Court Opinion

ID: 2788552
Source: CourtListenerOpinion
Date Created: 2015-03-23 20:02:57.985665+00
Date Added: 2024-06-11T11:28:46.020369
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

RICHARD HINDIN,                                   )
                                                  )
       Plaintiff/Counterclaim Defendant,          )
                                                  )
       v.                                         )      C.A. No. 9272-ML
                                                  )
EAGLEBANK, a Maryland Corporation,                )
                                                  )
       Defendant/Counterclaim Plaintiff.          )

                                    MASTER’S REPORT

                              Draft Report: October 21, 2014
                         Exceptions Submitted: December 24, 2014
                              Final Report: March 23, 2015

John G. Harris, Esquire and David B. Anthony, Esquire, of BERGER HARRIS, LLP,
Wilmington, Delaware; Attorneys for Plaintiff.

John C. Phillips, Jr., Esquire; Lisa C. McLaughlin, Esquire; and Stephen A. Spence, Esquire of
PHILLIPS, GOLDMAN & SPENCE, P.A., Wilmington, Delaware; Attorneys for Defendant.

LEGROW, Master
         The motion before the Court challenges a notice of pendency that the plaintiff

filed in connection with a dispute between the parties regarding title to an ocean front

property in Bethany Beach. That dispute culminated in the defendant recording a deed in

lieu of foreclosure, which the plaintiff executed several months before and which

transferred title in the property to the defendant.              The plain terms of the parties’

agreement, confirmed in a series of documents signed by the plaintiff over a number of

years, show that the plaintiff defaulted on his obligations and the bank was entitled to

record the deed. Because the plaintiff has not shown there is a probability that a final

judgment will be entered in his favor on the claims challenging title to the property, I

recommend that the Court grant the motion. This is my final report.

    I.      BACKGROUND1

         The plaintiff, Richard Hindin (“Hindin”), is a resident of the District of Columbia.

Defendant EagleBank (the “Bank”), is a Maryland corporation based in Bethesda,

Maryland. The Bank is the successor in interest to Fidelity & Trust Bank (“Fidelity”).2

         On January 11, 2005, Hindin entered into a loan agreement with Fidelity,

evidenced by a Commercial Line of Credit Agreement & Disclosure (the “Credit

Agreement”), under which Fidelity loaned Hindin $2 million for an initial two-year

term.3 As security for the loan, Hindin granted Fidelity a mortgage (the “Mortgage”) on

15 Heather Lane, Bethany Beach, Delaware (the “Property”).4 The Mortgage was the

1
  The following facts are derived from the underlying complaint and the parties’ papers filed in
connection with the pending motion.
2
  Opening Br. in Supp. of EagleBank’s Mot. to Cancel Notice of Pendency (“Def.’s Br.”) at 2.
3
  Pl.’s Answering Br. in Opp’n to Def.’s Mot. to Cancel Notice of Pendency (“Pl.’s Answ. Br.”), Ex. B.
4
  Pl.’s Answ. Br., Ex. C (hereinafter cited as the “Mortgage”).

                                                   1
third lien recorded on the Property. The Bank became Fidelity’s successor in interest to

the Mortgage and the Credit Agreement on August 31, 2008.5 The maturity date of the

loan was extended several times.6

    A. The Bankruptcy Plan

        On November 27, 2009, Hindin filed a petition in the Bankruptcy Court for the

Eastern District of Virginia seeking relief under Chapter 11 of the Bankruptcy Code.7

The bankruptcy court approved Hindin’s proposed reorganization plan (the “Plan”) on

September 19, 2011.8 Section 3.9 of the Plan governed Hindin’s debt to the Bank. This

section allowed Hindin to remain in possession of the Property, but required him to make

monthly payments to the Bank until the principal and interest on the loan had been fully

amortized and the balloon payment had been made.9 Section 3.9 of the Plan also required

Hindin to execute a deed in lieu of foreclosure to be held in escrow by the Bank.10 Under

the Plan, the Bank could release the deed from escrow if Hindin (1) elected to surrender

the Property rather than meet the requirements of the Plan, or (2) defaulted on his

5
  Press Release, Eagle Bancorp, Inc., EagleBank and Fidelity & Trust Bank Merger Completed, Resulting
in a $1.4 Billion Expanded Financial Services Organization (Sept. 2, 2008), available at
https://www.eaglebankcorp.com/uploads/FT%20MergerComplete%20Release%209-2-08-FINAL.pdf.
6
  Beginning in 2007, the parties agreed to modify the terms of the Credit Agreement by extending the
maturity date at various lengths and adjusting the interest rate margin. See Def.’s Br. at 2.
7
  Id. at 3.
8
  Id.
9
  Id., Ex. D §3.9(b).
10
   3.9(c) states “[t]o effectuate the terms of the treatment of Eagle Bank’s Claim herein, the Debtor shall
execute a Deed in Lieu, in form reasonably satisfactory to The Bank, no later than fifteen (15) days after
the Effective Date, which shall be held in escrow by Eagle Bank’s attorneys of record herein (or by such
other party as the Debtor and The Bank may jointly agree upon), and which may be recorded by Eagle
Bank only under the terms set forth herein.”

                                                     2
payment obligations and failed to cure within 15 days of notice of that default.11 Hindin

delivered an executed deed in lieu of foreclosure to the Bank on January 9, 2012.12

        Contemporaneous with the filing and approval of the Plan, Hindin and the Bank

agreed to extend the loan’s maturity date until August 2012.13 Hindin acknowledges that

he defaulted under the Plan by failing to pay the balloon payment,14 received notice of the

default, and failed to cure within 15 days, and that the Bank therefore had an immediate

right to record the deed in lieu of foreclosure.15

     B. The Forbearance Agreement and Deed in Lieu

        At Hindin’s request, the Bank agreed to forbear from exercising its right to record

the deed in lieu for a period of one year (the “Forbearance Period”), subject to the terms

of a forbearance agreement executed by the parties (the “Forbearance Agreement”).16

The Forbearance Agreement was signed on September 26, 2012 and contains several

important terms that form the basis of the present dispute between the parties.

        Recitals 10 and 11 memorialized the events that prompted the Forbearance

Agreement. In recital 10, Hindin acknowledged that he failed to make payments due

under the Plan, failed to cure his default after notice, and that the Bank had the right to

11
   3.9(d) states “… Eagle Bank may also, in its discretion record the Deed in Lieu if the Debtor (i) fails to
make any payment due under the Eagle Bank loan documents to Eagle Bank and/or any other monthly
payment or amount due to any other senior lien holder coming due at any time after the Effective Date but
before the final Distribution Date; and (ii) also fails to cure such missed or late payments within fifteen
(15) days after Eagle Bank has given written notice to the Debtor and his bankruptcy counsel of such
missed payment.”
12
   Def.’s Br., Ex. F (hereinafter cited as the “Forbearance Agreement”), at ¶R.9.
13
   Id., Ex. E, dated September 13, 2011.
14
   See Hindin v. EagleBank, C.A. No. 9272-ML (TRANSCRIPT) (Oct. 21, 2014) (hereinafter “Oral
Arg.”) at 21-22; Aff. of Richard Hindin ¶ 11.
15
   Forbearance Agreement, at ¶ R.10.
16
   Id.

                                                     3
release the deed from escrow and record it.17 In recital 11, the Bank agreed to forbear

from exercising these rights until September 26, 2013, provided the terms of the

Forbearance Agreement were met.18

        Additionally, Section 2(a) of the Forbearance Agreement contains various

representations and warranties, including a second acknowledgment by Hindin that he

was in default of his obligations under the Plan and that, if the Forbearance Agreement

was not executed, the Bank had the right to release the deed from escrow and record it

“immediately and without further notice or demand.”19 Notably, Section 3(c) specified

that the Forbearance Agreement was not a waiver of Hindin’s defaults under the Plan.20

        Under Section 3(a) of the Forbearance Agreement, the Bank agreed to forbear

from exercising its rights for a period of one year, subject to the conditions set forth in

Section 3(b). Under Section 3(b), Mr. Hindin was responsible for certain payments to the

Bank during the Forbearance Period. Unlike the Plan, the Forbearance Agreement did

not require the Bank to give Hindin notice and an opportunity to cure if he defaulted on

his payment obligations.          Hindin also pledged to market the Property during the

17
   “Borrower subsequently failed to make all payments due under the Loan Documents to Lender, and
also failed to cure such default within fifteen (15) days after Lender gave written notice to Borrower and
his bankruptcy counsel of such default, and accordingly, pursuant to Section 3.9(d) of the Plan, Lender
has the right to release the Deed in Lieu from escrow and record it among the Land Records of Sussex
County, Delaware forthwith.”
18
   The relevant portion of recital 11 states: “Notwithstanding the foregoing, Borrower has requested that
Lender forbear from exercising its right to record the Deed in Lieu as aforesaid, and otherwise to exercise
any or all remedies available by law under the Existing Document (to the extent permitted under the
Bankruptcy case), and Lender has agreed to do so, subject to the terms and conditions set forth in this
Agreement.”
19
   Forbearance Agreement §2 (a).
20
   Id. § 3(c).

                                                    4
Forbearance Period and, upon sale, to pay the Bank fifty percent of the net proceeds of

the sale after satisfying the entire amount due under the Credit Agreement.21

        Finally, as required by Section 4(d) of the Forbearance Agreement, Hindin

executed an estoppel affidavit (the “Affidavit”) and an updated deed in lieu of

foreclosure.22 The new deed in lieu of foreclosure (the “Deed in Lieu”) and the Affidavit

were executed and delivered on September 26, 2012.23 In the Deed in Lieu, Hindin

acknowledged that he was conveying “all right, title, and interest of the Grantor,

including any equity or right of redemption” in the Property.24 Additionally, in the

Affidavit, Hindin swore under oath that: (1) he voluntarily executed the Deed in Lieu as

an absolute conveyance of title to the Property and not as a mortgage or other security,

(2) the conveyance was supported by valuable consideration, (3) he knew the purpose and

effect of his acts, and (4) he had the opportunity to receive legal advice from counsel of

his choosing before executing the document.25

        During the Forbearance Period, Hindin marketed the Property in an attempt to sell

it, but was unable to find a buyer. Hindin also satisfied the first and second liens on the

Property during that period using proceeds of an insurance payment resulting from a fire

21
   Id. § 3(b)(iv).
22
   Def.’s Br., Ex. G. (hereinafter cited as “2012 DIL”).
23
   Id.
24
   Id.
25
   Def.’s Br., Ex. H (hereinafter cited as “Estoppel Affidavit”) at ¶¶ 2, 4, 5, 6, 9.

                                                       5
that occurred on the Property in July 2012.26 Hindin did not timely pay all the monthly

payments and did not pay the balloon payment when the Forbearance Period expired.27

     C. The Deed in Lieu is Recorded

        The Forbearance Period expired on September 26, 2013.28 In October 2013, the

Bank notified Hindin of its intent to record the Deed in Lieu.29 Shortly thereafter, Hindin

informed the Bank he had arranged funding to pay off the loan in full, based on a payoff

figure in a statement that recently had been provided to him by the Bank.30 Shortly

thereafter, the Bank demanded $2.325 million, approximately $275,000 more than the

amount Hindin was prepared to tender.31 The Bank recorded the Deed in Lieu in early

December 2013.32

        Hindin initiated this action on January 23, 2014 with a complaint alleging counts

for breach of contract, breach of the implied covenant of good faith and fair dealing,

declaratory judgment, and cancellation of the Deed in Lieu. The following day, Hindin

filed a Notice of Pendency of Action against the Property with the Sussex County

Recorder of Deeds. The Bank filed an answer and counterclaim on March 19, 2014 and

its Motion to Cancel Notice of Pendency (the “Motion to Cancel”) on June 24, 2014.

Oral argument was held on October 21, 2014, after which I issued a draft report from the

26
   Def.’s Br. at 6.
27
   Hindin contends that the Bank assured him the Forbearance Period would be extended because the
Bank did not want to repossess the Property and undertake the obligation to sell it. See Pl.’s Opening Br.
in Supp. of his Exceptions to the Master’s Draft Report (“Pl.’s Exceptions”) at 8.
28
   Id. at 4; Forbearance Agreement §2(a).
29
   Def.’s Br. at 7, Ex. I.
30
   Id.
31
   Id. at 7.
32
   Id. at 8.

                                                    6
bench recommending that the Court grant the Motion to Cancel. Hindin filed exceptions

to the draft report and the parties briefed those exceptions. This is my final report on the

Motion to Cancel.

     II.      ANALYSIS

           A. Governing Standard

           The doctrine of lis pendens, which in Latin literally translates to “a pending

lawsuit,” is an equitable principle that puts potential buyers of real property on

constructive notice that a dispute before the court may affect title to the property.33 The

doctrine does not establish an actual lien, but merely serves as notice to third parties that

any interest they may acquire in the Property during the pendency period is subject to the

result in the litigation.34 The common law doctrine of lis pendens was replaced by statute

in 1989.35      The statute added various requirements regarding filing, recording, and

serving a notice of pendency, but the equitable principles largely remain the same.36

           Under 25 Del. C. § 1608, the Court may cancel a notice of pendency at its

discretion if it “determines that there is not a probability that a final judgment will be

entered in favor of the party recording the notice of pendency.” The party recording the

notice of pendency bears the burden of establishing such probability. Hindin and the

Bank disagree as to the governing standard this statutory language creates. Hindin, citing

Robert J. Smith Companies, Inc. v. Bark,37 argues that this Court should apply a

33
   See DiSabatino v. Salicete, 695 A.2d 1118, 1119 (Del. 1997).
34
   See id.
35
   25 Del. C. § 1614.
36
   DiSabatino, 695 A.2d at 1120.
37
   1997 WL 294442 (Del. Ch. May 28, 1997).

                                                   7
deferential pleadings-based standard of review and only should cancel the Notice of

Pendency if “the plaintiff would not be entitled to recover under any reasonably

conceivable set of circumstances.”38 The Bank, on the other hand, relies on Providence

Creek Academy Charter Sch., Inc. v. St. Joseph’s at Providence Creek39 and argues that

the proper standard of review is more akin to the standard applied on motion for a

preliminary injunction: whether the plaintiff can demonstrate a probability of success on

the merits.

       In my view, the Bank’s interpretation of the governing standard is consistent with

both the statutory language and this Court’s precedent. The reference in Section 1608 to

“probability” cannot be squared with Delaware’s “conceivability” pleadings standard.

Consistent with that conclusion, the Court in Providence Creek required the plaintiff to

demonstrate a probability of success on the merits of its claim to the property and

ultimately concluded the notice of pendency should be cancelled because the plaintiff

could not meet that burden.40 This Court applied the same standard in Pierce v. Laws.41

In contrast, in Robert J. Smith Companies, on which Hindin relies, the Court applied a

pleadings-based standard because the parties had failed meaningfully to develop the

record beyond the allegations contained in the complaint.42

38
   Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011).
39
   2006 WL 318628, at *1 (Del. Ch. Jan. 30, 2006). See also River Enterprises, LLC v. Tamari
Properties, LLC, 2005 WL356823 at *2 (Del. Ch. Feb. 15, 2005) (applying a probability of success on the
merits standard of review).
40
   Id.
41
   2003 WL 23021937, at *1 (Del. Ch. Dec. 5, 2003).
42
   1997 WL 294442, at *2-3 (Del. Ch. May 28, 1997).

                                                  8
        There are two counts in the complaint that are relevant to this Court’s analysis of

whether the notice of pendency should be cancelled:43                     (1) Hindin’s request for a

declaratory judgment that the Deed in Lieu unlawfully was recorded,44 and (2) Hindin’s

application for cancellation of the Deed in Lieu because it unlawfully was recorded.45

Hindin raises the same arguments in support of each count, namely that the Bank was not

permitted to record the Deed in Lieu because (1) the Forbearance Agreement expired

with the Forbearance Period, at which point the parties’ rights were governed by the Plan

and the Bank was precluded from recording the Deed in Lieu without giving Hindin

notice and an opportunity to cure, or (2) Hindin tendered full payment before the Deed in

Lieu was released from escrow and did not waive his right to redeem the Property. In

this case, the documents that govern the claims are unambiguous and indicate there is no

probability of success on the merits on either of these counts.

        Ambiguity does not exist simply because parties disagree on the meaning of a

term in a contract.46 Contracts are ambiguous only “when the provisions in controversy

are reasonably or fairly susceptible of different interpretations or may have two or more

different meanings.”47        In this case, Hindin does not contend that the terms of the

agreement are ambiguous, but rather that the parties’ subjective intent must be examined

as a means to vary or interpret the agreement. Such an exercise is not proper, however,

43
   Although there are four counts alleged in the complaint, the parties agree that the counts for breach of
contract and breach of the covenant of good faith and fair dealing are not relevant to an analysis of
whether to cancel a motion for pendency because those counts seek monetary damages and cannot serve
as the basis for a notice of lis pendens. See 25 Del. C. § 1601(b)(1).
44
   Verified Compl. ¶¶ 52-57.
45
   Id. at ¶¶ 58-62.
46
   Nw. Nat’l Ins. Co. v. Esmarck, Inc., 672 A.2d 41, 43 (Del. 1996).
47
   Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).

                                                     9
when the meaning of the contract is clear from its terms.48 As explained below, under the

Forbearance Agreement the Bank unambiguously had the right to record the Deed in Lieu

at the end of the Forbearance Period. Therefore, Hindin has not shown a probability that

he will succeed on the merits of his claims. Finally, even under the lower pleadings-

based standard the plaintiff contends applies, the notice of pendency still should be

cancelled. As previously mentioned, the documents unambiguously provided the Bank

with the immediate right to record the Deed in Lieu,49 rendering Hindin unable to

succeed under any reasonably conceivable set of circumstances.

        B. The Forbearance Agreement did not expire.

        Hindin first argues that the Deed in Lieu improperly was recorded because the

Forbearance Agreement expired when the Forbearance Period expired, and the Plan

governed instead.50       Hindin’s argument finds no textual support in the Forbearance

Agreement, which contains no language regarding expiration of the agreement. Hindin,

however, argues that the Bank must have intended that the Forbearance Agreement

would expire because it specifically excluded survival language from all sections of the

Forbearance Agreement except subsection 3(b)(iv), which states:

        Borrower shall pay to Lender, as a fee for Lender’s granting the requested
        forbearance, upon (and only upon) any sale of the Property, fifty percent
        (50%) of the net proceeds of such sale, after Borrower shall have fully paid
        and satisfied all indebtedness under the Credit Agreement and Mortgage,
        and after Borrower shall have paid all other costs of closing on such sale.
        This requirement shall survive the expiration of the Forbearance Period.51

48
   See e.g., Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
49
   Forbearance Agreement, at ¶ R.10.
50
   Pl.’s Exceptions at 15.
51
   Forbearance Agreement §3(b)(iv).

                                                    10
Hindin argues that under the rule of expressio unius est exclusion alteris,52 because the

final sentence of this subsection is the only language in the agreement that addressed

what happened after the expiration of the Forbearance Period, the Bank, which drafted

the agreement, intended the remaining provisions of the Forbearance Agreement to expire

when the Forbearance Period ended.53                  Consequently, Plaintiff contends, when the

Forbearance Period ended, the Plan governed the parties’ obligations and the Bank was

required to give Hindin notice and a 15 day period to cure the default before releasing the

Deed in Lieu from escrow.54 I disagree.

        The Bank’s agreement to forbear from recording the Deed in Lieu for a period of

one year does not mean that the entire agreement was nullified once the Forbearance

Period ended. That the Forbearance Agreement does not contain a survival clause does

not support a conclusion that the parties intended it to expire. To the contrary, the only

fair reading of the parties’ agreement is that they intended one of two things to happen

when the Forbearance Period expired: either Hindin’s obligation to the Bank would be

satisfied by the balloon payment, or the Bank would record the deed.

52
   Cf. Arthur L. Corbin, 3 Corbin on Contracts § 552 at 206 (1960) (explaining that under the rule of
expressio unius est exclusio alteris, “If one subject is specifically named, or if several subjects of a larger
class are specifically enumerated, and there are no general words to show that other subjects of that class
are included, it may reasonably be inferred that the subjects not specifically named were intended to be
excluded”).
53
   Pl.’s Exceptions at 15.
54
   Id. at 16-17.

                                                      11
        Hindin’s reliance on Section 3(b)(iv) is not well-founded, particularly when that

clause is read in context.55 The section of the agreement Plaintiff cites refers to the

expiration of the Forbearance Period not the Forbearance Agreement. The provision

cited is part of Section 3(b), which states the conditions upon which the Bank agreed to

forbear from exercising its right to record the Deed in Lieu. Section 3(b)(i) called for

payments of specific amounts on certain dates. Subsection 3(b)(ii) required Hindin to

continue to make regular interest payments during the Forbearance Period. Subsection

3(b)(iii) required Mr. Hindin to comply with all of his obligations under the Mortgage.

Examining this section as a whole, it is clear that the purpose of the survival clause in

Section 3(b)(iv) was to clarify that the Bank’s right to share in the sale proceeds survives

beyond the expiration of the Forbearance Period, despite its inclusion in a subsection

describing Hindin’s obligations during the Forbearance Period. In addition, that language

clarified that the Bank’s right to share in the sale proceeds continued even if the Property

was not sold in the Forbearance Period. That sole subsection, which does not refer to

expiration of the parties’ agreement, is not a sufficient basis to conclude that the

agreement expired with the Forbearance Period.

        C. Even if the parties’ conduct is governed by the Plan, the Bank had the
           right to record the Deed in Lieu.

        Even if I could conclude that the Forbearance Agreement is ambiguous and there

is a probability Hindin can show that it expired, the Bank still had the immediate right to

55
  Stonewall Ins. Co. v. E.I. du Pont de Nemours & Co., 996 A.2d 1254, 1260 (Del. 2010) (rules of
statutory construction require a single clause or paragraph of a contract to be read in context rather than in
isolation).

                                                     12
record the Deed in Lieu under the Plan.                  Hindin repeatedly acknowledged in the

Forbearance Agreement his default under the Plan and the Bank’s right to record the

Deed in Lieu under the terms of the Plan.

        For example, recital 10 of the agreement states that Mr. Hindin defaulted under the

Plan and failed to cure within fifteen days of receiving notice of default.56 Therefore,

even if the Plan governed the parties’ conduct upon expiration of the Forbearance Period,

Hindin previously acknowledged the Bank’s right to record the Deed in Lieu under the

Plan. Although Hindin contends he “cured” the default by bringing the interest payments

current at the beginning of the Forbearance Period, the plain language of the Forbearance

Agreement compels the opposite conclusion.57                    Section 3(c) of the Forbearance

Agreement specifically provides:

        Forbearance Not a Waiver: Neither this Agreement nor the fact of Lender’s
        present forbearance is, or shall be construed as, a waiver of any of
        Borrower’s defaults under the Loan, or of any of Lender’s rights and
        remedies under the Loan Documents and any prior notices provided to
        Borrower, and under applicable law. All such rights and remedies are
        reserved.

The only reasonable reading of this language in the Forbearance Agreement is that the

Bank agreed to forbear on its existing right to record the Deed in Lieu, without waiving

56
   Forbearance Agreement ¶ R. 10:
          Borrower subsequently failed to make all payments due under the Loan Documents to Lender,
          and also failed to cure such default within fifteen (15) days after Lender gave written notice to
          Borrower and his bankruptcy counsel of such default, and accordingly, pursuant to Section 3.9(d)
          of the Plan, Lender has the right to release the Deed in Lieu from escrow and record it among the
          Land Records of Sussex County, Delaware, forthwith.
57
   It is not clear how bringing the interest payments current could “cure” Hindin’s failure to make the
balloon payment.

                                                    13
its right to do so when the Forbearance Period expired. Nothing in the Forbearance

Agreement can be read as “curing” Hindin’s default under the Plan.

          D. Plaintiff waived his right of redemption.

          Finally, Hindin argues that the Bank did not have the right to record the Deed in

Lieu because he exercised his right of redemption when he tendered full payment for the

entire debt owed to the bank. He argues that any waiver to which he might have agreed

in the Deed in Lieu was not intended to take effect until the Deed in Lieu was recorded,

and the Deed in Lieu was not recorded until after Hindin tendered payment.

          Mr. Hindin’s waiver of his redemption right was effective upon the execution and

delivery of the Deed in Lieu. The plain language of the Deed in Lieu states that it is an

“absolute conveyance of all right, title and interest … including any equity or right of

redemption.”58 There is nothing ambiguous in this term of the Deed in Lieu and Hindin

offers no precedent to support his position that his waiver was not effective until the deed

was recorded. It is settled law that a deed takes effect when it is delivered, not when it is

recorded.59 Because the Deed in Lieu was fully executed and delivered to the Bank and

unambiguously stated there was no right of redemption, Hindin could not redeem the

Property after he defaulted under the Forbearance Agreement.

          Plaintiff also tries to manufacture a factual issue by contending that the waiver in

the Deed in Lieu was not knowing and voluntary. Again, however, Hindin does not state

that the terms of the Deed in Lieu are ambiguous.                             Instead, he argues that he

58
     2012 DIL (emphasis added).
59
     See e.g., Hitchens v. Ellingsworth, 94 A. 903, 904 (Del. Super. 1915).

                                                      14
misunderstood the relation of the Forbearance Agreement to the Plan. As explained

above, however, a term is not rendered ambiguous simply because the parties disagree

about its construction.60        Rather, an ambiguity exists “[w]hen the provisions in

controversy are fairly susceptible of different interpretations or may have two or more

different meanings.”61 Moreover, the fact that Hindin misunderstood the effect of the

Forbearance Agreement does not mean he misunderstood the terms of the waiver.

       Hindin’s argument about whether his waiver was knowing and voluntary also

contradicts the terms of the agreements he signed. Hindin swore under oath in the

Affidavit that the Deed in Lieu transaction “was made at the request of [Hindin] as his

free and voluntary act.”62 The Affidavit states that Hindin was not “acting under any

misapprehension as to the effect of such acts, nor under any duress, undue influence, or

misrepresentation by [the Bank],” and had “been afforded the opportunity to be

represented by legal counsel of [Hindin’s] choosing.”63 Therefore, Hindin has not shown

there is any probability of success in demonstrating that the waiver of his redemption

right was not effective.

       E. The balance of the equities does not weigh in Mr. Hindin’s favor.

       Alternatively, Hindin argues that even if he cannot establish a probability of

success on the merits, the Court should exercise its discretion under Section 1608 to deny

the motion “based on the equities.” He argues that discovery is necessary to reveal the

parties’ subjective intent in entering into the Forbearance Agreement, and furthermore,
60
   Nw Nat’l Ins. Co. v. Esmark, Inc., 672 A.2d 41, 43 (Del. 1996).
61
   GMC Capital Invs., LLC v. Athenian Venture Partners I, LP, 36 A.3d 776, 780 (Del. 2012).
62
   Estoppel Affidavit at ¶ 5.
63
   Id. at ¶ 9.

                                                  15
that the Bank would not be prejudiced by “maintaining the status quo” during discovery.

I find these arguments unpersuasive.

        In this case, the equities do not balance in Mr. Hindin’s favor. As previously

stated, the language of the contract clearly and unambiguously gave the Bank the right to

record the deed.        It is a settled principle of contract law that when a contract is

unambiguous, extrinsic evidence may not be used to interpret the intent of the parties.64

Therefore, the subjective intent of the parties is wholly irrelevant and discovery on the

issue is not necessary before the Court resolves the Motion to Cancel. Hindin’s argument

also ignores the indisputable damage a notice of pendency carries. Non-meritorious

notices can cause substantial irreparable harm by impairing the marketability of the

disputed property.65 This potential for abuse was one of the driving forces behind the

decision of the General Assembly to enact a statute specifying the conditions necessary to

maintain a notice of pendency.66 To maintain a meritless notice of pendency would

require the Bank to continue to bear the cost and risk associated with holding the

Property for an indefinite period of time.

64
   See e.g., Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
65
   See DiSabatino v. Salicete, 695 A.2d 1118, 1119-20 (Del. 1997) (citing Vilone Sea & Pines Consol.
Corp., 541 A.2d 135 (Del. Ch. 1988) (rev’d on other grounds)).
66
   See e.g., id. at 1120 (“[The statute] was intended to codify in clear terms the protections to be afforded
to real property owners against unscrupulous plaintiffs, who might misuse the lis pendens doctrine and
cause irreparable harm to legitimate titleholders”).

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Conclusion

      For the foregoing reasons, I recommend that the Court grant the Defendant’s

motion to cancel the notice of pendency. This is my final report and exceptions may be

taken in accordance with Court of Chancery Rule 144.

                                              /s/ Abigail M. LeGrow
                                              Master in Chancery

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