Appellee The Bank of New York Mellon, f/k/a The Bank of New York brought a foreclosure proceeding against Appellants J.M. and and Kathy Shrewsbury. The Bank was not the original mortgagee; it received the Shrewsbury mortgage by an assignment from the original mortgagee. The Shrewsburys answered the complaint asserting that the note representing the debt secured by the mortgage had not been assigned to The Bank. They further asserted that since the note had not been assigned to The Bank, it did not have the right to enforce the underlying debt and, therefore, did not have the right to foreclose on the mortgage. The Superior Court rejected the Shrewsburys' argument and granted summary judgment to The Bank. The narrow question presented on appeal was whether a party holding a mortgage must have the right to enforce the obligation secured by the mortgage in order to conduct a foreclosure proceeding. After review, the Supreme Court held that a mortgage assignee must be entitled to enforce the underlying obligation which the mortgage secures in order to foreclose on the mortgage. Accordingly, the Court reversed the trial court and remanded for further proceedings. View "Shrewsbury v. The Bank of New York Mellon" on Justia Law
This case arose from a dispute over certain property subject to a foreclosure. At issue was whether the parol evidence rule required that a person who claimed to hold a "purchase money mortgage" must prove his purchase money mortgage holder status solely by reference to the mortgage instrument itself. The court concluded that, in this case, the recorded deed and purchase money mortgage established that the sellers' mortgage satisfied, at least prima facie, all three requirements of 25 Del. C. 2108. Moreover, the mortgage contained no subordination language that would relinquish priority to the third party lenders. Therefore, the presumption that the sellers' mortgage was a purchase money mortgage entitled to statutory priority standards stood unrebutted. By applying the parol evidence rule to reach a contrary conclusion, the Superior Court erred as a matter of law. View "Galantino v. Baffone" on Justia Law
Liberty commenced this action against the Trustee under the Indenture, seeking injunctive relief and a declaratory judgment that the proposed Capital Splitoff would not constitute a disposition of "substantially all" of Liberty's assets in violation of the Indenture. The Court of Chancery concluded, after a trial, that the four transactions at issue should not be aggregated, and entered judgment for Liberty. The Court of Chancery concluded that the proposed splitoff was not "sufficiently connected" to the prior transactions to warrant aggregation for purposes of the Successor Obligor Provision. The court agreed with the judgment of the Court of Chancery and affirmed.
Posted in: Banking, Business Law, Corporate Compliance, Delaware Supreme Court, Mergers & Acquisitions, Securities Law
Central Mortgage Company (CMC) sued Morgan Stanley after mortgages for which CMC purchased servicing rights from Morgan Stanley began to fall delinquent during the early financial crisis of 2007. CMC subsequently appealed the dismissal of its breach of contract and implied covenant of good faith and fair dealings claims. The court held that the Vice Chancellor erroneously dismissed CMC's breach of contract claims on the basis of inadequate notice where CMC's pleadings regarding notice satisfied the minimal standards required at this early stage of litigation. The court also held that the Vice Chancellor erroneously dismissed CMC's implied covenant of good faith and fair dealings claim where the claims were not duplicative. Accordingly, the court reversed the Vice Chancellor's judgment dismissing all three of CMC's claims and remanded for further proceedings.