Court Opinion

ID: 4689673
Source: CourtListenerOpinion
Date Created: 2021-05-25 13:03:22.923033+00
Date Added: 2024-06-11T09:02:21.669886
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MARY JANE LONG, as Executrix of          )
the Estates of David G. Moser and        )
Patricia Ann Moser, and                  )
GLEN MOSER, INC.,                        )
                                         )         C.A. No. N20C-05-022 JRJ
      Plaintiffs/                        )
      Counterclaim Defendants,           )
                                         )
      v.                                 )
                                         )
FULTON BANK, N.A.,                       )
                                         )
      Defendant/                         )
      Counterclaim Plaintiff.            )

                          MEMORANDUM OPINION

                         Date Submitted:     February 24, 2021
                         Date Decided:       May 24, 2021

           Upon Defendant/Counterclaim Plaintiff Fulton Bank, N.A.’s
  Motion for Judgment on the Pleadings: GRANTED IN PART AND DENIED
                                  IN PART

David A. White, Esquire, Matthew J. Rifino, Esquire, McCarter & English, LLP,
405 North King Street, Suite 800, Wilmington, Delaware 19801, Attorney for
Plaintiffs/Counterclaim Defendants.

Jared T. Green, Esquire, R. Karl Hill, Esquire, Seitz, Van Ogtrop & Green, P.A., 222
Delaware Avenue, Suite 1500, Wilmington, Delaware 19801, Attorney for
Defendant/Counterclaim Plaintiff.

Jurden, P.J.
                                   I. INTRODUCTION

       This action arises out of a mortgage leasehold relationship involving real

property (the “Real Property”) and a mortgage on that property. The Real Property

is owned by Plaintiff Mary Jane Long (“Long”) in her capacity as Executrix of the

Estates of David G. Moser and Patricia Ann Moser. The mortgage on the Real

Property was granted to Defendant Fulton Bank, N.A., (“Fulton Bank”). 1 Plaintiff

Glen Moser, Inc. (“Moser, Inc.”) is a Delaware corporation wholly owned by the

Estates of David G. Moser and Patricia Ann Moser. 2 Long sued Fulton Bank on

behalf of the Estates of David G. Moser and Patricia Ann Moser, (collectively, the

“Moser Plaintiffs”).3 The basis of the suit was an allegedly improper and illegal

mortgage granted on the Real Property known as 296 Churchmans Road, New

Castle, Delaware.4 Long asserts that a separate entity, Churchmans Road Venture,

LLC (“Churchmans Road Venture”), which at one time leased the Real Property

from Moser, Inc., entered into a loan agreement with Fulton Bank and subsequently

executed a mortgage in favor of Fulton Bank, granting Fulton Bank a security

interest in the Real Property as part of the loan agreement. 5 Long claims that

1
  Complaint (“Compl.”) ¶ 1 (Trans. ID 65614489).
2
  Id. ¶ 2.
3
  The Court will use “Moser, Inc.” when referring to Glen Moser, Inc. as the contracting party in
the lease, mortgage, and related agreements, and “Moser Plaintiffs” when referring to Mary Jane
Long and Glen Moser, Inc. in their capacity as a party to the present suit.
4
  Compl. ¶¶ 1-2.
5
  Id. ¶¶ 3-5. The mortgage on the Property was executed on behalf of Churchmans Road Venture
by Kenneth M. Freemark, Jr. as “Operating Manager” of Churchmans Road Venture.
                                               2
Churchmans Road Venture was not authorized to grant a mortgage on the Real

Property; that at all material times, Fulton Bank knew or should have known this

fact; and that, for these reasons, the mortgage is null and void as it relates to the Real

Property.6

      Fulton Bank does not dispute the existence of the mortgage or its business

relationship with Churchmans Road Venture; rather, Fulton Bank claims that the

mortgage validly creates and confers upon Fulton Bank a legal security interest in

the Real Property.7 The Real Property’s owner, Moser, Inc., entered into the lease

agreement with tenant Churchmans Road Venture. Fulton Bank argues that the lease

agreement expressly reserved for Churchmans Road Venture the right to mortgage

its leasehold interest in the Real Property.8         Fulton Bank also brought six

counterclaims against the Moser Plaintiffs relating to the various mortgage and lease

agreements. Now before the Court is Fulton Bank’s Motion for Judgment on the

Pleadings seeking judgment as to the Moser Plaintiffs’ claims against it and Counts

II, III, IV, and VI of its own counterclaims.9

                                 II. BACKGROUND

6
  Id. ¶¶ 6-8.
7
  Answer and Counterclaim (“Ans. & CC.”) ¶¶ 26-28 (Trans. ID 65701879).
8
  Id. ¶¶ 22-26.
9
   Defendant’s Motion for Judgment on the Pleadings (“Def. Mot. Judg. Plea.”) (Trans. ID
65818001).
                                            3
      The underlying facts of this suit are convoluted and voluminous, so for the

sake of brevity, the following includes the relevant but non-exhaustive recitation of

the parties’ dispute.

      A.     The Original Lease Agreement & Related Agreements

      On August 1, 1982, Moser, Inc., which was named “Reproduction Center,

Inc.” at that time and up until 1987,10 entered into an agreement with Churchmans

Road Venture titled Indenture of Land Lease (“Lease Indenture”). Under the

agreement, Moser, Inc. leased to Churchmans Road Venture certain physical land

on the Real Property that it owned (the “Premises”).11 The Lease Indenture, in

relevant part, required Churchmans Road Venture to pay a sum of $5,520.00 per

year, beginning on March 1, 1983, and it provided for increases in the amount of

rent due over the lifetime of Churchmans Road Venture’s tenancy.12 Importantly,

the Lease Indenture provided that any alterations, new construction, and

improvements made on the Premises must remain the property of Churchmans Road

Venture.13

      Two sections of the Lease Indenture lie at the heart of this dispute. The first

is Paragraph 13(b), which provides remedies for Moser, Inc. in the event of

10
   Ans. & CC. ¶ 36, Ex. 4.
11
   Id. ¶¶ 5-6, at 6-7. A subsequent agreement, the First Amendment to the Lease Indenture,
extended the Lease Term to July 31, 2045. Id. ¶¶ 33-35, Ex. 3.
12
   Id. ¶¶ 6-9, at 6-8, Ex. 1 ¶ 1.
13
   Id. ¶ 15, at 8, Ex. 1 ¶ 10.
                                            4
Churchmans Road Venture’s default or failure to observe or perform its duties. In

either case, Moser, Inc. could elect to (1) perform or cause the performance of

Churchmans Road Venture’s duties at the sole cost and expense of Churchmans

Road Venture, (2) terminate the lease and assume ownership of the improvements

subject to payment of any existing mortgage, or (3) compel Churchmans Road

Venture’s performance of the agreement.14

       The other section of the Lease Indenture of particular importance here is

Paragraph 15, which outlines Churchmans Road Venture’s rights as they relate to

mortgaging the leasehold. Among other things, Paragraph 15 permits Churchmans

Road Venture to “mortgage the leasehold estate hereby created and/or the

improvements on the [Premises] with all benefits and privileges appertaining

thereto” and requires Moser, Inc. to provide any mortgagee the same notice of

default and right to cure default that Moser, Inc. retains under the Lease Indenture.15

       On August 1, 1982, the parties entered into a contemporaneous agreement

titled the Memorandum of Lease Term (“Lease Memorandum”), which provided

that “all buildings and other improvements on the Premises shall belong to

[Churchmans Road Venture].”16 Following the execution of the Lease Indenture and

the Lease Memorandum, Churchmans Road Venture began constructing buildings

14
   Ans. & CC. ¶ 18, at 9, Ex. 1 ¶ 13(b).
15
   Id. ¶ 11, at 8, Ex. 1 ¶ 15.
16
   Id. ¶ 25, at 10, Ex. 2 ¶ 3.
                                           5
on the Premises for commercial purposes (collectively, with all other improvements,

additions, and new construction on the Premises, the “Improvements”).17

       B.      The Subordination           Agreement,       Second      Amendment,         and
               Mortgage

       On November 8, 2011, Moser, Inc. executed and delivered to Fulton Bank a

Landlord’s Agreement and Waiver (Borrower) (the “Subordination Agreement”)

acknowledging that Churchmans Road Venture was seeking a loan from Fulton

Bank and agreeing to subordinate its own rights in the collateral (“Collateral”) of

Churchmans Road Venture in favor of Fulton Bank’s rights in the same. 18 The

Subordination Agreement expressly defines Collateral as Churchmans Road

Venture’s personal property, including “all business assets including equipment,

inventory, and general intangibles,” to at no time “be deemed to be fixtures or part

of the Premises, notwithstanding the fact that the Collateral or any part thereof is

attached or affixed to the Premises in any manner whatsoever.”19 Also central to the

parties’ dispute here is the term of the Subordination Agreement that requires Moser,

Inc. to provide Fulton Bank with written notice of its intent to terminate the Lease

Indenture.20

17
   Id. ¶¶ 28-31.
18
   Id. ¶¶ 38-39, Ex. 5 ¶ 4.
19
   Plaintiff’s Opposition to Defendant’s Motion for Judgment on the Pleadings (“Pl. Opp. to Def.
Mot. Judg. Plea.”) at 3, Ex. 5 (Trans. ID 65966461). The Court will use the terms “Improvements”
and “Collateral” to indicate personal property owned by Churchmans Road Ventures on the
Premises interchangeably.
20
   Ans & CC. ¶ 43, Ex. 5 ¶ 2.
                                               6
       The second amendment to the Lease Indenture (the “Second Amendment”),

entered into by Moser, Inc., and Churchmans Road Venture added three new

provisions: (1) Moser, Inc.’s acknowledgment that Fulton Bank was to provide a

loan to Churchmans Road Venture in the amount of $539,000,00, (2) Churchmans

Road Venture’s permission to grant Fulton Bank a leasehold mortgage in the

Premises, and (3) Moser, Inc.’s duty to provide Fulton Bank with “written notice of

any event of default by [Churchmans Road Venture] and [Fulton Bank] shall have

the right to cure any such event of default within the succeeding thirty (30) days,

which cure [Moser, Inc.] agrees to accept.”21

       Churchmans Road Venture and Fulton Bank executed a mortgage (the

“Mortgage”) as security for the $539,000.00 loan provided by Fulton (“Loan 9001”)

on November 23, 2011.22 The Mortgage agreement required Churchmans Road

Venture to notify Fulton Bank if it defaulted on its performance or failed to perform

its terms under the Lease Indenture. 23 Loan 9001 is secured, inter alia, by the

commercial guaranties of Kenneth M. Freemark, Karen M. Ciaffi Freemark, David

G. Moser, and the Glenn Davis Moser Trust for the Benefit of David G. Moser U/A

8/22/2004.24 The validity of the Mortgage as a legally sound agreement is not in

21
   Id. ¶¶ 45-51, Ex. 5. ¶ 4.
22
   Id. ¶¶ 53-56, Ex. 7-9.
23
   Pl. Opp. to Def. Mot. Judg. Plea. at 3, Ex. 9 at 4.
24
   Ans. & CC. ¶ 59, Ex. 11-14.
                                                   7
dispute.25 Very much in dispute, however, is a document contemporaneous to the

Mortgage: the Assignment of Rents agreement (“Assignment of Rents”). According

to Fulton Bank, the Assignment of Rents, executed between Churchmans Road

Venture and Fulton Bank, allegedly assigns Churchmans Road Venture’s “right,

title, and interest in and to the Rents from the [Premises]” to Fulton Bank as security

for Loan 9001 and related indebtedness.26 The Assignment of Rents includes a

representation that Churchmans Road Venture “has the full right, power, and

authority to enter [into the agreement] and convey the Rents to [Fulton Bank].” 27

       C.      The Termination of the Lease Indenture and Following Disputes

       On April 19, 2019, Moser, Inc. sent notice to Churchmans Road Venture and

Fulton Bank of its termination of the Lease Indenture for Churchmans Road

Venture’s failure to pay the rental payments due under the Lease Indenture from

2012 to 2019 (“April 2019 Notice”).28 The April 2019 Notice also states that

“[Long], Trustee of Glen Moser Trust, the sole shareholder of [Moser, Inc.], hereby

25
   Though the parties dispute the validity of the Mortgage in their briefing, at oral argument held
on February 24, 2021, the parties agreed the validity of the Mortgage is not in dispute. For this
reason, the Court will not discuss the parties’ contentions as they relate to the issue of the validity
of the Mortgage.
26
   Ans. & CC. ¶ 57, Ex. 10.
27
   Id., Ex. 10 at 2.
28
   Id. ¶¶ 70-71, Ex. 16. Plaintiff does not dispute that Churchmans Road Venture failed to make
the rental payments from 2012 and 2019 or that it did not declare Churchmans Road Venture in
default of the Lease Indenture until April 2019. Plaintiff’s Reply to Counterclaim (“Pl. Rep. to
CC.”) ¶¶ 184-186 (Trans. ID 65764073).
                                                  8
assumes ownership of the improvements on the [Premises].”29 Less than one month

later, on May 16, 2019, Moser, Inc. sent notice to inform Fulton Bank of

Churchmans Road Venture’s default totaling $82,260.00 in unpaid rent as required

by the Second Amendment to the Lease Indenture (the “May 2019 Notice”).30 The

May 2019 Notice demanded that Fulton Bank “remove or take possession of the

Collateral located on the [Premises]” and that if Fulton Bank chose to take

possession of the Collateral, it must remit the payment of $82,260.00 to Moser, Inc.,

pursuant to the Second Amendment.31 It is undisputed that Moser, Inc. sent the April

2019 Notice and the May 2019 Notice (collectively, the “Notices”) to Fulton Bank. 32

       Fulton Bank claims that it engaged in settlement discussions with the Moser

Plaintiffs and Churchmans Road Venture after receiving the May 2019 Notice, but

the Moser Plaintiffs claim that Fulton Bank made no arrangements to assume the

Lease Indenture, take possession of the Collateral, or remit the rental payment due.33

29
   Ans. & CC. ¶ 71, Ex. 16.
30
   Id. ¶ 72, Ex. 17. The Second Amendment to the Lease Indenture requires Moser, Inc. to “give
Fulton Bank written notice of any event of default by [Churchmans Road Venture]” and allows
Fulton Bank the right to cure the default within 30 days. Id., Ex. 6 ¶ 3.
31
   Ans. & CC. ¶ 72, Ex. 17. On June 5, 2019, Fulton Bank sent a notice to Churchmans Road
Venture and its personal guarantors informing that it was in default of Loan 9001 and demanding
it pay the entire unpaid principal balance, along with accrued and unpaid interest, totaling
$403,245.71. Id. ¶ 62, Ex. 15. Churchmans Road Venture allegedly defaulted on a secondary loan
from Fulton Bank, Loan 9002, with an outstanding principal balance of $14,907.09. Id. The notice
of default demanded payment of the entire unpaid principal balance of both Loan 9001 and Loan
9002. Id.
32
   At oral argument on February 24, 2021, Fulton Bank’s counsel stated that, for purposes of the
argument on this Motion, he accepts that Fulton Bank received the Notices.
33
   Ans. & CC. ¶ 76; Pl. Opp. to Def. Mot. Judg. Plea. at 6.
                                               9
Moser, Inc. commenced an action against Churchmans Road Venture for summary

possession in Justice of the Peace Court and did not name Fulton Bank in the suit

(the “Eviction Lawsuit”).34 On August 22, 2019, the Justice of the Peace Court

entered default judgment for Moser, Inc. and awarded it summary possession of the

Premises (the “Summary Possession Judgment”).35

       The Moser Plaintiffs commenced this action against Fulton Bank seeking a

declaration that the Mortgage does not confer any right in the Premises to Fulton

Bank.36 Fulton Bank denied the claims in the Complaint and responded with six

counterclaims against the Moser Plaintiffs. 37 Relevant to this Motion are Counts II,

III, IV, and VI of Fulton Bank’s Counterclaims, which request, respectively,

       (1) a claim for declaratory relief regarding the validity of the mortgage;38

       (2) a claim for declaratory relief permitting Fulton Bank to take possession of
       the Premises subject to the Mortgage until the debt secured by the Mortgage
       is satisfied;39

       (3) a claim for declaratory judgment finding that the Premises is not the
       property of Moser, Inc., that Fulton Bank is authorized to foreclose on the
       Premises, and that any rights and/or interests of Moser, Inc. are subordinate
       to Fulton Bank, pursuant to the Subordination Agreement;40 and

34
   Def. Mot. Judg. Plea at 10; Pl. Opp. to Def. Mot. Judg. Plea. at 6-7 (Ans. & CC. Ex. 18).
35
   Pl. Opp. to Def. Mot. Judg. Plea. at 7 (Ans. & CC. Ex. 19). The Moser Plaintiffs point out that
Fulton Bank filed a motion for Relief from Default Judgment to Intervene in Action as
Indispensable Party and Stay of Judgment in the Eviction Lawsuit, but the motion was denied. Id.
36
   Compl. at 1.
37
   Ans. & CC. at 5.
38
   Ans. & CC at 22-25 (Count II).
39
   Id. at 25-27 (Count III).
40
   Id. at 27-29 (Count IV).
                                               10
       (4) a claim for declaratory relief barring the Moser Plaintiffs from recovering
       the unpaid rent due under the Lease Indenture from any party and finding that
       the Moser Plaintiffs failed to provide Fulton Bank with timely notice of
       default under the Lease Indenture such that Fulton Bank was precluded from
       exercising its right to take possession of the Premises. 41

       Fulton Bank now moves for default judgment as to the Moser Plaintiffs’

Complaint and Counts II, III, IV, and VI of its Counterclaims.42

                             III. PARTIES’ CONTENTIONS

       Despite the extensive background of this case, the present disputes between

the parties can be summarized succinctly, having been pared down during the oral

argument held on February 24, 2021. Both the Moser Plaintiffs’ Complaint and

Count II of Fulton Bank’s Counterclaims seek declarations relating to the validity

and enforceability of the Mortgage and whether it creates and confers a legal right,

title, interest, or lien in the Premises. At oral argument, however, counsel for both

parties agreed the Mortgage is valid, binding, and fully enforceable on its face. What

remains in dispute is whether, as the Moser Plaintiffs argue, Fulton Bank abandoned

its interest in the Mortgage when it received notice of Churchmans Road Venture’s

default on the Lease Indenture but failed to “make arrangements to take over the

lease, take possession the collateral, or pay the past due rent.” 43 The Moser Plaintiffs

argue that they complied with the requirement to provide notice to Fulton Bank of

41
   Id. at 32-33 (Count VI).
42
   Def. Mot. Judg. Plea at 12.
43
   Pl. Opp. to Def. Mot. Judg. Plea. at 6.
                                             11
Churchmans Road Venture’s default in the April 2019 and, in particular, in the May

2019 Notice, which gave Fulton Bank 30 days to take possession of the Collateral

on the Premises pursuant to the Subordination Agreement. 44 The Moser Plaintiffs

also question Fulton Bank’s characterization of the “Collateral” as defined in the

Subordination Agreement, suggesting that if Fulton Bank had intended the Collateral

to include improvements and buildings on the Premises, it would have expressly

included those terms in the Subordination Agreement.45 Therefore, the Moser

Plaintiffs assert that Fulton Bank has relinquished its right to claim or possess the

improvements and buildings on the Premises.46 Finally, the Moser Plaintiffs deny,

with no further explanation, all of the remaining material allegations in the

Counterclaims and assert various affirmative defenses.47

       At the heart of Fulton Bank’s Motion lies its claim that the Moser Plaintiffs

breached Paragraph 13(b) of the Lease Indenture and, as a result, caused Fulton Bank

financial harm, the loss of rent, and impairment of its Improvements.48 This is the

basis for Count III of its Counterclaims. Paragraph 13(b) of the Lease Indenture

provides three remedies to Moser, Inc. in the event of Churchmans Road Venture’s

44
   Id. at 5-6.
45
   The Moser Plaintiffs’ counsel raised this point at oral argument on February 24, 2021.
46
   Pl. Opp. to Def. Mot. Judg. Plea. at 7.
47
   Id. at 7-9.
48
   At oral argument on February 24, 2021, Fulton Bank’s counsel stressed that the application of
Paragraph 13(b) of the Lease Indenture is the dispositive issue on this Motion.
                                              12
default.49 It is undisputed that Moser, Inc. chose remedy number two, which

provides that, “[i]n the event of default hereunder by [Churchmans Road Venture],

[Moser, Inc.] shall have the right . . . (ii) to terminate the lease and assume ownership

of the improvements subject to payment of any mortgage thereon[.]” 50 Fulton Bank

argues that in the original Lease Indenture with Churchmans Road Venture, the

Moser Plaintiffs expressly contracted to assume ownership of the Improvements on

the Premises “subject to payment of any mortgage thereon.”51 According to Fulton

Bank, because the Moser Plaintiffs terminated the Lease Indenture and took

ownership of the Improvements on the Premises without satisfying the remaining

indebtedness secured by the Mortgage, the Mortgage serves as a lien on the Premises

and Fulton Bank possesses all rights and privileges afforded to a leasehold

mortgagee. 52

       In Count IV of the Counterclaims, Fulton Bank argues that the Mortgage

confers a valid security interest in the assets and property owned by Churchmans

Road Venture.53 This includes any new construction, improvements, and additions

made to the Real Property owned by Moser, Inc. 54 Fulton Bank asserts that the

relevant agreements evidence Churchmans Road Venture’s ownership rights in the

49
   Pl. Rep. to CC. ¶ 121.
50
   Ans. & CC. Ex. 1 at 12.
51
   Id.
52
   Def. Mot. Judg. Plea. at 22.
53
   Id. at 23.
54
   Id.
                                           13
Improvements.55 The Lease Indenture, in relevant part, provides that “[a]ll such

alternations, new construction and improvements shall be and remain the property

of [Churchmans Road Ventures].”56 Further, Fulton Bank argues that the Moser

Plaintiffs intended Fulton Bank’s security interest to vest in the Improvements on

the Premises, superior to Moser, Inc.’s interest, when Moser, Inc. entered into the

Subordination Agreement with Fulton Bank and agreed not “to take any action,

which could be detrimental to the [Improvements], or its value or the rights and

interest of [Fulton Bank] in and to the [Improvements].”57 Fulton Bank argues that

because it possesses a lien on and security interest in the Improvements, it should be

authorized to foreclose on the Improvements to satisfy the indebtedness on its

Mortgage.

       Finally, in Count VI, Fulton Bank seeks to be excused from its performance

of its contractual obligations to assume possession of the Collateral within 30 days

of notice of default in light of the Moser Plaintiffs’ alleged material breach of the

Second Amendment.58 Pursuant to the Lease Indenture, Churchmans Road Venture

was in default on a rental payment if the payment was not made within 30 days of

the due date.59 It is undisputed Churchmans Road Venture failed to make rental

55
   Id.
56
   Ans. & CC. Ex. 1 ¶ 10; see also id. Ex. 2 ¶ 3.
57
   Def. Mot. Judg. Plea. at 23; see supra note 19; Ans. & CC. Ex. 5 ¶ 2.
58
   Def. Mot. Judg. Plea. at 26.
59
   Ans. & CC. Ex. 1 ¶ 13(a).
                                               14
payments between 2012 and 2019. 60 Under the Second Amendment, Moser, Inc. is

obligated to provide any mortgagee with notice of Churchmans Road Venture’s

default.61 The Moser Plaintiffs did not declare default or provide notice to Fulton

Bank of the default until April 2019, when the amount owed reached $82,260.00. 62

For this reason, Fulton Bank argues that the Moser Plaintiffs failed to provide timely

notice of the default and, therefore, breached their obligations under the Lease

Indenture and Second Amendment.63 Fulton Bank relies on a significant body of

case law to support this contention. While admitting that the Lease Indenture does

not prescribe a specified number of days following default by which Moser, Inc.

must provide notice of the default, Fulton Bank argues that the promise to perform

with reasonable expediency implied in every contract dictates that waiting 7 years

to provide notice of a default is a clear breach of contract. 64 In light of the Moser

Plaintiffs’ delay, Fulton Bank argues the breach is material because it essentially

defeats the purpose of the contract, and, therefore, Fulton Bank’s alleged failure to

take action in response to the April 2019 notice should be excused.65 It is important

60
   See supra note 28.
61
   Ans. & CC. Ex. 6 ¶ 3.
62
   See supra note 28.
63
   Def. Mot. Judg. Plea. at 27.
64
   Id. at 27 n.27 (citing Comet Sys., Inc. S’holders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1034 (Del.
Ch. 2008)) (“In every contract there is implied a promise or duty to perform with reasonable
expediency the thing agreed to be done; a failure to do so is a breach of contract.”).
65
   Id. at 29 (citing Preferred Investment Servs., Inc. v. T&H Bail Bonds, Inc., 2013 WL 3934992,
at *11 (Del. Ch. July 24, 2013)).
                                                15
to note that the Moser Plaintiffs do not offer an argument to refute Fulton Bank’s

claim that the Moser Plaintiffs breached the Lease Indenture; they offer only an

outright denial.

       Fulton Bank also seeks a declaration that the Moser Plaintiffs have waived

their right to seek repayment of the full amount owed due to the Moser Plaintiffs’

delay to enforce Fulton Bank’s duty to cure.66 Fulton Bank argues that the Moser

Plaintiffs’ failure to enforce the rental payment obligation every month for 7 years

constitutes “a willful or intentional act or series of intentional acts capable of

establishing waiver.” 67 Therefore, Fulton Bank argues the Moser Plaintiffs have

waived their right to seek repayment from Fulton Bank for the missed rental

payments.

                                      IV. DISCUSSION

       A.      Standard of Review

       A motion for judgment on the pleadings made pursuant to Superior Court

Civil Rule 12(c) will be granted only when no material issues of fact exist and the

movant is entitled to judgment as a matter of law. 68 Under Rule 12(c), if matters

outside the pleadings are presented to and considered by the Court, the motion must

66
   Id. at 31.
67
   Id. at 31 n.41 (citing Julian v. Eastern States Const. Serv., Inc., 2008 WL 2673300, at *15 (Del.
Ch. July 8, 2000)).
68
   Artisans’ Bank v. Seaford IR, LLC, 2010 WL 2501471, at *1 (Del. Super. June 21, 2010) (citing
Gonzales v. Apartment Communities Corp., 2006 WL 2905724, at *1 (Del. Super. Oct. 4, 2006)).
                                                16
be treated as one for summary judgment under Rule 56. In this case, the following,

inter alia, are Exhibits to the Counterclaims and are incorporated by reference in the

Counterclaims: (1) the Lease Indenture, (2) the Lease Memorandum, (3) the

Corrective Deed, (4) the Subordination Agreement, (5) the Second Amendment, (6)

the Loan Agreement, (7) the Mortgage, (8) the Assignment of Rents, (9) the April

2019 Notice, (10) the May 2019 Notice, (11) the Eviction Lawsuit, and (12) the

Summary Possession Judgment. To the extent that the Moser Plaintiffs argue that

the documents included as exhibits and incorporated by reference in Fulton Bank’s

Counterclaims present extraneous matters outside the pleadings, such documents are

not outside the pleadings and may be considered in connection with Fulton Bank’s

Motion.69

       B.     Moser Plaintiffs’ Complaint & Count II of Counterclaims

       With respect to the allegations set forth in the Complaint, wherein the Moser

Plaintiffs seek a declaration that the Mortgage is null and void and that it does not

create or confer any right, title, interest, or lien in the Premises, the parties have

agreed that the Mortgage is valid, binding, and fully enforceable on its face. For this

reason, the Court will treat the claims made in the Moser Plaintiffs’ Complaint as

moot. The Court will also treat as moot Fulton Bank’s argument that procedural

69
   Lagrone v. Am. Mortell Corp., 2008 WL 4152677, at *4 (Del. Super. Sept. 4, 2008) (“Matters
attached to a complaint, and incorporated by reference, are not ‘extraneous’ for purposes of
Rule 12[.]”).
                                             17
bars preclude the relief sought in the Complaint.70 Because Count II of Fulton

Bank’s Counterclaims seeks a declaration relating to the validity of the Mortgage as

well, the Court will treat the relief sought under Count II as moot.

       C.      Fulton Bank’s Counterclaims Against the Moser Plaintiffs

               1.      Count III of Counterclaims: Fulton Bank’s Interest in the
                       Premises

       Having established that the Mortgage on Churchmans Road Venture’s

Improvements, located on the Premises, is a valid, binding, and enforceable

mortgage, the Court now turns to Fulton Bank’s claim that the Moser Plaintiffs may

only take possession of the Collateral at issue, subject to payment of any mortgage

thereon.

       The Court must abide by the clear and unambiguous language of the Lease

Indenture.71 The provision at issue here, Paragraph 13(b) of the Lease Indenture is

unambiguous; it allows Moser, Inc. to terminate the Lease Indenture and assume

ownership of the Premises, subject to payment of any mortgage thereon.72 The

language does not reasonably lend itself to two different meanings or

70
   Def. Mot. Judg. Plea at 14-21.
71
   Rhone-Poulenc Basic Chem. Co. v. American Motorists Inc. Co., 616 A.2d 1192, 1996 (Del.
1992) (internal citations omitted) (“Courts will not torture contractual terms to impart ambiguity
where ordinary meaning leaves no room for uncertainty.”); see also ConAgra Foods Inc. v.
Lexington Ins. Co., 21 A.3d 62, 68-69 (Del. 2011) (“This Court has adopted traditional principles
of contract interpretation. One such principle is to give effect to the plain meaning of a contract’s
terms and provisions when the contract is clear and unambiguous.”).
72
   The Moser Plaintiffs do not address the applicability of Paragraph 13(b) in their Opposition to
Fulton Bank’s Motion for Judgment on the Pleadings.
                                                 18
interpretations.73 After sifting through the non-dispositive facts and agreements in

this matter and viewing the relevant facts in the light most favorable to the non-

movant, the Court finds that the Moser Plaintiffs may take possession of the

Premises, subject to payment of the indebtedness secured by Fulton Bank’s

Mortgage. Fulton Bank’s Motion for Judgment on the Pleadings as to Count III of

the Counterclaim is therefore GRANTED.

              2.     Count IV of Counterclaims: Priority of Rights in the Premises

       The Court reaches the same conclusion as to Count IV of the Counterclaims.

Reading the Lease Memorandum, the language expressly states that “[a]ll buildings

and other improvements on the Premises shall belong to [Churchmans Road

Ventures.]”74 Similarly, the Lease Indenture provides that all “new construction and

improvements” remain the property of Churchmans Road Venture.75 No reasonable

interpretation of the relevant agreements would indicate that the Improvements are

the property of Moser, Inc; the Improvements on the Premises are the property of

Churchmans Road Venture, subject to the security interest held by Fulton Bank

pursuant to Paragraph 13(b) of the Lease Indenture.

     The language used in the Subordination Agreement does leave room for

uncertainty, but for the reasons discussed above, this uncertainty is immaterial to the

73
   See Rhone-Poulenc Basic. Chem. Co., 616 A.2d at 1196.
74
   Ans. & CC. Ex. 2 ¶ 3.
75
   Id. Ex. 1 ¶ 10.
                                             19
disposition of Count IV. The language of the Subordination Agreement indicates

that Moser, Inc. agreed to subordinate any and all rights with respect to the Collateral

in favor of Fulton Bank’s interests in the same.76 The Moser Plaintiffs, however,

argue that a distinction exists between the definition of “Collateral” in the

Subordination Agreement and that of “Improvements” in the Lease Indenture and

Lease Memorandum. 77 They assert that the Subordination Agreement, which grants

their interest in Collateral owned by Churchmans Road Venture in favor of Fulton

Bank, is defined as “goods,” which includes business assets, equipment, inventory,

and general intangibles, not the buildings, new construction, and improvements

contemplated in the Lease Indenture and Lease Memorandum. 78 Reasonable minds

may differ on the interpretation of the term “Collateral” as it exists in the

Subordination Agreement. However, it has been established that Fulton Bank

possesses a security interest in Churchmans Road Venture’s leasehold interest in the

Real Property. 79 Further, the agreements expressly state that Churchmans Road

Venture’s leasehold interest in the Real Property are the Improvements as defined in

the Lease Indenture and Lease Memorandum and that the Moser Plaintiffs have no

ownership interest conferred by the agreements in the same.80 Therefore, Fulton

76
   Ans. & CC. Ex. 5 ¶ 3.
77
   Pl. Opp. to Def. Mot. Judg. Plea. at 14.
78
   Ans. & CC. Ex. 5.
79
   Id. Ex. 9.
80
   Id. Ex. 1 ¶ 10, Ex. 2 ¶ 3.
                                              20
Bank’s security interest in the Improvements on the Premises is superior to the

Moser Plaintiffs’ interest, pursuant once again to Paragraph 13(b) of the Lease

Indenture. Fulton Bank may rightfully dispose of the Improvements to satisfy the

remaining unpaid principal on the Mortgage.81

       Therefore, Fulton Bank’s Motion for Judgment on the Pleadings as to Count

IV of the Counterclaim is GRANTED.

               3.     Count VI of Counterclaims: Moser, Inc.’s Failure to Notify

       Finally, the Court turns to Count VI of Fulton Bank’s Counterclaims, wherein

Fulton Bank seeks a declaration that the Moser Plaintiffs materially breached the

Lease Indenture, excusing Fulton Bank’s performance, and waived their right to

collect the missed rental payments under the same.82

       Even after viewing all facts in the light most favorable to the non-movant, the

Court concludes that the Moser Plaintiffs’ failure to notify Fulton Bank of

Churchmans Road Venture’s default for 7 years constitutes a material breach of their

obligations under the Lease Indenture and Second Amendment.                         The Lease

Indenture and Second Amendment do not require the Moser Plaintiffs to provide

notice of Churchmans Road Venture’s default within a specified amount of time, but

under well-settled principles of Delaware law, every contract contains an implied

81
   Fulton Bank states that in a sale of the Improvements, the proceeds will be allocated according
to the value attributable to the Land and the Improvements, respectively. See 25 Del. C. § 2501.
82
   Def. Mot. Judg. Plea. at 26-27.
                                               21
promise by the parties to perform with reasonable expediency.83 A landlord who is

contractually obligated to provide notice of a tenant’s default on rental payments but

who waits 7 years to do so cannot be said to have performed the duty with reasonable

expediency. The Moser Plaintiffs’ 7-year delay singularly precluded Fulton Bank

from realizing its contractual rights as a leasehold mortgagee, protected by the

Second Amendment. 84 Because the Court concludes that Fulton Bank’s right to cure

was fundamental to the protection of its security interest in the Improvements, the

Moser Plaintiffs’ 7-year delay constitutes a material breach of the Second

Amendment.85 With respect to whether Fulton Bank’s failure to exercise its right to

cure following the April 2019 Notice of default is excused, under Delaware law, “a

party clearly in material breach cannot thereafter complain of the other party’s

83
   Comet Sys., Inc. S’holders’ Agent, 980 A.2d at 1034 (“The [Plaintiffs] need not show that the
merger agreement contains a provision requiring payment on a specific date and the payment of
interest for any delay. Rather, they must simply show that payment was unreasonably withheld
after the right to that payment had absolutely vested[.]”); see also Allen v. Pictsweet Co., 2004 WL
2240640, at *3 (Del. Super. Sept. 20, 2004) (citing Martin v. Star. Pub. Co., 126 A.2d 238, 244
(Del. 1956) (“If there is not a time period in the contract, the Court will infer a reasonable time for
performance.”)).
84
   Ans. & CC. Ex. 6 ¶ 3.
85
   See SLMSoft.Com, Inc. v. Cross Country Bank, 2003 WL 1769770, at *13 (Del. Super. Apr. 2,
2003). Section 241 of the Restatement (Second) Contracts sets forth factors to be considered in
determining whether a breach of a duty is material. Those factors include (1) the extent to which
the injured party will be deprived of the benefit which he reasonably expected; (2) the extent to
which the injured party can be adequately compensated for the part of the benefit of which he will
be deprived; (3) the extent to which the party failing to perform or to offer to perform will suffer
forfeiture; (4) the likelihood that the party failing to perform or to offer to perform will cure his
failure, taking account of all the circumstances including any reasonable assurances; and (5) the
extent to which the behavior of the party failing to perform or to offer to perform comports with
standards of good faith and fair dealing. The Court concludes the circumstances at bar do not
present facts that weigh in favor of finding the breach was non-material.
                                                  22
failure to perform.”86 The Moser Plaintiffs’ material breach excuses Fulton Bank’s

failure to perform following the April 2019 Notice.

       Finally, in light of the “exacting” standards that must be met to prove waiver

of rights under a contract, the Court finds that judgment on this issue is premature.87

Under well-settled Delaware law, waiver “implies knowledge of all material facts

and an intent to waive, together with a willingness to refrain from enforcing those

rights.”88   To prove waiver, the “facts relied upon…must be unequivocal.”89

Whether those circumstances exist here very likely requires a determination of

material facts. This question cannot be answered at this stage of the proceedings,

and thus, judgment as to whether the Moser Plaintiffs waived their right to

repayment is inappropriate on this Motion.

       Therefore, Fulton Bank’s Motion for Judgment on the Pleadings on Count VI

of the Counterclaim is GRANTED as to the Moser Plaintiffs’ material breach of the

Second Amendment and Fulton Bank’s excuse from exercising its right to cure

following the April 2019 Notice and DENIED as to the Moser Plaintiffs’ waiver of

its right to repayment under the Lease Indenture.

86
   Commonwealth Const. Co. v. Cornerstone Fellowship Baptist Church, Inc., 2006 WL 2567916,
at *19 (Del. Super. Aug. 31, 2006).
87
   Bantum v. New Castle County Vo-Tech Educ. Ass’n, 21 A.3d 44, 50 (Del. 2011).
88
   Id. (internal citations omitted).
89
   Id. (internal citations omitted).
                                            23
                                   V. CONCLUSION

       Viewing the record in the light most favorable to the Moser Plaintiffs, the

Court finds that (1) the Moser Plaintiffs’ right to take possession of the

Improvements is subject to payment of Fulton Bank’s Mortgage thereon, (2) Fulton

Bank may rightfully dispose of the Improvements to satisfy the remaining unpaid

principal on the Mortgage, (3) the Moser Plaintiffs materially breached their

contractual obligations under the Lease Indenture and Second Amendment, and (4)

the material breach excuses Fulton Bank’s failure to exercise its right to cure

following the April 2019 Notice of default. Therefore, Fulton Bank’s Motion for

Judgment on the Pleadings as to Counts III and IV is GRANTED, and as to Count

VI is GRANTED IN PART and DENIED IN PART, for the reasons set forth

above. 90

              IT IS SO ORDERED.

                                                         Jan R. Jurden

                                                  Jan R. Jurden, President Judge

cc: Prothonotary

90
  Ans. & CC. at 33. Count VI includes three paragraphs specifying the declaration Fulton Bank
seeks. Paragraph A seeks a declaration that the Moser Plaintiffs waived the right to seek
repayment. Paragraphs B and C seek declarations that the Moser Plaintiffs materially breached
the Lease Indenture and Second Amendment, and that this material breach excuses Fulton Bank’s
obligation to exercise its right to cure, respectively.
                                             24