SUPERIOR COURT OF THE STATE OF DELAWARE RICHARD F. STOKES 1 THE CIRCLE, SUITE 2 JUDGE SUSSEX COUNTY CO URTH OUSE GEORGETOWN, DE

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1 SUPERIOR COURT OF THE STATE OF DELAWARE RICHARD F. STOKES 1 THE CIRCLE, SUITE 2 JUDGE SUSSEX COUNTY CO URTH OUSE GEORGETOWN, DE April 26, 2005 John A. Sergovic, Jr., Esquire Sergovic & Ellis, P.A. 9 North Front Street P.O. Box 875 Georgetown, Delaware Craig A. Karsnitz, Esquire Young Conaway Stargatt & Taylor, LLP 110 W. Pine Street P.O. Box 594 Georgetown, Delaware Walter F. Speakman, Jr., Esquire Brown Shiels Beauregard & Chasanov 108 East Water Street P.O. Drawer F Dover, Delaware RE: Kenneth V. Brittingham and Lynn Brittingham v. Board of Adjustment of the City of Rehoboth Beach C.A. No. 03A Date Submitted: April 15, 2005 Date Decided: April 26, 2005 Dear Counsel: This is my decision regarding Kenneth and Lynn Brittingham s ( the Brittinghams ) Application for Costs. For the reasons set forth herein, the Application is denied. DISCUSSION Brittingham v. Board of Adjustment of Rehoboth Beach, Del. Super. Ct., No. 03A , Stokes, J. (January 14, 2005) reversed a decision of the Rehoboth Beach Board of Adjustment 1

2 ( the Board ) denying the Brittinghams request for a variance. The facts and law pertinent to the appeal are set forth in that opinion. The Brittinghams have now filed an Application for Costs pursuant to 22 Del. C Section 332 provides that [c]osts shall not be allowed against the board of adjustment, unless it appears to the Court that it acted with gross negligence, in bad faith or with malice in making the decision appealed from. The Brittinghams admit that the Board s conduct was not malicious; however, they do claim the Board was grossly negligent and that it acted in bad faith. 1. Bad Faith The Brittinghams cite to Black s Law Dictionary for the definition of bad faith as [t]he opposite of good faith, generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one s rights or duties, but by some interested or sinister motive. Black s Law Dict. 139 (6th ed. 1990). The definition goes on to say, however, bad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that it contemplates a state of mind affirmatively operating with furtive design or ill will. The seventh edition of Black s Law Dictionary defines bad faith as [d]ishonesty of belief or purpose. Black s Law Dict. 134 (7th ed. 1999). Other than in cases involving administrative bad faith and costs, Delaware Courts have addressed bad faith in many different situations, including leases and contracts, at-will employment, partnership agreements, prosecutor mistake or misconduct and as an exception to the American Rule regarding attorneys fees. See Seaford Assocs. Ltd. P ship v. Subway Real 2

3 Estate Corp., 2003 WL (Del. Ch.) (Lease agreement); E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436 (Del.) (Breach of employment at-will contract); Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199 (Del. 1993); State v. Morris, 2002 WL (Del. Super. Ct.) (prosecutorial mistake or misconduct as grounds for finding double jeopardy for retrial); Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542 (Del. 1998) (exception to American Rule for attorney s fees). At times, Courts have either given no definition of bad faith, stated there is no definition or quoted Black s law Dictionary. See, e.g., Johnston, 720 A.2d at 546 ( there is no single definition of bad faith conduct, and giving examples of when courts have found a party litigated a case in bad faith); Desert Equities, Inc., 624 A.2d at 1208 n.16 (quoting the fifth edition of Black s Law Dictionary). Generally, a determination of bad faith turns on the specific facts of a particular case. Cantor Fitzgerald, L.P. v. Cantor, 2001 WL , at *4 (Del. Ch.). Two cases in Delaware have specifically addressed this issue of administrative costs and bad faith of the Board. In Chem. Indus. Council of Delaware v. State Coastal Zone Indus. Control Bd., 1994 WL , at *15 (Del. Ch.), the Chancery Court refused to award costs and to find the Board had acted in bad faith for withholding public records for a period of time. It reasoned, [the Board s] decision to do that had a colorable albeit erroneous legal basis. An award of costs was also denied in 4th Generation Ltd. v. Bd. of Adjustment of Rehoboth Beach, 1987 WL (Del. Super. Ct.) because the Court found the appellants allegations of inequitable or unlawful conduct by the City were either irrelevant or unsubstantiated by the record. Neither case required a definition of bad faith. 3

4 The common thread in all of the definitions of bad faith given is that there is some kind of dishonest motive or purpose. There is, thus, the implication of an element of scienter. For example, in Desert Equities, Inc., 624 A.2d at 1208, the Court stated, a claim of bad faith hinges on a party s tortious state of mind. There the Court examined bad faith in the context of the pleadings. Since it found that a claim of bad faith required an averment of a state of mind, it was not necessary for it to be pleaded with particularity. In order to prove bad faith on the part of the Board, the Brittinghams would have to show from the facts that the Board had a dishonest purpose or a state of mind affirmatively operating with furtive design or ill will. Black s Law Dict. (6th ed.). 1 The Brittinghams cite the original opinion in this case, focusing on the fact that the Board strong-armed the attorney for the City into taking a position against the settlement and that it was not fair for the Board to require the Brittinghams to return for a second hearing, only to pull the rug out from them and rehear the case.... From the record and the facts, however, it is not clear that the Board had a dishonest state of mind. Speculation is not sufficient. In this context I cannot conclude that the Board did not believe another hearing was required under its rules to approve the withdrawal of the application. Bad judgment by itself is not equivalent to a sinister motive or dishonest purpose. Moreover, the Board could have believed it was acting under color of law. Even if that belief was erroneous, it cannot be said to have acted in bad faith (absent evidence that the law was used to bad ends). After all, the Board is not made up of legal professionals: Members of the board are not attorneys subject to the ethical restraints of the legal profession or trained in its concepts of fair conduct.... Rather they are citizens assigned to discharge a difficult task without guidelines which mark out the distinctions between interests which conflict with impartial decision and those which do not. 4

5 4 Anderson s Am. Law. Zoning 22:47 (4th ed. 1997). There is also the problem of the missing record from the April hearing. Without the record from that hearing, it is impossible to know what exactly happened. Furthermore, there is no way of knowing for certain whether the tape was lost accidentally or for dishonest reasons. The applicant must prove either bad faith by the facts or that no other reasonable conclusion can be drawn from the circumstances. Reasonable people could have disagreed as to whether a settlement agreement might be valid, and, in fact, it was the Board s duty to interpret ambiguous zoning laws. Even though the Board s actions were not justified, this does not mean that the members had engaged in egregious conduct. 2. Gross Negligence Gross negligence requires a state of mind above and beyond mere negligence. However, it is an imprecise term, as can be seen in opinions from Delaware Courts and the U.S. Supreme Court. See Jardel Co. v. Hughes, 523 A.2d 518, 530 (Del. 1987); Farmer v. Brennan, 511 U.S. 825, 836 n. 4 (1994). 2 In Jardel, the Court stated: Criminal negligence as defined in 11 Del.C. 231(d) is the functional equivalent of gross negligence as that term is applied as a basis for the recovery of damages for civil wrongs. Gross negligence, though criticized as a nebulous concept, signifies more than ordinary inadvertence or inattention. It is nevertheless a degree of negligence, while recklessness connotes a different type of conduct akin to the intentional infliction of harm. Stevenson, Negligence In The Atlantic States, (1954) & Supp. (1975). In Delaware tort law the term "gross negligence" has little significance.... The concept of gross negligence continues to find application as a recovery threshold in cases of corporate director liability under the business judgment rule. Aronson v. Lewis, Del.Supr., 473 A.2d 805 (1984); Smith v. Van Gorkom, Del.Supr., 488 A.2d 858, 873 (1985), and as an exception to the immunity enjoyed by public officers and employees under the State Tort Claims Act, 10 Del.C et seq. Beck v. Claymont School District, Del. Super., 407 A.2d 226, 231 (1979), aff'd, Del.Supr., 424 A.2d 662 (1980). 5

6 The Delaware Supreme Court has defined gross negligence, as it is used in the State Tort Claims Act, 10 Del. C , as a higher level of negligence representing an extreme departure from the ordinary standard of care. Browne v. Robb, 583 A.2d 949, 953 (Del. 1990), cert. denied, 499 U.S. 952, citing, W. Prosser, Handbook of the Law of Torts 150 (2d ed. 1955). While the Brittingham s rely on the definition given in Black s Law Dictionary 3, and while such definitions are helpful, in keeping with Delaware precedent, I find an applicant must show that the Board made an extreme departure from the ordinary standard of care in order to be eligible to receive costs under 22 Del. C Even looking at the definition given in Black s, the Brittinghams do not really explain how the Board s behavior was an intentional failure to perform a manifest duty. Again, they focus on the fact that the Board strong-armed the attorney for the City into taking a position against the settlement and that it was not fair for the Board to require the Brittinghams to return for a second hearing, only to pull the rug out from them and rehear the case.... (quoting the Brittingham opinion). After review of the record, I do not find that the Board made an extreme departure from the ordinary standard of care, such that an award of costs would be required. Nor can it be said that it intentionally failed to perform a manifest duty. Perhaps a reasonable Board might have handled the situation differently. Yet a deviation from ordinary care does not make gross negligence. The Board had reason to believe that it was acting under color of law As a final note, it would be inappropriate to make gross negligence equivalent to arbitrary and unreasonable conduct. To equate it to a finding of arbitrary and unreasonable conduct would create the untoward result that every time a Court chose to reverse the Board s decision for those 6

7 reasons, the appealing party would be awarded costs. If the legislature had intended such a result it would have said so in the statute. CONCLUSION Considering the foregoing, the Brittinghams Application for Costs is denied. IT IS SO ORDERED. Very truly yours, Richard F. Stokes oc: Prothonotary 7

8 1. Another definition of bad faith that is helpful was given in the context of an exchange s failure to monitor the market: ENDNOTES [W]hen self-interest or other ulterior motive unrelated to proper regulatory concerns is alleged to constitute the sole or dominant reason for the exchange action, a complaint is sufficient even though the action was not beyond the bounds of reason. On the other hand, if the governors sincerely and rationally believe their action is in the public interest, there should not be liability simply because the action has the incidental effect of advancing their private interests or damaging someone whom they do not like. Sam Wong & Son, Inc. v. New York Mercantile Exchange, 735 F.2d 653, 677 (2d Cir.1984). 2. The Delaware District Court has equated gross negligence with the deliberate indifference standard used in constitutional law. Carrigan v. Delaware, 957 F. Supp. 1376, 1390 (D. Del. 1997) ( Though not identical, given these definitions, it is clear that the terms gross negligence and wanton conduct bear some resemblance to the deliberate indifference standard that permeates constitutional law. ). The Supreme Court, however, when defining deliberate indifference in the context of the Eighth Amendment, classified gross negligence as having a meaning closer to recklessness. In Farmer, 511 U.S. at 836 n. 4, the Supreme Court stated: Between the poles lies gross negligence too, but the term is a nebulous one, in practice typically meaning little different from recklessness as generally understood in the civil law. 3. Black s Law dictionary defines gross negligence as: 1. A lack of slight diligence or care. 2. A conscious, voluntary act or omission in reckless disregard of a legal duty and of the consequences to another party.... Black s Law Dict (7th ed. 1999). The Brittinghams rely on the definition given in the sixth edition of Black s Law Dictionary: The intentional 8

9 failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another. Black s Law Dict (6th ed. 1990). 9