Court Opinion

ID: 4164154
Source: CourtListenerOpinion
Date Created: 2017-04-27 21:09:11.654153+00
Date Added: 2024-06-11T14:24:08.775657
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

LAWRENCE E. MERGENTHALER
a resident of the State of Delaware,

Plaintiff,

C.A. No. 09C-09-203 AML

TRIUMPH MORTGAGE CORP.
a Delaware Corporation,

Defendant.

Submitted: April 6, 2017
Decided: April 27, 2017

COMMISSIONER’S REPORT AND RECOMMENDATION ON
DEFENDANT’S MOTIONS TO OUASH WRIT OF ATTACHMENT Fl. FA.

John A. Sergovic, Jr., Esq., SERGOVIC & CARMEAN, P.A., 30 E. Pine Street,
Ste. 1, P.O. Box 751, Georgetown, DE 19947. Attorney for Plaintiff.

Richard L. Abbott, Esq., ABBOTT LAW FIRM, 724 Yorklyn Road, Suite 240,
Hockessin, DE 19707. Attorney for Defendant.

MANNING, Commissioner:

Pursuant to 10 Del. C. § 512 and Superior Court Civil Rule l32(a)(4), the
above captioned case Was referred to the undersigned Commissioner on April 6,
2017, for findings of fact and a recommendation. Accordingly, I have reviewed
the parties’ submissions and a transcript of the hearings held on March 2nGI and Sth,
2017. Based on the record before me, I find and recommend as follows:

Facts and Procedural Background

The facts in this action are not in dispute; the question presented is purely
one of laW. In summary: on January 15, 2010, LaWrence E. Mergenthaler obtained
a default judgment against Triumph Mortgage Corporation, in the NeW Castle
County Superior Court, for failing to pay on two loans totaling over $207,000. On
November 18, 2010, a Testatum Fieri Facias (“Fi. Fa.”) Was filed transferring the
judgment to both Kent and Sussex counties.l Between April 4, 2010 and
December 2l, 2011, Mergenthaler filed numerous Writs of Attachment Fi. Fa.
garnishment on various individuals and businesses in an attempt to satisfy the debt.
Mergenthaler filed an additional Writ of garnishment on February 7, 2013».2

On November 29, 2016, Mergenthaler filed a Praecipe seeking the Writ of
Attachment presently at issue. On December 2, 2016, the Writ Was issued and

served by the sheriff upon Merrill Lynch. The Writ Was addressed to “ACCOUNT

 

1 D.I. #6 and 7.

2 D.I. #90

MANAGER, MERRILL LYNCH, of 1201 Market Street, Suite 2000, Wilmington,
Delaware 19801 (“Garnishee”) to garnish any liquidation of the pledge of stock of
Kathy L. Galvin, Account No. 753-97256, owed her indebtedness to Defendant,
Triumph Mortgage Corporation to Plaintiff, Lawrence E. Mergenthaler, under the
judgment in this action.” The account was subsequently liquidated and by
agreement of the parties, the proceeds were deposited with the Prothonotary
pending a final, non-appealable ruling in this action.

It is undisputed that at no time did Mergenthaler return to this Court and
seek to renew the judgment prior to issuing the 2016 writ.

Defendant’s Arguments

Triumph has filed two separate motions to quash the writ of attachment
served on Merrill Lynch. In its first motion, Triumph argues that because “Merrill
Lynch Was merged into Bank of America Corporation” on October l, 2013, it is
immune from the attachment laws of this State pursuant to 10 Del. C. § 3502(b).3
In its second motion, Triumph argues that the judgment is stale under 10 Del. C. §
5702(a) “due to its 5+ year age at the time the Writ was issued,” making it
“invalid.” Additionally, Triumph argues that because no writs of attachment were

issued within the first year and one day of the judgment being entered on January

 

3 10 Del. C. § 3502(b) Banks, trust companies, savings institutions and loan associations, except
only as to a wage attachment against the wages of an employee of the bank, trust company,
savings institution or loan association, shall not be subject to the operations of the attachment
laws of this State.

15, 2010, the judgment is stale and the common law prevents further execution
attempts. Mergenthaler disputes this interpretation of the law and argues that the
five year window for collecting on a judgment-_without the need to renew it_
was expanded to 10 years with the adoption of Superior Court Civil Rule 69(a)
when it is read in conjunction with 10 Del. C. § 4711.

BM§

Although the issue was not briefed, the issue of standing was raised by the
parties during argument before the Court. Because standing is a threshold issue, I
will address it first. At the hearing, Mergenthaler briefly argued that Triumph did
not have sufficient standing to “raise any issues with respect to [its] praecipe on
[Merrill Lynch].”4 Conversely, Triumph contended that “it’s our money,” that it’s
“within the zone of interest” to be protected and that if the garnishment is allowed
to proceed, it will cause injury.5

As a general matter, “[s]tanding is the requisite interest that must exist in
the outcome of the litigation at the time the action is commenced.”6 As further
explained by the Delaware Supreme Court:

The concept of standing, in its procedural sense, refers to

the right of a party to invoke the jurisdiction of a court to
enforce a claim or redress a grievance. lt is concerned

 

4 Tr. at 30.
5 Tr. at 47.

6 Schoon v. Smi¢h, 953 A.2d 196, 201 (Del. 2008).
4

only with the question of who is entitled to mount a legal

challenge and not with the merits of the subject matter of

the controversy. In order to achieve standing, the

plaintiffs interest in the controversy must be

distinguishable from the interest shared by other

members of a class or the public in general. state

courts apply the concept of standing as a matter of self-

restraint to avoid the rendering of advisory opinions at

the behest of parties who are mere intermeddlers.317

Applying the above law to the facts of this case, it is evident that Triumph
has standing to at least object to the garnishment levied against Merrill Lynch by
Mergenthaler. There is no dispute among the parties that the money in question
belongs to Kathy L. Galvin who, in turn, had pledged it as collateral to Triumph.
According to information in the docket, Triumph sent a letter to Merrill Lynch
requesting that the stock be liquidated and turned over to Triumph because Galvin
had defaulted on her loan obligations8 Thus, if the money is garnished and turned
over to Mergenthaler, Galvin and Triumph would, arguably, suffer injury. As to
this issue, Mergenthaler’s argument is without merit.
Merrill Lvnch’s Status
Triumph’s argument that Merrill Lynch is exempt from attachment under

Delaware Law is misplaced. Mergenthaler presented substantial evidence in his

Response establishing that the entity served was, in fact, Merrill Lynch, Pierce,

 

7 Schoon, 953 A.2d 201 (internal quotation marks omitted).

8 D1#96, “Exhibit 1.”

Fenner & Smith (“MLPF&S”), who is a registered broker dealer and a separate
Delaware Corporation from Merrill Lynch. Exhibit 3 to Mergenthaler’s Response
is a copy of the merger between Merrill Lynch and Bank of America purporting to
show that MLPF&S was not merged into or otherwise absorbed as part of the
merger. Additionally, in Exhibit 4, Mergenthaler provided a list of all Delaware
banking institutions, as recognized by the State Banking Commissioner_nowhere
on the list is MLPF&S identified as a bank, Finally, in Exhibit 5, Mergenthaler
attached a copy of the 1958 Certificate of Incorporation of MLPF&S showing that
it “shall not in any jurisdiction carry on the business of banking. .. .” Aside from
the merger with Bank of America, Triumph has presented no evidence that
MLPF&S is engaged in the business of banking, is a trust company, savings
institution or loan association, Based on the information presented, I am Satisfied
that MLPF&S is subject to the attachment laws of this State.
Validity of the Writ

The ultimate question before the Court is whether or not a valid execution
writ may issue upon a judgment that is more than five years old, but less than ten
years old, that has never been renewed. My review of the applicable statutes,
Superior Court Rules and decisional-law indicates that this is a question of first-

impression

Triumph argues that “[b]ecause the Judgment was over 5 years old when the
Writ was requested and issued in November of 2016 (nearly 7 years later),
execution process was not issuable and therefore the Writ was a legal nullity.” In
the alternative, Triumph also argues that based on the last sentence of Section
5702, (“[a]s to all other cases the law shall remain unaffected”), that the common
law year and a day rule applies, making the writ invalid because no execution
process was issued during that initial period.

In response, Mergenthaler argues that his filing of the two Testatum Fi Fa
documents with the Court was a form of execution process. I do not find this
argument persuasive. The documents merely served to transfer the judgment, as a
matter of record, to the prothonotary in Kent and Sussex counties so writs of
execution could then be subsequently issued.

lt is true, as argued by Triumph, that at common law there was a rebuttable
presumption of full payment after a year and a day, and that no execution process
could issue if none had been made within that same time period. However, that
rule, and the arcane process once used to circumvent it, known as vice comes,9 was

superseded by the adoption of 10 Del. C. § 5072 in 1857.10

 

9 2 Victor B. Wolley, Practice In Civil Actions, § 1312 at 890 (WM. W. Gaunt & Sons, Inc.
1985).

10 “Woolley explains that the right to issue execution process upon a judgment at any time after
a year and a day and within the life of the judgment, without scire facias, if a vices comes had

7

10 Del. C. § 5072 states:
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
installment of a judgment within 5 years from the time
when such installment fell due.

This section shall only apply to cases when no execution
has been previously issued to collect such judgment or
installment, 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 installment, 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.
In Knott v. LVNV Funding, the Delaware Supreme Court examined the

history of execution writs and Section 5072 in light of Victor B. Woolley’s well

known treatise on Delaware civil practice.11 The holding in Knott is not on-point

 

been entered thereon, maintained in Delaware until the enactment of 5072.” Knotl v. LVNV
Funding, LLC, 95 A.3d 13, 17 (Del. 2014) (internal quotation marks and punctuation omitted).

11 95 A.3d 13, 18 (Del. 2014) (citing Victor B. Woolley, Practice in Cz`vil Action and
Proceedings in the Law Courts in the State of DelaWare (1906)).

with the specific issue presented here.12 However, the Court did cite to Woolley
for the proposition that “[Section 5072] extended the time period when execution
could be issued without resorting to scirefacias, from one year and one day, to five
years.”13 Accordingly, the fact that Mergenthaler did not issue any type of
execution process_on anyone_ within the first year and one day after entry of the
judgment was entered, is no longer relevant under the current State of the law. The
fact that the judgment had not been renewed after five years had elapsed is a
separate issue.

Turning to the facts of this case, there is no dispute that the writ at issue here
was issued upon a judgment more than five years old, but less than ten, that had
not been renewed in any way. In his motion, Mergenthaler argues that the writ “is
a valid and timely execution levied within the time in which the lien against real
property under 10 Del. C. § 4711 applies to judgments, without renewal.” And,
most germane to the issue here, Mergenthaler writes that “Superior Court Rule
69(a) and 10 Del C. § 561(d) authorizes the Garnishment served upon MLPF&S

before the running of 10 years... notwithstanding 10 Del C. § 5072.”14 During

 

12 In Knott, the judgment creditor moved to renew the judgment nine years after it was entered_
but before attempting to execute on it. Thus, the Court in Knott was not presented with the
question of what effect Rule 69(a) has on the period during which an execution writ can be
issued before needing to refresh the judgment

13 Knon, 95 A.3d 18.

14 (emphasis added).

argument, Triumph disputed this construction, calling it “an absurd proposition”

”15

and that “implied repealer” is “heavily disfavored in Delaware. Hyperbole

aside, Triumph’s argument goes directly to the heart of the issue: can a court rule

validly contravene statutory law?

Validitv of Rule 69(a)
“There is no doubt at all that courts, particularly in Delaware, have long had

the inherent authority to promulgate rules governing practice before them, and, by

9316

such rules, to require the taking of certain steps within certain times. Ultimate

authority for the Superior Court to issue rules is found in 10 Del. C. § 561. The

statute provides:
Rules of Court in civil actions.

(a) The Judges of the Superior Court, or a majority of
them, may, from time to time, adopt and promulgate
general rules which prescribe, establish and regulate the
form, issuance and return of process and writs, the form
and system of pleading, and all other practice and
procedure with respect to the commencement, trial,
hearing and determination of civil actions in the Superior
Court.

(b) Such rules shall be for the purpose of securing the
just and, so far as possible, the speedy and inexpensive
determination of every such action. The rules shall not
abridge, enlarge or modify any substantive right of any

 

15 T. at37_38.

16 State ex rel. Massey v. Terry, 148 A.2d 102, 105 (Del. 1959) (holding that the county board of
canvass, as a judicial tribunal, has the inherent power to make rules and regulations governing
the proceedings before it).

10

party, and they shall preserve the right of trial by jury as
at common law and as declared by the statutes and
Constitution of this State.

(c) The rules so adopted and promulgated, and all
amendments thereof, shall, after they have taken effect,
supersede all statutory provisions in conflict or
inconsistent therewith.

(d) Any inconsistency or conflict between any rule
promulgated under the authority of this section or prior
law, and any of the provisions of this Code or other
statute of this State dealing with practice or procedure in
the Superior Court, shall be resolved in favor of such rule
of court. Nothing in this Code, anything therein to the
contrary notwithstanding, shall in any way limit,
supersede or repeal any rule heretofore promulgated
governing practice or procedure in civil actions in the
Superior Court.

(e) As used in this section, the phrase "civil actions in
the Superior Court" includes proceedings of every kind
or character within the jurisdiction of that Court except
criminal proceedings.

Thus, Section 561(a) gives the Superior Court the authority to enact rules of
“practice and procedure” that might contravene “prior law,” so long as, pursuant to
subsection (b), the rules do not “abridge, enlarge or modify any Substantive right of
any party.” Under subsection (c), “once rules are adopted, they supersede all

statutory provisions in conflict or inconsistent therewith.”17 And, subsection (d)

“provides that any inconsistency or conflict between a court rule and a statute be

 

11 Flemmg v. Jackson, 888 A.2d 321, *1 (Del. 2005).

ll

resolved in favor of the court rule.”18 By enacting Section 561, the legislature
delegated to the Superior Court the authority to overrule its prior legislation, but
only as to matters of practice and procedure within the Court itself. Undoubtedly,
the legislature did not wish to concern itself with the task of enacting the day-to-
day operating rules of the Superior Court.

Superior Court Civil Rule 69 provides:

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.

Therefore, it would appear, with the adoption of Rule 69(a), the time period
during which a judgment may be executed upon was enlarged to that as the same
time period in which the judgment operated as a lien on the real property of the
judgment debtor.

However, the language in Rule 69(a) only becomes applicable to the facts of
this case when read in conjunction with 10 Del. C. § 4711. That statute provides,

in pertinent, part:

No judgment for the recovery of money entered or
recorded in the Superior Court... shall continue a lien

 

111 ld.
12

upon real estate for a longer term than 10 years next
following the day of entry or recording of such
judgment... unless, within the term of 10 years, the lien
of such judgment is renewed. ..

No judgment which is a general lien, including
judgments for costs and judgments in favor of the State
or any political subdivision thereof, shall remain a lien
for more than the 10-year period hereinabove provided,
unless renewed for a further 10-year term in accordance
with the provisions of this section.

Thus, when read together, the plain language of Rule 69(a) unequivocally
modifies the time period during which an execution upon a judgment can be issued
so that it coincides with the same period of time during which the judgment
operates as a lien upon the real estate of the judgment debtor_ ten years per
Section 4711.

It is well established that the five or ten year period does not act as a
limitation upon the validity of the judgment itself. In Gamles Corp. v. Gibson, the
Delaware Supreme Court held that after the expiration of 10 years, although still
valid and enforceable, the judgment no longer operated as a lien upon the real
estate of the judgment debtor, unless renewed upon motion to the Court.19
Although the judgment in Gamles had not been renewed after ten years, the Court

held that the wage attachment_still then operative_survived the expiration of the

ten year period when the judgment operated as a lien against real estate under

 

19 Gamels CoRP. v. Gibson, 393 A.2d 1269, 1272 (Del. 2007).

13

Section 4711. The Court held that judgments in DelaWare do not expire, “[t]here
is only a rebuttable common law presumption of payment after twenty years.”20

As previously discussed, Rule 69 may supplant a conflicting statute, but only
if it is one of “practice and procedure.” To frame the question in the context of the
facts here: is the expansion of the ability to execute on the judgment, from five
years to ten, without the need to renew the judgment, a substantive right, or one
merely a matter of procedure? Again, no Delaware Court appears to have
addressed this specific question.

In Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., the United
States Supreme Court examined a conflict between the Federal Rules of Civil
Procedure and New York State law.21 The Court noted that “Congress authorized
this Court to promulgate rules of procedure subject to its review, 28 U.S.C. §
2072(a), but with the limitation that those rules shall not abridge, enlarge or modify

any substantive right.”22 Notably, the pertinent statutory language of 10 Del. C. §

561(b) and 28 U.S.C. § 2072(b) is identical. 23

 

211 Id.
21 559 U.S. 393, 407 (2010) (internal quotation marks omitted).

ZZId

23 28 U.S.C. § 2072: Rules of procedure and evidence; power to prescribe

(a) The Supreme Court shall have the power to prescribe general rules of practice and procedure
and rules of evidence for cases in the United States district courts (including proceedings before
magistrate judges thereof) and courts of appeals.

14

Expounding upon the doctrine, the Court held that “the Rule must really
regulate procedure,_the judicial process for enforcing rights and duties
recognized by substantive law and for justly administering remedy and
redress. . ..”24 Most relevant to this case, the Court also noted that the “test is not
whether the rule affects a litigant’s substantive right; most procedural rules do.
What matters is what the rule itself regulates: if it governs only the manner and
means by which the litigants’ rights are enforced, it is valid, if it alters the rules
and decision by which the court will adjudicate those rights, it is not.”25

Applying the above framework and guidance to the facts here, l am satisfied
that Rule 69(a) only modified the method by which a litigant’s rights are
enforced_i.e. the manner and means in which a judgment can be collected. Rule
69(a) is not a modification of the substantive rights governing the actual

adjudication of the judgment itself. The Rule does not create, abridge or expand

any type of substantive right.26 Rather, it merely regulates how often a judgment

 

(b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with
such rules shall be of no further force or effect after such rules have taken effect.

(c) Such rules may define when a ruling of a district court is final for the purposes of appeal
under section 1291 of this title.

24 Shady Grove, 559 U.S. 407, (internal quotation marks omitted).

25 Ia’. (internal quotation marks omitted).

26 In Fleming v. Jackson, 888 A.2d 231 (Del. 2005), the DelaWare Supreme Court confronted a
conflict between Statutory law and court rules of procedure that, arguably, pushed the issue even
further than presented here. In Fleming, the Court held that Superior Court Civil Rule 6(a)
validly extended the two-year statute of limitations imposed under 10 Del C. § 8119 for filing a

15

creditor must come back before the Court to seek permission to continue collecting
on an otherwise valid debt. Whether the judgment is initially valid for a period of

five years or ten years before it needs to be renewed is a matter of procedure within

the Court’s authority to regulate.
Ambiguig
In Knott, the Delaware Supreme Court recognized that the language of
Section 5072 is ambiguous.27 Decisional-law from this Court has grappled with
the interpretation and implementation of Section 5072 for some time. In Delmarva
Auto Fin. Ser'vices v. White, Judge Witham wrote that “[t]his Court respectfully
observes that it could be argued that [Section] 5072 does in fact require a judgment

creditor to revive their judgment after five years, based on the Statute’s use of the

d a z128

language ‘[a]s to all other cases the law shall remain unaffecte Judge

Witham also wrote that “it could be argued that [Section] 5072 implicitly requires
writs of scire facias/rules to show cause after five years in order to revive [a]

judgment.”29

 

personal injury claim because the last day of the two-year period_when plaintiff tried to file_
fell on a day the court was closed.

27 See Knott, Supra at *16.
28 2014 wL 4230399, *9, (Del. super August 15, 2014).

29 Id.
16

The specific question in Delmarve Aato Fin. Services, whether a judgment
transferred to the Superior Court from the Court of Common Plea needed to be
refreshed by way of a motion, or a writ of scirefacias/rule to show cause after five
years, is not on-point with the issue here. Analyzing the convoluted nature of the
law in this general area, Judge Witham authored a detailed and lengthy decision
with the expectation that it might be appealed to the Delaware Supreme Court who
would then provide definitive guidance; unfortunately, it was not appealed.

I recognize that my decision in this matter is at odds with Judge Witham’s
comments. However, I would respectfully suggest that Judge Witham’s comments
regarding Section 5072 were dicta to the holding in his opinion. Additionally, I
think it is important to note that Judge Witham only briefly addressed Rule 69(a),
noting that it was adopted in 1962 and other than abolishing the writ of vice comes,
it “did little to expand upon execution practice in Delaware. ...”30 Most critically,
because the issue was not before the Court, Judge Witham did not discuss or
analyze the effect of Rule 69(a) on executions in light of Section 4711. For these
reasons, I believe my Report and Recommendation in this matter stands apart

from, rather than contrary to, the holding in Delmarva Aato Fin. Services.

 

311 Id. at *3.

17

Conclusion
For the forgoing reasons, l find that Rule 69(a) validly created a uniform
period of 10 years during which Superior Court judgments31 do not need to be
renewed prior to issuing execution writs. Accordingly, Triumph’s Motions to

Quash Writ of Attachment Fi. Fa., should be DENlED.32

IT IS SO RECOMMENDED.

  

 

Bradley V. Man ing,
Commissioner

Original to Prothonotary
cc: All counsel via File & Serve

 

31 Under Superior Court precedent, judgments transferred from the Court of Common Pleas are
subject to a different procedure under 10 Del. C. § 5073. The specific language of the statute has
been read as requiring a motion of scire facias to renew after 5 years has elapsed. See Delmarva
Auto Fin. Services, sapra, at *12 (concluding that Sections 5072 and 5073 require different
procedures to renew a judgment prior to execution after five years has elapsed); see also Knott,
supra at *20 (declining to definitively rule on this issue because it Was not presented to the
Superior Court and thus waived on appeal).

32 One final note: it is apparent to me that the law in this area has developed over the last century
and a half in a disj ointed and piecemeal fashion. I strongly echo the comments by Chief Justice
Strine in footnote #55 of his dissent in J.M. Shrewberry, et al., v. T he Bank of New York Mellon,
No. 306, 2016 (Del. April 17, 2017), calling for a comprehensive evaluation and overhaul of the
law in this area.

18