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Vanderbilt Mortgage and Finance, Inc. v. Thomas

Court of Chancery of Delaware

October 30, 2014

Vanderbilt Mortgage and Finance, Inc., Plaintiff
v.
Weldon C. Thomas and Diane L. Burton, Defendants.

Submitted: July 8, 2014.

Draft Report: October 20, 2014.

MASTER'S REPORT

Kim E. Ayvazian, Master in Chancery.

Pending before me is a motion for summary judgment filed by Plaintiff Vanderbilt Mortgage & Finance, Inc. (hereinafter "Vanderbilt"), who is seeking a reformation of a deed of trust and imposition of a constructive trust on real property located at 37196 W. White Tail Drive, Selbyville, Delaware (Sussex County Tax Map Parcel No. 5-33 11.00 270.00) (hereinafter "the Property"). Defendant Diane L. Burton, the sole owner of the Property, opposes the motion, arguing that there are several disputed issues of material fact which preclude summary judgment, including whether she intended to use the Property as collateral to secure the installment loan she obtained on May 10, 1996, when she and Defendant Weldon C. Thomas purchased a manufactured home that was subsequently affixed to the Property.[1] For the reasons that follow, I recommend that Vanderbilt's motion for summary judgment be denied.

Background

On May 13, 1992, Daniel Pacini passed away.[2] In his Last Will and Testament, Pacini left the Property, described as "Lot 3 Deer Run Acres Tax Map 5-33-11 Parcel 270" and valued at $12, 000, to Burton, who was his stepdaughter. On May 10, 1996, Burton and Thomas purchased a manufactured home.[3] They secured financing through CMH HOMES, INC. D/B/A LUV HOMES, INC. #345 (hereinafter "CMH"), which is located in Millsboro, Delaware. A copy of the "Retail Installment Contract – Security Agreement" (hereinafter "the Contract") in the record shows the cash price (including "sales tax" of $1, 792.00) was $49, 592.00, the amount financed was $48, 270.50, and the total periodic payments to be made over the 17-year term of the Contract plus the initial deposit equaled $112, 360.60.[4] The Contract recited the proposed location of the manufactured home as "Route 2 Box H 1 Selbyville DE 19975, " the same address given for the buyers. Thomas and Burton signed the Contract, but although CMH was listed as the seller, no signature of a CMH representative appears on the Contract.

A "Deed of Trust" prepared by James F. Gallagher was signed by Thomas, Burton, and Gallagher on May 10, 1996, and recorded in the Office of the Recorder of Deeds in and for Sussex County, Delaware.[5] The Deed of Trust recites the obligation secured as "PROMISSORY NOTE DATED / /96 WHEREIN THOMAS WELDON & DIANE BURTON ARE MAKER AND CMH HOMES INC. D/B/A LUV HOMES #345 IS PAYEE" in the amount of $48, 270.50.[6] The Deed of Trust also recites the address of the subject real property as R.D. 1 Box H1, Selbyville, Del. 19975, and recites the legal description of the subject real property as follows:

COUNTY OF SUSSEX
DELAWARE
BEING A PART OF THE LANDS CONVEYED UNTO JANUARY CORP., A DELAWARE CORPORATION; BY DEED OF DAVID
GRAMKOW, ET UX., DATED FEBRUARY 1, 1974, AND OF RECORD IN THE OFFICE OF RECORDER OF DEEDS AT GEORGTOWN [sic], IN DEED RECORD VOLUME 725, PAGE 554[7]

On January 17, 2013, CMH assigned the Deed of Trust to Vanderbilt.[8]

Issues

Vanderbilt argues that, as a matter of law, Burton has been unjustly enriched because she has admitted that she received loan proceeds from CMH to purchase a manufactured home, and is now delinquent in her repayment of that loan.[9] Further, Vanderbilt contends that the Deed of Trust was intended by the parties to secure an obligation, i.e., the Contract, wherein Burton granted a security interest in the Property to CMH. According to Vanderbilt, because of the mutual mistake of the parties with respect to the legal description of the Property in the Deed of Trust, the only way for the parties to receive the benefit of their bargain is for the Deed of Trust to be reformed to reflect an adequate legal description of the ...


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