First Chatham Bank v. Baffone

SUPERIOR COURT
OF THE
STATE OF DELAWARE
PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
(302) 255-0660
Date Submitted: April 14, 2022
Date Decided: May 10, 2022
Brian J. McLaughlin, Esquire William D. Sullivan, Esquire
James A. Landon, Esquire SULLIVAN HAZELTINE ALLISON LLC
OFFIT KURMAN, P.A. 919 North Market Street, Suite 420
222 Delaware Avenue, Suite 1105 Wilmington, Delaware 19801
Wilmington, Delaware 19801
Mark A. Haltzman, Esquire
William C. Katz, Esquire
SILVERANG, ROSENZWEIG &
HALTZMAN, LLC
900 East 8th Avenue, Suite 300
King of Prussia, Pennsylvania, 19406
RE: First Chatham Bank v. Dominick Baffone, et al.,
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
Dear Counsel:
Given the impending pre-trial conference and trial dates in these matters, the
Court provides this Letter Opinion in lieu of more formal written decision resolving
Plaintiff First Chatham Bank’s three Motions for Summary Judgment in: (1) N21C-
01-049 PRW, (2) N21L-01-010 PRW, and (3) N21L-01-011 PRW. For the reasons
set forth below, all three Motions are GRANTED.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 2 of 27
I. FACTUAL AND PROCEDURAL BACKGROUND
A. NON-PAYMENT ACTION (N21C-01-049 PRW).
Plaintiff First Chatham Bank brings this non-payment action against
Defendants Dominick J. Baffone, III (“Dominick”1), Jean Baffone (“Jean”), Marc
Baffone (“Marc”), and Kathleen Baffone (“Kathleen”) (collectively, “Defendants”),
alleging the Defendants failed to fulfill their contractual obligations as dictated by
guarantees executed by each defendant in support of a promissory note.2 First
Chatham now brings a summary judgment motion in this non-payment action.3
Additionally, First Chatham brings two scire facias sur mortgage foreclosure actions
against each couple (Dominick and Jean, and Marc and Kathleen).4 And First
Chatham has filed motions for summary judgment in each of those actions, as well.5
First Chatham is a banking institution with its corporate headquarters located
1
Because the defendants all share the same surname the Court uses each person’s first name to
identify him or her. No disrespect or undue familiarity is intended.
2
See generally Complaint, Jan. 8, 2021 (D.I. 1) (“Compl.”).
3
See Pl.’s Mot. for S.J., May 4, 2021 (D.I. 14) (“First Motion”); see also Pl.’s Mot. for S.J., Jan.
14, 2022 (D.I. 25) (“Motion”).
4
See Complaint (N21L-01-010 PRW), Jan. 13, 2021 (D.I. 1) (“Compl. (010)”); Complaint
(N21L-01-011 PRW), Jan. 13, 2021 (D.I. 1) (“Compl. (011)”).
5
See Pl.’s Mot. for S.J. (N21L-01-010 PRW), Nov. 19, 2021 (D.I. 17) (“Motion (010)”); Pl.’s
Mot. for S.J. (N21L-01-011 PRW), Nov. 19, 2021 (D.I. 17) (“Motion (011)”).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 3 of 27
in Savannah, Georgia.6 Churchman’s Car Wash Corp. (“CCWC”) was a Delaware
Corporation associated with Defendants, and not named as a defendant in the current
actions.7 Dominick and Marc Baffone are brothers and were the sole shareholders
of CCWC during all relevant times.8 Jean Baffone, Dominick’s wife, and Kathleen
Baffone, Marc’s wife, are also named defendants in these actions, though neither
were CCWC shareholders.9
On November 23, 2016, First Chatham and CCWC entered into a
Construction Loan Agreement, whereby First Chatham extended CCWC a loan
CCWC in the principal amount of One Million Eight Hundred Thirty Dollars
($1,830,000.00) (the “Loan”) in exchange for CCWC executing a promissory note
to First Chatham for the same amount (the “Note”).10 On the same date, Dominick
and Marc each executed an Unconditional Guarantee in support of CCWC’s Note.11
6
Compl. ¶ 1.
7
See id. ¶ 6.
8
Decl. of D. Baffone, ¶¶ 3–4, Mar. 5, 2021 (D.I. 8); Decl. of M. Baffone, ¶¶ 3–4, Mar. 9, 2021
(D.I. 10).
9
Decl. of J. Baffone, ¶ 2, Mar. 8, 2021 (D.I. 9); Decl. of K. Baffone, ¶ 2, Mar. 9, 2021 (D.I. 12).
10
Compl. ¶¶ 6–8; Id. Ex. A, Loan Agreement; Id. Ex. B, Promissory Note.
11
Id. ¶¶ 17, 27; Id. Ex. G, D. Baffone Guarantee; Id. Ex. K, M. Baffone Guarantee.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 4 of 27
Too, Jean and Kathleen each executed an Unconditional Limited Guarantee,
specifying the properties to be used as collateral; those properties are the families’
personal residences.12
Five days later, the Note was modified to extend the term of the interest-only
payments by two months and the maturity date of the Note by an additional two
months.13 Later, the Loan was modified to increase the principal amount from One
Million Eight Hundred Thirty Thousand Dollars ($1,830,000.00) to One Million
Nine Hundred Thirty-Five Thousand Eight Hundred Dollars ($1,935,800.00).14
Accordingly, on April 24, 2017, each defendant executed a modification of his or
her respective guarantee to reflect the increase in the Loan amount.15
On October 31, 2018, First Chatham and CCWC entered into a Forbearance
Agreement that deferred the Loan principal and interest payments from October 1,
12
Id. ¶¶ 22, 32; Id. Ex. I, J. Baffone Guarantee at 2; Id. Ex. M, K. Baffone Guarantee at 2.
13
Id. Ex. C, Note and Loan Modification Agreement at 1.
14
Id. Ex. D, Modification to U.S. Small Business Administration Note at 1.
15
Id. Ex. H, D. Baffone Modification and Reaffirmation of U.S. SBA Unconditional Guarantee
at 1; Id. Ex. J, J. Baffone Modification and Reaffirmation of U.S. SBA Unconditional Limited
Guarantee at 1; Id. Ex. L, M. Baffone Modification and Reaffirmation of U.S. SBA Unconditional
Guarantee at 1; Id. Ex. N, K. Baffone Modification and Reaffirmation of U.S. SBA Unconditional
Limited Guarantee at 1.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 5 of 27
2018, to December 1, 2018, and during which interest continued to accrue.16
According to the Forbearance Agreement, First Chatham offered this forbearance
period because CCWC failed “to make the requisite Loan payments.”17 On February
1, 2019, First Chatham and CCWC entered into a second Forbearance Agreement.18
Like the first, First Chatham offered this second forbearance because CCWC failed
to make the requisite Loan payments.19
On June 30, 2020, CCWC and its real property were sold to a third party for
$673,129.17.20 First Chatham consented to the sale, and the full payment was
delivered to it at closing to contribute to the outstanding Loan balance.21 This,
however, did not fully cover Defendants’ obligations. As a result, First Chatham
alleges CCWC defaulted on its obligations under the Note and failed or refused to
cure the default.22 According to First Chatham, Defendants still owe the principal
16
Id. Ex. E, (First) Forbearance Agreement at 1.
17
Id.
18
Id. Ex. F, (Second) Forbearance Agreement at 1.
19
Id.
20
Decl. of D. Baffone, ¶ 18.
21
Id.
22
Compl. ¶¶ 13–14.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 6 of 27
sum of One Million Two Hundred Thirty-Nine Thousand One Hundred Ninety-Two
Dollars and Twenty Cents ($1,239,192.26).23
In late January 2021, First Chatham filed its Complaint seeking payment of
all remaining funds owed by Defendants under the Note.24 First Chatham requests
each defendant be found jointly and severally liable for the Loan, $1,239,192.26,
plus interest and late charges, plus attorney’s fees.25 The Complaint invoked 10 Del.
C. § 3901, with a notation demanding that each defendant answer the Complaint by
separate affidavit.26 Defendants filed their Answer and then subsequently filed
individual declarations of defense.27
First Chatham quickly filed a Motion for Entry of Judgment against
Defendants under 10 Del. C. § 3901, or in the alternative, an Order granting
summary judgment in favor of First Chatham pursuant to Superior Court Civil Rule
23
Id. ¶ 15.
24
See generally id.
25
Id. WHEREFORE clause (b).
26
See id. at 1.
27
See Answer to Compl., Mar. 1, 2021 (D.I. 7) (“Answer”); Decl. of D. Baffone; Decl. of J.
Baffone; Decl. of M. Baffone; Decl. of K. Baffone.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 7 of 27
56.28 The Court denied that motion without prejudice.29
First Chatham has, after certain limited discover, filed the instant Rule 56
summary judgment motion.30 In this motion, First Chatham seeks the principal
amount of $1,239,192.26 on the Loan, with interest thereon through November 10,
2021, in the amount of $396,988.60 and thereafter until paid at a per diem rate of
$263.12, plus fees and cost in the amount of $10,292.50, together with reasonable
attorney’s fees not to exceed twenty percent (20%) in the amount decreed for the
principal and interest, plus the cost of this litigation.31 Defendants filed their
response.32 Both parties then began a letter battle33 that the Court put a quick stop
to.34 Shortly thereafter, the Court heard argument on this motion.35
28
First Motion at WHEREFORE clause.
29
Order, July 12, 2021 (D.I. 22).
30
See Motion.
31
Id. at WHEREFORE clause.
32
Resp. to Mot. for S.J., Feb. 4, 2022 (D.I. 31) (“Response”).
33
Letter for Judicial Review, Feb. 8, 2022 (D.I. 32); Letter for Judicial Review, Feb. 8, 2022
(D.I. 33).
34
See D.I. 34; D.I. 35.
35
Judicial Action Form, Mar. 1, 2022 (D.I. 37).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 8 of 27
B. SCIRE FACIAS SUR MORTGAGE FORECLOSURE ACTIONS
(N21L-01-010 PRW AND N21L-01-011 PRW).
The non-payment action is just one action between these parties. There are
two others: each of the same kind, but naming each couple separately. One is by
First Chatham and against Dominick and Jean Baffone.36 The other is also by First
Chatham but against Marc and Kathleen Baffone.37 Each of these two suits is a scire
facias sur mortgage foreclosure action, which is subject to the “Automatic
Residential Mortgage Mediation Program of the state of Delaware.”38 Although
mediation occurred in these two lawsuits, the Final Mediation Records from October
2021 and November 2021 state the mediation processes were unsuccessful because
“the parties were unable to reach an offer in compromise.”39 Both Final Mediation
Records also state, as a result of the respective mediations, each defendant will not
“stay in [his or her] home because [] [f]oreclosure will proceed.”40
36
C.A. No, N21L-01-010 PRW.
37
C.A. No. N21L-01-011 PRW.
38
Compl. (010) ¶ 1; Compl. (011) ¶ 1.
39
Final Mediation R. (N21L-01-011) at 1, Oct. 28, 2021 (D.I. 15); Final Mediation R. (N21L-
01-011 PRW) at 1, Nov. 29, 2021 (D.I. 20).
40
Final Mediation R. (N21L-01-010 PRW) at 2; Final Mediation R. (N21L-01-011 PRW) at 2.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 9 of 27
First Chatham moved for summary judgment under Rule 56 in both scire
facias sur mortgage foreclosure actions.41 Both Baffone couples responded.42 First
Chatham replied.43 And the Court also heard argument on these motions.44
II. APPLICLE LEGAL STANDARD
“Summary judgment is appropriate where the record demonstrates that ‘there
is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.’”45 “But, summary judgment will not be granted if ‘a
material fact is in dispute’ or it ‘seems desirable to inquire thoroughly into [the facts]
to clarify the application of the law to the circumstances.’”46 Unless the Court is
reasonably certain that there is no triable issue, it is within the Court’s discretion to
41
Motion (010); Motion (011).
42
Defs.’ Resp. in Opp’n to Pl.’s Mot. for S.J. (N21L-01-010 PRW), Jan. 12, 2022 (D.I. 24)
(“Response (010)”); Defs.’ Resp. in Opp’n to Pl.’s Mot. for S.J. (N21L-01-011 PRW), Jan. 12,
2022 (D.I. 25) (“Response (011)”).
43
Pl.’s Reply to Defs.’ Resp. (N21L-01-010 PRW), Feb. 14, 2022 (D.I. 27) (“Reply (010)”);
Pl.’s Reply to Defs.’ Resp. (N21L-01-011 PRW), Feb. 14, 2022 (D.I. 28) (“Reply (011)”).
44
Judicial Action Form, Mar. 1, 2022 (D.I. 29); Judicial Action Form, Mar. 1, 2022 (D.I. 30).
45
Parexel Int’l (IRL) Ltd. v. Xynomic Pharms., Inc., 2020 WL 5202083, at *4 (Del. Super. Ct.
Sept. 1, 2020) (quoting Del. Super. Ct. Civ. R. 56(c)); see also Brzoska v. Olson, 668 A.2d 1355,
1364 (Del. 1995) (“If the facts permit reasonable persons to draw but one inference, the question
is ripe for summary judgment.”).
46
Unbound Partners, Ltd. P’ship v. Invoy Holdings Inc., 251 A.3d 1016, 1023 (Del. Super. Ct.
2021) (alteration in original) (quoting Ebersole v. Lowengrub, 180 A.2d 467, 468–69 (Del. 1962)).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 10 of 27
decline to decide the merits of the case in a summary adjudication, and to remit the
parties to trial.47
“The movant bears the initial burden of demonstrating its motion is supported
by undisputed material facts.”48 If the movant meets this burden, “then the non-
movant must demonstrate that there is a ‘genuine issue for trial.’”49 In meeting its
burden of rebuttal, the non-movant “may not rest upon mere allegations or
denials.”50 Summary judgment “should not be granted when material issues of fact
are in dispute or if the record lacks the information necessary to determine the
application of the law to the facts.”51 To determine whether there is a genuine issue,
the Court construes the record in the light most favorable to the non-movant.52
47
Cross v. Hair, 258 A.2d 277, 278 (Del. 1969).
48
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).
49
Humanigen, Inc. v. Savant Neglected Diseases, LLC, 2021 WL 4344172, at *3 (Del. Super.
Ct. Sept. 23, 2021) (quoting Del. Super. Ct. Civ. R. 56(e)).
50
Carriere v. Peninsula Ins. Co., 2002 WL 31649167, at *2 n.7 (Del. 2002) (citing Del. Super.
Ct. Civ. R. 56(e)).
51
Gateway Ests., Inc. v. New Castle Cnty., 2015 WL 13145613, at *13 (Del. Super. Ct. Sept. 29,
2015), aff’d, 140 A.3d 1142 (Del. 2016).
52
Humanigen, Inc., 2021 WL 4344172, at *3 (citing Judah v. Del. Tr. Co., 378 A.2d 624, 632
(Del. 1977)).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 11 of 27
III. DISCUSSION
A. Non-Payment Action (N21C-01-049 PRW).
1. Parties’ Contentions.
First Chatham alleges there is no genuine issue of material fact, and, therefore,
it is entitled to judgment as a matter of law.53 First Chatham states it served
discovery requests on Defendants Dominick and Marc Baffone in August 2021.54
This included Rule 36 Requests for Admission (“RFAs”).55 First Chatham states
each defendant failed to file responses to the RFAs by the deadline set in Rule 36,
which is thirty (30) days after service of the RFAs.56 As a result, contends First
Chatham, “each matter which is subject to [First Chatham’s] [RFAs] is deemed
admitted.”57 This includes: CCWC defaulted on its payment obligation under the
Note; Defendants received notice of the CCWC’s default on the Note, which is
guaranteed by Defendants; and payment under the Note is due.58
53
Motion ¶ 8.
54
Id. ¶ 5.
55
Id.
56
Id.; see also Del. Super. Ct. Civ. R. 36(a) (2022).
57
Motion ¶ 5.
58
Id. ¶¶ 7f–h.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 12 of 27
In the main, Defendants fail to take straight aim at First Chatham’s claim.59
Instead, Defendants contend First Chatham failed to conduct settlement negotiations
in good faith via the mandatory mediation process applicable to foreclosure actions
under the Small Business Association’s (“SBA”) Offer in Compromise (“OIC”)
procedures.60 Defendants contend summary judgment is “premature” as a result of
this noncompliance with good-faith effort requirements.61 To support their
conclusion, Defendants say First Chatham improperly seeks an in personam
judgment against Jean and Kathleen Baffone, both of whom executed limited
personal guarantees, while foreclosure efforts are still pending.62 Defendants further
insist summary judgment is premature as to Dominick and Marc Baffone because
“it is impossible to determine if there will be a deficiency necessitating [an] in
personam judgment against anyone” unless and until the foreclosure actions are
resolved and a sheriff’s sale of the properties occurs.63
59
See generally Response.
60
Id. ¶ 2.
61
Id. ¶ 5.
62
Id. ¶¶ 6–7.
63
Id. ¶ 8.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 13 of 27
After argument, the Court requested that the parties submit supplemental
answers to two questions: (1) can the Court consider default admissions under Rule
36 legally sufficient to support a conclusion that there is no genuine issue of material
fact on these summary judgment motions; and (2) how much weight should the
Court ascribe the alleged default admissions when deciding these motions for
summary judgment in light of Bryant ex rel. Perry?64 First Chatham says the first
question should be answered in the affirmative because “all of Defendants’
admission are factual in nature,” as opposed to “admissions of a legal conclusion.”65
As to the second, First Chatham suggests the Court’s role at this stage is not to weigh
the evidence or to determine the truth of the matter, but only to determine whether a
genuine issue exists for trial.66 First Chatham concludes that Defendants failed to
carry their burden of showing that a disputed fact remains for resolution by this
Court.67 Unsurprisingly, Defendants contend the first question should be answered
in the negative because, in their view, First Chatham requested admissions “that
64
Letter (N21C-01-049 PRW), Mar. 24, 2022 (D.I. 38).
65
See First Chatham’s Supp. Ans. at 1–2 (N21C-01-049 PRW), Apr. 14, 2022 (D.I. 42).
66
See id. at 3–4.
67
Id. at 4.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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asked the ultimate question in this litigation”—rendering the second question
inconsequential.68
2. Rule 36’s Application in the Non-Payment Action.
Under Delaware Superior Court Civil Rule 36, an “[RFA] is admitted unless,
within 30 days after service of the request, or within such shorter or longer time as
the Court may allow, the party to whom the request is directed serves upon the party
requesting the admission a written answer or objection addressed to the matter.”69
Further, “[a]ny matter admitted under this Rule is conclusively established unless
the Court on motion permits withdrawal or amendment of the admission.”70
As noted previously, the Court must consider our Supreme Court’s guidance
in Bryant ex rel. Perry.71 In that case, the plaintiff filed paper copies of a complaint,
a praecipe, and other required documents in this Court on May 1, 2006—the last day
of the limitations period for the plaintiff’s action. The next day, the Prothonotary
informed the plaintiff that the “hard copy” filing was being rejected because it was
68
Letter for Judicial Review (N21C-01-049 PRW), Apr. 14, 2022 (D.I. 41).
69
Del. Super Ct. Civ. R. 36(a) (emphasis added).
70
Id. (emphasis added).
71
Bryant ex rel. Perry v. Bayhealth Med. Ctr., Inc., 937 A.2d 118 (Del. 2007).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 15 of 27
required to be e-Filed. Later that same day, the plaintiff e-Filed the same documents
that had been filed the day before (including the praecipe) and filed another hard
copy of the praecipe on June 21, 2006. Only then did the Prothonotoary issue a
summons to the Kent County Sheriff, who perfected service of process upon the
defendant. The defendant filed a Rule 36 RFA requesting the plaintiff admit that the
praecipe had been filed on June 21, 2006, and that it was the first “legally
cognizable” document filed with the Court requesting service of process upon the
defendant. Because the plaintiff failed to respond to the RFA within 30 days, the
subject of the Request was deemed to have been admitted by default. The defendant
moved for summary judgment on the ground that the action was time-barred as a
matter of law. This Court granted the motion based solely on its conclusion that the
plaintiff had judicially admitted that the first “legally cognizable” document ordering
service upon the defendant had been filed on June 21. On appeal, the Supreme Court
explained:
The Superior Court also erred legally by giving effect to the judicial
admission resulting from [the plaintiff’s] counsel’s untimely response
to the Request for Admission. In this specific case, a request for
admissions was not the proper vehicle to resolve a legal dispute over
when this action was effectively commenced. The purpose of a request
for admissions is not to deprive the party of a decision on the merits.
Rather, it is to simplify trials by eliminating facts about which there is
no real controversy, but which “are often difficult and expensive to
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 16 of 27
prove.” Requests for admission “should not be used to establish the
ultimate facts in issue” or to demand that the other party admit the truth
of a legal conclusion.72
Here, the Court is satisfied that at least some of First Chatham’s requests must
be deemed admitted under Rule 36. The ultimate fact at issue in this dispute is
whether Defendants defaulted on their repayment obligations. Bryant ex rel. Perry
makes clear that the Court should not hold that Defendants admitted to a default
simply because several of First Chatham’s requests directly sought admissions to
that effect.73 But unlike in Bryant ex rel. Perry, where the defendant sought only
admissions of legal conclusions, First Chatham also properly sought admissions as
to basic, straightforward facts, including: (1) Plaintiff made the Loan to CCWC in
the principal amount of $1,830,000.000 in accordance with a Construction Loan
Agreement dated November 23, 2016;74 (2) the principal amount of the Loan was
subsequently increased to $1,935,800.00;75 (3) the Defendants signed documents in
connection with the Loan, under which they jointly and severally guaranteed
72
Id. at 126 (internal citations omitted).
73
See Motion, Ex. 1, ¶¶ 20, 22, 25, 27, 29, 30, 31, 33 (requesting admissions of default).
74
See id., Ex. 1, ¶¶ 3, 4, 5.
75
See id., Ex. 1, ¶ 8.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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payment to Plaintiff for all amounts owing under the Note;76 (4) Defendants received
notice dated June 20, 2019, demanding payment;77 (5) “the loan . . . has not been
repaid in full;”78 and (6) “the principal amount of indebtedness . . . currently owed
by [CCWC] to Plaintiff is $1,239,192.26.”79 The Court finds these requests must be
deemed admitted based on Defendants’ failure to respond within 30 days.
Further distinguishing this case from Bryant ex rel. Perry is that the fact the
summary judgment record is not populated “solely”80 by judicial admissions. The
record also contains the Affidavit of Thomas W. Gash, the Director of SBA Lending
of First Chatham Bank, which echoes the substance of the RFAs.81 For example,
Mr. Gash averred to his personal knowledge concerning the execution of the Loan
documents, the amount of the Loan, the failure to pay the full amount of the Loan,
the default under the Loan documents, and the amount remaining due and owing.82
76
See id., Ex. 1, ¶ 13.
77
See id., Ex. 1, ¶ 28.
78
See id., Ex. 1, ¶ 32.
79
See id., Ex. 1, ¶ 34.
80
Bryant ex rel. Perry, 973 A.2d at 121.
81
See Motion, Ex. 3.
82
See id., Ex. 3, ¶¶ 1–15.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 18 of 27
The record also includes the affidavit of Sabrina Leminska, Special Assets Manager
for First Chatham, through which First Chatham submitted records showing the
payment history on the Loan and the outstanding unpaid amount.83
Thus, the record of facts before the Court encompasses the undisputed
averments of Mr. Gage and Ms. Leminska, along with certain admissions arising
under Rule 36. In light of this record, First Chatham has met its initial burden of
demonstrating its motion is supported by undisputed material facts. Defendants have
not met their burden of showing any genuine issue for trial. Moreover, the record of
undisputed facts is sufficiently developed that the entry of judgment for First
Chatham would not be premature. Accordingly, the motion is GRANTED.
B. SCIRE FACIAS SUR MORTGAGE FORECLOSURE ACTIONS
(N21L-01-010 PRW AND N21L-01-011 PRW).
1. Parties’ Contentions.
First Chatham filed summary judgment motions in each of the scire facias sur
mortgage foreclosure actions—one against Dominick and Jean Baffone, and the
other against Marc and Kathleen Baffone.84 The motions are identical and will now
83
See id., Ex. 4.
84
See Motion (010); Motion (011).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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be resolved together. First Chatham’s arguments here are nearly identical to its
arguments in the non-payment action. It contends each defendant executed a
guarantee, making each defendant jointly and severally liable for amounts due under
the Note.85 CCWC defaulted on its payment obligations under the Note, and, as
such, First Chatham now demands payment for the outstanding balances due under
the Note.86 In these two actions, First Chatham contends there is no genuine issue
as to any material fact “as to why the mortgaged premises ought not to be seized and
taken in execution for the payment of indebtedness.”87 To that end, it contends, the
terms of the Mortgages and Mortgage Modification Agreements make clear First
Chatham may seize the properties at issue due to Defendants’ defaults.88 It further
states Defendants failed to raise any valid defense.89
Likewise, each couple’s response is identical,90 and will be discussed together.
85
Motion (010) ¶¶ 3d–e; Motion (011) ¶¶ 3d–e.
86
Motion (010) ¶¶ 3f–h; Motion (011) ¶¶ 3f–h.
87
Motion (010) ¶ 4; Motion (011) ¶ 4.
88
Motion (010) ¶ 1; Motion (011) ¶ 1; see also Compl. (010), Ex. E, Certified Copy of Mortgage
at 11–12, 13–14; Compl. (011), Ex. E, Certified Copy of Mortgage at 11–12, 13–14.
89
Reply (010) at 1; Reply (011) at 1.
90
See Response (010); Response (011).
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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Defendants again focus their arguments on First Chatham’s alleged failure to
conduct settlement negotiations in good faith under the SBA’s OIC procedures.91
Defendants contend they provided offers in compromise to First Chatham, but First
Chatham failed to provide counteroffers.92 This, say Defendants, constitutes a
failure by First Chatham to abide by the OIC procedures.93 As such, Defendants
requested the Court to refer the matters for further mediation.94 Defendants admitted
during argument that their proffered defense was one “based solely in equity and
notions of justice,” rather than one of the scire facias sur defenses recognized by
Delaware courts.95
2. Scire Facias Sur Mortgage Analysis.
“A complaint on a sci fa sur mortgage puts the existence of the mortgage debt
in issue and orders the mortgagor to show cause why the mortgaged premises should
91
Response (010) ¶ 23; Response (011) ¶ 23.
92
Response (010) ¶ 23; Response (011) ¶ 23.
93
Response (010) ¶ 23; Response (011) ¶ 23.
94
Response (010) ¶ 27; Response (011) ¶ 27.
95
Tr. of Mot. Hr’g at 22:23–23:1.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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not be taken in execution and sold to satisfy the debt.”96 “The sci fa proceeding may
appear simple, because the facts are usually undisputed, but it is the mortgagor’s
chance to litigate the existence of the debt and present any defenses.”97
“The writ of scire facias sur mortgage is founded upon a record, the record
being the Mortgage.”98 “The defenses available are limited to satisfaction, payment,
or avoidance of the [mortgage].”99 “A plea in avoidance must relate to the mortgage
sued upon, i.e., the plea must relate to the validity or illegality of the mortgage
documents.”100 These include: “acts of God, assignment, conditional liability,
duress, exception, forfeiture, fraud, illegality, justification, non-performance of
condition precedents, ratification, unjust enrichment[,] and waiver.”101 “If a
96
Shrewsbury v. The Bank of New York Melon, 160 A.3d 471, 475 (Del. 2017) (quoting Matter
of Celeste Ct. Apartments, Inc., 47 B.R. 470, 474 (D. Del. 1985)); see also DEL. CODE ANN. tit.
10, §5061(a) (2022).
97
Shrewsbury, 160 A.3d at 475 (internal quotations and citations omitted).
98
U.S. Bank Nat’l Ass’n as Trustee of NRZ Pass Through Trust IX v. Hegedus, 2021 WL
1987484, at *1 (Del. Super. Ct. May 18, 2021) (citing Gordy v. Preform Bldg. Components, Inc.,
310 A.2d 893, 895 (Del. Super. Ct. 1973)).
99
U.S. Bank, 2021 WL 1987484, at *1 (citing Gordy, 310 A.2d at 895); see also CitiMortgage,
Inc. v. Bishop, 2013 WL 1143670, at *5 (Del. Super. Ct. Mar. 4, 2013) (“Delaware courts
recognize the defenses of payment, satisfaction or avoidance.”).
100
CitiMortgage, Inc., 2013 WL 1143670, at *5 (internal quotations omitted).
101
Id.; First Fed. Sav. & Loan Ass’n of Norwalk v. Falls, 1986 WL 9916, at *1 (Del. Super. Ct.
Sept. 9, 1986); Shrewsbury, 160 A.3d at 475.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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mortgagor fails to assert one of these legally recognized defenses, the mortgagee is
entitled to summary judgment.”102
a. Defendants Have Not Demonstrated Any Issue of Material Fact Exists.
In these foreclosure actions, First Chatham, as movant, has demonstrated that
no issue of material fact exists. Too, Defendants do not argue there is a dispute as
to any material facts.103 The principal amount of the Loan to CCWC is evidenced
by the Note, which is signed by Dominick Baffone.104 Defendants executed
guarantees for payment of the Loan.105 Defendants defaulted on CCWC’s Loan
payments under the Note.106 Defendants’ obligation to pay First Chatham in the
event of a default is secured by their Mortgages and Mortgage Modification
Agreements.107 The Mortgages and Mortgage Modification Agreements permit First
102
Windsor I, LLC v. CWCapital Asset Mgmt. LLC, 2019 WL 4733430, at *7 (Del. Super. Ct.
Sept. 27, 2019); see id. at *7 n.52 (collecting cases).
103
See generally Response (010); Response (011).
104
Motion (010) ¶¶ 3b–c; Motion (011) ¶¶ 3b–c.
105
See Compl. (010), Ex. C, D. Baffone Guarantee; Id. Ex. D., J. Baffone Guarantee; Compl.
(011), Ex. C, M. Baffone Guarantee; Id. Ex. D, K. Baffone Guarantee.
106
Motion (010) ¶ 3f; Motion (011) ¶ 3f.
107
Compl. (010), Ex. E, Certified Copy of Mortgage at 11–12, 13–14; Compl. (011), Ex. E,
Certified Copy of Mortgage at 11–12, 13–14.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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Chatham to seize the properties at issue due to Defendants’ defaults on their
obligations under their guarantees.108 These facts are the same as those admitted by
default in the non-payment action.
“Once the movant meets its burden, the party opposing summary judgment
must come forward with admissible evidence, other than mere denials, showing the
existence of a genuine issue of fact.”109 Defendants have failed to do so.110 Instead,
their alleged disputes are fashioned as legal arguments, not factual disputes.111
Accordingly, no genuine issue of fact exists.112
b. Defendants’ Scire Facias Sur Defenses Are Legally Deficient.
Recall, the only acceptable defenses in these actions are payment, satisfaction,
or avoidance of the mortgage.113 Defendants do not plead payment or satisfaction.
108
Compl. (010), Ex. E, Certified Copy of Mortgage at 11–12, 13–14; Compl. (011), Ex. E,
Certified Copy of Mortgage at 11–12, 13–14.
109
Wells Fargo Bank, NA v. Banning, 2021 WL 212750, at *4 (Del. Super. Ct. Jan. 21, 2021).
110
See generally Response (010); Response (011).
111
See Response (010) ¶¶ 23–27; Response (011) ¶¶ 23–27.
112
Wells Fargo Bank, NA, 2021 WL 212750, at *4 (finding there was no genuine issue of
material fact on a motion for summary judgment in a sci fa sur mortgage action where non-movant
made only arguments pertaining to legal defenses, not factual disputes).
113
U.S. Bank, 2021 WL 1987484, at *1 (citing Gordy, 310 A.2d at 895); see also CitiMortgage,
Inc., 2013 WL 1143670, at *5 (“Delaware courts recognize the defenses of payment, satisfaction
or avoidance.”). Additionally, it appears that any defenses here were raised in the Responses to
the Motions, and not raised originally in the Answer or any affidavit. The Delaware Supreme
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 24 of 27
One potential—but ineffective—defense the Court might construe with a very
generous read of Defendants’ version of events is avoidance allowed by non-
performance of a condition precedent. Defendants argue First Chatham failed to
negotiate in good faith as required by the SBA’s OIC procedures.114 But this no
defense under Delaware (or any other identifiable) caselaw. Even still, First
Chatham’s Reply asserts it negotiated in good faith because: (1) it provided
counteroffers to Defendants’ offers in compromise,115 and (2) Defendants’
interpretation of the OIC procedures are incorrect because those procedures at best
recommend—but do not require—certain acts.116 For instance, the procedures
recommend parties should negotiate in good faith to reach a compromise where
personal residences are at stake, but it is not required.117
Court has stated that the failure of a defendant to assert a valid defense in the answer or
accompanying affidavit in accordance with 10 Del. C. § 3901 constitutes waiver. Gillette v.
Wilmington Sav. Fund Soc’y, FSB, 2020 WL 7861341, at *2–3 (Del. Dec. 31, 2020).
114
Response (010) ¶ 23; Response (011) ¶ 23. The entirety of Defendants’ responses focuses on
First Chatham’s failure to negotiate in good faith and not on their affidavit defenses. As such, in
construing the facts in the light most favorable to the non-movant, this is the only conceivable
defense that can be drawn.
115
Reply (010) at 4; Reply (011) at 4.
116
Reply (010) at 4–5; Reply (011) at 4–5.
117
Reply (010) at 5; Reply (011) at 5; Response (010), Ex. A, U.S. SBA SOPs, ch. 20, § B.1.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
Page 25 of 27
Other purported avoidance defenses might be creatively divined from
Defendants’ § 3901 affidavits. They assert: (1) First Chatham has not alleged facts
that a default occurred;118 and (2) First Chatham has not provided documentation
explaining the sum of money it seeks.119 Too, with respect to Jean and Kathleen
Baffone, they contend those two received no consideration in exchange for their
guarantees or mortgages.120
As to the contention that First Chatham did not allege facts that a default
occurred, this has already been addressed above—there simply are no genuine issues
of material fact in this regard. The Baffones’ affidavits make this contention,121 but
their responses do not.122 And the final mediation records make clear that
foreclosure will occur.123 It would make no sense for foreclosure to occur if there
had been no default. Accordingly, the Defendants’ attempt to conjure some no-
default factual dispute is wholly insufficient to repel summary judgment.
118
Decl. of D. Baffone (N21L-01-010 PRW), ¶¶ 8–16, Mar. 5, 2021 (D.I. 7).
119
Id. ¶ 17.
120
Decl. of J. Baffone (N21L-01-010 PRW), ¶ 7, Mar. 8, 2021 (D.I. 8).
121
See, e.g., Decl. of D. Baffone (N21L-01-010 PRW); Decl. of J. Baffone (N21L-01-010 PRW).
122
See generally Response (010); Response (011).
123
Final Mediation R. (N21L-01-010 PRW) at 2; Final Mediation R. (N21L-01-011 PRW) at 2.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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As to the contention that First Chatham did not provide documentation
explaining the sum it is now due, there is likewise no genuine dispute remaining.
The filings and record evidence clearly demonstrate the links from the Loan, to the
Note, to the guarantees and Mortgages. And it is now equally clear the sum of
money sought is ascertainable and directly related to the outstanding debt owed.124
The Defendants’ simple contrary forswearing can’t forestall summary judgment
here.
Finally, as to Jean and Kathleen’s lack-of-personal-consideration argument,
their Guarantee agreements at Paragraph 10, Line J read: “CONSIDERATION: The
consideration for this Guarantee is the Loan or any accommodation by Lender as to
the Loan.”125 Defendants provide neither facts nor law to support some conclusion
that this provision in their signed agreement is inaccurate or invalid. In turn, Jean
124
The principal amount of the Loan to CCWC is evidenced by the Note, which is signed by
Dominick Baffone. Motion (010) ¶¶ 3b–c. Defendants executed guarantees for payment of the
Loan. See Compl. (010), Ex. C, D. Baffone Guarantee; Id. Ex. D, J. Baffone Guarantee; Compl.
(011), Ex. C, M. Baffone Guarantee; Id. Ex. D, K. Baffone Guarantee. Defendants defaulted on
CCWC’s Loan payments under the Note. Motion (010) ¶ 3f; Motion (011) ¶ 3f. The Loan was
for $1,935,800, and CCWC was sold, to cover part of the Loan, for $673,129.17. Compl., Ex. D,
Modification to U.S. Small Business Administration Note at 1; Decl. of D. Baffone ¶ 18. And,
now, First Chatham seeks $1,239.192.26. Compl. WHEREFORE clause (b).
125
Compl. (010), Ex. D, J. Baffone’s Guarantee at ¶ 10; Compl. (011) Ex. D, K. Baffone’s
Guarantee at ¶ 10.
First Chatham Bank v. Dominick J. Baffone, III et al.
C.A. Nos. N21C-01-049 PRW; N21L-01-010 PRW; N21L-01-011 PRW
May 10, 2022
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and Kathleen’s asserted lack of consideration based on a purported lack of money or
other value passing directly from First Chatham to them individually is conclusory
and provides no valid legal § 3901 defense here.126
There is no real dispute on any material fact in these scire facias sur mortgage
foreclosure actions. And Defendants haven’t raised a single valid legal defense
thereto. Accordingly, summary judgment in favor of First Chatham in the two
separate scire facias sur mortgage foreclosure actions is due.127
IV. CONCLUSION
For the foregoing reasons, all three summary judgement motions are
GRANTED.128 The parties are to confer and First Chatham shall submit a form of
order of judgment for these three actions on or before June 3, 2022.
IT IS SO ORDERED.
_________________________
Original to Prothonotary Paul R. Wallace, Judge
126
See, e.g., Frantz v. Templeman Oil Corp., 134 A. 47, 48-49 (Del. Super. Ct. 1926) (“[I]n our
opinion an averment in an affidavit of defense that the plaintiff’s cause of action has wholly failed
is not sufficient to prevent judgment on an affidavit of demand. It is rather a conclusion of law
than a statement of the nature and character of a defense. There is no statement of facts from which
the court can judge whether the consideration for the notes has failed or not.”).
127
See Windsor I, LLC, 2019 WL 4733430, at *7 (“If a mortgagor fails to assert one of these
legally recognized defenses, the mortgagee is entitled to summary judgment.”).
128
Accordingly, the scheduled dates for the remaining proceedings contained in each action’s
scheduling order are hereby VACATED.