CRELK Enterprises v. Meris Properties, et al.

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SUPERIOR COURT OF THE STATE OF DELAWARE RICHARD F. STOKES SUSSEX COUNTY COURTHOUSE JUDGE 1 THE CIRCLE, SUITE 2 GEORGETOWN, DE 19947 TELEPHONE (302) 856-5264 April 11, 2016 Scott G Wilcox, Esquire Whiteford Taylor Preston, LLC Renaissance Centre, Ste 500 405 North King Street Wilmington, DE 19801-3700 RE: Dean A Campbell, Esquire Law Office of Dean A. Campbell, LLC 20175 Office Circle PO Box 568 Georgetown, DE 19947 CRELK Enterprises LLC, Plaintiff v. Meris Properties LLC, Cove at Sandy Landing LLC and Michael Daniels, Defendants v. Cove at Sandy Landing LLC, Third Party Plaintiff v. David Eppes, Third Party Defendant C.A. No.: S15L-07-019 RFS I. Facts and Procedural History Plaintiff, CRELK Enterprises (“CRELK”), filed this mortgage foreclosure and breach of contract action against Defendant, Meris Properties (“Meris”) on July 27, 2015. 1 On April 15, 2013, CRELK loaned Meris $350,000.00 to complete site work in the community of Waters Run; the loan was evidenced by a promissory note signed by Meris. 1 Also, defendant, Michael Daniels (“Daniels”), guaranteed payment of the loan through a Guaranty Agreement. 2 Pursuant to the terms of the parties’ agreement, Meris agreed to repay the loan, plus 24% interest, by January 15, 2014. 3 On February 4, 2014, when payment in full had not been received, CRELK and Meris entered into another agreement wherein the loan’s maturity date was extended to July 31, 2014. 4 Defendant, Cove at Sandy Beach (“Cove”), an affiliate of Meris, granted CRELK a mortgage on two of its lots as further security for the loan. 5 On May 7, 2015, after Meris failed to issue payment in full, CRELK issued a default notice. 6 CRELK issued a second default notice on May 19, 2015; Meris failed to remit any money at that time. 7 Soon after, CRELK filed the present action. Meris filed an Answer admitting that CRELK did loan it money and that the balance was not paid in full. 8 Meris also filed a Third-Party Complaint against David Eppes (“Eppes”) for failing to settle on a property owned by Cove. On January 28, 2016, this Court granted CRELK’s Motion for Judgment on the Pleadings. 9 However, the amount of damages was still in dispute. Both parties have submitted letter briefs with respect to the proper calculation of damages, and the matter is ripe for decision. 1 Compl. ¶ 4-5. Id. at ¶ 6. 3 Id. at ¶ 7. 4 Id. 5 Id. at ¶ 8. 6 Id. at ¶ 10 7 Compl. ¶ 12. 8 Answ. ¶ 14, 16. 9 Crelk Enterprises v. Meris Properties, et al., January 28, 2016 (ORDER). 2 2 II. Issue 1. What is the applicable interest rate? III. Parties’ Contentions CRELK contends that the 24% interest rate provided in the agreement is the applicable post-judgment interest rate. Meris contends that, pursuant to 6 Del. C. § 2301(a), the post-judgment interest rate is 5.75%. IV. Applicable Law In Sequoia Presidential Yacht Group LLC v. FE Partners, LLC, a dispute arose between the parties regarding the applicable post-judgment interest rate. Namely, the parties disputed whether the contract rate or the lower statutory interest rate under 6 Del. C. § 2301(a) applied.10 To begin its analysis, the court distinguished 6 Del. C. §§ 2301(a) and (c) and explained, “Section 2301(c) governs the rate of interest that may be charged by unlicensed lenders of a sum greater than $100,000 not secured by a mortgage, while Section 2301(a) provides the rate of interest that may be charged by unlicensed lenders for loans falling outside of subsection (c).”11 Section 2301 provides, in part: 10 11 Sequoia Presidential Yacht Club LLC v. FE Partners, LLC, 2014 WL 2610577, at *1 (Del. Ch. June 12, 2014). Id. 3 (a) Any lender may charge and collect from a borrower interest at any rate agreed upon in writing not in excess of 5% over the Federal Reserve discount rate including any surcharge thereon. Where there is no expressed contract rate, the legal rate of interest shall be 5% over the Federal Reserve discount rate including any surcharge as of the time from which interest is due; provided, that where the time from which interest is due predates April 18, 1980, the legal rate shall remain as it was at such time. Except as otherwise provided in this Code, any judgment entered on agreements governed by this subsection, whether the contract rate is expressed or not, shall, from the date of the judgment, bear post-judgment interest of 5% over the Federal Reserve discount rate including any surcharge thereon or the contract rate, whichever is less. ... (c) Notwithstanding any other provision in this chapter to the contrary, there shall be no limitation on the rate of interest which may be legally charged for the loan or use of money, where the amount of money loaned or used exceeds $100,000, and where repayment thereof is not secured by a mortgage against the principal residence of any borrower. 12 12 6 Del. C. § 2301. 4 The court decided that the loan agreement fell under subsection (c) which does not address the rate at which post-judgment interest accrues. 13 Bearing in mind the statutory scheme under subsection (a), the legislature intended that when a lawful contract rate is specified, that contract rate would set the post-judgment interest rate. 14 Unlike subsection (a), subsection (c) does not contain an express restriction on postjudgment interest. 15 Therefore, the rate agreed upon by the parties governs both pre- and post-judgment interest rates. 16 Like the loan in Sequoia, the loan at issue here falls under § 2301(c). The loan was for an amount in excess of $350,000 and was not secured by a mortgage against the principal residence of any borrower. Defendants’ argument that the post-judgment interest rate in § 2301(a) applies is without merit. Accordingly, the applicable postjudgment interest rate is the contract rate of twenty-four percent. V. Issue 1. Whether the attorney’s fees are reasonable? VI. Parties’ Contentions 13 Sequoia, 2014 WL 2610577, at *2. Id. 15 Id. 16 Id. 14 5 CRELK contends that payment of reasonable attorney’s fees was included in the agreement. Also, CRELK submitted an affidavit stating that the attorney’s fees charged were reasonable under the circumstances. Meris contends that although it agreed to pay reasonable attorney’s fees, the amount CRELK seeks lacks support. VII. Applicable law The Delaware Rules of Professional Conduct provide guidance as to the factors to consider reasonable attorney’s fees. Delaware Professional Conduct Rule 1.5(a) requires consideration of the following: (1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyers performing the service; and (8) whether the fee is fixed or contingent. 6 In the present case, Meris’ only contention concerning CRELK’s request for attorney’s fees is that CRELK offers no support for its claim. In response, CRELK submitted an affidavit in support of its request for attorney’s fees. Given the nature of the representation, the amount of the judgment, and the affidavit, the attorney’s fees seem reasonable. Very truly yours, Richard F. Stokes cc: Prothonotary 7

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