Court Opinion

ID: 9839247
Source: CourtListenerOpinion
Date Created: 2023-09-12 17:05:53.073747+00
Date Added: 2024-06-11T09:12:48.508718
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

LIONCAP, LLC,                              )
                            Plaintiff,     )
              v.                           )       C.A. No. N23M-05-036
NVR, Inc.,                                 )
                            Defendant. )
                                         ORDER
       This 12th day of September, 2023, upon consideration of Plaintiff LIONCAP,

LLC’s (“Plaintiff”) Petition Pursuant to 25 Del. C. § 2115 to Compel Entry of

Satisfaction of Mortgage and to Issue Rule To Show Cause; Defendant NVR, Inc.’s

(“Defendant”) Answer and Affirmative Defenses; Plaintiff’s Memoranda of Facts

and Law filed in Support of its Petition; Defendant’s August 11, 2023 supplemental

correspondence; and Plaintiff’s August 15, 2023 Response to Defendant’s Letter to

the Court, it appears to the Court that:

       On August 12, 2020, Plaintiff and Defendant entered into two Lot Purchase

Agreements (“LPA”) to purchase and develop detached and semi-detached homes

on two separate tracts of land in New Castle County, Delaware. 1 The first tract,

“Governor’s Glen,” includes approximately eighty-seven developable single family

1
  NVR, Inc. v. LIONCAP, LLC Lion Trust and MCJ Capital Partners, LLC, Del. Ch., C. A. No.
2023-0779-SEM, Verified Complaint, ¶ 12. After Plaintiff instituted this action in Superior
Court, Defendant NVR filed a Verified Complaint in the Court of Chancery. This Court has
taken judicial notice of what is believes to be uncontested facts as stated in NVR’s Verified
Complaint filed in the Court of Chancery.
                                               1
detached and semi-detached lots.2 Per the LPA, Plaintiff is obligated to develop the

individual lots, and then sell three different lots to the Defendant for a previously

agreed upon price.3 Plaintiff and Defendant also entered a second, virtually identical

LPA for a tract known as “Linden Grove,” which contained approximately eighty-

seven developable single-family detached and semi-detached lots.4 Again, Plaintiff

was obligated to develop the lots (as described infra at fn. 1) and sell three different

lots to the Defendant for a previously agreed upon price.5

       Defendant delivered to Plaintiff a deposit of $150,000 for each LPA and was

to pay an additional sum for each tract of land when “certain milestones in the

approval and the development process were met.”6 In exchange for each deposit, on

or about December 9, 2020, Defendant recorded a mortgage for $150,000 on each

tract of land. 7 These two mortgages are the subject of the Petition To Compel

Satisfaction of Mortgage.

2
   Id.
3
   Id. Plaintiff’s obligation as a developer was, at its own cost and expense, to create “fully and
improved building lots.” This included “grading, installing water and sewer mains, post and
maintain all forms of financial security as required by government authorities, complete paving of
streets, install sidewalks, off-lot curbs and gutters, street lighting and erect street signs, [and]
provide underground telephone, electrical and propane gas utility lines, etc.”
4
   Id., ¶ 13.
5
   Id.
6
   Id., ¶ ¶ 18, 19.
7
   Id.
                                                 2
       On April 20, 2023, Plaintiff sent Defendant two Fed Ex packages, both

containing a check for $150,000 to satisfy each mortgage. 8 Plaintiff requested,

among other things, that Defendant return the original Mortgage Satisfaction Piece

to counsel so the document could be recorded with the Recorder of Deeds.

       On or about April 25, 2023, Defendant sent Plaintiff’s counsel a letter

rejecting Plaintiff’s tender, refusing to accept the $150,000 payments, and declining

to execute the Mortgage Satisfaction Piece.9

       On May 8, 2023, Plaintiff filed a Petition Pursuant to 25 Del. C. § 2115 to

Compel Entry of Satisfaction of Mortgage and to Issue Rule to Show Cause.10 On

June 22, 2023, this Court issued an Order For Rule To Show Cause, which was

returned August 4, 2023.11

       On July 28, 2023, the Court received Defendant’s Answer and Affirmative

Defenses.12 As to each mortgage, Defendant generally averred that the mortgages

speak for themselves, and Defendant conceded “it refused the payments because

they were a part of a scheme created by Plaintiff, Red Lion Trust and MCJ Capital

Partners, LLC (related and affiliated entities that are commonly controlled and

8
   Id., ¶ 27.
9
    Docket Item (“D.I”) 4, Exhibit C, April 24, 2023 Letter from Defendant to Plaintiff entitled:
Re: 8/12/20 Lot Purchase Agreements for the Red Lion South (aka, Governor’s Glen aka Maple
Grove) Project (the “Contract”) by and between LIONCAP LLC (“Seller”) and NVR, Inc. d/b/a
Ryan Homes (“NVR”).
10
    D.I. 4.
11
    D.I. 15, June 22, 2023 Order for Rule to Show Cause.
12
    D.I. 18. Defendant’s Answer and Affirmative Defenses.
                                               3
owned) to wrongfully cut NVR out of two land deals so that Plaintiff and its cohorts

could instead sell their properties for a higher price.”13 Defendant’s Answer also

raised two affirmative defenses: (a) Plaintiff’s failed to state a claim upon which its

requested relief can be granted, and (b) Plaintiff’s efforts to satisfy the mortgages

constitutes an illegal conspiracy to prevent NVR from being able to purchase lots

from Plaintiff because it would not pay a higher price for the lots.14

       On August 1, 2023, Plaintiff submitted a Memorandum of Facts and Law in

Support of Petition Pursuant to 25 Del. C. § 2115 to Compel Entry of Satisfaction of

Mortgage and to Issue Rule to Show Cause. 15 Plaintiff argues the undisputed

mortgage payoff amount is $150,000 and neither mortgage contained a provision

limiting the Plaintiff’s ability to prepay the balance of the mortgages.16

       On August 4, 2023, a hearing was held to consider the Petition. After the

hearing, counsel for both Plaintiff and Defendant supplemented their oral

presentations with written submissions. Considering the arguments made at the

August 4, 2023 hearing, and the written submissions of counsel in support of their

respective positions, for the reasons that follow, the Court will DISMISS Plaintiff’s

Petition.

13
   Id., ¶¶ 11, 20.
14
   Id., Affirmative Defenses, ¶¶ 1-2.
15
   D.I. 19, Plaintiff’s Memorandum of Facts and Law in Support of Petition Pursuant to 25 Del.
C. § 2115 to Compel Entry of Satisfaction of Mortgage and to Issue Rule To Show Cause.
16
   Id., ¶ 4-5.
                                              4
         a. The application of 25 Del. C. § 2115.

         Plaintiff contends that the Petition, which it filed as a scire facias sur

mortgage satisfaction, complied with 25 Del. C. § 2115, and this Court should

compel Defendant to accept payment and register the Mortgage as paid. Plaintiff

argues a scire facias sur mortgage is an in rem proceeding, and as such any defenses

raised by Defendant are limited to attacks on the mortgage transaction itself.

Plaintiff further claims Defendant’s defenses are limited to issues surrounding

payment, satisfaction, absence of seal, or plea in avoidance of the deed.

         In response, Defendant asserts the lone defense of a plea in avoidance of the

deed. 17     Defendant argues, pursuant to the LPAs executed between the parties,

Defendant was required to pay a $150,000 deposit and, in exchange and as security

for the deposits, Defendant recorded the two mortgages at issue.18 Defendant claims

that earlier in 2023, Plaintiff approached Defendant and claimed the development

project was no longer “economically feasible” at the prices previously agreed to in

the 2020 LPAs. And, if the parties could not re-negotiate a “higher per lot price,”

Plaintiff would commence this litigation, cutting Defendant out of the development

17
     D.I. 24, Defendant’s August 11, 2023 Letter to the Court, at 2.
18
     Id., at 3.
                                                  5
deal.19 Defendant asserts “Plaintiff’s illegal conduct and the claims in the Chancery

Court Complaint support the defense of a plea in avoidance.”20

       Upon a review of the record and relevant caselaw, the Court concludes

Plaintiff has failed to satisfy the elements of 25 Del. C. § 2115. Section 2115 only

applies to “mortgages . . . on real estate [which] have been paid and the mortgagee

or obligee . . . refuses or neglects to enter satisfaction of such mortgage or judgment

on the record thereof in the office where the same is recorded or entered.”21 It is

undisputed that Defendant did not accept Plaintiff’s mortgage payments. This Court

can only enter an Order compelling satisfaction of a mortgage, and directing the

satisfaction be properly recorded, after concluding the evidence provided by

Plaintiff demonstrates that the mortgage, with all interests and costs due, has been

fully satisfied.22 Plaintiff has failed to meet this burden.23

19
   Id.
20
   As noted infra at fn. 1, on August 1, 2023, Defendant filed a Verified Complaint in the Court
of Chancery captioned NVR, Inc. v. LIONCAP, LLC, Red Lion Trust and MCJ Capital Partners,
LLC, C.A. No. 2023-0779-SEM, seeking specific performance of the Land Purchase Agreements
between NVR and the Defendants, Tortious Interference with Contract and Civil Conspiracy. See
NVR, Inc. v. LIONCAP, LLC Lion Trust and MCJ Capital Partners, LLC, Del. Ch., C. A. No.
2023-0779-SEM, Verified Complaint.
21
   25 Del. C. § 2115(a) (emphasis added).
22
   25 Del. C. § 2115(b).
23
   Plaintiff has also failed to identify any statute or court rule which provides a mechanism by
which this Court can compel Defendant to accept payment for a mortgage that is neither currently
due nor delinquent.
                                               6
       In In Re Agostini, 24 a similar dispute arose where petitioners obtained a

mortgage on property from Colonial Trust Company. 25 In Agostini, the parties

executed a written agreement to pay the mortgage on a set monthly basis over a

period of three years.26 If the petitioners prepaid the mortgage, they were required

to pay a sum of money in addition to the original debt owed. Fifteen months later,

the petitioners attempted to satisfy the mortgage earlier than agreed without

remitting the prepayment penalty.27 When the petitioners tendered funds to Colonial

Trust Company to satisfy the mortgage, the trust company refused the tender.28 To

keep the tender valid, the petitioners then remitted payment to the Prothonotary.29

In considering the positions of the parties, this Court recited the following in

describing the factual and procedural posture in Agostini:

       {This dispute] does not involve a plea of tender in a pending litigation.
       The mortgagee has not attempted to foreclose the mortgage. The
       mortgagors are not the moving party. They allege the unaccepted tender
       as constituting the payment of the debt, as required by the statute. In
       order that the unaccepted tender made by the petitioners might be
       construed as continued in force and presumably to operate as a payment
       of the debt secured by the mortgage, the petitioners on the same day as
       filing their petition for the satisfaction of the mortgage (December 23,
       1942), paid the amount of the tender to the Prothonotary of New Castle
       County. This payment was not made pursuant to any statute or rule of
       this Court, or any order of a Judge. Without passing upon any effect
       the payment may have as to any subsequent interest on the mortgage,
24
   33 A.2d 306 (Del. Super. June 15, 1943).
25
   Id. at 307.
26
   Id.
27
   Id.
28
   Id.
29
   Id.
                                              7
       or, in connection with the tender, as affecting the lien of the mortgage,
       we do not think it constitutes payment of the debt secured by the
       mortgage, within the meaning of the cited statute.30

       The current dispute before this Court mirrors Agostini’s factual and

procedural posture.         This matter was not the subject of pending litigation.

Defendant, who holds the mortgage, has not sought to foreclose on it. And, the

Defendant mortgagee is not the moving party.31

       In Agostini, this Court determined what should be the “remedy of a mortgagor

who may be assumed to be entitled to repay a mortgage and offers to do so in full as

to both principal and interest, but the mortgagee refuses to accept a tender, although

such tender is actually made and continued in force.”32

       Ultimately, applying Section 3694 of the Delaware Revised Code of 1935,

which preceded 25 Del. C. § 2115 and contains virtually identical statutory language

to § 2115,33 this Court concluded the statute did not consider the mortgage paid if

30
   Id., at 310.
31
   Unlike Agostini, Plaintiff did not remit funds to the Prothonotary after the trust company refused
to accept payment to preserve its tender. But, as discussed supra, that makes no difference to the
outcome.
32
   Agostini, 33 A.2d at 308.
33
   Section 3694 of the Delaware Revised Code of 1935 provides, in pertinent part:
§ 3694, Sec. 37. Satisfaction of Record of Mortgage or Judgment; Process to Compel Entry
of Petition to Superior Court; Rule; Service of; Substituted Service by Publication; When;
How; Order of Court; Entry by Recorder or Prothonotary: --
         In all cases where mortgages or judgments are liens on real estate in this State and
         the same have been paid and the mortgagee or obligee or their executors,
         administrators or assigns shall refuse or neglect to enter satisfaction of such
         mortgage or judgment on the record thereof in the office where the same is recorded
         or entered, within sixty days after the payment thereof, the mortgagor or obligor or
         their heirs or assigns may, upon sworn petition to the Superior Court of the county
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the mortgagee rejected the tender. Under those circumstances, the mortgage was not

paid, and the statute applied only to “cases where the recorded lien remains but the

debt has been paid.”34 The Court held:

       We do not think the statute was intended as a method of separating a
       debt from a lien securing such debt, or of removing a lien from an
       unpaid debt. We think the statute was solely for the purpose of
       removing the record evidence of a defunct but recorded lien, after the
       debt secured by the mortgage lien had been actually paid.35

       Consistent with Agostini, because Defendant rejected Plaintiff’s tenders to

satisfy the mortgages and Plaintiff cannot demonstrate that the mortgages are

satisfied. As a result, this Court cannot direct the mortgages be properly recorded

as satisfied pursuant to 25 Del. C. § 2115.

       in which such mortgage or judgment is recorded or entered, setting forth the facts,
       obtain from such Court a rule on the said mortgagee or obligee or their executors,
       administrators or assigns, to appear on the day fixed by said Court and show cause,
       if any they have, why such mortgage or judgment shall not be marked satisfied on
       the record thereof. Such rule shall be served as provided by law for service of writs
       of Scire Facias. In case the mortgagee or obligee or their executors, administrators
       or assigns reside out of the State and cannot be served, or in case the mortgagee or
       obligee is a corporation which has been dissolved for more than three years prior
       to the filing of said petition, and for whom no Trustee or Receiver has been
       appointed, the rule shall be continued and a copy thereof shall be published by the
       Sheriff in a newspaper of the County once each week for four successive weeks,
       and upon proof of such advertisement by affidavit of the Sheriff made at the time
       to which such rule was continued, shall be deemed and considered sufficient service
       of such rule.
34
   Agostini, 33 a.2d at 309.
35
   Id.
                                                 9
        b. The application of 10 Del. C. § 5061.

        Plaintiff presented his claim for relief, in applying 25 Del. C. § 2115, as a

scire facias sur mortgage satisfaction, 36 and Defendant’s post-argument briefing

reflects adoption of that position. In doing so, Defendant’s potential defenses were

limited, because under Delaware law, in a scire facias sur mortgage writ, “only those

claims or counterclaims arising under the mortgage may be raised in a scire facias

sur mortgage foreclosure action.”37

        Title 10 of the Delaware Code, Section 5061 provides the procedure by which

a party may issue a writ of scire facias sur mortgage to foreclose a delinquent

mortgage in the Superior Court.38 Section 5061 applies when a party breaches “the

condition of a mortgage of real estate by nonpayment of the mortgage money or

nonperformance of the condition stipulated in such mortgage at the time and in the

manner therein provided [in] the mortgage.” 39 It has no application to the facts

36
   D.I. 19, Plaintiff’s Memorandum of Facts and Law in Support of Petition Pursuant to 25 Del.
C. § 2115 To Compel Entry of Satisfaction of Mortgage and to Issue Rule to Show Cause, ¶2 (The
Petition was filed as a “SCIRE FACIAS SUR MORTGAGE SATISFACTION” pursuant to 25
Del. C. § 2115(a) which provides therein that ‘Such rule shall be served as provide by law for
service of writs of scire facias.’”)) While this statute requires a litigant to effect service as provided
by law as a writ of scire facias, it does not convert the § 2115 Petition into a writ of scire facias
sur mortgage, pursuant to 10 Del. C. § 5061.
37
   Lasalle National Bank v. Ingram, 2005 WL 1284049, at *1 (Del. Super. May 19, 2005) (quoting
Harmon v. Wilmington Trust Co., 1995 WL 379214, at *2 (Del. June 19, 1995)). These defenses
are limited to issues surrounding payment, satisfaction, absence of seal, or plea in avoidance of the
Deed. Id., (citing Gordy v. Preform Bldg. Components, Inc., 310 A.2d 893, 896 (Del. Super. Aug.
13, 1973).
38
   Wells Fargo Bank, N.A. v. Williford, 2011 WL 5822630, at *3 (Del. Super. Nov. 17, 2011).
39
   10 Del. C. § 5061.
                                                   10
before this Court, and there is no other execution provision in subchapter IX of Title

10 the Delaware Code which permits a writ of scire facias sur mortgage to Compel

Entry of Satisfaction of a Mortgage pursuant to 25 Del. C. § 2115.

CONCLUSION

      Plaintiff’s Petition, pursuant to 25 Del. C. § 2115, to compel entry of

satisfaction of the mortgage is DISMISSED.

      IT IS SO ORDERED.

                                 /S/ Martin B. O’Connor
                                 Commissioner Martin O’Connor

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