Court Opinion

ID: 4163643
Source: CourtListenerOpinion
Date Created: 2017-04-26 21:09:14.365122+00
Date Added: 2024-06-11T14:37:56.282201
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

913 MARKET, LLC,               )
                               )
          Plaintiff,           )
                               )
          v.                   )     C.A. No. N16C-11-149 JAP
                               )
KAMAL BATHLA,                  )
                               )
          Defendant.           )

                       MEMORANDUM OPINION

     This is a dispute over which party to a failed real estate

transaction is entitled to the purchaser’s deposit. Defendant Bathla

agreed to purchase 913 Market Street in Wilmington, Delaware

from Plaintiff and made a $118,000 deposit. Closing on the

transaction never took place, and the seller, 913 Market LLC, filed a

breach of contract claim seeking the deposit as liquidated damages

because of Bathla’s failure to settle.   Bathla claims he was not

obligated to close on the property because the title insurance

offered to him contained an exception for a potential lis pendens

lien. Bathla has filed a motion to dismiss or, in the alternative, a

motion for judgment on the pleadings.       The issue presented is
whether the exception in Bathla’s title insurance excused his failure

to close on the property.

                                        Background

       This story begins with a June, 2016 auction sale of 913

Market Street.           The high bidder at the auction was InvestUSA,

which bid $1,200,000. 913 Market and InvestUSA agreed to a July

15, 2016 closing, but for reasons not apparent here, InvestUSA

failed to close on the property.                    Bathla was the second highest

bidder, and a few days after InvestUSA failed to close, Bathla and

913 Market entered into the sale agreement which gives rise to this

lawsuit.      The 913 Market-Bathla agreement called for a closing on

September 19, 2016.

       The dispute arises from an exception in the title insurance

commitment issued to Bathla by First American Title Insurance

Company.1 In the title insurance policy delivered to Bathla by First

American, the insurer excepted any claim InvestUSA may have

against the property:

1  In his motion Bathla asserted that transactional counsel for the seller delivered the policy to
him. (Motion, ¶8). The attachments to Bathla’s motion show, however, that the policy was
issued directly to Bathla by First American and that the Seller played no role in delivering the
policy to Bathla. Bathla’s counsel conceded at oral argument that the assertion in the motion
that counsel for the Seller delivered the policy to Bathla is incorrect.

                                                2
               This Policy does not insure against loss or damage,
               and the Company will not pay costs, attorneys fees, or
               expenses that arise by reason of any rights, title and
               interest in the subject property by InvestUSA Holding
               Enterprises LLC . . . under the Ten-X Contract dated
               June 15, 2016 . . . and any claims related in any way
               to it as well.

Because the closing did not take place between 913 Market and

Bathla on September 19, 2016, as noted in the 913 Market-Bathla

agreement, 913 Market now seeks the deposit paid by Bathla as

liquidated damages.

                                       Analysis

        Bathla’s obligation to close on the agreement must be

determined solely on the basis of the terms of that agreement. The

Purchase        and     Sale    Agreement     contains    a   strongly    worded

integration clause which provides:

               This Agreement and the items incorporated herein
               contain all the agreements of the parties hereto with
               respect to the matters contained herein; and no prior
               agreement or understanding pertaining to any such
               matter shall be effective for any purpose. No provisions
               of this Agreement may be amended or modified in any
               manner whatsoever except by an agreement in writing
               signed by duly authorized officers or representatives of
               each of the parties hereto.2

2   Purchase and Sale Agreement, ¶8.

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Bathla does not contend there is any “agreement in writing” beyond

the Purchase and Sale Agreement, and, accordingly, the court’s

inquiry is limited to that agreement.

       The conditions precedent to Bathla’s obligation to purchase

the property are set out in paragraph 4.1 of the agreement.3 There

are two conditions precedent. The key one here is:

              Title to the Property shall be subject only to the same
              exceptions as shown on Seller’s title policy with the
              exception that the mortgage lien thereon shall be
              satisfied at Closing from the proceeds of sale.

Nowhere in the agreement is there any condition precedent relating

to Bathla’s title insurance. Thus, the fact that Bathla’s title insurer,

First American, excepted any lis pendens claim from coverage is of

no significance when determining whether Bathla was obligated to

close. What is significant is whether 913 Market was able to deliver

title clear of all liens saved for exceptions in 913 Market’s own title

policy.

       There was no lis pendens lien on the property as of the date of

the closing. In 1989 the Delaware general Assembly repealed the

common law doctrine of lis pendens and substituted a statutory

3  Paragraph 4.1 begins “Buyer’s obligation to purchase the property shall be conditioned upon
the fulfillment of the following conditions precedent.”

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scheme in its place. This scheme is the exclusive way to obtain a lis

pendens lien. Section 1614 of title 25 provides “no action instituted

after June 29, 1989, shall constitute constructive notice to any

person unless notice of such action complies with the requirements

of this chapter.” In order to obtain a lien, the claimant must file a

notice containing certain specified information in the office of the

Recorder of Deeds.4             That office is obligated to file and index the

notice and must indicate on it the date and time of filing.5

Critically, the statute provides that “[u]nless and until a notice of

pendency is filed as provided by this chapter, no action shall, before

final judgment is entered therein, be deemed to be constructive

notice to a person acquiring or having acquired a lien on or any

other interest in the affected real estate.”

        Bathla does not contend that, as of the date of the closing,

InvestUSA had filed the notice required for a lis pendens lien with

the Recorder of Deeds, and insofar as the court is aware, no such

notice had been recorded. In other words, on the date of closing

913 Market was able to deliver clear title (as defined in agreement)

to Bathla. The possibility that InvestUSA might file a lis pendens
4   25 Del. C. § 1601. The information required in the notice must be supplied under oath.
5   Id. § 1602.

                                               5
notice after closing is inconsequential. Had such a notice been filed

after the closing it would have been ineffective against Bathla.

       Finally, Bathla directs the court’s attention to a September 16,

2016, action that 913 Market filed against InvestUSA.                                  Bathla

claims that allegations made by 913 Market in that action

constitute a “judicial admission” that InvestUSA had a lien the

property.       Under these circumstances, allegations made by 913

Market against InvestUSA cannot, as a matter of law, bind it in this

matter.6 But even assuming the allegations in the InvestUSA matter

could have some sort of preclusive effect, nothing in the complaint

in that case amounts to an admission against 913 Market’s

interests in this matter. Rather than concede that InvestUSA had a

lien or interest in the property at 913 Market Street, 913 Market

alleged that InvestUSA had no such interest. Further, in this

instance, the existence of a lien on the property is a question of law,

6  Bathla cites Merritt v. United Parcel Service, 956 A.2d 1196 (Del. 2008) to support his
contention that “judicial admissions” are binding upon the party making them. But Merritt
involved admissions made by a party in the same action, whereas the ostensible admissions
here were made in an entirely different action. Merritt therefore does not help Bathla. Though
not mentioned in Bathla’s motion, there are limited instances in which assertions made by a
party in one action may constitute “judicial estoppel” against the same party in another suit.
The doctrine applies “operates only where the litigant's [assertion] contradicts another position
that the litigant previously took and that the Court was successfully induced to adopt in a
judicial ruling.” Motorola, Inc. v. Amkor Tech., Inc. 958 A.2d 852, 859–60 (Del. 2008) (emphasis
in original). There is no suggestion that this court was persuaded to rely upon 913 Market’s
“admissions” in InvestUSA and therefore the doctrine of judicial estoppel does not apply here.

                                               6
not fact. Thus, whatever admissions of fact 913 Market ostensibly

made in its complaint against InvestUSA are of no significance to

the issue now before the court.

     Wherefore, Defendant’s motion to dismiss or, alternatively

judgment on the pleadings, is DENIED.

Dated: April 26, 2017
                                        John A. Parkins, Jr.
                                       Superior Court Judge

oc: Prothonotary

pc: Charles J. Brown, III, Gellert Scali Busenkell & Brown, LLC,
    Wilmington, Delaware
    Jeffrey M. Weiner, Esquire, Law Offices of Jeffrey M. Weiner, PA,
    Wilmington, Delaware

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