Wells Fargo Bank, NA v. Earl Strong ( 2014 )

K|M E. AYVAZ|AN
MASTER lN cHANcERY
Daniel T. Conway, Esquire
At1antic LaW Group, LLC
512 East Market Street
Georgetown, DE l9947
Earl Strong
PO Box 471
11 Gooseneck Lane
Smyrna, DE 19977
COURT OF CHANCERY
OF THE
STATE OF DELAWARE
July l5, 2014
CHANCERV COURTHOUSE
34 The Circ|e
GEORGETOWN, DELAWARE 19947
AND
NEW CASTLE COUN'|'V COURTHOUSE
500 NORTH K|NG STREET, SU|TE 11400
W|LMINGTON, DELAWARE 19980~3734
RE: Wells Fargo Bank, NA v. Earl Strong, C.A. No. 8538-MA
Dear Counsel and Mr. Strong:
Pending before me are PlaintiffWel1s Fargo Bank’s exceptions to my draft
report in which 1 recommended that its complaint seeking the imposition of an
equitable lien on real property located at 11 Gooseneck Lane, Smyma, Delaware
19977 be dismissed as having been untimely transferred from the Superior Court
under 10 Del. C. § 1902. For the reasons that fo1low, 1 am adopting my draft
report as my final report, as modified herein.
F actual and Procedura1 Background:
Page 1 ofll
By way of background, 1 will summarize the facts as described by the
Superior Court in the original foreclosure case, Civil Action No. 05L-06-008
WLW.‘ Defendant Earl Strong had agreed to a mortgage on his property located at
ll Gooseneck Lane, Smyrna with MIT Lending on October 22, 2004, in exchange
for a loan in the amount of $205,277.00.2 Afcer Strong failed to tender monthly
payments of $l,l33.55 as required, Mortgage Electronic Registration Systems, Inc.
(hereinafter "MERS"), as nominee of MIT Lending, filed a foreclosure action in
Superior Court on June 10, 2005.3 After default judgment was entered on
November 3, 2005, MERS filed a writ of levari facias on January 31, 2006, but the
foreclosure was repeatedly halted by automatic stays after Strong filed three
successive pro se bankruptcy petitions." On November 23, 2010, MERS received
a recorded assignment in favor of Wells Fargo, and filed a writ of levari facias in
the name of Wells Fargo in Superior Court on January 11, 2011.5 The Superior
Court judge instructed the attomey for Wells Fargo to submit a memorandum
detailing the history of the mortgage and explaining the significance of the
assignment, and informed Strong that he could file a motion to vacate the default
1 Mortgage Electronic Registration Systems, Inc. v. Strong, 2011 WL 5316766, at *l
(Del. Super., Oct. 19, 201l).
2
Idaho
3 Id.
4 1¢1.
5 Id.
Page 2 of ll
judgment if he wished to contest its legitimacy.6 After the motion to vacate and
legal memorandum were filed, the Superior Court sua sponte decided that the
mortgage and note had not been properly sealed and, therefore, were not
enforceable at law.7 The Superior Court concluded that it lacked subject matter
jurisdiction over the case and, on October 19, 201 l, issued an order dismissing the
foreclosure action under Super. Ct. Civ. Rule 12(h)(3) and 10 Del. C. § 1902,
"without prejudice, to. be filed within 60 days of this Order in the Court of
Chancery."g
Nearly one month later, on November 17, 201 1, MERS filed a written
election to transfer the case to this Court.g On November 18, 20l1, the Superior
Court approved the election to transfer.l° Nearly 18 months later, on May 8, 2013,
Wells Fargo filed its complaint for an equitable foreclosure against Strong in this
Court." The caption describes Wells Fargo as "assignee of Mortgage Electronic
Registrations Systems, Inc., as nominee for MIT Lending," and the complaint as an
6 1¢1.
7 Id. The Superior Court also observed that there was an outstanding issue regarding the
mortgage/loan assignment because the original complaint and the default judgment were
in the name of MERS. Id. at n. 1 ("Plaintif``f suggests two possible solutions: 1) as the
assignment is alleged to have been filed in error, vacate it through filing a motion; or 2)
$lget the assignment stand and substitute Wells Fargo, N.A., as plaintiff.").
Id. at *2.
9 Verified Complaint, Ex. E, Docket Item No. 1 (Wells F argo Bank, N.A. v. Strong, C.A.
No. 853 S-MA) (hereinafter "D.I.").
‘° 1a
“ D.I. No. 1.
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In Rem Sci. Fa. Sur Mortgage action.lz On June 26, 2013, Strong filed a pro se
Motion to Dismiss, citing Court of Chancery Rule l2(b)(1), (2), (3), (4), (5), and
(6).13 Among other issues, Strong argued that_Wells Fargo had failed to transfer its
case to this Court within 60 days of the Superior Court Order dated October 19,
2011. 1 subsequently recommended that the case be dismissed as untimely
transferred in a draft report issued on August 29, 2013.14
ls_su_e_s_r
In its exceptions to my draft report, Wells Fargo addresses four issues:
service of the complaint, verification of the complaint, the validity of the mortgage,
and whether the complaint in Chancery Court was timely filed. Only the last issue
warrants discussion here. According to Wells Fargo, its complaint is timely
because "[a] little over a month following the Superior Court’s approval of
Plaintiff`` s Election to Transfer the case to ChanceryCourt,"‘S Strong filed a pro se
civil action against Wells Fargo and its attomey, Thomas Bamett, Esq., in Superior
Court,lé seeking damages for fraud, forgery, perjury, defamation, conspiracy,
malicious prosecution, and deceptive trade practices, arising out of the Superior
Court mortgage and foreclosure action. According to Wells Fargo, had its
12 1¢1.
‘3 D.l. No. 8.
"‘ 1).1. No. 15.
15 plaintiffs opening Briefar p. 10. 1).1. No. 25.
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equitable foreclosure case already been filed in this Court, it would not have been
able to go forward until Strong’s pro se civil action in Superior Court had
concluded because a final determination there might have materially affected this
equitable action. On July 20, 2012, the Superior Court granted summary judgment
in favor of the defendants on all claims but one." On November 30, 2012, the
Superior Court dismissed Strong’s remaining claim and his complaint in its
entirety,‘g and denied Strong’s pro se motion for reargument on January 3, 2013.‘9
Strong’s pro se appeal to the Supreme Court was dismissed by stipulation of the
parties on May 6, 2013, following Strong’s motion to withdraw the appeal filed on
April 26, 2013.2° Five days after the appeal was dismissed, on May 8, 2013, Wells
Fargo filed its complaint for an equitable foreclosure in this Court.
Wells Fargo argues that, instead of its case being dismissed by the Court
because of the 18-month delay in transferring the case, its counsel simply should
be faulted for not notifying this Court of Strong’s civil action and requesting a stay.
Wells F argo further argues that to allow Strong to retain possession of the real
‘6 srr~errg er et v. Wells Fargo Berrk er al., C.A. No. K12c-01-021 wLw (Del. supei~.).
Both Strong and his wife were plaintiffs in this action, but 1 will refer to them simply as
"Strong" to avoid repetition.
" srrerrg er et v. Wells Frrrge seek er ez., 2012 wL 3549730, er *3 (Del. Super. July 20,
2012) (plaintiffs were given ten days to file a more definite statement of their "deceptive
trade practices" claim).
18 Strong et al. v. Wells Fargo Bank et al., 2012 WL 6961995, at *3 (Del. Super. NOV. 30,
2012).
19 Strong et al. v. Wells Fargo Bank et al., 2013 WL 1228028, at *2 (Del. Super., Jan. 3,
2013)
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property at ll Gooseneck Road would result in Strong’s unjust enrichment at the
expense of Wells Fargo.
Strong’s pro se arguments in support of my draft report are somewhat
rambling and disjointed. Among other issues, Strong repeats his claims that the
mortgage is invalid as a product of consumer fraud and deceptive trade practices,
and that the transfer of the note from MIT Funding to Wells F argo was through a
falsified document. According to Strong, this case does not lie within the
jurisdiction of the Chancery Court, but should be prosecuted as a criminal case by
the Attomey General.
Analysis:
10 Del. C. § 1902 provides:
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,
discharges all costs accrued in the first court, and makes the usual deposit
for costs in the second court. All or part of the papers filed, or copies
thereof, and a transcript of the entries, in the court where the proceeding was
originally instituted shall be delivered in accordance with the rules or special
orders of such court, by the prothonotary, clerk, or register of that court to
the prothonotary, clerk, or register of the court to which the proceeding is
transferred. The latter court shall thereupon entertain such applications in
the proceeding as conform to law and to the rules and practices of such
court, and may by rule or special order provide for amendments in pleadings
2° srr~eeg er ez. v. Wells Ferge seek er ez_, Del. supr., No. 37, 2013, 1).1. No. 18.
Page 6 of 11
and for all other matters conceming the course of procedure for hearing and
determining the cause as justice may require. For the purpose of laches or of
any statute of limitations, the time of bringing the proceeding shall be
deemed to be the time when it was brought in the first court. This section
shall be liberally construed to permit and facilitate transfers of proceedings
between the courts of this State in the interests of justice.
The transfer period runs from the date of the order denying the jurisdiction
of the first court, which in this case was October 19, 2011.21 Although MERS filed
a timely written election to transfer on November l7, 2011, which was approved
by the Superior Court the following day, there is no record that of MERS’
complaint being lodged in this Court and assigned a new civil action number
before the expiration of the 60-day time period on December 19, 2011. The fact
that Strong subsequently filed his civil action against Wells Fargo and its attomey
on .1 anuary 19, 2012, does not change the analysis since the transfer period had
already expired without MERS having perfected the transfer of its case by making
"the usual deposit for costs" in this Court within 60 days of the date of the Superior
court order.” MERS failed to follow the direet order ofthe superior court dated
October 19, 201l, which mandated it to transfer its case to this Court within 60
” Lorenzetti v. Hodges, 2012 WL l4l03, at n. 7 (Del. Super. Jan. 27, 2012) (citing
Wilmington T rust Co. v. Schnel``der, 342 A.2d 240, 241 (Del. l995))
22 10 Del. c. § 1902
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days.23 MERS also failed to abide bythe plain language of Section 1902, which
required it to make "the usual deposit of costs in the second court" within 60 days.
By its own terms, Section 1902 must be "liberally construed to permit and
facilitate transfers of proceedings between the courts of this State in the interests of
justice."24
1t is "a remedial statute designed to prevent a case from being totally
ousted because it was brought in the wrong Court."z$ The remedy was properly
applied by the Superior Court in this case; that is, having filed the foreclosure
action in the wrong court, MERS was given the opportunity by the Superior Court
to transfer its case to the Court of Chancery. MERS started to effectuate the
transfer, but then failed to complete the process, contrary to the statute and the
Superior Court’s October 19, 2011 Order.
Wells F argo nevertheless argues that it should be allowed to proceed with its
complaint for an equitable foreclosure because otherwise Strong would be unjustly
enriched at the expense of the mortgage holder. 1n support of its argument, Wells
Fargo cites Branca v. Branca, 443 A.2d 929 (Del. 1982), a case involving an
immigrant couple who had furnished the entire consideration for the purchase of a
home for their son and his intended wife. Af``ter determining that the parents had
22 see, e.g., Aeerirel Heldreg e. rowe efBewers, 2004 wL 2744581 (Del. super. oet. 18,
2004y
24 let
Page 8 ofll
intended the transaction as a loan, the Chancery Court nevertheless refused to
impress an equitable lien on the real estate, holding that the parents were only
entitled to a judgment against their son after the son failed to repay the loan
following the dissolution of his marriage three years later.z° 1t ordered the real
estate to be sold with the net proceeds distributed one half to the parents and the
other half to the son’s former wife, whose name had been placed on the deed by
her then-husband. On appeal, the Supreme Court reversed, concluding that the
lower court had failed to properly apply equitable principles in this familial setting
to prevent unjust enrichment of the son’s former wife, who had contributed no
funds of her own to the purchase of the property.”
In contrast to the family situation above, this case involves a sophisticated
financial institution lender and an individual whose pleadings suggest that he has
had only a minimal level of formal education. In particular, 1 take judicial notice
of Strong’s pro se appeal to the Supreme Court from the decisions of the Superior
Court in his civil action against Wells Fargo and its attorney, The docket in No.
25 W'z``lmington T rust C0. v. Schnez``der, 342 A.2d 240, 242 (Del. 1975). See, e.g., Family
Court v. Giles, 384 A.2d 623, 624-625 (Del. 197 8) (reversing Superior Court decision
that denied motion to transfer case under the provisions of 10 Del. C. §1902).
26 Breeee, 443 A.2d at 93 l.
22 let
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37, 2013 reveals that on April 26, 2013, 22 strong filed a pro se Motion to
Withdraw the Appeal in which he stated at paragraph 8:29
In Judge Witham October 19, 2011 Decision it stated that Mers Attorney had
60 days to file their Supporting Affidavit and statement of the facts to
Chancery Court this was never executed and the chancery Court Never
except the transfer to Chancery Court after the Chancery Clerk 1 believe was
named (Bebra) made Several calls and Demands to Wells Fargo Attomeys
Thomas Barnett and his law Firm to comply with The Chancery court Rules,
Mr. Bamett Law Firrn stated and informed the Chancery Clerk that they
Were no Longer Pursuing the Mers Case, do to Mr. BARNETT and His Law
finn Refusal to Comply to the Chancery Court Rules against Accepted the
Transfer and Never Created a Court docket or number it has been over two
years since, The 60 Days’ time Allowed Have expired for more than two
years. This Issue is Mute. And Due to other prior Chancery Court Ruling
and the Delaware Attorney General Complaint this wouldn’t stand a Chance
in cnaneery court?°
1n conclusion, Strong requested:
Wherefore Appellants Earl Strong and Lillie Strong ask this SUPREME
COURT to Withdraw Appellants Appeal, we no longer want to pursue this
Appeal because Judge Witham is an Honorable Respectable Judge, and As
was stated Appellants doesn’t want another Piece of the Pie.3 '
lt appears from these excerpts that after years of litigation between the
parties, Strong voluntarily withdrew his Supreme Court appeal because he believed
that Wells F argo had abandoned its efforts to foreclose on his home. By
withdrawing his appeal, Strong gave up the possibility - no matter how remote - of
28 Strong v. Wells F argo Bank, et al., No. 37, 2013 (Del. Supr.), Docket1tem No. 15.
29 1 have made no effort to correct any errors in grammar, spelling, punctuation, or
capitalization in the two excerpts from Strong’s pro se motion.
2° D.l. 15, No. 37, 2013.
2‘ let
Page 10 of 11
obtaining monetary damages from Wells Fargo and Bamett for what he contended
were their fraudulent practices, among other claims of alleged misconduct. Thus,
even if 1 were to ignore the plain language of 10 Del. C. § 1902 requiring the
transfer of a case to another court to occur within 60 days from the date of the
order denying the jurisdiction of the first court, 1 would have to conclude that it
would be contrary to the general equitable principles of right and justice to allow
Wells Fargo’s complaint to proceed after Strong voluntarily dismissed his appeal
in the Supreme Court.
Conclusion:
l``~or the foregoing reasons, 1 recommend that the Court grant Strong’s motion
to dismiss Wells Fargo’s complaint for an equitable lien as untimely transferred.
The parties are referred to Court of Chancery Rule 144 for taking exception to a
Master’s Final Report.
Sincerely,
/s/ Kim E. Ayvazian
Kim E. Ayvazian
Master 1n Chancery
KEA/kekz
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