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U.S. District Court Examines Scire Fasias Sur Mortgage Actions Under 10 Del. C. §§ 5061-67
Deutsche Bank National Trust Company v. Ronald Bishop
In Deutsche Bank National Trust Company v. Ronald Bishop, a case involving a Motion for Summary Judgment in a scire fasias sur mortgage action filed pursuant to 10 Del. C. §§ 5061-67, the United States District Court for the District of Delaware concluded that Plaintiff had established all of the required elements of a scire fasias action and that Defendant had not raised any of the affirmative defenses recognized by Delaware law. Thus, Judge Gregory M. Sleet granted Plaintiff’s Motion for Summary Judgment.
By way of factual background, on August 29, 2013, Plaintiff Deutsche Bank National Trust Company ("Deutsche Bank" or “Plaintiff”), as Trustee for Securitized Asset Backed Receivables LLC Trust 2007-HEl, Mortgage Pass Through Certificates, Series 2007-HEl, filed a scire fasias sur mortgage action in the Superior Court of the State of Delaware in New Castle County pursuant to 10 Del. C. §§5061-67. In that state court complaint, Deutsche Bank alleged that Defendant Ronald Bishop ("Bishop" or “Defendant”): (1) was the mortgagor for the Mortgage at issue; (2) had failed to pay the monthly installments due under the Mortgage; (3) had further failed to pay after Deutsche Bank's demand and acceleration; and (4) demanded judgment against the Plaintiff for Mortgage. Deutsche Bank's original complaint had attached all statutorily required exhibits to support its case: (1) a certified copy of the mortgage; (2) disclosures required under 15 U.S.C. §§1601- 1692; and (3) an amounts due affidavit required by 10 Del. C. § 5062D(b)(2).
On October 3, 2013, under 28 U.S.C. § 1441(a) and (b), Bishop removed the matter to the U.S. District Court for the District of Delaware. On December 9, 2013, Deutsche Bank timely filed a loss mitigation affidavit as required by 10 Del. C. § 5062A. On December 20, 2013, Defendant filed his answer and admitted his failure to pay according to the terms of the mortgage agreement. Discovery proceeded according to the Scheduling Order and was completed on October 8, 2014. Discovery did not yield any additional material evidence. After discovery closed, Deutsche Bank filed a motion for summary judgment.
The Court began its analysis by explaining that a scire fasias sur mortgage action, codified in 10 Del. C. §§5061-67, is an in-rem action that provides a legal remedy to recover real property following the breach of a mortgage agreement by nonpayment or nonperformance. See 10 Del. C. § 5061(a). The action is an expedited means to demand that the mortgagor "appear and show cause why the mortgaged premises should not be seized and taken in execution for payment of the mortgage money and damages." Gordy v. Preform Bldg. Components, Inc., 310 A.2d 893, 896 (Del. Super. 1973). For a scire fasias sur mortgage claim to succeed, the Plaintiff need only show that he is a valid holder of the mortgage and that the Defendant has failed to fulfill his obligation under the mortgage. See 10 Del.C. § 5061.
The Court further explained that only two (2) legal defenses, payment or satisfaction, and the equitable claim of a plea in avoidance, are recognized defenses against a scire fasias action. See Gordy, 310 A.2d at 895-96 (discussing "plea in avoidance of the deed" as a vestige of the common law plea of confession and avoidance that captures equitable remedies notwithstanding legal liability); Brooks v. BAC Home Loans Servicing, LP, 53 A.3d 301 (Del. 2012); Wells Fargo Bank, NA. v. Williford, 2011WL5822630, at *3 (Del. Super. Nov. 17, 2011) (noting that answers in scire fasias actions are limited and counterclaims may not be asserted).
The Court noted that claims of fraud or other impropriety as a defense to the scire fasias action are generally barred unless the claims directly relate to the original mortgage transaction and are factually supported. See Lasalle Nat. Bank v. Ingram, 2005 WL 1284049, at *2 (Del. Super. May 19, 2005). This requirement preserves the in rem nature of the scire fasias action and avoids inserting in personam matters into the property focused action. Id. at *3. While these in personam counterclaims may not be joined with the in rem action, the Court noted that they may be separately pursued subject to the statute of limitations and other provisions of Delaware law. Id. at *2-*3. In summary, the Court explained that well-settled Delaware substantive law established a cabined foreclosure mechanism that specifically limited both counterclaims that may be joined and defenses that may be raised.
Deutsche Bank argued that it had made out a complete case for a scire fasias sur mortgage action with no material facts in question. Bishop asserted numerous state law counterclaims and three (3) federal counterclaims against Deutsche Bank. The Court first examined Deutsche Bank’s arguments, noting that with the original state court complaint, Deutsche Bank had clearly met its initial burden of production: Deutsche Bank established that it was an assignee of the mortgage and that Bishop had failed to perform under its terms. The Court explained that the burden then shifted to Bishop to demonstrate why the property should not be seized in satisfaction. Gordy, 310 A.2d at 896.
The Court noted that Bishop admitted in his Answer his failure to pay, and raised none of the affirmative defenses recognized by Delaware law. Citing 10 Del. C. § 5061, the Court explained that the two (2) facts that were “the heart of the scire fasias action” - that Deutsche Bank was an assignee of the mortgage and that Bishop failed to fulfill his responsibilities under the Mortgage agreement – were undisputed in the record. Accordingly, the Court concluded that no genuine issue of material fact existed to preclude the entry of summary judgment in favor of Deutsche Bank for the mortgage action.
The Court then examined Bishop’s counterclaims, explaining that Delaware state law preserves the in rem essence of foreclosure actions by baring joinder of in personam claims. See, e.g. First Fed. Sav. & Loan Assn., 1986 WL 9916, at *l. Thus, the Court refused to consider Bishop's counterclaims on the merits as they were not properly before the Court.
Accordingly, the Court granted Deutsche Bank’s motion for summary judgment, and dismissed Bishop’s counterclaims without prejudice.
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