JPMorgan Chase Bank v. Gallagher, S.

J-A27013-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JPMORGAN CHASE BANK, NATIONAL : IN THE SUPERIOR COURT OF
ASSOCIATION : PENNSYLVANIA
:
:
v. :
:
:
SEAN GALLAGHER AND HAIRONG :
WANG : No. 169 EDA 2018
:
Appellants :
Appeal from the Order Entered December 6, 2017
In the Court of Common Pleas of Northampton County Civil Division at
No(s): C-48-CV-2012-5631
BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.
MEMORANDUM BY BOWES, J.: FILED MAY 02, 2019
Sean Gallagher and Hairong Wang appeal from the entry of summary
judgment in favor of JPMorgan Chase Bank, National Association (“Bank”), in
this mortgage foreclosure action. We affirm.
On October 17, 2006, Appellants executed a mortgage and promissory
note in the principal sum of $407,000.00 for the purchase of property located
at 980 Cosenza Court, Folks Township, Pennsylvania (“the property”).
Pursuant to the note, the loan amount was to be payable in equal, consecutive,
monthly installments of principal and interest in the amount of $2,606.07.
The mortgage, which was executed in favor of Mortgage Electronic
Registration Systems, Inc. (“MERS”), as nominee for Weichert Financial
Services (“WFS”), was duly recorded by the Northhampton County Recorder
J-A27013-18
of Deeds on October 26, 2006. The mortgage was subsequently transferred
to Bank.1
Appellants defaulted under the terms of the loan documents by failing
to pay the monthly mortgage payment due on February 1, 2011, and every
month thereafter. On May 4, 2011, a notice of intent to foreclose on the
mortgage was mailed to Appellants at the property. Appellants failed to cure
their default within the time proscribed by the notice. On June 11, 2012, Bank
filed a complaint in mortgage foreclosure seeking an in rem judgment against
Appellants in the amount of $429,861.82, plus interest, costs, and fees.
Appellants filed an answer, new matter, and a counterclaim. Bank filed a reply
to the new matter and counterclaim.
Appellants subsequently filed a petition for leave to file an amended
answer, new matter, and counterclaims. The proposed amended answer
attached to the petition contained eighty-four assertions of new matter, and
four counterclaims seeking damages based on breach of contract, and
violations of the federal Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-
1616, federal Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§
2601-2617, and Pennsylvania’s Unfair Trade Practices and Consumer
____________________________________________
1 The record is unclear as to when the transfer occurred. Bank avers in its
brief that it has had the note since 2007. However, it appears undisputed that
the assignment of the mortgage was not recorded by the Northhampton
County Recorder of Deeds until March 22, 2012.
-2-
J-A27013-18
Protection Law (“UTPCPL”), 73 P.S. §§ 201-1-2-1-9.3. Bank opposed the
petition.
Following a hearing, the trial court granted in part and denied in part
Appellants’ petition. Specifically, the trial court ruled that because the action
was strictly an in rem proceeding, Appellants were not permitted to file their
proposed counterclaims, all of which sought money damages and none of
which arose from the execution of the mortgage documents. See Trial Court
Opinion, 12/18/15, at 3-5. The trial court additionally determined that “much
of the offered new matter contained in the proposed answer appears to
attempt to bolster and/or lay a factual foundation for [Appellants’] proposed
counterclaims, which the court has already found to be impermissible in this
action.” Id. at 5-6 (cleaned up). Accordingly, the trial court forbade any
amendment that added new matter pertaining to any of the prohibited
counterclaims. Id. at 6. Further, because Bank had averred that it possessed
the original promissory note and attached to its reply to new matter a copy of
the original promissory note signed by Appellants, the trial court determined
that the pleadings had already introduced the issue of whether Bank would be
able to prove that it was the real party in interest, and prohibited any
additional averments in the amended answer challenging the chain of
possession or Bank’s possession of the note. Id. at 7. Nevertheless, the trial
court determined that Appellants could amend their answer to include new
matter alleging non-receipt of notice of default and acceleration or notice of
-3-
J-A27013-18
transfer of the mortgage, and challenging the authenticity of their signatures
on the mortgage documentation. Id. at 8. Given the extent of the limitations
imposed by the trial court, however, it specifically cautioned Appellants “to
forgo filing the entire proposed answer, mostly notably its overabundance of
legal conclusions, [and] to carefully tailor any amended answer and new
matter they may file to conform to the [trial c]ourt’s analysis.” Id. at 8 n.2
(cleaned up).
On January 7, 2017, Appellants filed an amended answer which, like the
proposed amended answer, contained eighty-four assertions of new matter.
Bank filed preliminary objections on the basis that the filing failed to conform
to the trial court’s order because it was “virtually identical” to the proposed
amended answer and new matter the trial court prohibited Appellants from
filing. Bank’s Preliminary Objections, 1/26/16, at 3. The trial court agreed,
and on April 4, 2016, it entered an order sustaining Bank’s preliminary
objections and dismissing the amended answer and new matter, with
prejudice.2
Bank ultimately filed a motion for summary judgment supported by,
inter alia, the affidavit of Bank employee Joseph G. Devine. Attached to Mr.
Devine’s affidavit were copies of the promissory note signed by Appellants and
____________________________________________
2 Because Appellants’ amended answer and new matter was dismissed, it
never became the operative pleading, and Appellants’ original answer, new
matter, and counterclaim is, therefore, the operative pleading.
-4-
J-A27013-18
indorsed in blank without recourse,3 as well as the mortgage, the assignment
of mortgage to Bank, and the records of Appellants’ payment history and
default. Bank additionally relied on Appellants’ admissions and general denials
in their answer, the latter of which Bank claimed should be deemed as
admissions to the averments in the complaint. Appellants filed a response in
opposition. The trial court determined that Appellants’ general denials
constituted admissions, and by order dated December 6, 2017, granted
summary judgment in Bank’s favor. Appellants filed a timely notice of appeal
and a court-ordered Pa.R.A.P 1925(b) concise statement of errors complained
of on appeal raising twenty-two issues.4 The trial court responded by filing a
____________________________________________
3If the holder of an instrument indorses it in blank, the instrument becomes
payable to the bearer, and may be negotiated by transfer of possession alone
until specially indorsed. J.P. Morgan Chase Bank, N.A. v. Murray, 63 A.3d
1258, 1266 (Pa.Super. 2013) (citing 13 Pa.C.S § 3205(b)).
4 Although Rule 1925(b) dictates that, without more, the number of issues
raised in a concise statement will not be grounds for finding waiver, this
principle applies only “[w]here non-redundant, non-frivolous issues are set
forth in an appropriately concise manner[.]” Pa.R.A.P. 1925(b)(4)(iv)
(emphasis added); see also Mahonski v. Engel, 145 A.3d 175, 181
(Pa.Super. 2016). However, Pennsylvania courts have repeatedly held that
an appellant waives all matters for review where he identifies an outrageous
number of issues in the concise statement. See Jones v. Jones, 878 A.2d
86 (Pa.Super. 2005) (holding that a seven-page, twenty-nine issue statement
resulted in waiver); see also Kanter v. Epstein, 866 A.2d 394, 401
(Pa.Super. 2004) (holding that by raising an outrageous number of issues in
a Rule 1925(b) statement, an appellant impedes the trial court’s ability to
prepare an opinion addressing the issues on appeal, thereby effectively
precluding appellate review). Here, the twenty-two issues raised in
Appellants’ concise statement are excessive, as well as redundant. While we
could find waiver on this basis, we decline to do so.
-5-
J-A27013-18
Pa.R.A.P 1925(a) opinion which incorporated by reference its December 6,
2017 order.
Appellants raise the following issues for our review:
1. Did the court below err as a matter of law or abuse its discretion
in limiting the new matter that the Appellants could assert,
along with barring any counterclaims that the Appellants could
assert against the Bank?
2. Did the court below err as a matter of law in dismissing the
Appellants’ new matter that asserted defenses to the claims
made in the mortgage foreclosure complaint?
3. Did the court below err as a matter of law in granting the Bank’s
preliminary objections and in dismissing the Appellants’ new
matter, as they were integral to the entire case, particularly
the creation of the mortgage and note, upon which the [Bank]
is relying?
4. Did the court below err as a matter of law in granting the
[Bank’s] motion for summary judgment?
Appellants’ brief at 4 (cleaned up).5
In their first issue, Appellants challenge the trial court’s order denying,
in part, their petition to file the proposed amended answer, new matter, and
____________________________________________
5 Appellants’ issues, as presented in the argument section of their brief, do
not conform to the issues as stated in their statement of questions presented.
See Pa.R.A.P. 2119(a) (providing that “[t]he argument shall be divided into
as many parts as there are questions to be argued; and shall have at the head
of each part—in distinctive type or in type distinctively displayed—the
particular point treated therein”). Whereas Appellants raise four issues in their
statement, their argument contains only three sections. See id. Further, in
their argument, Appellants do not discuss the issues in the order indicated in
the statement. We will address the issues in the order presented in the
statement.
-6-
J-A27013-18
counterclaims.6 An appellate court’s standard of review of a trial court’s order
denying a party leave to amend a pleading is limited to considering whether
the trial court erred as a matter of law or abused its discretion.
Schwarzwaelder v. Fox, 895 A.2d 614, 621 (Pa.Super. 2006).
Pennsylvania Rule of Civil Procedure 1033(a) permits amendment of
pleadings and provides that “[a] party, either by filed consent of the adverse
party or by leave of court, may at any time . . . amend the pleading.”
However, while Rule 1033(a) provides a method for amending a pleading, it
does not provide any party the automatic right to amend its pleading. See
id. (requiring consent or leave of court to amend a pleading). While the right
to amend should not be withheld when there is some reasonable possibility
____________________________________________
6 Bank argues that Appellants may not appeal the trial court’s December 18,
2015 and April 4, 2016 orders because they are interlocutory orders, and
Appellants failed to seek permission to appeal them under Pa.R.A.P. 1311
within thirty days of their entry. Bank’s brief at 14. Bank is correct in that
the trial court’s December 18, 2015, and April 4, 2016 orders are, indeed,
interlocutory orders that were not appealable of right under Pa.R.A.P. 311.
However, those orders became appealable upon entry of a final order, see
Pa.R.A.P. 341, which, in this case, occurred when the trial court entered
summary judgment in favor of Bank. See Betz v. Pneumo Abex, LLC, 44
A.3d 27, 54 (Pa. 2012) (stating that “an appeal of a final order subsumes
challenges to previous interlocutory decisions”); see also K.H. v. J.R., 826
A.2d 863, 871 (Pa. 2003) (holding that in the context of a single action, a
notice of appeal filed from the entry of judgment will be viewed as drawing
into question any prior non-final orders that produced the judgment). While
Appellants could have requested permission to appeal those interlocutory
orders under Pa.R.A.P. 1311, they were not required to do so, and their
decision not to do so did not divest them of their ability to appeal those orders
upon entry of a final order in the case. See Pa.R.A.P. 311(g)(1) (providing
that, generally, a failure to file an appeal of an interlocutory order does not
waive any objections to the interlocutory order).
-7-
J-A27013-18
that the amendment can be accomplished successfully, “where allowance of
an amendment would . . . be a futile exercise, the [pleading] may be properly
dismissed without allowance for amendment.” Wiernik v. PHH U.S. Mortg.
Corp., 736 A.2d 616, 624 (Pa.Super. 1999).
Further, Rules of Civil Procedure 1141 to 1150 govern mortgage
foreclosure actions in Pennsylvania. Rule 1141(a) provides that a mortgage
foreclosure action “shall not include an action to enforce a personal liability.”
This restriction is equally applicable to a mortgagee and a mortgagor. See
Newtown Village P’ship v. Kimmel, 621 A.2d 1036, 1037 (Pa.Super.
1993). As this Court has explained:
Mortgage foreclosure in Pennsylvania is strictly an in rem or “de
terries” proceeding. Its purpose is solely to effect a judicial sale
of the mortgaged property. The holder of a mortgage note can
decide whether to file a foreclosure action or to file an in personam
assumpsit action on the note, but the actions are not usually
combined.
Rule of Civil Procedure 1148, which governs which counterclaims
are permissible in a mortgage foreclosure action, states:
A defendant may plead a counterclaim which arises
from the same transaction or occurrence or series of
transactions or occurrences from which the plaintiff’s
cause of action arose.
We have held that this rule is to be interpreted narrowly, and only
counterclaims that are part of or incident to the creation of the
mortgage relationship itself are to be permitted. Therefore, Rule
1148 does not permit a counterclaim arising from a contract
related to the mortgage, such as a contract for sale of real
property. Nor does it permit counterclaims where the facts giving
rise to the counterclaims occur after the creation of the mortgage
and after the mortgagors were in default. Thus, in Pennsylvania,
the scope of a foreclosure action is limited to the subject of the
-8-
J-A27013-18
foreclosure, i.e., disposition of property[,] subject to any
affirmative defenses to foreclosure or counterclaims arising from
the execution of the instrument(s) memorializing the debt and the
security interest in the mortgaged property. While Rule 1148 does
not govern affirmative defenses listed as new matter, such
defenses must be more than a restatement or continuation of an
impermissible counterclaim.
Nicholas v. Hofmann, 158 A.3d 675, 696-97 (Pa.Super. 2017) (cleaned up).
Appellants claim that the trial court erred in restricting the new matter
and counterclaims that they were permitted to file in their amended answer.
According to Appellants, their petition to amend “not only stated meritorious
and valid defenses to the Bank’s complaint in mortgage foreclosure, they also
set forth technical defenses to the manner in which the mortgage, note[,] and
assignment of mortgages were handled.” Appellants’ brief at 34 (unnecessary
capitalization omitted). Appellants further claim that “[a]s [they] averred that
this information was only proven through discovery and expert witnesses,
after their original answer, new matter[,] and counterclaim had already been
filed, [they] should have been allowed to conform their pleadings with the
evidence that had been discovered.” Id. (unnecessary capitalization omitted).
While Appellants assert that they should have been granted leave to file
their amended pleading, as proposed, they provide only vague and
generalized argument in support of their position. See Pa.R.A.P. 2119(a)
(providing that the parties’ briefs must include a discussion of each question
raised on appeal and a “citation of authorities as are deemed pertinent”).
Appellants do not identify any particular counterclaim or averment of new
-9-
J-A27013-18
matter prohibited by the trial court from inclusion in the amended answer.
Thus, we are unable to discern which counterclaims or averments of new
matter Appellants are challenging in this appeal. Moreover, the argument
portion of Appellants’ brief does not contain meaningful discussion of, or
citation to, relevant legal authority. Appellants’ brief at 32-35. While the
portion of the argument pertaining to Appellants’ issue does contain reference
to boilerplate case law discussing the general preference for liberal
amendment of pleadings in this Commonwealth, this section completely lacks
any citation to case law pertinent to the proposed counterclaims and new
matter, nor any discussion or developed analysis relevant to the propriety of
their inclusion in the amended answer. As we have explained:
The Rules of Appellate Procedure state unequivocally that each
question an appellant raises is to be supported by discussion and
analysis of pertinent authority. Appellate arguments which fail to
adhere to these rules may be considered waived, and arguments
which are not appropriately developed are waived. Arguments not
appropriately developed include those where the party has failed
to cite any authority in support of a contention. This Court will
not act as counsel and will not develop arguments on behalf of an
appellant. Moreover, we observe that the Commonwealth Court,
our sister appellate court, has aptly noted that mere issue spotting
without analysis or legal citation to support an assertion precludes
our appellate review of a matter.
Coulter v. Ramsden, 94 A.3d 1080, 1088-89 (Pa.Super. 2014) (cleaned up).
Here, the argument portion of Appellants’ brief is entirely bereft of any
citation to pertinent legal authority or developed analysis relevant to the issue.
Appellants’ brief at 32-35. This lack of comprehensible legal discussion or
- 10 -
J-A27013-18
analysis precludes meaningful appellate review. Accordingly, we conclude
that the issue is waived.
Apparently advocating their second and third issues, Appellants argue
that the trial court erred by sustaining Bank’s preliminary objections to the
amended answer and new matter, and by dismissing that pleading with
prejudice. Appellants’ brief at 36-40. Our standard of review of an order of
the trial court overruling or granting preliminary objections is to determine
whether the trial court committed an error of law. Khawaja v. RE/MAX
Cent., 151 A.3d 626, 630 (Pa.Super. 2016).7 When considering the
appropriateness of a ruling on preliminary objections, the appellate court must
apply the same standard as the trial court. Id.
Appellants do not deny that they defied the trial court’s directive by
including in their amended answer the proposed eighty-four assertions of new
____________________________________________
7 While we are mindful that, when preliminary objections are asserted in the
nature of a demurrer, see Pa.R.Civ.P. 1028(a)(4), our standard of review is
different. See Kuren v. Luzerne Cty., 146 A.3d 715, 753 (Pa. 2016) (stating
that, in examining the propriety of an order sustaining a preliminary objection
in the nature of a demurrer, a court may do so “only when, based on the facts
pleaded, it is clear and free from doubt that the complainant will be unable to
prove facts legally sufficient to establish a right to relief”). Here, however,
Bank did not assert preliminary objections in the nature of a demurrer.
Rather, its preliminary objections were based on the failure of Appellants’
amended pleading to conform to the trial court’s explicit order limiting the
content of the new matter, and its failure to state their defenses in a concise
and summary form with sufficient specificity. See Pa.R.Civ.P. 1019(a),
Pa.R.Civ.P. 1028(a)(2), (3).
- 11 -
J-A27013-18
matter without redaction of the content expressly prohibited by the trial court.
Nor do they dispute that their amended answer and new matter failed to
conform to Pa.R.Civ.P. 1019(a) and Pa.R.Civ.P. 1028(a)(3). Appellants cite
to no legal authority suggesting that their decision to violate the trial court’s
explicit order, or the Pennsylvania Rules of Civil Procedure, can simply be
overlooked. See Pa.R.A.P. 2119(a). Instead, Appellants essentially argue
that they purposefully ignored the trial court’s ruling and included in the
amended new matter defenses related to the prohibited counterclaims to
prevent waiver and create a record in the event of an appeal.8 Appellants’
brief at 37. Appellants also superficially argue that “[t]his case presents many
issues regarding the involvement in the execution and recording of the instant
mortgage and note, the existence and/or legality of mortgage assignment,
and other legal rights and duties of [MERS].” Id. at 38-39.
Here, the trial court determined that the amended answer and new
matter filed by Appellants was virtually identical to the proposed answer and
new matter previously rejected by the court. As the trial court explained:
[Appellants] evidently ignored the bulk of the court’s directives,
filing . . . an amended answer and new matter, which, save for
____________________________________________
8In support of their position, Appellants rely on BAC Home Loans v. Gubrud,
3285 EDA 2012 (Pa.Super. 2014) (unpublished memorandum). Appellants’
brief at 37. Presently, Pennsylvania law does not permit Appellants to rely on
unpublished memoranda decisions of this Court as controlling or persuasive
authority. But see Order Amending Rule 126 of the Pennsylvania Rules
of Appellate Procedure, No 278 (Pa. 2019) (recently amending Pa.R.A.P.
126, and providing that non-precedential unpublished memoranda decisions
of this Court filed after May 1, 2019 may be cited for their persuasive value).
- 12 -
J-A27013-18
the elimination of . . . “counterclaims,” this pleading was identical
to that which the court had previously found to contain
impermissible averments. In no way did [Appellants] carefully
tailor their pleading to conform to the court’s . . . analysis, and,
contrary to the court’s prior directive, it continues to contain,
under the heading “new matter,” “affirmative defenses that are
nothing more that restatements or continuations of [the
prohibited] counterclaims.” [Trial Court Opinion, 12/18/15,] at 6.
Furthermore, [Appellants’] pleading fails to conform to
Pa.R.C[iv].P. 1019(a) and Pa.R.C[iv].P. 1022, which provide,
respectively, that “[t]he material facts on which a cause of action
is based shall be stated in a concise and summary form,” and that
“[e]ach [consecutively numbered] paragraph shall contain as far
as practicable only one material allegation.” Given [Appellants’]
failure to conform their pleading to the Rules of Civil Procedure
and choice to deliberately ignore this court’s directives after the
court granted them an opportunity to file a late amendment, we
find that said pleading should be dismissed.
Trial Court Opinion, 4/4/16, at 2 (unnecessary capitalization omitted).
Given Appellants’ deliberate failure to conform their amended pleading
to the trial court’s explicit directive, see Pa.R.Civ.P. 2018(a)(2), and failure to
adhere to applicable procedural rules, see Pa.R.Civ.P. 1019(a) and Pa.R.Civ.P.
1022, we cannot conclude that the trial court erred in sustaining Bank’s
preliminary objections.9 Thus, Appellants’ second and third issues warrant no
relief.
____________________________________________
9 We additionally observe that Appellants had already created a record of the
defenses they wanted to assert by including them in their petition for leave to
file an amended answer, new matter, and counterclaims.
- 13 -
J-A27013-18
In their final issue, Appellants challenge the trial court’s order granting
Bank’s motion for summary judgment. This Court’s scope and standard of
review of a trial court’s order granting summary judgment is well-settled:
We review an order granting summary judgment for an abuse of
discretion. Our scope of review is plenary, and we view the record
in the light most favorable to the nonmoving party. A party
bearing the burden of proof at trial is entitled to summary
judgment whenever there is no genuine issue of any material fact
as to a necessary element of the cause of action or defense which
could be established by additional discovery or expert report. In
response to a summary judgment motion, the nonmoving party
cannot rest upon the pleadings, but rather must set forth specific
facts demonstrating a genuine issue of material fact.
Bank of Am., N.A. v. Gibson, 102 A.3d 462, 464 (Pa.Super. 2014) (citations
omitted). Furthermore, we are guided by the following:
[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.
Id. at 464-65 (citation omitted); see also First Wisconsin Trust Co. v.
Strausser, 653 A.2d 688, 694 (Pa.Super. 1995). (providing that summary
judgment is proper in mortgage foreclosure actions where the mortgagor
admits the delinquency of his mortgage payments). “This is so even if the
mortgagors have not admitted the total amount of the indebtedness in their
pleadings.” Cunningham v. McWilliams, 714 A.2d 1054, 1057 (Pa.Super.
1998).
Additionally, in a mortgage foreclosure action, the mortgagors and
mortgagee are the only parties with sufficient knowledge upon which to base
- 14 -
J-A27013-18
a specific denial. New York Guardian Mortg. Corp. v. Dietzel, 524 A.2d
951, 952 (Pa.Super. 1987); see also Pa.R.C.P. 1029(b), 1141(b). Thus,
responsive pleadings in a mortgage foreclosure action must contain specific
denials. Gibson, supra at 466-67; Pa.R.C.P. 1029(b). General denials by
mortgagors that they are without information sufficient to form a belief as to
the truth of averments as to the principal and interest owing must be
considered an admission of those facts. Strausser, supra at 692.
We first observe that the trial court granted Bank’s motion for summary
judgment, in part, on the basis of Appellants’ admissions and general denials
to the averments in the foreclosure complaint, the latter of which it deemed
to be admissions. Trial Court Opinion, 12/6/17, at 2-3. In their answer,
Appellants admitted that, on October 17, 2006, they executed the mortgage
to the property in favor of MERS, as the mortgagee, and that the mortgage
was duly recorded in the Office of the Recorder of Deeds of Northhampton
County. Answer, 8/6/12, at ¶3. Appellants further admitted that the property
is the subject of the mortgage at issue in this foreclosure action. Id. at ¶4.
Appellants claimed that they did not have to respond to, and thus offered only
a general denial to the averment that they failed to make the monthly
payment of principal and interest due February 1, 2011, and each month
thereafter, and that, upon such failure, the entire principal and balance and
all interest due thereon became collectible. Id. at ¶5. Appellants also
generally denied that “notice of intention to foreclose as set forth in Act 6 of
- 15 -
J-A27013-18
1974 and/or notice of default as required by the mortgage document, as
applicable, has been sent to [Appellants] on the date(s) set forth thereon.”10
Id. at ¶8 (cleaned up).
In light of Appellants’ admission in their answer that they executed the
relevant promissory note and mortgage, Appellants possessed sufficient
knowledge to specifically admit or deny Bank’s allegations in the complaint.
Dietzel, supra at 952. In particular, their denial of averments that they failed
to make payments and the calculation of sums due provided by Bank are
factual situations of which Appellants had knowledge, and therefore constitute
admissions if generally denied. See Bayview Loan Servicing, LLC v.
Wicker, 163 A.3d 1039, 1044 (Pa.Super. 2017) (holding that “general denials
constitute admissions where . . . specific denials are required”); see also
Strausser, supra at 692 (stating that general denials “as to the principal and
interest owing [on the mortgage] must be considered an admission of those
facts”). Here, Appellants’ general denials relating to mortgage default
constitute admissions. See Wicker, supra at 1044. Accordingly, the trial
court properly found that there were no issues of material fact and Bank was
entitled to summary judgment.
While we could end our analysis here, we will nevertheless address the
additional bases upon which Appellants challenge the entry of summary
____________________________________________
10Appellants specifically denied that any amount was due on the promissory
note, and claimed that it was paid in full. Answer, 8/6/12, at ¶6.
- 16 -
J-A27013-18
judgment for Bank. See Appellants’ brief at 15-31. Appellants initially
challenge the evidence supporting Bank’s motion for summary judgment on
the basis that the affidavit of Mr. Devine was “a mirror image of the motion
for summary judgment and add[ed] nothing by way of fact or proof to the
[Bank’s] allegations as set forth in the complaint.” Appellants’ brief at 16
(cleaned up). According to Appellants, Mr. Devine’s affidavit is deficient
because he did not attest to his personal knowledge of Bank’s record-keeping
practices and procedures, thereby rendering any records he relied upon as
inadmissible under the business records exception at 34 Pa.Code
§ 131.6911 and Pa.R.E. 6108. Relying on Nanty-Glo v. American Surety
Co., 163 A. 523 (Pa. 1932),12 Appellants claim that Mr. Devine’s
uncontradicted affidavit could not support a grant of summary judgment.
Appellants are correct that, under Nanty-Glo, entry of summary
judgment based on the moving party’s oral testimony is ordinarily prohibited.
The record reflects, however, that Mr. Devine’s affidavit referenced and
attached copies of the promissory note signed by Appellants and endorsed in
____________________________________________
11Section 131.69 is inapplicable to the instant proceedings, as it pertains to
an affidavit of a records custodian in response to a subpoena duces tecum in
administrative practice before workers’ compensation judges. See 34
Pa.Code § 131.69.
12 In Nanty-Glo, our Supreme Court ruled that oral testimony alone, either
through testimonial affidavits or depositions, of the moving party or the
moving party’s witnesses, even if uncontradicted, is generally insufficient to
establish the absence of a genuine issue of material fact for purposes of
summary judgment.
- 17 -
J-A27013-18
blank without recourse, as well as the mortgage, the assignment of mortgage
to Bank, and the records of Appellants’ payment history and default. Devine
Affidavit, 7/24/17, at ¶¶3, 4, 5, 11, Exhibits A, B, C, D, and F. Hence, this
was not a mere “testimonial affidavit” barred by Nanty-Glo. Instead, it was
documentary evidence supported by Mr. Devine’s affidavit. See Telwell Inc.
v. Grandbridge Real Estate Capital, LLC, 143 A.3d 421, 427-28 (Pa.Super.
2016) (holding that Nanty-Glo is not implicated when an affidavit is
supported by documentary evidence, including the promissory note).
Moreover, Nanty-Glo is not implicated when an affidavit in a mortgage
foreclosure action is also supported by the defendants’ admissions. See
Gibson, supra at 466; see also Sherman v. Franklin Regional Med. Ctr.,
660 A.2d 1370, 1372 (Pa.Super. 1995) (“An exception to [the Nanty-Glo]
rule exists . . . where the moving party supports the motion by using
admissions of the opposing party.”). Here, in moving for summary judgment,
Bank did not rely solely on Mr. Devine’s affidavit, but also relied on Appellants’
admissions and general denials, which were deemed admissions by the trial
court. Thus, the Nanty-Glo rule was not implicated herein.
Additionally, Mr. Devine’s affidavit complied with the standards
applicable to affidavits offered in support of motions for summary judgment
in civil proceedings filed in this Commonwealth. Rule 1035.4 of our Rules of
Civil Procedure provides that, in reference to motions for summary judgment,
“[s]upporting . . . affidavits shall be made on personal knowledge, shall set
- 18 -
J-A27013-18
forth such facts as would be admissible in evidence, and shall show
affirmatively that the signer is competent to testify to the matters stated
therein.” Additionally, pursuant to § 6108(b) of the Uniform Business Records
as Evidence Act:
(b) General Rule.-A record of an act, condition or event shall,
insofar as relevant, be competent evidence if the custodian or
other qualified witness testifies to its identity and the mode of its
preparation, and if it was made in the regular course of business
at or near the time of the act, condition or event, and if, in the
opinion of the tribunal, the sources of information, method and
time of preparation were such as to justify its admission.
42 Pa.C.S.A. § 6108(b). “As long as the authenticating witness can provide
sufficient information relating to the preparation and maintenance of the
records to justify a presumption of trustworthiness of the business records of
a company, a sufficient basis is provided to offset the hearsay character of the
evidence.” Boyle v. Steiman, 631 A.2d 1025, 1032-33 (Pa.Super. 1993).
In his affidavit, Mr. Devine attested that
I make this Affidavit based upon my review of those records
relating to the [promissory note and mortgage] and from my own
personal knowledge of how they are kept and maintained. The
business records are maintained by [Bank] in the course of its
regularly conducted business activities and are made at or near
the time of the event, by or from information transmitted by a
person with first-hand knowledge. It is the regular practice of
[Bank] to keep such records in the ordinary course of a regularly
conducted business activity.
Devine Affidavit, 7/24/17, at ¶6. Mr. Devine’s affidavit clearly satisfied the
requirements of Rule 1035.4 and § 6108(b). He attested that he was a Bank
employee authorized to execute the affidavit, and that he did so based on his
- 19 -
J-A27013-18
personal knowledge and review of Bank’s records, which were prepared in the
regular course of business at or near the time of the events described therein.
Devine Affidavit, 7/24/17, at ¶¶1, 6. Attached to Mr. Devine’s affidavit were
copies of the promissory note signed by Appellants and endorsed in blank
without recourse, as well as the mortgage, the assignment of mortgage to
Bank, and the records of Appellants’ payment history and default. Id. at ¶¶3,
4, 5, 11, Exhibits A, B, C, D, and F. Mr. Devine’s affidavit and supporting
documents, coupled with Appellants’ admissions and general denials,
established a prima facie case of mortgage foreclosure. Accordingly, we find
no merit to Appellants’ challenge to the evidence supporting Bank’s motion for
summary judgment.
Appellants also argue that summary judgment was inappropriate
because discovery had not yet been completed on unidentified “open
discovery issues.” Appellants’ brief at 17. Appellants claim that they sought
through discovery the production of documents within the exclusive
possession of Bank, “[y]et the bank objected to much of the discovery, and
did not or could not produce original documents.” Id. at 24.
Appellants fail to identify any particular discovery request directed to
Bank, nor any allegedly deficient response thereto. See Pa.R.A.P. 2119(c)
(providing that “[i]f reference is made to the pleadings, evidence, charge,
opinion or order, or any other matter appearing in the record, the argument
must set forth, in immediate connection therewith, or in a footnote thereto, a
- 20 -
J-A27013-18
reference to the place in the record where the matter referred to appears”).
Moreover, Appellants fail to identify the place in the record where they
preserved any discovery challenge for our review. See Pa.R.A.P. 2119(e)
(providing that “[w]here under the applicable law an issue is not reviewable
on appeal unless raised or preserved below, the argument must set forth, in
immediate connection therewith or in a footnote thereto, either a specific
cross-reference to the page or pages of the statement of the case which set
forth the information relating thereto”). Notably, nowhere on the docket is
there any motion filed by Appellants to compel Bank’s discovery responses.
See Pa.R.A.P. 302(a) (providing that “[i]ssues not raised in the lower court
are waived and cannot be raised for the first time on appeal”). Therefore, we
deem this argument waived.
Appellants assert that summary judgment was improper because they
denied “key elements” of Bank’s claim in their answer and in their response
to Bank’s motion for summary judgment. Appellants’ brief at 18. Appellants
additionally argue that the issues and claims raised in their amended answer
and new matter “were still in issue at the time of the Bank’s [m]otion for
[s]ummary [j]udgment,” and precluded the entry of summary judgment.
Appellants’ brief at 20-23.
We find no merit in Appellants’ contention that the defenses asserted in
the amended answer and new matter were “in issue” so as to preclude the
entry of summary judgment for Bank. The trial court dismissed Appellants’
- 21 -
J-A27013-18
amended answer and new matter on April 4, 2016, rendering it a legal nullity.
Bank filed its motion for summary judgment more than one year later, on July
31, 2017. Thus, Appellants’ amended answer and new matter clearly was not
“in issue” when the trial court ruled on Bank’s motion for summary judgment.
Moreover, in response to a motion for summary judgment, the non-moving
party may not rest upon mere allegations or denials of the pleadings.
Pa.R.C.P. 1035.3(a); see also Dietzel, supra at 952 (holding that summary
judgment was appropriate where appellants offered nothing to contradict
appellee’s claims except the denial in their answer). Thus, in order to avoid
the entry of summary judgment, it was not sufficient for Appellants to simply
rely on the denials asserted in their answer or assertions made in their
response to Bank’s motion for summary judgment. Rather, Appellants were
required to come forward with “evidence in the record controverting the
evidence cited in the motion [for summary judgment]” or “evidence in the
record establishing the facts essential to the cause of action or defense which
the motion [for summary judgment] cites as not having been produced.”
Pa.R.C.P. 1035.3(a)(1), (2).
Here, Appellants offered no evidence of record demonstrating that they
made any monthly mortgage payment on or after February 1, 2011, such that
the mortgage was not in default. Indeed, Appellants point us to no place in
the record where they presented the trial court with any evidence to raise a
genuine issue of fact in response to Bank’s motion for summary judgment.
- 22 -
J-A27013-18
See Washington Fed. Sav. & Loan Ass'n, 515 A.2d 980, 983 (Pa.Super.
1986) (“In order to properly raise a genuine issue of fact, [the appellant] had
the burden to present ‘facts’ by counter-affidavits, depositions, admissions, or
answers to interrogatories.”). Accordingly, we find no merit to this claim.
Appellants also challenge Bank’s standing to enforce the note, claiming
that Bank did not provide proof that it controls the note through the production
of records establishing transfer and assignment to Bank. Appellants assert
that, because Bank failed to produce any evidence documenting the transfer
or assignment of the note from Weichert Financial Services to Bank, it has not
demonstrated that it controlled the note or is entitled to enforce it.
It is well-established that the mortgagee is the real party in interest in
a mortgage foreclosure action, even when it is the assignee of the mortgage.
CitiMortgage, Inc. v. Barbezat, 131 A.3d 65, 68-69 (Pa.Super. 2016). The
holder of the mortgage maintains the right, upon a borrower’s default, to
initiate a foreclosure action. McWilliams, supra at 1056-57; Gibson, supra
at 464-65. The foreclosing party can prove standing either by showing that it
(1) originated or was assigned the mortgage, or (2) is the holder of the note
specially indorsed to it or indorsed in blank. J.P. Morgan Chase Bank, N.A.
v. Murray, 63 A.3d 1258, 1267-68 n.6; Barbezat, supra at 68. Here, the
trial court concluded, based on the evidence Bank produced in support of its
motion for summary judgment, that Bank had standing to enforce the note
because it established (1) the complete chain of assignments and that it is the
- 23 -
J-A27013-18
current mortgagee and real party in interest; and (2) that it is the current
holder of the original note. See Trial Court Opinion, 12/6/17, at 3. As the
record amply supports the trial court’s determination, we will not disturb its
ruling.
Appellants next argue that Bank shredded the original loan documents
and improperly converted the loan into an Electronic Signatures in Global and
National Commerce Act (“ESIGN”) document, thereby transforming the paper
note that they executed into an e-note. According to Appellants, MERS, as
the original lender, did not disclose in the note, mortgage, or other loan
documents that Appellants executed that the loan and loan documents would
be converted to an ESIGN document. Appellants assert that Bank and MERS
inserted a new paragraph permitting them to change a paper note into an e-
note. Appellants claim that enforcement of the note would violate both ESIGN
and the Uniform Electronic Transactions Act (“UETA”).
Appellants’ claim concerns matters occurring after the mortgage
documentation was executed. See Strausser, supra at 695. Thus, it does
not raise a valid defense to Bank’s complaint in these in rem mortgage
foreclosure proceedings. Id. Moreover, the trial court specifically determined
- 24 -
J-A27013-18
that Bank possessed the original note. See Trial Court Opinion, 12/6/17, at
3. Accordingly, this claim warrants no relief.13
Finally, relying on Green Tree Consumer Disc. Co. v. Newton, 909
A.2d 811, 814 (Pa.Super. 2006), Appellants request this Court to exercise its
equitable powers to vacate the trial court’s entry of summary judgment in
favor of Bank. Green Tree has no applicability here as it involved the
assertion of counterclaims to recoup or set off damages for claims under the
Home Improvement Finance Act with respect to a home improvement loan.
The Court in Green Tree observed that “the general rule is that a recoupment
claim is an improper defense to a mortgage foreclosure.” Green Tree, supra
at 815. Nevertheless, the Court in Green Tree recognized an exception to
this general rule where the mortgage was made as an integral part of the
home improvement loan, incorporated the terms of the home improvement
contract, was recorded with that contract, and was signed by a person alleged
to be incompetent and legally incapable of signing. See id. at 815. This case,
which presents what the Court in Green Tree called “a typical mortgage
____________________________________________
13 Even if this claim was properly related to the execution of the mortgage
documents, it was not raised in Appellants’ answer to the complaint;
therefore, it was not preserved for our review. See Pa.R.C.P. 1032(a)
(enumerated exceptions inapplicable). Raising an affirmative defense for the
first time in response to a motion for summary judgment waives the issue.
See Joyce v. Mankham, 465 A.2d 696, 697 (Pa.Super. 1983) (holding that
because an affirmative defense must be part of the pleadings, the subsequent
averment such a defense in an answer to a motion for summary judgment
fails to preserve the issue).
- 25 -
J-A27013-18
foreclosure where the owners have taken out a loan to fund the purchase of
a home and then defaulted on the payments,” id., exhibits none of the facts
that gave rise to Green Tree’s exception to the normal rule.
We conclude that the trial court did not commit an error of law or abuse
its discretion in entering the orders complained of herein.
Orders affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/2/19
- 26 -