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Mergenthaler v. Triumph Mortgage Corp.

Superior Court of Delaware

November 26, 2018

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

          Submitted: September 7, 2018

          John A. Sergovic, Jr., Esquire, SERGOVIC & CARMEAN, P.A., Georgetown, DE; Attorney for Plaintiff.

          Richard L. Abbott, Esquire, ABBOTT LAW FIRM, Wilmington, Delaware; Attorney for Defendant.

          OPINION

          LeGROW, J.

         The judgment creditor in this case obtained a judgment against the debtor in 2010. The creditor executed on the judgment, but it remains unsatisfied. More than five years after the entry of judgment, the creditor filed a writ of attachment to garnish stock held in an account and pledged to the debtor. The debtor moved to quash the writ as invalid because it was issued more than five years after the judgment's entry and without the judgment first being renewed. After two years of motion practice, hearings, a stay pending the Supreme Court's resolution of a legal question in a separate case, and supplemental motion practice, the parties' arguments with respect to the validity of the writ of attachment finally are before the Court for resolution.

         The fundamental issues in this case are whether the judgment creditor was required to renew the judgment after five years and, if so, whether the Court should grant the creditor's request to renew the judgment retroactively because the creditor's failure to seek renewal was based on the Court's practice of not requiring such motions until ten years after the entry of judgment. Based on the Supreme Court's recent ruling in the unrelated case, it is settled law that the creditor was required to renew the judgment after five years. But, because the creditor's decision not to renew was based on this Court's practice of not requiring such motions until ten years after a judgment's entry, and that failure to renew was not attributable to the creditor's negligence or carelessness, I grant the creditor's motion to renew the judgment retroactively. The challenged writ of attachment therefore is valid, and the motion to quash is denied.

         FACTUAL AND PROCEDURAL BACKGROUND

         The parties do not dispute the facts of this case. The plaintiff, Lawrence E. Mergenthaler, obtained a judgment in this Court against the defendant, Triumph Mortgage Company ("Triumph"), on January 15, 2010. Mergenthaler transferred the judgment to Kent and Sussex counties by means of a Testatum Fieri Facias and later filed several writs of attachment in an effort to collect the judgment.

         The issues presently before this Court arose when Mergenthaler filed a Writ of Attachment Fieri Facias (the "Challenged Writ") addressed to the account manager of a Merrill Lynch account (the "Account"). The Account's owner previously pledged her stock to Triumph to secure a debt on which she later defaulted, and Mergenthaler sought to garnish the funds owed to Triumph.[1] After the stock was liquidated, the Account held $131, 107.30, less than the amount necessary to satisfy Triumph's debt to Mergenthaler. The Challenged Writ was filed on November 29, 2016, more than five years after it was entered. Triumph later filed two motions to quash the Challenged Writ. In the second such motion, Triumph alleged the Challenged Writ was invalid because it was issued more than five years after the judgment was entered and without Mergenthaler taking any action to "refresh" the judgment (the "Second Motion to Quash").

         The parties agreed to deposit the Account proceeds with the Prothonotary while the Court determined which party, Mergenthaler or Triumph, was entitled to receive the funds.[2] The parties then litigated the motions to quash. The Court referred the motions to a Commissioner, who issued a report (the "Commissioner's Report") recommending that the Court deny both motions to quash. In his Report, the Commissioner concluded that although 10 Del. C. § 5072 requires a judgment creditor to refresh a judgment every five years, that statute was superseded by Superior Court Civil Rule 69(a), which requires a judgment creditor to refresh a judgment only every ten years.[3] The Commissioner reasoned that the time period for refreshing a judgment was a procedural rule, rather than a substantive right, and 10 Del. C. § 561 therefore required the Court to resolve the inconsistency between Rule 69 and Section 5072 in favor of the rule.[4] Triumph appealed the Commissioner's recommendation that the Court deny the Second Motion to Quash.[5]

         At the time the Commissioner issued his Report, the precise issue raised by the parties was a matter of first impression in Delaware. Shortly after the parties finished briefing Triumph's appeal, however, another judge of this Court issued a letter (the "Schatzman Letter") to a member of the Delaware bar explaining why the Superior Court Prothonotary's Office in Sussex County rejected praecipes that sought the issuance of execution writs more than five years after the judgments in those cases were entered.[6] As explained in more detail below, in rejecting the praecipes in those cases, the Schatzman Court disagreed with the reasoning in the Report and concluded the writs could not be issued until the judgments were refreshed. In so holding, the Schatzman Court concluded that the period to refresh judgments was a substantive right, not a procedural rule, and therefore Rule 69 did not supersede Section 5072. While Triumph's appeal of the Commissioner's Report was pending before this Court, the judgment creditor in Schatzman appealed that decision to the Delaware Supreme Court. This Court therefore stayed decision on Triumph's appeal pending resolution of the Schatzman appeal.

         On January 23, 2018, the Delaware Supreme Court affirmed the Superior Court's judgment in Schatzman.[7] Under Supreme Court Rule 8, the Court expressly declined to address the judgment creditor's argument that the ruling left unresolved the apparent inconsistencies in the Superior Court's interpretation of when a judgment must be refreshed.[8] The judgment creditor filed a motion to reargue the appeal, which the Supreme Court denied.[9] Accordingly, under the Supreme Court's ruling in Schatzman, when a civil judgment is entered in the Superior Court and remains unsatisfied after five years, the judgment creditor must file a motion to renew the judgment before continuing to execute on the judgment.

         While the Schatzman Motion for Reargument was pending before the Supreme Court, Mergenthaler filed a Motion to Renew Execution on Judgment (the "Motion to Renew"), and shortly thereafter Triumph filed a Motion for Withdrawal of Funds on Deposit (the "Motion for Withdrawal"). The parties briefed and argued those motions and filed supplemental submissions responding to questions the Court raised during oral argument.

         Mergenthaler's Motion to Renew asks the Court to "renew execution against [Triumph] nunc pro tunc to the date of January 14, 2015."[10] Mergenthaler first asserts, however, that renewal is not necessary because Section 5072 does not apply to this case. If the Court disagrees, however, Mergenthaler contends the Court should renew the judgment nunc pro tunc because Mergenthaler diligently has pursued execution and did not renew the judgment after five years based on the Superior Court's practice of not requiring renewal until ten years after a judgment's entry. Triumph argues Schatzman unequivocally requires renewal after five years, renewal nunc pro tunc is not warranted in this case, and in any event retroactive renewal would not revive the Challenged Writ because that writ was "void ab initio and cannot be revived."[11]

         In the Motion for Withdrawal, Triumph argues the Schatzman decision is dispositive, and the Court therefore should grant the Second Motion to Quash and enter an order authorizing Triumph to withdraw the funds on deposit with the Court. In response to the Motion for Withdrawal, Mergenthaler again asserts that the five-year renewal under 10 Del. C. § 5072 does not apply to this case.

         ANALYSIS

         The parties have filed numerous motions with the Court, to say nothing of the serial responses, replies, supplemental responses, and positions advanced at oral argument. Presently pending before the Court are Triumph's Second Motion to Quash, Mergenthaler's Motion to Renew, and Triumph's Motion for Withdrawal. Those motions collectively present two fundamental issues: (1) does the five-year renewal required by 10 Del. C. § 5072 apply to this case, and (2) if so, should the Court renew the judgment nunc pro tunc.

         I. Under Section 5072 and Delaware Supreme Court precedent, Mergenthaler was required to renew the judgment after five years.

         This decision explores the somewhat arcane, but undeniably important procedures by which parties execute upon judgments. Given the complexity of those procedures and the interplay of the various statutes and court rules, it first is necessary to set forth the relevant statutes, rules, and precedent.

         A. The governing statutes and rules

         There are a variety of means by which a judgment creditor may execute on a judgment in an attempt to satisfy a debt. Pertinent to this case, 10 Del. C. § 5072 governs execution on judgments in civil actions. That statute provides:

§ 5072. 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 instalment of a judgment within 5 years from the time when such instalment fell due.
This section shall only apply to cases when no execution has been previously issued to collect such judgment or instalment, 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 instalment, 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 such payment or satisfaction has been made.

         Section 5072 was adopted in 1857 and has not been amended substantially since that time.[12] The Delaware Supreme Court has acknowledged ambiguity in Section 5072 and therefore has interpreted it by relying on the statute's legislative history and the explanation of the statute and common law provided in Victor B. Woolley's well-recognized treatise, "Practice in Civil Actions and Proceedings in the Law Courts in the State of Delaware" (hereinafter, "Woolley's").[13]

         As interpreted by the Delaware Supreme Court and this Court, Section 5072 extended the period in which a creditor could execute on a judgment.[14] Under the common law, that execution period was one year and one day; under Section 5072, that execution period is five years. For a period of time, New Castle and Sussex counties extended that common law year-and-a-day period to twenty years through a writ of vices comes, which Woolley's explains was a fictitious writ that "enable[d] subsequent executions without sci. fa. at any time during twenty years."[15] The writ of vices comes was abolished, however, by Rule 69(a), and thereafter the year-and-a-day period was the common law practice in all counties.

         The time period in Section 5072 does not, however, bar execution altogether after five years. Rather, in Delaware, there is no statute of limitations on judgments, and the Delaware Supreme Court has held that Section 5072 and similar statutes simply require a judgment creditor to move to refresh a judgment after the specified time period before further executing on the judgment.[16]

         Mergenthaler maintains the five-year period in Section 5072 was expanded to ten years by Rule 69(a), which provides:

         Rule 69. Execution.

(a) In general. Except as herein provided the procedure on execution shall be as heretofore. An execution may be issued upon a judgment in a civil action at any time after such judgment was entered or rendered during the period that such judgment would constitute a lien upon the real property of the judgment debtor. The fictitious writ of vice comes or v.c. is hereby abolished.

Rule 69(a)'s provision that a judgment may be executed upon at any time "during the period that such judgment would constitute a lien upon real property of the judgment debtor" refers to 10 Del. C. § 4711, which states that a judgment shall continue as a lien on real property for ten years before it must be renewed.[17]

         Throughout these proceedings, Mergenthaler argued the inconsistency between Section 5072 and Rule 69(a) must be resolved in favor of the rule. ...


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