Kun Jiang v. Haslet Park Homeowners Association

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

KUN JIANG, )
)
Plaintiff, )
)
v. ) C.A. No. 2023-0780-LM
)
HASLET PARK HOMEOWNERS )
ASSOCIATION and MASTRIANA )
PROPERTY MANAGEMENT, INC., )
)
Defendants. )

ORDER

WHEREAS:

A. On August 1, 2023, Plaintiff Kun Jiang filed this action against

Defendants Haslet Park Homeowners Association (hereinafter, “HOA”) and

Mastriana Property Management, Inc. (hereinafter, “Mastriana”) (collectively, the

“Defendants”) for a declaration that Defendants failed to 1) comply with Code of

Regulations Article VI, Section 2 and 3 related to window installation; 2) violations

of Delaware Uniform Common Interest Ownership Act (DUCIOA) by denying

access to meetings and imposing fines without a hearing process; 3) breaches of

fiduciary duties.1

1
D. I. 1 at ⁋1.
B. Defendants filed a Motion to Dismiss Plaintiff’s claims under Court of

Chancery Rule 12(b)(6) on August 29, 2023.2

C. On October 10, 2023, Plaintiff responded to the Defendants’ Motion to

Dismiss.3

D. The Defendants filed their opening briefs in support of the motions to

dismiss on November 9th and 10th. 4

E. On November 29, 2023, Plaintiff filed an amended complaint against

Defendants for: (a) failure to comply with governing documents, including Code of

Regulations Article VI, Sections 2 and 3, regarding the approval process for window

installations that are not structural change or common elements; (b) violations of

Delaware Uniform Common Interest Ownership Act (DUCIOA) for denying access

to HOA board meetings, filing deed violation notices against Plaintiff’s property,

and imposing arbitrary fines without a proper hearing process; (c) breach of fiduciary

duties for arbitrary, capricious, and unreasonable actions, including self-dealing in

the HOA election; (d) Mastriana’s aiding and abetting for the breach of fiduciary

duties; (e) Defamation; (f) Civil Conspiracy; and, (g) Intentional infliction of

emotional distress.5

2
D. I. 11.
3
D. I. 12.
4
D. I. 17; D. I. 18.
5
D. I. 23 at ⁋ 1.
2
F. On December 5, 2023, Plaintiff responded to Defendants’ Motions to

Dismiss.6

G. At the request of the parties, and by order of this Court, the briefing

schedule was adjusted to allow Defendants to address Plaintiff’s Amended

Complaint and subsequent Response to the Defendants’ Motion to Dismiss, which

addressed the claims in the Amended Complaint.7

H. On January 22, 2024, the Defendants filed opening briefs on its motion

to dismiss Plaintiff’s amended complaint.8

I. On February 15, 2024, Plaintiff filed a response to Defendants’ motions

to dismiss.9

J. On March 7, 2024, Defendant Mastriana replied to the Plaintiff’s

opposition.10

K. On March 11, 2024, Defendant Haslet Park HOA replied to the

Plaintiff’s opposition. 11

6
D. I. 26; D. I. 27.
7
D. I. 29; D. I. 30.
8
D. I. 31; D. I. 34.
9
D. I. 36; D. I. 37.
10
D. I. 38.
11
Id.
3
L. That same day, Haslet Park HOA joined Mastriana, for reasons set forth

in Mastriana’s Opening Brief.12

M. On April 29, 2024, all parties agreed to forgo oral argument on the

motion to dismiss.13

N. Under Court of Chancery Rule 12(b)(6), the standard of review is

settled:

a. (i) all well-pleaded factual allegations are accepted as true; (ii)

even vague allegations are “well-pleaded” if they give the

opposing party notice of the claim; (iii) the Court must draw all

reasonable inferences in favor of the non-moving party; and

[(iv)] dismissal is inappropriate unless the “plaintiff would not

be entitled to recover under any reasonably conceivable set of

circumstances susceptible of proof.”14

IT IS HEREBY ORDERED, this 31st day of July 2024, as follows:

1. The Defendants’ Motion to Dismiss Plaintiff’s claims is GRANTED

IN PART and DENIED IN PART.

12
D. I. 39.
13
D. I. 41.
14
Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (footnotes omitted)
(quoting Kofron v. Amoco Chems. Corp., 441 A.2d 226, 227 (Del. 1982)).
4
2. The Defendants’ Motion to Dismiss Plaintiff’s claim for breach of

contract is DENIED. I find that, in viewing factual allegations most favorably to the

Plaintiff, this claim is sufficient to potentially recover damages. Article VI Sections

2 and 3, when interpreted in conjunction with 25 Del. C. § 81-302(a)(6), are

ambiguous. A sufficient breach of contract claim only must contain “a short and

plain statement of the claim showing that the pleader is entitled to relief.” 15 To

survive a motion to dismiss in failing to state a breach of contract claim, a plaintiff

must show that a contract exists, an obligation imposed by that contract was

breached, and that this breach resulted in damages. 16 Plaintiff has surpassed these

requirements by averring that a contract between Plaintiff and Defendants exists, all

parties have obligations per the contract, and that damages are imposed for failure

to follow the contract.

3. The Defendants’ Motion to Dismiss Plaintiff’s claim for breach of

fiduciary duties is DENIED. “It is well established that the directors owe their

fiduciary obligations to the corporation and its shareholders.”17 The Defendants are

Delaware Corporations and Plaintiff is a member of the HOA. 18 The harm alleged

15
Del. Ct. Ch. R. 8.
16
VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).
17
N. Am. Cath. Educ. Programming Found., Inc. v. Gheewalla, 930 A.2d 92, 99 (Del.
2007).
18
D. I. 1 at ⁋⁋2-3.
5
here is not unique to the Plaintiff and can occur to any member of the HOA.

Therefore, the harm arising from the breach here can be attributable to the

Defendants' breach of fiduciary duty.

4. The Defendants’ Motion to Dismiss Plaintiff’s claim for Management

Agent Aiding and Abetting the Breach of Fiduciary Duties is DENIED. Accepting

that the letter mailed to selected recipients before the August 8, 2023 election was

sent by Mastriana, this claim survives the motion to dismiss. 19 The four elements

required to succeed in a claim of aiding and abetting fiduciary duties are: “(i) the

existence of a fiduciary relationship, (ii) a breach of the fiduciary's duty, (iii)

knowing participation in that breach by the defendants, and (iv) damages

proximately caused by the breach.”20 As previously stated, Plaintiff has displayed

that a fiduciary duty exists and that duty has been breached. This letter explicitly

states that Plaintiff violated HOA regulations and claims that Plaintiff “has since

begun a campaign of harassment and threats in an attempt to circumvent the rules.”21

It is conceivable that this communication diminished Plaintiff’s reputation and

caused irreparable harm to Plaintiff under which he will recover.

19
D. I. 23 at ⁋59.
20
RBC Cap. Markets, LLC v. Jervis, 129 A.3d 816, 861 (Del. 2015).
21
D. I. 25 (Exhibit A_11).
6
5. The Defendants’ Motion to Dismiss Plaintiff’s claim for Defamation is

GRANTED. The Court of Chancery will only act if a plaintiff states an equitable

claim, an equitable remedy is required, there is an insufficiency of remedies at

common law, or if jurisdiction exists by statute.22 “[S]lander and libel are seen as

denizens of the Superior Court, and are subject to the findings made there by juries

regarding the speech of their peers.”23 The alleged libel here is not a separate tort

and a remedy at law is sufficient. 24 Furthermore, I decline to assert subject matter

jurisdiction under the “clean-up doctrine” 25 as “the Court of Chancery…lacks

subject matter jurisdiction to adjudicate the questions of whether a defendant made

a false statement about the plaintiff and whether it did so with actual malice.”26

Plaintiff’s complaint failed to seek a viable equitable remedy, therefore, Defendant’s

22
Preston Hollow Cap. LLC v. Nuveen LLC, 216 A.3d 1, 4 (Del. Ch. 2019).
23
Id.
24
See Organovo Holdings, Inc. v. Dimitrov, 162 A.3d 102, 113 (Del. Ch. 2017); Spence v.
Funk, 396 A.2d 967, 970 (Del. 1978) (“libel is written defamation”).
25
See Organovo Hldgs., Inc., 162 A.3d at 113 (“[T]he cleanup doctrine provides that if this
court would have equitable jurisdiction over a part of a controversy, then it can address the
remaining portions of the controversy as well.”); Kraft v. WisdomTree Invs., Inc., 145 A.3d
969, 974 (Del. Ch. 2016) (explaining that the clean-up doctrine “provides the Court of
Chancery with jurisdiction to resolve purely legal causes of action that are before it as part
of the same controversy over which the Court originally had subject matter jurisdiction in
order to avoid piecemeal litigation” (citation omitted)).
26
Smith v. Scott, 2021 WL 1592463, at *14 (Del. Ch. Apr. 23, 2021) (quoting Perlman v.
Vox Media, Inc., 2019 WL 2647520 at *1 (Del. Ch. June 27, 2019).
7
Motion to Dismiss for Defamation is GRANTED, subject to Plaintiff’s right under

10 Del. C. § 1902 to transfer the claim to Superior Court.27

6. The Defendants’ Motion to Dismiss Plaintiff’s Claim for Civil

Conspiracy is DENIED. “Under Delaware Law, to state a claim for civil conspiracy,

a plaintiff must plead facts supporting (1) the existence of a confederation or

combination of two or more persons; (2) that an unlawful act was done in furtherance

of the conspiracy; and (3) that the conspirators caused actual damage to the

plaintiff.”28 When viewing the Plaintiff’s allegations in the light most favorable to

him, the Defendants' failure to provide the HOA standard proxy form satisfies the

first element.29 The unlawful act committed in furtherance of the conspiracy by

Mastriana was the alleged tortious interference with the election.30 The actual

27
See 10 Del. C. § 1902 (“No civil action, suit or other proceeding brought in any court of
this State shall be dismissed solely on the ground that such court is without jurisdiction of
the subject matter, either in the original proceeding or on appeal. Such proceeding may be
transferred to an appropriate court for hearing and determination, provided that the party
otherwise adversely affected, within 60 days after the order denying the jurisdiction of the
first court has become final, files in that court a written election of transfer . . . .”).
28
See Allied Cap. Corp. v. GC-Sun Holdings, L.P., 910 A.2d 1020, 1036 (Del. Ch. 2006);
UbiquiTel Inc. v. Sprint Corp., No. CIV.A. 1489-N, 2005 WL 3533697, at *8 (Del. Ch.
Dec. 14, 2005) (Tortious interference must be accompanied by an intent to injure to prove
the second element of conspiracy).
29
D. I. 23 ⁋65.
30
Id.
8
damage caused to the Plaintiff is that this interference prevented the Plaintiff from

being elected to the HOA Board. 31

7. The Defendants’ Motion to Dismiss Plaintiff’s Claim for Intentional

Infliction of Emotional Distress is GRANTED. To succeed on a claim of intentional

infliction of emotional distress, a defendant’s extreme and outrageous conduct must

cause the plaintiff severe emotional distress.32 The Court must first decide whether

a defendant’s conduct is extreme and outrageous to permit recovery. 33 Here, Plaintiff

only alleges that Defendants were reckless in declining to participate in mediation.34

Plaintiff further attempts to allege that Defendants’ “defamation campaign,” emails

attempting to avoid litigation, and alleged breaches of fiduciary duties constitute

extreme and outrageous behavior.35 The Court considers all factors of the Plaintiff,

including his medical history. 36 The communication and allegations alleged do not

amount to extreme and outrageous conduct.

31
Id.
32
See Hunt ex rel. DeSombre v. State, Dep't of Safety & Homeland Sec., Div. of Delaware
State Police, 69 A.3d 360, 367 (Del. 2013); RESTATEMENT (SECOND) OF TORTS §
46(h) (1965).
33
Id.
34
D. I. 23 at ⁋ 66.
35
Id. at ⁋ 67-72.
36
Id. at ⁋70.
9
8. The Parties shall contact my chambers for a trial date and once

confirmed, submit a proposed schedule for my consideration.

9. This is a final report under Court of Chancery Rule 143 and exceptions

under Court of Chancery Rule 144 are stayed until a final order is issued on the

merits of the remaining claims.

IT IS SO ORDERED.

/s/ Loren Mitchell
Magistrate in Chancery

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