HSBC Bank USA v. Carney, P.

J-A03034-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
HSBC BANK USA, NATIONAL ASSOC AS IN THE SUPERIOR COURT OF
TRUSTEE FOR THE HOLDERS OF THE PENNSYLVANIA
CERTIFICATES ISSUED BY DEUTCHE
ALT-A SECURITIES MORTGAGE LOAN
TRUST SERIES 2007-ARI
Appellee
v.
PATRICK CARNEY
Appellant No. 877 EDA 2015
Appeal from the Judgment Entered May 5, 2015
In the Court of Common Pleas of Delaware County
Civil Division at No(s): 10-010108
BEFORE: GANTMAN, P.J., MUNDY, J., and DUBOW, J.
MEMORANDUM BY GANTMAN, P.J.: FILED APRIL 05, 2016
Appellant, Patrick Carney, appeals pro se from the judgment entered
in the Delaware County Court of Common Pleas, in favor of Appellee, HSBC
Bank, in this mortgage foreclosure action. We affirm.
In its opinion, the trial court fully and correctly sets forth the relevant
facts and procedural history of this case. We add Appellant timely filed post-
trial motions pro se on March 6, 2015, which the court denied on March 11,
2015. Appellant filed a pro se notice of appeal on March 23, 2015.1 The
____________________________________________
1
Ordinarily, an appeal properly lies from the entry of judgment, not from
the order denying post-trial motions. See generally Johnston the Florist,
(Footnote Continued Next Page)
J-A03034-16
court ordered Appellant on March 25, 2015, to file a concise statement of
errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Appellant
timely filed his Rule 1925(b) statement pro se on April 13, 2015. On May 5,
2015, the court entered judgment in favor of Appellee. Thereafter, on
August 3, 2015, this Court quashed Appellant’s separate appeal at docket
No. 838 EDA 2015 without prejudice to Appellant to raise any issues
pertaining to the foreclosure action within the context of the current appeal
at docket No. 877 EDA 2015.
Appellant raises the following issues for our review:
DID THE [TRIAL] COURT COMMIT AN ERROR OF LAW AND
ABUSE ITS DISCRETION WHEN IT DID NOT CONSIDER
THE CUMULATIVE EFFECT OF THE NUMEROUS
INTENTIONAL DECEITS AND MISREPRESENTATIONS OF
[APPELLEE] AND ITS VARIOUS COUNSELS, THEREBY
DEPRIVING THE [TRIAL] COURT OF JURISDICTION TO
HEAR THE MATTER WHEN APPELLEE DID NOT HAVE
STANDING TO INVOKE THE COURT’S JURISDICTION AND
DEPRIVE APPELLANT OF HIS PROPERTY RIGHTS?
_______________________
(Footnote Continued)
Inc. v. TEDCO Constr. Corp., 657 A.2d 511, 516 (Pa.Super. 1995) (en
banc). Nevertheless, a final judgment entered during pendency of an appeal
is sufficient to perfect appellate jurisdiction. Drum v. Shaull Equipment
and Supply, Co., 787 A.2d 1050 (Pa.Super. 2001), appeal denied, 569 Pa.
693, 803 A.2d 735 (2002). Here, Appellant filed a pro se notice of appeal
prematurely on March 23, 2015, prior to the entry of judgment. The court
entered final judgment on May 5, 2015. Thus, Appellant’s notice of appeal
relates forward to May 5, 2015, the date judgment was entered. See
Pa.R.A.P. 905(a) (stating notice of appeal filed after court’s determination
but before entry of appealable order shall be treated as filed after such entry
and on day of entry). Hence, there are no procedural/jurisdictional
impediments to our review.
-2-
J-A03034-16
DID THE [TRIAL] COURT MAKE AN ERROR IN FACT
AND AN ERROR OF LAW IN FAILING TO UPHOLD
PA.R.C.P. 2002 BY IGNORING GOVERNMENT-
CERTIFIED AND AUTHENTICATED EVIDENCE, THAT
THE TRIAL COURT ADMITTED, WHICH CLEARLY
ESTABLISHES APPELLEE LACKED STANDING AND
WAS THEREFORE NOT A REAL PARTY IN INTEREST?
DID THE [TRIAL] COURT MAKE AN ERROR IN FACT
AND AN ERROR IN LAW WHEN [MS. ROMANO]
ROBO-SIGNED APPELLANT’S ASSIGNMENT OF
MORTGAGE?
DID THE [TRIAL] COURT ABUSE ITS DISCRETION
AND SHOW BIAS IN FAVOR OF APPELLEE, THEREBY
DEPRIVING APPELLANT HIS RIGHT OF DUE PROCESS
TO A FAIR AND EQUITABLE TRIAL?
(Appellant’s Brief at 3-4).
As a preliminary matter, we note Appellant proceeds in this appeal pro
se. While this Court is willing to construe liberally materials filed by a pro se
litigant, pro se status generally confers no special benefit upon an appellant.
Strawn v. Strawn, 664 A.2d 129 (Pa.Super. 1995). See also Cole v.
Czegan, 722 A.2d 686, 687 (Pa.Super. 1998) (stating pro se status does
not entitle appellant to any particular advantage because appellant lacks
legal training). “[A]ppellant has a duty to file a comprehensible brief and to
raise and develop properly his appellate issues.” Cole, supra. Accordingly,
a pro se litigant must comply with the procedural rules set forth in the
Pennsylvania Rules of Court. Jones v. Rudenstein, 585 A.2d 520(Pa.Super. 1991), appeal denied, 529 Pa. 634, 600 A.2d 954 (1991). This
Court may quash or dismiss an appeal if an appellant fails to conform
-3-
J-A03034-16
substantially to the requirements set forth in the Pennsylvania Rules of
Appellate Procedure. Pa.R.A.P. 2101; Laird v. Ely & Bernard, 528 A.2d
1379 (Pa.Super. 1987), appeal denied, 520 Pa. 576, 549 A.2d 136 (1988).
Instantly, Appellant’s brief complies in form with most of the pertinent
rules of Pennsylvania’s appellate procedure. Nevertheless, Appellant’s brief
fails to provide us with an adequate argument section, pursuant to the
applicable rules, which require the argument section to contain a discussion
of Appellant’s contentions on appeal plus legal arguments and citations
supporting those contentions. See Pa.R.A.P. 2119(a). Here, Appellant’s
fourth issue challenges the trial court’s bias, but contains no citations to
authority. See Dalrymple v. Kilishek, 920 A.2d 1275 (Pa.Super. 2007)
(stating failure to support argument with pertinent authority results in
waiver on appeal). Instead, this issue consists of a string of contentions and
references to Appellant’s version of the facts. Thus, Appellant’s fourth issue
is waived. See id.After a thorough review of the record, the briefs of the parties, the
applicable law, and the well-reasoned opinion of the Honorable G. Michael
Green, we conclude Appellant’s remaining issues merit no relief. The trial
court’s opinion comprehensively discusses and properly disposes of these
questions presented. (See Trial Court Opinion, filed May 8, 2015, at 9-15)
(finding: (1)-(3) as security for Note, Appellant executed Mortgage in favor
of Mortgage Electronic Registration Systems, Inc. (“MERS”), acting solely as
-4-
J-A03034-16
nominee for American Brokers Conduit (“ABC”), and its successors and
assigns; Mortgage specifically lists MERS as mortgagee and nominee for
Lender, ABC; thus, MERS may execute Mortgage as nominee for Lender,
ABC; MERS granted signing authority to Ms. Romano, MERS’ certifying
officer, to execute Assignment of Mortgage (“AOM”); therefore, MERS acted
within its specific authority to execute AOM to Appellee, and Ms. Romano
had express authority to execute AOM with Recorder of Deeds; Appellant is
not third-party beneficiary of AOM, he is not party to AOM, and he did not
sign AOM; thus, Appellant lacks standing to challenge validity of transfer and
assignment of Note and Mortgage to Appellee; Appellee is owner and holder
of Mortgage and Note; Appellant’s failure to make monthly payments
constituted default under Mortgage and Note; Appellee issued proper pre-
foreclosure notifications, and Appellant failed to cure default; Note was
endorsed by Lender, ABC, and made payable in blank; Appellee holds and
possesses original Note, which it produced at trial). The record supports the
trial court’s decision; therefore, we have no reason to disturb it.
Accordingly, we affirm on the basis of the trial court’s opinion.
Judgment affirmed.
-5-
J-A03034-16
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/5/2016
-6-
Circulated 03/22/2016 10:47 AM
IN THE COURT OF COMMON PLEAS OF DELAWARE COUNTY,
PENNSYLVANIA
CIVIL ACTION-LAW
HSBC BANK, USA, NATIONAL NO. 2010-010108
ASSOCIATION, AS TRUSTEE FOR
THE HOLDERS OF THE
CERTIFICATES ISSUED BY
DEUTSCHE ALT-A SECURITIES
MORTGAGE LOAN TRUST SERIES
2007-ARl
v.
PATRICK T. CARNEY
Elizabeth Gallard, Esquire
Patrick T. Carney,pro se
OPINION
GREEN, J. FILED: M~y s, Jo\5_
Appellant, Patrick T. Carney, filed the instant appeal following a (Y)C\rv\.\ 1\, 2015
Order denying a Motion to Vacate Judgment Based on Judicial Bias and Judge's Lack
of Knowledge and Lack of Understanding of the Securitization Process.1 Appellant's
Concise Statement of Errors Complained of on Appeal was filed on April 13, 2015.2
Therein, Appellant neglects to specifically enumerate the errors complained of on
1
Said Motion was considered as a Motion for Post-Trial Relief pursuant to Pa. R.C.P. 227.1.
2
The companion case of HSBC Bank, USA, National Association, as Trustee for the Holders of the
Certificates Issued by Deutsche Alt-A Securities Mortgage Loan Trust Series 2007-ARl v. Patrick
T. Carney, 2010-008543 was tried in conjunction with the instant matter.
appeal over the course of his sixteen (16) page statement. Nevertheless, Appellant
raises the following issues for appellate review:
1. HSBC Bank, USA, National Association, as Trustee for the Holders of the
Certificates Issued by Deutsche Alt-A Securities Mortgage Loan Trust Series
2007-ARl (hereinafter "HSBC" or Appellee) is not a real party in interest as "it
did not have standing to bring this wrongful foreclosure action" and "that no
securitization has been proven to have ever taken place";
2. Both the Mortgage and the Note are void ab initio;
3. The Trial Court failed to find that American Brokers Conduit was a legal
corporation or that it was properly licensed to operate as a licensed lender;
4. The blank indorsement found in the Note is ineffective;
5. Plaintiff failed to produce evidence that it is the owner of the Note or that it
is a holder in due course;
6. "The manufactured assignment of mortgage ... is a fabricated document
that had no authority to assign ownership interest of said mortgage because
Mortgage Electronic Registration Systems, Inc. (:MERS-as nominee for ABC-
assignor) was not the owner of the subject mortgage and was only the nominee for
ABC, an alleged New York Corporation, which was a non-existent Corporation.
IvIERS, never has written instruction, nor written authorization to transfer the
Mortgage or the Note.";
7. The assignment of the Mortgage is void ab initio;
8. The assignment of the Mortgage is a "fabricated document" and MERs
lacked the authorization to transfer either the Mortgage or the Note;
9. Appellee should not have been permitted to file non-party verifications;
10. The Trial Court "showed bias in protecting and shielding witnesses from
Defendant's examination in violation of his federal civil right to due process";
2
11. The Trial Court "showed bias when [the Trial Court] refused Defendant
access to the notary witness's logbook";
12. The Trial Court "showed bias and a lack of adherence to the rules of
evidence in allowing hearsay documents of a generic nature .... "
13. The Trial Court erred by "failing to find that fraud was established in a clear
and convincing manner."
On November 16, 2006, Appeliant, Patrick T. Carney, executed a thirty-year
adjustable rate promissory note (hereinafter "Note") in the principal sum of
$74,175.00 in favor of lender, American Brokers Conduit (hereinafter "ABC"). (P-1;
P-133; ,r,r 3-4, N.T. 10/27/14, p. 41). The last page of the Note contains an undated
indorsement signed by Ryan Criscione, as Assistant Secretary of American Brokers
Conduit, which states: "PAY TO THE ORDER OF __ WITHOUT RECOURSE".
(P-1). ABC indorsed the Note and made it payable in blank, without recourse. (P-1).
Appellant, HSBC Bank, USA, National Association, as Trustee for the Holders of
the Certificates Issued by Deutsche Alt-A Securities Mortgage Loan Trust Series
2007-ARl (hereinafter "HSBC" or Appellee) is currently in possession of the Note.
(P-1).
3
HSBC served discovery, including Requests for Admission and Defendant failed and/or refused to
respond. (P-13). Given Defendant's failure to respond to the Requests for Admission, said Requests
were deemed admitted pursuant to Pa.R.C.P. 4014. (June 23, 2014 Order).
3
On November 16, 2006, Appellant executed a mortgage ("Mortgage") in favor
of Mortgage Electronic Registration Systems, Inc., ("MERS"), as mortgagee, as
nominee for ABC, the Lender, and Lender's successors and assigns, which secured
the indebtedness of the Note. l\1ERS is the identified mortgagee in the Mortgage.
(P-2; P-13; ,r,r 1-2, N.T. 10/27/14, p.38). The Property subject to the Mortgage is real
property located at 3921 Gideon Road, Brookhaven, Pennsylvania 19015
("Property"). The Mortgage was recorded in the Office of the Recorder of Deeds of
Delaware County on December 14, 2006 in Mortgage Book No. 003981, Page 1879.
(P-2).
At the time of the execution of the Note and Mortgage, Appellant was the
owner and President of Golden Mortgage Services, Inc., which did business as
Golden Mortgage Services. (P-39, N.T. 10/27/14, p. 9). Appellant through Golden
Mortgage Services selected American Brokers Conduit to serve as the Lender in the
underlying transaction. (N.T. 08/04/14, p. 25). Appellant through Golden Mortgage
Services had used American Brokers Conduit as Lender in prior real estate
transactions.4 Appellant was also the owner5 and President of Golden Abstract
Services, Inc., which did business as Golden Abstract Services. (P-39, N.T. 1027/14,
4 At trial, Mr. Camey testified that he worked with ABC "often." (N.T. 10/27/14, p. 14).
5
Based upon Mr. Camey's testimony, this Court assumes he was the sole shareholder of Golden
Abstract Services, Inc., at all times relevant to this civil action.
4
p. 10). Golden Abstract Services acted as the settlement agent for American Brokers
Conduit at the closing of the loan. (P-20, N.T. 10/27/14, pp.10-11).
Appellant's mortgage loan was fully funded. (N.T. 08/04/14, p. 25). Appellee,
HSBC, purchased the Note in January 2007. On September 1, 2009, the last
mortgage payment was tendered by Appellant. (P-13; ~ 7). Appellant did not apply
for a loan modification. (P-13; 18).
The Note provides that failure to pay the full amount of each monthly payment
on the date it is due is a default. (P-1, 1 7(B)). The Note and Mortgage provide that
upon default of such monthly payments for a period of one (1) month and upon
written notice of default which is left uncured, then the entire debt is collectible,
immediately. (P-1, 17(C); P-2, ,r 22; P-3, 1 10).
On or about June 21, 2010, counsel for HSBC sent Appellant, via certified
mail and regular mail, at both the Property's address and his last known address,
Notice of Intention to Foreclosure, and Notice of Intent to accelerate the debt, as set
forth in Act 6 of 1974, 41 P.S. §403(a) and a Notice of Homeowners' Emergency
Mortgage Assistance, pursuant to Act 91 of 1983, as amended in 1998, 35 P.S.§1680,
401(c) ("Act 6/91 Notice") due to the failure to make monthly mortgage payments.
(P-4). The Act 6/91 Notice explained to Appellant that his Mortgage was in default,
the nature of the foreclosure proceedings and how to take action to avoid foreclosure.
Appellant did not seek Act 6/91 assistance within the applicable time periods
5
provided under the Homeowners' Emergency Assistance Act with respect to the
Mortgage at issue. (P-13; 1 11). Appellant received the Act 6/91 Notice at least
thirty (30) days prior to the commencement of this foreclosure proceeding. See
Exhibit C to P-13. (P-13; 113). Despite this written notice, Appellant failed to make
any payments that were due and owing. (P-13, 118).
On or about July 30, 2010, HSBC commenced the instant mortgage
foreclosure action against the Appellant. Appellant is the mortgagor and real owner
of the Property. Select Portfolio Servicing, Inc. is the current servicer of the
mortgage loan. The total amount alleged and owing in the Complaint totaled
$93,819.62. (P-13, 116).
The Mortgage provides that the borrower pay taxes and property insurance
premiums on the Property. (P-2, ,r,r 3, 4, 5). The Mortgage also provides that the
Lender may obtain insurance coverage at Lender's option and at the borrower's
expense. (P-2, ,r,r 5, 9). Appellant did not pay taxes or homeowners insurance owed.
on the Property.' The loan servicer(s) on behalf of Plaintiff paid the taxes and
property insurance premiums on the Property totaling $13,562.42 ("escrow
advance") which are set forth in detail at Exhibit P-36. (P-36; P-2, ,r 9).6
6 The total disbursements in exhibit P-36 are shown as "escrow advance" on exhibit P-35.
6
At trial, Appellee produced the original Note, made it available for inspection,
and Appellant inspected the original Note and confirmed that he signed the original
Note. (N.T. 10/15/14, pp.224, 230-233, N.T. 10 /27/14, p.41.) Appellee's attorney
currently has possession of the original Note.
Judith Romano, Assistant Secretary and Vice President of MERS testified at
trial. Ms. Romano had authority to execute an assignment of mortgage on behalf of
MERS. (P-16). The Assignment of Mortgage dated June 15, was recorded on July 7,
2010, in the Office of the Recorder of Deeds of Delaware County in Record Book
4766, Page 2370. (P-3).
As of October 15, 2014, HSBC alleged the total amount due under the terms of
the Mortgage and Note were as follows:
Principal Balance $ 74,175.00
Interest from 8/1/2009 through 10/15/2014 $ 16,686.44
Cumulative Late Charges $ 251.16
Recoverable Balance $ 1,093.70
Escrow Advance $ 13,562.42
TOTAL $105,769.14
Pursuant to the terms of the Mortgage and Note, the total amount due is accruing
interest at the rate of $5.33 per day. (P-35).
7
At trial, Appellant was granted leave to pursue and prove a theory of fraud as a
counterclaim.7 Following trial, a review of post-trial submissions and closing
arguments, an in rem judgment was entered in favor of HSBC, and against Patrick T.
Carney, in the amount of $105,769.14 together with interest and other costs and
charges collectible under the mortgage, for foreclosure and sale of the mortgaged
property. On the counterclaim, judgment was entered in favor of HSBC, and against
Patrick T. Carney. Appellant did not through competent evidence prove concise facts
supporting a theory of a fraud and failed to prove any harm, injury, or damages he
sustained.
REAL PARTY IN INTEREST
Pennsylvania Rule of Civil Procedure 2002(a) provides that "[e]xcept as
otherwise provided . . . all actions shall be prosecuted by and in the name of the real
party in interest.... " Pa.R.C.P. 2002(a). A 'real party in interest,' as required to have
standing to maintain an action, is the person who has the power to discharge the
claim upon which suit is brought and to control the prosecution of the action brought
to enforce rights arising under the claims. See Spires v. Hanover Fire Ins. Co., 70
A.2d 828, 831 (Pa. 1950), overruled in part on other grounds by Guy v. Liederbach,
7
The decision to permit Appellant to present evidence in support of this counterclaim for fraud
occurred in a pre-trial conference that was placed on the record. (N.T., 10/15/14, pp.148-153, 2010-
008543, 2010-010108).
8
459 A.2d 744 (Pa. 1983); Collins v. Allstate Indemn. Co., 626 A.2d 1162, 1166 (Pa.
Super. 1993). Where an assignment is effective, however, the assignee stands in the
shoes of the assignor and assumes all of his rights. See Smith v. Cumberland, Ltd.,
687 A.2d 1167m 1172 (Pa. Super. 1997).
Although Appellant contends that l\t1ERS did not have the authority to assign
the Mortgage to HSBC, he provided no support for this claim. As security for the
Note and contemporaneously with the execution of the Note on November 16, 2006,
Appellant executed a mortgage ("Mortgage") in favor of Mortgage Electronic
Registration Systems, Inc. ("MERS"), acting solely as a nominee for American
Brokers Conduit and its successors and assigns. The Mortgage lists MERS as the
mortgagee under the security instrument and as nominee for the lender, American
Brokers Conduit, the mortgage further provides that:
This Security Instrument secures to Lender: (i) the repayment of the
Loan, and all renewals, extensions and modifications of the Note; and
(ii) the performance of Borrower's covenants and agreements under
this Security Instrument and the Note. For this purpose, Borrower
does hereby mortgage, grant and convey to l\t1ERS (solely as nominee
for Lender and Lender's successors and assigns) and to the successors
and assigns ofl\.1ERS, the following described property....
(P-2, page 3 of 16).
The Mortgage executed by the Appellant, specifically provides, inter alia, that
MERS was the mortgagee, as a nominee for the Lender, and Lender's successors and
assigns. (P-2 at p.1 ). As such, MERS acted within its specific authority by executing
9
the Assignment of Mortgage. rvIBRS may execute mortgage assignments as the
nominee for a lender. Mortgage Electronic Registration Systems, Inc. v. Ralich, 982
A.2d 77 (Pa. Super. 2009).
Further, rvIBRS granted signing authority to the individual who executed the
Assignment of Mortgage, Judith Romano, pursuant to an Agreement for Signing and
Corporate Resolution. (P-16). The Agreement for Signing Authority and Corporate
Resolution expressly identified Ms. Romano as a Certifying Officer and gave her
permission to execute ". . . any and all documents necessary to foreclose upon the
property securing any mortgage loan registered on the MERS System that is shown
to be registered to the Member .... " (P-16). rvIBRS had authority to execute the
Assignment of Mortgage to HSBC and Ms. Romano, as a Certifying Officer of
MERS, had express authority to execute the Assignment of Mortgage recorded with
the Recorder of Deeds. (P-2, P-16).
TIDRD PARTY BENEFICIARY
MERS, as nominee for Lender and its assigns, assigned Defendant's Mortgage
to HSBC and the Assignment of Mortgage was duly recorded with the Delaware
County Recorder of Deeds on 0u l y 7J 2010. (P-2). The recording of an
assignment of mortgage has no legal import between the parties to the assignment as
it is "not a prerequisite to [a bank] having standing to seek enforcement of the
mortgage via a mortgage foreclosure action." U.S. Bank, N.A. v. Mallory, 982 A.2d
10986, 994 (Pa. Super. 2009). A mortgage is a written instrument that both conveys
and creates a security interest in real estate. "A mortgage is in essence a defeasible
deed, requiring the grantee to re-convey the property held as a security to the grantor
upon satisfaction of the underlying debt or the fulfillment of established conditions."
Hahnemann Medical College & Hospital v. Com., 416 A.2d 604 (Pa. Commw.
1980).
A mortgage is generally accompanied by a promissory note. The note is
evidence of the debt obligation for which the mortgage is given. The mortgage and
the note, while separate instruments, secure the same debt. However, the note is a
personal obligation of the obligor (mortgagor). Judgment on the mortgage is on the
encumbered real estate, only. In Pennsylvania, the mortgage follows the note. 13
Pa.C.S. §9203(g). One who is not a party to a contract lacks standing to argue that
the contract is invalid. Shuster v. Pa. Turnpike Commonwealth. 395 Pa. 441, 149
A.2d 447, 452 (\'I 59J;'.Ira G. Steffy & Son. Inc., 7 A.3d 278, 287-88 (Pa. Super.
2010). Appellant is not a party to the Assignment of Mortgage and did not sign the
Assignment of Mortgage.
A party becomes a third party beneficiary only where both parties to the
contract express an intention to benefit the third party in the contract itself. Melley v.
Pioneer Bank, N.A., 834 A.2d 1191, 1202 (Pa. Super. 2003). Appellant is not a third
party beneficiary of the Assignment of Mortgage. Accordingly, Appellant lacks
11
standing to challenge the validity of the transfer and assignment of the Note and the
Mortgage to Plaintiff. A defendant lacks standing to challenge a transfer of the Note
unless the defendant demonstrates potential injury from the enforcement of the Note
and the Mortgage by a party acting under an alleged defective assignment. J.P.
Morgan Chase Bank v. Murray. 63 A.3d 1~1.iv, 1a1,1o (Pa: Super. 2013). Appellant has no
interest in the Assignment of Mortgage. He is also not at risk for a "potential injury"
as he is not at risk of paying the same claim twice; there is only one party, HSBC,
who is seeking enforcement of the Note and Mortgage.
Mortgage Foreclosure
HSBC, is the owner and holder of the Mortgage and Note. Appellant is the
owner of the property 3921 Gideon Road, Brookhaven, Pennsylvania 19015-1220
secured by the Mortgage. Appellant's failure to make monthly payments is a default
under the Mortgage and Note. This Court also found that HSBC issued the proper
pre-foreclosure notifications and Appellant failed to cure the default.
The Note at issue is a negotiable instrument governed by Pennsylvania's
Uniform Commercial Code. Section 3104 of the PUCC offers, in relevant part, the
following definition of a negotiable instrument:
Except as provided in subsections ( c) and (d), "negotiable instrument"
means an unconditional promise or order to pay a fixed amount of
money, with or without interest or other charges described in the
promise or order, if it:
12
(1) is payable to bearer or to order at the time it is issued or first
comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the
payment of money, but the promise or order may contain:
(i) an undertaking or power to give, maintain or protect
collateral to secure payment;
(ii) an authorization or power to the holder to confess
judgment or realize on or dispose of collateral; or
(iii) a waiver of the benefit of any law intended for the
advantage or protection of an obligor.
13 Pa.C.S. § · 3\ ot..{ (o..')
The Note at issue meets all of these qualifications. A holder in due course of a
negotiable instrument is defined as the holder of an instrument if "the instrument
when issued or negotiated to the holder does not bear such apparent evidence of
forgery or alteration or is not otherwise so irregular or incomplete as to call into
question its authenticity;" and the holder took the instrument for value and in good
faith. Id. § 3302. The PUCC defines a blank indorsement as follows: "If an
indorsement is made by the holder of an instrument and it is not a special
indorsement, it is a 'blank indorsement.' When indorsed in blank, an instrument
becomes payable to bearer and may be negotiated by transfer of possession alone
13
until specially indorsed." Id.§ 3205(b). A note is payable to bearer if it (1) states that
it is payable to bearer or to the order of bearer or otherwise indicates that the person
in possession of the promise or order is entitled to payment; (2) does not state a
payee; or (3) states that it is payable to or to the order of cash or otherwise indicates
that it is not payable to an identified person. JP Morgan Chase Bank, N.A. v. Murray,
63 A.3d 1258, 1265-66 (Pa. Super. 2013).
When a negotiable instrument, such as the subject Note, is transferred from one
party to another, the transfer of the instrument "vests in the transferee such rights as
the transferor has therein." 13 Pa. C.S. § 3~0!J(b). When indorsed in blank, "an
instrument becomes payable to bearer and may be negotiated by transfer of
possession alone until specially indorsed." 13 Pa.C.S. § 3205(b). "A note indorsed in
blank is a 'bearer note', payable to anyone on demand regardless of who previously
held the note" pursuant to 13 Pa.C.S. §3109(a), 3301. Bank of Am., N.A. v. Gibson,
102 A.3d 462, 466 (Pa. Super. 2014).
The Note was indorsed by the lender, American Brokers Conduit and made
payable in blank, without recourse making it bearer paper. 13 Pa.C.S. §3109(a).
HSBC holds and possesses the original Note and produced the original Note at trial.
In light of Appellant's default for failure to make monthly payments and the failure
to cure the default, an in rem judgment was entered in favor of HSBC, and against
Appellant in the amount of $105,769.14, together with interest and other costs and
14
charges collectible under the mortgage, for foreclosure and sale of the mortgaged
property.
Fraud
A prima facie case of fraud requires a party to establish: (1) a representation;
(2) that is material; (3) that is made with knowledge or reckless indifference of its
falsity; (4) with intent to mislead another; (5) justifiable reliance; and (6) injury.
Blumenstock v. Gibson, 811 A.2d 1029, 1034 (Pa. Super. 2002). The elements of
fraud must be proven by clear and convincing evidence. Pittsburgh Live, Inc. v.
Servov, 615 A.2d 438, 441 (Pa. Super. 1992). Appellant did not through competent
evidence prove concise facts supporting a theory of a fraud perpetrated upon him,
and failed to prove any harm, injury, or damages he purportedly sustained.
For the aforementioned reasons, the trial court respectfully requests that its
decision be AFFIRMED.
BY THE COURT:
I',:)
~~
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