Generation Mortg. Co. v. Bung Thi Nguyen , 2016 Pa. Super. 82 ( 2016 )

J-A03025-16
2016 Pa. Super. 82
GENERATION MORTGAGE COMPANY IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
BUNG THI NGUYEN
Appellant No. 1069 EDA 2015
Appeal from the Order Dated April 6, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): APRIL TERM, 2013, NO. 1497
BEFORE: GANTMAN, P.J., MUNDY, J., and DUBOW, J.
OPINION BY MUNDY, J.: FILED APRIL 11, 2016
Appellant, Bung Thi Nguyen, appeals from the order dated April 6,
2015, denying her motion for attorney’s fees filed after Appellee, Generation
Mortgage Company, discontinued its action for mortgage foreclosure. After
careful review, we affirm.
The trial court provided the relevant procedural history of this case as
follows.
This case commenced April 10, 2013, with the filing
of a complaint in mortgage foreclosure on the
premises of 6347 Kinsessing Avenue, Philadelphia,
Pennsylvania 19142 by Appellee[]. The complaint
averred that Appellant was in default on a
mortgage[.]
On May 10, 2013, Appellant filed a praecipe to
proceed in forma pauperis.
On May 17, 2013, Appellant filed an answer
with new matter in response to the complaint,
J-A03025-16
raising four (4) affirmative defenses: (1) lack of
subject matter jurisdiction due to premature
commencement of the mortgage foreclosure action
under the terms of the contract; (2) lack of subject
matter jurisdiction due to premature commencement
of the mortgage foreclosure action under
Pennsylvania’s Usury Law (Act 6 of 1974), 41 P.S.
§[§] 101[-605] (“Act 6”); (3) lack of standing
because Appellee is not a real party in interest; and
(4) breach of contract.
On June 19, 2013, Appellee filed its reply to
new matter, denying Appellant’s averments and each
of Appellant’s affirmative defenses.
On August 21, 2013, Appellee filed a motion
for summary judgment, arguing that the matter was
ripe for disposition by way of summary judgment
because neither Appellant’s answer to the complaint,
nor her new matter created a genuine issue of
material fact. Specifically, Appellee argued that
summary judgment was appropriate because
Appellant admitted in her answer to the complaint
that she is the real owner of the subject property
and that she executed the mortgage, which was
secured by the subject property, to Appellee, and
she did not deny that she failed to maintain taxes
and insurance on the property or that the mortgage
was in default. Consequently, Appellee was
permitted under the terms of the signed documents
to accelerate all amounts due.
On September 23, 2013, Appellant filed an
answer in opposition to the motion for summary
judgment, denying Appellee’s averments in its
motion for summary judgment because there are
genuine issues of material facts. Appellant raised
three (3) main arguments in opposition to summary
judgment. Appellant argued that the foreclosure
action should be dismissed: (1) pursuant to the
coordinate doctrine rule; (2) for lack of subject
matter jurisdiction; and (3) because Appellee has not
proven whether Appellant is in default under the loan
documents.
-2-
J-A03025-16
On October 15, 2013, Appellee filed a reply in
support of motion for summary judgment, arguing
that Act 6 does not apply to this matter because the
mortgage is a reverse mortgage, not a residential
mortgage under Act 6. Appellee also argued that
even if the pre-foreclosure notice it provided to
Appellant was deficient, [the trial court] retains
subject matter jurisdiction over the case.
On October 22, 2013, [the trial court] denied
Appellee’s motion for summary judgment.
On March 31, 2014, Appellee filed a second
motion for summary judgment, arguing that the
matter was ripe for disposition by way of summary
judgment because neither Appellant’s answer to the
complaint, nor her new matter created a genuine
issue of material fact. [Appellee asserted the same
basis for summary judgment contained in its first
motion for summary judgment, discussed above.]
On May 1, 2014, Appellant filed her answer in
opposition to Appellee’s second motion for summary
judgment[.] [Appellant’s arguments were identical
to those contained in her answer to the first motion
for summary judgment.]
…
On May 17, 2014, [the trial court] entered an
order denying Appellee’s second motion for summary
judgment as premature.
On January 7, 2015, the parties completed a
settlement conference.
On January 15, 2015, Appellee filed a praecipe
to discontinue and end, directing the prothonotary to
withdraw Appellee’s complaint and mark same as
discontinued and ended, without prejudice.
On January 20, 2015, the case was
discontinued.
-3-
J-A03025-16
On February 18, 2015, Appellant timely filed
the instant motion [for] counsel fees with [an]
accompanying declaration from Appellant’s counsel,
arguing that as a result of the discontinuance,
Appellant became the “prevailing party” in the
matter under Pennsylvania law and, was therefore
entitled to payment of reasonable attorneys’ fees
and costs by Appellee pursuant to § 503 of Act 6.
On March 10, 2015, Appellee filed its answer in
opposition of motion for counsel fees, arguing that a
discontinuance does not terminate the civil action
with an adjudication on the merits, which, in turn,
cannot result in a “prevailing party” who would be
entitled to recovery of attorney fees under the
applicable statutes.
On April 6, 2015, [the trial court] denied
Appellant’s motion for counsel fees.
Trial Court Opinion, 7/6/15, 1-4 (some capitalization and citations omitted).
On April 8, 2015, Appellant filed a timely notice of appeal.1
On appeal, Appellant raises the following issues for our review.
I. Did the [trial] court commit an error of law in
determining that it had no jurisdiction to act on
[Appellant’s] timely fee motion, as required by
Miller Electric Co. v. DeWeese[, 907 A.2d
1051 (Pa. 2006), amended by, 918 A.2d 114
(Pa. 2007) (mem.)], because [Appellee]
discontinued the action prior to the fee motion
being filed?
II. Did the [trial] court abuse its discretion in
failing to determine whether a violation of
§ 403 of [Act 6] occurred when no [Act 6]
____________________________________________
1
Appellant and the trial court have complied with Pennsylvania Rule of
Appellate Procedure 1925.
-4-
J-A03025-16
notice [of intention to foreclose] was sent prior
to foreclosure on a “residential mortgage” as
defined by § 101 of [Act 6]?
III. Did the [trial] court abuse its discretion in
failing to award mandatory counsel fees
because it determined that [A]ppellant was not
the “prevailing party” under § 503 of [Act 6]
despite this Court’s interpretation of § 503 in
Gardner v. Clark[, 503 A.2d 8 (Pa. Super.
1986)]?
Appellant’s Brief at 2.
We review a trial court’s decision regarding attorney’s fees as follows.
Trial courts have great latitude and discretion in
awarding attorney fees when authorized by contract
or statute. Generally, [t]he denial of a request for
attorney’s fees is a matter within the sound
discretion of the trial court, which will be reversed on
appeal only for a clear abuse of that discretion.
Cummins v. Atlas R.R. Const. Co., 814 A.2d 742, 746 (Pa. Super. 2002)
(citations and internal quotation marks omitted).
Further, to the extent that we must interpret a statute to resolve
Appellant’s issues, our standard of review is de novo and our scope of review
is plenary. Gilbert v. Synagro Cent., LLC, 131 A.3d 1, 10 (Pa. 2015)
(citation omitted). We construe the meaning of a statute according to the
Statutory Construction Act, 1 Pa.C.S.A. §§ 1501-1991.
Under the Statutory Construction Act, the object of
all statutory construction is to ascertain and
effectuate the General Assembly’s intention. When
the words of a statute are clear and free from all
ambiguity, the letter of the statute is not to be
disregarded under the pretext of pursuing its spirit.
-5-
J-A03025-16
Strausser Enters., Inc. v. Segal & Morel, Inc., 89 A.3d 292, 297 (Pa.
Super. 2014) (citation omitted).
Appellant’s first argument is that the trial court erred in concluding
that it was without jurisdiction to act on Appellant’s timely motion for
attorney’s fees. Appellant’s Brief at 8. However, the trial court did not find
that it lacked jurisdiction to address the attorney’s fees issue. Instead, the
trial court denied the motion on its merits “because the case had been
discontinued and [] Appellant was not a ‘prevailing party.’” Trial Court
Opinion, 7/6/15, at 8. Accordingly, Appellant’s first argument
mischaracterizes the trial court’s reasoning and is therefore meritless.
Next, Appellant contends that the trial court erred because it did not
determine whether Appellee violated Section 403 of Act 6 2 by purportedly
____________________________________________
2
41 P.S. §§ 101-605 is commonly referred to as Act 6 because it was
enacted as the “Act of January 30, 1974 (P.L. 13, No. 6).” It is alternatively
referred to as the loan interest and protection law or the usury law.
The preamble to Act 6 describes it as follows:
An Act regulating agreements for the loan or use of
money; establishing a maximum lawful interest rate in the
Commonwealth; providing for a legal rate of interest;
detailing exceptions to the maximum lawful interest rate
for residential mortgages and for any loans in the principal
amount of more than fifty thousand dollars and federally
insured or guaranteed loans and unsecured,
uncollateralized loans in excess of thirty-five thousand
dollars and business loans in excess of ten thousand
dollars; providing protections to debtors to whom loans are
made including the provision for disclosure of facts
(Footnote Continued Next Page)
-6-
J-A03025-16
failing to provide the requisite notice of its intention to foreclose. Appellant’s
Brief at 13. Appellant asserts “this refusal to consider the merits of
[Appellant’s] [Act 6] defense was a manifest error.” Id. However, Appellee
discontinued the action before the trial court decided the merits of
Appellant’s Act 6 defense. Once the case was discontinued, it was no longer
pending before the trial court. See Motley Crew, LLC v. Bonner
Chevrolet Co., Inc., 93 A.3d 474, 476 (Pa. Super. 2014) (explaining “[t]he
general effect of a discontinuance is to terminate the action without an
adjudication of the merits and to place the [parties] in the same position as
if the action had never been instituted[]”), appeal denied, 104 A.3d 526 (Pa.
2014). Consequently, the discontinuance rendered Appellant’s Act 6 defense
moot. Id. (noting that a discontinuance deprives the court of jurisdiction to
reach the underlying merits of the case). Accordingly, the trial court did not
_______________________
(Footnote Continued)
relevant to the making of residential mortgages, providing
for notice of intention to foreclose and establishment of a
right to cure defaults on residential mortgage obligations,
provision for the payment of attorney’s fees with regard to
residential mortgage obligations and providing for certain
interest rates by banks and bank and trust companies;
clarifying the substantive law on the filing of an execution
on a confessed judgment; prohibiting waiver of provisions
of this act, specifying powers and duties of the secretary of
banking, and establishing remedies and providing penalties
for violations of this act.
Glover v. Udren Law Offices, P.C., 92 A.3d 24, 26 n.2 (Pa. Super. 2014),
quoting Act of Jan. 30, 1974, P.L. 13, No. 6., appeal granted, 108 A.3d 28
(Pa. 2015).
-7-
J-A03025-16
err in not resolving the merits of Appellant’s Act 6 defense, and Appellant’s
second issue on appeal does not warrant relief. Id.
In her third issue, Appellant claims that the trial court erred by
denying her motion for attorney’s fees. Our Supreme Court has explained
“Pennsylvania law embodies the American rule, per which there can be no
recovery of attorneys’ fees from an adverse party in litigation, absent
express statutory authorization, clear agreement by the parties, or some
other established exception.” Doctor’s Choice Physical Med. & Rehab.
Ctr., P.C. v. Travelers Pers. Ins. Co., 128 A.3d 1183, 1189 (Pa. 2015)
(citation omitted). Appellant cites Section 503 of Act 6 as a statutory basis
for attorney’s fees and asserts she was the “prevailing party” due to the
discontinuance. Appellant’s Brief at 23. Section 503 provides as follows.
§ 503. Reasonable attorney’s fees recoverable
(a) If a borrower or debtor, including but not limited
to a residential mortgage debtor, prevails in an
action arising under this act, he shall recover the
aggregate amount of costs and expenses determined
by the court to have been reasonably incurred on his
behalf in connection with the prosecution of such
action, together with a reasonable amount for
attorney’s fee.
41 P.S. § 503(a) (emphasis added). Appellant contends that she is entitled
to attorney’s fees because Appellee allegedly did not provide the notice
mandated by Section 403 before commencing the foreclosure action, and
-8-
J-A03025-16
she prevailed when Appellee voluntarily discontinued the case.3 Appellant’s
Brief at 23. Section 403 provides, in part, as follows.
§ 403. Notice of intention to foreclose
(a) Before any residential mortgage lender may
accelerate the maturity of any residential mortgage
obligation, commence any legal action including
mortgage foreclosure to recover under such
obligation, or take possession of any security of the
residential mortgage debtor for such residential
mortgage obligation, such person shall give the
residential mortgage debtor notice of such intention
at least thirty days in advance as provided in this
section.
41 P.S. § 403(a).
Here, Appellant is not entitled to attorney’s fees under the plain
language of Section 503 because a mortgage foreclosure action does not
arise under Act 6.4 Instead, Pennsylvania Rules of Civil Procedure 1141-
____________________________________________
3
The certified record includes two letters Appellee sent to Appellant,
providing notice that she was in default and advising of its intention to
foreclose. The first was a “property charge delinquency letter,” which stated
the nature of the default, the right of Appellant to cure the default within 30
days, and that failure to comply would result in Appellee declaring the loan
due and payable and would entitle Appellee to foreclosure. See Complaint,
4/10/13, at Exhibit E, Property Charge Delinquency Letter, 10/7/11, at 1.
The second was a November 30, 2012 letter providing notice that Appellee
intended to foreclose because Appellant was still in default. See id. at
Exhibit F, Notice of Default Intent to Foreclose, at 1. Appellee sent both
letters before filing the foreclosure complaint on April 10, 2013.
4
To the extent that our reasoning differs from that of the trial court, we
note that “[a]s an appellate court, we may uphold a decision of the trial
court if there is any proper basis for the result reached; thus we are not
constrained to affirm on the grounds relied upon by the trial court.” In re
(Footnote Continued Next Page)
-9-
J-A03025-16
1150 govern mortgage foreclosure actions. Act 6 notice is a prerequisite to
commencing a residential mortgage foreclosure action. Wells Fargo Bank,
N.A. v. Spivak, 104 A.3d 7, 12 (Pa. Super. 2014) (citation omitted). “In
the residential mortgage context, Act 6 is typically raised as a defense to
mortgage foreclosure proceedings.” Id. (citation omitted). “Section 403
simply puts the residential homeowner on notice that the delinquent
mortgage is subject to foreclosure at some future date unless the owner
takes some action. It is not a foreclosure action[.]” CitiMortgage, Inc. v.
Barbezat, 131 A.3d 65, 72 (Pa. Super. 2016). “Remedies for a defective
Act 6 notice include setting aside the foreclosure or denying a creditor the
ability to collect an impermissible fee.” Spivak, supra (citations omitted).
Here, even accepting Appellant’s argument that she prevailed in the
foreclosure action by virtue of the voluntary discontinuance, she is not
entitled to recover attorney’s fees under Section 503 because a mortgage
foreclosure action does not arise under Act 6.5 Instead, a lender must give
Act 6 notice prior to filing a residential mortgage foreclosure complaint.
Therefore, even if Appellant has the status of a prevailing party in the
foreclosure action, that does not mean she succeeded on her Act 6 defense
_______________________
(Footnote Continued)
Estate of Strahsmeier, 54 A.3d 359, 364 n.17 (Pa. Super. 2012) (citation
omitted), appeal denied, 69 A.3d 603 (Pa. 2013).
5
Section 504 provides for an individual action for “[a]ny person affected by
a violation of the act[.]” 41 P.S. § 504.
- 10 -
J-A03025-16
because an Act 6 notice is separate from the foreclosure action.6 See
Spivak, supra; Barbezat, supra. Moreover, there is no statutory
provision that authorizes the award of attorney’s fees to a residential
mortgagor who successfully defends a mortgage foreclosure action, and
there was not a clause in the mortgage or note allowing Appellant to pursue
attorney’s fees. See Doctor’s Choice, supra. For these reasons, Appellant
is not entitled to relief on this issue.
Based on the foregoing, we conclude Appellant’s issues do not warrant
relief, and the trial court did not abuse its discretion in denying Appellant’s
____________________________________________
6
Appellant relies on Gardner to support the argument that a discontinuance
is the equivalent to prevailing on the merits. However, Gardner is
distinguishable because that case involved an action to enforce a confessed
judgment, which arose under Section 407(a) of Act 6. Gardner, supra at 9
(affirming attorney’s fees award when mortgagee discontinued its action to
enforce a confessed judgment against mortgagor’s residence brought under
Section 407(a) of Act 6). As we have explained above, the cause of action
for mortgage foreclosure does not arise under Act 6.
Additionally, the remaining cases Appellant cites are distinguishable
because they involve debtors who prevailed on the merits of their defenses
to prevent lenders from executing on confessed judgments. See Beckett v.
Laux, 577 A.2d 1341, 1347-1348 (Pa. Super. 1990) (concluding that debtor
prevailed in stay of execution action because lender did not comply with
Section 407(a) of Act 6 before executing on confessed judgment); First
Nat’l Bank of Allentown v. Koneski, 573 A.2d 591, 595 (Pa. Super. 1990)
(declaring that debtors who succeeded on their petition to open judgment
and prevented lender from executing on a confessed judgment were entitled
to attorney’s fees as prevailing party); Drum v. Leta, 512 A.2d 36, 36 (Pa.
Super. 1986) (holding debtor who succeeded in striking a confession of
judgment is entitled to attorney’s fees under Section 407(b)).
- 11 -
J-A03025-16
motion for attorney’s fees. See Cummins, supra. Accordingly, we affirm
the trial court’s April 6, 2015 order.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/11/2016
- 12 -