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Barbosa v. Bob's Canine Academy, Inc.

Court of Chancery of Delaware

May 19, 2017


          Date Submitted: March 13, 2017

         MASTER'S REPORT (Motions for Summary Judgment)

          Denise D. Nordheimer, Esquire, of The Law Office of DENISE D. NORDHEIMER, ESQUIRE, LLC, Wilmington, Delaware and Peter Moulinos, Esquire, of MOULINOS & ASSOCIATES, LLC, New York, New York; Attorneys for Plaintiff.

          David L. Finger, Esquire, of FINGER & SLANINA, LLC, Wilmington, Delaware; Attorneys for Bob's Canine Academy, Inc.

          Aaron C. Baker, Esquire, of BAIRD MANDALAS BROCKSTEDT, LLC, Dover, Delaware; Attorneys for H. Cubbage Brown.

         Plaintiff Luis Barbosa and his wife owned a home together. In 1992, after Barbosa began serving a long prison sentence, the couple agreed to sell the home. Documentation formalizing the sale in 1998 contained some irregularities. Barbosa's wife died in 2002, and Barbosa was released from prison in 2010. In 2012, Barbosa filed this action against the buyers and their attorney, claiming the 1998 deed was forged and seeking damages and the deed to be cancelled. The defendants moved for summary judgment on the basis of laches, and Barbosa moved for partial summary judgment on the merits of some of his claims. I conclude Barbosa had notice that his property might be conveyed or sold over a decade before he brought his claims, and that his claims are barred by laches and the applicable statute of limitations. I recommend the Court grant the defendants' motions for summary judgment and deny Barbosa's motion for summary judgment.

         I. Background

         A. The Parties

         In July 1989, Plaintiff Luis Barbosa ("Barbosa"), together with his now-deceased wife Carmen Barbosa ("Carmen"), bought real property consisting of a home and improved land at 20484 DuPont Highway in Harrington, Delaware ("the Property"). Defendant Dorothy Ball ("Ball") and her husband Robert ("Robert") own and operate Bob's Canine Academy, Inc. ("BCA"). BCA bought the Property from the Barbosas in 1992, and a deed purportedly conveyed the Property to BCA in 1998. In 2009, BCA conveyed the Property to Ball, who remains the owner of record today. BCA and Ball are referred to as "the BCA Defendants." Defendant H. Cubbage Brown ("Brown") is an attorney who represented both the Barbosas and the Balls in connection with the Property.

         B. The Property And Its Paper Trail[1]

         Barbosa was convicted of drug-related offenses and was incarcerated in federal prison from April 1992 to December 2010. The BCA Defendants allege that in June 1992, Robert drove by the Property, which had appeared abandoned for some time, and saw Carmen and her children outside barbecuing.[2] The BCA Defendants allege Robert asked Carmen about the Property, she responded that she wanted to sell it, and Robert replied he was interested.[3] Robert and Carmen agreed upon a price of $65, 000 and memorialized this agreement with a promissory note dated June 14, 1992.[4] Robert paid Carmen a $100.00 deposit.[5]

         On December 1, 1992, Barbosa signed a notarized document intended to permit Carmen to sell the property to the Balls without Barbosa's further involvement.[6] It reads:

Re: Contract Property Sale
I, Luis Barbosa, husband of Carman Barbosa, and owner of the house at RT. 13, Box 243, Farmington, Delaware. I would like to make all persons aware, that the above mentioned property is for sale. As owner and holder of the deed, I do give concent [sic] to my wife Carman Barbosa, to sell the above mentioned property. She Carman Barbosa and her three children, who are under age, are also part owners of said property.
If you have any further questions concerning the property mentioned above, please contact me with no hesitation at:
Luis Barbosa #33736-054 P.O. Box 8000 Bradford, PA. 16701
Sincerely, Luis Barbosa

         In 1994 or 1995, the Balls took possession of the Property.[7] Since that time, the Balls have lived on the Property, operated Bob's Canine Academy there, maintained the Property, and paid expenses such as back property taxes and utilities.[8] In 1995, the Barbosas and Balls sought to formally transfer the Property, but the title search revealed an irregularity in the chain of title.[9] On July 17, 1995, the Property had been purportedly transferred to K.S.C. Holdings, Inc. by a deed (the "KSC Deed") that bore the forged signatures of both Barbosa and Carmen.

         On July 26, 1995, Brown initiated Court of Chancery Civil Action No. 1298-K on behalf of the Balls, suing the Barbosas for rescission of the KSC Deed and specific performance of the contract to sell the Property.[10] Brown also initiated Civil Action No. 1402-K on behalf of the Barbosas, seeking cancellation of the KSC Deed as fraudulent.[11] In the latter action, Barbosa disavowed any involvement in the KSC Deed and stated he wanted to sell the Property to the Balls, via a signed, notarized affidavit dated June 23, 1998.[12] After a hearing on September 11, 1998, this Court cancelled the KSC Deed as fraudulent on September 18, 1998.[13]

         On September 14, 1998, Brown wrote Barbosa to confirm Barbosa's wishes for the net proceeds from the sale of the Property:[14]

Re: Sale of Harrington property
Dear Mr. Barbosa:
This letter will confirm your telephone conversation with Paul McNinch on Friday September 11, 1998 concerning the distribution of the net proceeds from the sale of the above referenced property. Specifically, as I understand it, you stated that it was your desire to have any cash due to you at settlement converted into a check made payable jointly to your wife, Carmen Barbosa and your attorney, Saul Jakubowitz. If this is in fact your intention, please return this letter, signed and notorized [sic], to me in the envelope provided.
I, Luis Barbosa hereby authorize the law firm of BROWN, SHIELS & CHASANOV to release all proceeds owed to me as a result of the real property located at 243 Route 13, Harrington Delaware and as evidenced by the deed of Luis Barbosa and Carmen Barbosa recorded in the office of the Recorder of Deeds for Kent County, Delaware in Deed Record D, Book 134, Page 259, by check made payable to the order of Carmen Barbosa and Saul Jakubowitz, Esq.

         The letter bears a signature of Luis Barbosa dated September 21, 1998, which was notarized by a prison official. The BCA Defendants allege Barbosa called the Balls collect from prison to emphasize he wanted the proceeds to go to his children. Barbosa denies signing this letter and making this call.

         The Property was transferred to BCA via the BCA Deed on December 10, 1998.[15] Brown represented BCA in that transaction, and Saul Jakubowitz ("Jakubowitz") was the lawyer on the Barbosas' side of the transaction.[16] Barbosa's signature on the BCA Deed was purportedly witnessed by a notary public, Henry C. McMahon ("McMahon") in the Bronx, New York. That notarization is false. Barbosa was incarcerated in Minersville, Pennsylvania, at the time of the purported notarization.[17] McMahon testified that McMahon's signature was forged and that he never met Barbosa.[18] Barbosa claims he did not sign the BCA Deed.[19] Brown presented the BCA Deed to the Recorder of Deeds in Kent County for recording on December 23, 1998.[20]

         The BCA transfer also generated a HUD-1 purportedly bearing the Barbosas' signatures, dated December 23, 1998. Barbosa alleges that when Ball signed the HUD-1, it did not bear Barbosa's signature and neither Barbosa nor Carmen was present.[21] The Barbosas' purported signatures eventually appeared on that HUD-1.[22]

         The Balls paid the Barbosas for the Property in full.[23] A satisfaction piece was signed on May 4, 2001, authorizing the Recorder of Deeds to enter satisfaction of and cancel a 1998 recorded mortgage executed by "Bob's Canine Academy, Inc."[24] Barbosa signed the satisfaction piece, and his signature was notarized.

         Carmen passed away in 2002. On June 24, 2009, Ball conveyed BCA's interest in the Property to herself via the "Ball Deed." Barbosa was released from prison in December 2010. He alleges he learned about the BCA Deed in mid-2011 when he inquired as to the status of his Kent County taxes.

         C. Procedural History

         In February 2012, Barbosa filed an action in the United States District Court for the Southern District of New York, the venue where the BCA Deed was executed, seeking cancellation of the BCA Deed and other relief.[25] Barbosa asserts that Court directed the action to be filed in Delaware, and it was so filed on September 5, 2012.[26] The Complaint names BCA, Ball, and Brown as defendants. Barbosa seeks damages in an amount to be determined at trial and cancellation of the BCA Deed and the Ball Deed so that the Property reverts back to him as the complete and sole owner.

         Count I, for fraud, asserts the defendants intentionally concealed the BCA Deed from Barbosa and knowingly recorded that forged deed. Count II asserts Brown owes Barbosa fiduciary duties from representing Barbosa in cancelling the KSC Deed, and that Brown breached those duties when he "intentionally and knowingly permitted the fraudulent execution and filing of the BCA Deed."[27]Barbosa also contends Brown had a conflict of interest when he represented both the Barbosas and BCA/the Balls in connection with the Property. Barbosa seeks damages under Counts I and II.

         In Count III, Barbosa seeks a constructive trust over the Property, alleging it was transferred to BCA without proper consideration. Count IV claims the BCA Defendants were unjustly enriched when they knowingly purchased the Property via a forged deed, and Count V is a claim of conversion against the BCA Defendants; these two counts seek damages. Count VII requests a declaratory judgment that quiets title to the Property and declares the BCA and Ball Deeds void, making Barbosa the true and sole owner of the Property. Finally, Count VIII asks that the Court cancel and set aside the BCA and Ball Deeds.[28]

         On October 31, 2012, the BCA Defendants moved to dismiss the Complaint on the ground that Barbosa's claims are barred by the statute of limitations and the doctrine of laches. Then-Master LeGrow recommended this Court deny that motion in a May 23, 2013, final report. She concluded that based on the pleadings, the period for Barbosa to bring his claims might be tolled under the doctrine of inherently unknowable injury, because the pleadings provided no basis to conclude that there was a specific trigger for inquiry such that Barbosa could have or should have known of the existence of the BCA Deed before he allegedly discovered it in 2011. Then-Master LeGrow noted that the defendants could raise the statute of limitations or laches as affirmative defenses if the factual record developed during discovery supported those defenses.

         On July 29, 2016, Barbosa filed a motion for summary judgment on counts IV, VII, and VIII, on the basis that he has proven the BCA Deed was forged. On September 1, 2016, the BCA Defendants and Brown filed cross-motions seeking summary judgment on all of Barbosa's counts on the grounds that they are untimely. The parties briefed their motions and participated in oral argument on November 7, 2016.

         Thereafter, Barbosa's former Delaware counsel's law practice was placed in receivership. On January 31, 2017, the action was stayed pursuant to a request from the receiver. Barbosa obtained new local counsel and the stay was lifted March 13, 2017. This is my final report on the motions for summary judgment.

         II. Analysis

         A. Barbosa's Claims Are Untimely.

         The BCA Defendants and Brown seek summary judgment on the basis that Barbosa's claims are untimely, as the BCA Deed was executed in December 1998 and Barbosa did not file this action until 2012. The parties agree that if no tolling exception applies, Barbosa's claims would be untimely. Barbosa contends that while he intended to sell the Property to BCA as late as June 1998, he changed his mind thereafter; and that while he knew about the KSC Deed, his concerns for the security of the Property's title were put to rest when the KSC Deed was set aside in September 1998. He argues that because he changed his mind about selling the property and was satisfied the Property's title was secure, his claims based on the December 1998 BCA Deed were inherently unknowable. He concludes the limitations or laches periods for his claims were therefore tolled until he discovered the BCA Deed in 2011.

         Defendants assert the inherently unknowable tolling exception does not save Barbosa's claims because Barbosa had notice that the Property's title might be conveyed to BCA or otherwise threatened. Defendants contend Barbosa intended and knew about the conveyance to BCA, as evidenced by his documented participation. Defendants also ...

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