Bank of New York v. Chughtai, S. ( 2015 )

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37
THE BANK OF NEW YORK MELLON FKA IN THE SUPERIOR COURT OF
THE BANK OF NEW YORK, AS TRUSTEE PENNSYLVANIA
FOR THE CERTIFICATE HOLDERS OF THE
CWMBS INC., CHL MORTGAGE PASS-
THROUGH TRUST 2007-17, MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES
2007-17
Appellee
v.
SAYEEDA CHUGHTAI
Appellant No. 1376 EDA 2014
Appeal from the Order of April 7, 2014
In the Court of Common Pleas of Bucks County
Civil Division at No.: 2011-10305
BEFORE: PANELLA, J., LAZARUS, J., and WECHT, J.
CONCURRING MEMORANDUM BY WECHT, J.: FILED MARCH 20, 2015
I agree with the learned majority that the trial court’s order must be
affirmed pursuant to this Court’s decision in U.S. Bank, N.A. v. Mallory,
982 A.2d 986 (Pa. Super. 2009). I write separately to address this Court’s
more recent decision in J.P. Morgan Chase Bank, N.A., v. Murray, 63
A.3d 1258 (Pa. Super. 2013), which Appellant Sayeeda Chughtai cites, but
which the majority does not discuss.
Pennsylvania Rule of Civil Procedure 3132 provides as follows
regarding the requirements for setting aside a sheriff’s sale:
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Rule 3132. Setting Aside Sale
Upon petition of any party in interest before delivery of
the . . . sheriff’s deed to real property, the court may, upon
proper cause shown, set aside the sale and order a resale or
enter any other order which may be just and proper under the
circumstances.
Pa.R.C.P. 3132 (emphasis added). It is well-settled that, once the sheriff’s
deed has been delivered to the sheriff’s sale purchaser, the sale may be set
aside only for “fraud or [the sheriff’s] lack of authority to make the sale.”
Mortgage Elec. Reg. Sys., Inc. v. Ralich, 982 A.2d 77, 80
(Pa. Super. 2009). In this case, the sheriff’s deed was acknowledged by the
Bank of New York Mellon (“BNY”) approximately one week before Chughtai
filed his petition. See Deed Poll, CPN #06-009-032, 9/18/2013, at 3.
Chughtai does not assert fraud, leaving his right to relief contingent upon his
ability to establish that the sheriff lacked authority to make the sale.
In his petition to set aside the sheriff’s sale, Chughtai made only the
following bald allegation regarding the sheriff’s authority: “As of the date of
[default] judgment, [BNY] was not the record assigned mortgagee nor
recipient of the subject note such as to allow it to have taken judgment.”
Defendant Chughtai’s Motion to Set Aside Plaintiff’s Sheriff’s Foreclosure Sale
at 1 ¶ 4 (citing Mallory, supra). The difficulty here is that, despite
undisputedly having received personal service of BNY’s foreclosure complaint
on the subject property, Chughtai did not contest BNY’s complaint, which led
to the entry of a default judgment. Chughtai also did not later seek to open
or strike that default judgment in a timely matter, effectively acquiescing to
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the judgment. Because the sheriff’s authority lay in the writ of execution
entered upon the default judgment, which Chughtai also did not challenge,
only by establishing that the default judgment was void ab initio might
Chughtai prevail in his challenge to the sheriff’s sale.
As noted, Chughtai never filed a petition to open or strike the default
judgment. Because “[a] petition to open a judgment is addressed to the
equitable powers of the court and is a matter of judicial discretion,” and
because a petition to open must be filed “promptly” 1 and provide an excuse
for the failure to appear to defend the complaint in the first instance, see
Schultz v. Erie Ins. Exch., 477 A.2d 471, 472 (Pa. 1984), it seems clear to
me that this is relief to which Chughtai cannot credibly seek by whatever
means. A petition to open implicates a trial court’s discretion; it does not
concern jurisdictional matters or other wants of authority to enter judgment
that are the proper subject of a petition to strike.
Turning to whether a duly presented petition to strike the judgment
could have prevailed, we have held that such a petition “operates as a
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1
Pennsylvania courts seldom will review a petition to open that is not
filed within a few weeks of the entry of judgment. See Flynn v. Amer. W.
Airlines, 742 A.2d 695, 698 (Pa. Super. 1999) (noting that delays of fewer
than three weeks may be deemed insufficiently prompt, and deeming
“generous” the trial court’s determination in that case that twenty-four days
satisfied the promptness prong); Carducci v. Albright Galleries, Inc., 366
A.2d 577, 579 (Pa. Super. 1976) (finding delay of fifty-four days
insufficiently prompt, and citing cases finding fifty-five-day, twenty-seven-
day, and three-week delays insufficiently prompt).
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demurrer to the record. As such, it is not a matter calling for the exercise of
discretion. A petition to strike a judgment may be granted only where a
fatal defect in the judgment appears on the face of the record.” U.K.
LaSalle, Inc. v. Lawless, 618 A.2d 447, 449 (Pa. Super. 1992). Unlike a
petition to open a judgment, which is always subject to the promptness
requirement, only under certain circumstances does timeliness matter in the
context of a petition to strike. The determination of whether a petition to
strike must be filed within a “reasonable period following the entry of [a]
default judgment” depends upon “whether the facial defect rendered the
default judgment void or voidable.” Erie Ins. Co. v. Bullard, 839 A.2d
383, 388 (Pa. Super. 2003). A voidable judgment may be stricken only
when the petition is filed “within a reasonable period following the entry of
the judgment.” Id. Conversely, timeliness is immaterial when the
underlying judgment is void ab initio. Id. “[W]here a fatal defect or
irregularity is apparent from the face of the record, the prothonotary will be
held to have lacked the authority to enter default judgment and the default
judgment will be considered void.” Mallory, 982 A.2d at 991.2
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2
Although I have found no authority suggesting that, even in case of a
fatal defect, relief may be sought procedurally through a pleading other than
a petition to strike an unauthorized judgment, it seems at least colorable
that such would be the case. That such a circumstance eliminates the
promptness requirement on a petition to strike suggests the corollary that
the want of proper authority is so grave as to trump the precise method by
which the lack of authority is pleaded. For the reasons set forth herein and
(Footnote Continued Next Page)
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In Mallory, upon which the majority relies, we found the face of the
record sufficient where the foreclosing party pleaded the existence and date
of the mortgage, the fact that the foreclosing party was the legal assignee of
the mortgage, and that the foreclosing party was in the process of
formalizing the assignment by recordation. That the assignment had not in
fact been recorded at the time that the complaint was filed did not render
the record deficient on its face such that the judgment was void; at most it
merely was voidable. Id. at 992-93.
In the instant case, the foreclosure complaint in fact was more
informative than the complaint in Mallory, which we found adequate to
avoid a finding that the judgment was void ab initio. As in Mallory, BNY in
this case pleaded that it was the holder of the underlying mortgage, satisfied
all other pleading requirements for such a complaint, and attached the
mortgage to the complaint.3 Compare Complaint at ¶ 3 with Mallory, 982
A.2d at 992. Indeed, in this case, unlike in Mallory, BNY averred that the
assignment of the mortgage had been recorded; in Mallory, the plaintiff
only asserted that an assignment had occurred and that the plaintiff was in
the process of recording the assignment. This Court held that the
substantive requirement of such an averment was to ensure that the
_______________________
(Footnote Continued)
in the majority’s memorandum, this case does not require us to address the
question.
3
See Pa.R.C.P. 1147 (specifying pleading requirements for complaint in
foreclosure).
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plaintiff’s complaint “sufficiently put [the mortgagor] on notice of [the
plaintiff’s] claim of interest with regard to the subject mortgage.” 982 A.2d
at 993. It is clear that, in this case, Chughtai received ample notice of BNY’s
claim of interest via personal service of the foreclosure complaint.
Chughtai contends that, in Murray, supra, this Court held that “[i]n
order to have ‘authority’ to foreclose upon a mortgage, the foreclosing
[party] must have a pre-judgment assigned mortgage and [a] negotiated
transferred note.” Brief for Chughtai at 12. In effect, Chughtai does not
dispute that, per Mallory, BNY duly pleaded that it was the assignee of the
mortgage, but implies that Murray limited Mallory by holding that a
foreclosing party may not seek judgment, by default or otherwise, unless it
establishes possession of the note, as distinct from the mortgage. Chughtai
contends that, because BNY did not plead possession of the note or attach it
to its complaint in foreclosure, the record was defective on its face, the
prothonotary lacked authority to enter default judgment, BNY was not
entitled to a writ of execution, and the sheriff therefore lacked authority to
conduct a sale of the property.
Even if this all were true, and even if the trial court was permitted (or
required) to treat Chughtai’s petition to set aside the sheriff’s sale like a
motion to strike for want of authority, see n.2, supra, in this case the
petition, treated as a petition to strike, would be untimely unless the
judgment was void ab initio rather than merely voidable. See Oswald v.
WB Public Square Assocs., LLC, 80 A.3d 790, 797 (Pa. Super. 2013)
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(“The general rule is that “judgments which are void ab initio are those
which the prothonotary was without authority to enter in the first place,”
i.e., those in which a fatal defect appeared on the face of the pleadings.
(internal quotation marks omitted)) (citing Erie Ins. Co. v. Bullard, 839
A.2d 383 (Pa. Super. 2003)). Because Mallory authorized the entry of a
default judgment despite the fact that the mortgage assignment had merely
been pleaded but was not memorialized by recordation, it is clear that, at
least in the context of a default judgment, merely pleading possession of the
mortgage rendered the pleadings facially adequate to support the entry of
the default judgment. Consequently, any other defect, such as the
purported lack of proof of possession of the note, implicated the judgment’s
voidability, not voidness ab initio. Thus, only if Chughtai had sought to
strike the judgment promptly would he be entitled to relief. There can be
no reasonable dispute that Chughtai’s delay of over twenty months after the
entry of the default judgment before appearing in any fashion was not
sufficiently prompt. Consequently, the sheriff’s authority cannot be
questioned.
Nonetheless, a word is due concerning this Court’s decision in Murray.
In that case, this Court recognized and did not undermine Mallory’s holding
that, to sustain a default judgment, the foreclosing party need only aver that
it is the assignee of the relevant mortgage, not that the assignment has
been recorded. Id. However, we held in Murray that the documents upon
which the foreclosure is based, including the note, must be produced when
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properly challenged. In that case, we reversed the trial court’s entry of
summary judgment because the mortgagor, in its duly and timely pleaded
answer and response to the foreclosing party’s motion for summary
judgment, created a question of fact regarding the mortgagee’s actual
possession of the note underlying the mortgage. We held that actual
possession was essential to establishing the right to foreclosure because the
creditor’s possession of the note, as a negotiable instrument under the
Uniform Commercial Code, was essential to the right to foreclose upon the
mortgage securing the debt. See id. at 1267-1268. Thus, per Mallory,
while merely pleading that the mortgagee possesses the relevant mortgage
may sustain a default judgment, per Murray, a mortgagor’s duly and timely
pleaded challenge to the mortgagee’s possession of the relevant note
creates an issue of fact such that the foreclosing party must establish
possession of the note before a contested judgment in foreclosure may be
entered.
The majority’s decision not to cite or discuss Murray, despite
Chughtai’s reliance upon that case, is not by itself problematic. Mallory
plainly is applicable to the instant case, whereas Murray addresses a
distinct circumstance in which the foreclosure defendant did not effectively
waive his opportunity to defend the action. I simply wish to emphasize that
Murray has added to the Mallory analysis by introducing the requirement
that foreclosing mortgagees produce the note memorializing the debt
secured by the mortgage when a mortgagor duly challenges the foreclosing
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party to do so. The law continues to evolve in this area. See, e.g., PHH
Mortgage Corp. v. Powell, 100 A.3d 611 (Pa. Super. 2014); U.S. Bank,
Nat’l Ass’n v. Zimmer, No. 3:12-CV-644, 2015 WL 412389 (M.D.Pa. Jan.
30, 2015).
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