Wells Fargo v. Barris, S. ( 2016 )

J. A33008/15
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
WELLS FARGO BANK NA, KONDAUR : IN THE SUPERIOR COURT OF
CAPITAL CORPORATION AND : PENNSYLVANIA
U.S. BANK NATIONAL ASSOCIATION :
:
v. :
:
SCOTT A. BARRIS AND KELLY HANSON :
A/K/A KELLY BARRIS :
:
APPEAL OF: SCOTT A. BARRIS, : No. 268 EDA 2015
:
Appellant :
Appeal from the Order Entered December 15, 2014,
in the Court of Common Pleas of Bucks County
Civil Division at No. 2012-03715
BEFORE: FORD ELLIOTT, P.J.E., STABILE AND STRASSBURGER,* JJ.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED FEBRUARY 23, 2016
Scott A. Barris and Kelly Hanson, a/k/a Kelly Barris (hereinafter
“appellants” or “defendants”), appeal from the December 15, 2014 order
granting Kondaur Capital Corporation’s (hereinafter “appellee” or “plaintiff”)
motion for summary judgment. We affirm.
The trial court provided the following facts and procedural history of
this case:
On April 23, 2012, the original Plaintiff in this
matter, Wells Fargo Bank, N.A. (hereinafter referred
to [as] “Wells Fargo”), filed a Complaint in Mortgage
Foreclosure against Scott A. Barris and Kelly Hanson
a/k/a Kelly Barris (hereinafter referred to [as]
“Defendants”). According to the Complaint, on or
* Retired Senior Judge assigned to the Superior Court.
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about September 7, 2007, Defendants executed and
signed an adjustable rate mortgage Note in favor of
Wells Fargo’s predecessor-in-interest, World Savings
Bank, FSB. They promised to repay $421,800.00
plus interest and other costs to “World Savings Bank,
F[SB], a Federal Savings Bank, its successors and/or
assignees, or anyone to whom the Note is
transferred.” See Note, Ex. A-1, Motion for
Summary Judgment, July 10, 2014, Kondaur
Capital Corp. v. Scott A. Barris and Kelly
Hanson aka Kelly Barris, BCCCP Docket No. 2012-
03715.
On or about September 7, 2007, Defendants
also executed a mortgage upon the real property
located at 115 Sovereign Drive, Warrington, Bucks
County as collateral for the Note. See Mortgage,
Exhibit A, Motion for Summary Judgment,
July 10, 2014, Kondaur Capital Corp. v. Scott A.
Barris and Kelly Hanson aka Kelly Barris, BCCCP
Docket No. 2012-03715. The Mortgage was
executed and recorded in the Bucks County Office of
the Recorder of Deeds in Book 5580, Page 1273.
The Complaint alleged that the Mortgage was
“in default because monthly payments of principal
and interest are due and unpaid for [July 1, 2011]
and each month thereafter.” Complaint, Kondaur
Capital Corp. v. Scott A. Barris and Kelly
Hanson aka Kelly Barris, BCCCP Docket No. 2012-
03715.
The Complaint also alleged that Defendants
failed to cure the default or otherwise comply with
the terms of the Mortgage. As of April 10, 2012, the
total amount due on account of the Mortgage,
including principal, interest, late charges, and costs
was $456,899.90. See id.
Subsequent to the filing of the Complaint, a
Foreclosure Conciliation Conference was scheduled
pursuant to Bucks County’s Residential Mortgage
Foreclosure Diversion Program.
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Both parties participated in Conciliation
Conferences held on August 12, 2012, November 19,
2012, February 25, 2013, May 22, 2013, July 22,
2013, and September 23, 2013. On the last
scheduled conference date of September 23, 2013,
Defendants failed to appear. See Docket Entry of
Oct. 7, 2013, Kondaur Capital Corp. v. Scott A.
Barris and Kelly Hanson aka Kelly Barris, BCCCP
Docket No. 2012-03715.
On October 7, 2013, the Honorable Susan
Devlin Scott of this court issued an Order authorizing
Wells Fargo “to obtain a judgment pursuant to and in
compliance with [Pennsylvania Rule of Civil
Procedure] 237.1 and to otherwise proceed with the
action as provided by rules of court.” Id.
On November 7, 2013, Defendants filed an
Answer to the Complaint. In their Answer,
Defendants generally denied that they were in
default under the terms of the Mortgage. They
further stated that the allegation of default was a
“conclusion of law to which no response is required.”
As to Wells Fargo’s allegations of the amount due
and owing on the Note and Mortgage, Defendants
denied “the characterization of the schedule of
amounts due under the mortgage.” Answer to
Complaint, Nov. 7, 2013, Kondaur Capital Corp.
v. Scott A. Barris and Kelly Hanson aka Kelly
Barris, BCCCP Docket No. 2012-03715.
On November 13, 2013, Wells Fargo filed a
Praecipe to substitute “U.S. Bank, National
Association, as Trustee for Stanwich Mortgage Loan
Trust, Series 2012-9” as successor Plaintiff for the
originally named Plaintiff. The Assignment of the
Mortgage to U.S. Bank as trustee (hereinafter
referred to [as] “U.S. Bank”) was attached as an
exhibit. Praecipe for Voluntary Substitution of
Party Plaintiff, Nov. 13, 2013, Kondaur Capital
Corp. v. Scott A. Barris and Kelly Hanson aka
Kelly Barris, BCCCP Docket No. 2012-03715.
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On June 26, 2014, U.S. Bank filed a Praecipe
to substitute “Kondaur Capital Corporation, as
Separate Trustee of Matawin Ventures Trust Series
2013-4” as successor Plaintiff. In support of the
Praecipe, U.S. Bank asserted the following:
Kondaur Capital Corporation, as Separate
Trustee of Matawin Ventures Trust Series
2013-4, is the current holder of the
Mortgage by virtue of that certain
Assignment of Mortgage, which has been
recorded March 11, 2014, in the Office of
the Recorder of Deeds of Bucks County
as Instrument #2014011458.
Praecipe for Voluntary Substitution of Party
Plaintiff, June 26, 2014, Kondaur Capital Corp. v.
Scott A. Barris and Kelly Hanson aka Kelly
Barris, BCCCP Docket No. 2012-03715.
A copy of the Assignment to Kondaur Capital
Corporation (hereinafter referred to [as] “Kondaur”)
was attached to the Praecipe as Exhibit “A”. See id.
On July 10, 2014, Kondaur filed a Motion for
Summary Judgment, re-asserting that Defendants
are in default for failing to pay the July 1, 2011
payment and each monthly payment thereafter.
Motion for Summary Judgment, Kondaur
Capital Corp. v. Scott A. Barris and Kelly
Hanson aka Kelly Barris, BCCCP Docket No. 2012-
03715.
In the Motion for Summary Judgment, Plaintiff
attached an Affidavit, authored by William Suh,
Foreclosure Specialist of Kondaur Capital
Corporation. In the Affidavit, Mr. Suh stated that, he
has “access to the business records relating to the
loan at issue herein, which are maintained in the
regular course of business activities.” Mr. Suh
further asserted that the Affidavit was made “based
upon [his] review of the facts contained in those
records pertaining to the account of Defendants.”
See id at Ex. B.
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In the Affidavit, Mr. Suh verified that the
July 1, 2011 payment, and every payment
thereafter, was due and owing. He further related
that, as of July 7, 2014, the total amount due upon
the Mortgage was $494,663.59 including interest
and late charges. The amount owed was itemized
and listed in his Affidavit. See id. at Ex. B.
In further support of its assertion of the
amount due and owing upon the Mortgage, Kondaur
attached a copy of Defendants’ loan payment
history. See id. at Ex-B-1.
On August 8, 2014, Defendants filed an
Answer in Opposition to Plaintiff’s Motion for
Summary Judgment. In their Answer, and in
response to Kondaur’s assertion that the mortgage is
due and owing for the July 1, 2011 payment and
each payment thereafter, Defendants once again
stated that these allegations are “conclusions of law
to which no response is required.” Answer in
Opposition of Motion for Summary Judgment,
Aug. 8, 2014, Kondaur Capital Corp. v. Scott A.
Barris and Kelly Hanson aka Kelly Barris, BCCCP
Docket No. 2012-03715.
On December 15, 2014, this Court granted
Plaintiff’s Motion for Summary Judgment.
On January 14, 2015, Defendants filed a Notice
of Appeal to the Superior Court of Pennsylvania from
this Court’s Order of December 15, 2014.
This Opinion is filed pursuant to Pennsylvania
Rule of Appellate Procedure 1925(a).
Trial court opinion, 2/12/15 at 1-4.
Appellants raise the following issues for our review:
I. Whether the trial court erred in granting
Plaintiff’s Motion for Summary Judgment as the
Affidavit of William Suh that Plaintiff attached
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as an exhibit to its Motion for Summary
Judgment, was legally defective due to its
failure to comply with the Uniform Business
Records of Evidence Act and the Pennsylvania
Rules of Evidence?
II. Whether the trial court abused its discretion by
relying upon William Suh’s Affidavit, given the
glaring inconsistencies and lack of explanation
as to the alleged amounts owing which indicate
a lack of trustworthiness of the Affidavit?
III. Whether the trial court erred in grating [sic]
Plaintiff’s motion for Summary Judgment as
William Suh’s Affidavit violated the Nanty-Glo
Rule?
IV. Whether the trail [sic] court erred in granting
Summary Judgment in favor of Plaintiff,
despite the failure of Plaintiff’s lack of standing
to foreclose?
Appellants’ brief at 4-5.
Before addressing appellants’ issues on appeal, we begin with our
well-settled standard of review for challenges of summary judgment:
A proper grant of summary judgment
depends upon an evidentiary record that
either (1) shows the material facts are
undisputed or (2) contains insufficient
evidence of facts to make out a prima
facie cause of action or defense and,
therefore, there is no issue to be
submitted to the jury. Pa.R.C.P. 1035.2
Note. Where a motion for summary
judgment is based upon insufficient
evidence of facts, the adverse party must
come forward with evidence essential to
preserve the cause of action. If the
non-moving party fails to come forward
with sufficient evidence to establish or
contest a material issue to the case, the
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moving party is entitled to judgment as a
matter of law. The non-moving party
must adduce sufficient evidence on an
issue essential to its case and on which it
bears the burden of proof such that a
jury could return a verdict favorable to
the non-moving party. As with all
summary judgment cases, the court
must examine the record in the light
most favorable to the non-moving party
and resolve all doubts against the
moving party as to the existence of a
triable issue.
Upon appellate review, we are not bound
by the trial court’s conclusions of law,
but may reach our own conclusions. In
reviewing a grant of summary judgment,
the appellate court may disturb the trial
court’s order only upon an error of law or
an abuse of discretion. The scope of
review is plenary and the appellate court
applies the same standard for summary
judgment as the trial court.
McCarthy v. Dan Lepore & Sons Co., Inc., 724
A.2d 938, 940-41 (Pa.Super.1998), appeal denied,
560 Pa. 707, 743 A.2d 921 (1999) (some internal
citations omitted). See also Moses v. T.N.T. Red
Star Exp., 725 A.2d 792 (Pa.Super. 1999), appeal
denied, 559 Pa. 692, 739 A.2d 1058 (1999).
Petrongola v. Comcast-Spectacor, L.P., 789 A.2d 204, 208-209
(Pa.Super. 2001), appeal denied, 803 A.2d 736 (Pa. 2002).
We shall address appellants’ first three issues simultaneously, as all
three relate to Mr. Suh’s affidavit. Appellants’ first issue for our review is
whether Mr. Suh’s affidavit is in compliance with the Uniform Business
Records of Evidence Act (hereinafter “the Records of Evidence Act”) and the
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Pennsylvania Rules of Evidence. Specifically, appellants aver that the
affidavit is facially defective because it lacks certain elements required by
the Act: (1) that the affidavit fails to state that the making of records was a
regular practice of that business activity; (2) that the affidavit lacks any
statement as to when the records in question were made; (3) that Mr. Suh
has no personal knowledge of the records in question; and (4) that Mr. Suh
lacks familiarity with the process in which the records in question were
produced. (See appellants’ brief at 15-17.) Under their second issue,
appellants aver that the trial court abused its discretion by relying on
Mr. Suh’s affidavit, despite defects in violation of the Records of Evidence
Act and the Pennsylvania Rules of Evidence. (See id. at 19.) Finally,
appellants allege that Mr. Suh’s affidavit is in violation of the Nanty-Glo
rule.
We begin with an analysis of the Nanty-Glo rule. In Borough of
Nanty-Glo v. American Surety Co. of New York, 163 A. 523 (Pa. 1932),
our supreme court held that oral testimony alone is insufficient to warrant an
entry of summary judgment. Id. at 524. “An exception to this rule exists,
however, where the moving party supports the motion by using admissions
of the opposing party . . .” Bank of America, N.A. v. Gibson, 102 A.3d
462, 466 (Pa.Super. 2014), appeal denied, 112 A.3d 648 (Pa. 2015),
quoting Sherman v. Franklin Regional Med. Ctr., 660 A.2d 1370, 1372
(Pa.Super. 1995), appeal denied, 670 A.2d 142 (Pa. 1995).
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General denials constitute admissions where—like
here—specific denials are required. See Pa.R.C.P.
No. 1029(b). Furthermore, “in mortgage foreclosure
actions, general denials by mortgagors that they are
without information sufficient to form a belief as to
the truth of averments as to the principal and
interest owing [on the mortgage] must be
considered an admission of those facts.” First Wis.
Tr. Co. v. Strausser, 439 Pa.Super. 192, 653 A.2d
688, 692 (1995); see Pa.R.C.P. No. 1029(c) Note.
By his ineffective denials and improper claims of lack
of knowledge, Appellant admitted the material
allegations of the complaint, which permitted the
trial court to enter summary judgment on those
admissions.
Gibson, 102 A.3d at 466-467. See also Buckno v. Penn Linen &
Uniform Service, Inc., 631 A.2d 674, 676 (Pa.Super. 1993), appeal
denied, 647 A.2d 895 (Pa. 1994) (“A party seeking to avoid the entry of
summary judgment against him or her may not merely rest on averments in
the pleadings. The party must show that there is a genuine issue for trial
once a properly supported summary judgment motion confronts him or her.”
(citation omitted)).
In the instant appeal, appellants responded to appellee’s averments of
default and the amount of the mortgage in the foreclosure complaint with
nothing more than general denials. Wells Fargo, in its original foreclosure
complaint, averred the following:
5. The Mortgage is in default because monthly
payments of principal and interest are due and
unpaid for 7/1/11 and each month thereafter.
By the terms of the Mortgage, upon failure of
Mortgagor(s) to make such payments after a
date specified in written notice sent to
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Mortgagor(s), the entire principal balance and
all interest due and other charges are due and
collectible.
6. The total amount due Plaintiff through 4/10/12
is $456,899.90, which breaks down as follows:
Principal: 443,396.12
Interest @ variable rate(s)
from 6/1/11 to 4/10/12: 7,632.86
Pre-Acceleration Late Charges: 704.90
Unapplied Funds Credit: (102.06)
Escrow Advance: 5,268.08
TOTAL: 456,899.90
Per diem interest in the amount of $24.30 will
accrue on the principal from 4/11/12 to the
next interest rate change date and accrue
thereafter with the variable rate.
Complaint, 4/20/12 at 1; R.R. at 11a.
Appellants answered with the following general denials:
5. Denied. The allegations set forth in
Paragraph 5 constitute conclusions of law to
which no response is required. To the extent a
response is required, the allegations are
denied.
6. Denied. Defendant denies the characterization
of the schedule of amounts due under the
mortgage and strict proof thereof is demanded
at trial. Plaintiff alleges an escrow advance of
$5,268.08 but does not set forth an itemization
whatsoever for Defendant to be able to answer
whether that amount is true or correct.
According, Defendant requests that Plaintiff
provide an itemized statement of the alleged
escrow advance.
Answer, 11/7/13 at 2; R.R. at 20a.
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Appellants failed to make any reference to what they believe is the
correct amount due on the mortgage, nor do they articulate why they
believe that the escrow advance of $5,268.08 alleged by appellee may be in
error. Due to their failure to include pleadings of specific facts in response
to appellee’s foreclosure complaint, especially pertaining to the amount of
principal and interest due on the mortgage, appellants are deemed to have
admitted the allegations pursuant to Strausser. See also New York
Guardian Mortg. Corp. v. Dietzel, 524 A.2d 951, 952 (Pa.Super. 1987)
(mortgagors’ general denial of mortgagee’s averment as to the principal and
interest due is deemed an admission of those facts because the mortgagor
and the mortgage holder are the only parties “who would have sufficient
knowledge on which to base a specific denial”); Cercone v. Cercone, 386
A.2d 1, 3 (Pa.Super. 1978) (a demand for proof without a reasonable
investigation by a nonmoving party is deemed to be an admission).
Therefore, we find that appellants’ general denials of the amount of
principal and interest due on the mortgage and their general denial of the
fact that the mortgage is in default constitute admissions to the facts
averred in appellee’s foreclosure complaint. As a result, appellants failed to
sustain their burden of presenting material facts in dispute, and summary
judgment was proper. Accordingly, appellants’ first three issues are without
merit.
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In their fourth issue for our review, appellants challenge whether
appellee has proper standing to bring an action in foreclosure. When
determining standing in a foreclosure action, we are governed by the
following standard:
Pennsylvania Rule of Civil Procedure 2002 provides,
“[e]xcept as otherwise provided . . . all actions shall
be prosecuted by and in the name of the real party
in interest, without distinction between contracts
under seal and parol contracts.” Pa.R.C.P. 2002(a);
see also J.P. Morgan Chase Bank, N.A. v. Murray,
63 A.3d 1258, 1258 (Pa.Super. 2013) (finding a
debtor’s claim that appellee bank was not a real
party in interest to bring foreclosure action was a
challenge to appellee’s standing). “[A] real party in
interest is a [p]erson who will be entitled to benefits
of an action if successful . . . . [A] party is a real
party in interest if it has the legal right under the
applicable substantive law to enforce the claim in
question.” U.S. Bank, N.A. v. Mallory, 982 A.2d
986, 993-994 (Pa.Super. 2009) (citation and
quotation marks omitted; some brackets in original).
In a mortgage foreclosure action, the mortgagee is
the real party in interest. See Wells Fargo Bank,
N.A. v. Lupori, 8 A.3d 919, 922 n.3 (Pa.Super.
2010). This is made evident under our Pennsylvania
Rules of Civil Procedure governing actions in
mortgage foreclosure that require a plaintiff in a
mortgage foreclosure action specifically to name the
parties to the mortgage and the fact of any
assignments. Pa.R.C.P. 1147. A person foreclosing
on a mortgage, however, also must own or hold the
note. This is so because a mortgage is only the
security instrument that ensures repayment of the
indebtedness under a note to real property. See
Carpenter v. Longan, 83 U.S. 271, 275 (1872)
(noting “all authorities agree the debt is the principal
thing and the mortgage an accessory.”). A mortgage
can have no separate existence. Id. When a note is
paid, the mortgage expires. Id. On the other hand,
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a person may choose to proceed in an action only
upon a note and forego an action in foreclosure upon
the collateral pledged to secure repayment of the
note. See Harper v. Lukens, 112 A. 636, 637 (Pa.
1921) (noting “as suit is expressly based upon the
note, it was not necessary to prove the agreement
as to the collateral.”). For our instant purposes, this
is all to say that to establish standing in this
foreclosure action, appellee had to plead ownership
of the mortgage under Rule 1147, and have the right
to make demand upon the note secured by the
mortgage.
CitiMortgage, Inc. v. Barbezat, 2016 WL 99772, A.3d , at *2-3
(Pa.Super. 2016).
Here, appellants aver that under the Pennsylvania Uniform Commercial
Code,
Wells Fargo is the only entity that can negotiate the
Note. Wells Fargo did not indorse the Note over to
another entity nor did it indorse the note in blank.
Therefore, Wells Fargo as the holder of the Note is
the only party [which] has standing to enforce the
Note.
Appellants’ brief at 25 (emphasis in original) (footnote omitted).
Appellants’ assertion that Wells Fargo did not indorse the note in blank
is inaccurate.
Pursuant to section 3205(a), a special indorsement is
one made by the holder of an instrument that
identifies a person to whom it makes the instrument
payable. 13 Pa.C.S.A. § 3205(a). Pursuant to
section 3205(b), a blank indorsement is an
indorsement made by the holder of a negotiable
instrument that is not a special indorsement. Id.
§ 3205(b). When indorsed in blank, an instrument
becomes payable to bearer and may be negotiated
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by transfer of possession alone until specially
indorsed. Murray, 63 A.3d at 1266.
PHH Mortg. Corp. v. Powell, 100 A.3d 611, 617 n.6 (Pa.Super. 2014).
Wells Fargo indorsed the note subject to the instant appeal as follows:
WITHOUT RECOURSE
PAY TO THE ORDER OF
WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER
TO WACHOVIA MORTGAGE F.S.B., FORMERLY
KNOWN AS WORLD SAVINGS BANK, F.S.B.
R.R. at 89a. By indorsing the note to itself, Wells Fargo indorsed the note in
blank and preserved its right to transfer possession of the note and
accompanying mortgage, as it did by transferring the note and mortgage to
U.S. Bank on February 20, 2013. Subsequently, U.S. Bank transferred its
interest in the note and mortgage to Kondaur on March 11, 2014. Both
transfers were recorded with the Bucks County Recorder of Deeds. As a
result, appellee has complied with Pa.R.C.P. 1147, which requires a
mortgagee to plead ownership in a foreclosure proceeding. In the motion
for summary judgment,1 appellee pled ownership of the mortgage by
detailing the assignment from U.S. Bank. (See motion for summary
judgment, 7/9/14 at 4; R.R. at 45a.) Therefore, appellants’ fourth issue is
without merit.
Order affirmed.
1
As noted above, Wells Fargo filed the original foreclosure complaint. While
this case was pending, Wells Fargo assigned the mortgage to U.S. Bank.
U.S. Bank subsequently assigned the mortgage to appellee.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/23/2016
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