Bank of America, N.A. v. Velardi, T. ( 2015 )

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
BANK OF AMERICA, N.A., SUCCESSOR : IN THE SUPERIOR COURT OF
BY MERGER TO BAC HOME LOANS : PENNSYLVANIA
SERVICING, L.P., F/K/A COUNTRYWIDE :
HOME LOANS SERVICING, L.P. :
:
v. :
:
TERESA VELARDI, : No. 989 MDA 2014
:
Appellant :
Appeal from the Order Entered May 8, 2014,
in the Court of Common Pleas of Lackawanna County
Civil Division at No. 12 CV 2460
BEFORE: FORD ELLIOTT, P.J.E., SHOGAN AND STABILE, JJ.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED MAY 20, 2015
Teresa Velardi (“Velardi”) appeals, pro se, from the order entered
May 8, 2014, granting summary judgment in favor of Bank of America, N.A.
(“BANA”), and against Velardi in this mortgage foreclosure action. After
careful review, we affirm.
On January 8, 2008, Velardi executed a mortgage and promissory note
for 612 Sunset Street, Clarks Summit, Pennsylvania. The mortgage was
recorded on March 3, 2008, in the Office of the Recorder of Deeds of
Lackawanna County with an instrument number of 200804763. The
mortgage was in the principal sum of $176,750 to Mortgage Electronic
Registration Systems, Inc. (“MERS”), as nominee for Countrywide Bank.
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Subsequently, the mortgage was assigned to BANA, and the assignment was
recorded on October 19, 2011, with an instrument number of 201119731.
At the time BANA filed its motion for summary judgment on
February 3, 2014, the mortgage was past due for the October 1, 2010
payment, a period in excess of 39 months. Velardi did make a payment on
or around November 4, 2010, which was applied to Velardi’s account for the
delinquent September 1, 2010 payment. The account remained due and
owing for the October 1, 2010 payment. On May 8, 2014, following
argument on the motion and Velardi’s response, the motion was granted,
entering in rem judgment against Velardi in the amount of $221,796.54
plus costs and charges, for foreclosure and sale of the subject property.
This timely appeal followed. Velardi was not ordered to file a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P.,
Rule 1925(b), 42 Pa.C.S.A., nor did the trial court file an opinion.
Velardi raises numerous issues in her brief on appeal, which we have
carefully reviewed and on which we can grant no relief. Her statement of
the questions involved is too lengthy and convoluted to reproduce here.1
Basically, Velardi’s issues can be boiled down to the following: 1) lack of
subject matter jurisdiction; 2) lack of proper notice in accordance with Act
91 of 1983, 35 P.S. § 1680.401c; 3) failure to join an indispensable party,
1
BANA urges this court to quash the appeal due to the numerous defects in
Velardi’s brief and her failure to comply with the Rules of Appellate
Procedure; however, in the interest of lenity, we decline to do so.
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i.e., the investors who allegedly purchased the securitized mortgage; and
4) that BANA failed to prove it is the holder in due course of the note and
mortgage and is the real party in interest.
Initially, we note:
Our scope of review of a trial court’s
order disposing of a motion for summary
judgment is plenary. Accordingly, we
must consider the order in the context of
the entire record. Our standard of
review is the same as that of the trial
court; thus, we determine whether the
record documents a question of material
fact concerning an element of the claim
or defense at issue. If no such question
appears, the court must then determine
whether the moving party is entitled to
judgment on the basis of substantive
law. Conversely, if a question of
material fact is apparent, the court must
defer the question for consideration of a
jury and deny the motion for summary
judgment. We will reverse the resulting
order only where it is established that
the court committed an error of law or
clearly abused its discretion.
Grimminger v. Maitra, 887 A.2d 276, 279
(Pa.Super.2005) (quotation omitted). “[Moreover,]
we will view the record in the light most favorable to
the non-moving party, and all doubts as to the
existence of a genuine issue of material fact must be
resolved against the moving party.” Evans v.
Sodexho, 946 A.2d 733, 739 (Pa.Super.2008)
(quotation omitted).
Ford Motor Co. v. Buseman, 954 A.2d 580, 582-583 (Pa.Super. 2008),
appeal denied, 970 A.2d 431 (Pa. 2009).
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As BANA points out, many of Velardi’s issues were not raised in the
court below, including failure to include an allegedly indispensable party,
failure to state a cause of action, and subject matter jurisdiction. (BANA’s
brief at 11.) Issues raised for the first time on appeal are generally waived.
Pa.R.A.P. 302(a). However, subject matter jurisdiction is non-waivable.
Before a court may issue an order, it must have
authority to act. Mintz v. Mintz, 83 Pa.Super. 85(1924). Jurisdiction over the subject-matter is
fundamental to a court’s authority to act. Leveto v.
Nat’l Fuel Gas Dist. Corp., 243 Pa.Super. 510, 366
A.2d 270 (1976).
Jurisdiction is the capacity to pronounce
a judgment of the law on an issue
brought before the court through due
process of law. It is the right to
adjudicate concerning the subject-matter
in a given case . . . . Without such
jurisdiction, there is no authority to give
judgment and one so entered is without
force or effect.
Mintz v. Mintz, supra 83 Pa.Super. at 88 (1924).
Rieser v. Glukowsky, 646 A.2d 1221, 1223 (Pa.Super. 1994).
According to Velardi, BANA’s allegedly deficient Act 91 2 notice deprived
the court of subject matter jurisdiction. (Velardi’s brief at 44.) Velardi relies
on Beneficial Consumer Discount Co. v. Vukman, 37 A.3d 596(Pa.Super. 2012), in which this court held that Act 91’s foreclosure notice
requirements are jurisdictional, and failure to comply will deprive a court of
2
Homeowner’s Emergency Mortgage Act, 35 P.S. §§ 1680.401c et seq.
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jurisdiction to act. (Id.) Vukman was recently reversed by our supreme
court. Beneficial Consumer Discount Co. v. Vukman, 77 A.3d 547 (Pa.
2013). The court determined that the Act 91 notice requirements are
procedural and do not sound in jurisdiction. Id. at 552-553. The notice
requirements set forth the steps a mortgagee must take prior to filing for
foreclosure but do not affect the classification of the case as a mortgage
foreclosure action. Id. Accordingly, provision of a defective Act 91 notice
does not deprive the courts of subject matter jurisdiction. Id.3
The record indicates that BANA sent Act 91 notice to Velardi by regular
mail on December 1, 2010. Furthermore, upon receipt of the Act 91 notice,
Velardi applied for assistance from the Homeowners’ Emergency Mortgage
Assistance Program (“HEMAP”), and was denied by the Pennsylvania Housing
Finance Agency (“PHFA”). PHFA informed Velardi that she was entitled to an
appeal hearing if she disagreed with its decision but Velardi failed to file an
appeal. Since Velardi received consideration of her application for HEMAP,
she cannot possibly show how she was prejudiced by BANA’s allegedly
defective Act 91 notice. See Wells Fargo Bank, N.A. ex rel. Certificate
3
We also note that on June 22, 2012, the legislature enacted the
Homeowner Assistance Settlement Act (Act 70), 35 P.S. § 1681.1 et seq.,
which specifically provides that failure of a mortgagee to comply with Act 91
notice requirements “shall not deprive a court of jurisdiction over any legal
action, including an action in foreclosure, for money due under the mortgage
obligation or to take possession of the mortgagor’s security.” 35 P.S.
§ 1681.5(3). Furthermore, Section 7 of Act 70 provides that “[t]he
provisions of section 5 [35 P.S. § 1681.5] shall apply retroactively to June 5,
1999.”
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Holders of Asset Backed Pass-through Certificates Wells Fargo Bank,
N.A. ex rel. Certificate Holders of Asset Backed Pass-through
Certificates Series 2004-MCWI v. Monroe, 966 A.2d 1140, 1143
(Pa.Super. 2009) (mortgagors could not show prejudice where they received
an Act 91 Notice, and even if it was defective, they were given and availed
themselves of the opportunity to pursue mortgage assistance through
HEMAP and met with a credit counseling agency).
In her response in opposition to BANA’s summary judgment motion,
Velardi also claimed that BANA was not the real party in interest and lacked
standing to bring a mortgage foreclosure action. According to Velardi, MERS
was only a “Nominee” of the original lender, Countrywide, and therefore had
no right to legally assign the note and mortgage. Velardi also argues that
even if MERS could assign the note as nominee of the lender, the
assignment was invalid as the note did not contain a valid endorsement by
the lender stating the note had been assigned to BANA.
First, we observe that the real party in interest rule is merely a rule of
procedure and does not alter the substantive rights of the parties. Spires v.
Hanover Fire Insurance Co., 70 A.2d 828 (Pa. 1950). Velardi raised the
issue in new matter as an affirmative defense. To the extent Velardi wished
to enter an objection that BANA was not the real party in interest, such
should have been raised by preliminary objection, not as new matter. As
was observed in Spitzer v. Smith, 10 Pa.D.&C.2d 243, 245 (Lackawanna
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1956), a violation of Pa.R.C.P. 2002 is not an affirmative substantive
defense and therefore is not a proper subject to be pleaded under new
matter.
At any rate, BANA is the real party in interest and has the authority to
bring this action in mortgage foreclosure. Velardi’s contention to the
contrary is baseless. In Bank of America, N.A. v. Gibson, 102 A.3d 462(Pa.Super. 2014), we rejected a similar argument, holding that MERS, as
nominee, had the ability to assign the mortgage. Id. at 465-466.
Furthermore, as BANA observes, Velardi made regular payments to BANA for
almost three years until she defaulted. (BANA’s brief at 22.) It was not
until foreclosure proceedings commenced that she complained that BANA
was not the holder in due course of the note or mortgage. (Id.) As this
court remarked in Gibson, supra, “we are persuaded by the fact that
Appellant made payments on his mortgage to Bank of America until his
default. Only after Bank of America began foreclosure proceedings did
Appellant contend that the mortgagee to whom he had been making
payments was operating under an improperly transferred mortgage.”
Gibson, 102 A.3d at 466.
Velardi also argues that the promissory note endorsed in blank is
insufficient to establish that BANA is the lawful holder in due course of the
note and therefore entitled to enforce the mortgage. (Velardi’s brief at 38,
45.) According to Velardi, there need to be endorsements showing a
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“complete chain of title” to establish ownership of the note. (Id. at 38.)
Again, we addressed an identical argument in Gibson:
Under the Pennsylvania Uniform Commercial Code
(PUCC), the note securing a mortgage is a negotiable
instrument. J.P. Morgan Chase Bank, N.A. v.
Murray, 63 A.3d 1258 (Pa.Super. 2013). A note
endorsed in blank is a “bearer note,” payable to
anyone on demand regardless of who previously held
the note. 13 Pa.C.S.A. §§ 3109(a), 3301. The note
in this case, therefore, is an unconditional promise
by Appellant to pay a fixed amount of money to Bank
of America, with interest, at a definite time. The
record in this case clearly shows that Bank of
America holds the note, and therefore the mortgage.
Gibson, 102 A.3d at 466. Instantly, BANA’s possession of the note
endorsed in blank entitles it to enforce same. As holder of the note and
mortgage, BANA has standing to pursue this foreclosure action as the proper
party in interest and Velardi’s assertions to the contrary are baseless, with
no support in the record or from legal authority.
Velardi’s primary issue on appeal is that the CHL Mortgage
Pass-Through Trust 2008-1 (“CHL Trust”) is the actual holder of the
mortgage and an indispensable party. According to Velardi, the investors of
the CHL Trust are the true beneficial owners of the mortgage and before any
foreclosure proceeding can be brought, they must be joined as indispensable
parties. (Velardi’s brief at 31.)
As BANA observes, this specific issue was not raised in the trial court.
(BANA’s brief at 11-12.) In new matter, as her thirteenth affirmative
defense, Velardi did allege that, “The original creditor has securitized the
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transaction that separated Defendant’s Promissory Note and Mortgage.
Therefore, a foreclosure action cannot be initiated against Defendant’s
property.” (Supplemental RR at 68b.) However, Velardi did not specifically
mention the CHL Trust. In her response in opposition to BANA’s motion for
summary judgment, Velardi alleged that “the trust into which the [sic] my
mortgage was securitized would be the [CHL Trust].” (Id. at 145b.) Velardi
also attached an affidavit from Charles K. Lamm, a forensic and fraud
examiner, averring that, “the trust into which the subject loan Could have
been securitized would be the [CHL Trust].” (Id. at 155b (emphasis added;
capitalization in original).) However, Velardi never argued the CHL Trust
was an indispensable party, nor did she present any actual evidence to
support the proposition that her mortgage was securitized into the
CHL Trust.
Nonetheless, it is well established that failure to join an indispensable
party is a non-waivable issue because it goes to the court’s jurisdiction to
decide the matter. Hart v. O'Malley, 647 A.2d 542, 549 (Pa.Super. 1994),
affirmed, 676 A.2d 222 (Pa. 1996). That said, Velardi presents no
competent evidence to support her assertion other than Lamm’s affidavit
stating that her mortgage “could have been” securitized into the CHL Trust.
Furthermore, even if the mortgage had been securitized, this does not make
the CHL Trust an indispensable party or deprive BANA of the right to enforce
the note. See PHH Mortg. Corp. v. Powell, 100 A.3d 611, 621 (Pa.Super.
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2014) (“Evidence that some other entity may be the “owner” or an
“investor” in the Note is not relevant to this determination, as the entity with
the right to enforce the Note may well not be the entity entitled to receive
the economic benefits from payments received thereon.”). “Ownership of
the Note is irrelevant to the determination of whether PHH is a “person
entitled to enforce” the Note. . . .” Id. Here, as discussed above, BANA is
in possession of the note endorsed in blank and MERS, as nominee for
Countrywide, had the authority to assign the mortgage. As such, BANA is
the real party in interest and entitled to enforce the note.
Finally, we note that in her answer to the complaint in mortgage
foreclosure, Velardi simply denies the allegations in paragraphs five and six,
without explanation or elaboration, which have the effect of admissions.
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
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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)).
Paragraphs five and six of the complaint aver the default and the
amounts due on the mortgage, respectively. Paragraph five avers that,
The mortgage is in default because monthly
payments of principal and interest upon said
mortgage due 10/01/2010 and each month
thereafter are due and unpaid, and by the terms of
said mortgage, upon failure of Mortgagor to make
such payments after a date specified by written
notice sent to Mortgagor, the entire principal balance
and all interest due thereon are collectible forthwith.
Paragraph six sets forth the amounts due on the mortgage as of October 17,
2011, including principal, interest, and late charges totaling $193,111.11.
In her answer, Velardi states that she “specifically denies each and
every allegation” in paragraphs five and six; however, she does not make
any reference to what she believes to be the correct amount due, or why she
believes the amount sought is erroneous. She does not set forth why or
how the mortgage is not in default. While she challenges the assignment of
the mortgage, she admits in response to paragraph three of the complaint
that she executed a mortgage on January 8, 2008, upon the subject
premises in favor of MERS, as nominee for Countrywide and that the
mortgage is recorded in the Office of the Recorder of Deeds of Lackawanna
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County at mortgage instrument number 200804763. Obviously, Velardi
knows what payments she made on the mortgage and whether the amount
due is correct. See New York Guardian Mortg. Corp. v. Dietzel, 524
A.2d 951, 952 (Pa.Super. 1987) (mortgagors’ general denial that they “are
without information sufficient to form a belief as to the truth of” mortgagee’s
averment as to the principal and interest due is to be considered an
admission of those facts where, unquestionably, apart from the mortgage
holder, mortgagors are the only parties who would have sufficient knowledge
on which to base a specific denial). If the defendant mortgagors do not
plead specific facts in response to the allegations in the complaint regarding
the default and the amount due, the defendants are deemed to have
admitted the allegations. Strausser, supra. We agree with BANA that
Velardi’s general denials of the amounts due and the default are properly
viewed as admissions. Therefore, Velardi failed to sustain her burden of
presenting facts which contradicted the elements of BANA’s claim and
summary judgment was proper.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/20/2015
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