U.S. Bank National Assoc. v. Cannon, M.

J-A31012-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

U.S. BANK NATIONAL ASSOCIATION AS IN THE SUPERIOR COURT OF

TRUSTEE FOR CITIGROUP MORTGAGE PENNSYLVANIA

LOAN TRUST, INC. 2006-HE-1, ASSET-

BACKED PASS-THROUGH CERTIFICATES

SERIES 2006-HE-1

v.

MICHAEL CANNON AND ANN CANNON,

THE UNITED STATES OF AMERICA C/O

THE UNITED STATES ATTORNEY FOR

THE EASTERN DISTRICT OF PA

APPEAL OF: MICHAEL CANNON AND

No. 406 EDA 2016

ANN CANNON

Appeal from the Judgment Entered February 26, 2016

In the Court of Common Pleas of Delaware County

Civil Division at No(s): 2014-001513

BEFORE: BENDER, P.J.E., MOULTON, J., and FITZGERALD, J.*

MEMORANDUM BY BENDER, P.J.E.: FILED FEBRUARY 03, 2017

Appellants, Michael and Ann Cannon, appeal from the judgment

entered on February 26, 2016,1 after the trial court denied their motion for

____________________________________________

*

Former Justice specially assigned to the Superior Court.

1

Appellants purport to appeal from the January 11, 2016 order denying their

post-trial motion. Ordinarily, an appeal properly lies from the entry of

judgment, not from the order denying post-trial motions. See Johnston

the Florist, Inc. v. TEDCO Constr. Corpo., 657 A.2d 511 (Pa. Super.

1995). 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, 1052 n.1 (Pa. Super. 2001).

Here, Appellants filed a notice of appeal prematurely on February 4, 2016,

prior to the entry of judgment. However, the record reflects that judgment

(Footnote Continued Next Page)

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post-trial relief in the instant mortgage foreclosure action. After careful

review, we affirm.

The relevant facts and procedural history were summarized by the trial

court in its Pa.R.A.P. 1925(a) opinion, as follows:

US Bank, N.A., as Trustee for Asset Backed Pass-Through

Certificates Series 2006-HEI, initiated this in rem mortgage

foreclosure action on February 19, 2014[,] with the filing of a

Complaint [against Appellants]. On May 5, 2015, US Bank, N.A.,

as Trustee for Asset Backed Pass-Through Certificates Series

2006-HEI was substituted by [U.S. Bank National Association as

Trustee for Citigroup Mortgage Loan Trust, Inc. 2006-HE-1,

Asset-Backed Pass-Through Certificates Series 2006-HE-1

(“Appellee”)]. [Appellants] filed preliminary objections on May

7, 2014, arguing, inter alia, that the Complaint was not properly

verified and failed to contain allegations concerning capacity to

sue and place of business. [Appellants’] preliminary objections

were overruled by Order dated June 26, 2014. [Appellants] filed

an answer with new matter on July 15, 2014, which new matter

was responded to on July 29, 2014.

A bench trial was held on September 29, 2015. Subsequently, a

Decision and Findings of Fact and Conclusions of Law was

entered on October 20, 2015 in favor of [Appellee]. [Appellants]

filed their post-trial motion on October 28, 2015, which was

denied by the Order dated January 11, 2016. [Appellants] filed

their notice of appeal on February 4, 2016 prior to judgment

having been entered. Judgment was ultimately entered on

February 26, 2016.

Trial Court Opinion (“TCO”), 4/4/16, at 1-2 (internal citations omitted).

_______________________

(Footnote Continued)

was entered on February 26, 2016. In accordance with the Pennsylvania

Rules of Appellate Procedure, we treat Appellants’ notice of appeal as if it

were filed after the entry of judgment and on the date thereof. See

Pa.R.A.P. 905(a)(5). Hence, the instant appeal is properly before this Court.

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On February 22, 2016, Appellants filed a timely, court-ordered concise

statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).

Now, Appellants raise the following issues on appeal:

1. Was the testimony of a sole witness, not an employee of

[Appellee] and not employed by anyone connected with the

subject mortgage for the first three years of said mortgage,

sufficient?

2. May a case proceed where the Complaint has not been

verified by an officer or employee of [Appellee]?

3. May a case proceed where [Appellee] has never averred or

produced evidence relating to its business form, its standing

and status in Pennsylvania, or its address?

4. May a case proceed where [Appellee] has failed to disclose its

business location, despite demand by [Appellants] for that

information?

5. May a case proceed where [Appellee] never demonstrated

that it was qualified to do business in Pennsylvania either as a

domestic or foreign entity?

6. Is an assignment of mortgage valid where a Texas notary

recited that the transaction was taking place in the

[Commonwealth] of Pennsylvania and County of Dallas [sic]?

7. Where the assignment of a mortgage explicitly involved a

trust and a power of attorney[,] is the transaction valid

without production of either of these alleged instruments?

8. Can a loan history of a mortgage be substantiated despite the

total lack of records between September 26, 2005 and

February 5, 2006?

Appellants’ Brief at 7-9.

To begin, we note our standard of review:

Our appellate role in cases arising from non-jury trial verdicts is

to determine whether the findings of the trial court are

supported by competent evidence and whether the trial court

committed error in any application of the law. The findings of

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the trial judge in a non-jury case must be given the same weight

and effect on appeal as the verdict of a jury, and the findings will

not be disturbed on appeal unless predicated upon errors of law

or unsupported by competent evidence in the record.

Furthermore, our standard of review demands that we consider

the evidence in a light most favorable to the verdict winner.

Levitt v. Patrick, 976 A.2d 581, 588-589 (Pa. Super. 2009). “[W]e will

reverse a trial court’s denial of a motion for JNOV or a new trial only if we

find an abuse of discretion or an error of law that controlled the outcome of

the case.” Walnut Street Associates, Inc. v. Brokerage Concepts, Inc.,

982 A.2d 94, 97 (Pa. Super. 2009).

Appellants raise numerous objections herein to the validity of the

underlying mortgage foreclosure action. For ease of disposition, we respond

to Appellants’ claims out of order and first address claims 3 through 5

together, as these issues all involve Appellee’s business location and

qualification to do business in Pennsylvania. Appellants essentially assert

that Appellee has failed to provide an address for its place of business

and/or proof that it is qualified to conduct business in the Commonwealth of

Pennsylvania, and question whether Appellee had standing to bring the

underlying foreclosure action against them. See Appellants’ Brief at 16-17.

We conclude that Appellants’ claims are wholly without merit.

The trial court found that Appellee’s business location and

qualifications to do business in Pennsylvania are,

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not relevant to the current cause of action because [Appellee]

does not do business within the Commonwealth of Pennsylvania

and is, therefore, not required to register or comply with the

Foreign Business Corporations Act. See 15 Pa.C.S.A. §§ 401,

402.[2] “A foreign corporation … is restricted only when ‘doing

business’ within the meaning of our acts requiring, in such case,

the performance of certain duties before becoming so engaged.”

Meaker Galvanizing Co. v. Charles E. McInnes & Co., 116 A.

400, 402 (Pa. 1992). Whether a corporation is “doing business”

is a matter of fact to be resolved on a case-by-case basis.

Wenzel v. Morris Distrib. Co., 266 A.2d 662, 666 (Pa. 1970).

In the instant matter, there is no allegation or indication that

[Appellee] was or is “doing business” in Pennsylvania within the

meaning of the statute…. It has been held that it is not

sufficient merely to allege that a corporation is doing business

within Pennsylvania, but that a defendant must set forth facts

supporting such an allegation. Id. Furthermore, under the

statute, a corporation is not doing business in Pennsylvania

simply by maintaining an action here, by creating or maintaining

indebtedness or mortgages here, or by securing or collecting

debts and enforcing mortgages here. 15 Pa.C.S.A. § 403. The

Pennsylvania Supreme Court has also found that the passive

owning of real estate for investment or fiduciary purposes does

not qualify as “doing business.” Am. Hous. Trust, III v.

Jones, 696 A.2d 1181, 1184 (Pa. 1997). Therefore, any

argument by [Appellants] that [Appellee’s] place of business has

any relevance to this matter lacks merit.

TCO at 7-8 (emphasis added).

We agree with the trial court’s conclusion that Appellee was not

required to register in the Commonwealth of Pennsylvania before bringing its

____________________________________________

2

Section 411 of the Foreign Business Corporations Act provides, in relevant

part, that “[e]xcept as provided in section 401 (relating to application of

chapter) … a foreign filing association or foreign limited liability partnership

may not do business in this Commonwealth until it registers with the

department under this chapter.” 15 Pa.C.S. § 411(a).

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foreclosure action against Appellants. However, this Court recognizes that

sections 401–403 of the Foreign Business Corporations Act, on which the

trial court relied, did not take effect until July 1, 2015, after the

commencement of the foreclosure action.3 Thus, we review the relevant

sections of the Act which were in place at the time the foreclosure action

was initiated.

Similar to its predecessor, section 4122(a) identified activities which

do not constitute “doing business” and provided, in relevant part, as follows:

[A] foreign business corporation shall not be considered to be

doing business in this Commonwealth for the purposes of this

subchapter by reason of carrying on in this Commonwealth any

one or more of the following acts:

…

(8) Securing or collecting debts or enforcing any rights in

property securing them.

…

(11) Inspecting, appraising and acquiring real estate and

mortgages and other liens thereon and personal property

and security interests therein, and holding, leasing,

conveying and transferring them, as fiduciary or otherwise.

____________________________________________

3

“A statute will not generally be construed to be retroactive unless clearly

and manifestly so intended by the legislature.” Morabito’s Auto Sales v.

Com., Dept. of Transp., 715 A.2d 384, 386 (Pa. 1998) (citing 1 Pa.C.S. §

1926). Here, there is no indication that the legislature intended for sections

401-403 to apply retroactively.

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15 Pa.C.S. § 4122(a)(8), (11).4 Based on the plain language of Section

4122, Appellee was clearly not “doing business” in Pennsylvania as defined

by the Act. Accordingly, we conclude that under either the old or new

version of the Act, the trial court was correct in finding that Appellee was not

required to register in this Commonwealth in order to have standing to bring

the underlying action against Appellants.

Appellants also attack the assignment of mortgage, claiming that it is

invalid because the seal of a Texas notary indicates that the transaction took

place in the Commonwealth of Pennsylvania and County of Dallas.

Appellants aver that this is not merely a spelling error or mistake, but that it

is “evidence of a reckless disregard for fundamental principles of transfers.”

Appellants’ Brief at 18. However, Appellants’ argument is not cognizable

because they do not have standing to challenge the validity of the

assignment. See J.P. Morgan Chase Bank, N.A. v. Murray, 63 A.3d

1258, 1264 (Pa. Super. 2013) (citing In re Walker, 466 B.R. 271, 285-286

(Bankr.E.D.Pa. 2012) (holding that a debtor lacks standing to question the

validity of an assignment of note)).5

____________________________________________

4

15 Pa.C.S. § 4122 was repealed by 2014, Oct. 22, P.L. 2640, No. 172, §

25, effective July 1, 2015.

5

The trial court opined:

A mortgagor in Pennsylvania has no standing to challenge the

assignment or transfer of a note and mortgage. JP Morgan[,

63 A.3d at 1266]; Bookmyer v. Davies, 69 Pa. Super. 240,

(Footnote Continued Next Page)

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To the extent that Appellants appear to be implying Appellee lacked

standing to enforce the note and mortgage with the underlying foreclosure

action, the trial court responded:

The holder of the mortgage can institute foreclosure

proceedings upon default of the mortgagors. Cunningham v.

McWilliams, 714 A.2d 1054, 1056 (Pa. Super. 1998). In

Pennsylvania, a mortgage follows the promissory note secured

by the mortgage. Moore v. Cornell, 68 Pa. 320, 322 (1871);

Appeal of Dubois, 38 Pa. 231, 236 (Pa. 1861). Furthermore,

under the Pennsylvania Uniform Commercial Code, the note

securing a mortgage is a negotiable instrument. J.P. Morgan[,

63 A.3d at 1265]. Therefore, a person is entitled to enforce a

note if they are: (1) the holder of the note; (2) a nonholder in

possession of the note who has the rights of a holder; or (3) a

person not in possession of the note who is entitled to enforce

the instrument under certain circumstances. 13 Pa.C.S. § 3301.

The right to enforce a note vests upon delivery of the note “by a

person other than its issuer for the purpose of giving to the

person receiving delivery the right to enforce the instrument.”

13 Pa.C.S. § 3203. Furthermore, a note endorsed in blank is a

“bearer note” and, as such, is payable to anyone on demand

regardless of the chain of possession of the note. 13 Pa.C.S. §

3205(b); Bank of Am., N.A. v. Gibson, 102 A.3d 462, 466

(Pa.Super. 2014), appeal denied, 112 A.3d 648 (Pa. 2015).

…

_______________________

(Footnote Continued)

242 (1918). The transfer of a note is a matter between the

transferor and the transferee and a mortgagor cannot rely on

defenses belonging to the transferor. [Id.] Such defenses are

not relevant to a mortgage foreclosure action because once a

debt is satisfied, the debtor cannot be required to satisfy the

debt again, “even if the recipient of the debtor’s performance is

not the holder of the note in question.” JP Morgan[, 63 A.3d at

1263].

TCO at 4.

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[Appellee] in the instant matter established that they hold

the original note at issue, which was endorsed in blank by the

original mortgagee in this matter. In accordance with the

authority cited above, [Appellee] is the legal holder of the

mortgage since it follows the note. Furthermore, [Appellee] is

the record holder of the mortgage as a result of the Corrective

Assignment of Mortgage duly recorded in the Recorder of Deeds

Office of Delaware County. This Corrective Assignment of

Mortgage, which purportedly transfers the mortgage from the

original lender through an attorney-in-fact to [Appellee], is the

only assignment of mortgage relevant to this matter.1 As noted

above, this assignment cannot be challenged by [Appellants]

because they were not a party to the transfer or assignment.

Therefore, [Appellee] had standing to foreclosure as the holder

of the mortgage and was entitled to judgment as a matter of

law.

1

It should be noted that the Assignment of Mortgage

marked as Exhibit D1 was offered by [Appellants] into

evidence and not [Appellee]. It should be further noted

that while a clerical error may exist on the face of that

assignment, the Corrective Assignment of Mortgage

marked as Plaintiff’s Exhibit 3 specifically notes that it is

being recorded to amend that assignment.

TCO at 3-4. After careful review, we conclude that the trial court’s findings

are well-supported by the record. We discern no error of law or abuse of

discretion.

Next, Appellants aver that the trial court erred in relying on the sole

testimony of Georgeann Sandstrom (“Ms. Sandstrom”), who had never been

an employee of Appellee and, therefore, had no personal knowledge of

activity regarding Appellants’ mortgage. Appellants’ Brief at 14. However,

as the trial court noted:

Ms. Sandstrom testified that she is an employee of the company

that services the loan for [Appellee]. Ms. Sandstrom testified

that her company is the records custodian for [Appellee] and

demonstrated that she is familiar with the procedure and

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regularity in which those records are created and maintained.

According to Ms. Sandstrom, her company has serviced the loan

and maintained the records for the loan since February 2006,

which is prior to the date of [Appellants’] default. The record

clearly establishes that Ms. Sandstrom was qualified to

authenticate the business records offered by [Appellee].

[Appellants] fail to cite to any authority that requires [Appellee]

to offer any other witness or evidence.

TCO at 6.

As we explained in U.S. Bank, N.A. v. Pautenis, 118 A.3d 386 (Pa.

Super. 2015):

“Hearsay” is an out of court statement offered in court for the

truth of the matter asserted. Pa.R.E. 801(c). A writing

constitutes a “statement” as defined by Rule 801(a). See

Pa.R.E. 801(a). Subject to certain exceptions, hearsay is

inadmissible at trial. Pa.R.E. 802. One such exception is

contained in Rule 803(6), which permits the admission of a

recorded act, event or condition if:

(A) the record was made at or near the time by—or

from information transmitted by—someone with

knowledge;

(B) the record was kept in the course of a regularly

conducted activity of a “business”, which term

includes business, institution, association,

profession, occupation, and calling of every kind,

whether or not conducted for profit;

(C) making the record was a regular practice of that

activity;

(D) all these conditions are shown by the testimony of

the custodian or another qualified witness or by a

certification that complies with Rule 902(11) or (12)

or with a statute permitting certification; and

(E) neither the source of information nor other

circumstances indicate a lack of trustworthiness.

Pa.R.E. 803(6) []. Furthermore, the Uniform Business Records

as Evidence Act states:

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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).

U.S. Bank, N.A., 118 A.3d at 401.

It is not essential under the Uniform Business Records as

Evidence Act to produce either the person who made the entries

or the custodian of the record at the time the entries were made.

Moreover, the law does not require that a witness qualifying

business records even have a personal knowledge of the facts

reported in the business record. 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 for 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) (internal

citations omitted). Based on the foregoing, we agree with the trial court’s

conclusion that Ms. Sandstrom was clearly qualified to authenticate the

business records produced by Appellee and that her testimony falls within

the exception to hearsay. We discern no abuse of discretion by the trial

court and deem Appellants’ claim to be meritless.

Appellants further suggest that the trial court erred in allowing the

foreclosure action to proceed in the absence of a complaint verified by an

officer or employee of Appellee. Appellants fail, however, to develop their

argument and/or cite to any relevant authorities in their brief in support of

this claim. See Appellants’ Brief at 15. Pennsylvania Rule of Appellate

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Procedure 2119 expressly states that the argument section of a brief “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, followed by such discussion

and citation of authorities as are deemed pertinent.” Pa.R.A.P. 2119(a)

(emphasis added). “Appellate arguments which fail to adhere to [the Rules

of Appellate Procedure] 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.” Coulter v. Ramsden, 94 A.3d 1080, 1088 (Pa.

Super. 2014). Thus, we deem this issue to be waived.

Even if Appellants had not waived this claim, we would deem their

contentions to be wholly without merit. Appellants’ assertion that the

complaint is invalid because it was not verified by an officer or employee of

[Appellee] blatantly disregards the plain language of Pa.R.C.P. 1024, which

provides, in relevant part, as follows:

Rule 1024. Verification

(a) Every pleading containing an averment of fact not

appearing of record in the action or containing a denial of

fact shall state that the averment or denial is true upon the

signer’s personal knowledge or information and belief and

shall be verified. The signer need not aver the source of

the information or expectation of ability to prove the

averment or denial at the trial. A pleading may be verified

upon personal knowledge as to a part and upon

information and belief as to the remainder.

…

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(c) The verification shall be made by one or more of the

parties filing the pleading unless all the parties (1) lack

sufficient knowledge or information, or (2) are outside the

jurisdiction of the court and the verification of none of

them can be obtained within the time allowed for filing the

pleading. In such cases, the verification may be made by

any person having sufficient knowledge or information and

belief and shall set forth the source of the person’s

information as to matters not stated upon his or her own

knowledge and the reason why the verification is not made

by a party.

Pa.R.C.P. 1024(a), (c) (emphasis added).

Rule 1024 expressly dictates that a verification may be signed by a

non-party, so long as it complies with the requirements of section (c) of this

Rule. See id. Here, the verification was executed by Linwood Williams

(“Mr. Williams”), Vice President of Loan Documentation at Wells Fargo Bank,

N.A., the mortgage servicing agent for Appellee. The verification states that

Mr. Williams is authorized to verify that the statements made in the

foreclosure action are true and correct to the best of his information and

belief, and it also contains the following notation:

[D]ue to its mortgage servicing agency relationship with

[Appellee], Wells Fargo Bank, N.A. is in possession and control of

all documents and records supporting the statements in the

foregoing pleading and, therefore, the undersigned, rather than

an officer or employee of [Appellee], is the appropriate individual

to make this Verification pursuant to Pa.R.C.P. 1024(c).

Verification, 2/10/14, at 1 (attached to Appellee’s Complaint in Mortgage

Foreclosure). After careful review, we conclude that the verification

attached to the complaint in mortgage foreclosure is in compliance with Rule

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1024 and, therefore, discern no error of law or abuse of discretion on the

part of the trial court.

Finally, Appellants aver that the trial court erred in relying on the loan

history to establish the amount they owed Appellee where a portion of the

loan history is missing. Again, we are constrained to find this issue waived

due to Appellants’ failure to properly develop their argument in accordance

with the Pennsylvania Rules of Appellate Procedure. See Pa.R.A.P. 2119.

Appellants fail to cite any authority in support of their argument, nor do they

elaborate in any detail on their theory. “This Court will not act as counsel

and will not develop arguments on behalf of [A]ppellant.” Coulter, 94 A.3d

at 1088.

Regardless, Appellants claims are also without merit. As the trial court

held,

the missing period [of the loan history] is prior to any default by

[Appellants] and is, therefore, not relevant to the instant action,

which involves damages incurred after [Appellants] defaulted on

their mortgage. [Appellee’s] loan history, which was properly

authenticated and admitted into evidence without objection by

[Appellants], established [Appellants’] default and the amount of

damages incurred by [Appellee] as a result of said default.

[Appellants] did not contest the allegation of default or the

amount of damages at trial and offered only general denials and

an improper claim of lack of knowledge in their prior pleadings.

Not only did [Appellee] establish [Appellants’] default and the

proper amount of damages, but [Appellants] effectively admitted

such allegations prior to trial. Therefore, [Appellee] was entitled

to judgment as a matter of law.

TCO at 5 (emphasis added). After careful review, we conclude that the trial

court’s findings are well-supported by the record.

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Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/3/2017

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