Opinion
C.A. No. 02C-11-242 MMJ.
Submitted: April 15, 2005.
Decided: June 21, 2005.
Upon Motion of Defendant, the Grand Lodge of the Knights of Pythias, for Summary Judgment, GRANTED.
Lois J. Dawson, Esquire, Wilmington, Delaware, Attorney for Plaintiffs.
Robert K. Pearce, Esquire, Ferry, Joseph Pearce, P.A., Wilmington, Delaware, Attorneys for House of Wright Mortuary, Inc. and Robert O. Wright.
Dennis B. Phifer, Esquire, Wilmington, Delaware, Attorney for The Independent Order of Odd Fellows Eden Lodge #34, the Independent Order of Odd Fellows Lodge #1, and The Grand Lodge of Delaware I.O.O.F., Inc., Robert J. Leoni, Esquire, Morgan, Shelsby Leoni, Newark, Delaware, Attorneys for The Grand Lodge of the Knights of Pythias.
MEMORANDUM OPINION
PROCEDURAL AND FACTUAL CONTEXT
This action was filed on November 27, 2002. Plaintiff Elena Green is the mother of Susie C. Green, who is deceased. Plaintiff Crystal Green is the daughter of the deceased. Elena Green contracted with defendant House of Wright Mortuary, Inc. ("Wright Mortuary") for services in connection with the funeral of Susie C. Green. Those services included the purchase of a cemetery plot at Riverview Cemetery. The Riverview Cemetery is owned by the Riverview Cemetery Company of Wilmington Delaware ("Riverview Cemetery"), a Delaware non-profit corporation.
The Grand Lodge of the Knights of Pythias ("Knights of Pythias") is a Pennsylvania organization that owned 80 of the 200 share of stock in Riverview Cemetery. The Knights of Pythias appointed two of the eight members of the Riverview Cemetery Board.
Susie C. Green died on December 13, 1998. A burial service was held at Riverview Cemetery on December 16, 1998. Plaintiffs subsequently became suspicious that Susie Green was not actually interred in burial plot G-76, as listed in certain of Riverview Cemetery's records. On October 6, 2002, the casket buried in burial plot G-76 was disinterred. The casket was not that of Susie Green, but of some other unknown deceased person.
Plaintiffs allege that they have been unable to verify where in Riverview Cemetery Susie Green is buried, or that she is in fact buried in Riverview Cemetery. Plaintiffs filed this action against several defendants, asserting that the defendants' negligent actions and breaches of contract proximately caused Plaintiffs pain and suffering, and seeking general, special and punitive damages.
The Knights of Pythias moved for summary judgment on the grounds that it has no ownership interest in the property; that it did not manage or operate Riverview Cemetery; and that it did not participate in the day-to-day operations of Riverview Cemetery, including burials or record-keeping. Plaintiffs oppose the summary judgment motion, alleging that the Knights of Pythias is an agent or alter ego for Riverview Cemetery.
Riverview Cemetery filed for bankruptcy protection. Although no party sought a stay of this action in the Superior Court, the parties apparently informally agreed that the bankruptcy automatic stay applied. Therefore, discovery was stalled until Plaintiffs' motion to lift the stay was granted by the bankruptcy court on November 18, 2004. Riverview Cemetery's bankruptcy now has been resolved.
Plaintiffs have argued that this motion for summary judgment is premature because discovery has not yet been completed. Nevertheless, Plaintiffs conceded during argument that it is unlikely that there exists any additional evidence that would bear upon the legal issues raised in the Knights of Pythias' motion. All parties agree that Riverview Cemetery did not maintain detailed financial records, or any other type of relevant records, with the exception of board minutes and tax returns.
The Court heard argument on the motion on March 17, 2005. At the close of the hearing, the Court granted Plaintiffs' counsel until April 15, 2005 to supplement the record. Plaintiffs declined to submit any additional evidence in opposition to the motion for summary judgment.
ANALYSIS
Summary judgment is appropriate when the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. In considering the motion, the Court must evaluate the facts in the light most favorable to the non-moving party. Summary judgment will not be granted under circumstances where the record reasonably indicates that a material fact is in dispute or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances. When a motion for summary judgment is made and supported as provided in Superior Court Civil Rule 56, the opposing party may not rest on mere allegations or denials. The adverse party must set forth specific facts, by affidavit or otherwise, showing that there is a genuine issue for trial.
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).
Id.
Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962).
Super. Ct. Civ. R. 56(e).
It is undisputed that the Knights of Pythias was a minority shareholder of Riverview Cemetery, holding 80 of the 200 outstanding shares. The Knights of Pythias elect two out of eight directors of the Riverview Cemetery Board. Riverview Cemetery Board members are not compensated for their service on the Board.
Plaintiffs argue that the Knights of Pythias is not a true corporation, having failed to observe corporate formalities. For example, minutes of the Knights of Pythias Board meetings are attached to minutes of Riverview Cemetery Board, and vice-versa. A representative of the Knights of Pythias reported to its board on a regular basis concerning the activities of Riverview Cemetery. Records of ownership and transfer of shares of Riverview Cemetery stock may not be formalized.
Riverview Cemetery is funded in large part through various lodges, including the Knights of Pythias. On one occasion the Knights of Pythias gave Riverview Cemetery $50,000 directly for the perpetual care fund.
Riverview Cemetery was managed by members of the lodges. Management consisted of an executive director for the cemetery and two employees. The managers received some minimal remuneration.
Even accepting the facts in the light most favorable to the non-moving party, summary judgment must be granted. Plaintiffs' complaint concedes that Riverview Cemetery "is a not-for-profit corporation organized and existing under the laws of the State of Delaware." A corporation is an entity distinct from its shareholders. Only the Court of Chancery may pierce the corporate veil to obtain a judgment against individual stockholders or officers, or against other corporations.
Scott-Douglas Corp. v. Greyhound Corp., 304 A.2d 309, 314 (Del.Super. 1973).
Sonne v. Sacks, 314 A.2d 194, 197 (Del. 1973); Wilson v. Klabe Construction Co., 2004 WL 1732217, at *3.
CONCLUSION
The Superior Court lacks jurisdiction to consider whether the relationship between the Knights of Pythias, a shareholder, and Riverview Cemetery, justifies piercing the corporate veil. The Court of Chancery has sole jurisdiction to determine the validity of Plaintiffs' claim that Riverview Cemetery is the agent or alter ego of the Knights of Pythias. Plaintiffs have not alleged that the Knights of Pythias is liable to Plaintiffs for any actions apart from its relationship with Riverview Cemetery. Without piercing the corporate veil, there can be no finding that the Knights of Pythias has acted negligently or in breach of any contract with regard to Plaintiffs.THEREFORE, The Motion for Summary Judgment of Defendant, The Grand Lodge of the Knights of Pythias is hereby GRANTED. All claims and cross-claims against The Grand Lodge of the Knights of Pythias are hereby DISMISSED WITH PREJUDICE.