Security National Mortgage Company v. Lehman Brothers Holdings, Inc. ( 2016 )


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  • IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
    SECURITY NATIONAL
    MORTGAGE COMPANY
    Plaintiff,
    v. C.A. No. N16C-01-221 PRW CCLD
    LEHMAN BROTHERS
    HOLDINGS INC.
    €\é\éS&/é\./%/&/\¢J\é
    Defendant.
    Submitted: July 20, 2016
    Decided: August 24, 2016
    MZ'BV_“RANDUM '-  AND ORDF ."~S``~
    Upon Defeha'ant, Lehman BrotherslHoldings, Inc'l ’s,
    Motion to Dismiss or, in the Alternative, to Stay this Action,
    GRANTED.
    Donald E. Reid, Esquire, Karl G. Randall, Esquire, Morris, Nichols, Arsht &
    Tunnell LLP, Wilmington, DE‘,] Gifford W. Price, Esquire (pro hac vz'ce), (Argued),
    Mackey Price & Mecham, PC, Salt Lake .City, UT, Blake D. Miller, Esquire (pro
    hac vice) (Argued), Miller Toone PC, Salt Lake City, UT, Att0rneys for Security
    National Mortgage Company.
    Vincent J. Poppiti, Esquire, Kasey H. DeSantis, Esquire, Fox Rothschild LLP,
    Wilmington, DE, Michael A. Rollin, Esquire, Of C0unsel (pro hac vice) (Argued),
    Maritza Braswell, Esquire, Of C0unsel (pro hac vice), Lindsay A. Unruh, Esquire,
    Of Counsel (pro hac vz'ce), Caleb Durling, Esquire Of Counsel (pro hac vice),
    Rollin Braswell Fisher LLC, Greenwood Village, CO, Attorneys for Defendant
    Lehman Brothers Holdings, Inc.
    WALLACE, J.
    I. INTRODUCTION
    Security National M0rtgage Company ("SecurityNational") brings this
    action pursuant to DelaWare’s Declaratory Judgment Act.l SecurityNational seeks
    a declaration that Defendant Lehman Brothers Holdings Inc.’s ("LBHI")
    indemnification claims related to loans sold by SecurityNational are time-barred,
    or in the alternative, that the indemnification claims are otherwise invalid.z
    Before the Court is LBHI’s Motion to Dismiss, or in the Alternative, to Stay
    the Action. LBHI asserts that this Court does not have subject matter jurisdiction
    over SecurityNational’s claims because SecurityNational’s complaint violates an
    automatic stay imposed by the Federal Bankruptcy Code.3 Even if subject matter
    jurisdiction exists, LBHI urges the Court to decline to exercise jurisdiction over
    SecurityNational’s action because there is no present "actual controversy"
    susceptible to declaratory relief. LBHI also argues that the Court should dismiss
    the action on first-filed or forum non conveniens grounds. If unwilling to dismiss,
    LBHI requests that the Court grant a stay pending resolution of related litigation in
    l _ `` _See Plf.’s_ Compl:for beclaratory J. 1111 37 -39 ("Plf.’s Compl."). DEL. CODE ANN. tit. 10,
    § 6501 (2015) (Delaware’s Declaratory Judgment Act).
    2 See Plf.’s Compl.
    3 see 11 U.s.c. §§ 362(3)(1), (3) (2015).
    declaratory judgment.‘l$ SecurityNational says it was unaware of any dispute with
    LBHI until August 27, 2015, the day it received notice of LBHI’s ADR
    proceeding. Thus, it argues, a declaratory judgment proceeding could not
    commence until after the commencement of that bankruptcy proceeding and is not
    barred.
    2. Bankruptcy Code Section 3 62(¢1)(3)
    Section 362(a)(3) of the Bankruptcy Code prohibits "any act to obtain
    possession of property of the estate or of property from the estate or to exercise
    control over property of the estate." Section 54l(a)(l) of that Code defines
    property of the estate very broadly, with certain exceptions inapplicable here, as
    "all legal or equitable interests of the debtor in property as of the commencement
    of the case."lé
    SecurityNational argues that the lndemnification Claims are not estate
    property. LBHI could only pursue the Indemnification Claims when the estate
    terminated - i.e., when the Bankruptcy plan was confirmed.‘w As a result, the
    Indemnifrcation Claims accrued only once LBHI settled with FannieMae and
    45 Plf.’_s Bpp’n 7-8.
    46 see also Gzuz¢an@ v. FDJC, 
    499 B.R. 439
    , 543 (Bani2005 WL 3277911
    , at *2 (Del. Ch. Nov. 23,
    2005).
    58 Def.’s Mor. 27-29.
    59 Ia'. at 27 (quoting Lisa, S.A. v. Mayorga, 993 A.Zd 1042, 1047 (Del. 2010) and citing
    Dura Pharms., Inc. v. Scandipharm, Inc., 713 A.Zd 925, 928 (Del. Ch. 1998)).
    _14_
    maintain sole oversight over the issues in this case. Namely, the Bankruptcy Court
    is familiar with both parties and with the statute-of-limitation and assignment
    arguments similar to SecurityNational’s - they have already been raised by other
    party mortgage loan originators.
    SecurityNational contends that their action was first-filed because an ADR
    proceeding is not tantamount to the filing of a lawsuit. And so, its filing, not
    LBHI’S, should be given deference.
    D. The Forum non Conveniens Doctrine
    When determining whether to dismiss or stay an action on forum non
    conveniens grounds, the Court will examine the six factors announced in General
    Foods v. Cryo-Maid: (l) whether Delaware law governs the case; (2) the relative
    ease of access to proof; (3) the availability of compulsory process for witnesses;
    (4) the pendency or nonpendency of a similar action or actions in another
    jurisdiction; (5) the possibility of a view of the premises; and (6) all other practical
    considerations that would make the trial easy, expeditious, and inexpensive.60
    LBHI contends that factors one, two, four, and six weigh heavily against
    Delaware: New York law applies to this action; no documents or witnesses are
    located in Delaware; the ongoing bankruptcy action in New York’s Banl198 A.2d 681
    , 684 (Del. 1964); Parvin v.
    Kaufinann, 236 A.Zd 425, 427 (Del. 1967); Certain Underwrz``ters at Lloya's Severally
    Subscribing P0licy No. DP359504 v. Tys0n Fooa's, Inc., 
    2008 WL 660485
    , at *3 (Del. Super. Ct.
    Mar. 7, 2008).
    _15_
    Court replicates this declaratory judgment action; and LBHI’s bankrupt entity
    status makes duplicate litigation costly and inefficient.él LBHI suggests that
    factors three - availability of compulsory process for witnesses - and five -
    viewing the premises - are inapplicable and do not favor either jurisdiction.éz
    According to SecurityNational, LBHI has failed to show that litigation in
    this forum presents an "overwhelming hardship" as required under Delaware law.63
    .And even if some lower standard were applied, it says, the Cryo-Maia' factors do
    not support New York over Delaware. SecurityNational argues that none of the
    alleged loans at issue involved New York property; that New York and Delaware
    are equally onerous for compulsory process for witnesses and premise viewing;
    that Delaware’s statute-of-limitations law applies due to New Yorl<’s borrowing
    statute; and that it is impractical to force all 149 alleged defendants to litigate in the
    Southem District of New York, one of the country’s busiest.64 SecurityNational
    6‘ 'ef.’s Mor. 33-34.
    63 Plf.’s Opp. 28-30 (citing BP Oil Supply Co. v. ConocoPhillips Co., 
    2010 WL 702382
    (Del. Super. Ct. Feb. 25, 2010)).
    To justify dismissal, the movant must demonstrate that litigating in
    Delaware would cause overwhelming hardship. To justify a stay, the movant need
    only demonstrate that the preponderance of applicable forum factors "tips in
    favor" of litigating the dispute in the non-Delaware forum.
    BP 011 supply, 2010 wL 702332, ar *2.
    64 1a
    _16_
    also makes much of the Bankruptcy Court’s alleged "inefficiency" because it
    cannot issue a final judgment on non-core issues, such as those present here.
    Instead, the Bankruptcy Court can only make findings of fact and conclusions of
    law; these are then reviewable by the federal district court.65 So, Security National
    concludes, the Court should not dismiss its action here on forum non conveniens
    grounds.
    IV. DISCUSSION
    The Court has thoroughly considered each of the parties’ arguments on these
    issues.66 After careful review though, the Court finds that the analysis suitable to
    the purpose here is that engaged under Delaware’s Declaratory Judgment Act.
    Accordingly, for the reasons hereafter, the Court exercises its judicial discretion to
    decline jurisdiction over this action.
    65- ._S'ee 28 U-.S.C-. §:l_57(_c)(l) ((c)(l) ("A bankruptcy judge may hear a proceeding that is not
    a core proceeding but that is otherwise related to a case under title ll. In such proceeding, the
    bankruptcy judge shall submit proposed findings of fact and conclusions of law to the district
    court, and any final order or judgment shall be entered by the district judge after considering the
    bankruptcy judge’s proposed findings and conclusions and after reviewing de novo those matters
    to which any party has timely and specifically objected."); see also In re Lehman Bros. Hola'ings
    Inc., 
    18 F. Supp. 3d 553
    , 556-58 (S.D.N.Y. 20l4).
    66 See IV-C, z``nj’ra,_,
    _1'7_
    A. Standard of Review for Delaware’s Declaratory Judgment Act
    Delaware’s Declaratory Judgment Act states:
    Except where the Constitution of this State provides otherwise,
    courts of record within their respective jurisdictions shall have power
    to declare rights, status and other legal relations whether or not further
    relief is or could be claimed. No action or proceeding shall be open to
    objection on the ground that a declaratory judgment or decree is
    prayed for. The declaration may be either affirmative or negative in
    form and effect, and such declaration shall have the force and effect of
    a final judgment or decree.67
    "The basic purpose of the Declaratory Judgment Act is to enable the courts to
    adjudicate a controversy prior to the time when a remedy is traditionally available
    and, thus, to advance to [a] stage at which a matter is traditionally justiciable."68 lt
    9
    is a tool to "promote preventive justice,"é not "a means of eliciting advisory
    opinions from the courts."m
    lt is well-settled that the Court has discretion to grant or deny declaratory
    judgment.n But, the Court cannot exercise that discretion unless the underlying
    Y _ _ _-»_.,§
    67 DEL. CoDE ANN. tit_. 1.0, § 6501.
    68 Diebold Computer Leasing, Inc. v. Commercial Crea'it Corp., 
    267 A.2d 586
    , 591-92 (Del.
    1970)-.-_-.
    69 Stabler v. Ramsay, 
    88 A.2d 546
    , 55l, (Del. l952) adhered to on reh ’g, 89 A.Zd 544 (Del.
    1952);.,;.
    70 Ackerman v_ s¢emerman, 201 A.zd 173, 175 (Del. 1964) (¢iring Szabz@r)t-..
    71 DEL. CODE ANN. tit. lO, § 6506; XI Specz``alty Ins. Co. v. WMI Liquidating Trust, 
    93 A.3d 1208
    , 1216 (Del. 2014); Delaware Bldg. & Constr. Trades Council, AFL-CIO v. Um``v. of
    Delaware, 
    2015 WL 884058
    , at *2 (Del. Super. Ct. Feb. 20, 20l5).
    _18_
    1172
    matter presents an "actual controversy. To determine whether an actual
    controversy exists, the following elements must be satisfled:
    (l) lt must be a controversy involving the rights or other legal
    relations of the party seeking declaratory relief; (2) it must be a
    controversy in which the claim of right or other legal interest is
    asserted against one who has an interest in contesting the claim;
    (3) the controversy must be between parties whose interests are real
    and adverse; and (4) the issue involved in the controversy must be ripe
    for judicial determination.n
    In this case, the first three factors are met and do not appear to be
    contested by either party. lt is the last - ripeness - that poses:'i*ssue.
    The ripeness prerequisite seeks to avoid adjudication of issues that "have not
    yet matured to a point at which judicial action is appropriate."m The requirement
    "reflects two goals: frrst, to conserve judicial resources by not allocating them to
    resolution of disputes that are not ready for judicial disposition, and, second, to
    avoid the development of the law in the absence of concrete facts and adversary
    positions upon which case law is premised."75
    52_ See Gannett C0., Inc. v. Bd. of Managers of the Delaware Criminal justice Info. Sys., 840
    A.Zd 1232, 1237 (Del. 2()03); XISpecialZ)/, 93 A._°)d at lZl6-l7.
    73 Rollins Int’l, Inc. v. Int’l Hydronics Corp., 303 A.Zd 660, 662-63 (Del. l973) (adopting
    the "actual controversy" requisites articulated by this Court in Marshall v. Hill, 
    93 A.2d 524
    (Del. Super. Ct. l952)).
    74 Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 
    533 A.2d 1235
    , 1239
    (Del. Ch. 1987).
    75 Tenneco Auto. Inc. v. El Pczso Corp., 2001 WL l64l744, at *6 (Del. Ch. Nov. 29, 2001)-_.4-_
    _19_
    "In the typical declaratory judgment action, an unwilling litigant will have
    cast a cloud upon a property right of the declaratory plaintiff, but will not have
    moved forward to litigate the claim."%
    But this is not a typical case. The action is clearly ripe for adjudication.
    Litigation is ongoing, has been for many years, and seems destined to continue. In
    fact, LBHI urges the Court to dismiss the action as "overripe." lt cites Burris v.
    77
    Cross.
    In Burris, the conflict centered around the scope of an easement.78 The
    parties had for many months prior been attempting to resolve the matter through
    good faith settlement negotiations.w The defendant provided the plaintiffs with a
    draft Chancery Court complaint he intended to file should the negotiations fail.g°
    _ _ __ _ .
    7"’ schzck, 533 A.zd at 1_239.
    Delaware courts generally look at five specific things to determine whether a matter is
    "ripe" for purposes of declaratory judgment: (l) a practical evaluation of the legitimate interests
    of the plaintiff in a prompt resolution of the question presented; (2) the hardship that further
    delay may threaten; (3) the prospect of future factual development that might affect the
    determination made; (4) the need to conserve scarce resources; and (5) a due respect for
    identifiable policies of law touching upon the subject matter in dispute. See 
    id. at 1239-40;
    Delaware Bldg. & Constr. Trades Council, AFL-CIO v. Univ. of Delaware, 
    2015 WL 884058
    , at
    *2 (Del. Super. Ct. Feb. 20, 2015); Hoechst Celanese Corp. v. Nat’l Union Fire Ins. C0. of
    Pittsburgh, Pa., 623 A.2d ll33, 1137 (Del. Super. Ct. June l7, 1992); Monsanto C0. v. Aetna
    Cas. & Sur. C0., 
    565 A.2d 268
    , 274 (Del. Super. Ct. May 22, 1989).
    77 Bum's v. cr@ss, 583 A.zd 1364(13@1. Super. ct sept 27, 1990).
    78 1a. ar 137011
    79 1a at 1369;§
    80 1a
    _2'@_
    the United States Bankruptcy Court for the Southem District of New York ("the
    Bankruptcy Court") that also involves SecurityNational.4
    In short, LBHI argues that the Bankruptcy Court is the most appropriate and
    suitable forum for the cause SecurityNational presents here. The Court agrees.
    Because SecurityNational’s declaratory judgment request fails to satisfy the
    requirements of Delaware’s Declaratory Judgment Act, LBHI’s motion to dismiss
    is GRANTED.
    II. FACTUAL AND PROCEDURAL BACKGROUND
    SecurityNational is a Utah-based corporation that acts as an originator of
    residential mortgage loans.§ LBHI is a DelaWare corporation that owned and
    operated Lehman Brothers Bancorp; that entity, in turn, owned Lehman Brothers
    Bani< LLC (“LB Bani<")?
    For several years, SecurityNational sold residential mortgage loans to LB
    Bank under the terms of an April l5, 2005 Loan Purchase Agreement ("LPA").7
    The LPA incorporated the "Seller’s Guide" of LB Bank’s loan administrator and
    :-"“.f_ " ' __" _ 1 ~
    4 See Adv. Proc., Lehman Brothers Hola'ings Inc. v. ]s’ Aa’vantage Mortgage, LLC et al.,
    No. 16-0l0l9 (SCC) (Feb. 3, 2016) (multi-party proceeding in the Bankruptcy Court against a
    number of loan originators including SecurityNational).
    __,..
    5 Plf.’s Ans. Br. in Opp’n to to LBHI’s Mot. to Dismiss ("Plf.’s Opp’n") l.
    6 
    Id. 7 Plf.’s
    Compl. 11 6_;.
    As negotiations deteriorated, it became clear litigation would likely result.gl
    Knowing that the defendant intended to file suit in the Chancery Court, the
    plaintiffs filed for declaratory judgment in this Court. Four days later, defendant
    filed a similar suit in Chancery.gz
    This Court found that, while the suit was ripe for adjudication, it should
    dismiss the matter as "overripe."$z In making this determination, the Court
    considered the following factors:
    (l) Whether the defendant is truly an unwilling litigant, thus
    necessitating declaratory action;
    (2) What form of relief is truly being sought by the plaintiff and
    whether that relief, if not solely a declaration of rights, would
    require resort to another court for supplemental relief. If so,
    whether both the rights and relief could be attained in a single
    non-declaratory action already available;
    (3) Whether another remedy exists and whether it would be more
    effective or efficient and, thus, whether declaratory judgment
    would serve a useful purpose;
    (4) Whether another action is pending, instituted either before or
    after the instant action, at the time of consideration of the
    Motion to Dismiss, and whether plaintiff would be able to raise
    all claims and defenses available in the instant action, as part of
    the pending action;
    82 Id§-
    83 
    Id. at l372,
    n. 6 (The Court noted that "overripeness is merely another aspect of the total
    concept of ripeness. Just as the Court has the discretion to dismiss an action if not ripe for
    determination, so may a Court dismiss an action if a practical evaluation of the peculiar facts and
    circumstances of the case lead the Court to believe that events have proceeded past the point
    where declaratory action will serve a practical and useful purpose.").
    _21_
    (5) Whether the instant action has truly been instituted to seek a
    declaration of rights or merely for tactical or other procedural
    advantage;
    (6) Whether the instant action was filed in apparent anticipation of
    other__pending proceedings; and
    (7)  "°F§,tiff will suffer any prejudice if the instant action
    is  f;_>
    The Court finds the Burris factors are suited to resolution of LBHI’s motion.
    As in Burris, the parties have moved far forward to litigate the claim. As in Burris,
    the Court will use the seven above-enumerated factors to determine whether
    SecurityNational’s declaratory judgment action is indeed "overripe."
    B. Application of Burris Fact0rs
    Taking each in turn, the Court concludes that the Burris factors, as well as
    considerations of judicial economy, outweigh any argument for the propriety of
    this Court’s further involvement.
    Factor _One_: LBHI is a willing litigant.
    LBHI is a willing litigant. lt has already proceeded with litigation under the
    method approved by the Bankruptcy Court. Prior to the filing of this action, LBHI
    initiated its own ADR proceedings against SecurityNational in Bankruptcy Court.
    LBHI continues to be a willing and very active litigant in that court. And there is
    no indication that LBHI will abandon its efforts there.
    ~=_ _e- _z_:
    84 1a ar 1372-73.
    _22_
    _.Eact_onsTwom_Threea_  Four: The Bankruptcy Court can hear all of
    SecurityNational’s claims and defenses and provide all rights and relief
    sought in a single action; declaratory judgment here does not serve a
    useful purpose.
    The Court concludes that the Bankruptcy Court is the appropriate forum for
    resolution of these issues. The Bankruptcy Court can provide full due process
    rights to all parties. SecurityNational can raise any defense there it wishes. And,
    most importantly, Bankiuptcy Court can provide the same relief sought here.
    At oral argument, SecurityNational conceded that the Bankiuptcy Court
    could address its claims, although it alleged that such resolution would not be in
    the expedited manner SecurityNational would prefer. lt argues too that the
    Bankruptcy Court cannot offer a final disposition until its decision is reviewed and
    upheld by the United States District Court. But that does not change the fact that
    the Bankruptcy Court can hear and decide these issues. Several times already, a
    party’s request to withdraw their "non-core" issues from Bankruptcy Court to the
    district court based on this "inefficient-two~litigation" argument has been denied.g§
    The Court finds these holdings persuasive and they inform its decision here.
    - _1,.,
    85 See, e_.g.,-Ila_re Lehma;t Bros. Holdings Inc., l8 F. Supp. 3d 553, 557-58 (S.D.N.Y. 2014)
    (holding that defendant’s concerns about double litigation are "exaggerated" because even if the
    Bankruptcy Court’s decision was challenged, the Bankruptcy Court’s findings would "be helpful
    to the Court and the review by the District Court could hardly be characterized as a separate and
    additional litigation."); In re Formica Corp., 305 B.R. l47, 150 (S.D.N.Y. 2004) ("The
    plaintiff s contention that [the District Court] would have to review any bankruptcy court
    determination de novo carries little weight in light of the litigation already occurring before the
    bankruptcy court."); Lehman Bros. Holdings Inc. v. Wellmont Health Sys., 
    2014 WL 3583089
    , at
    *4 (S.D.N.Y. July l8, 2014) ("although the bankruptcy court is limited to issuing a report and
    _23_
    Moreover, the Bankruptcy Court is particularly well-suited for this case. For
    over eight years the Bankruptcy Court has overseen LBHI’s dissolution. As the
    District Court of Southern New York has previously observed:
    [J]udicial efficiency will be served by keeping the present
    action in the bankruptcy court given its substantial experience with the
    '_°':__:_:tcy proceedings, the breadth and complexity of
    This Court recognizes the obvious complexity of the Lehman bankruptcy
    and the diligent and extraordinary efforts already undertaken (and completed) by
    the Bankruptcy Court. This Court should and will not waste judicial resources
    ;,-;_-  _-__- -_._ - - _. _. _______=___._``._
    recommendation, which must be reviewed de novo by the district court, neither court’s efforts
    will be duplicative. Multiple courts have observed that "experience strongly suggests that having
    the benefit of the report and recommendation will save the district court and the parties an
    immense amount of time.") (quoting Sec. Investor Prot. Corp. v. Berrcard L. Maclojj’[nv. Sec.
    LLC (Irc re Madojj’$ec.), 
    490 B.R. 46
    , 56 (S.D.N.Y. 2013)).
    86 Lehman Bros. Hola'ings lnc. v. Wellmont Health Sys., 
    2014 WL 3583089
    , at *4 (S.D.N.Y.
    July l8, 20l4). See also Court Minutes and Order, Guaranty Bank, FSB v. Lehman Brothers
    Holding Inc., No. 2:l5-cv-00549-PP (E.D. Wis. May 20, 20l6) (expressing the opinion that
    "because of her long-standing relationship with the claims in the Lehman bankruptcy,
    [Bankruptcy Court’s] Judge Chapman was uniquely suited to decide this claim."); In re Lehman
    Bros. Holdings, Inc., 
    2014 WL 4635576
    , at *l (S.D.N.Y. Sept. 5, 20l4) ("Keeping this matter in
    the bankruptcy court promotes judicial economy. The bankruptcy court has handled the Lehman
    bankruptcy for over five years and is well equipped to address these disputes."); In re Lehman
    Bros. Hola'ings Inc., 
    502 B.R. 376
    , 383 (Bankr. S.D.N.Y. 2013) ("Regardless of whether a
    particular count is core or non-core, it is most efficient and eminently sensible for all disputes
    involving swap agreements where Lehman and its affiliates are counterparties to be handled in
    this Court."); Lehman Bros. Holdings Irzc. v. Intel Corp. (In re Lehman Bros. Hola'ings Inc.), 
    18 F. Supp. 3d 553
    , 558 (S.D.N.Y. 20l4) ("The Bankruptcy Court’s resolution of any motion for
    summary judgment, or any decision by the Bankruptcy Court based on the documentary record,
    will be very useful to the District Court given the Bankruptcy Court’s experience with the
    Lehman bankruptcies and related adversary proceedings involving swap agreements and
    derivative-based claims.").
    _24_
    duplicating that work already done.87 Judicial efficiency weighs heavily in favor
    of dismissal-,_
    Accordingly, factors two, three, and four weigh against SecurityNational.
    ,_Fzi_ctor_s  This action was filed in anticipation of the
    Bankruptcy Court’s ADR proceedings and appears to have been filed
    for tactical advantage.
    Declaratory judgment is not a means to achieve tactical advantage.gg At oral
    argument, SecurityNational claimed that "forum shopping" exists only where a
    party is trying to gain an advantage in a favorable forum. lt argues that it could not
    have engaged in forum shopping because Delaware courts do not demonstrably
    present a particular advantage here.
    But it is clear that Delaware presents a tactical advantage over the
    Bankruptcy Court - a forum which has demonstrably disfavored arguments such as
    SecurityNational’s in the related bankruptcy litigation. Given the history between
    the parties and what occurred before the filing of this suit, the Court can only
    87 See Burris v. Cross, 583 A.Zd 1364, 1373 (Del. Super. Ct. Sept. 27, 1990) (declining
    declaratory judgment where the defendant had already moved to litigate in a forum "which can
    provide a more efficient and complete remedy"); Hoechst Celanese Corp. v. Nat’l Union Fire
    Ins. Co. of Pittsburgh, Pa., 623 A.2d ll33, ll37 (Del. Super. Ct. June l7, 1992) (explaining that
    declaratory judgment will only be granted where an actual controversy exists so that judicial
    resources are not wasted on "situations in which a judicial declaration will not end the dispute
    between the parties"). Cf Am. Guar. & Liab. Ins. Co. v. Intel Corp., 
    2009 WL 2589597
    , at *13,
    n. 85 (Del. Super. Ct. July 24, 2009) (rejecting argument that California court had more
    experience on the contested policy because the related California case settled before that court
    ruled on the policy and that case involved different issues).
    88 Bum's, 583 A.zd ar 1375.
    _25_
    conclude that SecurityNational engaged in preemptive forum shopping when it
    decided to file a declaratory judgment action here rather than face this issue as a
    defendant in Banl2003 WL 25849476
    , at *2
    (Del. Super. Ct. Jan. 24, 2003) (quoting Az``r Proa'. & Chemicals, Inc. v. Lummus Co., 
    252 A.2d 545
    , 547 (Del. Ch. 1968) rev’a' on other grounds, 
    252 A.2d 543
    (Del. l969) (decidingforum non
    conveniens issue)).
    90 See, e.g., Saudi Basic, 
    2003 WL 25849476
    , at *l (finding forum shopping occurred
    where the party filed its Delaware action to avoid having a trier of fact in New Jersey hear about
    the charges); See also Gen. Fooa's Corp. v. Cryo-Maid, lnc., 
    198 A.2d 681
    , 684 (Del. l964)
    (possible "jockeying" for position considered as factor in favor of granting motion to stay
    Delaware action).
    _26_
    the Bankruptcy Court provides rights and remedies equal to this Court. But given
    the peculiar history of this case, it is better-suited to resolve this specific claim.
    C. The Parties’ Remaining Arguments
    Because the Court dismisses this action on the grounds explicated, it need
    not reach the parties’ other arguments, namely: whether SecurityNational’s
    declaratory judgment action would violate the Bankruptcy Code’s automatic stay
    statute; whether the "first-filed" doctrine warrants dismissal of this action; or
    whether this action should be dismissed under forum non conveniens.
    But the Court notes its very healthy skepticism that SecurityNational would
    fare any better under any of those alternative arguments.
    First, it seems quite likely that this declaratory judgment action does violate
    the automatic stay under § 362 (a)(3). At a minimum, the lndernnification Claims
    seem to qualify as estate property under the Bankruptcy Code, given the Code’s
    broad definition of "estate property" to include "intangible or contingent
    interests."g] These Indemnification Claims directly impact the distribution of the
    _: "___ "? 1 ____ -¢'T -'-1¢``.'.
    91 See, e.g., Begier v. I.R.S., 
    496 U.S. 53
    , 58 (l990) (defining an interest of the debtor in
    property as "that property that would have been part of the estate had it not been transferred
    before the commencement of bankruptcy proceedings"); Unitea' States v. Whiting Pools, Inc.,
    
    462 U.S. 198
    , 205-06 n. 9 (1983) (noting that the legislative history of Bankruptcy Code
    § 541(21)(1) demonstrates that the definition of "estate property" was intended to sweep broadly
    to include "all kinds of property, including tangible or intangible property, causes of action . . .
    and all other forms of property currently specified in section 70a of the Bankruptcy Act."); In re
    Michener, 
    342 B.R. 428
    , 430 (Bankr. D. Del. 2006) ("It is well-settled that section 54l(a)(l)
    encompasses ‘all legally recognizable interests,’ even those that are "contingent and not subject
    _2'7_
    estate and were explicitly included in the Bankruptcy Plan. But, as the Bankruptcy
    Court is currently considering this very issue, this Court will not substitute its own
    judgment in that area.
    Second, while Delaware has not decided whether the first-filed doctrine
    applies to a non-binding mediation, such as the one entered into by LBHI and
    SecurityNational, the Delaware Supreme Court has recently applied the doctrine to
    arbitration proceedings.92 Our high Court explained that there simply is "no
    principled reason to distinguish an arbitration proceeding from other first-filed
    actions."% "[A]rbitrations are typically treated as ‘prior actions’ for other
    purposes."94 And, the principles underlying the McWane doctrine - "the desire to
    avoid the ‘wasteful duplication of time, effort, and expense that occurs when
    judges, lawyers, parties, and witnesses are simultaneously engaged in the
    adjudication of the same cause of action in two courts,’ and ‘the possibility of
    inconsistent and conflicting rulings and judgments" - apply equally to arbitration
    proceedings.% The Court might reasonably conclude that the same "underlying
    _ -- '_1 _.'a-.__-.§
    1 :_-- -=._ ___
    to possession until some future_time.’_’) (quc_)ting_l_rz__re_R-y_erson, 
    739 F.2d 1423
    , 1425 (9th Cir.
    l984)).
    92 LG Elecs., Inc. v. InterDigital Commc’ns, Inc., ll4 A.3d l246 (Del. 2015).
    93 ld. at 1252;~_\.;
    94 
    Id. 95 Ia'.
    (quoting McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g C0., 
    263 A.2d 28l
    , 283 (Del. 1970)).
    _23_
    policies" could support application of the first-filed doctrine to non-binding
    mediation. But given the lack of precedent and its resolution here on other
    grounds, the Court need not do so now.
    Lastly, in evaluating whether to dismiss or stay an action on forum non
    conveniens grounds, the Court notes that the six Cryo-Maio’ factors% are practically
    coextensive with the Burrz's factors discussed above. So, as above, application of
    the forum non conveniens principals too would seem to weigh against this
    litigation in Delaware.
    V. CONCLUSION
    Accordingly, for the reasons stated above, this action is not right for
    declaratory judgment by this Court and LBHI’s Motion to Dismiss is GRANTED.
    IT IS SO ORDERED.
    @,J..a.)
    Paul R. Wallace, Judge
    96 
    See supra
    III-D, n. 60.
    _29_
    agent, Aurora Loan Services ("Aurora").g These agreements outlined the parties’
    responsibilities for the sale and purchase of the mortgage loans, including
    SecurityNational’s indemnification obligations.9 In September 20()8, LB Bank and
    LBHI entered into an Assignment Agreement whereby LB Bank assigned its rights
    under SecurityNational’s LPA and Seller’s Guide to LBHI.‘°
    LB Bank subsequently sold many of these residential mortgage loans to
    LBHI. LBHI then sold these loans to the Federal National Mortgage Association
    ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie
    Mac")."
    Previously, in December 2007, LB Bank, Aurora’, and SecurityNational had
    entered into an Indemnification Agreement.lz The Indemnification Agreement
    arose out of a concern that SecurityNational had breached the LPA and Seller’s
    3
    Guide with respect to certain loans.l Under the Indemnification Agreement,
    SecurityNational agreed to indemnify LB Bank and Aurora on those loans and
    9 Id.; Def.’s Mot. to Dismiss 4 (setting forth SecurityNational’s indemnification
    obligations, among other duties). '
    ‘°_ Pif.’s compi. 1111 24-26.
    " 1¢1.11 7;1>1£.’3 opp’n 2.
    ‘2 Plf.’s c<>mp1.111117-19.
    13 1¢1.1117.
    deposited several million dollars into a reserve account to be used to cover LBHI’s
    incurred losses.m
    In the wake of the subprime mortgage crisis, on September l5, 2008, LBHI
    entered into the largest Chapter ll bankruptcy in history.l$ Since then - and
    perhaps for many more years - the Bankruptcy Court has overseen that
    proceeding.m In late 20ll, the Bankruptcy Court confirmed LBHI’s bankruptcy
    reorganization plan, with the Plan’s effective date being March 6, 2012.17 The
    Plan grants a "Plan Trust" sole authority to liquidate LBHI’s assets, including the
    ability to litigate claims to maximize distributions to creditors.lg
    with the Bankruptcy proceedings, SecurityNational expressed
    concerns that it had overpaid into the indemnification reserve account in a letter
    dated November 2010.19 Months later, on March 28, 20ll, Aurora/LB Bank
    assigned to LBHI their rights under the Indemnification Agreement.zo Less than
    . _1-_1_-___= - _.__
    14 1§1118.
    15 Der.’s Mot. 4.
    ‘6 1¢1.
    " ld.
    18 ld. ar 5.
    19 Plf.’s compi. 11 19.-,;_
    2° see zd. 1111 19-20.
    '2‘ 1a 11 21_.
    one month later, LBHI sent its first monthly bill to SecurityNational.zl On June 2,
    20ll, because of concerns related to overpayment, SecurityNational refused to
    pay.zz LBHI unilaterally declared that the Indemnification Agreement was "null
    and void."
    In January and February 2014, the Bankruptcy Court approved LBHI’s
    multi-billion dollar settlements with Fannie Mae and Freddie Mac.23 These
    settlements resolved issues related to LBHI’s sale of the defective mortgages.z"
    Following the settlement, LBHI began to pursue its indemnification claims (the
    "Indemnification Claims") against various loan sellers, including
    SecurityNational.”
    To simplify LBHI’s indemnification claims against approximately three-
    thousand counter-parties, the Bankruptcy Court granted LBHI’s request to
    implement an Altemative Dispute Resolution ("ADR") Procedure specifically for
    22 1a 1 22.
    23 Def.’s Mot.
    24 rd.
    25 Plf.’s Compl. 11 29_.,__
    their indemnification claims.% The Bankruptcy Court outlined the procedure for
    providing notice of the claims and directed the parties to commence ADR.N
    LBHI served SecurityNational with notice of the ADR on August 28,
    2015.28 SecurityNational initially objected, but ultimately agreed to participate
    29
    under a full reservation of rights. The parties began negotiations, but did not
    resolve their issues.30
    Many other loan providers likewise objected to LBHl’s indemnification
    claims. Several, not including SecurityNational, pursued statute-of-limitation
    claims in the Bankruptcy Court. The Bankruptcy Court rejected those arguments,
    finding that "LBHI’S claim for indemnification . . . did not accrue until its liability
    to a third-party [FannieMae] was fixed or payment was made."m
    SecurityNational did not join in these motions, but the arguments were
    substantially similar to those it now asserts.
    26 
    Id. 1111 30-32.
    See also ADR Order, attached as Ex. F. to Def.’s Mot.
    27 Plf.’s Compl. 1111 30-32; Def.’s Mot. 7.
    28 Def.’s Mot. 7; Plf.’s Opp’n 6 (stating that SecurityNational received the Indemnification
    ADR Notice on August 27, 2015); Plf.’s Compl. jj 33.
    29 Pif.’s Compl. 1111 30-32.
    30 1a
    3' 1a re Lehman Bms. Holdzngs Inc., 
    530 B.R. 601
    , 613 (Bani2015 WL 5674899
    , at *3 (S.D.N.Y. Sept.
    25, 2015) (denying motions for leave to appeal from the Bankruptcy Court’s decision).
    _7_
    After ADR negotiations failed, SecurityNational initiated this action on
    January 26, 2016. lt seeks a declaratory judgment that LBHl’s indemnification
    claims are time-barred and that LBHl’s claims against them are invalid.”
    SecurityNational served LBHI notice of this suit on February 4, 2016.33
    LBHI filed a similar "omnibus" lawsuit against all loan providers, including
    SecurityNational, in the Bankruptcy Court on February 3, 2016. lt seeks a
    declaratory judgment that the loan providers owe LBHI indemnity for losses
    sustained on the loans.34 On February l7, 2016, LBHI filed in the Banl;.'
    37 Ia'. See also Mot. of LBHI to Enforce the Automatic Stay, the plan, and the Confmnation
    Order Against iFreedom Direct Corporation and SecurityNational Mortgage Company, In re
    Lehman Brothers Hldgs. Inc., et al., No. 08-13555 (SCC) (Bankr. S.D.N.Y. Feb. l7, 2016).
    _3_
    III. THE PARTIES’ CONTENTIONS
    LBHI filed the instant Motion to Dismiss or, in the Alternative, to Stay this
    Action on March 2, 2016.38 It sets forth four separate reasons why
    SecurityNational’s action in this Court is inappropriate and should be dismissed:
    Lst, LBHI argues that the Bankruptcy Code’s automatic stay statute, ll
    U.S.C. §§ 362(a)(l) and (a)($), precludes subject matter jurisdiction in any
    DelaWare court.39
    Second, it says SecurityNational’s declaratory judgment action abuses
    Delaware’s Declaratory Judgment Act.lo
    Third, LBHI asserts that as its ADR proceeding was filed prior to the current
    action, it should be afforded deference under Delaware’s "first-filed" doctrine.‘"
    And, fourth, LBHI urges the Court to dismiss the action on the ground
    . 42
    of forum non convenzens.
    SecurityNational filed an answering brief opposing LBHI’s motion and the
    Court held oral argument thereon last month.
    38 D.I. 18 (Def.’a Mar.  Dismiss).
    39 Ial. at 12-18-§
    ‘*° 1a ar 18-26.
    "‘ la'. ar 26-31.
    42 1a ar31-33.
    713
    A. The Automatic Stay Under §§ 362(a)(1) and (a)(3) of the
    Bankruptcy Code
    LBHI contends that SecurityNational’s declaratory judgment action here
    violates §§ 362(a)(l) and (3) of the Bankruptcy Code. It argues that, under the
    prevailing view among federal courts, actions taken in violation of such an
    automatic stay are void ab initio.“
    1. Bankmptcy Code Section 362(¢1)(1)
    Section 362(a)(l) of the Bankruptcy Code prohibits "the commencement or
    continuation . . . of a judicial . . . or other action or proceeding against the debtor
    that was or could have been commenced before the commencement of a case under
    this title, or to recover a claim against the debtor that arose before
    commencement."
    LBHI asserts that SecurityNational’s action seeks a declaration as to the
    enforceability of LBHI’s claims arising from pre-bankruptcy ("prepetition")
    contracts between the parties,44 and thus, are barred under § 362(a)(l).
    SecurityNational argues that the relevant inquiry is not the contracts’
    effective dates, but rather the date SecurityNational could have filed its request for
    1a air 17-18_ (i:icing e_.g_ Raymark lndus_, ma v. Laz, 973 F.zd 1125, 1132 (3<1 Cir. 1992)
    ("actions taken in violation of the automatic stay are void ab initio")).
    44 1¢1. ar 14.
    _10_