KAB Loan Services v. Wells Fargo Bank ( 2016 )

J-S43003-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
KAB LOAN SERVICES, LLC IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
WELLS FARGO BANK N.A.
Appellee No. 1425 MDA 2015
Appeal from the Judgment July 20, 2015
In the Court of Common Pleas of Berks County
Civil Division at No(s): 15-3541
BEFORE: GANTMAN, P.J., PANELLA, J., and JENKINS, J.
MEMORANDUM BY GANTMAN, P.J.: FILED JULY 19, 2016
Appellant, KAB Loan Services, LLC, appeals from the judgment entered
in the Berks County Court of Common Pleas in favor of Appellee, Wells Fargo
Bank N.A., in this quiet title action. We affirm.
In its opinion, the trial court set forth the relevant facts and procedural
history of this case as follows:
The property in question, 2528 Cumberland Avenue,
Reading, PA 19606 [(“the property”)] was formerly owned
by Charles N. Buzeleski who executed two separate
mortgages on the property with Wachovia Bank
[(“Wachovia”)]. The first mortgage [(“senior mortgage”)]
in the amount of $29,542.00 was executed by Buzeleski on
July 27, 2007 and was recorded with the Office of the
Recorder of Deeds in Berks County, Pennsylvania on
August 17, 2007. The second mortgage [(“junior
mortgage”)] in the amount of $117,329.00, also executed
on July 27, 2007, was recorded in the same office on
August 21, 2007, obviously subsequent to the first
mortgage.
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In October 2013, [Appellee], as successor by merger to
Wachovia, filed an in rem foreclosure complaint against
Buzeleski to enforce the junior mortgage. Judgment was
entered in favor of [Appellee] and as a result, [Appellant]
purchased the property at a sheriff’s sale conducted by the
Berks County Sheriff on December 5, 2014. [Appellant]
filed an action to quiet title for the property on March 25,
2015 and argument was held for [Appellee’s] Motion for
Judgment on the Pleadings on July 20, 2015.[1] This
[c]ourt issued an order granting [Appellee’s] Motion for
Judgment [on the Pleadings] that same day. [Appellant]
filed a Notice of Appeal on August 19, 2015 and a
[Pa.R.A.P. 1925(b)] Concise Statement of Errors
Complained of on Appeal on September 10, 2015.
(Trial Court Opinion, filed October 16, 2015, at 2-3).
Appellant raises one issue for our review:
WHETHER THE TRIAL COURT COMMITTED AN ERROR OF
LAW, OR ABUSED ITS DISCRETION, WHEN IT GRANTED
[APPELLEE’S] MOTION FOR JUDGMENT ON THE
PLEADINGS, AND REFUSED TO ALLOW [APPELLANT] THE
OPPORTUNITY TO CONDUCT DISCOVERY IN THIS ACTION?
(Appellant’s Brief at 4).
Appellant argues there was a factual dispute regarding the order in
which Appellee’s predecessor-in-interest, Wachovia, intended to record the
mortgages. Specifically, Appellant avers Wachovia intended to record the
senior mortgage subsequent to the junior mortgage. Appellant contends
Appellee foreclosed on the “intended” senior mortgage, which should have
resulted in the merger of both mortgages with the judgment entered in the
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1
Appellee filed a motion for judgment on the pleadings on June 24, 2015.
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foreclosure action against the former property owner. Appellant asserts the
court should have permitted discovery on the issue of whether the
mortgages had been recorded in the wrong order. Appellant concludes the
court abused its discretion by granting Appellee’s motion for judgment on
the pleadings without allowing discovery. We cannot agree.
The applicable scope and standard of review are as follows:
[A]ppellate review of a trial court’s decision to grant or
deny judgment on the pleadings is limited to determining
whether the trial court committed an error of law or
whether there were facts presented which warrant a jury
trial. In conducting this review, we look only to the
pleadings and any documents properly attached
thereto. Judgment on the pleadings is proper only where
the pleadings evidence that there are no material facts in
dispute such that a trial by jury would be unnecessary.
In passing on a challenge to the sustaining of a motion for
judgment on the pleadings, our standard of review is
limited. We must accept as true all well pleaded
statements of fact of the party against whom the motion is
granted and consider against him only those facts that he
specifically admits. We will affirm the grant of such a
motion only when the moving party’s right to succeed is
certain and the case is so free from doubt that the trial
would clearly be a fruitless exercise.
Bowman v. Sunoco, Inc., 986 A.2d 883, 886 (Pa.Super. 2009) (emphasis
added). Pennsylvania Rule of Civil Procedure 4003.1 provides for the scope
of discovery:
Rule 4003.1. Scope of Discovery Generally.
Opinions and Contentions
(a) Subject to the provisions of Rules 4003.2 to 4003.5
inclusive and Rule 4011, a party may obtain discovery
regarding any matter, not privileged, which is relevant to
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the subject matter involved in the pending action, whether
it relates to the claim or defense of the party seeking
discovery or to the claim or defense of any other party,
including the existence, description, nature, content,
custody, condition and location of any books, documents,
or other tangible things and the identity and location of
persons having knowledge of any discoverable matter.
(b) It is not ground for objection that the information
sought will be inadmissible at the trial if the information
sought appears reasonably calculated to lead to the
discovery of admissible evidence.
(c) Except as otherwise provided by these rules, it is not
ground for objection that the information sought involves
an opinion or contention that relates to a fact or the
application of law to fact.
Pa.R.C.P. No. 4003.1.
Mortgage priority is governed by statute as follows:
§ 622. Priority according to date of recording
From and after the passage of this act, all mortgages, or
defeasible deeds in the nature of mortgages, made or to
be made or executed for any lands, tenements, or
hereditaments within this Commonwealth, shall have
priority according to the date of recording the same,
without regard to the time of making or executing such
deeds; and it shall be the duty of the recorder to endorse
the time upon the mortgages or defeasible deeds, when
left for record, and to number the same according to the
time they are left for record, and, if two or more are left
upon the same day, they shall have priority according to
the time they are left at the office for record. No
mortgage, or defeasible deed in the nature of a mortgage,
shall be a lien, until such mortgage or defeasible deed shall
have been recorded, or left for record, as aforesaid. Any
mortgage, given by purchase to seller, for any part of the
purchase money of the land so mortgaged, shall have a
lien from the time of delivery of said mortgage, provided
the same be recorded within thirty days from the date of
the mortgage.
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21 P.S. § 622. See also First Citizens Nat. Bank v. Sherwood, 583 Pa.
466, 879 A.2d 178 (2005) (stating recording of mortgage serves as
constructive notice of mortgage to subsequent purchasers). A judicial sale
of an encumbered property affects mortgage liens on the property as
follows:
§ 8152. Judicial sale as affecting lien of mortgage
(a) General Rule.—Except as otherwise provided in this
section, a judicial or other sale of real estate shall not
affect the lien of a mortgage thereon, if the lien of the
mortgage is or shall be prior to all other liens upon the
same property except:
(1) Other mortgages, ground rents and purchase
money due the Commonwealth.
(2) Taxes, municipal claims and assessments, not
at the date of the mortgage duly entered as a lien in
the office of the clerk of the court of common pleas.
(3) Taxes, municipal claims and assessments
whose lien though afterwards accruing has by law
priority given it.
* * *
(c) Sale on prior lien.—A judicial or other sale of real
estate in proceedings under a prior ground rent, or in
foreclosure of a prior mortgage, shall discharge a
mortgage later in lien.
* * *
42 Pa.C.S.A. § 8152(a), (c). See also Public Federal Sav. & Loan Ass’n
v. Neumann, 483 A.2d 505 (Pa.Super. 1984) (stating sale of real property
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pursuant to writ of execution does not affect lien of mortgage if mortgage is
prior to all other liens on property). Additionally,
[A] Sheriff’s Sale is made without warranty; the purchaser
takes all the risk, and the rule of caveat emptor applies in
all its force. The purchaser at such a sale receives all the
right, title, and interest in the property that the judgment
debtor held and the rights of the purchaser become fixed
when the property is knocked down to the highest bidder.
If the debtor had no rights in the property at the time of
the sheriff’s sale, however, no title passes to the
purchaser.
Irwin Union Nat’l Bank & Trust Co. v. Famous, 4 A.3d 1099, 1104
(Pa.Super. 2010).
Instantly, Appellant’s quiet title complaint is devoid of any allegation
that Wachovia intended to record the mortgages in the reverse order.
Appellant made that assertion for the first time in its response to Appellee’s
motion for judgment on the pleadings. Our review of the judgment,
however, is limited to the pleadings and the attachments to the pleadings.
See Bowman, supra. Therefore, Appellant waived its argument on appeal
regarding the order in which Wachovia intended to record the mortgages.
Moreover, the court reasoned as follows:
In the instant case[, Appellant] purchased the property in
a sheriff’s sale due to [Appellee’s] foreclosure action on the
junior mortgage alone. [Appellant] claims that through
the doctrine of merger, the senior and junior mortgages
were merged in the foreclosure action and thus it
purchased the property free and clear of any liens. As
learned counsel for [Appellee] argued and this [c]ourt
agrees, [Appellant’s] claim is contrary to the law of
mortgages and Pennsylvania law regarding the
preservation of senior mortgages after a sheriff’s sale on a
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junior mortgage. The senior mortgage was neither erased
by this sale nor merged with the junior mortgage as a valid
foreclosure of a mortgage terminates all interests in the
foreclosure real estate that are junior to the mortgage
being foreclosed and whose holders are properly joined or
notified under applicable law, it does not terminate
interests in the foreclosed real estate that are senior
to the mortgage being foreclosed. Additionally, liens
upon real estate, whether prior or subsequent, including
any lien on which the sale is made, are divested by judicial
sale unless specifically preserved by statute or because of
the peculiar character of the lien or encumbrance. 42
Pa.C.S.A. § 8152(a) expressly provides that a judicial or
other sale of real estate shall not affect the lien of a
mortgage thereon, if the lien of the mortgage is or shall be
prior to all other liens upon the same. Priority of
mortgages is based on the date of recording, regardless of
the date of execution. The senior mortgage, not subject to
the foreclosure action, was recorded 4 days prior to the
junior mortgage and as the senior mortgage was not the
mortgage foreclosed upon and subject to the sheriff’s sale,
the senior mortgage remains as it is the mortgage
recorded first in time.
[Appellant’s] claims are also barred by the rule of caveat
emptor as [Appellant] purchased the property at sheriff’s
sale, which is a sale made without warranty where the
purchaser takes all the risk and the rule of caveat emptor
applies in all its force. The purchaser at such a sale
receives all the right, title, and interest in the property that
the judgment debtor held and the rights of the purchaser
become fixed when the property is knocked down to the
highest bidder. A title search would have uncovered the
existence of the first senior mortgage and as the senior
mortgage was properly recorded, that recording serves as
constructive notice equally as effective to any purchasers
as actual notice. There is no dispute that the senior
mortgage was recorded first in time. Consequently
[Appellant] purchased the property with notice of and
subject to the senior mortgage as a matter of law and thus
their claim to quiet title fails.
Secondly, this [c]ourt will address [Appellant’s] complaint
that this [c]ourt did not allow discovery in the action.
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[Appellant] had hoped to prove [its] theory that
[Wachovia] intended to record the senior and junior
mortgage in reverse order, alleging that a mistake was
made in the recording process. This would mean that the
mortgage subject to the foreclosure action was originally
meant to be the senior mortgage and thus through the
doctrine of merger, the senior and junior mortgages were
merged in the foreclosure action and thus [Appellant]
purchased the property free and clear of any liens. This
[c]ourt is not concerned with Wachovia’s intentions,
however, as the priority of mortgages is based on the date
of recording, regardless of the date of execution and
nothing in 21 P.S. § 622 allows for the consideration of
recording order mistakes or intentions. There is no dispute
as to which mortgage was recorded first, the dispute is
why they were recorded in that order and therefore any
discovery as to Wachovia’s intentions on recording order
would be irrelevant.
(Trial Court Opinion, filed October 16, 2015, at 3-5) (some internal citations
and quotations omitted) (emphasis in original). The record supports the
court’s analysis. Appellee’s foreclosure action on the junior mortgage, which
was recorded on August 21, 2007, did not extinguish the senior mortgage
that was recorded on August 17, 2007. See 42 Pa.C.S.A. § 8152(a); Public
Federal Sav. & Loan Ass’n, supra. Appellant cites no law for the
proposition that mortgage priority may be determined from a mortgagee’s
subjective intentions as opposed to recording dates. Thus, discovery on
whether Wachovia intended to record the mortgages in a different order
would have been irrelevant and unnecessary. See 21 P.S. § 622; Pa.R.C.P.
No. 4003.1. Therefore, even if Appellant had preserved the issue, no relief
would be due. Accordingly, we affirm.
Judgment affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/19/2016
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