Opinion
C.A. No: 98L-10-025.
Submitted: March 3, 2006.
Decided: May 16, 2006.
Upon Consideration of LaSalle National Bank's Motion to Dismiss and Motion for Summary Judgment GRANTED.
Stephen P. Doughty, Esq., Wilmington, Delaware, attorney for Lasalle National Bank.
William P. Ingram, pro see.
OPINION
The present action is a consolidation of two separate lawsuits. The first lawsuit is a scire facias sur mortgage action filed by Plaintiff, LaSalle National Bank, against Defendants, William P. Ingram and Margaret A. Ingram on October 27, 1998. The second lawsuit was filed on July 5, 2005 by the Ingrams against LaSalle, alleging breach of contract, breach of implied covenant of good faith and fair dealing, fraud, and RICO violations. These two actions were consolidated by an order of this Court, dated November 4, 2005. LaSalle now moves this Court for summary judgment as to the claims made in the first lawsuit regarding the Ingrams' alleged default of the mortgage agreement. LaSalle also moves the Court to dismiss the claims asserted in the Ingrams' complaint. For the following reasons, LaSalle's motions should be GRANTED.
FACTUAL AND PROCEDURAL HISTORY
On December 30, 1997, the Ingrams obtained a loan for $588,000 from American Investment Mortgage Inc. ("American Investment"), which was secured by a mortgage on property located at 272 Troon Drive, Dover, Delaware. On January 14, 1998, the mortgage was assigned to Alliance Funding Company, a division of Superior Bank FSB. Subsequently, the mortgage was assigned to LaSalle National Bank. LaSalle initiated the mortgage foreclosure action on October 27, 1998.The parties do not dispute that the Ingrams are in default of the mortgage agreement. However, the Ingrams assert that LaSalle breached the mortgage agreement, inter alia, by failing to provide 30-days notice before accelerating the loan, as required by paragraph 21 of the mortgage agreement. In addition, the Ingrams claim that American Investment breached an oral agreement to lend them $2.2 million, which American Investment purportedly knew the Ingrams needed to service the $588,000 mortgage. The Ingrams claim that American Investment was aware that the Ingrams obtained the $588,000 mortgage to fund Stoney Creek, a real estate development project, and they would require additional funding to make payments on the mortgage. To that end, an agent of American Investment allegedly represented that he would arrange two additional loans for the Ingrams through American Investment/Bank West and Eastern Savings Bank, which never materialized. The Ingrams blame their failure to make the mortgage payments on American Investment's breach of its oral agreement to secure the additional loans.
In the scire facias sur mortgage action, the Ingrams asserted counterclaims against LaSalle for breach of contract, breach of implied covenant of good faith and fair dealing, fraud, and RICO violations related to the oral agreement to secure additional funding. On May 19, 2005, this Court dismissed the Ingrams' counterclaims pertaining to the oral agreement from the scire facias sur mortgage action. However, the Ingrams revived those claims by filing the second lawsuit. The Ingrams' lawsuit was consolidated with the scire facias sur mortgage action on November 4, 2005.
Although the oral agreement for the additional loans was allegedly made by American Investment, the Ingrams did not name American Investment as a party in the second action. The Ingrams filed suit against LaSalle, reasoning that LaSalle, American Investment Mortgage and Superior Bank were under control of the same principal owners. On July 27, 2001, Superior Bank of Hinsdale, Illinois was closed by the United State Treasury's Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.
http://www.fdic.gov/bank/individual/failed/superior.html (Last viewed on April 12, 2006).
DISCUSSION
Motion for Summary JudgmentLaSalle moves for summary judgment of the claims asserted in the mortgage action, arguing that there are no genuine issues of material fact. In dismissing a portion of the Ingram's counterclaims, this Court determined that, in a scire facias sur mortgage action, the only claims that may be asserted are those claims that arise under the mortgage agreement. As such, the only counterclaim that survives in the mortgage action is the Ingrams' claim that they were not provided 30-days notice before LaSalle accelerated the loan.
LaSalle National Bank v. Ingram, Del. Super., C.A. 98L-10-025, Young, J. (May 19, 2005) (ORDER) ( citing Gordy v. Preform Building Components, Inc., 310 A.2d 893 (Del.Super. 1973)).
Viewing the record in a light most favorable to the non-moving party, the Court may grant summary judgment if it determines that there are no genuine issues of material fact. The burden of proof is initially borne by the moving party. However, if a movant can make such a showing, "the burden shifts to a non-moving party to demonstrate that there are material issues of fact."
Pullman, Inc. v. Phoenix Steel Corp., 304 A.2d 334, 335 (Del.Super. 1973) ( citing Matas v. Green, 171 A.2d 916 (Del.Super. 1961); Super. Ct. Civ. R. 56(c)).
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979) ( citing Ebersole v. Lowengrub, 180 A.2d 467 (Del. 1962)).
Id. at 681 ( quoting Hurtt v. Goleburn, 330 A.2d 134 (Del. 1974)).
With its Motion for Summary Judgment, LaSalle included an Affidavit from Corina West, custodian of records for LaSalle, who averred that LaSalle was not a party to the original mortgage for $588,000. West confirmed that the Ingrams entered into the mortgage agreement with American Investment Mortgage in 1997, and the loan was subsequently assigned to LaSalle. When the Ingrams failed to make mortgage payments from March 1998 to September 1998, LaSalle retained an attorney to commence foreclosure proceedings. The Ingrams were notified by certified letter, dated September 11, 1998, that the mortgage was in default; and, unless they paid all outstanding amounts due by October 12, 1998, foreclosure proceedings would be initiated. The Ingrams were further advised that satisfaction of the deficiency would serve to "de-accelerate" and reinstate the mortgage. A copy of the certified mail receipt, which indicates that Mr. Ingram signed for LaSalle's letter on September 11, 1998, is also attached to West's Affidavit. The scire facias sur mortgage action was filed on October 27, 1998, forty-seven (47) days later.
Notwithstanding the notice provided to the Ingrams, Delaware law is clear that filing of a scire facias sur mortgage action "constitutes notice of the most unequivocal character that the mortgagee wishes to avail himself of the acceleration provision of the mortgage." In Wilmington Savings Fund, the mortgagor also claimed that the mortgagee had not provided the contractual 30-days written notice before exercising its option to accelerate the mortgage. In that case, the Court held that the filing of the foreclosure action was sufficient notice of the mortgagee's election to accelerate the mortgage. Accordingly, LaSalle's filing of the foreclosure action provided the Ingrams with notice of its intention to accelerate the mortgage, in compliance with the mortgage agreement. Because there are no genuine issues of material fact as to whether the Ingrams received notice of the acceleration of the mortgage, LaSalle's Motion for Summary Judgment is GRANTED. Motion to Dismiss
Wilmington Savings Fund Society, F.S.B. v. Meconi, 1989 WL 124888, at *4 (Del.Super.) ( quoting Giannone v. Kennedy, 1987 WL 8280, at *2 (Del.Super.), aff'd 527 A.2d 732 (Del. 1987)).
Id.
LaSalle moves to dismiss the claims asserted in the Ingrams' lawsuit, arguing that the Complaint is defective, because it does not name Superior Bank, an indispensable party, as a defendant. LaSalle argues that, because Superior Bank is in receivership, the FDIC, as receiver, should be substituted for Superior Bank as a defendant in this matter. LaSalle relies on Kojro v. Sikorski for its argument that the Ingrams' failure to join the FDIC as a party is fatal to the Ingrams' lawsuit.
267 A.2d 603 (Del.Super. 1970).
Dismissal of an action is normally granted if an indispensable party cannot be joined to an action. An indispensable party is one "who not only [has] an interest in the controversy, but an interest of such a nature that a final decree cannot be made without either affecting that interest, or leaving the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience."
Kojro, 267 A.2d at 605 ( citing 3A Moore's Federal Practice, Sec. 19-07(1), p. 2222.)
Kojro, 267 A.2d at 605 ( citing Shields v. Barrow, 58 U.S. 130, 139 (1854)).
Generally, an indispensable party whose joinder will not deprive the Court of subject matter jurisdiction must be joined to an action. Whenever joinder is not feasible, however, this Court is required to "determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable." Rule 19(b) provides the following four factors to be considered when dismissing an action that cannot join an indispensable party:
Super. Ct. Civ. R. 19(a).
A person who is subject to service of process and whose joinder will not deprive the Court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (I) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the Court shall order that the person be made a party.
Del. Super. Ct. Civ. R. 19(b).
(1) to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties;
(2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided;
(3) whether a judgment rendered in the person's absence will be adequate;
(4) whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
A. American Investment and Superior Bank are indispensable parties.
The Ingrams' claims revolve around an alleged oral promise to secure additional loans for $2.2 million made by a representative of American Investment Mortgage, Inc., the same entity that loaned the Ingrams $588,000, which was secured by a mortgage on their residence. The parties dispute LaSalle's role as party in this case. The Ingrams claim that LaSalle is a proper party, because LaSalle, Superior Bank, and American Investment Mortgage, Inc. were controlled by the same principals. LaSalle defends on the basis that Superior Bank is in receivership, and the FDIC is an indispensable party.
Both parties focus on the role of Superior Bank, which was not the entity that originally loaned the $588,000, nor was it the entity that made oral promises for additional loans. Neither party, however, addresses the role of American Investment Mortgage, the party that originated the mortgage, and allegedly made the oral promises. Notwithstanding the Ingrams' claims that all three entities are controlled by the same principals, American Investment is an indispensable party. American Investment is the party that the Ingrams allege in their Complaint provided them with loan commitment papers for both the $588,000 mortgage and the $2.2 million acquisition and development (AD) loan to fund the Stoney Creek project. The Ingrams identify Ron Monic, an American Investment Mortgage employee, as the individual who originated the mortgage and orally promised the AD loan. The absence of American Investment, an indispensable party, in the present matter would "leave the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience."
Kojro, 267 A.2d at 605 (citing Shields, 58 U.S. at 139).
The role of Superior Bank in the present controversy, however, is not as clear. The mortgage was assigned from American Investment to Alliance Funding Company in January 1998. Alliance Funding is identified in the documents filed with the Kent County Recorder of Deeds as a division of Superior Bank, FSB. The Ingrams' reasons for involving Superior Bank in the controversy are clear. Paragraphs eleven and twelve of the complaint state that "the FDIC seized Superior Bank for writing fraudulent mortgages and accounting irregularities related to those mortgages . . . [and] one of the principal [sic] perpetrators of the fraud, paid the FDIC $470 million to cover these loan losses." The Ingrams have involved Superior Bank in this matter from the onset in every manner, except naming Superior Bank as a defendant. Because of the extent to which the Ingrams involve Superior Bank in this matter, the absence of Superior Bank would adversely affect the final disposition of this manner. Superior Bank is an indispensable party.
Cmpl., ¶¶ 11, 12.
B. American Investment and Superior Bank cannot be joined to this action. Although American Investment was the entity that originated the mortgage and allegedly made oral promises to the Ingrams, American Investment was never identified as a defendant in this matter. The alleged oral promises in this matter occurred more than eight years ago. An action based on a promise is subject to a three-year statute of limitations. Joining American Investment at this late date in the litigation would be untimely. Not only is joinder of American Investment time barred by the statute of limitations, but also joinder at this late date would be prejudicial to American Investment.
10 Del.C. § 8106.
LaSalle argues that this Court does not have jurisdiction over Superior Bank, because the FDIC is acting as receiver for Superior Bank. Whenever the FDIC acts as receiver for an insured depository institution, any claims made against the institution may be reviewed by the FDIC during the statutory 60-day period. A claimant may also file a lawsuit "in the district or territorial court of the United States for the district within which the depository institution's principal place of business is located or the United States District Court for the District of Columbia." LaSalle is correct that this Court does not have jurisdiction over any claims made against the FDIC on behalf of Superior Bank, and the FDIC cannot be joined to the present action.
Id.
The fact that American Investment and Superior Bank are indispensable parties, which could not be joined in the present action, does not end this Court's review. The four factors identified by Rule 19(b) also must be considered. The absence of American Investment and Superior Bank in these proceedings would be prejudicial to LaSalle. All of the Ingrams' claims revolve around events that occurred before the mortgage was assigned to LaSalle. Both parties agree that LaSalle did not make the alleged oral agreement to loan the Ingrams $2.2 million. The alleged commitment papers for the AD loan provided to the Ingrams were prepared by American Investment. An American Investment employee made the alleged oral promise for the AD loan. The absence of American Investment as a party, would place LaSalle at a significant disadvantage. There are no measures that the Court could employ to lessen or avoid the prejudice to LaSalle. A judgement in this matter without American Investment or Superior Bank would not be adequate.
Curiously, the Ingrams do not name American Investment or Superior Bank as defendants. Through eight years of litigation, beginning with the scire facias sur mortgage action and the Ingrams' counterclaims that are the present claims in their lawsuit, the Ingrams had had ample opportunity to join other parties that may be liable. Although a pro se litigant may be afforded some degree of leniency, a pro se litigant is still required to submit pleadings that afford the Court the opportunity to "conduct a meaningful consideration of the merits of Plaintiff's claim." The Ingrams' failure to name American Investment and Superior Bank to their Complaint is not excused.
Alston v. DiPasquale, 2001 WL 34083824, at *2 (Del.Super.) ( citing Forst v. Wooters, 1993 WL 370865, at *2 (Del.Supr.)).
The Ingrams had the opportunity either to file a lawsuit in federal court against Superior Bank, or to make a claim directly to the FDIC. In fact, the Ingrams provided a copy of a claim notification they received from the FDIC. Whether the Ingrams exercised their remedy against Superior Bank by filing a claim with the FDIC does not detract from the fact that the Ingrams had an adequate remedy available to them. Equity and good conscience dictate that the claims against LaSalle should be dismissed, because American Investment and Superior Bank are indispensable parties that cannot be joined to this action.
CONCLUSION
For the reasons stated above, the Motion for Summary Judgment of Plaintiff, LaSalle National Bank, regarding the scire facias sur mortgage action is GRANTED. In addition, LaSalle's Motion to Dismiss the claims brought by Defendants, William P. Ingram and Margaret A. Ingram, alleging breach of contract, breach of implied covenant of good faith and fair dealing, fraud, and RICO violations is GRANTED.