Submitted: January 23, 2018
Consideration of Plaintiff's Motion to Disqualify
Defendant's Counsel & Extend Case Schedule, DENIED.
Consideration of Plaintiff's Motion for Summary Judgment
- Defendant's Lack of Counsel, DENIED.
Consideration of Plaintiff's Motion for Summary Judgment,
Richard L. Abbott, Esquire of Abbott Law Firm, of Wilmington,
Delaware. Attorney for Plaintiff
William D. Sullivan, Esquire of Sullivan Hazeltine Allinson
LLC, of Wilmington, Delaware. Attorney for the Defendant.
L. MEDINILLA, JUDGE.
Triumph Mortgage Corp. ("Plaintiff) filed a Sci. Fa.
Sur Mortgage complaint after Defendant Glasgow Citgo,
Inc. ("Defendant") defaulted on a mortgage created
as part of a 2002 refinancing transaction ("Refinancing
Transaction") between the parties. Defendant alleges
several affirmative defenses to prevent foreclosure on the
moves to disqualify Defendant's counsel and for summary
judgment under Superior Court Civil Rule 56 based on
allegations that Defendant does not have the authority to
retain counsel, and that Defendant lacks any viable
affirmative defenses. After consideration of the
parties' briefings and oral arguments, for the reasons
stated below, Plaintiff Triumph Mortgage Corp.'s Motion
to Disqualify Counsel & Extend Case Schedule and Motion
for Summary Judgment - Defendant's Lack of Counsel are
DENIED. Additionally, Plaintiffs Motion for
Summary Judgment is DENIED.
AND PROCEDURAL HISTORY
a commercial mortgage foreclosure action, initiated pursuant
to the filing of a Sci. Fa. Sur Mortgage Complaint.
The mortgage at issue encumbers property located at 2964
Pulaski Highway (the "Property") on which Defendant
operated a gas station and convenience store. The mortgage is
the product of the Refinancing Transaction between the
parties. Plaintiff Triumph is a corporation wholly-owned by
Ralph Estep ("Estep"), while Defendant Glasgow
Citgo was majority-owned by the late Robert
Galvin. Estep was Robert Galvin's
accountant and one-time business partner.
January 17, 2002, the parties set up the Refinancing
Transaction, which Defendant alleges was to pay off two
existing loans with the Wilmington Trust Company. However,
the terms of the Refinancing Transaction refinanced other
unsecured loans that Estep had made to Robert Galvin and
resulted in Defendant receiving funds upwards of $100, 000
with which to conduct business. Defendant alleges that
the Wilmington Trust Company loans were removed from the
transaction on the eve of settlement, based on side
negotiations between Estep and the Wilmington Trust
Company. Defendant alleges that Estep failed to
get adequate consent for the revised transaction.
Galvin died six months after the Refinancing Transaction
closed, in July of 2002. The transaction's obligations
were inherited by his wife, Kathy Galvin
("Galvin"). However, in the intervening years,
Galvin has not filed an accounting on her husband's
estate. Defendant became a void Delaware
corporation effective March 1, 2004, for failure to file the
necessary annual reports and/or pay taxes.Subsequently,
Defendant first defaulted on the mortgage when it failed to
timely pay off the remaining principal balance due under the
loan by a January 17, 2007 deadline. Thereafter, Defendant
was in default on the mortgage for failure to pay the default
interest rate and due to cessation of payments in March of
Motions for Summary Judgment and in seeking to disqualify
defense counsel, Plaintiff claims that it exercised its
rights under an agreement ("Pledge Agreement") also
dated January 17, 2002, which provided additional collateral
for the loan at issue. This Pledge Agreement allegedly
authorizes Plaintiff to take over Defendant's
uncertificated stockholdings by operation of law and to vote
the stock. Plaintiff alleges that this corporate takeover of
Defendant by Plaintiff/Estep took place on November 22, 2017,
and entitles Plaintiff to judgment as a matter of law.
thus filed (1) the Motion to Disqualify Defendant's
Counsel & Extend Case Schedule; (2) the Motion for
Summary Judgment - Defendant's Lack of Counsel, and (3)
the Motion for Summary Judgment on December 15, 2017.
Defendant responded to Plaintiffs Motion to Disqualify
Defendant's Counsel & Extend Case Schedule on January
8, 2018. Defendant responded to both Plaintiffs motions on
January 12, 2018. A hearing was held on January 18, 2018.
Both sides provided supplemental correspondence to the Court
interspersed between the briefs and following the hearing
between January 19-23, 2018. This Court granted a separate,
yet related, filing on Defendant's Motion to Compel
additional discovery on April 3, 2018. Having considered all
submissions, the matter is now ripe for review.
MOTION TO DISQUALIFY COUNSEL & EXTEND CASE
to disqualify are brought for violations of the Delaware
Rules of Professional Conduct ("DRPC") where the
challenged conduct allegedly prejudices the
proceedings. "[T]he burden of proof must be on
the non-client litigant to prove by clear and convincing
evidence (1) the existence of a conflict and (2) to
demonstrate how the conflict will prejudice the fairness of
the proceedings." For all types of conflicts, the Court
reviewing the motion "must weigh the effect of any