01/19/81 FREEDMAN AND REACH v. BLOOMFIELD LEWIS V.

1981 | Cited 0 times | Court of Chancery of Delaware | January 19, 1981

WILLIAM MARVEL, CHANCELLOR

UNREPORTED OPINION

The first matter before the Court for decision in this long-pending litigation is the motion of the defendant Fred A. Woitscheck, who was elected a director of the defendant Bloomfield Building Industries on July 16, 1968, to dismiss the complaint against him for lack of jurisdiction over his person, insufficiency of process, as well as insufficiency of service of process. Also, before the Court for decision is the motion of the defendant Woitscheck to dismiss the complaint under Rule 41(e) for failure of the plaintiffs diligently to prosecute this action or specifically inaction for a period of one year.

The present action was filed on April 22, 1969 by two former directors of the corporate defendant, the complaint naming Fred A. Woitscheck, a non-resident of Delaware, as one of the defendants. Thereafter, little action took place in the case until June 4, 1971, when counsel for plaintiffs belatedly sought to compel the appearance of the non-resident defendant Woitscheck by causing, through the entry of an order, the seizure of Mr. Woitscheck's stock in the corporate defendant for the purpose of compelling his appearance in Delaware in this case under the provisions of 10 Del.C. § 366. Responding to such compulsory process, Mr. Woitscheck entered his appearance in this action on August 13, 1971. He now contends, for the reasons hereinafter stated, that such general appearance was improperly coerced by means of a statute which authorized a procedure which violated his constitutional right as a non-resident with virtually no contacts with Delaware not to enter a personal appearance in this Delaware proceeding.

He so contends because after the entry of his personal appearance in this case on June 24, 1977, in the case of Shaffer v. Heitner, 433 U.S. 186 (1977), the Supreme Court of the United States, applying the principle enunciated in the case of International Shoe Co. v. Washington, 66 Sup. Ct. 54 (1954), which case required a showing of minimal contacts by a non-resident with the state in which he has been sued in order to make such non-resident amenable to process there, thereby satisfying "* * * traditional notions of fair play and substantial Justice", held that the Delaware sequestration process, as applied to the case at bar, was unconstitutional in light of the absence of any real contact with the State of Delaware on the part of the named non-resident directors of the defendant corporation.

Being thereafter apprised by his counsel of such ruling, on September 26, 1977 Mr. Woitscheck moved to dismiss the complaint against him for lack of personal jurisdiction, it being contended by him that his appearance had been improperly compelled by an unconstitutional process, namely through seizure of his shares in a Delaware corporation in a situation in which there was no showing that he as a defendant had any contact with Delaware other than his ownership of shares of stock in such corporation.

However, in the case of Tuckman v. Aerosonic Corporation, Del. Ch. 394 A.2d 226 (1978) aff'd by order of the Supreme Court of Delaware on June 11, 1979, this Court held that in a similar situation in which a defendant, who knew the implication of the decision in Shaffer v. Heitner, supra, at least 82 days before filing his motion to dismiss on jurisdictional grounds, that such defendant had by delay waived his constitutional right to raise the question as to his amenability to the jurisdiction of the State of Delaware secured through sequestration, the Court pointing out:

"In order to decide whether an 82 day delay was an unreasonable delay and accordingly a waiver of a constitutional defense, it is necessary to examine, by analogy, the time limits and procedures required under Rule 12 of the Rules of this Court. Under Rule 12(h) the defenses of lack of jurisdiction over the person and insufficiency of process are waived unless raised by motion before pleading or included in a responsive pleading. Thus a Rule 12(b) defense, if available at the time, is waived, even if set forth in the answer, if it was not included in a Rule 12 motion filed before the answer. Wright & Miller, Federal Practice and Procedure, Civil § 1391. See Varone v. Varone, 392 F.2d 855 (7th Cir. 1968); Graff v. Nieberg, 233 F.2d 860 (7th Cir. 1956)."

"Rule 12(a) requires that an answer be served within 20 days of service of the complaint on defendant unless the time for answering is extended, and therefore, under normal circumstances a defendant would be held to have waived the defenses of lack of jurisdiction over the person and insufficiency of process if the defenses had not been raised in the answer or by motion before service of the answer. In either event, whether raised by motion or pleading, the maximum time allowed would have been 20 days from service of the complaint on a defendant. Alger v. Hayes, 452 F.2d 841 (8th Cir. 1972); Standard Oil Co. v. Montecatini Edison S.p.A., 342 F.Supp. 125 (D. Del. 1972); Wright & Miller, supra, Civil § 1390-1393: 2A Moore Federal Practice (2d Ed.) § 12.23, pp. 2446-2463.

"However, because Shaffer was not decided until long after all the pleadings had been filed, the defenses contained in Frank's motion were unavailable at the time his answer was filed. Unavailable defenses are not waived until available. Wright & Miller, supra, Civil § 1388; Printing Plate Supply Co. v. Curtis Publishing Co., 278 F.Supp. 642 (E.D.Pa. 1968). The question arises, therefore, of how long should a defendant be given to raise a Rule 12(b) defense, not available at the time the answer was filed. Policy dictates that promptness be required. See Grier v. Tri-State Transit Co., 36 F.Supp. 26 (W.D.La. 1940). If Frank is now permitted to raise the Rule 12(b) defenses of lack of personal jurisdiction and insufficiency of process 82 days after they became available by virtue of Shaffer, and known to him, he would in essence receive a benefit which he could not have obtained had Shaffer been decided before the suit was instituted. If the defenses had been available at the time the suit was filed, Frank would have had a maximum of 20 days to raise these defenses or be deemed to have waived them. Of course, relief against the 20 day limitation is available in special circumstances. See Rule 6 or 60. But Frank has shown no reason for his delay in filing his Motion To Dismiss although it is clear that he knew of the implications of Shaffer at least 82 days before his Motion was filed."

Unless it can be demonstrated by affidavit or otherwise that the defendant Woitscheck and his counsel were justifiably unaware of the decision in Shaffer v. Heitner, supra, and its implications until shortly before the filing of such defendant's motion to dismiss the action against him on constitutional grounds, such motion will be denied on the ground that such defendant has waived such constitutional right.

As to defendant's motion to dismiss for lack of prosecution under Rule 41(e), I am satisfied that despite the length of time which has elapsed since the bringing of this action, that the record supports a finding that plaintiffs, subsequent to the filing of defendant's motion, sought to have this case, which names defendants other than Mr. Woitscheck, set for trial. In other words, there is no showing on the record before me that there has been any recent delay on plaintiffs' past which would justify the dismissal of the complaint against the defendant Woitscheck.

Finally, I am satisfied that the basic purpose of Rule 41(e) is to goad a recalcitrant plaintiff into action and should not be a means of arbitrarily dismissing a pending action.

On notice, an order in conformity with the above may be submitted.

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