Summary
observing that if monies subject to a gift letter were not a gift, "a representation was made to the . . . mortgagor"
Summary of this case from Masiello v. JohnsonOpinion
C.A. No. 97C-02-268.
Date Submitted: December 10, 1999.
Date Decided: February 3, 2000.
UPON PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT DENIED
ORDER
On this 3rd day of February, 2000, upon consideration of Plaintiffs' Motion for Summary Judgment and the December 10, 1999 oral arguments of both parties it appears to the Court that:
(1) David and Rita Krigstein ("Plaintiffs") filed this action to collect on a $50,000 promissory note signed by Theresa Krigstein ("Defendant"), Plaintiffs' former daughter-in-law and Defendant's ex-husband Alan Krestein, Plaintiffs' son. The $50,000 promissory note was executed on December 15, 1988 and payable on demand with 12% interest payable in equal monthly installments of $500 beginning January 15, 1989 until demand for the principal was to be made.
On August 16, 1989, a mortgage for the $50,000 was given by Defendant and Alan Krigstein to Plaintiffs. However, the mortgage is not the subject of this action.
(2) Defendant and former husband Alan Krigstein separated in September of 1989 and were ultimately divorced in June of 1990. As with most who divorce, Defendant and Alan Krigstein had property and debts to settle. The $50,000 debt has been in dispute at least since December of 1996. Pursuant to a March 23, 1992 Formal Stipulation and Order, Defendant was to list and/or sell the marital home or purchase Alan's Kreigstein's interest in the marital home within three years from the date of the order. Alan Kregstein was to pay, among other things, the first mortgage and second mortgage, the $50,000 mortgage and/or promissory note held by Plaintiffs. Defendant neither sold nor purchased her former husband's interest in the property. Pursuant to a December 3, 1996 Family Court Order, Defendant was to pay the first and second mortgages on the marital residence. Per an August 18, 1997 Family Court Order Defendant was held in contempt for failure to make the mortgage payments per the December 3, 1996 Family Court Order.
Krigstein v. Krigstein, Del. Fam., C.A. No. 90-6082, Tumas, J. (Dec. 3, 1996) (ORDER).
(3) There is nothing in the record indicating Defendant denies signing either the promissory note or the second mortgage. However, Defendant has maintained and continues to maintain that the $50,000 was not a loan but was rather a gift and therefore she does not owe Plaintiffs the money.
(4) Plaintiffs first argue that since the Family Court heard and considered Defendant's argument regarding the note owed being a sham she is barred by collateral estoppel and res judicata from raising that defense in this action. Plaintiffs argue that the Family Court's June 10, 1997 Order upholds the note's validity and rejects the same sham arguments Defendant is presenting in this action. Thereby, according to Plaintiffs, the doctrines of collateral estoppel and res judicata are applicable and summary judgment should be granted. Defendant argues that res judicata is inappropriate whereas Plaintiffs were not parties to the divorce action. Defendant also argues that pursuant to Chrysler Corp. v. New Castle County, it is within the Court's discretion as whether to allow offensive collateral estoppel. Defendant argues that the Court should not allow offensive collateral estoppel because (i) it will now encourage a "wait and see" attitude by Plaintiffs; (ii) certain procedural opportunities were not afforded her in the Family Court proceedings; and (iii) her incentive to contest the note is different in this action.
Chrysler Corp. v. New Castle County., Del. Super., 464 A.2d 75, 82 (1983) (citing Parklane Hosiery v. Shore, 439 U.S. 322, 99 S.Ct. 645 (1979)).
(5) The Court finds no application for the doctrines of res judicata and collateral estoppel in this action. Family Court is limited in its jurisdiction and has no power to hear or determine claims of third parties against a husband and wife. In Eberly v. Eberly, the Court found the following:
Joseph B.P. v. Kathleen M.P., Del. Supr., 469 A.2d 800, 802 (1983); Eberly v. Eberly, Del. Supr. 489 A.2d 433, 446 (1985); Parag v. Parag, Del. Fam., C.A. No. CN89-9331, Conner, J. (Jan. 22, 1991) (ORDER).
When there is a dispute in divorce litigation as to the existence or the validity of a marital debt, the debt due and owing to third party creditors must first be determined to exist by a Court of competent jurisdiction. Under Joseph B.P. v. Kathleen MP., . . ., this Court does not have jurisdiction to make that determination. Only after such a determination is made, can this Court assign or allocate responsibility for payment of the judicially determined debt.
Parag at 4 (alteration in original).
Consequentially, the Family Court's findings regarding the validity of the promissory has no bearing on this Court and does not prevent Defendant from asserting her defenses in this action.
(6) Plaintiffs' next argument stems from Defendant's claims of fraud and misrepresentation. Defendant claims that she signed both the promissory note and second mortgage after representations were made at different times by both her former husband and Plaintiff David Krigstein, her former father-in-law. In addition, Defendant claims that if the monies were not a gift a misrepresentation was made to the first mortgagor evidenced by a gift letter to Pinnacle Mortgage. The gift letter was signed by Plaintiff David Krigstein and stated that $21,000 was a gift to his son Alan Krigstein. Plaintiffs argue that even if misrepresentations were made at some point, Defendant acknowledged and/or ratified her obligation to pay the debt on two separate occasions. First, Plaintiffs claim, the note was acknowledged when Defendant, eight (8) months after signing the note, executed the second mortgage granting an interest in real property. Second, argues
Second, argues Plaintiffs, Defendant again acknowledged her obligation to pay the $50,000 note when she entered into the January 23, 1991 Stipulation of Settlement, which was filed March 23, 1992. As a result, argues Plaintiffs, Defendant cannot now claim the debt is invalid.
(7) Defendant argues in response that the fraud continued beyond the signing of the note and mortgage. Defendant asserts that the misrepresentations regarding the fact that the money was a loan not to be repaid were still being proclaimed at the various executions of the note and mortgage. Therefore, Defendant argues there are genuine issues of material fact.
(8) In viewing the facts in a light most favorable to Defendant, the Court finds that there are genuine issues of material fact regarding the true nature of the transaction and/or whether Defendant was deceived by alleged misrepresentations. In addition, the Court finds that there is a genuine issue of material fact as to whether the alleged misrepresentations continued at the time of execution of the second mortgage and Stipulation agreement.
See The Federal Land Bank of Baltimore v. Pusey, Del. Super., C.A. No. 85L-MR4, Chandler, J. (Jul. 21, 1986) (Mem. Op.).
(9) Plaintiffs' final argument for summary judgment is that due to the confession of judgment clause in the promissory note Defendant is barred from asserting any defenses because they were known or knowable at the time the note was signed. Defendant counters by arguing that she did not know of the fraud when she signed and the additional defenses of accord and satisfaction and failure to join and indispensable party did not arise until after the note was signed. Pursuant to 10 Del. C. § 2306(j) Defendant may present any defenses she did not know of at the time she signed the promissory note with the confession of judgement clause as well as any defenses that subsequently arose. The Court finds that the defenses Defendant raises, which include, fraud, accord and satisfaction, and failure to join an indispensible party satisfy this requirement.
Pennsylvania House, Inc. v. Kauffman's of Delaware, Inc., Del. Super., C.A. No. 97J-10-039, Terry, R.J. (Dec. 23, 1997) (ORDER).
For the forgoing reasons Plaintiffs' Motion for Summary Judgment is hereby DENIED.
IT IS SO ORDERED.