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JPMorgan Chase Bank v. Smith

Superior Court of Delaware, Sussex

December 15, 2014


Date Submitted: September 8, 2014

Upon Plaintiff's Motion for Summary Judgment. Granted.

Janet Z. Charlton, Esquire, McCabe Weisberg & Conway, P.C., Attorney for Plaintiff

William R. Smith, W. Ralph Smith, and Myla Gomez, Pro se Defendants




This matter is presently before the Court on the motion of Plaintiff, JP Morgan Chase Bank, National Association ("Plaintiff") for summary judgment. The Court finds there are no material issues of fact and Plaintiff is entitled to summary judgment as a matter of law. Procedurally a default judgment may be entered; however, Plaintiff filed a motion for summary judgment. For the foregoing reasons, Plaintiff's motion for summary judgment is GRANTED.


Plaintiff's motion arises out of a mortgage validly executed and delivered by Belva B. Smith. On October 26, 2006, Belva B. Smith signed a mortgage for the property known as 304 Pine Court, Lot 35, Mill Pond Subdivision Selbyville, Delaware 19975. The mortgage then was delivered to the Mortgage Electronic Registration System as a nominee for Millennium Bank, National Association. The mortgage was subsequently assigned to Plaintiff. The property was transferred by deed to the Belva B. Smith Living Trust ("Trust") and Myla Gomez prior to Belva B. Smith's death on October 12, 2011. The Estate was the successor in interest of the property, and William R. Smith is the executor of the Estate of Belva B. Smith.

On October 1, 2009, the mortgage fell into default and a Notice of Intent to foreclose was sent on January 7, 2013. After failure to cure, Plaintiff filed its Complaint on August 6, 2013 against the executor of the estate, William R. Smith; Trustee of the Belva B. Smith Living Trust, W. Ralph Smith; and Myla Gomez (collectively "the Defendants") in this in rem scire facias sur mortgage action. Pursuant to 10 Del. C. § 3104, certified letters and first-class mail were sent to W. Ralph Smith and Myla Gomez to their last known address on August 15, 2013. The certified mail was returned unclaimed and the first-class mail was not returned. On August 22, 2013, the Sheriff personally served William R. Smith.

Thereafter, William R. Smith requested a continuance of forty-five days to respond to the complaint on August 26, 2013. Discovery requests were served upon Plaintiff on November 19, 2013.

Plaintiff filed responses on November 26, 2013. The case remained idle on the docket until notice letters were sent out on May 28, 2014 pursuant to Superior Court Civil Rule 41(e).[1] Plaintiff subsequently filed a motion for summary judgment on June 1, 2014, seeking foreclosure of its interest in the above-mentioned property. In response, the Defendants filed an answering brief in opposition to the Plaintiff's motion. Plaintiff filed a reply brief in support of its motion for summary judgment on September 5, 2014.


The Court may grant summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law."[2] The moving party bears the initial burden of showing no material issues of fact are present.[3] 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.[4] In considering a motion for summary judgment, the Court must view the record in a light most favorable to the non-moving party.[5] 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.[6]


A. Requirements for Timely Answers and Affidavits

i. Default Judgment may be Entered Based on Myla Gomez and the Trust's Failure to Defend

First, Plaintiff argues it is entitled to default judgment with respect to Myla Gomez and the Trusts' untimely answer to the Complaint filed on August 6, 2013.[7]Generally, motions for default judgment are governed by Superior Court Civil Rule 55.[8] Rule 55(b) provides that "when a party against whom a judgment for affirmative relief is sought, has failed to appear, plead or otherwise defend as provided by these Rules, and that fact is made to appear, judgment by default may be entered."[9]

In response, Defendants assert their responses, based on the answering brief in opposition to Pla inti ff's motion for summary judgment filed in 2014, preclude default judgment.[10] Superior Court Civil Rule 12[11] requires "[a]n answer or an appropriate motion must still be filed within 20 days after being served with process or entering an appearance, whichever first occurs."[12] Moreover, a failure to defend is not cured by the filing of an untimely answer.[13] Here, Myla Gomez and the Trust failed to defend by failing to answer or file an appropriate motion within the required time—20 days after service of process of the Complaint filed in August of 2013—and their untimely answer filed in 2014 does not cure this defect.[14] As such, default judgment may be entered in the Court's discretion pursuant to Rule 55.[15]

ii. Default Judgment may be Entered Based on William R. Smith's Failure to Provide an Affidavit of Defense

Plaintiff also contends the response from one of the Defendants, the Estate as represented by the executor William R. Smith, was insufficient because it was not accompanied with an affidavit of defense as requested by Plaintiff[16] and as required under Delaware law.[17] Subsection (a) of § 3901 explicitly allows a plaintiff in a scire facias sur mortgage action to "specifically require the defendant or defendants to answer any or all allegations of the complaint by an affidavit setting forth the specific nature and character of any defense and the factual basis therefor."[18] Subsection (b) of § 3901 further provides:

If the defense is to a part only of the cause of action, defendant, or if there be more than 1, any 1 or more of them shall, in such affidavit, specify the sum which he or they admits or admit to be due.[19]

Here, Plaintiff sent an account history to the Defendants in addition to complying with the requirements of 10 Del. C. §3901.[20] Attached to the Complaint was a certified copy of the mortgage and the face of the pleading documents bears the following conspicuous language: "ALL ALLEGATIONS OF THE COMPLAINT MUST BE ANSWERED BY AFFIDAVIT IN ACCORDANCE WITH THE PROVISIONS OF 10 DE. C. §3901."[21] The same language, with slight differences in typeface, was also reproduced on the Defendant's cover sheet.[22] However, Plaintiff contends that the Estate, by and through the executor William R. Smith, failed to answer by affidavit as required by 10 Del. C. § 3901(a).[23] A specific sum which the Defendant admits to be due has not been identified as required under Delaware law.[24] Subsection (d) of § 3901 provides:

If the plaintiff or plaintiffs complies with this section, and the defendant or defendants fails to respond to the designated allegations by affidavit filed with the answer or answers, the designated allegations will be deemed admitted, and default judgment may be entered thereon, in the discretion of the court and upon motion by the plaintiff.[25]

Based on Plaintiff's compliance, as established above, and the Estate's failure to satisfy these requirements, a default judgment may be entered.[26]

B. Limited Defenses Available in a Scire Facias Sur Mortgage Action

i. Defendant's Failure to Assert a Limited Defense

Plaintiff next claims Defendants' failure to allege a limited defense entitles it to judgment as a matter of law.[27] It is a well-settled principle in Delaware law that there are only a limited number of circumstances where a defense may be applicable in a scire facias sur mortgage action.[28] As explained in CitiMortgage, Inc. v. Bishop, "[t]he defenses available in a scire facias sur mortgage foreclosure action are limited and only those claims or counterclaims arising under the mortgage may be raised. Delaware courts recognize the defenses of payment, satisfaction or avoidance."[29]

In the instant case, Defendants have failed to assert a valid limited defense.[30]Defendants do not allege the mortgage has been paid or otherwise satisfied.[31] The Defendants only assert allegations regarding a modification; however, even if this was a valid plea in avoidance—the only remaining plea available—it "must relate to the subject matter of the complaint."[32] Here, the matter being sued upon is the original mortgage transaction.[33] Therefore, a successful plea in avoidance must relate directly to the validity of the underlying mortgage transaction not an alleged subsequent modification thereof.[34] For example, pleas related to the validity or illegality of the original mortgage include: "acts of God, assignment, conditional lia bil ity, duress, exception, fo rfeiture, fraud, ill ega lit y, justification, non-performance of condition precedents, and waiver."[35]

The Defendants suggest "modifications [were] entered into under duress" and question the legality of an alleged modification;[36] however, the loan entered default and the debt was accelerated notwithstanding any modified terms.[37] These allegations are irrelevant, as established above, because the subject matter of this case is not a modification.[38] The subject matter of this action is the loan that had entered default—the original mortgage transaction—of which the Defendants are in receipt of a certified copy.[39]

ii. Defendants Lack Standing to Challenge the Assignment

Defendants assert Plaintiff lacks standing to bring this foreclosure action because it has failed to produce "the actual wet ink note."[40] However, numerous courts have held a mortgagee-debtor, as a non-party to a mortgage assignment, lacks standing to challenge the validity of the assignment.[41] This proposition is consistent with general contract principles because

Under Delaware contract law, a nonparty to a contract generally has no rights relating to it unless he or she is a third-party beneficiary to the contract. In order to qualify as a third-party beneficiary, a party must be an intended beneficiary. Even though a third-party happens to benefit from the performance of the contract indirectly, the third person has no rights under the contract.[42]

As such, the Defendants lack standing to contest the validity of the assignment of the note to Plaintiff because the Defendants are non-parties to the assignment and do not qualify as third-party beneficiaries.[43]

This conclusion is buttressed by a recent decision by the Delaware Supreme Court, in Deutsche Bank Nat. Trust Co. v. Moss.[44] In Deutsche Bank the Court addressed an analogous case with a similar defense.[45] Chief Justice Strine noted the significance of two "colorable legal arguments" that may be independent grounds for defeating a Defendant's motion for summary judgment[46] by affirming the rationale of prior Delaware Superior Court decisions[47] and the supporting case law from other jurisdictions.[48] These arguments include: First, a Defendant lacks standing to contest an assignment where the mortgagee-debtor is neither a party nor a third-party beneficiary of the assignment.[49] Second, a plaintiff could foreclose on a mortgage "regardless of whether the mortgage and note had been validly transferred."[50]

Even if it is assumed that the assignment was invalid in this case, any impropriety relating to the assignment would be inconsequential.[51] Defendants are neither a party nor a third-party beneficiary of the assignment and the property would be subject to foreclosure regardless of the validity of the assignment.[52]

Moreover, the Defendants may not contest the validity of the assignment because any alleged misconduct would not be traceable to an injury suffered by the Defendants.[53] Plaintiff does not lack standing, as the Defendants suggest.[54]Rather, the circumstances of this case show the Defendants' objection to standing to be inexpedient as the judicial consensus is the opposite.[55] In fact, the Defendants lack standing.[56] Thus, the Defendants in this matter cannot show legal harm resulting from the assignment nor may they contest the validity of the assignment.[57]

C. Eligibility for the Automatic Residential Mortgage Foreclosure Mediation Program

The Defendants also claim they are entitled to the benefit of the Automatic Residential Mortgage Foreclosure Mediation Program ("Mediation Program").[58] The Mediation Program was enacted to afford qualifying homeowners an opportunity to utilize alternatives to foreclosure by encouraging parties to meet face-to-face to discuss mutually amicable resolutions.[59] Detailed instructions about how to participate in the Mediation Program were supplied to the Defendants in the Notice of Intent to Foreclose.[60] Later, in compliance with subsection (a) of §5062D, [61]Defendants were provided a directive to contact the Department of Justice regarding eligibility questions.[62] Plaintiff also included their belief that Myla Gomez was not utilizing the property as a primary residence at the time the complaint was filed, as required by § 5062C(b), [63] as a potential reason for why the Defendants were ineligible for the Mediation Program.[64]

There is no evidence that Myla Gomez asserted her rights by contacting a Program Administrator from the Mediation Program, a Certificate of Participation, or a timely expression of intent to participate prior to eligibility expiring as required by Delaware law.[65] As a result of the failure to timely assert any rights Myla Gomez may have had, in addition to the failure to defend established above, the Defendants do not qualify for the Mediation Program.[66]


For these reasons, default judgment may be entered; however, Plaintiff filed a

motion for summary judgment. The Court finds there are no material issues of fact and Plaintiff is entitled to summary judgment as a matter of law. Therefore,

Plaintiff's motion for summary judgment is therefore GRANTED.


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