Opinion
C.A. No. 15276-NC
Date Submitted: August 2, 2002
Date Decided: August 27, 2002
Laraine A. Ryan, Esquire, Wilmington, DE.
David J. Ferry, Esquire, FERRY, JOSEPH PEARCE, P.A., Wilmington, DE.
Dear Counsel:
On June 17, 2002, the Delaware Supreme Court affirmed the judgment of this Court imposing a resulting trust upon residential real estate titled in the names of Defendants John Hudak, Jr. and John M. Hudak for the benefit of Plaintiff Anna Procek and remanded the matter to this Court "for a determination . . . of the terms of the resulting trust and for a determination and award of any credit to the Hudaks for expenses attributable to maintenance and preservation of the trust res."
Hudak v. Procek, Del. Supr., No. 416, 2000, slip op. at 28, Veasey, C.J. (June 17, 2002) ( "Hudak II").
The Hudaks have moved to amend their answer to assert two counterclaims. The first counterclaim seeks a quantum meruit recovery for services they and Helen Hudak (their predecessor in interest) provided to her parents, John Procek and Plaintiff Anna Procek. The Hudaks previously alleged that Mr. and Mrs. Procek put title to the subject real estate in the name of Helen Hudak in exchange for her commitment to care for Mr. and Mrs. Procek for the balance of their lives. As this Court found, Helen Hudak's prior death precluded satisfying the terms of the agreement. Essentially, the Hudaks seek to argue that they should benefit from Helen Hudaks' (and their) efforts in caring for Mr. and Mrs. Procek and that the benefit should be in the form of quantum meruit recovery. The second counterclaim seeks reimbursement of expenses that they incurred and payment of compensation that they claim they earned because they were holding title to the property.
The facts of this extended dispute are set forth in Hudak II, the Supreme Court's prior opinion, Hudak v. Procek, 727 A.2d 841 (Del. 1999) ( "Hudak I"), and the two post-trial opinions of this Court, Procek v. Hudak, C.A. No. 15276, mem. op., Steele, V.C. (June 18, 1998) and Procek v. Hudak, Del. Ch., C.A. No. 15276, mem. op., Steele, V.C. (Apr. 20, 2000).
I.
The scope of a trial court's authority following a remand is as defined and specified by the appellate court. Here, the Supreme Court has specified two issues for resolution. The first is to determine the terms of the resulting trust. The second is to determine any credit to which the Hudaks might be entitled for their efforts in maintaining and preserving the residential real estate.
Hoechst Celanese Corp. v. National Union Fire Ins. Co., No. 89C-SE-35, 1995 WL 1995 WL 411792 (Del.Super. Apr. 7, 1995) (Order).
The Supreme Court left it to this Court "to determine, in the first instance, what issues are ripe for consideration in resolving the terms of the resulting trust." Hudak II, slip op. at 28 n. 47.
I conclude that the claim for quantum relief is beyond the bounds of the remand because it has no relationship to the terms of the resulting trust and presents issues distinct from those associated with determining the expenses incurred in preserving the trust res. The quantum meruit claim is based on personal services provided to Mr. and Mrs. Procek in anticipation that the Hudaks (including Helen Hudak) would eventually become the full owners of the residential real estate. These personal services were in the nature of meeting the daily needs of Mr. and Mrs. Procek. In contrast, the remand allows the Hudaks to recover expenses incurred in preserving the residential real estate, a narrow and focused set of expenses. Thus, the concept of quantum meruit is a claim separate and independent from both the claims that have already been tried in this matter and the issues defined for remand.
I do not understand the Supreme Court to have drawn a distinction between out-of-pocket expenses and work performed by the Hudaks to care for the property. For example, if the Hudaks painted the house (instead of paying a painting contractor), they may be entitled to compensation. I also note, however, that their entitlement to compensation would have to reflect any rental income or other benefits that they received from having possession of the residential real estate.
Although the Supreme Court authorized this Court "to determine in the first instance" the issues to be addressed in establishing the terms of the resulting trust ( see supra note 4), it also directed that the proceedings on remand be expedited. While complex factual issues — such as the searching inquiry involved in resolving the merits of a quantum meruit claim — could be done on an expedited basis, the Supreme Court's directive that the matter be expedited seems more consistent with a perception that the issues on remand are narrow. Moreover, if entitlement to a quantum meruit award were somehow necessary to establish the terms of the resulting trust, then the Hudaks' right to reimbursement of expenses incurred in maintaining the property would also be a term of the resulting trust. Because the Supreme Court set out reimbursement of expenses as a separate issue, and not a term of the resulting trust, I am satisfied that the quantum meruit claim cannot be fairly considered to be a term of the resulting trust.
Accordingly, because I am limited by the scope of the remand as prescribed by the Supreme Court, the Hudaks' motion for leave to assert their first counterclaim is denied.
II.
By its terms, however, the remand both allows for consideration, and requires consideration, of those claims presented in the second counterclaim. The second counterclaim seeks compensation for the expenses that the Hudaks incurred and for the services that they provided in caring for the residential real property. I need not determine, at this stage, whether the Hudaks are entitled to all (or indeed, any) of the remuneration which they seek. It is enough, for present purposes, that the second counterclaim fits within the scope of the remand. Accordingly, leave is granted to the Hudaks to assert their second counterclaim.
III.
Although consideration of the Hudaks' quantum meruit claim is beyond the scope of the remand, I also conclude that, if I had the discretion to allow them to assert a quantum meruit claim, I would exercise that discretion to deny that portion of their motion to amend. Under Court of Chancery Rule 15, leave to amend is to be freely granted. Indeed, motions to amend are routinely granted in the absence of prejudice to the non-moving party. Here, however, the prejudice to Mrs. Procek is palpable. This is not simply a case where a date set by a scheduling order for amendments to the pleadings has expired; this is not a case where the date for completing discovery has passed; this is not a case that is "merely" ready for trial. To the contrary, this is a case that has been tried. Indeed, this is a case which has been before this Court for trial of the merits twice and before the Supreme Court for post-trial appeals twice. Thus, this case, except for the limited additional proceedings directed by the Supreme Court, is essentially over after more than six years of litigation. Mrs. Procek is entitled to finality. The Hudaks, by their motion to amend to add a quantum meruit claim, are seeking to assert a separate and distinct theory of entitlement — one that would require a significant trial effort. The quantum meruit claim could have been presented earlier; no good reason to excuse or to justify the delay in its presentation has been forthcoming. In short, "[a]ll things have their season." Mrs. Procek won; to take away from her (or reduce) that which she won after two appeals to the Supreme Court would constitute prejudice. Thus, even if the scope of my authority allowed me to consider allowing the Hudaks to present a quantum meruit claim, I would decline to do so.
See, e.g., Mullen v. Alarmguard of Delmarva, Inc., 625 A.2d 258, 263 (Del. 1993). The liberality of the policy allowing amendments is set forth in Foman v. Davis, 371 U.S. 178, 182 (1962), which teaches that motions to amend will typically be granted unless there is (1) undue delay; (2) bad faith or dilatory motive; (3) continued failure to cure deficiencies by prior amendments; (4) undue prejudice; or (5) futility of amendment. See also Fox v. Christina Square Assoc., L.P., C.A. No. 13907, Del. Ch., mem. op. at 4, Chandler, V.C. (June 19, 1995).
Bowl-Mor Co. v. Brunswick, 297 A.2d 61, 63 (Del.Ch. 1972).
As the Supreme Court observed, "[t]his case has gone on for too long." Hudak II, slip. op. at 28 n. 47.
The Hudaks also seek to plead a new affirmative defense to the effect that the resulting trust would be limited to a life estate and that the Hudaks would hold the remainder interest. (Proposed First Amended Answer and Counterclaim, Fourth Aff. Def.) To the extent that they seek certain specific terms defining the resulting trust, the motion to amend is unnecessary because the terms of the resulting trust are before the Court in accordance with the remand. To the extent that they seek to relitigate a decision of this Court, it is denied. More specifically, the question of whether the resulting trust is limited to a life estate will be addressed when the Court determines the terms of the resulting trust.
In addition, the Hudaks have proposed several other amendments that are more accurately characterized as clarifications or updates. The Hudaks are granted leave to make those amendments.
IV.
For the foregoing reasons and as set forth above, the Hudaks' Motion for Leave to Amend is granted in part and denied in part. The Hudaks may serve their amended answer within five days of the date of this letter opinion. Mrs. Procek shall have ten days to respond to the counterclaim.IT IS SO ORDERED.