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LLC v. Chestnut Run Investors, LLC

Superior Court of Delaware

July 30, 2015

WBCMT 2006-C29 OFFICE 4250, LLC, Plaintiff,
v.
CHESTNUT RUN INVESTORS, LLC, Defendant.

Submitted: July 10, 2015

Upon Plaintiff's Motion for Summary Judgment GRANTED.

Matthew G. Summers, Esquire (argued) and Jessica C. Watt, Esquire, Ballard Spahr LLP, 919 N. Market Street, 11th Floor, Wilmington, Delaware 19801-3034, Attorneys for Plaintiff.

Benjamin J. Berger, Esquire and David B. Anthony, Esquire (argued), Berger Harris LLP, 1105 N. Market Street, I.M. Pei Building, 11th Floor, Wilmington, Delaware 19801, Attorneys for Defendant.

OPINION AND ORDER

FERRIS W. WHARTON, JUDGE.

I. INTRODUCTION

Before the Court is WBCMT 2006-C29 OFFICE 4250, LLC's ("Plaintiff") Motion for Summary Judgment with regard to an action to foreclose on commercial real property owned by Chestnut Run Investors, LLC ("Defendant") located at 4250 Lancaster Pike, Wilmington, Delaware 19720 ("Property"). Plaintiff is not the original lender that received the mortgage and promissory note but purports to have acquired an interest in enforcing the promissory note by a series of alleged assignments. Plaintiff requests that the Court determine 1) whether Plaintiff has the right to enforce the promissory note related to the Property under Article 3 of the Uniform Commercial Code ("U.C.C."); 2) whether Defendant lacks standing to challenge the validity of the alleged assignments of the promissory note to Plaintiff; and 3) whether Plaintiff is entitled to a judgment for Plaintiff and in rem against the Property in the amount of $20, 000, 057.81 as of February 11, 2014, plus interest from February 11, 2014 to June 8, 2015 in the amount of $2, 244, 263.33, plus interest from June 8, 2015 to the date of entry of judgment at the per diem rate of $4, 646.51, plus interest from the date of judgment to the date of payment, attorney's fees and costs.

Applying Super. Ct. Civ. R. 56(c) to Plaintiff's Motion for Summary Judgment, the Court finds that 1) the factual record is clear that Plaintiff is entitled to enforce the promissory note as a nonholder in possession of the instrument who has the rights of a holder; 2) because the Court finds that Plaintiff is entitled to enforce the promissory note, the Court need not address the merits of Plaintiff's argument that Defendant lacks standing to challenge the alleged assignments of the promissory note; and 3) the undisputed facts support Plaintiff's request for the amount of the judgment. Therefore, Plaintiff's Motion for Summary Judgment is GRANTED.

II. FACTUAL AND PROCEDURAL CONTEXT

On November 2, 2006, in connection with the financing of the Property, Wachovia Bank, N.A. ("Wachovia"), loaned Defendant $18, 400, 000.00 (the "Loan").[1] Defendant executed and delivered a promissory note (the "Note"), pursuant to which Defendant promised to repay the Loan, and a Mortgage, Security Agreement and Fixture Filing ("Mortgage") which granted a first-priority lien against the Property as security for the Loan.[2] The Mortgage was recorded with the New Castle County Recorder of Deeds ("Recorder of Deeds") on November 3, 2006 as Instrument No. 20061103-0104847.[3] On or about November 10, 2006, the Note was delivered by counsel for Wachovia to Wells Fargo Bank, N.A. ("Wells Fargo Bank").[4]

A. Alleged Loan Assignments

Between the time that the Note and Mortgage were executed and delivered to Wells Fargo Bank and the commencement of this action, several documents relating to the Mortgage and Note were executed by various entities. Specifically, documents were executed by Wachovia to Wells Fargo Bank, N.A., as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C29 ("Wells Fargo"); Wells Fargo to Bank of America, N.A., as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C29 ("Bank of America"); Bank of America to U.S. Bank National Association, as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C29 ("U.S. Bank"); and U.S. Bank to Plaintiff. The record contains the full text of the documents but, for purposes of this Opinion, the Court finds it necessary to include only a brief summary of the relevant excerpts from the various documents.

1. Wachovia to Wells Fargo

Wachovia executed a document titled "Assignment of Mortgage, Security Agreement and Fixture Filing" that purported to assign the Mortgage to Wells Fargo.[5] The document was recorded with the Recorder of Deeds as Instrument No. 20070821-0074091 on August 21, 2007.[6] Wachovia also executed the undated "Allonge" to the Note payable to Wells Fargo that is neither notarized nor made under seal.[7] On February 3, 2015, Wachovia executed the "Corrective Allonge" to the Note payable to Wells Fargo that is witnessed, notarized and made under seal by Wells Fargo as successor by merger to Wachovia.[8] Wachovia executed a document titled "Assignment of Note and Ancillary Security Documents" on January 26, 2007.[9] The notarized document provides that

[Wachovia] does hereby transfer, assign, grant and convey to [Wells Fargo]…all of the right, title, interest and benefit of [Wachovia] in and to the following documents…and does hereby grant and delegate to [Wells Fargo]…any and all of the duties and obligations of [Wachovia] under the following documents from and after the date hereof:
a. The Note;…[10]

2. Wells Fargo to Bank of America

Wells Fargo executed a document titled "Assignment of Mortgage, Security Agreement and Fixture Filing" that purported to assign the Mortgage to Bank of America.[11] The document was recorded by the Recorder of Deeds on August 19, 2009 as Instrument No. 20090819-0054590.[12] Wells Fargo also executed the "Allonge" to the Note payable to Bank of America that is not dated, notarized or made under seal.[13] On February 12, 2015, Wells Fargo executed the "Corrective Allonge" to the Note made payable to Bank of America.[14] The "Corrective Allonge" is witnessed, notarized and sealed.[15] On March 31, 2009, Wells Fargo executed a document titled "Omnibus Assignment" which provides that Wells Fargo

transfers, assigns, delivers, sets-over and conveys to Bank of America...all right, title and interest of [Wells Fargo] in and to the [L]oan…including without limitation all of [Wells Fargo's] right, title and interest in any claims, collateral, insurance policies, certificates of deposit, letters of credit, escrow accounts, performance bonds, demands, causes of action and any other collateral arising out of and/or executed and/or delivered in or to or with respect to the Loan, ...

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