Deutsche Bank National Trust Company v. Eugene Moss ( 2016 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
DEUTSCHE BANK NATIONAL )
TRUST COMPANY, )
Plaintiff, )
)
v. ) C.A. No.: N11L-03-097 ALR
)
EUGENE MOSS, )
Defendant. )
Submitted: January 15, 2016
Decided: January 26, 2016
MEMORANDUM OPINION
Upon Consideration of Plaintiff’s Motion for Summary Judgment
GRANTED
Upon Consideration of Defendant’s Motion for Summary Judgment
DENIED
Jarret P. Hitchings, Esq., Duane Morris LLP, Wilmington, Delaware, and Brett L.
Messinger, Esq., admitted pro hac vice, Attorneys for Plaintiff Deutsche Bank
National Trust Company
Dean A. Campbell, Esq., The Law Office of Dean A. Campbell, LLC,
Georgetown, Delaware, Attorney for Defendant Eugene Moss
ROCANELLI, J.
Factual Background
On January 10, 2007, Defendant Eugene Moss executed a note (“Note”) in
favor of New Century Mortgage Corporation (“New Century”) for a principal
amount of $369,000.00 with initial payments of $3,123.94 per month.1 The Note
explicitly provided that monthly payments were subject to change. 2 Also on
January 10, 2007, Moss executed a mortgage (“Mortgage”) as security for
repayment of the Note to Mortgage Electronic Registration Systems (“MERS”) –
acting as nominee for New Century – on property located at 210 Porky Oliver
Drive, Middletown, Delaware, 19709 (“Property”).3 Moss resides at the Property.
The Mortgage was recorded with the Recorder of Deeds of New Castle County on
January 31, 2007.
On April 7, 2007, New Century filed for Chapter 11 bankruptcy. In May
2007, the Bankruptcy Court for the District of Delaware approved the sale of New
Century’s loan servicing business to Carrington Capital Management, LLC and
Carrington Mortgage Services (collectively “Carrington”). On January 17, 2008,
MERS – as nominee for New Century and then Carrington – assigned and
transferred the Mortgage (“First Assignment”) to Deutsche Bank Trust Company
1
Aff. in Support of Plaintiff’s Mot. for Summary Judgment (hereinafter “Plaintiff’s MSJ Aff.”),
Aug. 14, 2015, Ex. A.
2
Id.
3
Plaintiff’s MSJ Aff., Ex. B.
1
Americas (“DBTCA”).4 The First Assignment was recorded with the Recorder of
Deeds on February 5, 2008.5 DBTCA and Moss entered into a loan modification
agreement on April 14, 2009, which provided that Moss’s payments would be
$1,908.57 per month.6 Subsequently, on November 16, 2009, DBTCA assigned
and transferred the Mortgage (“Second Assignment”) to Plaintiff Deutsche Bank
National Trust Company (“Deutsche Bank”). 7 The Second Assignment was
recorded with the Recorder of Deeds on April 13, 2010.8
Moss concedes that he has not made a payment on the Mortgage since
September 2009 – approximately six (6) years.9 Although Moss was afforded an
opportunity to participate in a loss mitigation program with Deutsche Bank
pursuant to 10 Del C. § 062A, 10 Moss chose not to engage in the program.
Deutsche Bank is the holder of the Note and the Mortgage.
4
Plaintiff’s MSJ Aff., Ex. C.
5
Id.
6
Plaintiff’s MSJ Aff., Ex. E.
7
Plaintiff’s MSJ Aff., Ex. D.
8
Id.
9
Moss. Depo. Jan. 14, 2015, 38:18-21.
10
See 10 Del. C. § 5062A(a) (“In connection with any mortgage foreclosure action brought
under § 5061 of this title with respect to an owner-occupied 1- to 4-family primary residential
property, unless the mortgage is held by the seller of the subject property who does not hold
more than 5 such mortgages, the defendant must have an opportunity to apply for relief under a
federal loss mitigation program for which the defendant may be eligible including, but not
limited to . . .”).
2
Procedural Background
Deutsche Bank filed a scire facias sur mortgage action against Moss in
March 2011 seeking foreclosure on the Mortgage. Moss filed an answer to
Deutsche Bank’s complaint and pled several counterclaims, including: collateral
estoppel, consumer fraud, common law fraud, equitable fraud, breach of contract,
and violations of the Fair Debt Collection Practices Act. In October 2011 (and as
amended in May 2012), Moss filed a motion for summary judgment with the
Court. Deutsche Bank filed a motion in opposition thereto. Moss’s motion for
summary judgment was granted by Order dated December 18, 2013.
Deutsche Bank filed a timely appeal with the Delaware Supreme Court,
which reversed and remanded the matter for further proceedings. In its Order, the
Delaware Supreme Court noted the confusing nature of the proceedings and found
that Moss raised factual doubts regarding whether Deutsche Bank owned the
Mortgage, but the doubts raised by Moss were not uncontradicted, according to the
Court and, therefore, summary judgment in favor of Moss was not warranted.11
Moreover, the Supreme Court noted that, in order to prevail, Deutsche Bank must
prove it has the right to foreclose.12 Since there is no dispute regarding Moss’s
11
Deutsche Bank Nat. Trust Co. v. Moss, 99 A.3d 226 (TABLE) (Del. 2014).
12
See id. at *3 (“But that failure is one that would be fatal to Deutsche Bank if it were moving
for summary judgment for itself, and would justify the denial of its motion and force Deutsche
Bank to face a trial where it would bear the burden of proving its right to foreclose.”).
3
default, the only question is whether Deutsche Bank is the party in interest which is
entitled to the relief it seeks, i.e. foreclose and, ultimately, possession.
On remand, the parties have submitted cross-motions for summary
judgment. Specifically, Deutsche Bank filed a motion for summary judgment on
August 14, 2015 and Moss filed his opposition thereto. Subsequently, Moss filed a
motion to dismiss on November 10, 2015, and Deutsche Bank filed its opposition.
Because Moss’s motion to dismiss was submitted with various materials outside
the pleadings, the Court gave notice to the parties that Moss’s motion was
converted to a motion for summary judgment. 13 Accordingly, the parties were
afforded the opportunity to present all materials made pertinent to such a motion
under Rule 56. This is the Court’s ruling on the cross-motions for summary
judgment.
Discussion
I. Standard of Review
The Court may grant summary judgment only where the moving party can
“show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.”14 The moving party bears the
13
See Super. Ct. Civ. R. 12(b) and 56; see also Furman v. Delaware Dep’t of Transp., 30 A.3d
771 (Del. 2011).
14
Super. Ct. Civ. R. 56.
4
initial burden of proof and, once that is met, the burden shifts to the non-moving
party to show that a material issue of fact exists. 15 At the motion for summary
judgment phase, the Court must view the facts “in the light most favorable to the
non-moving party.”16
II. Deutsche Bank has standing to foreclose on the Mortgage.
Moss argues that Deutsche Bank lacks standing to bring the present
foreclosure action against Moss. Specifically, Moss contends that the Mortgage
and Note could not have been validly transferred to Deutsche Bank because New
Century filed for bankruptcy before the First Assignment and, therefore, Deutsche
Bank is not entitled to foreclose on the Mortgage.
Deutsche Bank has standing to foreclose on the Mortgage. New Century’s
bankruptcy did not affect MERS ability to assign the Mortgage. Although New
Century filed for bankruptcy before the First Assignment was effectuated, MERS
was able to execute the First Assignment as nominee on behalf of Carrington – the
successor and assign of New Century. 17 Deutsche Bank has established the
validity of the First and Second Assignments. Under 10 Del. C. § 5061, an
15
Moore v. Sizemore, 405 A.2d 679, 680–81 (Del. 1979).
16
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
17
See Plaintiff’s MSJ Aff., Ex. C. (explicitly providing for the First Assignment of the Mortgage
from MERS “as nominee for New Century [] its successors and assigns . . .”) (emphasis added).
5
assignee may bring a foreclosure action.18 Further, under 6 Del. C. § 3-301, the
holder of an instrument is entitled to enforce that instrument. Accordingly,
Deutsche Bank – as assignee and holder of the Mortgage – has standing to
foreclose on the Mortgage.
Moreover, any right Moss may have had19 to challenge the assignment of the
Mortgage is judicially estopped. “[U]nder the doctrine of judicial estoppel, a party
may be precluded from asserting in a legal proceeding a position inconsistent with
a position previously taken by him in the same or in an earlier legal proceeding.”20
Specifically, Moss originally admitted that Deutsche Bank was the owner of the
Mortgage and Note and changed positions throughout the proceedings.21
18
10 Del. C. § 5061(a) (“. . . upon breach of the condition of a mortgage of real estate by
nonpayment of the mortgage money or nonperformance of the condition stipulated in such
mortgage at the time and in the manner therein provided the mortgagee, the mortgagee's heirs,
executors, administrators, successors or assigns may, at any time after the last day whereon the
mortgage money ought to have been paid or other conditions performed, sue out of the Superior
Court of the county wherein the mortgage premises are situated a writ of scire facias upon such
mortgage directed to the sheriff of the county commanding the sheriff to make known to the
mortgagor . . . .”); see also CitiMortgage, Inc. v. Bishop, 2013 WL 1143670, at *4 (Del. Super.
Mar. 4, 2013) (“Under 10 Del. C. § 5061, an assignee may bring a foreclosure action.”).
19
Although the Court does not reach this issue, Deutsche Bank raised a question as to whether
Moss had any standing to challenge the validity of any Mortgage assignment considering that
Moss was not party to the assignments. See, e.g., Branch Banking & Trust Co. v. Eid, No. CV
2013 WL 3353846, at *4 (Del. Super. June 13, 2013) (citing CitiMortgage, Inc., 2013 WL
1143670, at *4) (noting that “[A] debtor is not a party to a mortgage assignment, is not a third
party beneficiary to the assignment and cannot show legal harm as a result of the assignment. As
such, the debtor has no legally cognizable interest in an assignment and therefore is not in a
position to complain about it.”).
20
Capaldi v. Richards, 2006 WL 3742603, at *2 (Del. Ch. Aug. 9, 2006).
21
See Deutsche Bank Nat. Trust Co, 99 A.3d at *1, *3 (As the Delaware Supreme Court
described, “In Moss’s Answer to Deutsche Bank’s Complaint [. . .], Moss embraced the notion
6
III. Deutsche Bank is entitled to summary judgment.
As a threshold matter, the Court finds it necessary to stress that this matter
could have been properly resolved in 2013 had the parties presented the matter as it
was presented to the Delaware Supreme Court, and now to this Court on remand.
Deutsche Bank has standing to bring this foreclosure action. Moreover, it is
undisputed that Moss executed the Note and the Mortgage. It is also undisputed
that Moss defaulted on his payment obligations on the Mortgage. Indeed, Moss
admits that he has not made payments on the Mortgage in over six (6) years. Moss
has not sufficiently pled any other defense to a scire facias sur mortgage action.22
Accordingly, judgment is entered in favor of Deutsche Bank.
IV. Moss is not entitled to judgment on his counterclaims.
Moss takes the position that there are no genuine issues as to any material
fact and that this Court can resolve all pending disputes as a matter of law. Moss
has the burden of proof regarding his counterclaims, which are challenged by
Deutsche Bank. Moss has not demonstrated that he is entitled to judgment as a
that Deutsche Bank was the owner of the [M]ortage and the [N]ote, and sought to enforce against
Deutsche Bank a modification to the loan he entered into in 2009. Moss then changed course,
and through counsel, filed a motion for summary judgment, [in which] Moss contended that [. . .]
Deutsche Bank was not [. . .] the owner of the [M]ortgage and the [N]ote.” Also, the Supreme
Court pointed out that “Moss had fundamentally shifted position[s]”).
22
See CitiMortgage, Inc., 2013 WL 1143670, at *5 (“Delaware courts recognize the defenses of
payment, satisfaction or avoidance.”); JPMorgan Chase Bank v. Hopkins, 2013 WL 5200520, at
*3 (Del. Super. Sept. 12, 2013) (recognizing only the defenses of payment, satisfaction, or
avoidance for a scire facias sur mortgage).
7
matter of law on his claims against Deutsche Bank. It is not enough for a party to
merely assert the existence of a disputed issue of fact. 23 Moss has not pled
sufficient facts to substantiate his counterclaims to survive summary judgment and
in fact, does not even claim there are factual issues in dispute. Moreover, to the
extent that any of Moss’s counterclaims do not arise under the Mortgage, they are
improperly asserted in this scire facias sur mortgage action.24 Finally, although
Moss now argues that the Note has not been properly authenticated, the Note is not
dispositive. Scire facias sur mortgage actions are in rem proceedings and “are
based upon the mortgage, not the [n]ote.”25 Therefore, because this is an in rem
proceeding to foreclose on the Mortgage and not an in personam action, Moss’
arguments regarding the Note’s authenticity are without merit. Accordingly, Moss
is not entitled to judgment as a matter of law.
23
Carriere v. Peninsula Ins. Co., 810 A.2d 349 (TABLE) (Del. 2002).
24
See JPMorgan Chase Bank v. Hopkins, 2013 WL 5200520, at *2 (Del. Super. Sept. 12, 2013)
(“. . . only claims that arise under the mortgage agreement subject to foreclosure can be asserted
in a scire facias sur mortgage action.”); Harmon v. Wilmington Trust Co., 663 A.2d 487 (Del.
1995)(“In general, only those claims or counterclaims arising under the mortgage may be raised
in a scire facias sur mortgage foreclosure action.”).
25
HSBC Mortgage Corp. (USA) v. Bendfeldt, 2014 WL 600233, at *2 (Del. Super. Feb. 4, 2014)
aff’d sub nom. Bendfeldt v. HSBC Mortgage Corp. (USA), 2014 WL 4978666 (Del. Oct. 7,
2014).
8
Conclusion
NOW, THEREFORE, this 26th day of January, 2016, Plaintiff Deutsche
Bank’s Motion for Summary Judgment is hereby GRANTED, Defendant
Eugene Moss’s Motion for Summary Judgment is hereby DENIED, and
JUDGMENT is entered in favor of Plaintiff Deutsche Bank and against
Defendant Eugene Moss.
IT IS SO ORDERED.
Andrea L. Rocanelli
____________________________________
The Honorable Andrea L. Rocanelli
9