Draft Report: October 21, 2014 Exceptions
Submitted: December 24, 2014
John G. Harris, Esquire and David B. Anthony, Esquire, of BERGER HARRIS, LLP, Wilmington, Delaware; Attorneys for Plaintiff.
John C. Phillips, Jr., Esquire; Lisa C. McLaughlin, Esquire; and Stephen A. Spence, Esquire of PHILLIPS, GOLDMAN & SPENCE, P.A., Wilmington, Delaware; Attorneys for Defendant.
Abigail M. LeGrow Master in Chancery
The motion before the Court challenges a notice of pendency that the plaintiff filed in connection with a dispute between the parties regarding title to an ocean front property in Bethany Beach. That dispute culminated in the defendant recording a deed in lieu of foreclosure, which the plaintiff executed several months before and which transferred title in the property to the defendant. The plain terms of the parties' agreement, confirmed in a series of documents signed by the plaintiff over a number of years, show that the plaintiff defaulted on his obligations and the bank was entitled to record the deed. Because the plaintiff has not shown there is a probability that a final judgment will be entered in his favor on the claims challenging title to the property, I recommend that the Court grant the motion. This is my final report.
The plaintiff, Richard Hindin ("Hindin"), is a resident of the District of Columbia. Defendant EagleBank (the "Bank"), is a Maryland corporation based in Bethesda, Maryland. The Bank is the successor in interest to Fidelity & Trust Bank ("Fidelity").
On January 11, 2005, Hindin entered into a loan agreement with Fidelity, evidenced by a Commercial Line of Credit Agreement & Disclosure (the "Credit Agreement"), under which Fidelity loaned Hindin $2 million for an initial two-year term. As security for the loan, Hindin granted Fidelity a mortgage (the "Mortgage") on 15 Heather Lane, Bethany Beach, Delaware (the "Property"). The Mortgage was the third lien recorded on the Property. The Bank became Fidelity's successor in interest to the Mortgage and the Credit Agreement on August 31, 2008. The maturity date of the loan was extended several times.
A. The Bankruptcy Plan
On November 27, 2009, Hindin filed a petition in the Bankruptcy Court for the Eastern District of Virginia seeking relief under Chapter 11 of the Bankruptcy Code.The bankruptcy court approved Hindin's proposed reorganization plan (the "Plan") on September 19, 2011. Section 3.9 of the Plan governed Hindin's debt to the Bank. This section allowed Hindin to remain in possession of the Property, but required him to make monthly payments to the Bank until the principal and interest on the loan had been fully amortized and the balloon payment had been made. Section 3.9 of the Plan also required Hindin to execute a deed in lieu of foreclosure to be held in escrow by the Bank. Under the Plan, the Bank could release the deed from escrow if Hindin (1) elected to surrender the Property rather than meet the requirements of the Plan, or (2) defaulted on his payment obligations and failed to cure within 15 days of notice of that default. Hindin delivered an executed deed in lieu of foreclosure to the Bank on January 9, 2012.
Contemporaneous with the filing and approval of the Plan, Hindin and the Bank agreed to extend the loan's maturity date until August 2012. Hindin acknowledges that he defaulted under the Plan by failing to pay the balloon payment,  received notice of the default, and failed to cure within 15 days, and that the Bank therefore had an immediate right to record the deed in lieu of foreclosure.
B. The Forbearance Agreement and Deed in Lieu
At Hindin's request, the Bank agreed to forbear from exercising its right to record the deed in lieu for a period of one year (the "Forbearance Period"), subject to the terms of a forbearance agreement executed by the parties (the "Forbearance Agreement").The Forbearance Agreement was signed on September 26, 2012 and contains ...