Ark. Code Ann. § 16-116-102(5) (defining "product liability action" to include "all actions brought for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging, or labeling of any product."). The question whether a plaintiff can maintain a products liability action in Arkansas against the name brand manufacture[r] of a prescription drug when the consumer only ingested the generic form of the drug has been answered. In
Fields v. Wyeth, Inc., et al, Judge Robert Dawson held that as a matter of law such an action can not be maintained in Arkansas.
613 F. Supp. 2d 1056, 1058 (W.D. Ark. 2009). The Court agrees with Judge Dawson's reasoning (and the weight of authority considering this issue) and concludes that under Arkansas law a manufacturer of a brand name prescription drug may not be held liable for injuries arising from the use of another manufacturer's generic equivalent of the drug.
Neal v. Teva Pharm. USA, Inc., No. 09-1027,
2010 WL 2640170, at *2 (W.D. Ark. Jul. 1, 2010) (footnote omitted).
This Court agrees with Judges Dawson and Barnes. A plaintiff in a product liability action must allege that the actual product manufactured or distributed by the defendant caused the injury to the plaintiff. Ark. Code Ann. § 16-116-102(5) (2010) (making clear that causation is a required element of a products liability action); s ee also Jackson v. Anchor Packing Co., 994 F.2d 1295, 1303 (8th Cir. 1993) ("Arkansas has . . . retained the traditional requirement of proximate cause in all tort cases."); Fields, 613 F. Supp. 2d at 1061 (finding that because the products of the Brand Name Defendants did not give rise to the plaintiff's injury, causation was lacking); Chavers v. Gen'l Motors Corp., 349 Ark. 550, 563, 79 S.W.3d 361, 370 (2002) (finding that the plaintiff failed on her Arkansas product liability claim because she could not prove that her husband was exposed to a particular asbestos-containing product made by the defendants); see also Mensing v. Wyeth, Inc., 588 F.3d 603, 613 (8th Cir. 2009) (determining that name brand manufacturers cannot be held liable for harm caused by generic manufacturers); Foster v. Am. Home Prods. Corp., 29 F.3d 165, 170 (4th Cir. 1994) (rejecting "the contention that a name brand manufacturer's statements regarding its drug can serve as the basis for liability for injuries caused by another manufacturer's drug"); Morris v. Wyeth, Inc., No. 1:07-CV-176-R, 2008 WL 2677048, at *3 (W.D. Ky. June 30, 2008) ("Under Kentucky law, when a person[] suffers an injury caused by the advertising and labeling of a product, it is the company that advertised and labeled the product that is responsible, not the company that advertised and labeled the product's competitors."); Pustejovsky v. Wyeth, Inc., No. 4:07-CV-103-Y, 2008 WL 1314902, at *2 (N.D. Tex. April 3, 2008) ("Texas law precludes imposition of products liability on a defendant who did not manufacture or distribute the product that caused the plaintiff's injuries); Swicegood v. Pliva, Inc., 543 F. Supp. 2d 1351, 1354-58 (N.D. Ga. 2008) (finding that, under Georgia law, a defendant could only be held liable if the plaintiff was exposed to its products); LeBlanc v. Wyeth, Inc., No. 04-0611, 2006 WL 2883030, at *6 (W.D. La. Oct. 5, 2006) (rejecting the plaintiff's argument that brand name manufacturers should be liable for injuries caused by generic versions of their drugs). But see Conte v. Wyeth, Inc., 85 Cal. Rptr. 3d 299, 317-18 (Cal. Ct. App. 2008) (departing from the majority of courts and holding that the originator of a warning may be held liable in a product liability case when the ultimate harm to the plaintiff is foreseeable in light of the circumstances).
Fullington did not ingest and was not injured by an product manufactured by Pfizer, Wyeth, Schwarz, and Alaven, so those defendants are entitled to summary judgment. Fullington's claims against Pfizer, Wyeth, Schwarz, and Alaven are dismissed with prejudice.
IT IS SO ORDERED this 17th day of September, 2010.
ursuant to DGCL § 102(b)(7).
See 8 Del. C. § 102(b)(7); Certificate § 7. This statute authorizes a corporation to include in its certificate: "A provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: (i) For any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under § 174 of this title; or (iv) for any transaction from which the director derived an improper personal benefit."
In this case, Adams contends that several decisions of the CFMC Board amount to breaches of various Board members' duties of care. In particular, she argues that Board members breached their duties through their decision to increase the amount of Turf grass, thereby increasing Members' annual assessment dues. In addition, she claims Board members caused her harm by improperly disseminating a neighborhood directory with her personal information in it and agreeing to pay Emory Hill before it began providing accounting services to CFMC.
See POB 18-19, 29-30; PRB 23.
For the reasons previously discussed, I have concluded that none of the disputed actions mentioned were improper or violated any law or regulation. Therefore, I am not persuaded that any of the alleged wrongdoing by the CFMC Board or its officers constitutes gross negligence. As a result, Adams has failed to show the existence of any breach of the duty of care, let alone one that would justify injunctive or declarative relief in this action. Furthermore, aside from the frequent use of the term "bad faith" in her briefs, Adams has failed to present a single shred of probative evidence that any director made any corporate decision in bad faith. Thus, I will dismiss with prejudice Adams's claims against CFMC based on an alleged breach of the duty of care.
b. The duty of loyalty
Directors of a Delaware Corporation also owe stockholders a duty of loyalty whereby they must pursue the best interests of the company in good faith. Directors breach this duty when they place their own "interests, preferences, or appetites before the welfare of the corporation." One of the most common instances of a breach of this duty is when a director receives a personal benefit not shared by all stockholders. Bad faith conduct on the part of directors also may give rise to a breach of the duty of loyalty.
See Kuttner, 2010 WL 2739995, at *11.
See Portnoy v. Cryo-Cell Int'l, Inc., 940 A.2d 43, 75 n. 179 (Del. Ch. 2008) (citing In re RJR Nabisco, Inc. S'holder Litig., 1989 WL 7036, at *15 (Del. Ch. Jan. 31, 1989)).
See Disney, 907 A.2d at 751.
As the business judgment rule would not apply to actions taken in bad faith or otherwise in the context of a breach of the duty of loyalty, I address each of Adams's claims in turn. First, Adams asserts that she was harassed by Board members when they assessed her a fine of $300.00 without identifying the reason for doing so. Adams also makes a vague allegation that Board members slandered her after she disagreed with their decision to revise the Landscape Plan. Aside from some comments in her opening statement, Adams provided no evidence that she ever was fined $300.00 or paid such a fine and failed to identify any specific conduct taken by a Board member to "harass" her. Similarly, she presented no evidence of any Board member ever having slandered her. Thus, she has failed to carry her burden of proof on these aspects of her breach of fiduciary duty claim.
PRB 23.
Next, Adams avers that the Board improperly disseminated her personal contact information through a neighborhood directory, as well as certain letters she wrote to the Board to object to various governance issues with which she disagreed. As discussed supra Part II.D.3, Adams failed to show that the Board actually created and disseminated a neighborhood directory. Moreover, she presented no evidence at trial that any Board member disseminated her personal letters addressed to the Board, or otherwise acted in bad faith. Thus, I hold that she has not demonstrated a breach of loyalty with regard to these issues.
Id.
Third, Adams claims that the directors sought and approved a revision to the Landscape Plan to allow for an increase of Turf-level grass in the Open Spaces for self serving purposes, which had the effect of increasing Member dues. The evidence, however, fails to show that the Board or a majority of its members acted for any purpose other than to advance the best interests of the subdivision. Indeed, it appears that the Board considered a number of factors in making its decision to increase the amount of Turf grass, including cost to Members, safety of neighborhood children, and aesthetic considerations. Thus, Adams's claim that the decision to increase the amount of Turf grass was taken in bad faith or in breach of the duty of loyalty also fails.
See supra Part II.B.5.
The directors' decision not to submit the revision issue to a Member vote provides no basis for finding that they breached their duties of loyalty. See supra Part II.B.2.
Fourth, Adams alleges that Board Members wastefully paid Emory Hill for a period of time before it began providing any accounting services to CFMC. Specifically, she claims that despite being paid $775.00 a month beginning in April 2008, Emory Hill did not start providing accounting services for CFMC until October 2008. Again, however, Adams failed to prove that the directors acted in bad faith when they chose Emory Hill as the subdivision's management firm or decided to pay Emory Hill for their services beginning in April. Indeed, it appears that the Board chose Emory Hill after conducting competitive interviews because it believed that obtaining Emory Hill's services would be in the best interest of the Members. In addition, Emory Hill provided more than just accounting services. In fact, one of the Board's primary purposes in retaining its services was so that it would enforce deed restrictions and relieve Board members of that duty and the attendant awkwardness of confronting noncompliant neighbors. Thus, even if Emory Hill did not begin providing accounting services until October 2008, which is not clear from the evidence presented, that does not mean it failed to provide any services to CFMC before then. The Board properly could find that harmony among subdivision residents was a paramount concern and retaining and paying a firm to enforce deed restrictions, even if it had not yet begun providing accounting services, would serve the best interests of Calvarese Farms. I find, therefore, that the CFMC Board did not breach their duty of loyalty by retaining and paying Emory Hill beginning in April 2008 to provide management services.
POB 30.
T. Tr. 414 (McLamb) ("So I figured it would be to the best interest of the people involved to get an outside company to enforce [the deed restrictions] . . .").
Id.
Simon testified that Emory Hill handled Member complaints, managed property issues, and enforced deed restrictions, among other things, in addition to providing accounting services to CFMC. T. Tr. 492-95, 501.
Finally, Adams alleges that two directors on the 2008 board, Aidoo and his wife, Ninette Aidoo ("N. Aidoo"), breached their duties of loyalty by drawing a check on the CFMC corporate account to pay for their personal lawn care services. According to Adams, Aidoo and his wife, by virtue of their positions as Board members and vice president and treasurer, respectively, used CFMC funds to pay "Mr. Clark" for $100.00 worth of lawn cutting at their personal residence.
POB 29; PRB 24.
It is well settled that a director breaches her duty of loyalty if she receives a personal benefit using corporate funds to the exclusion of other stockholders. Here, Adams presented some evidence that the Aidoos used their Board positions, and in particular N. Aidoo's check-writing authority as CFMC treasurer, to pay Clark to cut their own lawn using corporate funds. Aidoo acknowledged on cross examination that Clark mowed his family's lawn from time to time. He also admitted that, to his knowledge, the CFMC president was required to countersign all checks drawn by the CFMC treasurer, but that the disputed check to Clark did not contain any such countersignature. Although this latter fact is suspect, this evidence is sufficient to support a reasonable, but not conclusive, inference that the Aidoos may have used CFMC funds to pay for their own expenses.
See Disney, 907 A.2d at 751.
See PX 32.
T. Tr. 577.
Id. at 582; PX 32.
Adams, however, has the burden to show by a preponderance of the evidence that the Aidoos did in fact use such funds to secure a private benefit to the exclusion of other Members. She did not carry this burden. Aidoo testified that CFMC had contracted with Clark to perform services for the corporation in the past and, to the best of his recollection, the $100.00 check was given to Clark after he removed a damaged tree from an area near the Calvarese Farms sign, but unrelated to the Aidoos' property. Moreover, Adams did not present testimony from Clark, or any other witness, who could corroborate her assertions about why the check was drawn. Without more, I am not persuaded that the Aidoos violated their fiduciary duties of loyalty with regard to the challenged payment to Clark.
T. Tr. 580-81.
I further note that the allegedly improper payment of $100.00 would not support any of Adams's claims against CFMC for declaratory or injunctive relief. In addition, neither Yaw nor Ninette Aidoo is a defendant in this action.
5. Should the testimony of Pinkett and Aidoo be excluded under Delaware Rule of Evidence 403?
Adams argues that the testimony of Pinkett and Aidoo was not relevant to any issues at trial and, in any case, should be excluded under Delaware Rule of Evidence 403 because the "prejudice [of their testimony] outweighs the relevance." Pursuant to Rule 402, all relevant evidence is admissible. Evidence is relevant if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Some evidence, even if relevant still may be excluded under Rule 403 if the trial judge concludes that its probative value is substantially outweighed by the danger of unfair prejudice.
POB 5; T. Tr. 3-5. At the beginning of trial Adams also objected to the testimony of N. Aidoo. Because N. Aidoo did not testify, however, I consider the portion of Adams's Rule 403 argument related to her to be moot. See T. Tr. 564.
D.R.E. 402.
D.R.E. 401.
Adams's objections to the testimony of Pinkett and Aidoo on relevance and unfair prejudice grounds are without merit. She has failed to offer any convincing argument as to why either individual's testimony is not relevant. Aidoo's testimony was probative of, among other things, the procedure the Board followed when it took actions to revise the Landscape Plan, the amount and number of assessments levied on Members, and matters relating to the logistics and costs of mowing various areas of Calvarese Farms. Pinkett's testimony related to, among other things, Munson's authority to contact the Land Use Department to obtain a revision to the Landscape Plan and the alleged creation and dissemination of a neighborhood directory containing Members' personal information.
T. Tr. 565, 567, 571-75.
T. Tr. 344, 349, 352, 358-61.
In addition, Adams has not explained how or why the challenged testimony is unfairly prejudicial to her case under Rule 403. This is especially important in the context of a bench trial, such as this, because a trial judge is better able than a jury to ignore any arguably improper inferences. Thus, I deny Adams's motion to exclude the testimony of Pinkett and Aidoo.
See Tracinda Corp. v. DaimlerChrysler AG, 362 F. Supp. 2d 487, 497 (D. Del. 2005).
6. Should the Court admonish Adams for spurious accusations and name calling?
Based on various statements made by Adams at trial and in her post-trial briefs, counsel for CFMC asks this Court to admonish Adams for her name calling, unfounded accusations of falsehood, and statements impugning the character and reputation of defense counsel and various witnesses. This Court, like all Delaware courts, "expects civility among parties, even when such parties are pro se" or self-represented. In most respects, Adams did an admirable job representing herself in this case and becoming familiar with the applicable law and procedures. Over the course of the litigation, however, Adams repeatedly made unnecessary, and often personal, attacks on the integrity and motives of CFMC's counsel and cast unfounded aspersions on the truthfulness and character of several witnesses.
Nevins v. Bryan, 885 A.2d 233, 255 (Del. Ch. 2005).
See, e.g., POB 5, 28-29 ("The credibility of Yaw Aidoo is critically challenged, and even his appearing `well-studied', [sic] prepared and staged answers prompted by defense counsel, his testimony was entirely plagued with falsehoods [sic]."); PRB 5-6 (implying that defendant Board members are fascists); T. Tr. 11-12 (implying that CFMC is a fascist society).
I consider Adams's outbursts and instances of hyperbole to be inappropriate and disrespectful of the litigants and this Court. Therefore, I admonish her to avoid them in the future and to exhibit greater self-control in her efforts to press her arguments in this or any other court.
7. Is Adams entitled to relief on issues not addressed in her post-trial briefing?
Adams raised several other issues earlier in this litigation, which she did not pursue after trial. Because Adams did not address these items in her post-trial briefs or otherwise cogently present evidence and argument regarding them in connection with the trial, she has waived them.
These include whether: (1) the Board had been enforcing deed restrictions discriminatorily; (2) the Board's decision to cut certain areas designated as Meadows to Turf level lowered the value of her property; (3) CFMC has the authority to change the entrance to Calvarese Farms without Member approval; (4) CFMC or its Members singled out and harassed Adams; and (5) CFMC failed to collect assessments from all homeowners.
Adams also listed many forms of relief in her Complaint for which she did not marshal any evidence or present any argument in her post-trial submissions, including: removal of CFMC Board members with a conflict of interest and appointment of a custodian; a decree quieting title to Adams's property; an order requiring CFMC to allow Adams to inspect its books and records pursuant to 8 Del. C. § 220; an examination of the validity of an unspecified Board election under 8 Del. C. § 225; and a declaratory judgment regarding the election process for directors on the CFMC Board, including (1) the qualifications to vote or be an electoral candidate and (2) the validity of the Board's imposition of fines.
Thus, in addition to waiving the issues she failed to brief, I also deny Adams's petition for any form of relief for which she did not present argument or evidence.
See Emerald P'rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) ("Issues not briefed are deemed waived.") (citing Murphy v. State, 632 A.2d 1150, 1152 (Del. 1993); Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 140 n. 3 (Del. 1997)).
E. Relief Sought
Due to the number and disparate nature of the remedies sought by Adams in connection with the trial, I address each remedy in turn below.
1. Damages a. Money paid by Plaintiff
Among other things, Adams seeks punitive damages for alleged breaches by the CFMC directors and officers of their fiduciary duties of care and loyalty. The Court of Chancery, however, lacks jurisdiction to award punitive or exemplary damages unless it has received express statutory authority from the Delaware Legislature. See Beals v. Wash. Int'l, Inc., 386 A.2d 1156, 1158-59 (Del. Ch. 1978); see also Donald J. Wolfe, Jr. Michael A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery § 2.05 (2010). The Legislature has not authorized punitive damages for a director's breach of fiduciary duty; thus, Adams's claim for such relief must be denied.
In her Complaint, Adams asks the Court to require CFMC to reimburse her for alleged payments of $590.00 in 2007, $100.00 in 2008, and approximately $590.00, plus late charges in 2009, because such sums represent invalid assessments levied in violation of the Declaration. As discussed supra Part II.C.4, Adams is entitled to recover her payments of $100.00 in 2008 and $590.00 in 2009, plus late charges actually paid. I deny her claim to recover the 2007 sum, however, because that payment was made to Gemcraft before control over the Open Spaces was transferred to Defendant.
b. Money spent by CFMC
Adams also seeks to require CFMC to repay all money collected in prior assessments and paid to landscaping companies that mowed the Open Spaces in violation of the Landscape Plan, money paid to Emory Hill, and money spent by CFMC on "Meet and Greet Your Neighbor" events.
Compl. ¶¶ 13(5), 13(7)-(9).
Adams, however, brought and prosecuted this action in her individual capacity, and not derivatively on behalf of all similarly situated CFMC Members. In terms of a derivative action, Adams also has not alleged with specificity that she made a demand on the CFMC Board before filing this action or that demand is excused as required by Rule 23.1. Similarly, Adams has not moved the Court to approve her as a representative of a certified class action under Court of Chancery Rule 23, nor has she offered any other basis for authorizing her to proceed in a representative capacity. As a result, she is precluded from seeking damages that were not suffered uniquely by her in her personal capacity as a CFMC Member. Accordingly, I deny Adams's request to have CFMC return all improperly assessed sums collected from any Members other than herself.
See Compl. at Prayer for Relief; Pl.'s Proposed Pre-Trial Order.
T. Tr. 438-39 (Adams).
See, e.g., Alston v. State, 2002 WL 184247, at *3 (Del. Super. Jan. 28, 2002) (noting that a court will consider only the plaintiff's personal claims, and not claims on behalf of a putative class of persons, where class certification is denied); cf. In re Countrywide S'holders Litig., 2009 WL 846019, at *10-11 (Del. Ch. Mar. 31, 2009) (explaining that the prerequisites of Rule 23 must be met before class certification may be granted).
2. Declaratory judgment
Adams also seeks a declaratory judgment regarding various issues.
a. Whether notice of elections to Adams was provided timely or at all?
Adams claims that she did not receive notice, timely or otherwise, of CFMC Board elections as is required under the Bylaws. According to the Bylaws, Members are entitled to notice of all annual meetings at which they shall elect, by a plurality vote, a board of directors.
POB 40.
Bylaws § 3 ("Notice of all meetings shall be mailed or hand delivered . . . to each member of record entitled to vote . . . for annual meetings . . . ten (10) days . . . prior thereto.").
The evidence, however, weighed heavily in favor of finding that the CFMC Board fully complied with its notice obligations under the Bylaws. McLamb, for example, credibly testified that each Member received a first-class mailing, along with a proxy statement, before each upcoming meeting to elect directors. In addition, the Board attempts to place a large sign at the entrance to the subdivision to apprise Members of the date and location of upcoming meetings. Maria Ann Simon, CFMC's current property manager from Emory Hill, testified that Emory Hill took over notice responsibilities from the Board and continued the practice of providing notice by mail and signage. Adams repeatedly denied receiving notice of any such meetings, but admitted on cross examination that she had seen a notice sign at the entrance to the subdivision in January 2010. Adams also acknowledged that she had received a notice announcing a meeting to hold 2008 annual elections, but alleged that she did not receive it until after the meeting took place — a notice McLamb convincingly stated had timely been sent to all Members.
T. Tr. 416-17. McLamb personally mailed the letters until June 2008 when Emory Hill took over such responsibilities. Id. at 504-05 (Simon).
Id. at 504-05 (Simon).
Id.; Tr. 418-19 (McLamb).
Adams contended that the date of the meeting noticed on the sign was changed deliberately so that the meeting would conflict with Adams's obligations to attend this trial. T. Tr. 541.
Id. at 560-61.
Having considered all the evidence, I find that Adams failed to carry her burden of showing by a preponderance of the evidence that she did not in fact receive notice of any annual meeting at which Board members were elected. Instead, Adams offered only bare assertions that she had not received such notice, which I consider less reliable than the evidence to the contrary presented by CFMC. Thus, I deny Adams's claim for declaratory relief on this issue.
b. Whether Members must pay assessments not duly authorized?
In her Complaint, Adams requests a declaratory judgment that CFMC incorrectly levied annual assessments against Members without the Member vote required by the Maintenance Declaration. As discussed supra Part II.C, unless and until the Declaration is amended, only the Members of CFMC are empowered to set annual assessments pursuant to § 1(c) of the Declaration and any contrary provisions of the Certificate or Bylaws are inoperative. Thus, any assessments levied on Members without the assent of a majority vote of the Members voting in person or by proxy at the annual meeting, pursuant to § 1(c) of the Declaration, are voidable. In accordance with my analysis above, Adams is entitled to recover the $100.00 annual assessment she paid in 2008 and the $590.00 annual assessment, plus late charges, she paid in 2009. She is not entitled to recover her $590.00 payment to Gemcraft in 2007.
Compl. ¶ 5.
3. Permanent Injunction
In her Pre-Trial Order, Adams also seeks a permanent injunction (1) requiring CFMC to enforce certain deed restrictions and prohibiting it from (2) cutting the Meadow areas to Turf, (3) contracting with Emory Hill Real Estate Services, (4) installing speed bumps, (5) placing liens on her property for refusing to pay assessments or fines issued in violation of the Governing Documents, and (6) making further assessments. To obtain a permanent injunction, a plaintiff must show: "(1) actual success on the merits of the claims; (2) that the plaintiff will suffer irreparable harm if injunctive relief is not granted; and (3) that the harm to the plaintiff outweighs the harm to the defendant if an injunction is granted."
See id. ¶¶ 2, 4, 6-8 and Prayer for Relief.
Examen, Inc. v. VantagePoint Venture P'rs 1996, 2005 WL 1653959, at *2 (Del. Ch. July 7, 2005) (quoting Christiana Town Ctr. LLC v. New Castle Cty., 2003 WL 21314499, at *2 (Del. Ch. June 6, 2003), aff'd, 841 A.2d 307 (Del. 2004) (TABLE)).
Here, Adams's request for a permanent injunction must be denied as to the first four matters she challenges because she has not shown actual success on the merits. In my ruling on CFMC's motion for summary judgment, for example, I rejected items 3 and 4 by ruling that the Governing Documents authorize the CFMC Board to install speed bumps and contract with a firm, such as Emory Hill, to provide services to the Board to help it carry out its responsibilities. Additionally, although Adams has shown that CFMC may not force Members to pay assessments made in violation of the Maintenance Declaration or place liens on a Member's property for refusing to pay assessments or fines issued in violation of the Governing Documents, she has not shown that she will suffer irreparable harm if injunctive relief is denied. Rather, Adams has an adequate remedy at law in that she may seek recovery of any money she pays for an unlawful assessment or fine imposed by CFMC. Accordingly, I deny Adams's claims for injunctive relief.
Furthermore, the evidence shows that no speed bumps were ever installed.
D.I. 65.
4. Attorneys' fees and costs
In their respective pleadings, Adams and CFMC each seek to recover their costs of litigation, including attorneys' fees. For the reasons stated below, I deny Adams's request in full and award CFMC's reasonable costs under Rule 54(d).
Compl. ¶ 13(6); DAB 30.
a. Attorneys' fees
Delaware follows the American Rule, under which each party must bear its own litigation expenses, including attorneys' fees. Two well settled exceptions to this rule exist for "cases where the underlying . . . conduct of the losing party was so egregious as to justify an award of attorneys' fees as an element of damages, and . . . cases where the court finds that the litigation was brought in bad faith, or that a party's bad faith increased the costs of litigation." A moving party bears a heavy burden to show entitlement to fees based on the bad faith conduct of the opposing party, as she must do so by clear evidence. Moreover, Delaware, like many other states, does not grant attorneys' fees to self-represented litigants.
FGC Hldgs. Ltd. v. Teltronics, Inc., 2007 WL 241384, at *5 (Del. Ch. Jan. 22, 2007).
Cove on Herring Creek Homeowners' Ass'n v. Riggs, 2005 WL 1252399, at *1 (Del. Ch. May 19, 2005).
See, e.g., M G Polymers USA v. Carestream Health Inc., 2010 WL 1611042, at *67 (Del. Super. Apr. 21, 2010); FGC Hldgs., 2007 WL 241384, at *7.
See Clark v. D.O.W. Fin. Corp., 2000 WL 973092, at *7 (Del. Super. May 26, 2000) ("there is no Delaware precedent for granting a pro se litigant attorney's fees."); see also 20 C.J.S. Costs § 138.
Based on the facts and circumstances of this case, I hold that Adams is not entitled to recover her litigation expenses or "attorneys' fees." She has failed to establish that CFMC's conduct falls into a recognized exception to the American Rule. CFMC's underlying conduct, including its flawed attempt to impose certain annual assessments, does not rise to the "high level of egregiousness" necessary to make it liable for Adams's fees as an element of her damages. Likewise, Adams has not shown that CFMC acted in bad faith or vexatiously to increase the costs of this litigation. Thus, Adams is not entitled to recover any expenses in the nature of attorneys' fees.
See FGC Hldgs., 2007 WL 241384, at *5.
As to CFMC's claim against Adams for its attorneys' fees and expenses, the only issues are whether Adams brought this action in bad faith or prosecuted it in bad faith or vexatiously to increase the costs of litigation. While Adams occasionally resorted to inflammatory rhetoric during the litigation, she generally acquitted herself well and endeavored to comport with this Court's rules and procedures. CFMC also has not demonstrated that she brought frivolous claims without a good faith belief in the correctness of her position or deliberately took any action to increase the costs of the litigation. As such, I deny CFMC's request to recover its attorneys' fees.
See supra Part II.D.6
b. Costs
Under the American Rule, litigants are generally responsible for their own costs. Court of Chancery Rule 54(d), however, creates an exception to the general rule whereby costs "shall be allowed as of course to the prevailing party unless the court otherwise directs." Under Rule 54(d), the "prevailing" party is a party who successfully prevails on the merits of the main issue or the party who prevailed on most of her claims. Courts interpret the term "prevailing" to mean that a party need not be successful on all claims, but rather must succeed on a general majority of claims. Moreover, the Court of Chancery has "wide discretion" in awarding or apportioning costs in each particular case, including the discretion to find that no party may be regarded as having prevailed.
See FGC Hldgs., 2007 WL 241384, at *5.
For the purposes of Rule 54(d), costs include "expenses necessarily incurred in the assertion of a right in court, such as court filing fees, fees associated with service of process or costs covered by statute. . . . [I]tems such as computerized legal research, transcripts, or photocopying are not recoverable." Id. at *17.
See FGC Hldgs., 2007 WL 241384, at *17.
Brandin v. Gottlieb, 2000 WL 1005954, at *27 (Del. Ch. July 13, 2000).
See FGC Hldgs., 2007 WL 241384, at *17.
See Barrows v. Bowen, 1994 WL 514868, at *1 (Del. Ch. Sept. 7, 1994).
See Vianix Del. LLC v. Nuance Commc'ns, Inc., 2010 WL 3221898, at *28 (Del. Ch. Aug. 13, 2010).
In this case, I find that CFMC is the prevailing party under Rule 54(d) and, thus, is entitled to its costs. While I sustained Adams's claim that the Board may not levy an annual assessment without a Member vote pursuant to the Maintenance Declaration, I found for CFMC on each of Adams's other claims, which were at least as important and clearly outnumbered the claims on which Adams prevailed. Therefore, I hold that Adams must pay CFMC's costs of litigation pursuant to Rule 54(d).
III. CONCLUSION
For the foregoing reasons, I hold that: (1) the revision to the Calvarese Farms Landscape Plan adopted in or around October 2007 is valid and that Adams has not shown that the CFMC Board or the New Castle County Department of Land Use acted improperly in connection with that revision; (2) CFMC may not levy an annual assessment upon Members of the subdivision unless the assessment is approved by a majority vote of the Members who are voting in person or by proxy at the annual meeting pursuant to § 1(c) of the Declaration; (3) CFMC Board members did not unlawfully approve or condone mowing in Reforestation areas identified in the Landscape Plan, create or disseminate a neighborhood directory containing Adams's telephone number or other personal information, or breach their fiduciary duties of care and loyalty; (4) the CFMC Board has authority to, and properly did, contract with Emory Hill; and (5) Adams has waived any other issues that she did not brief or otherwise pursue after trial.
I further hold that: (6) Adams is entitled to recover only the monies she paid to CFMC as part of past annual assessment collections for 2008 and 2009, plus any late charges; (7) in accordance with Rule 54(d), Adams must pay CFMC's costs in connection with this litigation; (8) Adams is not entitled to declaratory judgment on the issues of improper notice of Board elections or payment of assessments not duly authorized under the Maintenance Declaration, except as stated in item (6) above; and (9) Adams is not entitled to a permanent injunction against the CFMC Board. In all other respects, Adams's claims in this action are dismissed with prejudice. Plaintiff and Defendant's competing claims for attorneys' fees and expenses, other than costs recoverable under Rule 54(d), are denied. I am entering concurrently herewith a final judgment reflecting these rulings.