Opinion
C.A. No. N14C-12-259 EMD
06-30-2016
PAZUNIAK LAW OFFICE, LLC and GEORGE PUZUNIAK, Plaintiffs, v. PI-NET INTERNATIONAL, INC. and LAKSHMI ARUNACHALAM, Defendants.
Dr. Lakshmi Arunachalam, Menlo Park, California, Defendant Pro Se. George Pazuniak, Esquire, Pazuniak Law Office LLC, Wilmington, Delaware, Attorney for Plaintiffs Pazuniak Law Office, LLC and George Pazuniak.
ORDER DENYING DEFENDANT'S AND THE REAL PARTY IN INTEREST, DR. LAKSHMI ARUNACHALAM'S MOTION TO SUBSTITUTE PARTIES UNDER RULES 25(c), 17(a) AND 17(b) OF FEDERAL RULES OF CIVIL PROCEDURE Dr. Lakshmi Arunachalam, Menlo Park, California, Defendant Pro Se. George Pazuniak, Esquire, Pazuniak Law Office LLC, Wilmington, Delaware, Attorney for Plaintiffs Pazuniak Law Office, LLC and George Pazuniak. DAVIS, J.
Upon consideration of Defendant's and the Real Party in Interest, Dr. Lakshmi Arunachalam's Motion to Substitute Parties under Rules 25(c), 17(a) and 17(b) of Federal Rules of Civil Procedure ("Motion to Substitute") filed by Defendants Pi-Net International, Inc. ("Pi-Net") and Lakshmi Arunachalam; Plaintiffs' Omnibus Answering Brief to (i) Defendant's Motion to Substitute Parties filed on November 12 and December 1, 2014; (ii) Defendant's Motion for Transfer of Jurisdiction filed on December 1, 2014; (iii) Defendant's Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Personal Jurisdiction filed on December 5, 2014; (iv) Defendant's Motion for Summary Judgment to Dismiss Plaintiff's First Amended Complaint with Prejudice filed on December 10, 2014; and (v) Defendant's Motion for Enlargement of Time filed on November 12 and December 10, 2014 ("Omnibus Response") filed by Plaintiffs Pazuniak Law Office, LLC and George Pazuniak; the First Amended and Supplemental Complaint (the "Complaint"); the arguments of the parties advanced in the Motion to Substitute and the Omnibus Response; and, the entire record of this civil action:
1. This is a civil action brought by Plaintiffs Pazuniak Law Office, LLC and Mr. Pazuniak (collectively, "Pazuniak Law"). Pazuniak Law seeks declaratory relief as to certain funds held by Pazuniak Law. In addition, Pazuniak Law alleges that Defendants Pi-Net International, Inc. ("Pi-Net") and Dr. Arunachalam are liable to Pazuniak Law on claims of common law libel and tortuous interference with prospective business opportunities.
2. According to the Complaint, Pazuniak Law and Pi-Net, Dr. Arunchalam and WebXchange entered into a retainer agreement (the "Agreement") on January 25, 2012. Count I of the Complaint seeks a declaration as to the distribution of certain funds under the terms of the Agreement and Pazuniak Law's purported right to recover costs for providing certain files to Pi-Net upon the termination of Pazuniak Law's services to Pi-Net, Dr. Arunchalam and WebXchange.
3. Through the Motion to Substitute, Dr. Arunachalam seeks an order substituting Dr. Arunachalam for Pi-Net, contending that Dr. Arunachalam is the real party-in-interest. The Motion to Substitute provides that Dr. Arunachalam has a 100% ownership interest in Pi-Net and has transferred all of her patents from Pi-Net to herself. Dr. Arunachalam relies upon Rules 25(c), 17(a) and 17(b) of Federal Rules of Civil Procedure, contending these rules require the substitution because Dr. Arunachalam is the real party-in-interest due to the transfer of the patents and her stock ownership in Pi-Net.
4. The Court notes that the Federal Rules of Civil Procedure do not apply to this case. The Delaware Rules of Civil Procedure apply. "Substitution of a party under Rule 25(c) [of the Delaware Rules of Civil Procedure] is committed to the discretion of the Court. Where there has been a transfer of interest during the course of an action, Rule 25(c) provides that 'the action may be continued by or against the original party, unless the Court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.' A 'transfer of interest' in the corporate context takes place when one corporation becomes the successor, typically by merger, to the interest the original corporate party had in the proceeding."
ClubCorp, Inc. v. Pinehurst, LLC, No. CIV.A. 5120-VCP, 2011 WL 5554944, at *6 (Del. Ch. Nov. 15, 2011).
5. While Dr. Arunachalam may be the transferee of "patents-in-suit" and the 100% shareholder in Pi-Net, Pi-Net is a separate legal entity. Dr. Arunachalam admits as much in the Motion to Substitute when she notes that Pi-Net is an entity formed and operating under the laws of California.
6. Although patent litigation was the subject of Dr. Arunachalam's litigation in other courts, it is not the subject of this civil action. This litigation, in part, concerns Pazuniak Law's legal representation of Dr. Arunachalam and Pi-Net, and certain rights and obligations under the Agreement. Pi-Net, as a party to the Agreement, is, likely, an indispensable party to this civil action. As such, a transfer of patents-in-suit from Pi-Net to Dr. Arunachalam does not extinguish Pi-Net's interest in this litigation as a party to the Agreement, or the fact that the costs which are the subject of the declaratory action purportedly were incurred when Pazuniak Law transferred certain files to Pi-Net.
7. In the early stages of this civil action, Dr. Arunachalam represented to the Court that she was allowed to substitute herself for Pi-Net in litigation in the United States District Court for the District of Delaware (the "Delaware District Court"). The Court reviewed the order entered by the Delaware District Court and the facts of that litigation. The Delaware District Court allowed the substitution after Dr. Arunachalam represented that she would be personally responsible for any of Pi-Net's obligations. Moreover, the suit in the Delaware District Court involved the patents and Dr. Arunachalam as the transferee of the patents-in-suit, was the proper party in that instance. Pazuniak Law asserts defamation claims against both Dr. Arunachalam and Pi-Net. In addition, the declaratory judgment claim arises out of the Agreement and Pi-Net, as well as Dr. Arunachalam, is a party to the Agreement. In order for there to be complete relief, Pi-Net needs to be a party to this civil action.
8. The Court finds that the Motion to Substitute fails to demonstrate cause for the relief sought. The Court believes it would be an abuse of its discretion under Superior Court Civil Rule 25 to substitute Dr. Arunachalam for Pi-Net in this civil action. Accordingly, the Court will, at this stage in the proceedings, allow the civil action to proceed against both Dr. Arunachalam and Pi-Net.
9. The Court needs to make another very important point. Pi-Net cannot proceed pro se in this civil action. A corporation is regarded as an artificial or fictional entity, and not a natural person. This is true even though a corporation, like Pi-Net, is a legally recognized entity. A natural person may represent himself or herself in this Court even though he or she is not a licensed attorney. However, a corporation, being an artificial entity, can only act through its agents and, before this Court only through an agent duly licensed to practice law. Going forward , the Court will not accept pleadings filed by Pi-Net unless such pleadings are filed by a licensed attorney.
See, e.g., Transpolymer Indus., Inc. v. Chapel Main Corp., 582 A.2d 936 (table), 1990 WL 168276, at *1 (Del. 1990).
Id.
Id. --------
IT IS HEREBY ORDERED, for the reasons set forth herein, that Defendant's and the Real Party in Interest, Dr. Lakshmi Arunachalam's Motion to Substitute Parties under Rules 25(c), 17(a) and 17(b) of Federal Rules of Civil Procedure is DENIED. Dated: June 30, 2016
Wilmington, Delaware
/s/_________
Eric M. Davis, Judge