Delaware Legislative Update

Delaware Legislative Update

The Delaware legislature recently adopted the Delaware Servicemembers Civil Relief Act (the “Act”) governing the protection of service members from abusive practices, effective July 23, 2014.

 

DELAWARE SENATE BILL 206

 

The provisions of the Act are intended to be supplemental to any rights that persons called to military service have under any applicable federal statutes, including the Servicemembers Civil Relief Act, and under any other applicable laws of the state of Delaware.

 

Definitions

 

“Servicemember” means a resident of Delaware or a natural person stationed in Delaware who is a member of the Army, Navy, Air Force, Marine Corps, Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, the commissioned corps of the Public Health Service, or the Delaware National Guard.

 

Whenever the term “servicemember” is used, it will be treated as including a reference to a legal representative of a servicemember, which will include an attorney acting on behalf of the servicemember or an individual possessing power of attorney.

 

“Military Service” means:

·        in the case of a servicemember who is a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard, active duty, as defined under federal law;

·        in the case of a member of the National Guard, includes service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days for purposes of responding to a national emergency declared by the President and supported by Federal funds;

·        in the case of a servicemember who is a commissioned officer of the Public Health Service or the National Oceanic and Atmospheric Administration, active service;

·        in the case of a servicemember who is a member of the Delaware National Guard, called out to serve in a state duty status pursuant to Delaware state law for a period of more than 30 consecutive days; or

·        any period during which a servicemember is absent from duty on account of sickness, wounds, leave, or other lawful cause.

 

“Period of Military Service” means the period beginning on the date on which a servicemember enters military service and ending on the date on which the servicemember is released from military service or dies while in military service.

 

“Court” means any court or administrative agency of the state of Delaware, or a subdivision thereof, whether or not a court or administrative agency of record.

 

“Judgment” means any judgment, decree, order, or ruling, final or temporary.

 

Protection of servicemembers against default judgments

 

This law applies to any civil action or proceeding in which the defendant does not make an appearance.

 

In any action or proceeding, the court, before entering judgment for the plaintiff, will require the plaintiff to file with the court an affidavit:

  • stating whether or not the defendant is in military service and showing necessary facts to support the affidavit; or
  • if the plaintiff is unable to determine whether or not the defendant is in military service, stating that the plaintiff is unable to determine whether or not the defendant is in military service.

 

If in an action covered by the Act it appears that the defendant is in military service, the court may not enter a judgment until after the court appoints an attorney to represent the defendant.  If an attorney appointed to represent a servicemember cannot locate the servicemember, actions by the attorney in the case will not waive any defense of the servicemember or otherwise bind the servicemember.

 

If based upon the affidavits filed in such an action, the court is unable to determine whether the defendant is in military service, the court, before entering judgment, may require the plaintiff to file a bond in an amount approved by the court.  If the defendant is later found to be in military service, the bond must be available to indemnify the defendant against any loss or damage the defendant may suffer by reason of any judgment for the plaintiff against the defendant, should the judgment be set aside in whole or in part.  The bond must remain in effect until expiration of the time for appeal and setting aside of a judgment under applicable federal or state law or regulation or under any applicable ordinance of a political subdivision of a state.  The court may issue such orders or enter such judgments as the court determines necessary to protect the rights of the servicemember under the Act.

 

The requirement for the above affidavit may be satisfied by a statement, declaration, verification, or certificate, in writing, subscribed and certified or declared to be true under penalty of perjury.

 

A person who makes or uses an affidavit permitted as described above knowing it to be false, is guilty of perjury under Delaware law, a class F felony, and may be punished as provided by law.

 

In an action covered by the Act in which the defendant is in military service, the court must grant a stay of proceedings for a minimum period of 90 days upon application of counsel, or on the court’s own motion, if the court determines that:

  • there may be a defense to the action and a defense cannot be presented without the presence of the defendant; or
  • after due diligence, counsel has been unable to contact the defendant or otherwise determine if a meritorious defense exists.

 

A stay of proceedings under the above provision is applicable only when the servicemember does not have notice and will therefore not be controlled by procedures or requirements applicable when the servicemember does have notice as outlined below.

 

If a default judgment is entered in an action against a servicemember during the servicemember’s period of military service (or within 60 days after termination of or release from military service), the court entering the judgment will, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action if it appears that:

  • the servicemember was materially affected by reason of that military service in making a defense to the action; and
  • the servicemember has a meritorious or legal defense to the action or some part of it.

 

An application must be filed not later than 90 days after the date of the termination of or release from military service.

 

If a court vacates, sets aside, or reverses a default judgment against a servicemember and the vacating, setting aside, or reversing is because of a provision of the Act, that action will not impair a right or title acquired by a bona fide purchaser for value under the default judgment.

 

 

Stay of proceedings when servicemember has notice

 

The following applies to any civil action or proceeding in which the plaintiff or defendant at the time of filing an application under this section:

 

(1)        is in military service or is within 90 days after termination of or release from military service; and

 

(2)        has received notice of the action or proceeding.

 

At any stage before final judgment in a civil action or proceeding in which a servicemember described above is a party, the court may on its own motion and will, upon application by the servicemember, stay the action for a period of not less than 90 days, if the conditions in the next paragraph are met.

 

An application for a stay as indicated above will include the following:

 

  • A letter or other communication setting forth facts stating the manner in which current military duty requirements materially affect the servicemember’s ability to appear and stating a date when the servicemember will be available to appear.
  • A letter or other communication from the servicemember’s commanding officer stating that the servicemember’s current military duty prevents appearance and that military leave is not authorized for the servicemember at the time of the letter.

 

An application for a stay does not constitute an appearance for jurisdictional purposes and does not constitute a waiver of any substantive or procedural defense (including a defense relating to lack of personal jurisdiction).

 

A servicemember who is granted a stay of a civil action or proceeding as described above may apply for an additional stay based on continuing material affect of military duty on the servicemember’s ability to appear.  Such an application may be made by the servicemember at the time of the initial application for stay or when it appears that the servicemember is unavailable to prosecute or defend the action.  The same information required above must be included in an application for additional stay.

 

If the court refuses to grant an additional stay of proceedings, the court will appoint counsel to represent the servicemember in the action or proceeding.

 

A servicemember who applies for an additional stay under this section and is unsuccessful may not seek the protections against default judgments described above.

 

Fines and penalties under contracts

 

When an action for compliance with the terms of a contract is stayed, a penalty will not accrue for failure to comply with the terms of the contract during the period of the stay.

 

If a servicemember fails to perform an obligation arising under a contract and a penalty is incurred arising from that nonperformance, a court may reduce or waive the fine or penalty if:

  • the servicemember was in military service at the time the fine or penalty was incurred; and
  • the ability of the servicemember to perform the obligation was materially affected by such military service.

 

Stay or vacation of execution of judgments, attachments, and garnishments

 

If a servicemember, in the opinion of the court, is materially affected by reason of military service in complying with a court judgment or order, the court may on its own motion and must on application by the servicemember:

  • stay the execution of any judgment or order entered against the servicemember; and
  • vacate or stay an attachment or garnishment of property, money, or debts in the possession of the servicemember or a third party, whether before or after judgment.

 

This applies to an action or proceeding commenced in a court against a servicemember before or during the period of the servicemember’s military service or within 90 days after such service terminates.

 

Duration and term of stays; codefendants not in service

 

A stay of an action, proceeding, attachment, or execution made by a court may be ordered for the period of military service and 90 days thereafter, or for any part of that period.  The court may set the terms and amounts for such installment payments as is considered reasonable by the court.

 

If the servicemember is a codefendant with others who are not in military service and who are not entitled to the relief and protections provided under the Act, the plaintiff may proceed against those other defendants with the approval of the court.

 

This does not apply to a stay of proceedings granted when a servicemember has notice or a stay related to anticipatory relief.

 

Statute of limitations

 

To the extent that it is allowable by federal law, the period of a servicemember’s military service must not be included in computing any period limited by law, regulation, or order for the bringing of an action or proceeding in any court, or in any board, bureau, commission, department or other agency of government of Delaware or any of its political subdivisions by or against a servicemember or the servicemember’s heirs, executors, administrators, or assigns, nor will a period of military service be included in computing any period provided by law for the redemption of real property sold or forfeited to enforce an obligation, tax, or assessment.

 

Maximum rate of interest on debts incurred before military service

 

An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service must not bear interest at a rate in excess of 6 percent:

  • during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or
  • during the period of military service, in the case of any other obligation or liability.

 

Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition described above is forgiven.

 

The amount of any periodic payment due from a servicemember under the terms of the instrument that created an obligation or liability will be reduced by the amount of the interest forgiven that is allocable to the period for which such payment is made.

 

In order for an obligation or liability of a servicemember to be subject to the interest rate limitation described above, the servicemember must provide to the creditor written notice and a copy of the military orders calling the servicemember to military service and any orders further extending military service, not later than 180 days after the date of the servicemember’s termination or release from military service.

 

Upon receipt of written notice and a copy of orders calling a servicemember to military service, the creditor will treat the debt in accordance with the interest rate limitation described above effective as of the date on which the servicemember is called to military service.

 

A court may grant a creditor relief from the limitations of the Act if, in the opinion of the court, the ability of the servicemember to pay interest upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the servicemember’s military service.

 

The term “interest” includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability, and the term “obligation or liability” includes an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage.

 

 

Anticipatory relief

 

A servicemember may, during military service or within 180 days of termination of or release from military service, apply to a court for relief:

  • from any obligation or liability incurred by the servicemember before the servicemember’s military service; or
  • from a tax or assessment falling due before or during the servicemember’s military service.

 

In such case, the court may, if the ability of the servicemember to comply with the terms of such obligation or liability or pay such tax or assessment has been materially affected by reason of military service, after appropriate notice and hearing, grant the following relief:

  • Stay of enforcement of real estate contracts.
    • In the case of an obligation payable in installments under a contract for the purchase of real estate, or secured by a mortgage or other instrument in the nature of a mortgage upon real estate, the court may grant a stay of the enforcement of the obligation:
      • during the servicemember’s period of military service; and
      • from the date of termination of or release from military service, or from the date of application if made after termination of or release from military service.
    • Any stay will be:
      • for a period equal to the remaining life of the installment contract or other instrument, plus a period of time equal to the period of military service of the servicemember, or any part of such combined period; and
      • subject to payment of the balance of the principal and accumulated interest due and unpaid at the date of termination or release from the applicant’s military service or from the date of application in equal installments during the combined period at the rate of interest on the unpaid balance prescribed in the contract or other instrument evidencing the obligation, and subject to other terms as may be equitable.
  • Stay of enforcement of other contracts
    • In the case of any other obligation, liability, tax, or assessment, the court may grant a stay of enforcement:
      • during the servicemember’s military service; and
      • from the date of termination of or release from military service, or from the date of application if made after termination or release from military service.
    • Any stay will be:
      • for a period of time equal to the period of the servicemember’s military service or any part of such period; and
      • subject to payment of the balance of principal and accumulated interest due and unpaid at the date of termination or release from military service, or the date of application, in equal periodic installments during this extended period at the rate of interest as may be prescribed for this obligation, liability, tax, or assessment, if paid when due, and subject to other terms as may be equitable.

 

When a court grants a stay under this section, a fine or penalty will not accrue on the obligation, liability, tax, or assessment for the period of compliance with the terms and conditions of the stay.

 

Enforcement

 

The Attorney General will have the authority to enforce and carry out the Act.

 

If a court or tribunal of competent jurisdiction finds that any person has violated the Act, the Attorney General, upon petition to the court or tribunal, will recover from the person, on behalf of the State of Delaware, in addition to all costs, a civil penalty of not more than $10,000 per violation.  Where such violation is willful, each day that a willful violation continues will be considered a separate violation.  A “willful violation” occurs when the party committing the violation knew that the party’s conduct was of the nature prohibited by the Act.