Pazuniak Law Office LLC v. Pi-Net International, Inc.
N14C-12-259 EMD
| Del. Super. Ct. | Aug 25, 2017Background
- Pazuniak Law Office (plaintiffs) represented Pi-Net and Dr. Lakshmi Arunachalam under a retainer agreement that placed patent-recovery proceeds in Pazuniak’s IOLTA escrow account and provided for contingent-fee distributions.
- Pazuniak was discharged in 2014; disputes arose over the accounting and final distributions from the trust account.
- Pazuniak filed an initial declaratory-judgment action in Court of Common Pleas, later transferred to Delaware Superior Court under 10 Del. C. § 1902; Pi‑Net never obtained counsel or answered and default judgment was entered against Pi‑Net on liability, with distribution reserved.
- Dr. Arunachalam (pro se) filed counterclaims, sought to intervene/substitute for Pi‑Net, and moved to vacate the default and for summary judgment on Counts I (against Pi‑Net) and II (against Dr. Arunachalam) arguing fraud, that she is the real party in interest, and procedural defects.
- The Court declined to vacate the default (Rule 60(b)(3)) for lack of evidence of fraud that corrupted the judicial process and denied summary judgment on both counts because Count I is affected by the existing default and genuine issues remain as to Count II.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Default Judgment against Pi‑Net should be vacated under Rule 60(b)(3) | Pazuniak: default was properly entered because Pi‑Net never answered | Arunachalam: default resulted from Pazuniak’s fraud/misleading filings and procedural errors | Denied — no evidence of fraud that prevented fair presentation; Court warned Arunachalam she could not represent Pi‑Net pro se and Pi‑Net never obtained counsel |
| Whether Court should grant summary judgment on Count I (declaratory relief as to Pi‑Net) | Pazuniak: Count I concerns distribution from IOLTA; default already entered against Pi‑Net | Arunachalam: seeks judgment on Pi‑Net’s behalf as real party in interest | Denied — Court already entered default against Pi‑Net and will not vacate it, so summary judgment for Arunachalam on Count I is inappropriate |
| Whether Court should grant summary judgment on Count II (declaratory relief as to Arunachalam) | Pazuniak: disputed accounting; genuine issues of material fact exist | Arunachalam: asserts failure to attach retainer and other procedural defects; claims she is real party in interest | Denied — Arunachalam’s allegations do not negate factual disputes about distribution and do not establish entitlement to judgment as a matter of law |
| Whether Arunachalam may intervene or substitute for Pi‑Net under Rule 17 (real party in interest) | Arunachalam: she has unconditional right to intervene/substitute as real party in interest | Pazuniak: Rule 17 does not allow a non‑attorney defendant to represent a corporation; substitution untimely and moot after default | Denied — Rule 17 does not permit Arunachalam to represent Pi‑Net pro se; substitution is moot after default judgment |
Key Cases Cited
- Merrill v. Crothall-American Inc., 606 A.2d 96 (Del. 1992) (summary judgment standard)
- Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322 (Del. Super. 1973) (summary judgment standard and appellate principles)
- Ebersole v. Lowengrub, 180 A.2d 467 (Del. 1962) (summary judgment and need for factual development)
- Moore v. Sizemore, 405 A.2d 679 (Del. 1979) (movant’s burden on summary judgment)
- Brzoska v. Olsen, 668 A.2d 1355 (Del. 1995) (allocation of burdens in summary judgment practice)
- MCA, Inc. v. Matsushita Elec. Indus. Co., 785 A.2d 625 (Del. 2001) (Rule 60(b)(3) reserved for fraud that corrupts judicial process)
- Carney v. Qualls, 514 A.2d 1126 (Del. Super. 1986) (10 Del. C. § 1902 is remedial and allows transfer to correct venue)