Title: Brown v. Stornawaye Capital, LLC, et al.

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
SHIRLEY HARLEY BROWN,  
 
Intervenor Below, 
Appellant, 
 
v. 
 
STORNAWAYE CAPITAL 
LLC/NEW FALLS 
CORPORATION, 
 
Plaintiff Below, 
Appellee, 
 
v. 
 
SANDRA SMITHERS,  
 
Defendant Below, 
Appellee. 
§ 
§  No. 253, 2012 
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§  Court Below-Court of Chancery 
§  of the State of Delaware 
§  
§  C.A. No. 18845   
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Submitted:  September 7, 2012 
 
Decided:  
October 24, 2012 
 
Before BERGER, JACOBS, and RIDGELY, Justices. 
 
 
O R D E R 
 
 
This 24th day of October 2012, upon consideration of the briefs of the 
parties, and the record below, it appears to the Court that: 
 
(1) The intervenor-appellant, Shirley Harley Brown (“Brown”), 
appeals from the Court of Chancery’s April 27, 2012 order denying her 
motion for summary judgment and granting the motion for summary 
 
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judgment of the plaintiff-appellee, Stornawaye Capital LLC (“Stornawaye”) 
under Court of Chancery Rule 56.1  We find no merit to the appeal.  
Accordingly, we affirm.2 
 
(2) The property that is the subject of this case is located at 1008 
North Walnut Street, Wilmington, Delaware (the “Property”).  Brown’s 
mother, Rachel Harley (“Harley”), and her husband owned the Property as 
tenants by the entirety.  At the time of her husband’s death in 1978, Harley 
became the sole owner of the Property.3  On June 26, 1991, Harley executed 
a deed conveying the Property to another daughter, Sandra Smithers 
(“Smithers”).  The deed was properly executed and filed in the office of the 
New Castle County Recorder of Deeds.  The record reflects that there was 
no objection to the conveyance of the Property to Smithers at that time, and 
that Brown has been aware of the conveyance since at least 1993.  There is 
no evidence that Harley suffered from any mental impairment at the time she 
conveyed the Property to Smithers. 
                                                 
1While this case was pending in the Court of Chancery, New Falls Corporation, 
Stornawaye’s successor-in-interest, was substituted as the proper party plaintiff.  
Stornawaye’s counsel has continued to litigate the case on behalf of both parties. 
2 The defendant-appellee, Sandra Smithers, has not participated in the proceedings on 
appeal.   
3 The Register of Wills documentation reflects that the Property passed to Harley as the 
surviving tenant by the entirety. 
 
3
 
(3) In September 1995, Stornawaye’s predecessor-in-interest, 
Delaware Trust Company, granted a loan to Smithers for her shoe business.4  
The loan was secured by personal guarantees by both Smithers and her sister 
Mary, and also by a mortgage on the Property.  As with the deed conveying 
the Property to Smithers, the loan documents were properly executed and 
recorded.                
 
(4) The record before us indicates that, in 1999, Brown petitioned the 
Court of Chancery to be appointed the guardian of Harley.  Although it is 
unclear why, Brown’s petition was denied.  Instead Mary was appointed 
Harley’s guardian.  The order granting the guardianship noted that, at that 
time, Harley suffered from dementia caused by Alzheimer’s disease.  There 
is no evidence that during the guardianship proceedings Brown made any 
argument challenging the 1991 conveyance.  The guardianship matter and 
the instant case were consolidated in the Court of Chancery in 2004.  Not 
until then did Brown first question the validity of the 1991 conveyance. 
 
(5) Smithers defaulted on the loan, and foreclosure proceedings were 
initiated in July 2000.5  On February 12, 2010, the Court of Chancery ruled 
                                                 
4 Thereafter, the loan was bought and sold on the secondary market over the course of at 
least 17 years.   
5 The foreclosure complaint was initially filed in the Superior Court, but, because the 
mortgage in question was not filed under seal, the case was transferred to the Court of 
Chancery for proceedings in equity. 
 
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provisionally in favor of Stornawaye and against Smithers, but permitted 
Brown to intervene to show cause why summary judgment should not be 
entered in Stornawaye’s favor.  On January 24, 2012, after Brown had filed 
several motions,6 and after full briefing on the parties’ cross-motions for 
summary judgment, the Court of Chancery held a hearing. 
 
(6) The transcript of that hearing reflects that both Brown and 
Stornawaye were given ample opportunity to present arguments on their 
respective motions. The essence of Brown’s claim was that Harley was not 
competent at the time she conveyed the Property to Smithers and/or that she 
was the victim of undue influence by Smithers.  Brown also claimed that, 
before the conveyance, she and her siblings had executed an “estoppel by 
deed,” that was intended to prevent any one sibling from gaining an 
advantage over the others with respect to their parents’ property.  Although 
the Vice Chancellor requested a copy of the “estoppel by deed,” it was not 
produced at the hearing, nor has any such document ever been produced. 
 
(7) The Vice Chancellor’s rationale for his decision on the parties’ 
cross-motions for summary judgment is set forth in his April 27, 2012 order, 
and in his bench rulings following the January 24, 2012 hearing.  Noting that 
                                                 
6 Brown’s motions included a motion for summary judgment as a matter of law/for 
failure to state a claim upon which relief can be granted, a motion to show cause-
contempt, a motion to set aside conveyances and encumbrances, and a motion for default 
judgment. 
 
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Brown had waited an inordinate amount of time to pursue her claim and that 
Stornawaye, as well as its predecessor-in-interest, had properly relied on the 
validity of the documentation in the public record, the Vice Chancellor 
concluded that Brown had failed to show any cause for not entering 
summary judgment in favor of Stornawaye and against Smithers. 
 
(8) In this appeal, Brown makes several claims, which take the form 
of five questions that may fairly be summarized as follows:  (a) the Court of 
Chancery’s April 27, 2012 order granting Stornawaye’s motion for summary 
judgment was contrary to its order of February 12, 2010 granting her motion 
to intervene; (b) the Court of Chancery failed to address all of her motions at 
the January 24, 2012 hearing; (c) the Court of Chancery failed to address the 
issue of Harley’s incompetence at the time the Property was conveyed to 
Smithers; and (d) the Court of Chancery legally erred and/or abused its 
discretion when it entered summary judgment in favor of Stornawaye. 
 
(9) Brown first claims that the Vice Chancellor’s April 27, 2012 
order was contrary to his previous order of February 12, 2010.  We have 
reviewed both orders and find no inconsistency.  The first order permitted 
Brown to intervene and present evidence concerning why summary 
judgment should not be entered in Stornawaye’s favor.  In that order, the 
Vice Chancellor noted that Brown would have to overcome “major 
 
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obstacles” to her claims, including her failure to object to the conveyance in 
a timely fashion and the fact that the documentation evidencing the 
transactions was facially valid.  At the hearing, Brown argued that Harley 
was incompetent and/or the victim of undue influence.  Ultimately, the Court 
of Chancery rejected that argument, but that does not make the Court of 
Chancery’s two orders inconsistent.  We conclude that Brown’s first claim is 
without merit. 
 
(10) Brown’s second claim is that the Vice Chancellor failed to 
address all of her motions at the hearing.  The Vice Chancellor’s 
December 20, 2011 letter to the parties, which listed the matters to be taken 
up at the hearing, encompassed all of Brown’s motions.  It appears that the 
Vice Chancellor viewed all of Brown’s motions as subsumed within his 
ultimate decision on the cross-motions for summary judgment.  We find no 
abuse of discretion in the Vice Chancellor addressing Brown’s motions in 
that fashion.  Brown’s second claim also lacks merit.  
 
(11) Brown’s third claim is that the Vice Chancellor failed to address 
the issue of Harley’s incompetence at the time the Property was conveyed to 
Smithers.  The transcript of the hearing reflects that the Vice Chancellor 
directly and thoroughly considered that issue, but concluded that there was 
“scant” evidence to support the claim, which he therefore rejected.  We find 
 
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no abuse of discretion by the Vice Chancellor in so finding, and therefore, 
conclude that Brown’s third claim also must fail. 
 
(12) Brown’s fourth, and final, claim is that the Vice Chancellor erred 
and/or abused his discretion by entering summary judgment in favor of 
Stornawaye.  This Court reviews de novo the Court of Chancery’s grant of 
summary judgment under Court of Chancery Rule 56.7  In doing so, this 
Court determines whether the record establishes that there is no genuine 
issue of material fact, thus entitling the moving party to judgment as a matter 
of law.8  This Court will accept the Court of Chancery’s factual conclusions 
as long as they are supported by the record and are the product of an orderly 
and logical reasoning process.9   
 
(13) We have carefully reviewed the parties’ submissions, the Court 
of Chancery’s rulings, and the record in this case.  We conclude that the 
Vice Chancellor properly found that Brown failed to demonstrate any reason 
why the court should not enter summary judgment in favor of Stornawaye 
and against Smithers in accordance with its February 12, 2010 order.  We 
                                                 
7 Emerald Partners v. Berlin, 726 A.2d 1215, 1219 (Del. 1999). 
8 Id. 
9 Id. 
 
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further conclude that the Vice Chancellor properly denied Brown’s motion 
for summary judgment.  Accordingly, Brown’s fourth claim is without merit. 
 
NOW, THEREFORE, IT IS ORDERED that the judgment of the 
Court of Chancery is AFFIRMED.10 
 
 
 
 
 
 
 
BY THE COURT: 
 
 
 
 
 
 
 
/s/ Jack B. Jacobs 
 
 
 
 
 
 
 
        Justice    
 
 
                                                 
10 We do not address Brown’s purported petition for a writ of habeas corpus as any such 
petition is irrelevant to this appeal.