The opinion
J-A34013-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BANK OF AMERICA, N.A. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
PAUL S. GALANTI AND GRACE D.
GALANTI A/K/A GRACE P. GALANTI
APPEAL OF: GRACE D. GALANTI No. 1021 MDA 2015
Appeal from the Order June 1, 2015
In the Court of Common Pleas of Berks County
Civil Division at No(s): 13-2571
BEFORE: PANELLA, J., OTT, J., and JENKINS, J.
MEMORANDUM BY PANELLA, J. FILED MARCH 01, 2016
Appellant, Grace D. Galanti, appeals from the order entered June 1,
2015, in the Court of Common Pleas of Berks County, which granted
summary judgment in favor of Appellee, Bank of America, N.A (“the Bank”).
No relief is due.
We take the facts of this matter from the trial court’s Rule 1925(a)
opinion filed July 27, 2015.
On September 10, 2004, Julie Chapman, agent under
power of attorney for Paul [S. Galanti (“Mr. Galanti”)], executed
a note for $333,700.00. Also on September 10, 2004, Ms.
Chapman, as agent for [Mr. Galanti] and also as agent for [the
Appellant], executed a purchase money Mortgage on the
property at 3197 West Philadelphia Avenue, Oley, PA 19547.
The Mortgage is recorded in the Office of the Recorder of Deeds
in Book 4156, Page 466. A copy of [the] Power of Attorney to
Buy/Mortgage, executed on August 30, 2004, is recorded in the
Office of the Recorder of Deeds at Volume 4156, Page 459 and is
attached as an exhibit to several of Bank’s filings in this action.
J-A34013-15
The February 25, 2013 Complaint alleged that [Appellant
and Mr. Galanti] defaulted under the Mortgage for failing to
make payments due December 1, 2010 and each month
thereafter. The complaint also set forth the amount due on the
mortgage with a breakdown for principal balance, interest, late
charges, property inspections, title costs, and escrow deficits.
Although Act 6 does not apply to this action due to the mortgage
amount[] exceeding the dollar amount set in the statute, the
[Bank] alleged service of the Act 6 and Act 91 notices. The
Complaint was served on the [Appellant and Mr. Galanti] on
February 28, 2013.
On March 20, 2013, [Mr. Galanti] filed Preliminary
Objections arguing that the doctrine of “in custodial legis”
warranted dismissal of the Complaint because of the [couple’s]
impending divorce action. On April 9, 2013, [the] Bank filed an
answer citing case law that a matrimonial court has no authority
to interfere with a mortgage foreclosure action and that the
divorce proceedings did not bar the foreclosure action. After
argument on May 30, 2013, the [c]ourt stayed this action and
scheduled a hearing for October 21, 2013 for determination of
whether the stay should be lifted despite pendency of the
equitable distribution matter. Following this hearing, the [c]ourt
ordered that the stay remain in place until January 6, 2014. As
of January 6, 2014, the stay was lifted, and [the] Bank was
authorized to proceed with the foreclosure action, effectively
dismissing [Mr. Galanti’s] preliminary objection because
equitable distribution in the divorce was still pending.
On January 14, 2014, [Appellant] filed an Answer and New
Matter containing affirmative defenses to the Complaint.
[Appellant] alleged that [Mr. Galanti’s] “attorney-in-fact” signed
the Note on his behalf alone. She further averred that this agent
also signed the Mortgage as her agent “—a claim that has no
basis within the record and cannot be sustained, Bank of
America, N.A. cannot produce any document evidencing
[Appellant’s] assent to either the mortgage or note, or to anyone
serving as her ‘attorney-in-fact’ or ‘agent.’” Answer, paragraph
3. [Appellant] averred the mortgage was invalid and therefore
could not be in default. She also listed a series of legal doctrines
and conclusions of law, without factual support, as affirmative
defenses.
Contemporaneously with the Answer, [Appellant] also filed
a Motion for Judgment on the Pleadings. [Appellant] again
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J-A34013-15
argued that the Note was executed by [Mr. Galanti’s] agent on
his behalf alone and that the Bank “cannot produce any
document evidencing [her] assent to either the mortgage or
note, or to anyone serving as her ‘attorney-in-fact’ or ‘agent’
who would have been authorized to assent on her behalf.”
Motion, paragraph 6. The Motion again listed unsupported
conclusions of law as affirmative defenses to the action.
Argument on the Motion was scheduled for March 19, 2014.
On February 24, 2014, [the] Bank filed its Response to
[Appellant’s] Motion for Judgment on the Pleadings. [The] Bank
argued that the pleadings were not yet closed because it was not
served with [Appellant’s] Answer Containing New Matter and
Affirmative Defenses and it intended to file a reply thereto.
[The] Bank also responded that [Appellant] had executed a
power of attorney in the State of Washington, which is recorded
in the Office of the Recorder of Deeds and designates Julie
Chapman as her agent to purchase, mortgage, or otherwise
acquire real property. A copy of the power of attorney was
attached to the Response.
On March 4, 2014, [the] Bank filed its Reply to New Matter
and Affirmative Defenses. [The] Bank noted the Mortgage is
recorded in the Office of the Recorder of Deeds, as is
[Appellant’s] Power of Attorney to Buy/Mortgage, copies of which
were attached to the Reply. The Reply further averred the Note
is not relevant to this cause of action because [the] Bank is
pursuing only an in rem action against the property, and not
suing [Appellant and Mr. Galanti] personally for a money
judgment. [The] Bank also denied the affirmative defenses as
conclusions of law and further responded that its Complaint fully
complies with the requirements for a foreclosure complaint as
set forth in Pa.R.C.P. 1147.
On March 19, 2014, the [c]ourt denied [Appellant’s]
Motion for Judgment on the Pleadings. On December 8, 2014, a
default judgment was entered against [Mr. Galanti].
On February 26, 2015, [the] Bank filed its Motion for
Summary Judgment against [Appellant], supporting brief, and
certificate of service. [The] Bank alleged that no material issues
of fact were in dispute and that [Appellant], in her answer to the
Complaint, effectively admitted all of the allegations in the
Complaint. [The] Bank urged that [Appellant’s] New Matter
consisted of conclusions of law unsupported by facts. [The] Bank
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J-A34013-15
argued that the law requires the non-moving party to set forth
specific facts demonstrating a genuine issue for trial in order to
survive summary judgment, and [Appellant] had not done so.
[Appellant] filed her Answer in Opposition to Motion for
Summary Judgment on March 26, 2015. She averred that [the]
Bank had not complied with all requirements to proceed to
foreclosure, that she was entitled to rescission, that [the] Bank
is estopped or barred by laches from proceeding, and that [the]
Bank discharged further obligation under the Mortgage. She
continued to argue that [the] Bank could not produce anything
evidencing her assent to the Mortgage, causing the Mortgage to
be invalid and therefore incapable of being in default. She
argued the Note was not due and payable in full until October 1,
2034. She argued that [the] Bank should have pursued [Mr.
Galanti] for any default under the Note, especially since he was
negotiating the release and acquisition of other loans and looting
the marital estate. [Appellant] further averred that [the] Bank
would not communicate with her because she was not party to
the Note, and she had no idea what [Mr. Galanti] paid against
the loan. Absent from her argument was any allegation that she
attempted to any discovery or otherwise attempted to compel
communication and information sharing.
[Appellant] attached an Affidavit to her Answer to
Summary Judgment. She stated that she did not sign the Note
or Mortgage and that she relied on [Mr. Galanti] to honor his
obligations under the Note. She averred attempts to
communicate with [the] Bank, who refused to discuss the
Mortgage or any assistance to which she might have been
entitled … because she was not on the Note. She averred that
[Mr. Galanti] was enjoying the benefits of other loans and
business dealings, which [the] Bank could and should have
attached. She also averred that $50,000 of the initial purchase
monies for the property came from her father.
The first ten pages of [Appellant’s] brief in opposition to
summary judgment portrayed a story about the [couple’s]
relationship and [Mr. Galanti’s] business dealings and divorce
planning. She argued that all prerequisites for foreclosure have
not been met and that notices were set only to [Mr. Galanti].
She believed that [Mr. Galanti’s] business loans, income, and
valuations had an impact on [the] Banks’ rights and duties with
respect to the Note and Mortgage. She argued that she
justifiably relied on [the] Bank to hold [Mr. Galanti] to his
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J-A34013-15
obligations under the Note and because [the] Bank did not
properly pursue [Mr. Galanti] for his failure to meet his
obligations, [the] Bank is barred by estoppel and laches from
foreclosing on her surety interest. She further argued that [the]
Bank’s inaction de facto nullified the Note and discharged the
Mortgage. Finally, she argued that summary judgment would be
inappropriate while the equitable distribution issue of the parties’
divorce remained pending.
On May 6, 2015, [the] Bank filed a praecipe for argument
with a requested argument date of June 1, 2015.
On May 11, 2015, [Appellant] filed a supplemental brief in
opposition to summary judgment. In addition to previous
arguments, [Appellant] believed that a recent Third Circuit
opinion, Kaymark v. Bank of America, N.A.; Udren Law
Offices, P.C., 783 F.3d 168 (3d Cir., April 7, 2015), was
applicable and relevant. She argued that fair debt collection laws
required dismissal of the Complaint because fees not yet earned
and costs not yet or improperly incurred were requested in the
Complaint….
On May 28, 2015, [the] Bank filed its Supplemental Brief
in Support of its Motion. [The] Bank argued that the [couple’s]
divorce is not a defense to foreclosure, and [Appellant] is not
entitled to rescission. [The] Bank further argued that the Note is
not relevant to an in rem foreclosure action and that Kaymark
did not apply because [the] Bank did not seek to recover any
unearned fees.
After argument on June 1, 2015, the [c]ourt entered an
order granting summary judgment. On June 9, 2015, [Appellant]
filed a Notice of Appeal. After being ordered to do so, [Appellant]
filed a Concise Statement of Matters Complained of on Appeal….
Trial Court Opinion, 7/27/15 at 1-6.
Appellant raises the following issues for our review.
A. Did Appellant present evidence that BOA had an affirmative
duty to pursue Mr. Galanti to pay his debt?
B. Did Appellant present evidence that BOA’s inexcusable delay
in pursuing remedy under the Note renders Laches
applicable?
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J-A34013-15
C. Is Appellant a “mere surity” [sic] and, thus, entitled to
Rescission?
D. Did Appellant “affirmatively set forth specific facts that
demonstrate that [BOA] has listed in its Complaint fees or
costs that it has not earned or accrued.”
Appellant’s Brief at 3.
We review a challenge to the entry of summary judgment as follows.
[We] may disturb the order of the trial court only where it is
established that the court committed an error of law or abused
its discretion. As with all questions of law, our review is plenary.
In evaluating the trial court’s decision to enter summary
judgment, we focus on the legal standard articulated in the
summary judgment rule. See Pa.R.C.P., Rule 1035.2. The rule
states that where there is no genuine issue of material fact and
the moving party is entitled to relief as a matter of law,
summary judgment may be entered. Where the nonmoving
party bears the burden of proof on an issue, he may not merely
rely on his pleadings or answers in order to survive summary
judgment. Failure of a non-moving party to adduce sufficient
evidence on an issue essential to his case and on which he bears
the burden of proof establishes the entitlement of the moving
party to judgment as a matter of law. Lastly, we will review the
record in the light most favorable to the nonmoving party, and
all doubts as to the existence of a genuine issue of material fact
must be resolved against the moving party.
E.R. Linde Const. Corp. v. Goodwin, 68 A.3d 346, 349 (Pa. Super. 2013)
(citation omitted).
In actions for in rem foreclosure due to the defendant’s failure to pay a
debt, summary judgment is proper where the defendant admits that he had
failed to make payments due and fails to sustain a cognizable defense to the
plaintiff’s claim. See Gateway Towers Condo. Ass’n v. Krohn, 845 A.2d
855, 858 (Pa. Super. 2004); First Wis. Trust. Co. v. Strausser, 653 A.2d
688, 694 (Pa. Super. 1995).
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J-A34013-15
We have reviewed Appellant’s issues raised on appeal, along with the
briefs of the parties, the certified record, and the applicable law. Having
determined that the Honorable Linda K.M. Ludgate’s July 27, 2015 opinion
ably and comprehensively disposes of the issues raised on appeal, with
appropriate reference to the record and without legal error, we will affirm on
the basis of that opinion. See Trial Court Opinion, 7/27/15 at 6-14 (finding,
inter alia: 1) Appellant failed to cite a provision of the Mortgage or the Note,
or any other communication by the Bank, in support of her claim that the
Bank was obliged to pursue Mr. Galanti personally to pay his debt and not
exercise its rights under the Mortgage; 2) Appellant’s failure to allege
inexcusable delay was fatal to a laches defense; 3) Appellant did not have
the right to rescind the Mortgage more than eight years after the execution
of the Mortgage and after the filing of the Complaint; and 4) the Third
Circuit’s decision in Kaymark was inapplicable to the instant mortgage
foreclosure case.1
____________________________________________
1
In Kaymark, the mortgagor initiated a class action against the mortgagee
and the law firm that initiated the foreclosure proceedings. The Mortgagor
alleged that the foreclosure Complaint listed certain not-yet-incurred fees as
due and owing in violation of, inter alia, the Fair Debt Collection Practices Act
(FDCPA) and the Pennsylvania Fair Credit Extension Uniformity Act (FCEUA).
Kaymark, 783 F.3d at 171-172. Appellant’s reliance upon the Kaymark
decision is entirely misplaced, as that decision provides no defense to a
mortgage foreclosure action. We additionally note, as does the trial court,
that Appellant fails to allege with any particularity which fees listed in the
foreclosure complaint she is contesting.
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J-A34013-15
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/1/2016
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Circulated 02/10/2016 09:49 AM
BANK OF AlvIERICA, N.A., : IN THE COURT OF COlWlVION PLEAS
Plaintiff BERKS COUNTY, PENNSYLVANIA
CIVIL ACTION
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OPINION LUDGATE, S.J. Dated: .Julv27, 2015
On February 25, 2013, Bank of America, N.A. (hereinafter "Bank") filed a Complaint in
Mortgage Foreclosure against Defendants, Paul and Grace Galanti. Judgment by default was
entered against Defendant Paul Galanti (hereinafter "Paul"). Following entry of summary
judgment against Defendant Grace Galanti (hereinafter "Grace"), she filed an appeal.' This
Opinion is written in support of the Court> sentry of summary judgment
FACTUAL A.ND PROCEDURAL HISTORY
On September 10, 2004, Julie Chapman, agent under power of attorney for Paul,
executed a Note for $333,700.00. Also on September 10, 2004, Ms. Chapman, as agent for Paul
and also as agent for Grace, executed a purchase money Mortgage on the property at 3197 West
Philadelphia Avenue, Oley, PA 19547 to secure the Note. The Mortgage is recorded in the
Office of the Recorder of Deeds in Book 4156~ Page 466. A copyof Grace's Power of Attorney
to Buy/Mortgage, executed on August 30, 2004, is recorded in the Office of the Recorder of
Deeds at Volume 4156, Page 459 and is attached as an exhibit to several of Bank' s filings in this
action.
The February 25, 2013 Complaint alleged that Defendants defaulted under the Mortgage
by failing to make payments due December l 1 2010 and each month thereafter. The Complaint
alsoset forth the amount due on the mortgage with a breakdown for principal balance, interest,
late charges, property inspections, title costs, and escrow deficits. Although Act 6 does not apply
to this action due to the mortgage amount's exceeding the dollar amount set in the statute, the
Plaintiff alleged service of the Act 6 and Act 91 notices. The Complaint was served on the
Defendants on February 28, 2013.
On March 20, 2013, Paul filed Preliminary Objections arguing that the doctrine of "in
custodial legis" warranted dismissal of the Complaint because of the Defendants' pending
divorce action. On April 9, 2013, 'Plaintiff filed an answer citing case law that a matrimonial
court has no authority to interfere with a mortgage foreclosure action and that the divorce
proceedings did not bar the foreclosure action. After argument on May 30, 2013, the Court
stayed this action and scheduled a hearing for October 21, 2013 for determination of whether the
stay should be lifted despite pendency of the equitable distribution matter. Following this
hearing, the Court ordered that the stay remain in place until January 6, 2014. As of January 6,
2014, the stay was lifted, and Bank was authorized to proceed with the foreclosure action,
effectively dismissing Paul's preliminary objection because equitable distribution in the divorce
was still pending.
On January 14, 2014, Grace filed an Answer and New Matter containing affirmative
defenses to the Complaint. Grace alleged that Paul's "attorney-in-fact" signed the Note on his
behalf alone. She further averred that this agent also signed the Mortgage as her agent "._ a claim
that has no basis within the record and cannot be sustained, Bank of America, N.A. cannot
2
produce any document evidencing Grace Galanti 's assent to either the mortgage or note, or to
anyone serving as her 'attorney-in-fact' or 'agent.?' Answer, paragraph 3. Grace averred the
mortgage was invalid and therefore could not be in default. She also listed a series of legal
doctrines and conclusions of law, without factual support, as affirmative defenses.
Contemporaneously with the Answer, Grace also filed a Motion for Judgment on the
Pleadings. Grace again argued that the Note was executed by Paul's agent on his behalf alone
and that the Bank "cannot produce any document evidencing [her] assent to either the mortgage
or note; or to anyone serving as her ' attorney-in-fact' or 'agent' who would have been authorized
to assent on her behalf." Motion, paragraph 6. The Motion again listed unsupported conclusions
of law as affirmative defenses to the action. Argument on the Motion was scheduled for March
19, 2014.
On February 24, 2014, Bank filed its Response to Grace's Motion for Judgment on the
Pleadings. Ba11k argued that the pleadings were not yet closed because it was not served with
Grace's Answer Containing New Matter and Affirmative Defenses and it intended to file a reply
thereto. Bank also responded that Grace executed a power of attorney in the State of
Washington, which is recorded in the Office of the Recorder of Deeds and designates Julie
Chapman as her agent to purchase, mortgage, or otherwise acquire real property. A copy of the
power of attorney was attached to the Response.
On March 4, 2014, Bank filed its Reply to New Marter arid Affirmative Defenses . Bank
noted the Mortgage is recorded in the Office of the Recorder of Deeds, as is Grace's Power of
Attorney to Buy/Mortgage, copies of which were attached to the Reply. The Reply further
averred the Note is not relevant to this action because Bank is pursing only an in rem action
against the property and not suing the Defendants personally for a money judgment. Bank also
3
denied the affirmative defenses as conclusions of law and further responded that its Complaint
fully complies with the requirements for a foreclosure complaint as set forth in Pa.R.C.P. 1147.
On March 19, 2014, the Court denied Grace's Motion for Judgment on the Pleadings.
On December 8, 2014, a default judgment was entered against Paul.
On February 26, 2015, Bank filed its Motion for Summary Judgment against Grace,
supporting brief, and certificate of service. Bank alleged that no material issues of fact were in
dispute and that Grace, in her answer to the Complaint, effectively admitted all of the allegations.
in the Complaint. Bank argued that Grace's New Matter consisted of conclusions of law
unsupported by facts. Bank argued that the law requires the non-moving party to set forth
specific facts demonstrating a genuine issue for trial in order to survive summary judgment, and
Grace had not done so.
Grace filed her Answer in Opposition to Motion for Summary Judgment on March 26,
2015. She averred that Bank had not complied with all requirements to proceed to foreclosure,
that she was entitled to rescission, that Bank is estopped or barred by laches from proceeding,
and that Bank discharged further obligation under the Mortgage. She continued to argue that
l~ank could not produce anything evidencing her assent to the Mortgage, causing the Mortgage
to be invalid and therefore incapable of being in default. She argued the Note was not due and
payable in full until October 1, 2034. She argued that Bank should have pursued Paul for any
default under the Note, especially since he was negotiating the release and acquisition of other
loans and looting the marital estate. Grace further averred that Bank would not communicate
with her because she was not party to the Note, and she had no idea what Paul paid against the
loan. Absent from her argument was any allegation that she attempted any discovery or
otherwise attempted to compel communication and information sharing.
4
Grace attached an Affidavit to her Answer to Summary Judgment. She stated that she did
not sign the Note or Mortgage and that she relied on Paul to honor his obligations under the
Note. She averred attempts to communicate with Bank, who refused to discuss the Mortgage or
any assistance to which she might have been entitled with her because she was not on the Note.
She averred that Paul was enjoying the benefits of other loans and business dealings) which Bank
could and should have attached. She also averred that $50,000 of the initial purchase monies for
the property came from her father.
The first ten pages of Grace's brief in opposition to summary judgment portrayed a story
about the Defendants) relationship and Paul's business dealings and divorce planning. She
argued that all prerequisites for foreclosure have not been met and that notices were sent only to
Paul. She believed Bank did not properly service the mortgage. She argued that she is entitled
to rescission. She believed that Paul's business loans, income, and valuations had an impact on
Bank's rights and duties with respect to the Note and Mortgage. She argued that she justifiably
relied on Bank to hold Paul to his obligations under the Note and because Bank did not properly
pursue Paul for his failure to meet his obligations, Bank is barred by estoppel and laches from
foreclosing on her surety interest. She further argued that the Bank' s.inaction de facto nullified
the Note and discharged the Mortgage. Finally, she argued that summary judgment would be
inappropriate while the equitable distribution issue of the parties' divorce remained pending.
On May 6, 2015, Bank filed a praecipe for argument with a requested argument date of
June 1, 2015.
On May 11, 2015, Grace filed a supplemental brief in opposition to summary judgment.
In addition to previous arguments, Grace believed that a recent Third Circuit opinion, Kaymark
v. Bank of America, N.A.; Udren Law Offices, P.C., 783 F.3d 168 (3rd Cir., April 7, 2015),
5
was applicable and relevant. She argued that fair debt collection laws required the dismissal of
the Complaint because fees not yet earned and costs not yet or improperly incurred were
requested in the Complaint. She argued that because the Bank has not done equity, it cannot ask
for equity.
O.n May 28, 2015, Bank filed its Supplemental Brief in Support of its Motion. Bank
argued that the Defendants' divorce is not a defense to foreclosure, and Grace is not entitled to
rescission. Bank further argued that the Note is not relevant to an in remforeclosure action and
that Kaymark does not apply because Bank did not seek to recover any unearned fees.
After argument on June 1, 2015, the Court entered an order granting summary judgment.
On June 9, 2015, Grace filed a Notice of Appeal. After being ordered to do so, Grace filed a
Concise Statement of Matters Complained of on Appeal, wherein she argues that the Court
"ignored, failed to address, or consider binding precedent" or her New Matter and Affirmative
Defenses, which are repeated in the Concise Statement.
LEGAL ANALYSIS
Summary judgment serves the purpose of promoting judicial economy by
eliminating cases prior to trial if a party cannot make out a claim or defense. See Miller v.
Sacred Heart Hosp., 753 A.2d 829 (Pa.Super. 2000). Summary judgment is appropriate when
the record shows there is no genuine issue as to any material fact and the moving party is entitled
to judgment as a matter of law. Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa.Super. 2013)
( citation omitted). The moving party bears the burden of clearly demonstrating that there are no
\
genuine issues of material fact. Stimmler v. Chestnut Hill Hosp., 981 A.2d 145, 154 (Pa. 2009)
( citations omitted). The nonmoving party may not rest upon the pleadings but must
affirmatively set forth specific facts that demonstrate a genuine issue for trial. Pa.R.C.P. 1035.3
6
Furthermore, averments in a pleading to which a response is required are deemed admitted if not
denied specifically or by necessary implication, Pa.R.C.P. 1029(b). A general denial is
effectively an admission for purposes of summary judgment, Ld.
Complaint states a clahn for which relief can be granted
Pursuant to Pa.R.C.P. 1147 a mortgage foreclosure complaint must set forth the parties
to and the date of the mortgage; a description of the mortgaged land; the names, addresses, and
interest of the defendants; a specific averment of default; an itemization of the amounts due; and
a demand for judgment for the amount due. Bank's Complaint meets all of these requirements -
it establishes the Defendants' creation of a mortgage of their property in favor of Bank, states a
default under the mortgage by the Defendants' failure to make monthly payments due December
1, 201 0 and thereafter, states the damages, and makes a claim for relief in the form of an in rem
judgment of foreclosure. Incidentally, there is no requirement in Rule 1147 to make any
allegation about or to produce the promissory note that the mortgage secures,
Grace's assent to the Mortgage
Grace's argument that there are no indicia of her assent to the Mortgage is incredible.
She executed a power of attorney that specifically authorized the transaction:
I, Grace D. Galanti, (principal) duly constitute and appoint Julie Chapman my
true Agent for me in my name, place and stead, to enter into and take possession
of all lands, messuages, tenements, hereditaments and real estate whatever, for the
following limited purpose:
To purchase the same or any part thereof, for such sum or price and upon such
terms as he/she feels appropriate.
To make, execute, acknowledge and deliver any documents, deeds, mortgages or
instruments necessary or appropriate in the sole discretion of my Agent, in
connection with the sale or mortgage of3 l 97 W. Philadelphia Ave., Oley PA
19547.
***
By this Power of Attorney I hereby give and grant my Agent, my full and
complete authority to act with respect to said transaction as I might do myself if
personally present and to do all lawful acts requisite for effectuating the said
7
purchase or mortgage; and Therebvratify an.cl confl:rmalltbatmy Agent.shall do
thereirt bv virh1e of these presents;
Power of Attorney to Buy/Mortgage, August 30, 2004, recorded as aforesaid (emphasis added).
This Power of Attorney has been referenced by and attached to several of Bank' s filings, but at
no time did Grace allege ti-mt the Power of Attorney was invalid or revoked prior to the agent's
execution of the Mortgage. Instead, Grace has disingenuously argued that she did not sign the
Mortgage or Note.
Estoppel
"The essential elements of estoppel are 'an inducement by the party sought to be
estopped to the party who asserts the estoppel to believe certain facts to exist -- and theparty
asserting the estoppel acts in reliance on that belief?" Westinghouse Elec. Corp.!CBS v.
W. C.A.B. (Korac!t), 584 .Pa. 411, 422, 883 A.2d 579, 586 (2005), quoting Blofsen v. Cutaiar,
460 Pa. 411,333 A.2d 841, 844 (1975) (emphasis in original).
Grace argued that, as a surety, she «absolutely relied upon Bank . . . to hold Paul ... to
his obligations nuder the Note." Grace's brief opposing summary judgment, p. 23. She seems to
think that Bank had an obligation to pursue him for monies he "looted" from the Defendants'
I
marital estate. Nowhere did she cite a provision of the Mortgage or the Note that Bank had an
affirmative duty to pursue Paul personally to pay his debt, which would have required the filing
of a separate civil action, rather than pursue foreclosure. Nowhere did Grace cite a specific
communication or action that Bank induced her to reasonably believe that Bank would pursue
Paul personally and not exercise its rights under the Mortgage. The Bank's concern was that it
received the payments that it was due, and, failing such payments, mortgage foreclosure
provided a direct and typically efficient means of enforcing payment. Finally, there was no
alleged inaction by Bank that could have reasonably caused Grace to reasonably believe that the
8
ongoing default was forgiven. See below discussion on laches. Grace has not affirmatively
produced any facts that show that she was induced in any way by Bank to believe that Bank
would not pursue foreclosure.
Lach es
"Laches arises when a defendant's position or rights are so prejudiced by length of time
and inexcusabl e delay, plus attendant facts and circumstances, that it would be an injustice to
permit presently the assertion of a claim against him." Jacobs v. Halloran, 551 Pa. 350, 356,
710 A.2d 1098, 1102 (1998) (citations omitted, emphasis in original).
Grace does not allege inexcusable delay. Furthermore, pursuant to 42 Pa.C.S;A, § 5529,
(''an action upon an instrument in writing under seal must be commenced within 20 years"),
Bank had 20 years from December 1, 2010 to commence this action because the Mortgage was
executed under seal. Lastly, the prejudice that Grace alleged was the result of Bank's perceived
failure to prosecute Paul personally, not the passage of time and delay. 'The doctrine of laches
does not apply to this action.
Rizht of Rescission
,l[I]n the case of any consumer credit, .. in which a security interest ... is or will be
retained or acquired in any property which is used as the principal dwelling of the person to
whom credit is extended, the obliger shall have the right to rescind the transaction until midnight
of the third business day following the consummation of the transaction or the delivery of the
information and rescission forms required under this section together with a statement containing
the material disclosures required under this subchapter, whichever is later," 15 U.S. C.A. §
1635(a); however, this section does not apply to a residential mortgage transaction. 15 U.S.C.A.
§ 1635(e). Even when 15 U.S.C.A. § 1635 applies to a transaction, the tight of rescission expires
9
three years after the consummation of the transaction even if required information, forms, and
disclosures have not been provided to the obliger. 15 tJ.S,C.A. § 1635(f).
By the terms of§ 1635, Grace did not have the ability to rescind the Mortgage, certainly
not after the filing of the Complaint, which came more than eight years after execution of the
Mortgage, nor did she allege an attempt to rescind the Mortgage. Bank's foreclosure action is
not barred by 15 U.S.C.A. § 1635. Grace did not specifically allege or argue any other statutory
right of rescission.
In arguing that the Mortgage is properly rescinded under comrnon.Iaw, Grace's brief
cited First Federal Sav. and Loan Ass'n of Pittston v. Reggie, 376 Pa.Super. 346, 546 A.2d 62
(1988) as a case in which a surety was discharged because of a lender's improper subordination
of liens and impairment of the collateral. In Reggie, the defendants pledged their home as
collateral so that their son and daughter-in-law would qualify for a mortgage to buy a home, the
"Spring property." The following year, the defendants placed yet another lien against their home
to help their son and daughter-in-law buy and borrow against another property, the "Luzerne
property." Thereafter, the son and daughter-in-law refinanced the Luzeme property mortgage
into their names only and used the Spring property as additional collateral, removing the
defendants' latest lien against their home. The lender foreclosed on the refinanced mortgage and
bought both of the Luzerne and Spring properties at the sheriffs sale, After selling these
properties, the lender applied the proceeds to the combined indebtedness of the two properties,
effectively satisfying the Luzerne debt, but causing a deficiency on the Spring property debt and
leaving the defendants exposed on the first lien against the Spring property as also secured by
their home. Because of this deficiency exposure, the defendants gave the lender another
mortgage against their home. The Court determined that the lender should have applied the
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Spring property sale proceeds to the first lien against
.
the property,
.
not the second/junior Hen and
Luzerne property lien. Had the lender applied the Spring property proceeds correctly, the first
lien, for which the defendants served as sureties, would.have been nearly if not completely
satisfied. The Court found the mortgage that the defendants gave to secure the deficiency was
fraudulently induced and discharged the mortgage.
In the instant case; Grace alleges that Paul gave Bank a second mortgage against their
home for a commercial purpose and that Bank later discharged this mortgage without any
consideration of the primary mortgage. Grace did not provide a copy of this mortgage or give a
Recorder of Deeds reference to support its existence, validity, or discharge. Grace did not allege
being a party to the loan or second mortgage. She did not even aver that the discharge of this
mortgage was in any way improper except that it did not"consider" the primary mortgage - no
fraud was specifically alleged. See Pa.R.C.P. 1019 (fraud "shall be averred with particularity").
Viewing the alleged existence of the second mortgage in a light most favorable to Grace,
the Court still does not have evidentiary support that its commercial purpose was not achieved
nor that its discharge was the product of improper loan subordination or other fraudulent activity.
Additionally, the primary mortgage at issue was not a commercial mortgage; therefore, H should
not be expected that commercial proceeds would be used to first satisfy the primary mortgage
and not the secondary mortgage securing the commercial loan. Finally, if Paul had money to
make payments on either of the loans, he would have been the one with control to pay whichever
loan he wanted·- the Bank would not have properly dictated which loan to pay first. To further
expound on this point by following the logic used by the Reggie Court in its footnote 3, had the
second mortgage been secured from another creditor, there would be no argument that discharge
or satisfaction of the second lien by the second creditor somehow impaired the first. On the
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other hand, if a sale of the collateral occurred, then priority ofeach mortgage would be a
concern, but that is not the scenario here.
It should also be noted that discharge of the second mortgage inured to Grace's benefit
because a cloud on her title to the property was removed. It is disingenuous to argue that Grace
is a "mere surety" when she is a beneficiary of the purchase money note and mortgage that has
allowed her to purchase and reside in the property securing the debt. There simply were not
sufficient specific facts affirmatively set forth to raise a genuine issue that the discharge of the
second mortgage somehow affected the validity of the first so as to justify rescission or
discharge.
Standing
Aside from the above arguments that the mortgage is invalid or unenforceable, Grace
made no other arguments regarding Bank's standing. As the mortgagee, Bank is a real party in
interest aggrieved by Defendants' failure to pay their debt; therefore, Bank has standing.
Fair Credit Extension Uniformity Act
"This act establishes what shall be considered unfair methods of competition and unfair
or deceptive acts or practices with 'regard to the collection of debts." 73 P .S. § 2270.2. Grace
made no arguments about how this act allegedly barred the foreclosure action, nor did the Court
perceive any violations of the act
Divorce
Upon the commencement of a divorce action, all marital property is placed under the
jurisdiction and wardship of the family court - the property is in custodia legis. Fidelity Bank v,
Carroll, 416 Pa.Super. 9, 14, 610 A.2d 481, 483 (1992). Such property is not subject to
attachment by judicial liens. Id. "Marital property does not include ... [p [roperty to the extent
12
to which the property has been mortgaged or otherwise encumbered in good faith for value prior
to the date of final separation." 23 Pa.C.S.A. § 3501(a)(7). "To the extent that a secured
creditor has acquired a bona fide interest in property owned by spouses, a matrimonial court does
not have power to impair the creditor's security." Kronz v. Kronz, 393 Pa.Super. 227, 232, 574
A.2d 91, 94 (1990).
The Mortgage in this case was executed prior to the Defendants' separation; therefore,
the encumbered property is not marital, is not subject to the jurisdiction and wardship of the
court, and is not protected from attachment by judicial liens. Just as in Kranz, "[tjhe rights of the
mortgagee bank in this real estate were contractual; they did not depend upon a continuing
marriage of the mortgagors or upon the distribution of the real estate between them upon
divorce." Id. at 234, 574 A.2d at 95. Bank's foreclosure action was not barred by the divorce.
Kaymark
In Kaymark, 783 .F.3d 168 (3rd Cir., April 7, 2015)1 the mortgagor filed a claim against
the mortgagee and its counsel alleging that the mortgagee's mortgage foreclosure complaint
listed certain fees that had not yet been earned and costs that had not yet been incurred as due
and owing. The Court determined that the mortgagor sufficiently pled an actionable
misrepresentation under the Fair Debt Collection Practices Act.
In this action, Grace has not affirmatively set forth specific facts that demonstrate that
Bank has listed in its Complaint fees or costs that it has not earned or accrued. Kaymark is not
applicable to this case.
CONCLUSION
Bank complied with all applicable rules of civil procedure in the filing of its Complaint
and Motion for-Summary Judgment. The Complaint sufficiently identified the parties, the nature
13
of the claim, and the calculation of damages. There ls no fatal defect or irregularity in the
record. Grace did not affirmatively set forth specific facts that demonstrated a genuine issue for
trial and did not plead a meritorious defense to the allegations contained in the Complaint. The
Court properly granted summary judgment.
For these reasons, the Court suggests that its June 1,2015 Order granting summary
judgment be affirmed.
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