Federal National Mortgage Association v. Riley, T.

J-S41014-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
FEDERAL NATIONAL MORTGAGE IN THE SUPERIOR COURT OF
ASSOCIATION, PENNSYLVANIA
Appellee
v.
TERRENCE AND ANDREA RILEY,
Appellants No. 2038 MDA 2016
Appeal from the Order Entered November 23, 2016
in the Court of Common Pleas of Franklin County
Civil Division at No.: 2015 593
BEFORE: GANTMAN, P.J., LAZARUS, J., and PLATT, J.*
MEMORANDUM BY PLATT, J.: FILED AUGUST 16, 2017
Appellants, Terrence and Andrea Riley, appeal from the trial court’s
November 23, 2016 order granting the motion for summary judgment of
Appellee, Federal National Mortgage Association. We affirm.
In its opinion, the trial court fully and correctly sets forth the relevant
facts and procedural history of this case.1 (See Trial Court Opinion,
2/09/17, at 0-22).3 Therefore, we have no reason to restate them.
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
1
On December 19, 2016, the trial court ordered Appellants to file a concise
statement of errors complained of on appeal. See Pa.R.A.P. 1925(b). On
January 9, 2017, Appellants filed a timely Rule 1925(b) statement. See id.
On February 9, 2017, the court filed an opinion that was a modified version
of its November 23, 2016 opinion granting summary judgment. See
(Footnote Continued Next Page)
J-S41014-17
On appeal, Appellants raise the following issues for our review:
(I). Did the trial court err in entering summary judgment in
favor of [Appellee]?
(II). Did the trial court correctly apply the Nanty-Glo Rule[4]
and is the “Anderson Affidavit” sufficient to demonstrate
the absence of a genuine issue of material fact?
(Appellants’ Brief, at 23).
We briefly note our standards of review.
Our scope of review of an order granting summary
judgment is plenary. We apply the same standard as the trial
court, reviewing all the evidence of record to determine whether
there exists a genuine issue of material fact. We 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. Only where there is
no genuine issue as to any material fact and it is clear that the
moving party is entitled to a judgment as a matter of law will
summary judgment be entered.
Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of his cause of
action. Thus, a record that supports summary judgment will
_______________________
(Footnote Continued)
Pa.R.A.P. 1925(a); (see also Order of Court, 2/09/17, at unnumbered page
1).
2
The first page of the February 9, 2017 opinion is unnumbered, its second
page is numbered page one. In the interest of simplicity, we will keep the
trial court’s numbering and designate the first page of the opinion as page
zero.
3
We note that on page one of its opinion, the trial court incorrectly states
the address of the property in question as 12417 Gilbert Road, rather than
13417 Gilbert Road. (See Trial Ct. Op., at 1).
4
Borough of Nanty-Glo v. Am. Surety Co. of N.Y., 163 A. 523 (Pa.
1923).
-2-
J-S41014-17
either (1) show the material facts are undisputed or (2) contain
insufficient evidence of facts to make out a prima facie cause of
action or defense and, therefore, there is no issue to be
submitted to the fact-finder. Upon appellate review, we are not
bound by the trial court’s conclusions of law, but may reach our
own conclusions. The appellate court may disturb the trial court’s
order only upon an error of law or an abuse of discretion.
Dibish v. Ameriprise Financial, Inc., 134 A.3d 1079, 1084-85 (Pa. Super.
2016), appeal denied, 141 A.3d 481 (Pa. 2016) (citation omitted).
Moreover,
[t]he holder of a mortgage has the right, upon default, to
bring a foreclosure action. The holder of a mortgage is entitled
to summary judgment if the mortgagor admits that the
mortgage is in default, the mortgagor has failed to pay on the
obligation, and the recorded mortgage is in the specified
amount.
Bank of America, N.A. v. Gibson, 102 A.3d 462, 464-65 (Pa. Super.
2014), appeal denied, 112 A.3d 648 (Pa. 2015) (citations omitted).
Lastly, the Nanty–Glo Rule controls the use of oral testimony (either
through affidavits or depositions) to determine the outcome of a case in
motions practice. The Rule states “. . . the party moving for summary
judgment may not rely solely upon its own testimonial affidavits or
depositions, or those of its witnesses, to establish the non-existence of
genuine issues of material fact.” Dudley v. USX Corp., 606 A.2d 916, 918
(Pa. Super. 1992), appeal denied, 616 A.2d 985 (Pa. 1992) (emphasis
added) (citation and footnote omitted). Three (3) factors determine the
applicability of the Nanty–Glo Rule:
-3-
J-S41014-17
Initially, it must be determined whether the plaintiff has
alleged facts sufficient to establish a prima facie case. If so, the
second step is to determine whether there is any discrepancy
as to any facts material to the case. Finally, it must be
determined whether, in granting summary judgment, the trial
court has usurped improperly the role of the [fact-finder] by
resolving any material issues of fact. It is only when the third
stage is reached that Nanty–Glo comes into play.
DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 594–95 (Pa. Super.
2013) (citation omitted) (emphasis added). Therefore, in order for the
Nanty–Glo Rule to apply in the instant matter, there must be a genuine
discrepancy or dispute as to a material fact.
After a thorough review of the record, the parties’ briefs, the
applicable law, and the well-reasoned opinion of the trial court, we conclude
that there is no merit to the issues Appellants have raised on appeal. The
trial court opinion properly disposes of the questions presented. (See Trial
Ct. Op., at 7, 11-14) (finding that: (1) Appellants have failed to meet their
burden to respond to the motion for summary judgment with evidence of
record that would rebut Appellee’s factual claims or establish a legal
defense; (2) Appellants failed to establish the second prong of the Nanty-
Glo applicability test because they did not demonstrate a discrepancy in any
material fact; (3) Appellants only presented legal arguments in their
pleadings which cannot create a dispute of material fact; and (4) Appellants
wrongly sought relief under Nanty-Glo, because there was no factual
dispute to which the trial court could apply the rule). Accordingly, we affirm
based on the trial court’s opinion.
-4-
J-S41014-17
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/16/2017
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IN THE COURT OF COMMON PLEAS OF THE 39TH JlJDICIAL
DISTRICT OF PENNSYLVANIA -- FRANKLIN COUNTY BRANCH
Federal National Mortgage Civil Action - Law
Association,
Plaintiff
v. No. 2015-593
Terrence J. Riley and
Andrew L. Riley,
Defendants
-----------------·--·---·-
Honorable Shawn ~ers _
ORDER OF COURT
AND NOW THIS 9111 day of February, 2017, the Court has reviewed the
Defendant's Statement ofMatters Complained of on Appeal and is of the opinion
that the issues raised are adequately addressed by the Court's November 23, 20 J 6
Opinion granting Plaintiff's Motion for Summary Judgment: Therefore, the Court
directs the Superior Court to that Opinion, as modified to comport with Pa. R.A.P.
124, a copy of which is attached.
3IPage
JT JS ORDERED that the Franklin County Prothonotary promptly transmit
to the Prothonotary of the Superior Court the record in this matter.
Pursuant to Pa.R.C.P. 236, the Prothonotary shall give written notice of the
entry of this Order, including a copy of this Order, to each party, and shall note in
the docket the giving of such notice and the time and manner thereof.
The Prothonotary shall give notice and serve:
Joseph L. Riga, Esq.
J. McDowell Sharpe, Esq.
Daniel A. Pallen, Esq ..
&l,t..(.\- Mrf\li'\\ ~tm::h.01'\
41Page
IN THE COURT OF COMMON PLEAS OF THE 39TH JUDICIAL
DISTRICT OF PENNSYLVANIA -- FRANKLIN COUNTY BRANCH
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Federal National Mortgage Civil Action - Law "'.')
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Association, -q
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Plaintiff c:=-.:i ···-(
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v. No. 2015-593 ~.: ~ •. ")
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Terrence J. Riley and .-·<
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Andrew L. Riley,
Defendants _______ _I_ionorable Sha~n D. Mey~~-----
OPINION
PROCEDURAL HISTORY
HSBC Bank USA, N.A. ("HSBC Bank") filed a Complaint in Mortgage
Foreclosure against Terrence and Andrea Riley ("the Rileys") on February I 2,
20 I 5. After disposition of Preliminary Objections, the Rileys filed an Answer and
New Matter on December 7, 2015. Federal National Mortgage Association
(FNMA) was substituted as successor to HSBC Bank on February 26, 20 I 6.1
HSBC Bank responded to this New Matter on July 11, 20 I 6.
On August 8, 20 J 6, FNMA simultaneously filed a Motion for Summary
Judgment, Affidavits from Joseph F. Riga and Van Anderson in support of that
motion, and a Praecipe to list the Motion for Argument. On August 22, 2016, the
I
For clarity purposes, when discussing the contents of pleadings throughout this opinion, the
court will refer to the actions of both HSBC Bank and FNMA as actions of FNMA even though
FNMA may not yet have been a substitute plaintiff at the time of the respective. pleadings.
SI Page
RiJeys filed a Response in Opposition to FNMA's Motion for Summary Judgment
and a corresponding Memorandum of Law in opposition to FNMA's Motion for
Summary Judgment. Oral argument on this Motion took place on October 6, 2016
before the undersigned judge. I I
Based on representations by the Rileys ' counsel, this courted granted both
parties twenty days leave to file supplemental briefs limited to tscussion of Bank
of America v. Wicker, (C.P. Jefferson Cty., Dec. 19, 2014), cited by the Rileys'
counsel during argument." FNMA filed a Supplemental Brief Addressing Nanty-
Glo and Its Motion for Summary Judgment on October 26, 2016. The Rileys did
not file a supplemental brief.
This matter is now ripe for decision by this court,
FACTUAL HISTORY
The Rileys own property al I 2417 Gilbert Road, Upper Strasburg,
Pennsylvania 17265. Plaintiffs Complaint, ~2. On August 27, 2008, the Rileys
executed a Note for $137,750.00 and mortgaged the Gilbert Road property.'
Plaintiff's Complaint, Exhibits A, B. FNMA is the last assignee of the Mortgage as
of December 14, 2015. Plaintiff's Motion for Summary Judgment, iJ6. In support
2
This court's order dated October 6, 2016, granting leave for further briefing on this case
incorrectly named the case as Bayview Loan Servicing v. Wicker.
3
Both documents were notarized at the time of signing. These acknowledgements establish that
the RiJeys have signed these documents. See 57 Pa. C.S.A. §302(a) (defining an
Acknowledgment as "a declaration by an individual before a notarial officer that the individual
has signed a record for the purpose stated in the record.")
6IPage
of their Mortgage Foreclosure Complaint, the FNMA attached photostatic copies
of the promissory note, the mortgage, and the assignment of the mortgage from
HSBC Bank to FNMA. Plaintiffs Complaint, ilif3,4,6. However, the Rileys deny
the truth and accuracy of these documents. Defendants' Answer and New Matter,
In short, the Rileys have denied FNMA's factual averments based on legal
arguments which this court will address in turn.
DISCUSSION
I. APPLICABLE STANDARD: SUMMARY JUDGMENT IN
MORTGAGE FORECLOSURE
To evaluate a motion for summary judgment, the court must apply the
following standard laid out by the Supreme Court of Pennsylvania in Washington
v. Baxter:
As with all summary judgment cases, we must 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. In order to withstand a motion for summary
judgment, a non-moving party must adduce sufficient evidence on an
issue essential to his case and on which he bears the burden of proof
such that a jury could return a verdict in his favor. Failure to adduce
this evidence establishes that there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law.
Finally we stress that summary judgment will be granted only in those
cases which are free and clear from doubt.
719 A.2d 733, 737 (Pa. J 998) (internal citations and quotations omitted).
2
71Page
In a mortgage foreclosure action, summary judgment shou Id be granted if
"the mortgagors admit that the mortgage is in default, that they have failed to pay
interest on the obligation, and that the recorded mortgage is in the specified
amount." Cunningham v. Mc Williams, 714 A.2d I 054, I 05 7 (Pa. Super. 1998)
(citing Landau v. Western Pennsylvania National Bank, 282 A.2d 335, 340 (Pa.
J 971 )). Furthermore, the non-moving party is obligated under Pennsylvania Rule
of Civil Procedure I 035.3 to respond to a motion for summary judgment within
thirty days of service indicating either of the following:
(I) one or more issues of fact arising from evidence in the record
controverting the evidence cited in support of the motion or from a
challenge Lo the credibility of one or more witnesses testifying in
support of the motion, or
(2)evidence in the record establishing the facts essential to the cause
of action or defense which the motion cites as not having been
produced.
Pa. R.C.P. I 035.3(a) (emphasis added). Even though the movant must bear the
burden of establishing an absence of genuine issues of material fact, the responding
party "may not merely rely on his pleadings or answers in order to survive
summary judgment." t,Jordi y,._]:CJ~ystone Health Plan West, Ins:_,, 989 A.2d 376, 379
(Pa. Super. 20 I 0). The responding party "must set forth specific facts
demonstrating a genuine issue of material fact." Bank of America, N.A. v. Gibso1!,
I 02 A.3d 462, 464 (Pa. Super. 20 I 4) (referencing Pa. R.C.P. I 035.3 ).
3
SI Page
If a mortgage foreclosure defendant admits that a fixed-rate mortgage has
been recorded and that they have failed to make payments or pay interest on the
mortgage, then no genuine issues of material fact remain, and the plaintiff should
be granted summary judgment. See Landau v. Western Pennsylvania Nat. Bank,
282 A.2d 335, 340 (Pa. 197 l); Cunningham v. Mc Williams, 714 A.2d l 054, 1057
(Pa. Super. 1998).
The Rileys claim here that "[i]t is not the Defendant's obligation to rebut the
Plaintiffs case by way of record supported evidence." Defendants' Response, ~115
(internal quotations omitted). However, to survive summary judgment, the Rileys
must present actual specific facts which would establish a genuine issue of material
fact. See Pa. R.C.P. l 035.3; Gibson, 102 A.3d at 464. Here, the Rileys have
disputed averments of fact with arguments of law.
II. ANALYSIS
A. STANDING
i. Under the Best Evidence rule, must FNMA present the original
note to have standing?
Under Pa. R. E. I 002, "[a]n original writing ... is required in order to prove
its content unless these rules, other rules prescribed by the Supreme Court, or a
statute provides otherwise." However, according to Pa R.C.P. l l 47(a), the Plaintiff
must set forth only the following to have standing in a mortgage foreclosure action:
4
9 I Page
(1) the parties to and the date of the mortgage, and of any
assignments, and a statement of the place of record of the mortgage
and assignments;
(2) a description of the land subject to the mortgage;
(3) the names, addresses and interest of the defendants in the action
and that the present real owner is unknown if the real owner is not
made a party;
(4) a specific averment of default;
(5) an itemized statement of the amount due; and
(6) a demand for judgment for the amount due.
Pa R.C.P. J 147(a). The Rules do not require attachment of a copy of the mortgage
or note, let alone an original document. A mortgage foreclosure complaint cannot
be deficient when a copy of the promissory note is not attached, but the Complaint
has specifically averred each requirement under the rule.~~~ Bank of New York
Mellon v. Johnson, I 21 A.3d l 056 (Pa. Super. 2015). In accordance with the
Pennsylvania Rules of Civil Procedure, FNMA has set forth the required
averments and statements in its Complaint and bas supplemented those averments
with copies of relevant documents. The Best Evidence rule does not apply here to
establish standing where the document itself is irrelevant to standing under the
Rules of Civil Procedure.
The Rileys claim that In re Walker establishes the court must review the
indorsements of an original note in camera. Defendants' Answer and New Matter,
13 (citing In re Walker, 466 B.R. 271 (Bankr, E.D. Pa. 2012)). However, in In re
Walker, the court held that a blank indorsement indicates that the Note is "payable
5
10 I Page
to bearer and may be negotiated by transfer of possession alone until specially
indorsed." In re Walker, 466 at 281 (citing Pa. UCC §3205(b)). Since the note was
indorsed in blank and the subject bank had presented evidence of its possession of
the note, the court held that the Bank was in fact the holder of the note. Id.
Here, FNMA has incorporated into the record three assignments which
establish the chain of ownership of this Note. It is evident to the court from the
copy attached to FNMA's Complaint that the Note is endorsed in blank. Plaintiff's
Complaint, Exhibit A; see also Plaintiffs Response to Defendant's New Matter,
~116. Since the Rules of Civil Procedure do not require an original Note be attached
to have standing, and because FNMA has evidenced its possession of the Note
through various assignments, FNMA is the holder of the Note and has standing to
bring the current action.
ii. Does conversion of negotiable instrument to a security separate
the note from the mortgage, thereby destroying the negotiable
instrument'?
The Rileys' brief lays out numerous allegations of fact to support this
argument with respect to the methods by which mortgages and notes are assigned
and conveyed." However, the Rileys' have failed to present any affidavits,
'1In support ofthe their argument that bifurcation destroys the negotiable instrument, the Rilcys
rely primarily on a federal case, Montgomery Coun.!Y. Pa. v. MERSCORP, Inc., which held that
"the Pennsylvania Recording Act does in fact require the transfer ofsecured deb! [i.e. the
6
111Page
depositions, interrogatories or other record evidence that would support these
factual and legal assumptions. Here, the Rileys are prompting this court to take
judicial notice of assumptions of facts which have not been established in the
record. As such, the Rileys have failed to meet their burden of responding to
FNMA's Motion for Summary Judgment under Pa. R.C.P. 1035 with evidence of
record which can rebut FNMA's factual claims or establish a legal defense.?
For example, the Rileys argue that FNMA is not in possession of the note
because the mortgage document did not give MERS the power to assign the note.
Defendants' Brief, Part A. However, Section 20 of the Mortgage document states
that "the Note or a partial interest in the Note (together with this Security
Instrument) can be sold one or more times without prior notice to the borrower."
Plaintiff's Complaint, Exhibit B. Each of the three assignments of record in this
case state that the assignment has been made in consideration for a certain sum or
"other good and valuable consideration" paid to the Assignor. Plaintiff's
Complaint, Exhibit C, D; Anderson Affidavit, Exhibit C. Therefore, each
---------------------------·····--··--··-·-----·--····- -----
mortgage note) to first be documented in a form suitable for recording and then recorded in the
land records because it creates in the transferee an equitable interest in the mortgage."
Montgomery County. Pa. v. MERSCORl', Inc., l 6 F.Supp.3d 542, 557 (E.D. Pa. 2014).
However, the Third Circuit Court of Appeals overturned the District Court's decision, holding
Pennsylvania's Recording Act "does not create a duty to record all land conveyances."
Montgomery County, Pa. v. MERSCORP, Inc., 795 F.3d 372, 374 (3d. Cir. 2015). Furthermore,
the Third Circuit Court of Appeals found no merit in appellant's argument that "MERSCORP
[was] violating (state law] by failing lo record its transfer of mortgage debts, thus depriving the
county governments of recording fees." lg. al 379.
5
Despite presenting numerous allegations in their New Matter, the Rileys presented no evidence
of record to successfully create disputes of material fact which would allow them to survive
summaryjudgment.
7
12 I Page
assignment of the note and mortgage has been made for compensation in
accordance with Section 20 of the mortgage document.
In addition, the Rileys allege that when they closed on their property, the
original lender signed a Pooling and Servicing Agreement (PSA) which "detailed
the closing date by which the horneowner's loan must be 'sold' to the REM!C, and
described exactly how the homeowner's note is to find its way from the original
lender to the REMIC trust." Defendants' Brief, Pait A. However, the Rileys fail to
refer to any part of the record that establishes the existence or enforcement of this
alleged PSA and have therefore failed to establish that the note has in fact been
securi ti zed.
Therefore, since the Rileys' legal argument regarding the bifurcation of the
note and mortgage are not based in facts established within the record, the court
finds that FNMA has standing as the current holder of the note.
iii. Docs bifurcation of the note and mortgage discharge obligation
to pay debt?
For the purpose of completeness, the court will address whether separation
of the note and mortgage would discharge the Rileys' obligation to pay the debt at
issue.
At oral argument, counsel for the Rileys relied upon a Pennsylvania
Common Pleas case, which the court attached as part of the record pursuant to
I
8
Bl Page
court order on October 6, 2016. See Bank of America v. Wicker (C.P. Jefferson
Cty., Dec. 19, 20 I 4). Counsel argued that this case supported his present
arguments with respect to bifurcation of the mortgage and destruction of the
negotiable instrument. In reality, the court in Wicke1: expressly rejects the
argument that the mortgage foreclosure plaintiff lacks standing because the Note
had been expressly conveyed with the mortgage in all relevant assignments.
Wicker at 3 ("Consequently, the Assignment's clear conveyance of the note
eliminates any question regarding the Bank's standing as its current holder").
The Rileys asserted that the negotiable instrument was destroyed and
therefore unenforceable because only the mortgage was assigned without the Note.
However, the specific language ofthe May 18, 201 I assignment from Mortgage
Electronic Registration Systems (MERS) as nominee for HSBC Mortgage
Corporation to HSBC Mortgage Corporation reads as follows:
Assignor hereby assigns unto the above-named Assignee, the said
Mortgage having an original principal sum of $13 7, 750.00 with
interest, secured thereby, with all moneys now owing or that may
hereafter become due or owing in respect thereof, and the full benefit
of all the powers and of all the covenants and provisos therein
contained, and the said assignor hereby grants and conveys unto the
said assignee the assignor's beneficial interest under the security
instrument.
9
14 I Page
Plaintiff's Complaint, Exhibit C (emphasis added)." The April 6, 2012 assignment
from HSBC Mortgage Corporation to HSBC Bank USA, N.A. contains identical
language. Plaintiff's Complaint, Exhibit D. In Wicker, the court reasoned the
language "and the indebtedness thereby secured" blatantly referred to the note and
therefore negated any claim by the defendants that the note and mortgage had been
separated. Wicker at 3. Here, the language "secured thereby, with all moneys now
owing or that may hereafter become due or owing in respect thereof" similarly
refers to the Note which the Rileys claim was separated from the mortgage via
assignment. Defendants' Response, ~I I 7. 7
More specifically, the December 14, 2015, assignment from HSBC Bank
(predecessor plaintiff) to FNl\1A (current plaintiff) expressly states that the "all
beneficial interest under that certain Mortgage described below together with the
note(s) and obligations therein described and the money due and to become due
thereon wit interest and all rights accrued or to accrues under said mortgage."
Anderson Affidavit, Exhibit C. As in Wick.er, clear conveyance of the note
eliminates any questions regarding FNMA's standing as current holder. This most
recent assignment establishes FNMA's interest in continuing the suit originally
brought by HSBC Bank by granting all the rights and benefits under both the
6
This assignment was recorded 011 May 20, 201 I with the Franklin County Recorder of Deeds.
1
The Rileys claimed "[a]n assignment of a mortgage can never also assign the note, especially
when, us in the instant case, the purported note was securitized and separated from the
mortgage." Defendants' Brief in Opposition to Plaintiff's Motion for Summary Judgment, Part B
[no page numbers provided). However,
JO
15 I P age
mortgage and the note. Clearly, based on the language of the assignments, there
has been no bifurcation of the mortgage and note which would dissolve the
negotiable instrument and negate FNMA's standing.
Therefore, since the note and mortgage have been assigned together in
accordance with the language of the mortgage document, the court. finds that
FNMA has standing to bring the current action because it is the present holder of
the Note.
B. MORTGAGE IN DEFAULT
i. Under the Nantv-Glo rule, is the Anderson Affidavit sufficient
to establish default?
The Nanty-Glo rule establishes that summary judgment may not be granted
where the movant "relies exclusively upon oral testimony, through affidavits or
depositions, to establish the absence of a genuine issue of material fact." Kee v,
Pennsylvania Turnpike Commission, 743 A.2d 546, 550 (Pa. Cmwlth, 1999). The
Superior Court has outlined three steps to determine whether the Nanty-Glo rule
applies:
Initially, it must be determined whether the plaintiff has alleged facts
sufficient to establish a prima facie case. If so, the second step is to
determine whether there is any discrepancy as to any facts material to
the case. Finally is must be determined whether in granting summary
judgment, the trial court has usurped improperly the role of the jury
by resolving any material issues of fact.
11
16 I P age
Kirby v. Kirby, 687 A.2d 385, 388 (Pa. Super. 1997). When no disputed issues of
material fact have been presented, Nanty-Glo does not preclude consideration of
affidavits establishing default in mortgage foreclosure. Beal Bank v. PIDC
Financing Corp, WL 31012320 (C.P. Phi la. Cty. 2002).
The Rileys argue that under the Nanty-Glo rule, the affidavit of one
individual cannot be considered conclusive on the issue of whether the mortgage is
in default. Defendants' Response; i/8, 14. However, the Rileys do not sufficiently
establish the Nanty-Glo rule in fact applies to this case based on the three step
analysis outlined by the Superior Court. The Complaint alleges that the mortgage is
in default, that the Rileys have failed to pay interest, and that the recorded
mortgage is in a specified amount. Plaintiff's Complaint, i/i/8, I 0. In support of
these allegations, FNMA attached copies of the mortgage Note, the notarized
Mortgage document, relevant assignments of the mortgage establishing their
interest, and required notices which had been mailed to the Rileys. Complaint,
Exhibits A, B, C, D, E, and F. Fl-!MA established a prima facie case, thereby
satisfying the first prong of the Nanty-Glo applicability test. However, the second
prong of the Nanty-Glo applicability test has not been established. To create a
discrepancy in material fact, the Rileys "had the burden to present facts by counter-
affidavits, depositions, admissions, or answers to interrogatories." Washington
Federal Savings and Loan Association v. Stein, 515 A.2d 980 (Pa. Super. 1986)
J2
171Page
(holding reliance on pleadings without additional evidence does not create dispute
of material fact). The Ri Ieys have presented only legal argument in their pleadings
and supporting brief, which cannot create a dispute of material fact under Pa.
R.C.P. l 035. Whereas disputes of law were raised by the Rileys and decided
herein, the Nanty-Glo rule does not apply in the instant case because no genuine
disputes of material facts exist.
Simply, the Rileys have put the cart before the horse by seeking relief under
Nanty-Glo without creating a factual dispute to which the rule could be applied.
For example, in its Complaint, FNMA alleged that the mortgage is in default
because the payments had not been made since August 2010. Plaintiffs Complaint,
~8. In response to this factual averment, the Rileys argue that as a matter of law,
the mortgage cannot be in default because it has been destroyed. Defendants'
Answer and New Matter, il8. Nowhere in that responsive paragraph do the Rileys
present factual averrnents which could create a genuine issue of material fact with
regard to whether the mortgage is in default for failure to make payments. Id.Furthermore, they implicitly admit their failure to make payments by citing an
obscure legal theory which seeks to defend their failure to pay. Id.The Rileys contend that since Van Anderson is not an employee of FNMA,
he does not have competency to testify under Pa. R.E. 601, 602. Defendants'
Response, i/7. "Actual knowledge and observation on the part of the lay witness are
I3
18 I Page
the essential bases for the reception of the opinion." Krauss v. Trane U.S. Inc., I 04
A.3d 556, 567 (Pa. Super. 20 J 4) (holding affidavit regarding presence of asbestos
was too speculative to be based on personal knowledge). In addition, summary
judgment cannot be granted where "mere speculation would be required for the
jury to find in plaintiffs favor." Id. at 568.
Here, Mr. Anderson's affidavit is based on actual know ledge he possesses
based on his position as Foreclosure Specialist for the Mortgage Servicing Agent
for FNMA. Anderson Affidavit, ~II. He kept the records in the ordinary course of
business, analyzed the documents, delivered logic-based opinions, and is therefore
competent in delivering a lay opinion of the mortgage documents in question. Id. at
,r2. Furthermore, the Rileys have presented no specific evidence as to what specific
personal knowledge Mr. Anderson lacks and based this unfounded allegation
solely on the fact that Mr. Anderson is not directly employed by FNMA.
Defendants' Response, if7-8. In the absence of any evidence to the contrary in the
form of counter-affidavits, depositions, or interrogatories, the Rileys have failed to
establish not only that Mr. Anderson Jacks competency, but also that there is no
genuine issue of material fact as to whether the mortgage is in default.
Moreover, counsel for the Rileys during oral argument relied upon the
above-referenced common pleas case, Bank of America v. Wicker, which found
that the mortgage foreclosure plaintiff Bank's affidavit confirming dare o.f default
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was inconclusive of that fact under Nanty-Glo. Bank of Ame1:ica v. Wicker (C.P.
Jefferon Cty, 2015) at 5. However, unlike the instant case, in Wicker, the
defendants bad created a dispute of material fact only as to the dare of the default
and had implicitly admitted by presenting legal defenses that the mortgage was in
fact in default. For the limited purpose of determining on what date the default
took place, the court held that Nanty-Glo prohibited conclusiveness where the
Bank's only evidence was an affidavit. Therefore, the Rileys' reliance on this case
to affirm their arguments is misplaced.
Therefore, based on the Rileys' failure to establish a dispute of material fact
and thereby the applicability of Nanty-Glo, the court finds there is no dispute of
material fact: even viewing the facts in the light most favorable to the Rileys, the
mortgage is in default.
C. FAILURE TO PAY INTEREST
For the same reasons asserted above with respect to default of the mortgage,
there is also no genuine dispute of material fact as to whether the Rileys have
failed to pay interest. The Rileys have failed to present specific evidence which
contradicts FNMA's factual averments and inappropriately present legal arguments
which are inapplicable given their failure to create disputes of material fact.8 Just
as the Rileys implicitly admitted to default because they argued no legal obligation
s See discussion above (Section B) as to inapplicability ofNanty-GIQ.
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existed which would require such payments, here too, the Rileys have implicitly
admitted, by claiming a legal defense to their actions, that they have not paid
.
interest on t I ie mortgage. 9
Therefore, based on the same reasoning it found default, the court finds that
no dispute of material fact exists: even viewing the facts in the light most favorable
to the Rileys, they have failed to make interest payments on the mortgage.
D. RECORDED MORTGAGE IS IN SPECIFIED AMOUNT
FNMA's Complaint alleges the specific amount due based on the terms and
conditions of the mortgage and the date which the Rileys discontinued making
payments." Plaintiff's Complaint, ill 0. In response, the Rileys argue that "a
witness with personal knowledge must establish this fact." Defendants' Answer,
,r10. When FNMA filed its Motion for Summary Judgment, it also filed the
affidavit of Mr. Anderson who had personal knowledge of the mortgage
documents and established logic-based conclusions to support FNMA's averment
and valuations of the amount due. As stated above, although the Rileys have
challenged the competency of Mr. Anderson, they presented no evidence or
specific allegations as to where specifically Mr. Anderson's personal knowledge is
lacking. The Rileys argue only that Mr. Anderson cannot have personal knowledge
9
See discussion above (Section B) discussing implicit admission by raising legal a legal defense.
10
Amount due includes the principal balance, interest through February 6, 2015, taxes, hazard
insurance, private mortgage insurance, late charges, broker's price opinion, and property
inspection.
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because he is not employed by FNMA or its predecessor plaintiff: HSBC Bank.
Defendants' Response, ~1~17-8.
Therefore, because the Rileys have presented no record evidence which
challenges specific reasons why Mr. Anderson lacks personal knowledge, no
genuine dispute of material fact has been established: even viewing the facts in the
light most favorable to the Rileys, the recorded mortgage is in a specified amount.
CONCLUSION
The Rileys have denied allegations of fact based on arguments of law.
However, these arguments of law are based on presumptions of fact which are not
established in the record. Since they have presented no factual basis for their pied
denials and have relied solely on the pleadings, they have failed to establish
disputes of material fact which would survive summary judgment. As such, their
reliance on Nanty-Glq to exclude Mr. Anderson's affidavit is misplaced as it
cannot apply where there are no disputes of material fact.
Even viewing the facts in the light most favorable to the Rileys, no dispute
of material fact exists as to whether the mortgage was in default, the Rileys failed
to make payments, and the recorded mortgage is in a specified amount. Therefore,
FNMA's Motion for Summary Judgment is hereby GRANTED.
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