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Mergenthaler v. Triumph Mortgage Corp.

Superior Court of Delaware

April 27, 2017

LAWRENCE E. MERGENTHALER a resident of the State of Delaware, Plaintiff,
v.
TRIUMPH MORTGAGE CORP. a Delaware Corporation, Defendant.

          Submitted: April 6, 2017

          John A. Sergovic, Jr., Esq, SERGOVIC & CARMEAN, P.A., 30 E. Pine Street, Ste. 1, P.O. Box 751, Georgetown, DE 19947. Attorney for Plaintiff.

          Richard L. Abbott, Esq, ABBOTT LAW FIRM, 724 Yorklyn Road, Suite 240, Hockessin, DE 19707. Attorney for Defendant.

          COMMISSIONERS REPORT AND RECOMMENDATION ON DEFENDANTS MOTIONS TO QUASH WRIT OF ATTACHMENT Fl. FA.

          Bradley V. Manning, Commissioner

          Pursuant to 10 Del. C. § 512 and Superior Court Civil Rule 132(a)(4), the above captioned case was referred to the undersigned Commissioner on April 6, 2017, for findings of fact and a recommendation. Accordingly, I have reviewed the parties' submissions and a transcript of the hearings held on March 2nd and 8th, 2017. Based on the record before me, I find and recommend as follows:

         Facts and Procedural Background

         The facts in this action are not in dispute; the question presented is purely one of law. In summary: on January 15, 2010, Lawrence E. Mergenthaler obtained a default judgment against Triumph Mortgage Corporation, in the New Castle County Superior Court, for failing to pay on two loans totaling over $207, 000. On November 18, 2010, a Testatum Fieri Facias ("Fi. Fa.") was filed transferring the judgment to both Kent and Sussex counties.[1] Between April 4, 2010 and December 21, 2011, Mergenthaler filed numerous Writs of Attachment Fi. Fa. garnishment on various individuals and businesses in an attempt to satisfy the debt. Mergenthaler filed an additional writ of garnishment on February 7, 2013.[2]

         On November 29, 2016, Mergenthaler filed a Praecipe seeking the Writ of Attachment presently at issue. On December 2, 2016, the writ was issued and served by the sheriff upon Merrill Lynch. The writ was addressed to "ACCOUNT

          MANAGER, MERRILL LYNCH, of 1201 Market Street, Suite 2000, Wilmington, Delaware 19801 ("Garnishee") to garnish any liquidation of the pledge of stock of Kathy L. Galvin, Account No. 753-97256, owed her indebtedness to Defendant, Triumph Mortgage Corporation to Plaintiff, Lawrence E. Mergenthaler, under the judgment in this action." The account was subsequently liquidated and by agreement of the parties, the proceeds were deposited with the Prothonotary pending a final, non-appealable ruling in this action.

         It is undisputed that at no time did Mergenthaler return to this Court and seek to renew the judgment prior to issuing the 2016 writ.

         Defendant's Arguments

         Triumph has filed two separate motions to quash the writ of attachment served on Merrill Lynch. In its first motion, Triumph argues that because "Merrill Lynch was merged into Bank of America Corporation" on October 1, 2013, it is immune from the attachment laws of this State pursuant to 10 Del. C. § 3502(b).[3] In its second motion, Triumph argues that the judgment is stale under 10 Del. C. § 5702(a) "due to its 5 year age at the time the Writ was issued, " making it "invalid." Additionally, Triumph argues that because no writs of attachment were issued within the first year and one day of the judgment being entered on January 15, 2010, the judgment is stale and the common law prevents further execution attempts. Mergenthaler disputes this interpretation of the law and argues that the five year window for collecting on a judgment-without the need to renew it- was expanded to 10 years with the adoption of Superior Court Civil Rule 69(a) when it is read in conjunction with 10 Del. C. § 4711.

         Standing

         Although the issue was not briefed, the issue of standing was raised by the parties during argument before the Court. Because standing is a threshold issue, I will address it first. At the hearing, Mergenthaler briefly argued that Triumph did not have sufficient standing to "raise any issues with respect to [its] praecipe on [Merrill Lynch]."[4] Conversely, Triumph contended that "it's our money, " that it's "within the zone of interest" to be protected and that if the garnishment is allowed to proceed, it will cause injury.[5]

         As a general matter, "[s]tanding is the requisite interest that must exist in the outcome of the litigation at the time the action is commenced."[6] As further explained by the Delaware Supreme Court:

The concept of standing, in its procedural sense, refers to the right of a party to invoke the jurisdiction of a court to enforce a claim or redress a grievance. It is concerned only with the question of who is entitled to mount a legal challenge and not with the merits of the subject matter of the controversy. In order to achieve standing, the plaintiffs interest in the controversy must be distinguishable from the interest shared by other members of a class or the public in general. ... state courts apply the concept of standing as a matter of self-restraint to avoid the rendering of advisory opinions at the behest of parties who are mere intermeddlers."[7]

         Applying the above law to the facts of this case, it is evident that Triumph has standing to at least object to the garnishment levied against Merrill Lynch by Mergenthaler. There is no dispute among the parties that the money in question belongs to Kathy L. Galvin who, in turn, had pledged it as collateral to Triumph. According to information in the docket, Triumph sent a letter to Merrill Lynch requesting that the stock be liquidated and turned over to Triumph because Galvin had defaulted on her loan obligations.[8] Thus, if the money is garnished and turned over to Mergenthaler, Galvin and Triumph would, arguably, suffer injury. As to this issue, Mergenthaler's argument is without merit.

         Merrill Lynch's Status

         Triumph's argument that Merrill Lynch is exempt from attachment under Delaware Law is misplaced. Mergenthaler presented substantial evidence in his Response establishing that the entity served was, in fact, Merrill Lynch, Pierce, Fenner & Smith ("MLPF&S"), who is a registered broker dealer and a separate Delaware Corporation from Merrill Lynch. Exhibit 3 to Mergenthaler's Response is a copy of the merger between Merrill Lynch and Bank of America purporting to show that MLPF&S was not merged into or otherwise absorbed as part of the merger. Additionally, in Exhibit 4, Mergenthaler provided a list of all Delaware banking institutions, as recognized by the State Banking Commissioner-nowhere on the list is MLPF&S identified as a bank. Finally, in Exhibit 5, Mergenthaler attached a copy of the 1958 Certificate of Incorporation of MLPF&S showing that it "shall not in any jurisdiction carry on the business of banking... ." Aside from the merger with Bank of America, Triumph has presented no evidence that MLPF&S is engaged in the business of banking, is a trust company, savings institution or loan association. Based on the information presented, I am satisfied that MLPF&S is subject to the attachment laws of this State.

         Validity of the Writ

         The ultimate question before the Court is whether or not a valid execution writ may issue upon a judgment that is more than five years old, but less than ten years old, that has never been renewed. My review of the applicable statutes, Superior Court Rules and decisional-law indicates that this is a question of first-impression.

         Triumph argues that "[b]ecause the Judgment was over 5 years old when the Writ was requested and issued in November of 2016 (nearly 7 years later), execution process was not issuable and therefore the Writ was a legal nullity." In the alternative, Triumph also argues that based on the last sentence of Section 5702, ("[a]s to all other cases the law shall remain unaffected"), that the common law year and a day rule applies, making the writ invalid because no execution process was issued during that initial period.

         In response, Mergenthaler argues that his filing of the two Testatum Fi Fa documents with the Court was a form of execution process. I do not find this argument persuasive. The documents merely served to transfer the judgment, as a matter of record, to the prothonotary in Kent and Sussex counties so writs of execution could then be subsequently issued.

         It is true, as argued by Triumph, that at common law there was a rebuttable presumption of full payment after a year and a day, and that no execution process could issue if none had been made within that same time period. However, that rule, and the arcane process once used to circumvent it, known as vice comes, [9] was superseded by the adoption of 10 Del. C. § 5072 in 1857.[10]

         10 Del. C. §5072 states:

Execution on judgments in civil actions.
(a) An execution may be issued upon a judgment in a civil action at any time within 5 years from the time when such judgment was entered or rendered, or from the time when such judgment became due; or to collect any installment of a judgment within 5 years from the time when such installment fell due.
This section shall only apply to cases when no execution has been previously issued to collect such judgment or installment, and to cases where 1 or more have been issued for such purpose, and it appears by the return of the officer that such judgment or installment, as the case may be, has not been paid or satisfied. As to all other cases the law shall remain unaffected.
(b) No judgment shall be deemed to be paid or satisfied, in whole or in part, by a levy on execution process, unless it appears otherwise than by the fact of such levy that ...

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