A recent report submitted by Master in Chancery Patricia W. Griffin serves as a good reminder of some basic principles in a field not often the focus of Chancery cases. In Cache Private Capital Diversified Fund v. Cove at Sandy Landing, C.A. No. 12511-MG (Del. Ch, Jan. 17, 2019) (Final Report), Griffin recommended that the Court of Chancery grant a creditor’s motion for summary judgment and order the entry of personal and in rem judgments against its debtors based on a finding that the undisputed facts gave rise to an enforceable equitable mortgage.

Although there appeared to be no genuine issue of material fact, the significance of the facts was contested. Cove MD and Meris, limited liability companies organized under Maryland and Delaware law, respectively, executed a note in favor of Cache. At the same time, they executed a mortgage and security agreement on real properties in Sussex County, Delaware, to secure the debt. The mortgage was not under seal. In addition to listing Meris as a borrower, the mortgage listed Cove MD as a borrower at the beginning of the document, but Cove DE, a Delaware limited liability company, as borrower and signatory at the end of the document. An individual named Daniels, who was the sole member of Cove MD, Cove DE, and Meris, signed the mortgage as sole member and manager of Meris and Cove DE.

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