Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WILLIAMS v. NATIONAL HOUS. EXCH.

December 13, 1996

DONNA LEE H. WILLIAMS, INSURANCE COMMISSIONER OF THE STATE OF DELAWARE, AS RECEIVER OF NATIONAL HERITAGE LIFE INSURANCE COMPANY IN REHABILITATION, CONTINENTAL STOCK TRANSFER & TRUST COMPANY, and MIDWEST MORTGAGE SERVICING, L.L.C., Plaintiffs,
v.
NATIONAL HOUSING EXCHANGE INC, APX MORTGAGE SERVICES, INC., and RESOURCE ASSET MANAGEMENT, Defendants.



The opinion of the court was delivered by: BUCKLO

 The plaintiffs brought suit against the defendants alleging various federal and state law violations in connection with the sale of certain debentures and the mortgage servicing for those debentures. The plaintiffs now have moved for summary judgment on Count II, seeking a declaratory judgment establishing that the defendants had no authority to transfer their powers or rights to other entities. For the following reasons, the motion is granted.

 Background

 The following facts are undisputed. National Housing Exchange ("NHE") is the issuer of 21 series of 1993 8.5% Registered Collateralized Mortgage Debentures (the "Bond"). This Bond has a total face value of $ 126,000,000 which is secured by a pool of mortgages. NHE sold the Bond to National Heritage Life Insurance Company ("National Heritage") on December 28, 1993. On that same date, NHE entered an Indenture and Servicing Agreement (the "Indenture") with Continental Stock Transfer and Trust Company ("Continental"), which was the trustee on the Bond, and APX Mortgage Services ("APX"), which was the servicer of the mortgages securing the Bond. Subsequent to this purchase, the Court of Chancery of the State of Delaware placed National Heritage in rehabilitation and then ultimately in liquidation. The court appointed Donna Lee H. Williams, the Insurance Commissioner of the State of Delaware (the "Commissioner"), as the receiver for National Heritage.

 The parties' relationship, however, deteriorated from this point onward. Continental's Chairman of the Board, Steven Nelson, wrote to APX and NHE on July 29, 1994, claiming that they had failed to comply with their respective obligations under the Indenture. A representative of the Commissioner sent a similar letter of default to APX and NHE on August 1, 1994. Finally, on November 7, 1994, less than one year after signing the Indenture, Continental sent a letter to APX and NHE terminating their respective rights under the Indenture.

 Despite that termination letter, on December 19, 1994, NHE sent a letter to Midwest Mortgage Servicing ("Midwest") which appointed it as servicer for the mortgages on the condition that Midwest appoint Resource Asset Management ("RAM") as subservicer. Accordingly, on December 23, 1994, Midwest sent a letter to RAM naming it as subservicer for the mortgages. Subsequently, Continental sent a letter to Midwest on February 23, 1995 which named Midwest as the new servicer of the mortgages. The letter stated that the appointment was effective as of January 13, 1995.

 Litigation has followed this paper trail of terminations and appointments ever since. The issue presently before the Court on this motion for summary judgment is whether or not NHE's appointment of Midwest as servicer and Midwest's appointment of RAM as subservicer are valid actions.

 Legal Standard of Review

 A court may award summary judgment to the moving party only when there is no genuine issue of material fact and that party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). A genuine issue of material fact exists when a reasonable jury could return a verdict for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In considering the motion, all reasonable inferences must be drawn in favor of the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970).

 Termination of NHE's Rights and Powers

 The Commissioner claims that Continental's letter of November 7, 1994, which terminated NHE's rights under the Indenture, precluded NHE from subsequently appointing Midwest as the servicer on December 19, 1994. RAM disputes this claim and argues that NHE and APX were not in default of their obligations under the Indenture, and therefore Continental's termination was ineffective. RAM's argument is without merit.

 On April 12, 1996, I ruled on the Commissioner's motion for summary judgment on Count I. In that order, I stated that all of NHE's and APX's rights under the Indenture were terminated on November 7, 1994, the date that Continental sent its termination letter to NHE. Amended Declaratory Judgment Order at 1. Nothing has changed since I rendered that decision, and no new facts have been brought to light by RAM.

 Moreover, RAM previously has taken a position directly at odds with its present argument. In March, 1996, RAM filed a Local Rule 12(N) statement of facts in connection with the Commissioner's motion for summary judgment on Count I. *fn1" In that prior statement, RAM agreed with the very same facts which it attempts to dispute for purposes of this motion. Specifically, it agreed with the facts contained in paragraphs 27 and 28 of the Commissioner's 12(M) statement. RAM's 12(N) Statement for Count I, PP 27-28. Those paragraphs state that NHE's and APX's rights under the Indenture were terminated as a result of the November 7th letter from Continental, and upon termination, all of NHE's and APX's authority and power under the Indenture passed to Continental. Commissioner's 12(M) Statement for Count I, PP 27-28.

 Thus, I once again find that all of NHE's and APX's rights were terminated pursuant to Continental's letter dated November 7th, 1995. As of that date, all of NHE's and APX's powers and authority passed to Continental according to Section 9.05 of the Indenture agreement. Consequently, NHE's December 19th appointment of Midwest as servicer is null and void because it had no authority or power under the Indenture to make such an appointment. Likewise, Midwest's December 23rd appointment of RAM as subservicer is invalid. Naturally, if NHE lacked ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.