Bank of America v. Ellsworth, W. ( 2015 )

J-A23009-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BANK OF AMERICA, N.A., S/B/M TO : IN THE SUPERIOR COURT OF
BAC HOME LOANS SERVICING, L.P., : PENNSYLVANIA
F/K/A COUNTRYWIDE HOME LOANS :
SERVICING, L.P., :
:
Appellees :
:
v. :
:
WILLIAM C. ELLSWORTH, A/K/A :
WILLIAM C. ELLSWORTH, JR., AND :
TERESA A. ELLSWORTH, :
:
Appellants : No. 1395 WDA 2014
Appeal from the Order entered on August 4, 2014
in the Court of Common Pleas of Allegheny County,
Civil Division, No. MG-13-000449
BEFORE: GANTMAN, P.J., LAZARUS and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED DECEMBER 17, 2015
William C. Ellsworth a/k/a William C. Ellsworth, Jr., and Theresa A.
Ellsworth (collectively “the Ellsworths”) appeal from the Order denying their
Petition to Set Aside Sheriff’s Sale and Default Judgment. We affirm.
The trial court set forth the relevant underlying facts as follows:
On March 27, 2013, Bank of America, N.A. (“BANA”) filed a
Mortgage Foreclosure Action against the Ellsworths with respect
to [a Federal Housing Administration (“FHA”)] Mortgage that had
been assigned to BANA. [The subject property is located at 490
Herbst Manor Road, Coraopolis, Pennsylvania.] The Assignment
to BANA was recorded in the Allegheny County Recorder of
Deeds Office on April 18, 2012. [The Ellsworths failed to make
their monthly payments beginning on September 1, 2012.] After
commencing th[e] action, BANA assigned the mortgage to
Nationstar Mortgage, LLC (“Nationstar”)[,] pursuant to an
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Assignment recorded in the Allegheny County Records of Deeds
Office on July 23, 2013.
The Ellsworths did not respond to the mortgage foreclosure
complaint and, on July 2, 2013, a[n in rem] default judgment
was entered against them in the amount of $308,477.19. The
judgment was assigned to Nationstar pursuant to an Assignment
of Judgment recorded September 19, 2013. The Ellsworths filed
an Emergency Motion to Stay the Sheriff Sale, which was
scheduled to occur on October 7, 2013. The Emergency Motion
to Stay was granted and the Sheriff’s Sale was continued. The
Ellsworths’ home was ultimately sold at Sheriff’s Sale on January
6, 2014.
The Ellsworths filed a Petition to [S]et [A]side the Sheriff’s Sale
and Default Judgment on February 4, 2014[,] arguing that
[BANA] did not have jurisdictional standing to file this action,
and thus, could not enter a judgment against the Ellsworths.
[On April 28, 2014, BANA filed a Praecipe to Substitute
Nationstar as the plaintiff of record. The Ellsworths did not
object.] After argument and briefing by the parties, t[he trial
c]ourt denied the Ellsworths’ Petition by Order dated August 4,
2014. The Ellsworths filed a Notice of Appeal[.]
Trial Court Opinion, 12/1/14, at 1-2 (unnumbered).
The trial court ordered the Ellsworths to file a Pennsylvania Rule of
Appellate Procedure 1925(b) concise statement. The Ellsworths filed a
timely Concise Statement and the trial court issued an Opinion.
On appeal, the Ellsworths raise the following questions for our review:
1. Did the lower court err when it held that [BANA’s] [S]heriff’s
[S]ale should not be set aside?
2. Were [BANA] and Nationstar [] indispensable parties at the
time of the Default Judgment and Sheriff’s Sale?
3. When the mortgage contract only authorizes a foreclosing
plaintiff to collect unliquidated, reasonable foreclosure fees
that are incurred for services performed, but the foreclosing
plaintiff in the complaint demands fixed fees, does the
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Prothonotary have the Article V power to ignore the contract
and enter a default judgment of a sum certain or is that
judgment void?
4. Did the lower court err when it overlooked the correct FHA
laws and non-record facts were deemed part of the record?
Brief for Appellants at 2.
The purpose of a sheriff’s sale in mortgage foreclosure
proceedings is to realize out of the land, the debt, interest, and
costs which are due, or have accrued to, the judgment creditor.
Pursuant to Rule 3132 of the Pennsylvania Rules of Civil
Procedure, a sheriff’s sale may be set aside upon petition of an
interested party “upon proper cause shown” and where the trial
court deems it “just and proper under the circumstances.”
Pa.R.C.P. 3132. The burden of proving circumstances
warranting the exercise of the court’s equitable powers is on the
petitioner. Equitable considerations govern the trial court’s
decision to set aside a sheriff’s sale, and this Court will not
reverse the trial court’s decision absent an abuse of discretion.
An abuse of discretion occurs where, for example, the trial court
misapplies the law.
Nationstar Mortgage, LLC v. Lark, 73 A.3d 1265, 1267 (Pa. Super. 2013)
(some citations omitted).
In their first claim, the Ellsworths contend that the trial court erred in
failing to set aside the sheriff’s sale. Brief for Appellants at 9, 15. The
Ellsworths point out that because the property in question involved an FHA
mortgage, BANA and Nationstar was required to afford them pre-forclosure
rights as set forth in HUD regulations. Id. at 10-14. The Ellsworths argue
that these federal regulations preempt state pre-foreclosure laws and thus,
must be applied to save homes from foreclosure. Id. at 14-15. The
Ellsworths claim that BANA was required to plead compliance with HUD
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regulations in its Complaint, pursuant to Pa.R.C.P. 1147. Brief for Appellants
at 14. The Ellsworths primarily rely upon Everbank v. Chacon, Boston
Housing Court No. 13-SP-50 (June 19, 2013) (Winik, F.J.), and Fleet Real
Estate Funding Corp. v. Smith, 530 A.2d 919 (Pa. Super. 1987), to
support their argument. Brief for Appellants at 9-12.
Here, the trial court addressed the Ellsworths’ claims and correctly
determined that they are without merit. See Trial Court Opinion, 12/1/14,
at 2-4 (unnumbered); Smith, 530 A.2d at 922-23; see also Wells Fargo
Bank, N.A. v. Gilroy, 2015 WL 4680780, at *3 (Pa. Super. 2015)
(concluding that appellant’s claim that VA foreclosure law “trumps”
Pennsylvania law, requiring the bank to send her a pre-foreclosure notice
that complied with VA foreclosure laws and regulations was waived because
she waited five years after entry of judgment before filing her petition to
strike). Thus, we adopt the sound reasoning of the trial court for the
purpose of this appeal. See Trial Court Opinion, 12/1/14, at 2-4
(unnumbered).
As an addendum, we note that the plain language of Pa.R.C.P. 1147
contains an exhaustive list of what must be pleaded in a complaint for a
mortgage foreclosure action. See Pa.R.C.P. 1147. In point of fact,
compliance with HUD regulations is not an averment required under
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Pa.R.C.P. 1147.1 Here, BANA fulfilled all of the requirements of Rule 1147 in
its Complaint for mortgage foreclosure. Moreover, as noted by the trial
court, the Ellsworths could have asserted non-compliance with the HUD
regulations as a defense, but failed to do so. See Smith, 530 A.2d at 923
(holding that “a mortgagor of an FHA-insured mortgage may raise as an
equitable defense to foreclosure, the mortgagee’s deviation from compliance
with the forbearance provisions of the HUD Handbook and regulations.”);
see also Resolution Trust Corp. v. Copley Qu-Wayne Assocs., 683 A.2d
269, 275 (Pa. 1996) (noting that “it is improper to consider the equities of
the matter in a petition to strike[.]”); Gilroy, 2015 WL 4680780, at *3
(stating that while equitable defense raise important concerns, they are not
jurisdictional in nature and can be waived). Thus, we conclude that the
Ellsworths’ first claim is without merit.2
1
We also note that the HUD regulations were not a condition precedent that
must be pleaded under Pa.R.C.P. 1019(c).
2
The Ellsworth also rely upon U.S. v. Buskell, 2014 WL 1765386 (E.D. Pa.
2014), to support their claims. However, it is well-settled that “[d]ecisions
of the federal district courts are not binding authority for this Court[.]”
Huber v. Etkin, 58 A.3d 772, 779 n.7 (Pa. Super. 2012). Nevertheless,
upon our review of Buskell, we conclude that its reasoning is inapplicable to
this case. In Buskell, the federal district court denied the mortgagee’s
motion for default judgment without prejudice and directed the mortgagee
to file a new motion with instructions to attach specific exhibits. Buskell,
2014 WL 1765386, at *8. In this case, default judgment had already been
entered and the property in question had already been sold at a Sheriff’s
Sale. Thus, the reasoning in Buskell cannot be applied to this case, as the
Ellsworths failed to raise the issue of the HUD regulations in response to the
mortgage foreclosure Complaint, and the Ellsworths have not met their
burden to set aside the sale. See Smith, 530 A.2d at 923.
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In their second claim, the Ellsworths contend that BANA and
Nationstar are indispensable parties to this action as both had an
enforceable interest in the Ellsworths’ note and mortgage. Brief for
Appellants at 15, 17; see also id. at 15-16 (wherein the Ellsworths argue
that this claim is not waived because it involves the jurisdiction of the court).
The Ellsworths point out that while BANA assigned the mortgage and note to
Nationstar in June 2013, BANA continued to litigate its mortgage foreclosure
action without adding Nationstar as a party. Id. at 15. Id. at 15-16. The
Ellsworths claim that BANA and Nationstar have advanced conflicting and
overlapping interests with respect to which mortgagee is entitled to
foreclose. Id. at 17.
All actions shall be prosecuted by and in the name of the real party in
interest. Pa.R.C.P. 2002. “A real party in interest in any given contract or
chose in action is the person who can discharge the duties created and
control an action to enforce rights.” JP Morgan Chase Bank, N.A. v.
Murray, 63 A.3d 1258, 1263 (Pa. Super. 2013). However,
[i]f a plaintiff has commenced an action in his own name and
thereafter transfers his interest therein, in whole or in part, the
action may continue in the name of the original plaintiff, or upon
petition of the original plaintiff or of the transferee or of any
other party in interest in the action, the court may direct the
transferee to be substituted as plaintiff or joined with the original
plaintiff.
Pa.R.C.P. 2004. “The language of Rule 2004 is clear in not requiring that,
once a transfer of an interest occurs by a plaintiff after an action has
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commenced, a transferee be named as a co-plaintiff or substituted as
plaintiff.” Cole v. Boyd, 719 A.2d 311, 313 (Pa. Super. 1998).
BANA instituted the underlying foreclosure action on March 27, 2013.
Thereafter, BANA assigned the mortgage and note to Nationstar on June 19,
2013.3 On July 2, 2013, after the Ellsworths did not respond to the
mortgage foreclosure complaint, an in rem default judgment was entered
against them in the amount of $308,477.19. Prior to the Sheriff’s Sale, on
September 19, 2013, BANA filed a praecipe to assign the default judgment
to Nationstar. Thereafter, the Ellsworths home was sold by Sheriff’s Sale on
January 6, 2014.
Here, BANA was permitted to remain the named party in the action,
despite having assigned the mortgage to Nationstar. See Cole, 719 A.2d at
314 (stating that under “rule [2004], it is not mandatory for the assignee to
be substituted as plaintiff or joined as co-plaintiff, and the fact that the
plaintiff and assignee choose to continue the action in the name of the
original plaintiff cannot be construed as a fraud upon the court, nor does it
render the proceeding defective or create an infirmity in the judgment.”);
see also Pa.R.C.P. 2004. Further, the Ellsworths have not pointed to any
rule or case law that imposes a time limit within which Nationstar, as the
successor in interest, was required to substitute itself as a party in the
action. See, e.g., Pa.R.C.P. 2352, Substitution of Successor. Indeed,
3
The assignment of the mortgage was recorded on July 23, 2013.
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the Ellsworths, who were on notice of the assignment, never demanded that
Nationstar be substituted as a party. See Pa.R.C.P. 2352(b) (stating that
“[i]f the successor does not voluntarily become a party, the prothonotary,
upon praecipe of an adverse party setting forth the material facts[,] shall
enter a rule upon the successor to show cause why the successor should not
be substituted as a party.”). Moreover, contrary to the Ellsworths’ bald
argument, there is no evidence that Nationstar and BANA have conflicting
and overlapping interests. Based upon the foregoing, we conclude that the
fact that BANA continued as the named plaintiff in this case despite
assigning the mortgage to Nationstar did not affect the substantive rights of
the Ellsworths. See Cole, 719 A.2d at 314 (noting that the failure to
substitute the successor in interest as the plaintiff did not change the fact
that the plaintiff still had to prove his case, and the defendant had a full and
fair hearing to present its defense). Thus, the Ellsworths’ second claim is
without merit.4
In their third claim, the Ellsworths contend that the Prothonotary did
not have authority to enter default judgment in this case. Brief for
Appellants at 17, 19. The Ellsworths argue that the Prothonotary engaged in
judicial functions in determining attorneys’ fees when entering the judgment.
4
We note that the Ellsworths have cited to numerous Civil Rules as part of
their argument. However, a review of the rules demonstrates that they do
not entitle the Ellsworths to relief.
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Id. at 17-18. As a result, the Ellsworths assert that the default judgment
must be stricken. Id. at 18-19.
Default judgments generally are governed by the
Pennsylvania Rules of Civil Procedure and are entered by
prothonotaries and without judicial involvement. Such
judgments are not judicial orders and are not subject to an
immediate appeal after their entry; rather, to obtain relief, the
party against whom the judgment was entered may either file a
petition to strike the default judgment or file a petition to open
the default judgment. Once a court of common pleas rules on
one of these petitions, then the aggrieved party has a right to an
appeal to a higher court pursuant to Pennsylvania Rule of
Appellate Procedure 311(a)(1).
EMC Mortgage, LLC v. Biddle, 114 A.3d 1057, 1061 (Pa. Super. 2015)
(citations omitted).
Here, the Ellsworths did not file a petition to open or strike the default
judgment and did not raise this claim until filing their Petition to Set Aside
the Sheriff’s Sale. See Trial Court Opinion, 12/1/14, at 5 (unnumbered)
(stating that the Ellsworths claim regarding the Prothonotary’s entry of
default judgment was waived); see also Biddle, 114 A.3d at 1061 (stating
that “to obtain relief, the party against whom the judgment was entered
may either file a petition to strike the default judgment or file a petition to
open the default judgment.”); id. at 1063-64 (stating that a judgment
should only be stricken if it is defective on its face and that a judgment need
not be stricken where the only alleged error is the amount entered).
Nevertheless, our review of BANA’s Complaint and the entry of the in rem
default judgment discloses that BANA never sought attorneys’ fees in
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seeking judgment in the amount of $308,477.19.5 See Complaint, 3/27/13,
at 3 (unnumbered); see also Gilroy, 2015 WL 4680780, at *6 (stating that
there was no reason to modify the amount of judgment as “the prothonotary
entered judgment in the precise amount prayed for in the complaint.”).
Indeed, the Ellsworths have not cited to any place in the record
demonstrating that the default judgment included attorneys’ fees, or that
the Prothonotary made any calculations in entering the default judgment.
See Pa.R.A.P. 2119(a). Thus, the Ellsworths are not entitled to relief on
their third claim.
In their final claim, the Ellsworths contend that the trial court
improperly reached its decision by relying on incorrect HUD Handbook
provisions and facts that were not part of the record. Brief for Appellants at
19, 21. The Ellsworths argue that the trial court ignored the applicable HUD
regulations, which are binding on state courts. Id. at 21.
The Ellsworths failed to raise this claim in their Rule 1925(b) Concise
Statement. See Concise Statement, 9/17/14. Thus, the Ellsworths’ claim is
waived on appeal. See Hess v. Fox Rothschild, LLP, 925 A.2d 798, 803
(Pa. Super. 2007) (stating that “any issue not raised in an appellant’s Rule
1925(b) statement will be deemed waived for purposes of appellate
review.”).
5
On September 19, 2013, BANA assigned the default judgment to
Nationstar in the amount of $308,477.19.
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Moreover, the Ellsworths reiterate their argument from their first claim
by asserting that the trial court erred in refusing to set aside the Sheriff’s
Sale. See Brief for Appellants at 19-22. However, as noted above, we have
already concluded that the trial court did not abuse its discretion in denying
the Ellsworths’ Petition to Set Aside the Sheriff’s Sale. Thus, we cannot
grant the Ellsworths relief on their final claim.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/17/2015
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