Wilmington Savings Fund v. Hill, K. ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WILMINGTON SAVINGS FUND : IN THE SUPERIOR COURT OF
SOCIETY FSB D/B/A CHRISTIANA : PENNSYLVANIA
TRUST, NOT INDIVIDUALLY BUT A :
TRUSTEE FOR PREMIUM MORTGAGE :
ACQUISITION TRUST, OR ITS :
SUCCESSOR OR ASSIGNEE :
:
:
v. : No. 516 WDA 2019
:
:
KEITH D. HILL AND ANNETTE E. HILL :
:
Appellants :
Appeal from the Order Entered March 15, 2019
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): MG-12-01762
BEFORE: BOWES, J., LAZARUS, J., and PELLEGRINI, J.*
MEMORANDUM BY LAZARUS, J.: FILED JANUARY 6, 2020
Keith D. Hill and Annette E. Hill (collectively, the Hills) appeal from the
order, entered in the Court of Common Pleas of Allegheny County, denying
their emergency petition to set aside the sheriff’s sale of 210 Garlow Drive,
Pittsburgh, PA 15235 (the Property). After careful review, we affirm.
On June 27, 2018, Wilmington Savings Fund Society, FSB’s (WSFS)
predecessor-in-interest1 executed a $79,920.00 loan with the Hills, secured
by a mortgage on the Property. The Hills subsequently defaulted on their
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* Retired Senior Judge assigned to the Superior Court.
1Bank of America, NA., successor by merger to BAC Home Loans Servicing,
LP, initiated the instant action against the Hills. WSFS substituted as plaintiff
on August 1, 2017.
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repayment obligations. WSFS’ predecessor filed the complaint in the instant
action on September 25, 2012. On October 11, 2012, the Allegheny County
sheriff’s Office personally served the complaint at the Property upon Annette
Hill, who accepted service on behalf of Keith Hill.
On October 29, 2013, after the Hills failed to answer the complaint, the
prothonotary entered default judgment in favor of WSFS’ predecessor. On
December 20, 2013, WSFS’ predecessor’s attorney produced a sworn affidavit
of compliance with Act 6 of 1974, 41 P.S. 101, et seq., and Act 91 of 1983,
stating that on April 10, 2012, the Hills were “mailed Act 6 [n]otices of
[i]ntention to [f]oreclose by certified mail, return receipt requested and first[-
]class U.S. Mail” and that “[n]otice under Act 91 was not provided as the
provisions of Act 91 were not applicable after August 27, 2011[.]” Affidavit,
12/20/13, at 1. On December 23, 2013, WSFS’ predecessor filed a praecipe
to issue writ of execution to enforce the default judgment, but stayed the writ
on April 14, 2015.
WSFS became the party in interest by assignment and substitution of
plaintiff on August 1, 2017, thereafter filing a praecipe to reissue the writ of
execution on August 15, 2017. The Allegheny County Sheriff was directed to
sell the Property to satisfy the judgment against the Hills in a sale scheduled
for November 6, 2017. On September 10, 2017, the sheriff personally served
Keith Hill with notice of the impending sheriff’s sale. Keith Hill accepted notice
for Annette Hill. The sheriff’s sale proceeded as scheduled, resulting in WSFS’
purchase of the Property for costs.
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On November 9, 2017, the Hills filed a Chapter 13 bankruptcy petition
in the U.S. Bankruptcy Court for the Western District of Pennsylvania,
automatically staying all collection actions by creditors and preventing WSFS
from recording the deed to the Property. On November 22, 2017, the Hills
also filed an emergency petition to set aside the sheriff’s sale. On May 11,
2018, upon WSFS’ motion, the Bankruptcy Court vacated the automatic stay,
permitting WSFS to continue pursuing its right to the Property, and allowing
the Hills to contest the result of the November 6, 2017 sheriff’s sale.
With the stay lifted, WSFS filed a reply to the Hill’s petition to set aside
the sheriff’s sale. On November 1, 2018, the court issued a rule upon WSFS
to show cause why the Hills were not entitled to have the sheriff’s sale set
aside. After receiving briefs from both parties and hearing oral argument, the
court denied the Hills’ petition on March 18, 2019, from which the Hills timely
filed a notice of appeal. Both the Hills and the court complied with Pa.R.A.P.
1925.
The Hills raise the following claims on appeal:
1. Did the trial court err by denying [the Hills’] petition to set
aside a sheriff’s sale where [the Hills] established that
[WSFS] failed to adequately serve [the Hills], denied [the
Hills] due process and divested the trial court of jurisdiction
to enter judgment in this matter?
2. Did the trial court err in denying [the Hills’] petition to set
aside the sheriff’s sale without providing [the Hills] with the
opportunity to present evidence that the sale price of their
property was grossly inadequate?
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3. Did the trial court err by denying [the Hills’] petition to set
aside the sheriff’s sale where [WSFS] failed to comply [with]
Act 6 and Act 91 by failing to adequately serve [the Hills]
with notice pursuant to the Pennsylvania Foreclosure
Prevention Act and the rules and regulations promulgated
by the Pennsylvania Housing Finance Agency?
4. Did the trial court err that in denying [the Hills’] petition to
set aside the sheriff’s sale, it did not find that [WSFS] failed
to comply with the mandatory requirement of Act 6 in
violation of [our] Supreme Court’s holding in JP Morgan
Chase Bank N.A. v. Taggart, 203 A.3d 187 (Pa. 2009)?[2]
Brief of Appellant, at 5–6.
We keep the following principles in mind while reviewing the Hills’
claims:
The purpose of a sheriff’s sale in mortgage foreclosure
proceedings is to realize out of the land, the debt, interest, and
costs which are due, or have accrued to, the judgment creditor.
A petition to set aside a sheriff’s sale is grounded in equitable
principles and is addressed to the sound discretion of the hearing
court. The burden of proving circumstances warranting the
exercise of the court’s equitable powers rests on the petitioner, as
does the burden of showing inadequate notice resulting in
prejudice, which is on the person who seeks to set aside the sale.
When reviewing a trial court’s ruling on a petition to set aside a
sheriff’s sale, we recognize that the court’s ruling is a discretionary
one, and it will not be reversed on appeal unless there is a clear
abuse of that discretion.
An abuse of discretion is not merely an error of judgment.
Furthermore, it is insufficient to persuade the appellate court that
it might have reached a different conclusion if, in the first place,
charged with the duty imposed on the trial court.
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2 We note with disfavor the fact that the Hills raise four claims in their
statement of questions involved, yet consolidate their third and fourth claims
into a single argument section. See Pa.R.A.P. 2119(a) (“The argument shall
be divided into as many parts as there are questions to be argued[.]”).
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An abuse of discretion exists when the trial court has rendered a
judgment that is manifestly unreasonable, arbitrary, or capricious,
has failed to apply the law, or was motivated by partiality,
prejudice, bias, or ill will. Where the record adequately supports
the trial court’s reasons and factual basis, the court did not abuse
its discretion.
GMAC Mortg. Corp. of PA v. Buchanan, 929 A.2d 1164, 1167 (Pa. Super.
2007) (citations and quotations omitted).
In their first claim, the Hills argue WSFS’ predecessor served process on
Keith Hill via substituted service under Pa.R.C.P. 430(a) without first seeking
the court’s permission to do so, giving rise to a violation of due process that
prevents WSFS from foreclosing on the Property, deprives the court of
jurisdiction, and invalidates the sale of the Property. See Brief of Appellant,
at 16 (citing Pa.R.C.P. 400 and Pa.R.C.P. 410); see also id. at 20–21 (citing
Pa.R.C.P. 430(a)).
The Hills’ claim rests on the assumption that they received substituted
service under Rule 430(a). See id. The sheriff’s return, however, indicates,
on October 11, 2012, at 3:11 pm, the Allegheny County sheriff’s Office served
process upon Annette Hill in person at the Property, and that she accepted
service on behalf of both herself and Keith Hill. See sheriff Return for Annette
Hill, 10/11/12, at 1; see also sheriff Return for Keith Hill, 10/11/12, at 1.
There is nothing in the record implicating Rule 430(a).
Rather, the instant circumstances are governed by Rule 410(a), which
states, “[i]n actions involving title to, interest in, possession of, or charges or
liens upon real property, original process shall be served upon the defendant
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in the manner provided by Rule 400 et seq.” Pa.R.C.P. 410(a). Rule 402(a)
allows for service of original process, inter alia, by: (1) handing a copy to the
defendant; or (2) handing a copy at the residence of the defendant to an adult
member of the family, or if no adult member of the family is found, then to
an adult person in charge of such residence. Pa.R.C.P. 402(a).
The complaint, which was never contested, states the Hills were
mortgagors of, and residents at, the Property. See Complaint, 9/25/12, at 3;
see also Pa.R.C.P. 1029 (“Averments in a pleading to which a responsive
pleading is required are admitted when not denied specifically or by necessary
implication.”). The Hills do not contest the fact that Keith and Anita Hill are
family members.3 See Brief of Appellant, at 14–23. The sheriff, therefore,
properly served the Hills with process under the Rules of Civil Procedure. See
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3 The Hills raise an ancillary argument that the “representation in the
[S]heriff’s return that service upon [Keith] Hill was made upon a family
member with whom he resides is not a matter within the knowledge of the
[S]heriff who executed the return.” Brief of Appellant, at 20. This assertion
is based on a misreading of Liquid Carbonic Corp. v. Cooper & Reese,
Inc., 416 A.2d 549 (Pa. Super. 1979), a clearly distinguishable case in which
this Court found error in the trial court’s refusal to open default judgment
under circumstances where a sheriff went to a shopping center, approached
what he believed was the corporate defendant’s place of business, “saw a
number of men in the immediate vicinity” and “gave the complaint to a man
whose name he did not learn[,]” never confirming whether he gave the
complaint to an employee of the corporate defendant. See id. (citing Liquid
Carbonic Corp., supra at 551–52). Instantly, the sheriff served process
personally upon one co-defendant, who accepted service on behalf of her co-
defendant. See sheriff Return for Annette Hill, 10/11/12, at 1; see also
sheriff Return for Keith Hill, 10/11/12, at 1.
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Pa.R.C.P. 402(a); see also Flaherty v. Atkins, 152 A.2d 280, 281 (Pa.
Super. 1959) (serving process upon defendant by handing copy of process to
adult member of family at residence constitutes valid service).
In their second claim, the Hills argue the court erred by failing to set
aside the sheriff’s sale based on the gross inadequacy of the sale price of the
property.4 Brief of Appellant, at 23.
“Mere inadequacy of price is not a sufficient reason to set aside a
sheriff[’s] [s]ale. To set aside such a sale[,] the price must be grossly
inadequate.” Vend-A-Matic, Inc. v. Frankford Trust Co., 442 A.2d 1158,
1162 (Pa. Super. 1982). “Furthermore, the outstanding mortgage balance
must be considered in determining the adequacy of a sale price.” See
Continental Bank v. Frank, 495 A.2d 565, 569 (Pa. Super. 1985)
(considering “outstanding mortgage debt including interest, late charges and
attorney’s fees” totaling $227,030.70 plus cost of sale for $245,000 in
evaluating adequacy of sale price as compared to mortgagor’s asserted value
of $400,000).
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4 In their appellate brief, the Hills aver both that the Property was sold for a
grossly inadequate price and that they were not given an opportunity to
present evidence of the sale price’s gross inadequacy. See Brief of Appellant,
at 23. They, however, waived the latter argument by failing to raise it in their
Rule 1925(b) concise statement of errors complained of on appeal. See
Pa.R.A.P. 1925(b) statement (averring only gross inadequacy of price); see
also Feilder v. Morris Coupling Co., 784 A.2d 812, 817 (Pa. Super. 2001)
(precluding Superior Court from reviewing issues not raised in Rule 1925(b)
statement).
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The Hills assert the fair market value of the house in 2012 was between
$110,000.00 and $130,000.000. Brief of Appellant, at 8. The outstanding
mortgage balance totaled $116,882.89. Praecipe to Reissue Writ of Execution,
8/15/17, at 2. Although the Property sold for costs, we must consider the
value of the outstanding mortgage along with the sale price when evaluating
whether or not the sale price was grossly inadequate. See Frank, supra at
569 (considering the outstanding mortgage balance together with sale price
in evaluating adequacy of sale price); see also Pa.R.A.P. 1925(a) Opinion,
6/6/19, at 6 (“This figure falls within the alleged ‘fair market’ values as
suggested by the [Hills.]”). Consequently, we cannot find the court abused
its discretion in failing to set aside the result of the sheriff’s sale on the grounds
that the price was grossly inadequate as the outstanding mortgage balance
alone fell squarely within the range of values asserted by the Hills. See
Frank, supra at 569; see also Vend-A-Matic, Inc., supra at 1162.
In their third and final claim,5 the Hills argue the trial court erred by
failing to set aside the sheriff’s sale on the grounds that WSFS and its
predecessors-in-interest failed to comply with mandatory notice requirements
under the Loan Interest and Protection Law6 (Act 6) and the Homeowner’s
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5 As stated supra, the Hills list four questions presented, but improperly
present their third and fourth claims as a single argument. See supra at n.2
(citing Pa.R.A.P. 2119(a)).
6 41 P.S. §§ 101 et seq.
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Emergency Mortgage Assistance Act7 (Act 91). See Brief of Appellant, at 27.
The Hills claim WSFS and its predecessor filed separate actions, and that WSFS
failed to provide notice under Act 6, violating our Supreme Court’s holding in
Taggart, supra. See id. at 31–36. The Hills further assert WSFS never sent
Act 91 notice, arguing this omission should have deprived the trial court of
jurisdiction. See id. We address these alleged errors seriatim.
In Taggart, supra, our Supreme Court expounded on Act 6, in relevant
part, as follows:
Act 6 is a usury law, designed to protect borrowers against
improper mortgage lending practices. The comprehensive
statutory scheme demonstrates an extensive program designed
to avoid mortgage foreclosures. In addition to regulating
maximum lawful interest rates, Act 6 provides safeguards to
residential borrowers before they face foreclosure.
...
The General Assembly has identified industry customs that it
deems particularly pernicious, one of which is the initiation of
foreclosure with insufficient notice. In order to remedy this
problem, the lawmakers created specific notice requirements to
ensure that borrowers are aware not only that they are considered
to be in default, but also of the amount required to cure that
default and the time within which they may do so.
...
In view of the statutory language, the occasion and necessity for
Act 6, the mischief to be remedied, and the object to be attained,
we conclude that Act 6 requires a new pre-foreclosure notice each
time the lender initiates a mortgage foreclosure action. It is not
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7 35 P.S. §§ 1680.401c et seq.
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sufficient for the lender to recycle a stale notice that preceded a
prior action, regardless of how that action finally was resolved.
Taggart, supra at 194–96 (emphasis added).
The Hills argue WSFS failed to send Act 6 notice as mandated by
Taggart.8 See Brief of Appellant, at 34 (“The trial court erred in not applying
Taggart to the instant case since the cases are similar in that in both cases,
the plaintiffs failed to comply with the mandatory Act 6 notice.”).
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8 The Hills argue both: (1) they were not served with Act 6 notice by WSFS;
and (2) the Act 6 notice upon which WSFS relies is legally insufficient. See
Brief of Appellant, at 34–35 (arguing alternatively, “it is undisputed that
[WSFS] never provided the Hills with [] Act 6 Notice,” and “[t]he notice that
[WSFS] purportedly provided[] is insufficient to overcome the notice
deficiency under Act 6 [as] the notice upon which [WSFS] relies” fails to
conform with Act 6 notice content requirements.). The Hills, however, did not
argue in their emergency petition to set aside the sheriff’s sale that WSFS or
its predecessor failed to clearly and conspicuously conform to the content
requirements of Act 6. Emergency Petition to Set Aside sheriff’s Sale,
11/22/17, at 6–7. They, instead, argue WSFS provided defective service. See
id. (alleging mailing failed to conform to Act 6 service requirements).
Moreover, the relevant portion of their Rule 1925(b) statement claims WSFS
and its predecessor provided service improperly and the trial court failed to
apply Taggart, supra. See Pa.R.A.P. 1925(b) statement, 5/2/19, at 1–2.
Consequently, the Hills have waived any argument regarding WSFS’ failure to
conform to the content requirements of Act 6. See Tindall v. Friedman, 970
A.2d 1159, 1174 (Pa. Super. 2009) (“[T]he trial court was not given an
opportunity to correct any purported error . . . [therefore,] this issue is
waived.”). We further note the complaint filed by WSFS’ predecessor attested
to sending notice of its intent to foreclose in compliance with Act 6—a
complaint, which, as stated supra, went uncontested. See Complaint,
9/25/12, at 5 (“Notice of Intention to Foreclose under Act 6 of 1974 (41 P.S.
§ 403) was sent to Defendant by certified mail, return receipt requested as
required by that Act.”); see also see also Pa.R.C.P. 1029 (“Averments in a
pleading to which a responsive pleading is required are admitted when not
denied specifically or by necessary implication.”).
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Taggart is factually distinguishable and logically inapplicable. In
Taggart, our Supreme Court sought to protect a mortgagor from lenders
attempting to “recycle a stale notice that preceded a prior action[.]” Taggart,
supra at 196. The facts underpinning the Court’s ruling were as follows:
Taggart filed preliminary objections to the 2010 Action. Chase
Bank failed to file a timely response. . . . [T]he trial court sustained
Taggart’s preliminary objections. On March 8, 2012, Chase Bank
assigned the rights and interest in the mortgage to JP Morgan
Chase Bank (“JP Morgan”). Neither Chase Bank nor JP Morgan
took further action on the docketed complaint. On May 1, 2013,
the docket was closed administratively due to inactivity exceeding
twenty-four months.
On July 26, 2013, JP Morgan filed a second complaint in mortgage
foreclosure against Taggart, under a new docket number. . . . JP
Morgan did not sent a new Act 6 Notice.
Taggart, supra at 195 (emphasis added).
Instantly, WSFS continued pursuing the same matter as its predecessor
by means of substitution under Pa.R.C.P. 2532, not by initiating a second
matter under a second docket number by filing a second complaint. See
Substitution of Successor Plaintiff, 8/1/17, at 1. Further, WSFS’ filings sought
to enforce the default judgment already in effect against the Hills by means
of filing a praecipe to reissue the writ of execution. See Praecipe to Reissue
Writ of Execution, 8/15/17, at 1 (requesting amount due under default
judgment, entered October 29, 2013, plus interest).
Taggart sought to prevent “the initiation of foreclosure with insufficient
notice” by ensuring mortgagors are informed by “a new pre-foreclosure notice
each time the lender initiates a mortgage foreclosure action.” Taggart, supra
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at 196. The remedy provided by Taggart is, therefore, inapplicable under
circumstances where a substituted party continued pursuing its predecessor’s
claims by seeking to enforce a previously entered judgment. See id.; see
also Praecipe to Reissue Writ of Execution, 8/15/17, at 1.
We turn to the Hills’ remaining argument concerning Act 91. Act 91
enables the Pennsylvania Housing Finance Agency (the Agency) to assist
mortgagors with monthly mortgage assistance payments. See 35 P.S. §
1680.405c. Broadly, Act 91 requires foreclosing mortgagees to send notice of
the impending foreclosure to mortgagors. See 35 P.S. § 1680.403c.
However, “[t]he provisions of [Act 91] shall not be applicable to any mortgage
which becomes delinquent at any time when the [A]gency has officially
declared that it does not have money currently available in the Homeowner’s
Emergency Mortgage Assistance Fund to approve applications for emergency
mortgage assistance[.]” 35 P.S. § 1680.409c. Ninety days after the Agency
declares a lack of funds, “mortgagees shall no longer be subject to the
provisions of this article and mortgagees may, at any time after the published
date, take legal action to enforce the mortgage without any further restriction
or requirement under [Act 91].” Id.
On May 28, 2011, pursuant to Section 1680.403c, the Agency declared
it would have insufficient funds to accept new applications for emergency
mortgage assistance as of July 1, 2011. See 41 Pa.B. 2789 (announcing lack
of funds in Pennsylvania Bulletin). On July 16, 2011, the Agency updated its
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declaration, establishing August 27, 2011 as the date on or after which
mortgagees could “take legal action to enforce the mortgage without further
restriction or requirement of [Act 91.]” 41 Pa.B. 3943, at 1. The July 16,
2011 declaration specifically enumerated the provisions of Act 91 being
suspended—a range including Section 1680.403c. See id. (“[M]ortgagees
shall no longer be subject to the provisions of Article IV-C of [Act 91] (35
[P.S.] §§ 1680.401c–1680.412c).”); see also id (noting suspension of notice
requirements under Act 91 did not impact notice requirements under Act 6).
The Agency reinstated Act 91’s notice requirements on October 2, 2012. See
Pa.B. 5447 at 1–2 (stating the Agency had sufficient funds to resume
mortgage-relief activity; informing mortgagees of effective date for
reinstatement of notice requirements).
WSFS’ predecessor filed the complaint in the instant action on
September 25, 2012. Act 91’s notice requirements were not reinstated until
October 2, 2012; consequently, the trial court did not abuse its discretion by
declining to set aside the result of the sheriff’s sale for lack of Act 91 notice.
See 35 P.S. § 1680.409c. Consequently, both arguments under the Hills’ third
claim fail.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/6/2020
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