Bendfeldt & Roloff v. HSBC Mortgage ( 2014 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
KENNETH BENDFELDT, and §
BETTINA ROLOFF, § No. 68, 2014
§
Defendants Below- §
Appellants, § Court Below: Superior Court
§ of the State of Delaware in and
v. § for Kent County
§
HSBC MORTGAGE CORPORATION, §
(USA), § C.A. No. K09L11016
§
Plaintiff Below- §
Appellee. §
Submitted: September 10, 2014
Decided: October 7, 2014
Before STRINE, Chief Justice, HOLLAND, RIDGELY, VALIHURA,
Justices, and GLASSCOCK,* Vice Chancellor, constituting the Court en Banc.
ORDER
On this 7th day of October 2014, it appears to the Court that:
(1) Defendants-Below/Appellants Kenneth Bendfeldt and Bettina Roloff
(collectively, the “Mortgagors”) appeal from a Superior Court order granting a
Motion to Affirm Default Judgment and Proceed to Sheriff Sale in favor of
Plaintiff-Below/Appellee HSBC Mortgage Corp. (USA) (“HSBC”). The
Mortgagors raise three claims on appeal. First, they argue that the trial court erred
by concluding that they did not have standing to challenge HSBC’s ownership of
*
Sitting by designation pursuant to art. IV, § 12 of the Delaware Constitution and Supreme
Court Rules 2 and 4(a) to fill up the quorum as required.
the mortgage. Second, they argue that the trial court erred in making factual
determinations without considering the Mortgagors’ evidence. And third, they
contend that the trial court erred when it refused to address the ownership of the
note that secured the mortgage.
(2) In 2007, the Mortgagors obtained a loan for $283,500 from HSBC (the
“Mortgage”). The Mortgagors also executed a note evidencing their obligation to
repay the Mortgage, secured by their real property in Harrington, Delaware. The
Mortgage named Mortgage Electronic Registration Systems, Inc. (“MERS”) as the
mortgagee in its capacity as nominee for HSBC. On or about March 1, 2009,
Mortgagors defaulted on the Mortgage. In November 2009, HSBC initiated a
foreclosure action in the Superior Court. Days after the filing, MERS executed a
certificate of assignment assigning HSBC the Mortgage. The Mortgagors were
served notice of the complaint, but failed to appear or file a response.
(3) On March 22, 2010, the Superior Court issued a default judgment in
favor of HSBC. HSBC then attempted to execute the judgment by filing a writ of
levari facias. The writ was issued and a sheriff’s sale was scheduled for July 2010.
One day prior to the sheriff’s sale, the Mortgagors entered an appearance. The sale
was stayed, and the parties engaged in discovery. Due to a clerical error in the
original assignment, MERS executed a corrective assignment to HSBC. HSBC
then assigned the Mortgage to the Federal National Mortgage Association (“Fannie
Mae”). On April 23, 2013, HSBC moved to affirm the default judgment and
proceed to sheriff’s sale. The Mortgagors objected and moved to vacate the
default judgment. After oral argument and additional briefing, the Superior Court
granted HSBC’s motion to affirm the default judgment. This appeal followed.
(4) Rule 55(c)2 of the Superior Court Rules of Civil Procedure provides that
default judgments may be set aside in accordance with Rule 60(b).3 “‘A motion to
reopen a judgment under Rule 60(b) is addressed to the sound discretion of the trial
court and will be reviewed by this Court on appeal for an abuse of that
discretion.’”4
(5) As a preliminary matter, we assume without deciding that the
Mortgagors had standing to challenge the assignments in this case. The issue of
whether and, if so, when mortgagors have standing to challenge an assignment is
an important one that we need not and therefore do not reach to decide this appeal
because the Mortgagors’ challenge is without merit. The record shows that the
Mortgagors were served personally by the Sheriff and did not file a timely answer
to the complaint.5 The Mortgagors have been in default since 2009. The record
also shows that HSBC was both the holder of the mortgage and the holder of the
2
Super. Ct. Civ. R. 55(c).
3
Super. Ct. Civ. R. 60(b).
4
Gibson v. Car Zone, 2011 WL 5354270, at *2 (Del. Nov. 8, 2011) (internal quotation marks
omitted).
5
See Appellants’ Op. Br. App. at A7, Dkt. Item 6.
3
negotiable note evidencing the Mortgagors’ debt. The note was endorsed in blank,
a copy was attached to HSBC’s brief submitted to the trial court, and HSBC
offered to produce the original note upon request.
(6) The burden lies on the Mortgagors to show that the default judgment
should be vacated under Rule 60(b) of the Superior Court Rules of Civil
Procedure. We find no abuse of discretion in denying relief to the Mortgagors
because they have failed to meet this high burden. Accordingly, we affirm.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior
Court is AFFIRMED.
BY THE COURT:
/s/ Henry duPont Ridgely
Justice
4