IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY

Transcription

1 IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY PNC BANK, N.A., Intervenor, v. C. A. No. 03L SCD GMAC MORTGAGE CORPORATION, Plaintiff, and SCOTT SAUNDERS, Intervenor, v. KATHERINE COWAN, Defendant. Appearances: Submitted: December 12, 2003 Decided: June 16, 2004 Intervenor PNC Bank, N.A. s Motion to Set Aside Sheriff s Sale. Denied. Intervenor Scott Saunders Motion to Authorize Deed. Granted. OPINION John R. Weaver, Esquire, Wilmington, Delaware. Attorney for PNC Bank, N.A. Theodore F. Sandstrom, Esquire, Wilmington, Delaware, Attorney for Scott Saunders. Robert T. Aulger, Esquire, Wilmington, Delaware. Attorney for GMAC Mortgage Corp. JOHN E. BABIARZ, JR., JUDGE

2 This case arises from two separate foreclosure actions filed by Plaintiff GMAC and Intervenor PNC against Defendant Katherine Cowan, who had defaulted on mortgages held by both entities. Complications arose because PNC, the junior lienholder, misspelled Defendant s last name on its mortgage instrument. The consequence of the misspelling was that neither lienholder had notice of the other s foreclosure action, a critical element in the process of foreclosure. Intervenor PNC has moved the Court to set aside the sheriff s sale brought about by Plaintiff GMAC s foreclosure action. The buyer of the property, Intervenor Scott Saunders, joins GMAC in its opposition to the motion. For the reasons explained below, the motion to set aside the sheriff s sale is denied. FACTS Defendant Katherine Cowan, record owner of a property known as 913 Fairview Avenue, Wilmington, Delaware, defaulted on a mortgage made to Plaintiff GMAC Corporation. In April 2003, GMAC filed a Complaint of Scire Facias Sur Mortgage. 1 A default judgment was entered against Defendant on May 27, The property was sold at Sheriff s sale on August 12, 2003, for $81,000 to Intervenor Scott Saunders. The sale was confirmed by this Court on September 5, 2003, and the Sheriff received final payment on September 24, See DEL.CODE ANN. tit. 10,

3 In the meantime, on June 24, 2003, Intervenor PNC instituted a separate foreclosure action on a second mortgage on the same property against Katherine Paris a/k/a Katherine Cowan. Thus began the twists and turns that led to a quandary which will now be resolved. The PNC mortgage, which was recorded on December 27, 2001, was indexed with the Recorder of Deeds under both Paris and Cowen, as presented on the face of the mortgage. When GMAC conducted its title search, it did not locate the PNC morgage because GMAC had no knowledge of the name Paris and the correct spelling of Defendant s name is Cowan rather than Cowen. For this reason, GMAC did not give notice to PNC of the foreclosure. Notice of PNC s foreclosure action was delivered to the GMAC office in Waterloo, Iowa, on July 1, Notice was not sent to local counsel. Although PNC has submitted a copy of a stamped rather than signed mail receipt documenting delivery to GMAC s Iowa office, GMAC represents to the Court that it has not been able to locate the notice. On July 22, 2003, GMAC performed its bringdown title search in preparation for giving notice to lienholders of the sheriff s sale scheduled for August 12, Seven days later, on July 29, 2003, PNC filed an entry of default judgment on its own 2 See GMAC Letter Memorandum (Nov. 17, 2003, Ex. C. 3

4 foreclosure action. On this document, Defendant Cowan s name was spelled correctly. PNC eventually learned of the GMAC action when it attempted to notice its sheriff s sale. PNC is not a party to the GMAC action, and the record does not indicate that PNC filed a motion to intervene, as required under Super. Ct. Civ. R. 24. Nonetheless, on October 16, 2003, PNC filed the motion currently before the Court to set aside GMAC s sheriff s sale. GMAC did not object to PNC s failure to move to intervene, and the Court therefore in its discretion recognizes PNC s standing to intervene because it has an undisputed interest in the property. The same holds for Scott Saunders, the buyer of the property, who joined in GMAC s opposition to the motion without filing a motion to intervene. DISCUSSION The issue before the Court is whether the GMAC sheriff s sale should be set aside because PNC did not receive notice of GMAC s complaint or the sale. PNC argues that GMAC failed to comply with the notice provisions of both Rule 4(f(4 and Rule 69 (g, which govern the sci fa complaint and the subsequent sale, respectively. 3 3 DEL. CODE ANN. tit. 10, 506(d authorizes the Superior Court to make rules governing scire facias procedures. These rules are Rule 4(f(4 and Rule 69(g. 4

5 PNC makes three specific arguments. First, PNC asserts that GMAC should have done its bringdown search closer in time to the GMAC sheriff s sale so that the PNC default judgment (which had the correct spelling of Defendant s name would have been located. The GMAC bringdown search was done on July 22, 2003, in preparation for the sale on August 12, Rule 69(g, which governs notice of sheriff s sales, provides that, at least seven days prior to the sale, notice be given to lienholders who have acquired liens at least 30 days prior to the sale. The Court finds that GMAC s title search met the terms of Rule 69(g and was reasonably timed to identify lienholders. There is no dispute that GMAC complied with the Rule 4(g(4 service requirements. GMAC is not responsible for the misspelling on the face of the PNC mortgage filed on December 27, PNC also argues that GMAC had actual notice of the PNC action by virtue of the notification received by GMAC s Iowa office on July 1, However, GMAC entered judgment on its foreclosure on May 27, 2003, at which time the GMAC mortgage merged into the foreclosure. 4 Furthermore, no GMAC address was included on the judgment, in which case, Rule 4(f(4 requires that notice be given to counsel of record for the lien. No such notice was given. The Court rejects PNC s argument that the Iowa notification was sufficient and required GMAC to notice an 4 See In re Skelly, 38 B.R (D. Del

6 unknown party ( Paris or misspelled party ( Cowen of its already accomplished foreclosure against Defendant Cowan. PNC also asserts that the Recorder of Deeds should have located the PNC mortgage despite the misspelling. There is no authority to suggest that the Recorder of Deeds may not rely on the name of a mortgagee as it is spelled on the face of the instrument. Nor does common sense support such a proposition. This argument has no merit. Plaintiff GMAC asserts that the PNC lien information was not reasonably available because of the misspelled name and consequential incorrect index entries. The Court agrees. Although the factual record in this case is complicated, the rule of law is not. The process of instituting an action of scire facias is governed by Super. Ct. Civ. R. 4(f(4. As it pertains to the notice which a plaintiff is required to give lienholders, Rule 4(f(4 provides as follows: The notice shall be addressed to holders of liens at the address which appears upon the recorded or filed instrument creating the lien or upon the record of the lien, or to the counsel or record for the holder of the lien, or, if such addresses are not ascertainable from the public records, at the last known available or reasonably ascertainable address of the holders of such liens. This section is based on the assumption that a lienholder will see to it that the names 6

7 of its debtors are correctly spelled on the instrument of liability. Identical language is found in Rule 69(g, which sets forth the notice requirements for a sheriff s sale: The notice shall be addressed to holders of liens at the address which appears upon the recorded or filed instrument creating the lien or upon the record of the lien, or to the counsel or record for the holder of the lien, or, if such addresses are not ascertainable from the public records, at the last known available or reasonably ascertainable address of the holders of such liens. In this case, Plaintiff GMAC complied with the explicit provisions of both Rule 4(f(4 and Rule 69(g. The parties do not dispute that GMAC conducted a computer search for liens using the correct spelling Cowan and that the search failed to locate PNC s mortgage because of a misspelling on the face of the mortgage. This is the reason that PNC did not receive notice of the GMAC foreclosure, and fault cannot be placed at the door of either GMAC or the Recorder of Deeds. The sheriff s sale will not be set aside. Intervenor Saunders has moved the Court to authorize the New Castle County Sheriff to issue a deed to the property to Mr. Saunders. The motion is granted. The Sheriff is hereby so authorized. 7

8 CONCLUSION For the reasons explained above, Intervenor PNC s motion to set aside the GMAC sheriff s sale is Denied. Intervenor Saunders motion to obtain the deed to the subject property is Granted. It Is So ORDERED. Judge John E. Babiarz, Jr. JEB,Jr/ram/bjw Original to Prothonotary 8