Hsia v. KAPG Hockessin

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

The Estate of Shyuan Hsia, by and )
through Lynn Chao, Executrix and )
Personal Representative of the Estate )
of Shyuan Hsia, et al., )
)
Plaintiffs, )
v. ) C.A. N25C-04-270 FJJ
)
KAPG Hockessin Senior Housing )
Opco, LLC, d/b/a The Summit, )
Hockessin Senior Housing I, et al., )
)
Defendants, )
v. )
)
Kevin Kelly, Thomas Terranova, )
Timothy Terranova, et al., )
)
Third-Party Defendants. )

Submitted: May 19, 2026
Decided: May 26, 2026

OPINION AND ORDER
On Defendants Timothy and Thomas Terranovas’
Motion for Fees and Costs

GRANTED in part; DENIED in part.

Timothy A. Dillon, Esquire, McCann, Dillon, Jaffee & Lamb, LLC, Wilmington,
Delaware, Attorney for Plaintiff.

Don Gouge, Esquire, Wilmington, Delaware, Attorney for Third-Party Defendant
Kevin Kelly.

Kevin Buttery, Esquire, Wilmington, Delaware, Attorney for Defendant KAPG
Hockessin Senior Housing OPC, LLC.
Randall S. MacTough, Esquire and Colleen Shields, Esquire, Eckert Seamans
Cherin & Mellott, LLC, Attorneys for Third-Party Dr. Carolyn Ianni.

Maria Granaudo, Esquire, Burns and White, Wilmington, Delaware, Attorney for
Third-Party Defendant Dr. Jennifer Christian.

Jennifer Sutton, Esquire, O’Hagan Meyer, Wilmington, Delaware, Attorney for
Defendant American Trust Senior Care, LLC, Virginia Gray, Hockessin Senior
Housing I.

Robert M. Greenberg, Esquire, Tybout, Redfearn & Pell, Wilmington, Delaware,
Attorney for Third-Party Defendant Timothy Terranova.

Maura L. Burke, Esquire and Carl Neff, Esquire, Pierson Ferdinand, LLP,
Wilmington, Delaware, Attorneys for Defendant Discovery Senior Living, LLC.

John D. Balaguer, Esquire and Claire McCudden, Esquire, Balaguer, Milewski &
Imbrogno, Wilmington, Delaware, Attorneys for Third-Party Defendants Thomas
Terranova and Timothy M. Terranova.

Jones, J.

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This matter arises from the fatal assault of Shyuan Hsia (“Hsia”) by Kevin

Kelly (“Kelly”) while Hsia was under the care of KAPG Hockessin Senior

Housing OPCO, LLC D/B/A The Summit (hereinafter referred to as “Summit”).

Summit is a licensed Assisted Living Facility that operates the Shine Memory Care

Unit (“MCU”) to care for residents with Alzheimer’s, dementia or other

mental/memory impairments. Kelly and Hsia were residents in Summit’s MCU.

It is alleged that on August 5, 2024, while both were under the care of Summit,

Kelly, who suffers from dementia, entered Hsia’s private room and assaulted her,

leading to her death. Hsia’s estate and beneficiaries filed suit against Summit

alleging that Summit’s negligence caused her death.

Timothy Terranova and Thomas Terranova are each the nephew and power

of attorney for Kelly. Timothy has power of attorney over medical decisions under

Delaware Code Title 16 Chapter 25, and both Timothy and Thomas have durable

personal power of attorney under Delaware Code Title 12, Chapter 49A.

Summit filed an original third-party complaint against a number of

defendants, including Timothy and Thomas.1 In its original third-party complaint,

Summit alleged that as POAs for Kelly, Timothy and Thomas, “were responsible

for making decisions necessary for Kevin Kelly’s health and wellbeing, as well as

arranging for and facilitating his personal and health care services not provided by

1
Docket Item (“D.I.”) 16.

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the Summit.”2 Summit contended that Timothy and Thomas failed to fulfill these

duties while Kelly was a resident at Summit by poorly managing his medication

regiment in light of advancing mental deterioration and concerns of aggressive

behavior. Summit claims that Timothy and Thomas were negligent in their

capacity as POAs which resulted in Kelly’s assault of Hsia and the subsequent

injuries and death for which plaintiffs allege damage in the underlying complaint.

Summit sought contribution and/or indemnification from Timothy and Thomas.

Timothy and Thomas filed a motion for judgment on the pleadings.3 The

argument advanced by Timothy and Thomas was that they owed no duty to

Summit or Hsia and, as such, a claim based on negligence was not proper. At the

February 20, 2026 oral argument on the motion for judgment on the pleadings,

Summit conceded that there was no legal authority to support an argument that

Timothy or Thomas owed a duty to either Summit or Hsia. Summit requested that

the Court grant them leave to file an amended third-party complaint. Summit filed

its motion to file an amended third-party complaint and attached to the motion the

proposed amended third-party complaint. 4 The proposed amended complaint

reasserted the original allegations and added allegations based on fraud by

Timothy and Thomas. Timothy and Thomas opposed the motion. 5 On March 24,

2
Id. at ¶12.
3
D.I. 92.
4
D.I. 157.
5
D.I. 164.

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2026, this Court issued a written opinion and order denying Summit’s motion to

amend as futile and granting the Terranovas’ motion for judgment on the

pleadings. 6 The Court ruled that Summit’s negligence claim failed because the

Terranova brothers owed no legal duty to Summit. As to the fraud claim, the Court

found that Summit merely alleged a sense that there was information being

withheld by the Terranova brothers, but this sense was nothing more than a bare

allegation stated without the necessary particularly or element of reliance. The

Court concluded that Summit could not establish the reliance element of fraud for

two reasons: 1) Kelly had been in Summit’s care for almost a year prior to the

deadly assault; and 2) Summit was aware that three weeks before the alleged attack

on the decedent Kelly had attacked another resident while he was a resident at

Summit, and Summit was aware of this incident before the attack in question.

The Terranovas’ have requested that this Court award them attorney’s fees

and costs maintaining that Summit’s third-party filing amounted to filing and

pursuing a frivolous claim which would justify such an award. 7 Summit opposes

the motion. 8

Delaware follows the American Rule as to the award of attorneys fees.9

Generally, the American Rule states that parties must cover their own litigation

6
D.I. 176.
7
D.I. 206.
8
D.I. 216.
9
In re Delaware Public Schools Litigation, 312 A.3d 703, 715 (Del. 2024).

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costs. However, there are a few exceptions to the rule. One such exception is the

“Bad Faith Exception,” 10 which has been recognized by both the US Supreme

Court11 and Delaware Courts. The Chancery Court in Beck v. Atlantic Coast PLC

provided a general outline of the exception:

The bad faith exception to the American Rule applies in
cases where the court finds litigation to have been
brought in bad faith or finds that a party conducted the
litigation process itself in bad faith, thereby unjustifiably
increasing the costs of litigation. There is no single
standard of bad faith that warrants an award of
attorneys' fees in such situations; rather, bad faith is
assessed on the basis of the facts presented in the case.
Courts have found bad faith conduct where parties have
unnecessarily prolonged or delayed litigation, falsified
records, or knowingly asserted frivolous claims.
Specific behavior that has been found to constitute bad
faith in litigation includes misleading the court, altering
testimony, or changing position on an issue. The bad
faith exception is not lightly invoked. The party seeking
a fee award bears the stringent evidentiary burden of
producing “clear evidence” of bad-faith conduct.12

“[T]he bad faith exception applies only in extraordinary cases, and the party

seeking to invoke that exception must demonstrate by clear evidence that the party

from whom fees are sought ... acted in subjective bad faith.”13 “Although there is

no single definition of bad faith conduct, courts have found bad faith where parties

10
Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 545 (Del. 1998).
11
Chambers v. NASCO, Inc., 501 U.S. 32 (1991); Christiansburg Garment Co. v. Equal Emp. Opportunity Comm'n,
434 U.S. 412, 419, 422 (1978).
12
Beck v. Atl. Coast PLC, 868 A.2d 840, 850–51 (Del. Ch. 2005) (citations omitted) (emphasis added).
13
Lawson v. State, 91 A.3d 544, 552 (Del. 2014) (quoting Dover Historical Soc'y, Inc. v. City of Dover Planning
Comm'n, 902 A.2d 1084, 1093 (Del. 2006)) (also quoting Auriga Capital Corp. v. Gatz Properties, LLC, 40 A.3d
839, 880 (Del.Ch.2012), aff'd, 59 A.3d 1206 (Del. 2012)) (internal quotation marks omitted).

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have unnecessarily prolonged or delayed litigation, falsified records or knowingly

asserted frivolous claims.” 14 “Bad faith conduct also can include reversing

position on issues and changing testimony to suit the moment.” 15 However, “the

bad faith exception does not apply to conduct that gives rise to the substantive

claim itself.”16 “Accordingly, ‘an award of fees for bad faith conduct must derive

from either the commencement of an action in bad faith or bad faith conduct taken

during litigation, and not from conduct that gave rise to the underlying cause of

action.’”17 “The purpose of [the] bad faith exception is to deter abusive litigation

in the future, thereby avoiding harassment and protecting the integrity of the

judicial process.”18

Whether the bad faith exception applies in this case turns on whether

Summit knowingly asserted a frivolous claim. Once the Terranovas filed their

motion for judgment on the pleadings, it was incumbent on Summit to squarely

and truthfully address the question of whether the Terranovas owed a duty to

Summit. In its response to the original motion for judgment on the pleadings

Summit did not address the duty argument made by the Terranovas. At oral

14
Johnston v. Arbitrium, 720 A.2d at 546 (multiple citations omitted).
15
In re Rural Metro Corp., 88 A.3d 54, 109 (Del. Ch.), decision clarified on denial of reargument sub nom. In re
Rural Metro Corp. S'holders Litig. (Del. Ch. 2014) (quoting In re Trados Inc. S'holder Litig., 73 A.3d 17, 78 (Del.
Ch. 2013)) (internal quotation marks omitted).
16
Johnston v. Arbitrium, 720 A.2d at 546 (citing Shimman v. International Union of Operating Engineers Local
18, 744 F.2d 1226, 1230 (6th Cir. 1984), cert. denied 469 U.S. 1215).
17
Versata Enters., Inc. v. Selectica, Inc., 5 A.3d 586, 607 (Del. 2010) (citing Johnston v. Arbitrium, 720 A.2d at
546).
18
In re Rural, 88 A.3d at 109 (quoting Kaung v. Cole Nat'l Corp., 884 A.2d 500, 506 (Del. 2005)) (internal quotation
marks omitted).

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argument on the motion, Summit admitted to the Court that they could find no

legal authority for the proposition that the Terranovas’ owed a legal duty to

Summit. Rather than conceding that no claim existed against the Terranovas,

Summit sought leave to file an amended complaint to add a claim based on fraud.

The proposed fraud claim was ultimately dismissed because there was no factual

or legal basis for the claim. In fact, the claim was made when Summit knew that

Kelly had assaulted another resident of Summit while he was in the care and

custody of Summit, and this assault occurred a mere three weeks prior to the attack

in the instant case. Additionally, this assault occurred almost a year after Kelly

had been at Summit.

On this record the Terranovas have met their high burden in demonstrating

that this is one of those extraordinary cases justifying a shifting of fees. I find the

Terranovas are entitled to an award of attorney’s fees against Summit for all fees

incurred after the filing of the original motion for judgment of the pleadings. It

was at this point that it must have been clear to Summit that its third-party

complaint had no basis in either law or fact. The Terranova brothers, through

counsel, warned Summit’s counsel that it would seek attorney’s fees and costs if

Summit did not dismiss or withdraw the third-party complaint against them.19

19
The Terranovas also seek the imposition of fees under Superior Court Civil Rule 11. Rule 11 requires that the
Motion be served upon the opposing party at least 21 days before it is filed and served with the Court. While
there was notice to Summit by the Terranovas about filing a Rule 11 motion, the Rule 11 motion was not sent 21

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Summit failed to head the Terranovas’ request and proceeded with the filing of the

amended third-party complaint which doubled down on their original complaint.

I am not persuaded that the Terranovas are entitled to fees before the filing

of the motion for judgment on the pleadings. Up until that point, the Terranovas

have not presented sufficient clear and convincing evidence that Summit was

acting subjectively in bad faith.

Within 10 days of the date of this order the Terranovas should file and advise

the Court of the amount of fees to which they are entitled based on this decision.

The Terranovas, without violating any privilege, should provide more details for

the time being sought.

The Terranovas are the prevailing party. As such, they are entitled to

ordinary court costs. The Terranovas have attached to their motion a listing of

costs they are seeking to recover. I will award the items listed as filing fees and

process server fees. I need a further explanation as to the other charges, especially

the court reporter fees, as to whether they are recoverable. Within 10 days of the

date of this decision the Terranovas should provide the Court with a more detailed

explanation of the Court reporter fees, including an identification of the transcript

involved, the deponent and the date of the proceeding being transcribed. The

days in advance as required by the rules. Even if the Terranovas had complied with Rule 11, any relief under Rule
11 would be duplicative of the relief I have fashioned under the bad faith exception.

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Court will analyze the award of these costs as it normally does when costs are

being requested for transcript fees post-trial.

IT IS SO ORDERED.

/s/ Francis J. Jones, Jr.
Francis J. Jones, Jr., Judge

cc: Counsel via File & ServeXpress

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