Wykel, N. v. U.S. Bank Trust ( 2022 )

J-A11035-22
2022 PA Super 218NANCY A. WYKEL : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
WILLIAM N. KNAPP A/K/A WILLIAM : No. 2185 EDA 2021
A.N. KNAPP AND U.S. BANK TRUST :
NATIONAL ASSOCIATION, AS :
TRUSTEE OF THE CHALET SERIES III :
TRUST :
Appeal from the Order Entered October 16, 2021
In the Court of Common Pleas of Chester County Civil Division at No(s):
2020-03823-RC
BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.
OPINION BY McLAUGHLIN, J.: FILED DECEMBER 20, 2022
Nancy A. Wykel (“Wife”) appeals from the order entering judgment in
favor of U.S. Bank Trust National Association, as Trustee of the Chalet Series
III Trust (“U.S. Bank”). The order directed that the mortgage at issue, held
by U.S. Bank, would continue to encumber Wife’s interest in the subject
property. We affirm.
This case involves Wife’s quiet title action and U.S. Bank’s counterclaim,
regarding whether U.S. Bank’s mortgage is defective because Wife did not
sign it. The following recitation of facts is taken from the trial court’s factual
findings, which Wife does not challenge. Wife married William N. Knapp
(“Husband”) in 2000. Thereafter, in February 2001, Husband conveyed a
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home in Kennett Square, Pennsylvania (“Property”), to himself and Wife as
tenants by the entireties. In 2002, both Husband and Wife executed a
mortgage against the Property (“2002 mortgage”).
Husband refinanced the Property on April 14, 2004, by executing a
mortgage in favor of World Savings Bank (“Refinanced Mortgage”). Wife did
not sign the documents securing the Refinanced Mortgage. The documents
referred to Husband as “William A. Knapp, A married man.” The proceeds of
the Refinanced Mortgage were used to pay off the 2002 Mortgage. At the time
Husband executed the Refinanced Mortgage, Husband handled the couple’s
finances.
Husband and Wife then obtained a home equity loan in July 2004,
secured by a mortgage to Countrywide Home Loans (“Countrywide
Mortgage”). In the Countrywide Mortgage documents, both parties
acknowledged that this new mortgage was subordinate to the Refinanced
Mortgage. Countrywide Mortgage at ¶ g. Later that year, the couple moved to
another home and rented the Property.
Husband continued making payments on the Refinanced Mortgage until
February 2016, when he defaulted. The couple divorced in April 2016. On
August 23, 2017, Wells Fargo Bank (World Savings Bank’s successor in
interest) filed a quiet title action seeking to reform the Refinanced Mortgage
to include Wife. In June 2019, U.S. Bank became Wells Fargo’s successor in
interest to the Refinanced Loan, and the court dismissed the suit.
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Wife then instituted this action in June 2020, to quiet title against U.S.
Bank. U.S. Bank filed a counterclaim containing three counts, two of which
are relevant here. One count sought to quiet title and asserted the “entireties
presumption,” which sets up a presumption that when a spouse takes action
regarding marital property titled as a tenancy by the entireties, the spouse
has acted on behalf of both spouses. U.S. Bank’s Answer and Counterclaim at
7 (unpaginated); R.R. 57a. As relief, this count sought a declaration that the
subject mortgage was perfected at the time of recordation, as a valid lien
against both Wife’s and Husband’s interests in the Property as tenants by the
entireties.
Another count alternatively sought reformation of the mortgage. It
asserted that “the Mortgage was not executed by [Wife] as the result of a
mistake on the part of the parties to the transaction and/or the title agent
which closed the transaction.” U.S. Bank’s Answer and Counterclaim at 8
(unpaginated); ¶ 59; R.R. 58a. This count sought a reformation of the
mortgage to render it a valid lien encumbering both spouses’ tenancy by the
entireties interests.
The trial court conducted a trial in July 2021, at which Wife and a
representative of U.S. Bank testified. Following trial, the trial court applied the
entireties presumption and declared that the Refinanced Mortgage
“remain[ed] a lien against the entire” Property. Decision, entered 7/13/21, at
8. Wife filed a motion for post-trial relief, which the trial court denied after
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oral argument.1 Wife filed the instant timely appeal and both the trial court
and Wife complied with Pa.R.A.P. 1925.
Wife raises the following issues on appeal, which we have reordered for
ease for disposition:
1) Whether the trial court below erred in applying the “entireties
presumption” where [Wife], the non-executing spouse to the
[Refinanced Mortgage] did not consent to the mortgage or execute it
as required by the Statute of Frauds?
2) Whether the trial court below erred in equitabl[y] reforming a
mortgage in violation of the rule set forth by the Supreme Court of
Pennsylvania’s decision in Regions Mortgage, Inc. v. Muthler that
limits reformation to mistake, accident, fraud or bad faith?
3) Whether the trial court below erred in applying the doctrine of
equitable subrogation where the original lender volunteered to lend
the funds without [W]ife’s execution of the mortgage and application
of the doctrine would be substantially unjust to [Wife]?
4) Whether the trial court below erred in failing to apply the doctrine of
laches to bar equitable reformation of a 17-year[-]old mortgage or
applying the four[-]year statute of limitations for unjust enrichment
and/or the six[-]year statute of limitations for a quiet title action?
Wife’s Br. at 3.
In her first issue, Wife argues that the court erred by applying the
“entireties presumption” and thereby concluding that Husband acted on behalf
of Wife when executing the Refinanced Mortgage. Wife makes what is
essentially a public policy argument that the entireties presumption is
antiquated and allows spouses to act for each other without the other’s
knowledge. She argues that the statute of frauds should preclude the
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1Following oral argument, the trial court granted Wife’s motion to dismiss
Husband as a party in this case.
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application of this doctrine because the non-participating spouse’s interest in
real property is affected without that spouse’s assent in writing.
When reviewing a judgment rendered after a bench trial, we determine
“whether the findings of the trial court are supported by competent evidence
and whether the trial court committed error in any application of the law.”
Bank of N.Y. Mellon v. Bach, 159 A.3d 16, 19 (Pa.Super. 2017) (quoting
Stephan v. Waldron Elec. Heating and Cooling LLC, 100 A.3d 660, 664-
65 (Pa.Super. 2014)). We give a judge’s findings of fact the same weight and
effect on appeal as a jury verdict, and we consider the evidence in a light most
favorable to the verdict winner. Id. We reverse the court’s factual findings
only if the record does not support them or if the court based them on an error
of law. Id. However, as to questions of law, our standard of review is de novo,
and our scope of review is plenary. Id.A tenancy by the entireties exists when property, either real or personal,
is held jointly by a married couple. Clingerman v. Sadowski, 519 A.2d 378,
380-81 (Pa. 1986). “Neither spouse in a tenancy by the entireties may
independently appropriate property to his or her own use to the exclusion of
the other, and neither spouse, acting independently, may sever the estate by,
for example, conveying part of the property away.” Id. (citations omitted).
This form of ownership gives rise to the “entireties presumption,” which
provides that, “with respect to properties held by the entireties” during the
marriage, “either spouse has the power to act for both without specific
authority, so long as the benefits of such action inure to both.” J.R. Christ
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Constr. Co. v. Olevsky, 232 A.2d 196, 199 (Pa. 1967). The entireties
presumption can be rebutted by establishing, by a preponderance of the
evidence, that a spouse did not have the other spouse’s tacit authority to act
on both spouses’ behalf. Id.In this case, the trial court properly considered Wife’s testimony when
concluding that the entireties presumption applied:
[Wife] deferred to [Husband] on matters concerning the family’s
finances, including the mortgage at issue. [Wife] benefited from
the mortgage as the proceeds repaid a prior mortgage on which
she was obligated. The tenancy was not severed when [Husband]
refinanced the existing joint mortgage. Given these
circumstances, the presumption supplies implied authority that
[Husband] was acting on [Wife’s] behalf. To overcome this
presumption, [Wife] was required to establish, by a
preponderance of the evidence, that [Husband] did not have her
tacit authority to refinance the property, which she failed to do.
Trial Court Order, entered 10/15/21, at n.1 (citations to record omitted).
We discern no error. The benefit of the Refinanced Mortgage inured to
Wife as her obligation on a prior mortgage was thereby extinguished. See J.R.
Christ, 232 A.2d at 199. Further, the trial court, as factfinder, was well within
its purview when finding that Wife’s testimony failed to establish that she
opposed the Refinanced Mortgage and that Husband did not have her
authority to execute the mortgage document. Id.
Wife also raises the issue of the application of the statute of frauds in
cases involving the entireties presumption. She contends that the
presumption cannot apply where only one spouse signed the mortgage. The
trial court cited Deutsche Bank National Trust Co. v. Evans, 421 B.R. 193,
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200 (W.D. Pa. 2009), and concluded that the statute of frauds did not preclude
the application of the entireties presumption where Wife “does not contend
that there was perjury or fraud in the transaction at issue and none is evident.”
See Trial Ct. Order at n.1.
The trial court did not err in its reconciling of the statute of frauds with
the entireties presumption. “The entireties presumption can render a
mortgage enforceable even though only one spouse actually executed the
mortgage.” Wells Fargo Bank, N.A. v. Carnell, No. 3:16-cv-130, 2018 WL
2994393, at *7 (W.D. Pa. 2018) (citation and internal quotation marks
omitted)). In the case the trial court cited, Evans, the court faced a similar
question as the trial court faced here: whether a husband could grant a
mortgage on marital property without the wife’s signature. The federal district
court found that he could, and rejected the husband’s and wife’s reliance on
the statute of frauds. The court explained that “[w]here perjury or fraud is
impossible, there is no room for the statute.” Evans, 421 B.R. at 199 (quoting
Schuster v. Pa. Turnpike Comm’n, 149 A.2d 447, 451 n.11 (Pa. 1959)).
Accordingly, the court concluded that where a party asserts the statute of
frauds as a defense against the entireties presumption, the proper analysis
requires “(1) a determination of whether the entireties presumption is
properly applicable; and (2) if so, a determination that the specific application
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of the entireties presumption complies with the purpose and policies of the
[s]tatute of [f]rauds.” Id.2
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2 Wife contends that “an array of Federal cases applying Pennsylvania real
property law” contradict Evans. Application of Appellant Nancy A. Wykel for
Reargument En Banc, filed Oct.14, 2022, at 6. However, we find Evans
persuasive and the cases cited by Wife to be distinguishable and/or inapposite.
In Herb v. Citimortgage, Inc., 955 F.Supp.2d 441, 448-50 (M.D. Pa. 2013),
the United States District Court for the Middle District of Pennsylvania
discussed the entireties presumption and statute of frauds case law and denied
summary judgment because the wife had presented evidence that “she was
unaware of, did not consent to, and did not authorize the mortgage, despite
the benefit of the mortgage inur[ing] to both spouses.” The court concluded
the evidence could support findings that the wife did not know her husband
took out the loan, did not consent to the mortgage, required her husband to
consult with her regarding financial changes, and “someone forged her initials
and signature.” Id. at 449. The court reasoned that where it is alleged the
document is forged, no agency relationship can be established, noting the
evidence viewed in the light most favorable to the wife negated the premise
that she authorized her husband to establish the mortgage. Here, unlike in
Herb, Wife allowed Husband to control the finances, without consulting with
her, such that he had her tacit authority to enter into the mortgage, and there
is no allegation of forgery.
In In re Farris, 194 B.R. 931, 939 (Bankr. E.D. Pa. 1996), the United States
Bankruptcy Court for the Eastern District of Pennsylvania addressed a claim
that the bank violated the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C.
§§ 1691-1691f, by requiring a wife’s signature when her husband was the sole
applicant for a loan. It found, among other things, that where the husband
offered the marital residence as collateral for his personal loan, his wife’s
signature was required on the mortgage and therefore the bank did not violate
ECOA by requiring the wife’s signature on the mortgage. Id. Here, there is no
ECOA claim.
Finally, in In re Butz, 1 B.R. 435 (Bankr. E.D. Pa. 1979), the United States
Bankruptcy Court for the Eastern District of Pennsylvania found the creditor
was not a secured creditor. The creditor had entered into a loan agreement
with a husband where the husband offered the marital home as collateral in
exchange for a loan of $3,000.00. The court found the absence of “the
signature of the debtor’s wife on the note and of a signed statement vesting
(Footnote Continued Next Page)
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The Evans court’s harmonization of the statute of frauds with the
entireties presumption is sound. We should reconcile seemingly conflicting
cases where possible. See Durante v. Pa. State Police, 809 A.2d 369, 372
(Pa. 2002) (“[I]t would be improvident to conclude that Cunningham
overruled Palmeri sub silentio unless the two are irreconcilable.” (emphasis
in original)). As in Evans, here, Wife “does not contend that there was perjury
or fraud in the transaction at issue and none is evident.” See Trial Ct. Order
at n.1; see also Carnell, 2018 WL 2994393, at *7. The trial court did not err
by concluding that the statute of frauds did not preclude the application of the
entireties presumption.
Wife’s citations to Del Borrello v. Lauletta, 317 A.2d 254, 255 (Pa.
1974), and Salzman v. Miller, 369 A.2d 1216 (Pa. 1974), for the propositions
that the mortgage violates the statute of frauds and that marriage does not
extend general agency to a spouse for purposes of entering into a written
agreement without the other’s consent, also afford her no relief. The court in
Del Borrello considered “whether an ‘option to purchase’ clause contained in
a lease of realty is enforceable against a husband and wife holding title to the
premises as tenants by the entireties, when only the now-deceased husband
had signed the lease.” 317 A.2d at 254-55. The Supreme Court noted the rule
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authority in the husband to convey an interest in the real estate mandates the
conclusion that the written agreement is unenforceable under both case law
and the [s]tatute of [f]rauds.” Id. at 437. There was no discussion in Butz of
the entireties presumption or the wife’s knowledge or consent regarding the
loan, and it is not clear that the wife in Butz would have received a benefit
from the loan under its terms, as Wife in this case did.
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that neither spouse’s independent actions may work a severance of the
entireties estate. It also stated that “no general agency” relationship arises
from a marriage “nor any presumption flowing therefrom that either spouse
has authority to convey real estate held by the entireties without the other’s
joinder therein.” Id. at 255. Applying these principles, and without any
mention of the entireties presumption, the Court found the option clause
unenforceable.
In Salzman, the plaintiff entered into a lease agreement with Lloyd
Miller. Miller’s wife did not sign the lease, which had a one-year term and an
option to purchase the property within two years.3 The trial court ordered
specific performance of the lease agreement. The Pennsylvania Supreme
Court reversed, pointing out that Miller’s wife did not sign the lease-option
agreement, and that there was no evidence she was aware of the transaction,
acquiesced in it, or ratified it. 369 A.2d at 1218. The Court reasoned it had
previously held that “a husband’s attempt to alienate or encumber an estate
by the entireties absent his wife’s joinder violates the [s]tatute of [f]rauds and
is unenforceable against the wife.” Id. (citing Del Borrello, 317 A.2d at 254).
As in Del Borello, the Court did not mention the entireties presumption.
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3 At the time the lease was signed, Miller had a deed to the property signed
by the former owner and the former owner’s wife, but the space for the
grantee’s name on the deed was blank. In 1969, the plaintiff communicated
the desire to purchase the property, but Miller did not fix a date. In 1973,
Miller and his wife received a second deed to the property from the prior
owner, which named both Millers as grantees as tenants by the entireties.
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Neither Salzman nor Del Borrello requires a finding of error. Just
seven years before the decision in Del Borrello, the Supreme Court in J.R.
Christ set forth the principles of the entireties presumption, which it has never
overruled, including in Del Borrello and Salzman. Because the decisions
address different rules of law, we will not find an implicit overruling. See
Commonwealth v. Johnson, 582 A.2d 336, 339 (Pa.Super. 1990) (refusing
to find a prior decision overruled sub silentio when cases presented different
issues). The Court in Del Borrello and Salzman did not comment on the
entireties presumption, while in J.R. Christ, it explicitly set forth the
parameters for raising and rebutting the presumption, and applied them.
Moreover, it appears the presumption would not have applied in Del Borrello
or in Salzman, where the actions would have worked divestitures of the
wives’ interests and not inured to both spouses’ benefits. In contrast, in the
instant case, the trial court properly applied the entireties presumption
because Wife was not divested of a property interest by the Refinanced
Mortgage. Rather, she benefited by obtaining a refinancing of her obligations
under the previous mortgage. See Carnell, 2018 WL 2994393, at *7. Wife’s
first issue warrants no relief.
In her second issue, Wife contends that this case is analogous to
Regions Mortgage, Inc. v. Muthler, 889 A.2d 39 (Pa. 2005). In Muthler,
the Pennsylvania Supreme Court reaffirmed prior holdings limiting the remedy
of equitable reformation of a mortgage for mutual mistake to cases where the
party against whom reformation is sought had “knowledge of the mistake
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sufficient to justify an inference of fraud or bad faith.” Id. at 42. Wife posits
that because U.S. Bank did not establish mistake or fraud, the Refinanced
Mortgage should not have been deemed to be enforceable against her as a
non-signatory.
The trial court here found Muthler to be instantly unavailing, and we
agree. While our Supreme Court in Muthler declined to reform a mortgage
that was signed only by a husband, to include his wife, in that case the lender
had unilaterally removed the wife’s name from the mortgage. Most
significantly, the Court in Muthler merely restated the law regarding mutual
mistake as applied to a mortgage. It did not consider the entireties
presumption. It does not appear that the parties in Muthler even raised the
entireties presumption. Conversely, here, U.S. Bank asserted the
presumption, and the trial court properly applied it to conclude that the
Refinanced Mortgage encumbers Wife’s interest in the Property. Therefore,
Wife’s second issue also lacks merit.
In light of our disposition, we need not address Wife’s third issue. Wife
argues that the trial court erroneously applied the doctrine of equitable
subrogation as an alternative means of continuing to encumber her property
with the Refinanced Mortgage. Because we hold that the trial court properly
determined that the entireties presumption operates to continue Wife’s
obligations under the Refinanced Mortgage, we need not review the trial
court’s alternative basis for relief.
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In her fourth and final issue, Wife presents several thinly developed
claims. First, she contends that the doctrine of laches should apply because
although Wells Fargo initiated this case back in 2017, assigning the mortgage
to U.S. Bank delayed the matter until 2020. Wife claims that because she was
divorced in 2016, this delay caused her prejudice. In addition, Wife presents
the overarching contention that both the four-year statute of limitations for
claims sounding in unjust enrichment and the six-year general “catch-all”
statute of limitations should apply to preclude this action. She claims the
breach of contract occurred when Husband defaulted on the Refinanced
Mortgage in February 2016, and thus the instant action filed in 2020 should
be deemed too late. Wife also maintains that the quiet title action should have
accrued in 2004 when the Refinanced Mortgage was executed, so the six-year
catch-all statute of limitations is also implicated.
The doctrine of laches is an affirmative defense that bars the prosecution
of stale claims and is the practical application of the maxim that “those who
sleep on their rights must awaken to the consequence that they have
disappeared.” Fulton v. Fulton, 106 A.3d 127, 131 (Pa.Super. 2014)
(quoting Kern v. Kern, 892 A.2d 1, 9 (Pa.Super. 2005)). We have explained
laches as follows:
Laches bars relief when the complaining party is guilty of want of
due diligence in failing to promptly institute the action to the
prejudice of another. Thus, in order to prevail on an assertion of
laches, respondents must establish: a) a delay arising from
petitioner’s failure to exercise due diligence; and, b) prejudice to
the respondents resulting from the delay.
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Id. (quoting Estate of Scharlach, 809 A.2d 376, 382-83 (Pa.Super. 2002)).
Evidence of prejudice may include evidence “that a witness has died or
become unavailable, that substantiating records were lost or destroyed, or
that the defendant has changed his position in anticipation that the opposing
party has waived his claims.” Commonwealth ex rel. Baldwin v. Richard,
751 A.2d 647, 651 (Pa. 2000).
In this case, the court concluded that Wife failed to demonstrate
prejudice. It explained that even according to Wife’s evidence, “No witness
has died, no records are missing, no position has been changed in anticipation
that claims had been waived.” Trial Ct. Order at n.1. We discern no error. See
Fulton, 106 A.3d at 131; Baldwin, 751 A.2d at 651.
Wife’s related statute of limitations arguments are inadequately
developed and thereby waived. Wife presents limited argument and scant
legal authority, which she fails to connect to the facts of this case. See
Pa.R.A.P. 2119(a); Norman for Estate of Shearlds v. Temple Univ. Health
Sys., 208 A.3d 1115, 1119 (Pa.Super. 2019) (holding claims waived “because
they are undeveloped and lack citation to pertinent legal authority”). Wife fails
to explain how the statute of limitations for unjust enrichment is applicable
here. Wife further committed waiver by failing to include her “catch-all”
statute of limitations argument in her Rule 1925(b) statement. See Pa.R.A.P.
1925(b)(4)(vii) (“[i]ssues not included in the Statement and/or not raised in
accordance with the provisions of this paragraph (b)(4) are waived”). Hence,
Wife’s last issue also fails. Accordingly, we affirm.
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/20/2022
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