Opinion
C.A. No. N10C-09-071 CLS.
Submitted: March 2, 2011.
Decided: May 25, 2011.
On Defendant SFJV-2002-1, LLC's Motion to Dismiss.
GRANTED in part and DENIED in part.Robert K. Beste, Jr., Esq., Wilmington, DE, Attorney for Plaintiff.
Lisa R. Hatfield, Esq., Newark, DE, Chase N. Miller, Esq., Newark, DE, Attorneys for Defendant, SFJV-2002-1, LLC.
Anga N. Goodwine, Wilmington, DE, Pro Se Defendant.
ORDER
Introduction
Defendant SFJV-2002-1, LLC has filed a motion to dismiss the complaint for lack of subject matter jurisdiction. The Court has reviewed the parties' submissions. For the reasons that follow the motion to dismiss is granted in part and denied in part.
Background
Ocwen Loan Servicing, LLC ("Plaintiff") filed this declaratory action on September 10, 2010. On November 14, 2001, Anga N. Goodwine ("Defendant Goodwine") executed and delivered to Wells Fargo Home Mortgage, Inc. ("Wells Fargo Mortgage") a mortgage in the amount of $124,642. It was recorded in the Recorder of Deeds in New Castle County as Mortgage Instrument Number 2001119-0095657. The Wells Fargo Mortgage was subsequently assigned to the Secretary of Housing and Urban Development. The Secretary of Housing and Urban Development then assigned the mortgage to SFJV-2002-1, LLC ("Defendant SFJV").
On September 18, 2008, Defendant Goodwine entered into a mortgage with Taylor, Bean Whitaker Mortgage Corporation ("TBW Mortgage"). It was recorded with the Recorder of Deeds in New Castle County as Mortgage Instrument Number 20080929-0064819. The TBW Mortgage was subsequently assigned to Plaintiff, the "Ocwen Mortgage."
Defendant SFJV alleges a default of the Wells Fargo Mortgage and instituted foreclosure proceedings against Defendant Goodwine. Plaintiff alleges the Wells Fargo Mortgage has been paid in full.
The Civil Action Number is 09L-06-062 CLS. That case has been stayed pending this declaratory action to determine the priority of the mortgages.
Defendant SFJV has filed this motion to dismiss for lack of subject matter jurisdiction pursuant to 10 Del. C. § 342, claiming all allegations in this declaratory action are equity in nature.
Counts I and II of the complaint seek declaratory relief. Count I requests the Court to declare the Wells Fargo Mortgage has been paid so it can no longer constitute a lien against the property. Count II alleges an improper mortgage modification as it was not recorded to put all interested and affected third parties on notice.
Plaintiff alleges the original loan amount was $124,642 and Defendant SFJV indicates the outstanding principal balance is $191,731.
Count III requests a constructive trust be placed on the proceeds of a sheriff's sale of the property that is the subject matter of the foreclosure. Plaintiff alleges unjust enrichment as it contends the Wells Fargo Mortgage has been paid.
Count IV requests equitable subrogation based on unjust enrichment as the Wells Fargo Mortgage has allegedly been paid. Plaintiff asserts it has the priority position, at least to the amount in excess of $124,642, the original amount of the Wells Fargo Mortgage.
Count V alleges unjust enrichment if Defendant SFJV receives the proceeds from the Sheriff's Sale, at least the amount above $124,642.
Discussion
Counts I and II: Declaratory Judgment Act
This Court has jurisdiction to hear actions filed pursuant to the Declaratory Judgment Act when the nature of the underlying claim is a mortgage foreclosure. "Jurisdiction under the Declaratory Judgment Act hinges upon whether law or equity would independently have jurisdiction, without reference to the Act, if the subject matter of the controversy should develop to a later stage." This declaratory action is a derivative of the mortgage foreclosure action previously filed with this Court. The Superior Court has concurrent jurisdiction with the Court of Chancery in mortgage foreclosure proceedings, despite the proceedings being inherently equitable. Since this Court has jurisdiction over the mortgage foreclosure action, it has jurisdiction over declaratory judgment claims.
10 Del. C. § 6501 et. seq.
10 Del. C. § 5061.
Heathergreen Commons Condo. Ass'n v. Paul, 503 A.2d 636, 642 (Del. Ch. 1985) ( citing Diebold Computer Leasing, Inc. v. Commercial Credit Corporation, supra, 267 A.2d at 591; Western Air Lines, Inc. v. Allegheny Airlines, Inc., Del.Ch., 313 A.2d 145, 149 (1973); Jefferson Chemical Co. v. Mobay Chemical Co., Del.Ch., 253 A.2d 512, 514 (1969)).
Civil Action Number 09L-06-062 CLS.
Burge v. Fidelity Bond and Mortgage Co., 648 A.2d 414, 421 (Del. 1994).
Inherent in the Court's ability to control its own processes related to the sale of property at a sheriff's sale is the authority to determine which lien holder has the superior priority, as well as how the proceeds should be divided. To determine priority of rights, this Court has permitted lenders to intervene in foreclosure matters. In matters concerning the actual priority of a mortgage, this Court has decided whether a mortgage executed to extinguish both the first mortgage and an equity line of credit was superior to the line of credit when it was not closed and the homeowner made subsequent advances of it. As a result, the Court has the authority to determine whether Plaintiff is the superior lien holder, and if not, the appropriate amount of proceeds that should be distributed to Defendant SFJV in the mortgage foreclosure action.
Id. at 420.
Gordon v. Gordon, 1998 WL 110103, *2 (Del. Super.); Solomon v. Duggan, 2004 WL 692903, *3 (Del. Super.).
In re Leslie, 1994 WL 89346, *4 (Del. Super.).
Count III: Constructive Trust
The Court of Chancery has jurisdiction to hear all matters in equity, while the Superior Court has jurisdiction to hear all matters at "common law." A constructive trust is an equitable remedy requiring economic restitution to the plaintiff. As an equitable remedy, a constructive trust is only available in the Court of Chancery. Accordingly, Count III of the complaint seeking a constructive trust should Defendant SFJV obtain the proceeds from the sheriff's sale is dismissed.
Monroe Park v. Metro. Life Ins. Co., 457 A.2d 734, 738 (Del. 1983) ( citing Del. Const. art. IV, §§ 7, 10; 10 Del. C. §§ 341, 542(c)).
Teachers' Ret. Sys. of Louisiana v. Aidinoff, 900 A.2d 654, 673 (Del. Ch. 2006) ( citing Hogg v. Walker, 622 A.2d 648, 654 (Del. 1993).
Clark v. Teeven Holding Co., Inc., 625 A.2d 869, 878 (Del. Ch. 1992).
Count IV: Equitable Subrogation
The remedy of equitable subrogation is an equitable remedy only available in the Court of Chancery. "Under the doctrine of equitable subrogation, `a surety who pays the debt of another is entitled to all the rights of the person he paid to enforce his right to be reimbursed.'" Since the claim is based in equity, Count IV of the complaint seeking equitable subrogation is dismissed.
Id.
Travelers Cas. Sur. Co. of Am. v. Colonial Sch. Dist., 2001 WL 287482 (Del. Ch.) ( quoting Pearlman v. Reliance Ins. Co., 371 U.S. 132, 137 (1962)).
Id. (citations omitted).
Count V: Unjust Enrichment
This Court has jurisdiction over the unjust enrichment claim because Plaintiff seeks monetary damages, an adequate remedy at law. The Court of Chancery confers jurisdiction over an unjust enrichment claim when a party can show "(1) an enrichment; (2) an impoverishment; (3) a relation between the enrichment and impoverishment; (4) the absence of justification; and (5) the absence of a remedy at law." When an adequate remedy at law exists, the Court of Chancery lacks subject matter jurisdiction over the claim. In his claim for unjust enrichment, Plaintiff seeks the proceeds from the sale of the property. Monetary damages are a remedy at law, so this Court has jurisdiction over the claim.
Grace v. Morgan, 2004 WL 26858 (Del. Super. Ct.) ( citing Jackson Nat'l. Live Ins. Co. v. Kennedy, 741 A.2d 377, 393 (Del. Ch. 1999)).
Id. ( citing Khoury Factory Outlets, Inc. v. Snyder, 1996 WL 74125 (Del. Ch.)).