Bendfeldt & Roloff v. HSBC Mortgage

• Court: Supreme Court of Delaware
• Decided: October 7, 2014
• Docket: 68, 2014
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

KENNETH BENDFELDT, and § BETTINA ROLOFF, § No. 68, 2014 § Defendants Below- § Appellants, § Court Below: Superior Court § of the State of Delaware in and v. § for Kent County § HSBC MORTGAGE CORPORATION, § (USA), § C.A. No. K09L11016 § Plaintiff Below- § Appellee. §

Submitted: September 10, 2014 Decided: October 7, 2014

Before STRINE, Chief Justice, HOLLAND, RIDGELY, VALIHURA, Justices, and GLASSCOCK,* Vice Chancellor, constituting the Court en Banc.

ORDER On this 7th day of October 2014, it appears to the Court that:

(1) Defendants-Below/Appellants Kenneth Bendfeldt and Bettina Roloff

(collectively, the “Mortgagors”) appeal from a Superior Court order granting a

Motion to Affirm Default Judgment and Proceed to Sheriff Sale in favor of

Plaintiff-Below/Appellee HSBC Mortgage Corp. (USA) (“HSBC”). The

Mortgagors raise three claims on appeal. First, they argue that the trial court erred

by concluding that they did not have standing to challenge HSBC’s ownership of

* Sitting by designation pursuant to art. IV, § 12 of the Delaware Constitution and Supreme Court Rules 2 and 4(a) to fill up the quorum as required. the mortgage. Second, they argue that the trial court erred in making factual

determinations without considering the Mortgagors’ evidence. And third, they

contend that the trial court erred when it refused to address the ownership of the

note that secured the mortgage.

(2) In 2007, the Mortgagors obtained a loan for $283,500 from HSBC (the

“Mortgage”). The Mortgagors also executed a note evidencing their obligation to

repay the Mortgage, secured by their real property in Harrington, Delaware. The

Mortgage named Mortgage Electronic Registration Systems, Inc. (“MERS”) as the

mortgagee in its capacity as nominee for HSBC. On or about March 1, 2009,

Mortgagors defaulted on the Mortgage. In November 2009, HSBC initiated a

foreclosure action in the Superior Court. Days after the filing, MERS executed a

certificate of assignment assigning HSBC the Mortgage. The Mortgagors were

served notice of the complaint, but failed to appear or file a response.

(3) On March 22, 2010, the Superior Court issued a default judgment in

favor of HSBC. HSBC then attempted to execute the judgment by filing a writ of

levari facias. The writ was issued and a sheriff’s sale was scheduled for July 2010.

One day prior to the sheriff’s sale, the Mortgagors entered an appearance. The sale

was stayed, and the parties engaged in discovery. Due to a clerical error in the

original assignment, MERS executed a corrective assignment to HSBC. HSBC

then assigned the Mortgage to the Federal National Mortgage Association (“Fannie Mae”). On April 23, 2013, HSBC moved to affirm the default judgment and

proceed to sheriff’s sale. The Mortgagors objected and moved to vacate the

default judgment. After oral argument and additional briefing, the Superior Court

granted HSBC’s motion to affirm the default judgment. This appeal followed.

(4) Rule 55(c)2 of the Superior Court Rules of Civil Procedure provides that

default judgments may be set aside in accordance with Rule 60(b).3 “‘A motion to

reopen a judgment under Rule 60(b) is addressed to the sound discretion of the trial

court and will be reviewed by this Court on appeal for an abuse of that

discretion.’”4

(5) As a preliminary matter, we assume without deciding that the

Mortgagors had standing to challenge the assignments in this case. The issue of

whether and, if so, when mortgagors have standing to challenge an assignment is

an important one that we need not and therefore do not reach to decide this appeal

because the Mortgagors’ challenge is without merit. The record shows that the

Mortgagors were served personally by the Sheriff and did not file a timely answer

to the complaint.5 The Mortgagors have been in default since 2009. The record

also shows that HSBC was both the holder of the mortgage and the holder of the

2 Super. Ct. Civ. R. 55(c). 3 Super. Ct. Civ. R. 60(b). 4 Gibson v. Car Zone, 2011 WL 5354270, at *2 (Del. Nov. 8, 2011) (internal quotation marks omitted). 5 See Appellants’ Op. Br. App. at A7, Dkt. Item 6.

3 negotiable note evidencing the Mortgagors’ debt. The note was endorsed in blank,

a copy was attached to HSBC’s brief submitted to the trial court, and HSBC

offered to produce the original note upon request.

(6) The burden lies on the Mortgagors to show that the default judgment

should be vacated under Rule 60(b) of the Superior Court Rules of Civil

Procedure. We find no abuse of discretion in denying relief to the Mortgagors

because they have failed to meet this high burden. Accordingly, we affirm.

NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior

Court is AFFIRMED.

BY THE COURT:

/s/ Henry duPont Ridgely Justice