Chaplake Holdings, Ltd. v. Chrysler Corp.

• Decision Date: 29 January 2001
• Docket Number: No. 100, 2000.,100, 2000.
• Parties: CHAPLAKE HOLDINGS, LTD., Vehiclise Ltd., Portman Lamborghini, Inc., Ltd. (In Receivership), and David T. Lakeman, Plaintiffs Below-Appellants, v. CHRYSLER CORPORATION, Defendant Below-Appellee.
• Court: Delaware Superior Court

766 A.2d 1

CHAPLAKE HOLDINGS, LTD., Vehiclise Ltd., Portman Lamborghini, Inc., Ltd. (In Receivership), and David T. Lakeman, Plaintiffs Below-Appellants, v. CHRYSLER CORPORATION, Defendant Below-Appellee.

No. 100, 2000.

Superior Court of Delaware.

Submitted: December 14, 2000.

Decided: January 29, 2001.

Laurence V. Cronin, Esquire, Smith, Katzenstein & Furlow LLP, Wilmington, Delaware and Michael J. Connolly, Esquire (argued) and Kelley A. Jordan-Price, Esquire, Hinckley, Allen & Snyder, LLP, Boston, Massachusetts, for Appellants.

Thomas C. Marconi, Esquire, Losco & Marconi, P.A., Wilmington, Delaware and Robert D. Cultice, Esquire (argued) and David A. Wilson, Esquire, Hale and Dorr, Boston, Massachusetts, for Appellee.

Before WALSH, HOLLAND, and BERGER, Justices.

WALSH, Justice.

As permitted by Supreme Court Rule 41, we have accepted certification of a question of law from the Superior Court concerning whether a plaintiff, incorporated in the United Kingdom, may pursue an amended complaint under the relation-back provision of Superior Court Rule 15(c), if its corporate status has been terminated through receivership. Specifically, the question posed is:

Since [plaintiff's] cause of action in the third amended complaint would be barred under the law of the United Kingdom, can it, nevertheless be permitted under the relation-back doctrine of Superior Court Civil Rule 15(c).

We hold that the entitlement of a party to file an amended pleading is controlled by the procedural law of the forum. Thus, notwithstanding the plaintiff's dissolution under the law of its place of incorporation, it may be permitted to re-enter the litigation through an amended pleading if it has been restored to corporate status, and otherwise satisfies the requirements of Rule 15(c). Accordingly, we answer the certified question in the affirmative.

I

Our acceptance of a certified question assumes that the underlying factual basis for the question has been the subject of a stipulation between the parties. See Supr. Ct. R. 41(c)(ii)(C). Despite this requirement, the parties to this appeal appear to disagree concerning the substantive law of the United Kingdom as it relates to the legal status of the plaintiff following receivership. As will appear hereafter, however, in our view this disagreement does not preclude our holding that Delaware procedural law controls the result. Thus, we assume the following facts in deciding the certified question.

The plaintiffs in the underlying action are Chaplake Holdings Ltd. ("Chaplake"), Vehiclise Ltd. ("Vehiclise"), Portman Lamborghini Ltd. ("Portman") and David T. Lakeman ("Lakeman") (collectively "Plaintiffs"). Chaplake is the parent of Vehiclise and Portman, both of which are incorporated under the laws of the United Kingdom ("UK"). Lakeman is the majority shareholder of Chaplake. On April 22, 1994, Plaintiffs commenced an action in Superior Court against Chrysler Corporation ("Chrysler") alleging: (i) breach of implied contract; (ii) fraud; (iii) negligent misrepresentation; and (iv) promissory estoppel. Plaintiffs are seeking damages in excess of $15 million.

Portman was originally formed under the laws of the UK as Lamborghini London. At that time, it was placed on the Registrar of Companies, which serves as the public record in the UK for companies formed under English law. On June 1, 1984, Vehiclise entered into an agreement with Automobili Lamborghini ("Lamborghini") to become Lamborghini's exclusive automobile dealer in the UK and Ireland. Pursuant to the terms of the agreement, Vehiclise appointed Portman to serve as its London dealer.

In April 1987, Chrysler acquired all of Lamborghini's stock. According to Plaintiffs, Chrysler indicated its intention to increase distribution of Lamborghini automobiles. Plaintiffs claim they spent large sums of money to expand their distribution capacity in reliance on this representation and suffered significant losses when Chrysler did not fulfill its end of the bargain.

On August 27, 1992, a creditor of Portman requested the appropriate English Court to issue an order that Portman be wound up pursuant to the UK's Insolvency Act of 1986. On November 25, 1992, the court appointed an official receiver as Portman's liquidator and ordered that Portman be wound up. Portman joined this present action in 1994 through its administrative receiver, an entity different from the official receiver appointed by the English court.¹

On October 15, 1997, Portman's official liquidator issued a notice to the English Registrar of Companies that Portman's winding up for insolvency was complete. Portman's dissolution was deferred until October 15, 1998 when it was formally dissolved effective January 15, 1999. Notice of dissolution was placed in the Registrar of Companies and was available for public inspection. When Portman's insolvency become effective on January 15, 1999, its name was struck from the Registrar of Companies. Lakeman and Portman's administrative receiver claim they were unaware of Portman's dissolution until October, 1999. They further claim it was their understanding that the process under which Portman's affairs were "wound up" would continue through the pendency of the Superior Court litigation. In short, Plaintiffs assumed that this action, commenced by Portman's administrative receiver, would continue while the formal dissolution was pending.

Under UK law, since the corporation was dissolved, Portman lost the capacity to sue and all actions initiated prior to dissolution automatically and permanently terminated as of the date of dissolution. On this basis, Chrysler filed a motion to dismiss Portman as a party to the Superior Court action in October 1999.

In response to Chrysler's motion to dismiss Portman as a party, Portman petitioned the English Court on November 12, 1999 to declare the formal dissolution void. Under UK law, a company may petition for an order declaring the dissolution void within two years following formal dissolution. During this period, causes of action terminated by the dissolution vest with the Crown of England. By court order, Portman's dissolution was declared void and the corporation was reinstated as of November 12, 1999. A declaration that the dissolution is void, however, does not automatically reinstate proceedings terminated by the dissolution. While Portman's claims vested in the newly reinstated Portman, under UK law Portman would be able to institute "fresh proceedings" only if it complied with the applicable statute of limitations.

In response to Chrysler's motion to dismiss, Portman agreed it should be dismissed since its claims were automatically and permanently terminated as of the date of dissolution under applicable UK law. Subsequently, on January 7, 2000, the remaining Plaintiffs moved for leave to file a third amended complaint adding the reinstated Portman as a plaintiff and sought to have its causes of action relate back to the date of the originally filed complaint under Superior Court Rule 15(c) ("Rule 15(c)"). The proposed third amended complaint is identical to the second amended complaint except for the substitution of the reinstated Portman as a party plaintiff. For purposes of this certification, Chrysler accepts Plaintiffs' contention that the three year limitations period did not begin to run until April, 1992. The UK six year period of limitations, if applicable, would begin on the same date. In either event, Portman's formal dissolution rendered its claims time-barred unless they are permitted to relate back under Rule 15(c).

II

Preliminarily, we note that the normal standards of review employed when reviewing a trial court's ruling are inapplicable when this Court addresses a certified question of law. See State v. Anderson, Del.Supr., 697 A.2d 379, 382 (1997). Rather, "[t]his Court must review the certified questions in the context in which they arise." Id. (citing Rales v. Blasband, Del. Supr., 634 A.2d 927, 931 (1993)); see also Kerns v. Dukes, Del.Supr., 707 A.2d 363, 367 (1998) (same). The question presented here requires this Court to determine whether the third amended complaint can be permitted under the relation-back provision of Rule 15(c), but subsumed within the determination of that question is the issue of whether the amendment to the complaint should be granted as a matter of discretion. See Grand Ventures, Inc. v. Whaley, Del.Supr., 632 A.2d 63, 72 (1993). Chrysler, of course, disputes the applicability of Rule 15(c) and thus views the posed question as presenting a pure question of law. Even if this Court rules that there is no legal barrier to the relation-back provision of Rule 15(c), however, the Superior Court must, as the trial court to whom the issue is posed, determine, in its discretion, whether to grant the amendment. We thus address only the question of whether there is a legal barrier to the application of Rule 15(c).

The certification recites that, under UK law, Portman's claims would be barred by the applicable statute of limitations.² Chrysler thus contends that, as a matter of law, Portman is precluded from reentering the litigation since Portman's existence and capacity to sue are governed by UK law. Chrysler cites no specific authority in support of this proposition. On the other hand, Plaintiffs contend that since this issue is procedural in nature, it is governed by the laws of Delaware.

Admittedly, the substantive law of Delaware is being applied to the claims asserted by the Plaintiffs against Chrysler. A company's capacity to sue, however, is governed by the laws of its state of incorporation. See Johnson v. Helicopter & Airplane Services Corp., D. Md., 404 F.Supp. 726, 730 (1975)(ruling based on Fed.R.Civ.P. 17(b) which has no Superior Court Rule counterpart). To the extent that UK substantive law applies, Portman's capacity to sue is clearly subject to challenge.

As a general rule, the law of the forum governs procedural...