Nationstar Mortgage, LLC v. Sears.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR SUSSEX COUNTY
Nationstar Mortgage, LLC, :
Plaintiff, : C.A. No: S14L-06-002 (RFS)
:
v. :
:
Lee Ann Sears, :
a/k/a LeeAnn Sears, :
Defendant. :
MEMORANDUM OPINION
Upon Plaintiff’s Motion for Summary Judgment. Granted.
Date Submitted: July 28, 2015
Date Decided: August 7, 2015
Matthew G. Summers, Esq., Jessica C. Watt, Esq., Erika R. Caesar, Esq.,
Ballard Spahr LLP, 919 North Market Street, 11th Floor, Wilmington, Delaware
19801, Plaintiff
LeeAnn Sears, 10 Pondview Lane, Lewes Delaware, 19958, Pro Se
Defendant
STOKES, J.
Before the Court is the Motion for Summary Judgment of Plaintiff
Nationstar Mortgage LLC, (“Nationstar”), against Defendant LeeAnn Sears
(“Sears”). This is a mortgage foreclosure case in which Nationstar seeks to
foreclose on residential property (“Property”) owned by Sears. 1
PROCEDURAL POSTURE
Twenty-six months after Sears’ entry of default on her loan, Nationstar
initiated a scire facias sur mortgage foreclosure action on Property on June 2,
2014. On October 20, 2014, the parties attempted to resolve this dispute through
mediation, but no settlement was reached. Following the parties attempt to
mediate, Sears filed an answer and a counterclaim. Nationstar sought to dismiss
the counterclaim, as it was an improper claim on November 10, 2014. In response
to Nationstar’s Motion to Dismiss, Sears conceded the counterclaim was improper.
On December 3, 2014, this Court entered an order dismissing the counterclaim
with prejudice. Sears filed another answer on January 2, 2015.
1
The subject property is located in Sussex County, Delaware at 10 Pondview Lane, Lewes
Delaware, 19958.
1
On July 6, 2015, Nationstar filed this Motion for Summary Judgment
presently before the Court. On July 22, 2015, Sears filed a Response to
Nationstar’s Motion for Summary Judgment.
STATEMENT OF THE FACTS
Sears entered into a transaction with American Home Mortgage Corp.,
(“Original Lender”), on November 18, 2005. Original Lender loaned Sears the
amount of 299,200.00 dollars, (“Loan”), and Sears executed an Interest-Only
Period Fixed Rate, (“Note”), in connection with the loan which included several
provisions. Pertinently, the Note required Sears to repay the Loan, provided
Original Lender first-priority lien and security interest in the Property as security
for the Loan, (“Mortgage”). The Mortgage was duly recorded with the Recorder of
Deeds for Sussex County. 2
Sears acquired property by paying the purchase price of 375,000 dollars with
the proceeds from the Loan and 30,000 dollars she acquired from other sources.
At the closing, Lawrence Steele, the closing attorney, explained the terms of the
Mortgage to Sears including consequences for the failure to pay the mortgage—
such as foreclosure. There were no concerns raised at the closing regarding Sears’
2
The mortgage was recorded in Book 008247, Page 001 et seq.
2
ability to pay, or about information listed on the application including the amount
of income.
Prior to acquiring the Property, Sears lived in the same development in
another unit located in an older phase of the development (“Plantation West
Property”). 3 Property differed from Plantation West Property in that the unit was
an end unit on a townhome located on a pond. Also, the homeowners association
and condominium association fees for the Property were 730 dollars quarterly
whereas the fees for the Plantation West Property were 375 dollars quarterly.
For a period of time, between November 18, 2005 and sometime in 2008,
Sears owned both properties—Property and Plantation West Property. During this
time, Sears rented the Plantation West Property to a tenant in exchange for 800
dollars per month until it was sold in a short sale in the summer of 2008.
On January 23, 2009, the Loan was modified. The following changes were
made: the maturity date was extended, the payments were changed from interest
only to principal and interest payments, and the interest rate was lowered to 4.375
percent.
On June 26, 2012, Sears filed a voluntary petition for bankruptcy in the
United Stated District Court for the District of Delaware. Attached to Sears’
3
11-H Plantations East, Lewes, Delaware 19958 is the location of Sears’ prior property.
3
petition were Schedules A-J, and a Statement of Financial Affairs. In Schedule A,
Sears listed the Property as having a value of 250,000 dollars and being subject to
a secured claim under the Mortgage in the amount of 250,000 dollars. In Schedule
B, Sears states she did not have any claims of any nature and did not have any
personal property of any kind that was not already listed in the petition. In
Schedule D, Sears listed the outstanding amount of the Loan secured by the
Property as being 294,233 dollars. In Schedule F, Sears listed 144,289.63 in
unsecured debt.
Sears did not allege the Mortgage, Note, or Loan was invalid in either the
Schedules or the Statement of Financial Affairs submitted to the Bankruptcy Court.
Rather, the Sears’ petition was being entertained by the District Court with the
understanding that the Loan was valid and the amount owed on the Loan exceeded
the value of the Property based on Sears’ sworn testimony throughout the
proceedings.
Sears’ case was treated as a no asset case on account of Sears’ failure to
disclose, or raise any concerns regarding the validity of Mortgage, Note, or Loan.
Accordingly, none of Sears’ assets were sold by the trustee. On September 18,
2012, Sears obtained a discharge of 144,000 dollars of unsecured debt.
4
Pursuant to the Note, Sears was obligated to make monthly payments on the
Note. Sears dutifully made payments from January 1, 2006 through March 2012.
In May of 2012, Sears defaulted on the loan 4 by failing to make any payments due
that month and on any month thereafter. To date, the last loan payment was made
in April of 2012 and Sears has failed to make payments for 38 consecutive months.
On August 29, 2012, the Mortgage was assigned to Nationstar pursuant to an
Assignment of Mortgage, (“Mortgage Assignment”). The Mortgage Assignment
was recorded.5 The original executed Note is presently in the possession of
Nationstar.
Twenty-six months from the default, Nationstar initiated a scire facias sur
mortgage foreclosure action on Property on June 2, 2014. According to
Nationstar’s records, Sears owes 343,255.18 dollars as of July 2, 2015. This
amount includes 294,233.27 dollars in the principal amount, interest through July
2, 2015 in the amount of 41, 871.74 dollars, and escrow advances for taxes and/or
insurance in the amount of 2,471.37 dollars, and other advances and expenses in
the amount of 4,006.78 dollars, and late charges in the amount of 672.02 dollars.
4
The Note provides:
“Default
If I do not pay the full amount of each monthly payment on the date it is due, I will be in
default.” Pl.’s Ex. A at 41.
5
The Mortgage Assignment was recorded in the Land Records Book at 13417, page 216 and was
notarized by Deb Seibert, a general notary in the State of Nebraska.
5
Interest on the balance owed by Sears will continue to accrue from the date of
entry of judgment at the per diem rate of 35.27 dollars.
STANDARD OF REVIEW
Summary judgment is appropriate only if the moving party establishes that
there are no genuine issues of material fact in dispute and judgment may be
granted as a matter of law. 6 It is the moving party’s burden to establish the
absence of material factual disputes. 7 On the other hand, if the record reflects a
material factual dispute, or a need exists to clarify the application of law to the
underlying matter than summary judgment may not be granted. 8 The Delaware
Supreme Court illustrates the parameters of granting summary judgment as
follows:
Under no circumstances, however, will summary judgment be granted when,
from the evidence produced, there is a reasonable indication that a material
fact is in dispute. Nor will summary judgment be granted if, upon an
examination of all the facts, it seems desirable to inquire thoroughly into
them in order to clarify the application of the law to the circumstances. 9
6
Super. Ct. Civ. R. 56 (c) (providing summary judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on file together with the affidavits, if any,
show there is not genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law).
7
Gray v. Allstate Ins. Co., 2007 WL 1334563, at *1 (Del. Super. May 2, 2007) (explaining how
“the moving party bears the burden of establishing the non-existence of material issues of fact”).
8
Mumford & Miller Concrete, Inc. v. New Castle Cnty., 2007 WL 404771, at *1 (Del.
Super. Jan. 31, 2007).
9
Ebersole v. Lowengrub, 180 A.2d 467, 470 (1962).
6
In considering a motion for summary judgment, the Court views the facts in
the light most favorable to the non-moving party. 10 If the moving party properly
supports their motion, the burden then shifts to the non-moving party to rebut the
contention that no material issues of fact exist. 11 In order to rebut, the non-moving
party must establish genuine issues of material fact by “do[ing] more than simply
show[ing] that there is some metaphysical doubt as to material facts.” 12
Conversely, if the facts “permit a reasonable person to draw only one inference, the
question becomes one for decision as a matter of law.” 13
DISCUSSION
Pursuant to Superior Court Civil Rule 56, summary judgment is appropriate
in this case. Plaintiff, as the moving party, is required to show that there are no
genuine issues of material fact. 14 In the scire facias sur Mortgage Complaint,
Nationstar alleges Sears is in default of her Mortgage, with interest, late charges,
and advances to the date of confirmation and reasonable attorney's fees and costs.
This is undisputed.
10
Merrill v. Crothall-American, Inc., 606 A.2d 96, 99 (Del. 1992).
11
Id.12
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995) (quoting Matsushita Elec. Indus. Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
13
Tyson Foods, Inc. v. Allstate Ins. Col., 2011 WL 3926195, at *4 (Del. Super. Aug. 31,
2011).
14
Super. Ct. Civ. R. 56 (c).
7
The Delaware Supreme Court has held there a limited number of defenses
available for an in scire facias sur mortgage action. No legally recognized
defenses to an in scire facias sur mortgage action 15 were raised in Sears’ Answer
or Response to Plaintiff’s Motion for Summary Judgment. Although, Sears filed a
Response with the Court, the Response was unresponsive to Plaintiff’s pleading.
In the Response, Sears discusses pre-trial stipulations and a case scheduling order,
but does not respond to Nationstar’ legal allegations or raise a genuine material
fact in dispute.
In some instances, Delaware Courts have provided leeway, particularly to
pro se parties, when it comes to the rules of the court. 16 Nonetheless, the pro se
status of a party does not excuse the failure to timely respond to pleadings or
overcome the failure to raise a valid defense or genuine factual dispute. In this
case, it was crystal clear in the scheduling order that a response to Plaintiff’s
Motion for Summary Judgment was required by July 22, 2015. Sears filed a
Response to Plaintiff’s Motion for Summary Judgment, but did not respond to the
15
Christiana Falls, L.P. v. First Fed. Sav. & Loan Ass'n of Norwalk, 520 A.2d 669 (Del.1986),
aff'g 1986 WL 9916 (Del.Super.Ct. Sept. 9, 1986) (citing Gordy v. Preform Bldg. Components,
Inc., 310 A.2d 893, 895–96 and 10 Del. C. § 5061).
16
Smith v. Christina Sch. Dist., 1996 WL 757282, at *1 (Del. Ch. Jan. 2, 1997) (noting in this
case the Court was “mindful that the plaintiff [wa]s proceeding pro se, and will interpret his
pleading leniently”).
8
legal allegations contained therein. Sears’ pro se status does not excuse the failure
to be responsive to Plaintiff’s allegations.
Nationstar was not required to provide a response to Sear’s inquiries prior to
Sears filing an appropriate Response to Plaintiff’s Motion for Summary Judgment.
In order to survive summary judgment, Sears was required to respond to
Nationstar’s legal arguments or attempt to raise a material factual dispute. Sears
did not. Thus, Sears has failed to set forth specific facts that a genuine issue of
material fact exists and she has raised no defenses that may be properly asserted in
an action for scire facias sur mortgage. Based on this failure and the reasons
stated below, Plaintiff is entitled to summary judgment as a matter of law.
Nationstar has satisfied its burden and is entitled to entry of an order of
summary judgment in its favor. It is undisputed Sears is in substantial payment
default and has not submitted payments pursuant to the Note for over three years.
Nationstar successfully established that: (1) Nationstar is the proper party to
enforce the Note that Sears has defaulted on, (2) Sears lacks standing to the
validity of the assignment of the note, (3) Sears should be estopped from asserting
defenses following the discharge of debt after the bankruptcy proceeding.
9
Under Delaware law, a mortgagee or the assignee of a mortgagee’s interest
has standing to pursue foreclosure.17 The assignment in this case was valid
because it operated to convey all the rights, and interest of the assignor, was
attested to by a credible witness, and notarized. 18 As such, Nationstar is a valid
assignee of the mortgagee.19 As a valid assignee Nationstar is the proper party to
enforce the Note.
Also, Nationstar is the proper party to foreclose against the property in
accordance with the Uniform Commercial Code as adopted in Delaware. 20
Nationstar is the proper party in this case because Nationstar is in possession of the
original executed note that was indorsed in blank. A promissory note is a
negotiable instrument. 21 A promissory note that fails to provide for a payee creates
bearer paper.22 Bearer paper is enforceable by a holder in possession and is
considered to be indorsed in blank.23 Here, the original note did not state a payee,
and the original note is thus payable to the bearer. As such, the original note is
17
10 Del C. §5061(a) (providing “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 condition performed, sue out of the Superior
Court of the county wherein the mortgage premises are situated a writ of scire facias).
18
25 Del. C. §2109(a).
19
See e.g., CitiMortgage, Inc. v. Bishop, 2013 WL 1143670, at *4–6 (Del. Super. Mar. 4, 2013).
20
6 Del. C. § 3-101, et. seq.
21
6 Del. C. § 3-104.
22
6 Del. C. § 3-109.
23
6 Del. C. §§1-201(b)(21)(A); 3-109.
10
enforceable bearer paper to anyone in possession. Nationstar is in possession of
the original note and entitled to enforce the instrument. 24
Furthermore, Sears lacks standing to challenge the validity or enforceability
of the assigning documents as a non-party who is not a third-party beneficiary to
the assignment. Any allegations that could be raised by Sears regarding the
enforceability of the assignment documents are inconsequential. Nationstar’s
status as an assignee is not invalidated based on the execution of the assignment
through MERS.25 Furthermore, Sears was not a party to any of the assignments,
nor was she a third-party beneficiary. General contract principles upheld in
Delaware Courts provide a third-party who is not a party to the contract does not
have rights under a contact. 26 As a non-party to the contract that is a not a third-
party beneficiary, Sears does not have standing to object to the assignments she
disputes. 27
Lastly, Sears is estopped from asserting defenses due to the failure to
disclose potential claims against the mortgage during bankruptcy proceedings.
Delaware Courts have held the doctrine of judicial estoppel prevents a party from
asserting a contradictory position to a position “previously taken that the court was
24
Branch Banking & Trust Co. v. Eid, 2013 WL 3353846, at *3 (Del. Super. Jun. 13, 2013).
25
Id. (stating “Delaware Courts have shown little appetite for invalidating mortgage assignment
merely because they were assigned by MERS”).
26
Bishop, 2013 WL 1143670, at *4.
27
Deutsche Bank Nat. Trust Co. v. Moss, 99 A.3d 226 (Del. 2014) (TABLE); JPMorgan Chase
Bank v. Smith, 2014 WL 7466729, at *4 (Del. Super. Dec. 15, 2014).
11
persuaded to accept as the basis for its ruling.” 28 In other words, Sears may not
benefit from concealment of information related to any potential claims or defenses
that invalidate the mortgage because Sears previously took the position, upon
which the Bankruptcy Court relied, no valid claims or defenses against the
mortgage existed.
During the bankruptcy proceedings, Sears failed to assert any potential
grounds for invalidating the mortgage. Sears did not allege any claims or defenses,
nor was there any disclosure regarding the misstatement of her income. Given
Sears’ financial circumstances including the mortgage related debt, Sears’ case was
treated as a no asset by the Bankruptcy Court. As a no asset case, the trustee did
not sell any of Sears’ assets to distribute to her creditors. The Bankruptcy Court
entered the Order of Discharge, in reliance on the sworn testimony by Sears
indicating there were no valid defenses or claims regarding the mortgage,
discharging Sears of her personal liability for unsecured debt in excess of 144,000
dollars.29 Hence, Sears is estopped from asserting any defenses to the validity of
or enforceability of the Mortgage based on the previous failure to disclose potential
claims during the bankruptcy proceeding.
28
Motorola Inc. v. Amkor Technology, Inc., 958 A.2d 852, 859 (Del 2008).
29
Sears’ personal liability on the debt owed to Nationstar based on the Note was not discharged.
As such, Nationstar could pursue this action in personam, but has elected to proceed in rem.
12
In sum, based on the present record and taking the light most favorable to
Sears there is no genuine legal or factual question as to whether Nationstar may
enforce the instrument.
CONCLUSION
Considering the foregoing, Plaintiff has satisfied its burden and there are no
material issues of fact in dispute. The Court finds Plaintiff is entitled to summary
judgment as a matter of law in its favor. Therefore, Plaintiff’s Motion for
Summary Judgment is GRANTED.
IT IS SO ORDERED
Very truly yours,
/s/ Richard F. Stokes
______________________________
Richard F. Stokes, Judge
cc: Prothonotary
13