August v. August.
Annotate this Case
Download PDF
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR SUSSEX COUNTY
JENNIFER AUGUST,
:
Plaintiff,
C.A. NO. SS06J-09-168
:
v.
:
DAVID AUGUST,
:
Defendant.
JENNIFER AUGUST,
:
:
Plaintiff,
C.A. NO. SS07J-09-096
:
v.
:
DAVID AUGUST,
:
Defendant.
:
DECISION UPON APPEAL FROM COMMISSIONER’S
FINDINGS OF FACT AND RECOMMENDATIONS
DATE SUBMITTED: September 19, 2012
DATE DECIDED: December 10, 2012
Jennifer August, pro se, 2 Black Duck Reach, Rehoboth Beach, DE 19971
David August, pro se, 55 Commanche Circle, Millsboro, DE 19966
Graves, J.
The cases before the Court are judgment liens entered on
behalf of Jennifer August (“Creditor”) which secure payments of
Family Court judgments entered against David August (“Debtor”).
Creditor sought to execute on the judgments and Debtor objected
thereto, arguing that he had paid the judgments and they should
be marked satisfied. The matter was referred to the Commissioner,
who entered Findings of Fact and Recommendations Upon Defendant’s
Motion to Stay Execution (“Commissioner’s Decision”). Creditor
seeks review of the Commissioner’s Decision. This review is de
novo.1
In undertaking this review, the Court has reviewed the files
in these consolidated cases, read the transcript of the October
17, 2011 hearing before the Commissioner, examined the exhibits
introduced thereat, reviewed the Commissioner’s Decision, and
read the parties’ submissions on appeal.2 Based upon this de novo
1
Super. Ct. Civ. R. 132(a)(4)(iv).
2
The submissions are as follows: Creditor’s “Appeal from
Commissioner’s Findings of Fact and Recommendations upon
Defendant’s Motion to Stay Execution” filed on November 23, 2011
(“Original Appeal Filing”); Debtor’s “Reply” filed on December
14, 2011 (“Debtor’s Reply”); Creditor’s Supplemental Arguments to
Plaintiff’s 11/22/11 Appeal from Commissioner’s Findings of Fact
and Recommendations upon Defendant’s Motion to Stay Execution”
filed on August 27, 2012 (“Supplemental Arguments”); and Debtor’s
1
review, the Court rejects Creditor’s objections and accepts in
whole the Commissioner’s Decision.
The Court anticipates that Creditor will appeal this
decision to the Supreme Court. In order to make a review on
appeal easier, this Court will incorporate the adopted portions
of the Commissioner’s Decision within its decision here rather
than refer to the Commissioner’s Decision.
Creditor has asserted various arguments on appeal. Some of
those arguments, unfortunately, are not clearly stated and the
Court is unable to address them. These arguments appear as
follows: Original Appeal Filing, paragraphs 3.8) and 5;
Supplemental Arguments 12, 13, and 25-29. Most of the arguments,
however, are clear and I address them.
Debtor responds to each of Creditor’s arguments. It is
unnecessary to address his responses, as he basically agrees to
the Commissioner’s Decision, although he did assert several
objections. Those objections are that the Commissioner erred in
failing to subtract payments made through bankruptcy court, in
“Answer to Supplemental Arguments to Plaintiff’s Appeal” filed on
September 19, 2012 (“Debtor’s Answer to Supplemental Arguments”).
2
not applying the $4,000 payment Creditor received to settle her
Chancery Court case against Anthony Morabito, and in not removing
the lien from the boat when he proved he did not own the boat.
However, Debtor did not raise these objections until he filed his
Answer to Supplemental Arguments to Plaintiff’s Appeal. Because
Debtor did not timely file these objections, he waived those
arguments.
Thus, I deal only with Creditor’s objections in this appeal.
DISCUSSION OF CREDITOR’S OBJECTIONS
This litigation stems from two judgment liens in Superior
Court which are based upon judgments in Sussex County Family
Court. Creditor has a fundamental misunderstanding of the nature
of these judgment liens. Creditor makes many arguments which
state, or which use as a premise, her position that the only way
to reduce the judgments liens is by way of direct payments to
her, such as Debtor’s transfer of stock to her, Debtor’s direct
payment of money directly to her outside the bounds of Family
Court, and by proceeds from judgment executions. She argues that
Debtor’s payments towards the judgments in Family Court and/or
3
payments made on his behalf towards the judgments cannot reduce
the amounts owed. Her position is based upon a premise that the
Superior Court liens are additional judgments above and beyond
the judgments entered in Family Court. They are not. They are
liens which secure the payment of the judgments in Family Court.
They provide an additional means of collecting the monies owed
besides direct payment on the judgments in Family Court.
Family Court judgments in and of themselves cannot bind real
estate; only judgments filed with the Superior Court can
constitute liens on property.3 The liens provide an additional
method for satisfying the Family Court judgments. Methods of
satisfaction are direct payment by Debtor, payment by others
towards Debtor’s account, payments via wage attachments through
Family Court, and the sale of properties by way of executions on
the judgments. As the underlying debts or judgments owed the
Family Court are reduced through payments, the amount owed on the
judgment liens must be reduced.4 Once the debts on the underlying
3
10 Del. C., ch. 47. See Pettinaro Construction Co. v.
Lindh, 428 A.2d 1161 (Del. 1981).
4
10 Del. C. §§ 4751-59.
4
Family Court judgments are paid, either by direct payments
towards the underlying debts and/or by execution on the
judgments, the judgment liens must be marked satisfied.5
In an attempt to show Creditor that her position is
meritless, I set forth a scenario using her premise in another
creditor/debtor situation. Sally owes Bank $1,000.00 on a credit
card debt. Bank obtains a judgment in the Court of Common Pleas
against Sally. Bank then transfers this judgment to Superior
Court so that the judgment will become a lien on Sally’s property
and so that Bank can execute on the judgment. Bank sells Sally’s
car and nets $500.00 in the execution process. Meanwhile, Sally
pays Bank $500.00 on her account directly. At this point, the
$500.00 she directly paid Bank and the $500.00 in proceeds from
the execution constitute a satisfaction of the $1,000.00
judgment. However, employing Creditor’s rationale, Sally should
not receive credit for the $500.00 she directly paid Bank and
Bank would be able to execute on Sally’s property until it
obtains an extra $500.00 through the execution process.
5
Id.
5
Thus,
Bank, according to Creditor, should be paid $1,500.00 on a
$1,000.00 debt.
Creditor’s premise is fundamentally flawed. Thus, all of
Creditor’s arguments based on Creditor’s flawed premise are
legally meritless. I do not set forth the multitude of arguments
and instead, reference their locations in Creditor’s filings.
These arguments are located as follows: 1) Original Appeal
Filing, paragraphs 3-4, 6, and 7; and 2)Supplemental Arguments,
Arguments 1-10, 14-20, and 30. However, by adopting the
Commissioner’s recommendations as my own, I do deal with the
arguments regarding credit for monies paid in connection with the
Chancery matter as contained in Original Appeal Filing paragraphs
3.b)2)-8)and 4.
Creditor also objects to the Commissioner’s rejection of
Creditor’s request for non-legal remedies in the execution
process. The Commissioner correctly stated that Superior Court
only may allow legal proceedings, not any equitable ones.
Creditor’s objection, apparently based upon her unfamiliarity
with the law controlling this Court’s jurisdiction, is legally
6
meritless.
In another argument, Creditor asserts the Commissioner was
biased. A review of the Commissioner’s Decision establishes that
the Commissioner extended every benefit possible to Creditor to
insure she collected every penny available to her and to provide
her with the greatest opportunity for collecting other monies.
The fact the Commissioner did not adopt Creditor’s arguments and
see things Creditor’s way does not mean the Commissioner was
biased. This, too, is a factually and legally frivolous argument.
Finally, there are several arguments which Creditor advances
and which this Court addresses within the context of the Findings
of Fact and Conclusions. Confusion would ensue if I addressed
those arguments at this point rather than within the context of
the factual and legal discussion.
Thus, I now turn to the facts and decision of the matter.
FINDINGS OF FACT AND DECISIONS
Despite her general objection6 to the Commissioner’s
statement that the findings of fact are clear and undisputed,
6
Original Appeal Filing, paragraph 2.
7
Creditor fails to point out any contested facts.7 Creditor
correctly points out in paragraph 1 of the Original Appeal Filing
that the Commissioner erroneously substituted the word “Creditor”
for “Debtor” at page 5 of the Commissioner’s Decision.8 It is
clear from the context that the Commissioner meant “Debtor”.
Furthermore, the error is completely insignificant to the final
decision in the Commissioner’s recommendations. The record is
deemed corrected. However, the correction makes no difference to
the outcome.
As noted above, there are two liens involved in this case.
The judgment lien upon which Creditor has executed is the later
judgment. Both judgment liens arise from Family Court proceedings
involving these parties. Because monies have been paid to Family
Court and to Creditor towards the underlying debts secured by the
7
Past disagreements with the Debtor, disagreements with the
Debtor’s actions, and disagreement with the results of the
Commissioner’s Decision do not render the facts (which
acknowledge these disagreements) to be disputed.
8
The Commissioner incorrectly stated, at page 5:
The Family Court further directed that Creditor
was responsible for paying monthly mortgage
payments of approximately $2,500.00 on the marital
home and to continue paying child support.
[Emphasis added].
8
judgment liens and because payments are to be applied to the
first filed judgment, it is necessary to consider both judgments
in this matter. Consequently, the Court sua sponte joined the
first judgment action with the second in order to render an
accurate and complete accounting in the matters.
The first judgment action is August v. August, C.A. No.
SS06J-09-168. (“Judgment 1").9 Judgment 1 is based upon a
September 14, 2006 Family Court Order (“9/14/06 Family Court
Order”) wherein that court held Debtor in contempt for failure to
pay child support and spousal support.10 The 9/14/06 Family Court
Order states:
Obligor owes arrears/retroactive support of $14679.52
as of 09/01/2006, as established by this order,
calculated as follows: 5 MONTHS @ $950.00 PLUS 7 MONTHS
@ $2351.00 MINUS $6248.24 PAID THRU DCSE11 AND $279.24
DIRECT PLUS 7 MONTHS OF ALIMONY ($2282.11).
The $14,679.52 figure which the Family Court listed is not
the total amount of arrears owed. Instead, that figure represents
9
Plaintiff’s Exhibit #2.
10
“Spousal support” is another term for “alimony”, whether
interim or permanent. The Family Court uses those terms
interchangeably as does this court.
11
“DCSE” is the abbreviation for Delaware’s Division of Child
Support Enforcement.
9
only the child support arrears. The correct calculation shows
total child support arrears were $14,679.5212 and total alimony
arrears were $15,974.77.13 The alimony arrears sum added to the
child support arrears sum totals $30,654.29. Unfortunately, the
sentence “Obligor owes arrears/retroactive support of $14679.52
as of 09/01/2006" was a misstatement.
However, the misstatement
is fortuitous because the $15,974.77 in spousal arrears are made
a part of the second judgment involved in this case. To have had
two judgments awarding duplicate spousal arrears would have been
illegal. Since Judgment 1 deals with child support arrears and
the second judgment deals with spousal support arrears, no
duplication of awards exists. Judgment 1 is for
$14,679.52.14
No interest was awarded.
12
Child support arrears as of 9/1/06 are calculated as
follows:
$950.00 x 5 = $4,750.00
$2,351.00 x 7 = $16,457.00
Subtotal: $21,207.00
Minus Payments: $6,527.48 ($6,248.24 + $279.24)
Total Child Support Owed: $14,679.52
13
$2,282.11 x 7= $15,974.77.
14
The 9/14/06 Family Court Order (Plaintiff’s Exhibit #2)
provided at ¶6: “Arrears are reduced to a judgement which may be
filed with the Prothonotary and entered in the Judgement Docket
of the Superior Court, thus operating as a lien....”
10
The second judgment (“Judgment 2") stems from an August 13,
2007 Order of the Family Court regarding Creditor’s Petition for
Rule to Show Cause (“RTSC”), Petition to Modify Custody and
Visitation, and a Request for Review of Commissioner’s Order
(“8/13/07 Family Court Order”).15
The 8/13/07 Family Court Order
provides for Creditor to recover $78,921.09, which is made up of
$30,000.00 in interim alimony Debtor failed to pay pursuant to an
August 2004 interim order; $34,152.41 in permanent alimony;16 a
$4,768.68 payment on Creditor’s equitable share of the marital
estate;
and $10,000.00 in attorney’s fees owed to Creditor as of
the date of the RTSC hearing.17
The 8/13/07 Family Court Order
specifically provides as follows at 8:
Therefore, judgment is hereby entered in favor of
Wife against Husband in the principal sum of
$78,921.09, together with post-judgment interest at the
15
August v. August, C.A. No. SS07J-09-096, which is
Plaintiff’s Exhibit #3.
16
This figure was calculated from February 2006 to May 2007,
and consequently includes the $15,974.77 which was ordered in the
9/14/06 Family Court Order.
17
The interim child support award in the amount of $8,288.00
was not included in this judgment because “the Court’s child
support arrears/contempt order dated September 14, 2006,
addressed this issue and applied the back support to Husband’s
DCSE balance.” 8/13/07 Family Court Order at 8.
11
legal rate commencing from May 16, 2007, together with
costs incurred in perfecting this judgment and levying
on the same. Wife is hereby authorized to enter this
judgment on the Superior Court records of the State of
Delaware. [Emphasis added.]
The post-judgment interest rate is calculated pursuant to 6
Del. C. § 2301(a).18
The Court takes judicial notice of the fact
that the Federal Reserve discount rate at that time was 6.25%.
Consequently, the interest rate is 11.25% per annum, which breaks
down to .938% per month or .0308 % per day.19
In the past, Creditor has executed on Judgment 2. She
commenced new execution proceedings in 2011. In response thereto,
Debtor filed his motion to stay. He advanced numerous contentions
in support of this motion: he was in full compliance with the
Family Court payments to Creditor; this debt was disputed in
Chancery Court; the amount Creditor claimed to be owed is not
accurate; there is a pending Family Court petition in the matter;
past efforts to levy have failed to produce money because the
house is heavily mortgaged; he does not own a boat upon which she
seeks to levy; a levy on the Chevrolet will generate poor
18
M&G Polymers USA, LLC v. Carestream Health, Inc., 2010 WL
2125463, * 3 (Del. Super. May 21, 2010).
19
Id.
12
returns; and he will have greater cash flow to pay Creditor once
alimony requirements end in August, 2011.20
The only valid ground for stopping the execution on the levy
is that Debtor does not owe Creditor anything on the judgments.
The legally correct proceeding to have pursued would have been
one seeking relief pursuant to 10 Del. C. § 4751, et seq.21
However, because the parties are pro se and because the practical
effect is the same as it would have been had Debtor filed such a
petition, this Court hereby addresses, within the context of the
execution proceedings, the issue of whether Debtor’s debts to
Creditor have been satisfied.22
The parties, who have three daughters together, divorced in
2003, and in the early 2000's, the Family Court began issuing
orders on ancillary matters.
By order dated August 26, 2004
20
Debtor’s Motion to Stay Levy filed 9/29/11 in August v.
August, C.A. No. SS07J-09-096.
21
See Bejger v. Shreeve, 1997 WL 524060 (Del. Super. June 26,
1997).
22
The Family Court, of course, has jurisdiction over the debt
issues since the judgment liens here are based upon Family
Court’s judgments. However, this Court also has jurisdiction,
based on 10 Del. C. § 4751, et seq., to determine whether monies
remain owing on the judgments.
13
(“8/26/04 Family Court Order”), the Family Court ordered Debtor
to provide Creditor with some funds, specifically, $30,000.00 in
cash which should have been transferred as follows: $10,000.00 no
later than September 10, 2004; $10,000 no later than October 10,
2004; and $10,000.00 no later than November 10, 2004.23 The
Family Court further directed that Debtor was responsible for
paying monthly mortgage payments of approximately $2,500.00 on
the marital home and to continue paying child support.
Debtor filed for bankruptcy in September, 2004. In January,
2005, the Bankruptcy Court granted relief from the stay to allow
the ancillary Family Court proceedings to continue.24
In its order dated January 30, 2006, the Family Court
resolved all of the parties’ ancillary issues. This order, which
is Plaintiff’s Exhibit #1, is referenced as “1/30/06 Family Court
Order”. In resolving the marital assets aspect of this case,
Family Court ordered Debtor to pay Creditor $4,761.68 per year
23
Plaintiff’s Exhibit #7.
24
Plaintiff’s Exhibit #1 at 2, which is a Family Court Order
issued on January 30, 2006. Although the order is dated January
30, 2005, the parties agree that the year is incorrect; the
order actually was entered on January 30, 2006.
14
for five years, payable annually on July 1.
It awarded alimony
to Creditor in the amount of $2,282.11 per month for a period of
5 years, 5 months, beginning with February 2006. As to child
support, it ordered Debtor to pay arrearages in the amount of
$950.00 per month from August, 2005 through January, 2006. It
further ordered he pay $2,351.00 per month beginning on February
15, 2006, and continuing on the 15th day of each month “until the
children have turned 18 years of age, or there shall be a
modification of the child support calculation by order of this
Court.”25 Finally, the Family Court awarded Creditor $10,000.00
in attorneys’ fees, to be paid no later than December 31, 2006.
Debtor appealed to the Supreme Court. The Supreme Court
affirmed all parts of the 1/30/06 Family Court Order but for the
award of child support.26 On remand, the Family Court reduced
this child support obligation to $2,308.00 per month.
Creditor did not comply with the Family Court orders
regarding payments and various proceedings thereafter took place.
25
1/30/06 Family Court Order (Plaintiff’s Exhibit #1) at 26-
7.
26
Andrews v. Andrews, No. 108, 2006, Holland, J. (Del. Dec.
5, 2006).
15
A Family Court Commissioner entered the earlier discussed
9/14/06 Family Court Order wherein it found Debtor owed child
support arrears/retroactive support in the amount of $14,679.52,
which was reduced to Judgment 1. Again, no interest was awarded.
Thereafter, Debtor sought a further reduction of his child
support payments based upon his contention he could not work due
to his own mental health issues. By order dated April 9, 2007, a
Family Court Commissioner reduced his child support obligations
to $1,129.00 per month beginning April 1, 2007.27
About this time, Debtor fled to Israel to avoid his courtordered obligations.
Meanwhile, Creditor filed the aforementioned Petition for
Rule to Show Cause (“RTSC”),
Petition to Modify Custody and
Visitation, and Request for Review of the Commissioner’s April 9,
2007, order reducing Debtor’s child support obligations.
The
Family Court addressed these requests in the previously-mentioned
8/13/07 Family Court Order.
The Family Court affirmed the Commissioner’s decision
27
8/13/07 Family Court Order (Plaintiff’s Exhibit #3) at 4.
16
reducing Debtor’s child support obligations to $1,129.00 per
month.
As to the $30,000.00 Creditor claimed was due in interim
alimony from the August 2004, interim order, the Family Court
ruled she was entitled to that entire $30,000.00.
The award of
the entire $30,000.00 may have been undeserved as the evidence
shows some sums previously were to be credited towards that
award.28 However, because Debtor fled to Israel during this time
and did not file any objections to the 8/13/07 Family Court
Order, he is bound, by his own failure to object, to the
determination that the entire $30,000.00 was owing as of August
13, 2007. Consequently, Debtor cannot receive any credits for any
payments made before August 13, 2007, towards the $30,000.00 in
interim alimony.
The Family Court found that because Debtor had fled from the
28
In May, 2005, Family Court ordered that the proceeds of the
sale of a vehicle for $1,000.00 should be applied to the
$30,000.00 previously owed. 1/30/06 Family Court Order
(Plaintiff’s Exhibit #1) at 4. The Family Court also ordered
Debtor to apply monies from a tax refund to the $30,000.00.
According to the 1/30/06 Family Court Order, Debtor paid
$2,000.00. Id. at 5-6. A Final Report and Account from the
Bankruptcy Court establishes that the Bankruptcy Court Trustee
paid Creditor $3,622.20 towards that $30,000.00. Defendant’s
Exhibit #6.
17
United States and the Court’s remedies were limited, “the
appropriate remedy at this juncture is to enter a monetary
judgment in favor of Wife and grant Wife permission to enter the
judgment into the records of the Superior Court so that she may
pursue whatever enforcement procedures that are available to
her.”29 As was explained above, the Family Court entered a
judgment providing for Creditor to recover $78,921.09, which
reflects interim alimony in the amount of $30,000.00 which Debtor
failed to pay pursuant to the August 2004 interim order;
$34,152.41 in permanent alimony; a $4,768.68 payment on
Creditor’s equitable share of the marital estate;
and $10,000.00
in attorney’s fees owed to Creditor as of the date of the RTSC
hearing.
It also ordered Debtor to pay post-judgment interest at
the legal rate commencing from May 16, 2007, plus execution
costs. Finally, it ordered the judgment be entered with the
Superior Court.
Creditor appealed the portion of the 8/13/07 Family Court
Order reducing child support. The Supreme Court affirmed the
29
8/13/07 Family Court Order at 8.
18
Family Court’s decision, ruling the child support reduction was
appropriate.30
Creditor then began her quest to collect the monies due her.
Debtor actively sought to prevent the collection of those monies.
In December, 2007, Creditor received the proceeds from the
sale of DTE Energy stock in the amount of $2,548.00.31
Creditor sought to execute on Judgment 2. Debtor enlisted
the help of his mother Sally Eder (“Eder”) and Anthony Morabito
(“Morabito”) to evade the executions. The full history of the
executions and evasions thereof exists in the file for Judgment
2. After much effort, Creditor was able to obtain some proceeds
from the sale of two of Debtor’s vehicles. On March 18, 2008, a
Toyota Avalon was sold for $8,000.00.32 However, Sheriff’s fees
and costs totaled $584.45.33
Creditor only netted $7,415.55 on
the sale of the Toyota Avalon. Because Creditor is entitled,
30
Andrews v. Andrews, 959 A.2d 27, 2008 WL 4349028 (Del.
Sept. 24, 2008).
31
Defendant’s Exhibit #9.
32
Sheriff’s Return filed on March 28, 2008.
33
Id.
19
pursuant to the terms of the 8/13/07 Family Court Order, to
recover execution costs, this Court concludes Judgment 2 is
reduced by $7,415.55 as of March 28, 2008.34 On October 23, 2008,
a Chevrolet Suburban was sold for $700.00.35 However, Sheriff’s
costs were $392.27 and because she is entitled, pursuant to the
8/13/07 Family Court Order, to execution costs, Creditor need
only apply the net proceeds of $307.73 towards the judgment owed.
Consequently, Judgment 2, as of October 29, 2008, was reduced by
$307.73.
Creditor argues in paragraph 9 of her Original Appeal Filing
that she is entitled to all amounts spent to perfect, and levy
upon, the liens. However, Creditor failed to provide evidence of
any such expenditures at the hearing in this matter and
consequently, she is barred from pursuing their recoupment.
Creditor was litigating her collection efforts on two fronts
34
This number differs from that which Creditor provided the
Court. See Defendant’s Exhibit #9. She gave Debtor credit for the
full amount of the sale against the debt owed. The Sheriff’s
costs, however, are in the record of this case. Because the
8/13/07 Family Court Order allows for their recovery, the Court
will reduce the principal amount of the debt owed only by the net
amount Creditor recovered.
35
Sheriff’s Return filed on October 29, 2008.
20
during this time. While she was attempting to retrieve the
vehicles and personal property taken out of Debtor’s home in the
Superior Court, she had to pursue litigation in the Court of
Chancery to stop the fraudulent transfer of assets. In August,
2007, Creditor filed suit in Chancery Court against Debtor, Eder,
Morabito, and David August, D.O., Co., seeking remedies for the
fraudulent transfer of various items of property.
August v.
August, et al., Del. Ch., C.A. No. 3180-VCS (“Chancery Case”).
Various resolutions reached and several decisions entered in the
Chancery Case are pertinent to the current matter. Consequently,
I detail them below.
The claims against Morabito focused on the fraudulent
transfer of personal property. Creditor ultimately settled with
Morabito for $4,000.00 and he was dismissed from the Chancery
litigation. Debtor testified in the case at hand that he
reimbursed Morabito for this $4,000.00 payment. He argued he
should receive credit for that payment against the monies he owes
Creditor. I conclude that no legal basis exists for Debtor to
receive credit for this reimbursement and that Debtor only is
21
entitled to credit for monies he paid Creditor except in the
limited situation discussed below where Eder paid Creditor.36
The Chancery Case claims against Debtor and Eder involved
the real estate located at 55 Comanche Circle, Millsboro,
Delaware (“Subject Property”). Debtor transferred title to the
Subject Property to Eder.
After the filing of the suit in
Chancery, Eder quitclaimed all of her rights in the Subject
Property to Debtor. However, that did not end the lawsuit.
The first pertinent decision in the Chancery Case was the
March 10, 2008 Order of Default and Partial Judgment entered
against Debtor and David August, D.O., Co.37
That Order provided
in pertinent part:
1. The defendants, David August and David August,
D.O., Co., are adjudged to be in default in this
action.
2. Plaintiff Jennifer August is entitled to recover
from defendant David August in the amount of $58,307.74
plus costs as well as pre-judgment and post-judgment
interest at the legal rate. That amount is the court’s
best estimate of the plaintiff’s damages on the record
before it and was calculated by summing the two unpaid
installments of the property division due July 1, 2006
36
Debtor failed to timely object to the Commissioner’s
recommendation on this issue. My de novo review shows no basis
for reaching a conclusion different from the Commissioner’s
recommendation.
37
Plaintiff’s Exhibit #10.
22
and July 1, 2007 with the totals of the child support
arrears and spousal support arrears contained in
Exhibit 4 to the plaintiff’s Motion for Entry of
Default Judgment Against Defendants David August and
David August D.O. Co. Pursuant to Rule 55(b). To the
extent this figure departs from the current damages the
plaintiff can establish against defendant David August,
if at all, plaintiff may seek additional funds from the
account to be established pursuant to Paragraph 6 of
this Order in an appropriate court.
3. A lien in the amount provided in Paragraph 2 of
this Order shall be placed on the property commonly
known as 55 Comanche Circle, Millsboro, Delaware,
19966, ... (the “Subject Property”) for the benefit of
the plaintiff, and subject to a first mortgage held by
Washington Mutual Bank. Such lien shall be recorded
with the Sussex County Recorder of Deeds along with a
copy of this order.
4. Consistent with defendant Eder’s renunciation of
the quitclaim deed and second mortgage from defendant
David August to defendant Eder in the Subject Property,
and as evidenced by her quitclaim deed dated October
12, 2007 conveying any and all rights in the Subject
Property held by her to defendant David August,
defendant David August has legal title to the Subject
Property. Because of defendant David August’s
misconduct, his unsatisfied obligations to the
plaintiff and others, and failure to appear, the
plaintiff may, if she so chooses, exercise sole control
over the sale, disposition, or other use of the Subject
Property, subject, however, to the rights of Washington
Mutual Bank. In particular, the plaintiff may exercise
any rights of ownership over the Subject Property as
are necessary for her, in accordance with Washington
Mutual Bank, to sell or otherwise maximize the value of
the property for their joint benefit and in accordance
with this Order.
***
6. In recognition of the ongoing support and other
obligations of the defendant David August, any proceeds
of a sale or other disposition of the Subject Property
exceeding both any proceeds owed to Washington Mutual
Bank pursuant to its mortgage and the amount provided
in Paragraph 2 shall be placed in trust by the
plaintiff in an interest-bearing account pending a
determination or determinations of the plaintiff’s
right to collect from the defendant David August. ***
23
To clarify, this order “effectively deem[ed] the transfer of
the Property from him to Eder a fraudulent one” and allowed
Creditor to exercise ownership rights over the Property in order
to maximize her recovery.38
At a later point in the litigation, during a court
proceeding, the following exchange occurred:
MRS. AUGUST: ... There has been an assertion that
[the judgment entered against David August in the
Chancery case] is the only claim; that that trumps the
recorded judgment of $87,000 in Superior Court and that
—
THE COURT: There has been a claim by who?
MRS. AUGUST: Mr. Sergovic. We are not sure if that
is in addition to or instead of the previously-recorded
Family Court judgments.
THE COURT: It’s in addition to it. It doesn’t
extinguish it. The whole premise of the order is that
the child support obligation is alive and well.39
The second pertinent Chancery Court decision is the February
20, 2009 decision,
hereinafter sometimes referred to as
“Fraudulent Conveyance Decision”.
This decision contains the
following findings and conclusions.
While he was in Israel, Debtor quitclaimed the Subject
Property to Eder.
Creditor filed a lis pendens.
A contract for
the sale of the Subject Property at the price of $315,000.00 was
38
August v. August, 2009 WL 458778, *2 (Del. Ch. Feb. 20,
2009). This decision is Plaintiff’s Exhibit #8.
39
Plaintiff’s Exhibit #12.
24
entered. Had the sale been completed, net proceeds of around
$50,000.00 would have been realized after closing costs and
satisfaction of the senior mortgage. The lis pendens blocked the
sale.
The Court of Chancery notes the existence of the Family
Court orders and judgments.40
It references the procedural
posture of the Chancery case. It explains that the default
judgment was entered against Debtor in the Chancery case and
thereby Debtor “lost standing to challenge the factual assertions
of the complaint.”
41
It recites the fact that Eder “conceded
that the Quitclaim Deed effected a fraudulent transfer, and has
chosen not to defend its legitimacy.”42
The Chancery Court
explains that because, in May 2008, Creditor received an offer of
$250,000.00 to purchase the property, which was insufficient to
pay off the mortgage, Creditor was unable to realize the money
awarded her in the Default Judgment.43
The Chancery Court considered, in its decision, the question
of to what further equitable relief was Creditor entitled in
light of the fact that Eder had returned the asset. As explained,
“[t]he overarching goal in applying these remedies is to put a
40
August v. August, 2009 WL 458778 at *3.
41
Id.
42
Id.
43
Id.
at *9.
25
creditor in the position she would have been in had the
fraudulent transfer not occurred.”44 The remedy of restitution
exists because “the mere acceptance of the asset by the recipient
works a wrong on the third party creditor by preventing the
creditor from reaching an asset she could have otherwise used to
satisfy her debts.”45
In examining the remedy available to
Creditor, the Chancery Court stated as follows at **13-14:
In this case, two purported transfers occurred: the
Second Mortgage in April 2006 before David August’s
flight; and the Quitclaim Deed in March 2007, after
David August had become a fugitive. I focus my remedy
here on restoring Jennifer August to the position she
would have been in if the Quitclaim Deed and Second
Mortgage had not impeded her attempt to extract value
from the Property, a period that roughly began when
David August fled and the Quitclaim Deed was executed.
I choose that period because that is when Jennifer
August first made an attempt to extract value from the
Property. ***
***
If David August had not fraudulently transferred the
Property, Jennifer August would have had access to the
equity existing in the Property at the time of his
departure. For her to realize that equity, the Property
would have had to have been sold. I therefore look to
the purchase price that was offered on the Property in
July 2007 as the most reliable evidence in the record
of how much equity was in the Property. Eder ...
entered a sales contract in July for $315,000. ... a
fair market price. The estimated seller’s closing costs
for this transaction were $22,050. At the time, the
payoff amount on the WaMu Mortgage was $243,148.78.
This left approximately $49,800 in value that would
have been available to Jennifer August had the transfer
not occurred. I recognize, however, the fact that
realizing that amount required an outlay of money. Eder
44
Id. at *10.
45
Id.
26
paid $8,850.67 in WaMu Mortgage and maintenance
payments in order to keep the Property saleable until a
purchaser could be found. .... As a result, Jennifer
August is entitled to recover $40,950 from Eder under
the equitable principles outlined in the UFTA and our
common law. FN 83 [All other footnotes and citations
omitted.]
FN83. In keeping with the requirement that a
creditor cannot recover more from a
transferee than the amount a creditor is
owed, I note that this amount is considerably
less than the $58,307.74 that this court
already determined Jennifer August was owed
in the Default Judgment, not to mention all
of the unpaid child and spousal support and
interest that has accrued since then.
The Court’s conclusion was as follows:
For the foregoing reasons, I award Jennifer August a
judgment against Sally Eder in the amount of: 1)
$40,950 in principal amount; 2) $8,430.58 in prejudgment interest, composed of simple interest at the
legal rate of 11.25% fixed as of March 23, 2007; and 3)
post-judgment simple interest at the legal rate
accruing from the date of this judgment until the date
of the satisfaction of this judgment. Costs are also
awarded to plaintiff Jennifer August. The outstanding
liens Jennifer August holds on David August’s property
shall be reduced to the extent this judgment is
satisfied. To the extent that Eder proves to this court
by way of separate complaint that David August has
satisfied all of his outstanding obligations to
Jennifer August and her children, plus full payment of
interest, she may seek to be relieved of the burden of
the judgment in this case.46
On April 9, 2009, Eder paid Creditor the monies due and
owing. She paid $49,645.63, representing $40,950.00 in principal
and $8,695.63 in pre-judgment interest; $2,805.80 for costs to
Chancery Court; $11.78 for post-judgment interest; and $13.44
46
Id. at *17.
27
regarding additional post-judgment interest.47
The Chancery Court issued a letter dated April 21, 2009,
stating the following:
This letter is to inform all of the parties in the
above-captioned matter that the claims brought by
plaintiff Jennifer August against each of the
defendants have been resolved in full and that this
civil action is now closed.
As agreed in the joint letter of Jennifer August and
defendant Sally Eder dated April 17, 2009, the judgment
the court issued against Eder on February 20, 2009 has
been satisfied, and all issues between Jennifer August
and Eder are closed.
All claims between Jennifer August and defendant
Anthony Morabito were dismissed with prejudice by this
court on December 8, 2008, in accordance with a
settlement agreement that Jennifer August and Morabito
entered into on November 20, 2008
Finally, the claims brought by Jennifer August
against David August and David August, D.O., Co. were
resolved by this court’s order of default and partial
judgment entered on March 20, 2008.
As a result of these dispositions, there are no
outstanding issues between the parties to this action
at this time, and the matter is hereby closed.
IT IS SO ORDERED.48
In September, 2008, Debtor filed a motion for relief from
judgment with Family Court. The Court dismissed this motion and
noted that the Chancery Court’s decision was not germane to the
issue pending before it.49
The parties returned to Family Court in November 2009 to
address various issues concerning child, spousal, and medical
47
Defendant’s Exhibit #4.
48
Defendant’s Exhibit #3.
49
Plaintiff’s Exhibit #14 at 4-5.
28
arrears.50 As a part of these proceedings, Debtor argued payments
Eder made to Creditor should be attributed to Debtor’s debt. The
Family Court Commissioner concluded in her November 6, 2009
Decision at pages 1-2:
Unfortunately, from the evidence at the hearing that is
the subject matter of this decision, it is not possible
to know what the default judgment in Chancery Court
covered, and to what extent, if any, the judgment
against Dr. August’s mother incorporated any spousal
support showing on the DCSE account statement. The
Family Court judgment was clearly for unpaid alimony,
and it is presumed herein that spousal support, which
predates the filing of the divorce, was not part of the
figure awarded. Ms. August testified that she has
provided Dr. August with an accounting; it would be
beneficial to him to review that accounting and do his
math. There is insufficient evidence in this case to
overturn the DCSE account statement.
Creditor argues in her appeal from the Commissioner’s
Decision that the Family Court Commissioner’s decision is res
judicata and prevents this Court from determining whether monies
paid by Eder could be applied towards Debtor’s Family Court
debts. That is not the case. The Family Court Commissioner did
not have the amount of information in front of her which this
Court has. This Court has obtained all the information from this
complicated matter and has painstakingly calculated what is owed
in what categories. This Court, employing the evidence and the
law discussed below, is able to determine how to apply the monies
Eder paid Creditor towards the Family Court debt. Creditor’s
50
Plaintiff’s Exhibit #5.
29
objection to this determination fails.
The Family Court, in 2009, modified the previous Family
Court orders to provide that, effective August 17, 2009, Debtor
must pay $2,946.00 to child support; $523.00 to
arrears/retroactive support; $100.00 to medical support; and
$2,282.11 to spousal support, for a total monthly payment of
$5,851.11.
On February 17, 2010, shares of David August were
transferred to Jennifer August but there is no information on
their value or how they might affect the balance owed.
On January 10, 2011, Debtor was ordered to pay an additional
$200.00 to medical support, making his total medical support
payment $300.00 and increasing his total monthly payment to
$6,051.11.51 Payments to the medical support category are
irrelevant to the Superior Court judgments.
During the hearing in this Court on October 17, 2011, Karen
Smalls, Senior Fiscal Administrative Officer of DCSE’s Accounting
Unit, testified regarding payments Debtor has made towards the
child support, spousal support and medical support orders. She
employed the account statement on the matter which was introduced
as Defendant’s Exhibit #1. Her testimony and this account
statement provided information necessary to resolve the question
of what is owed on the pending judgments.
51
Plaintiff’s Exhibit #6.
30
The account statement only shows monies paid to child
support, spousal support, medical support, retroactive child
support and retroactive spousal support. It does not reflect
payments made towards the
$4,768.68 debt representing Creditor’s
equitable share of the marital estate; the $10,000.00 debt in
attorney’s fees; nor the $30,000.00 debt for interim alimony.
Family Court has not been, and will not be, keeping an account of
the debts in those categories.
The account statement shows all payments made as of
September 20, 2011. Debtor produced evidence that the Family
Court wage attachment transferred monies from his October, 2011
paycheck to Family Court.52
However, the application of that
payment to his Family Court obligations is not in the record.
Thus, all the calculations end as of September 20, 2011.
Creditor raises several objections regarding the application
of Ms. Smalls’ testimony and the documents submitted through her.
However, the Court does not understand those objections. Failure
to make the objections clear renders them meritless.
The account statement shows that as of February 1, 2007, the
child support arrears were caught up and Debtor had paid the
$14,679.52 which Judgment 1 secured. Creditor agrees in her
appeal documents that the debt secured by Judgment 1 is
satisfied. Creditor now must mark Judgment 1 satisfied. 10 Del.
52
Defendant’s Exhibit #2.
31
C. § 4751.
I now turn to a consideration of what might be owed on
Judgment 2.
Of great dispute is whether Debtor may receive credit for
the monies Eder paid Creditor as a result of the Chancery Case.
Creditor maintains that the phrase “outstanding liens” which the
Chancery Court ordered to be reduced to the extent the judgment
was satisfied encompasses only the default judgment “lien”
against Debtor filed with the Recorder of Deeds. This Court
accepts the Commissioner’s conclusions on this issue and adopts
them in full.
The Chancery Court explained the nature of Creditor’s action
and the remedy awarded her in the Fraudulent Conveyance
Decision.53
The relief awarded put Creditor in the position she
would have been had the fraudulent transfer not occurred. The
Chancellor54 awarded Creditor the amount of money she would have
received had she been able to sell the Subject Property without
Debtor and Eder’s interference. That is $40,950.00 in net
proceeds plus interest. Put another way, had Creditor been able
to sell the Subject Property without Debtor and Eder’s
interference, Creditor would have had to have credited those
53
August v. August, 2009 WL 458778 at **10, 13.
54
He was a Vice Chancellor at the time he issued the
decision; he now is Chancellor of Chancery Court.
32
monies to Debtor’s debt to Family Court and also would have had
to reduce Judgment 2 by that amount.
Creditor could not have
pocketed the $40,950.00 and thereafter maintained that Debtor
still owed her the full amount on Judgment 2.
Nothing in any of Chancellor Strine’s decisions or oral
statements support Creditor’s position. He clarifies that she is
not entitled to anything more than what she is owed. He views the
debt in Family Court as what Creditor is owed. It is clear that
he hoped Debtor would assume his responsibilities and not allow
his mother to pay his debts.55 That fact shows the Chancellor did
not consider the award to be duplicative and in the nature of a
windfall but instead, he considered it to be a payment on the
Family Court debt owed. Finally, the Chancellor’s decision
specifically directs that the judgment liens Creditor holds be
reduced by the amount Eder paid Creditor.
No legal reason exists not to apply the $40,950.00 plus
interest towards the underlying Family Court debt and
consequently, to reduce the judgment lien in Superior Court by
that amount. As explained below, I conclude that an appropriate
application of the Chancery Court payments towards the Family
55
This conclusion is based upon the following statement: “To
the extent that Eder proves to this court by way of separate
complaint that David August has satisfied all of his outstanding
obligations to Jennifer August and her children, plus full
payment of interest, she may seek to be relieved of the burden of
the judgment in this case.” August v. August, 2009 WL 458778 at
*17.
33
Court account can be made. Should this Court not give Debtor the
credit due, it would thereby grant Creditor a windfall to which
she is not entitled. Again, the Chancery Court remedy put her in
the position in which she otherwise would have been but for
Debtor and Eder’s interference.
Creditor vehemently objects to the Court taking this step.
However, she fails to provide any validly legal basis for it not
to do so. I reject Creditor’s objections and I credit Debtor’s
account with the
$40,950.00 in principal and the $8,720.85 in
interest which Eder paid and reduce Judgment 2 by that amount.
The next question is how to apply those payments when the
parties have not made an application thereof. As noted earlier, I
reject Creditor’s positions, discussed earlier, that only limited
credits are allowed. The law provides, that generally, payments
are applied to interest first and then to principal.56 However,
the law also is that the Court should apply the payments in such
a manner as will best protects the rights of the parties and is
most just in light of the circumstances.57 To accomplish this
goal, I take the following steps.
56
Nelson v. Kamara, 2009 WL 1964788 (Del. Super. June 30,
2009), app. dism., 981 A.2d 1172, 2009 WL 3083212 (Del. Supr.
Sept. 25, 2009); Estate of Carpenter v. Dinneen, C.A. No. 1804VCP, Parsons, V.C. (March 26, 2008) at 67 n. 239; 70 C.J.S.
Payment § 60 (2007).
57
Estate of Carpenter v. Dinneen, supra; 70 C.J.S. Payment §
60 (2007).
34
1) I duplicate the Family Court’s actions and apply payments
from wage attachments to reduce the principal debt owed on the
spousal support category of Judgment 2.58 Creditor’s objection to
the Court taking this action is unintelligible and consequently,
fails.
2)
I apply payments from all other sources (sales of
vehicles and stocks, payment from Eder) to the interest owed
first and then to the principal due.
3) I will not apply the non-interest, non-wage payments to
the category of spousal support. Instead, I apply those payments
to the categories of Judgment 2 representing the awards for
interim support, equitable share of the marital estate, and
attorney’s fees.
If I did not apply the payments in this manner, then
Creditor would have more difficulty collecting the monies owed.
If I applied all payments to the spousal support category first,
then the monies owed in the other categories would remain
outstanding. The Family Court will not collect monies owed in
those other categories. Creditor’s remedies then would be limited
to collecting the monies owed by attempting executions on
Judgment 2, a process which has not been particularly productive.
Family Court’s collection of the spousal arrears has proven more
58
To do otherwise would create an accounting nightmare
between this Court and Family Court.
35
fruitful than Creditor’s attempts to levy upon Debtor’s property.
Justice is better served for Creditor by applying payments as
explained above.
I note that Creditor objects to this method because it
reduces the judgment lien amounts rather than the spousal support
amounts. Creditor ignores reality. Executions on the properties
have not been particularly fruitful to date and there is no
reason to think future executions would garner her the monies to
which she is entitled.
In order to determine what is owed, I adopt the
Commissioner’s calculations based upon the evidence presented and
by employing the law regarding the application of the payments.
PRIN.BAL.59 TIME PERIOD
INT. ACCR.60 INT. BAL.61
DATE/AMT PAID
$78,921.09 5/16/07-12/31/07 $5,546.61
$5,546.61 12/31/07 $2,548.0063
$78,921.09 1/1/08-3/28/08
$5,137.01
$2,138.40
3/28/08 $7,415.5564
INT.BAL.62
$2,998.61
0
59
Principal Balance after making appropriate deductions or additions
60
Interest Accrued during specified time period
61
Interest Balance, which includes outstanding interest balance and the “Interest Accrued”
balance
62
Interest Balance after deducting payment made, if such a deduction is applicable
63
Sale of DTE Energy Stock. The exact date of this transfer was not provided so the Court
applies the end of the month as the effective date.
64
Sale of the Avalon.
36
$76,642.55 3/29/08-10/29/08 $5,032.30
$5,032.30
10/29/08 $307.7365
$76,642.55 10/30/08-1/23/09 $1,958.80
$6,683.37
1/23/09 $9,942.3766
$66,700.18 1/24/09-4/9/09
$1,519.96
$8,203.33
4/9/09 $49,670.8567
$25,332.66 4/10/09-4/27/09
$132.60
$132.60
4/27/09
$53.1968
$132.60
$25,279.47 4/28/09-5/21/09
$186.72
$319.32
5/21/09
$53.19
$319.32
$25,226.28 5/22/09-6/18/09
$209.79
$529.11 6/18/09
$53.19
$529.11
$25,173.09 6/19/09-6/30/09
$85.25
$614.36
6/30/09
$1,732.15
$614.36
$23,440.94 7/1/09-7/29/09
$201.88
$816.24
7/29/09
$53.19
$816.24
$23,387.75 7/30/09-8/27/09
$201.60
$1,017.84 8/27/09
$53.19
$1,017.84
$23,334.56 8/28/09-9/24/09
$186.68
$1,204.52 9/24/09
$53.19
$1,204.52
$23,281.37 9/25/09-10/21/09
$186.42
$1,390.94 10/21/09
$53.19
$1,390.94
$23,228.18 10/22/09-12/29/10 $3,092.22
$4,724.57
$6,683.37
0
$4,486.16 12/29/10 $1,766.89 $4,486.16
65
Sale of Suburban
66
Wages
67
Payment of principal and interest from Eder.
68
All the subsequent payments were from wage attachments and consequently, will be
applied to the principal only.
37
$22,461.29 12/30/10-6/15/11
$1,191.85
$5,678.01
6/15/11 $2,282.11
$5,678.01
6/16/11-7/26/11
$248.40
$5,926.41
7/26/11 $2,282.11
$5,926.41
$17,897.07 7/27/11-8/23/11
$148.77
$6,075.18
8/23/11 $2,282.11
$6,075.18
$15,614.96 8/24/11-9/20/11
$129.87
$6,205.05
9/20/11 $2,310.74
$6,205.05
$20,179.18
$13,304.22
Thus, as of September 20, 2011, Debtor owed Creditor, on
Judgment 2, $13,304.22 in principal and $6,205.05 in interest.
Of the $13,304.22 due on the principal as of September 20, 2011,
$11,181.60 consists of spousal support.69
After the Commissioner issued her Decision, Debtor paid all
sums due.70 Creditor must now mark Judgment 2 satisfied.71
CONCLUSION
In conclusion, this Court rejects all of Creditor’s
objections, adopts the Commissioner’s Decision, and orders
69
Total owed on Judgment 2 towards spousal support: $34,152.41
Total paid towards spousal support: $22,970.81
Balance due on Judgment 2 towards spousal support: $11,181.60
To clarify, these calculations and credits do not reduce the outstanding spousal support
arrears balance owed in Family Court as of September 20, 2011, which was $42,986.06. Put
another way, of that $42,986.06 balance, $11,181.60 is attributable to the moneys which
Judgment 2 secures.
70
11/28/11 Docket Entry and 12/19/11 Docket Entry.
71
10 Del. C. § 4751.
38
Creditor to mark both judgment liens against Debtor satisfied.
IT IS SO ORDERED.
39
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.