Bayview Loan Servicing LLC v. Wicker

J-A23021-16

2017 PA Super 149

BAYVIEW LOAN SERVICING LLC IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellee

v.

JAMES BERNARD WICKER AND BERYL G.

WICKER

Appellants No. 1832 WDA 2015

Appeal from the Judgment Entered November 4, 2015

In the Court of Common Pleas of Jefferson County

Civil Division at No: No. 516-2012-CD

BEFORE: LAZARUS, STABILE, and STRASSBURGER,* JJ.

OPINION BY STABILE, J.: FILED MAY 17, 2017

Appellants James Bernard and Beryl G. Wicker, husband and wife,

appeal from the November 4, 2015 judgment entered in the Court of

Common Pleas of Jefferson County (“trial court”) against them and in favor

of Appellee Bayview Loan Servicing, LLC (“Bayview”) in this in rem mortgage

foreclosure action. Upon review, we affirm.

On February 11, 2008, in consideration of a loan in the principal

amount of $119,000.00, Appellants executed and delivered a note in favor of

and to Countrywide Bank, FSB (“Countrywide”). To secure the obligations

under the note, Appellant James Wicker executed and delivered to Mortgage

____________________________________________

*

Retired Senior Judge assigned to the Superior Court.

J-A23021-16

Electronic Registration Systems, Inc. (“MERS”) (“solely as nominee for

Lender . . . and Lender’s successors and assigns”), a mortgage for the

property located at 643 Highland Park Road, Punxsutawney, Jefferson

County, Pennsylvania, as security for the note. On September 28, 2011,

MERS assigned the mortgage to Bank of America, N.A., successor by

merger to BAC Home Loans Servicing L.P. F/K/A/ Countrywide Home Loans

Servicing L.P. (“Bank of America”). Bank of America recorded the same on

November 1, 2011.

On May 30, 2012, Bank of America filed a mortgage foreclosure

complaint against Appellants, requesting, inter alia, judgment against them

for $127,360.74. Bank of America alleged that Appellants had failed to

make the scheduled payments on the mortgage since September 1, 2010.

Bank of America also alleged that it complied with the requirements of Act 6

(41 P.S. § 403) by sending Appellants a written notice of intention to

foreclose (the “Notice”). See Complaint, 5/30/12, at ¶¶ 10-11. Appellants

eventually filed an answer to the complaint, generally denying Bank of

America’s averments and raising new matter.1

____________________________________________

1

On January 13, 2013, the trial court sustained Bank of America’s

preliminary objections to Appellants’ counterclaims, dismissing with

prejudice all but one of them. Appellants filed an amended counterclaim,

which the trial court dismissed on summary judgment, as discussed infra,

on December 19, 2014.

-2-

J-A23021-16

On October 17, 2014, Bank of America moved for summary judgment,

arguing that it was entitled to judgment as a matter of law. Specifically,

Bank of America asserted that Appellants’ general denials in their answer to

the complaint were sufficient to establish that Appellants defaulted on their

mortgage obligations. Bank of America also asserted that no factual dispute

existed as to the amount of the mortgage, and the total amount of

indebtedness. Following Appellants’ response, the trial court granted in part

and denied in part Bank of America’s summary judgment motion. In

particular, the trial court denied in part the summary judgment motion

because a factual dispute existed as to the date of Appellants’ default, the

amount of indebtedness, and the date when Appellants received the Notice.

On July 14, 2015, Bank of America filed a “Praecipe to Substitute

Plaintiff” (the “Praecipe”), naming Bayview as the substitute plaintiff. Bank

of America attached to the Praecipe a document titled “Corporate

Assignment of Mortgage,” indicating that Appellants’ mortgage had been

assigned to Bayview. On August 3, 2015, Appellants filed a “Motion in

Limine to Strike Praecipe to Substitute Plaintiff” (“Motion in Limine”),

claiming that the substitution did not conform with Pa.R.C.P. No. 2352(a)

because Bayview, as Bank of America’s successor, failed to file “a statement

of material facts.” Motion in Limine, 8/3/15, at ¶¶ 3-6.

The case proceeded to a bench trial, following which the trial court

entered a verdict in favor of Bayview, as Bank of America’s successor, and

against Appellants. On the same day, the trial court denied Appellants’

-3-

J-A23021-16

Motion in Limine, concluding, among other things, that attached to the

Praecipe was a document titled “Corporate Assignment of Mortgage,” the

contents of which obviated the need for Bayview to file a statement of

material facts on which the right to substitution is based under Rule 2352.

Specifically, the trial court concluded that the “Corporate Assignment of

Mortgage” “establishes Bayview’s legal interest in the mortgage and the

factual circumstances.” Trial Court Opinion, 9/4/15, at 1. On September

14, 2015, Appellants filed a motion for reconsideration, which we, like the

trial court, treat as a motion for post-trial relief. See Mackall v. Fleegle,

801 A.2d 577, 580 n.1 (Pa. Super. 2002) (“Despite being improperly styled

as a motion to reconsider, upon review, it appears that [a]ppellant’s motion

was actually a motion for post-trial relief, thus preserving the issues raised

therein”). On September 16, 2015, the trial court denied Appellants’ post-

trial relief.

Appellants timely appealed to this Court. The trial court directed

Appellants to file a Pa.R.A.P. 1925(b) statement of errors complained of on

appeal. They complied, raising 33 assertions of error.2 In response, the

____________________________________________

2

We disapprove of Appellants’ excessive assertions of error. We repeatedly

have emphasized that a Rule 1925(b) statement must be “sufficiently

concise and coherent such that the trial court judge may be able to identify

the issues to be raised on appeal, and the circumstances must not suggest

the existence of bad faith.” Jiricko v. Geico Ins. Co., 947 A.2d 206, 210

(Pa. Super. 2008), appeal denied, 958 A.2d 1048 (Pa. 2008).

-4-

J-A23021-16

trial court issued a Pa.R.A.P. 1925(a) opinion, concluding that Appellants’

issues on appeal lacked merit.

On appeal, Appellants raise four issues for our review:

I. Did the trial court err in granting partial summary

judgment to . . . Bank of America, N.A.?

II. Did the trial court err and abuse its discretion in denying

[Appellants’] motion in limine to strike substitution of

Bayview . . . as the party plaintiff and by doing so only

after trial had concluded?

III. Did the court commit prejudicial error by permitting the

testimony of a witness without personal knowledge and by

further receiving exhibits into evidence which did not

satisfy the requirements of Pa.R.E. 803(6)?

IV. Is the judgment void due to fraud insofar as the

securitization of the promissory note prior to trial

obliterated Bayview’s standing and removed all

controversy before the court including any obligation of

[Appellants] to repay?

Appellants’ Brief at 19.3

____________________________________________

3

Appellants have waived their fourth issue relating to securitization on

appeal. Although Appellants initially raised this issue in their pro se

counterclaim against Bank of America, the trial court dismissed with

prejudice that counterclaim. Appellants thereafter failed to revisit this issue

until after trial and only in their “Memorandum of Law in Support” of their

“Motion for Reconsideration.” Tellingly, Appellants also did not raise this

issue in the Praecipe challenging Bayview’s substitution as plaintiff. Thus,

because Appellants failed to raise the securitization issue vis-à-vis Bank of

America or Bayview until after trial, we deem it waived. See, e.g.,

Shelhamer v. Crane, 58 A.3d 767, 771 (Pa. Super. 2012) (reversing an

order granting a new trial because the ground for post-trial relief had not

been asserted during trial). Appellants also may not raise this issue for the

first time on appeal. “Issues not raised in the lower court are waived and

cannot be raised for the first time on appeal.” Pa.R.A.P. 302(a).

-5-

J-A23021-16

Appellants first argue that the trial court erred in granting Bank of

America’s summary judgment motion. Specifically, Appellants argue that a

factual dispute existed concerning whether they had admitted in their

pleadings that the mortgage was in default.

It is well-settled that

[o]ur scope of review of a trial court’s order granting or denying

summary judgment is plenary, and our standard of review is

clear: the trial court’s order will be reversed only where it is

established that the court committed an error of law or abused

its discretion.

Summary judgment is appropriate only when the record clearly

shows that there is no genuine issue of material fact and that

the moving party is entitled to judgment as a matter of law. The

reviewing court must view the record in the light most favorable

to the nonmoving party and resolve all doubts as to the

existence of a genuine issue of material fact against the moving

party. Only when the facts are so clear that reasonable minds

could not differ can a trial court properly enter summary

judgment.

Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting

Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)). Moreover,

“[w]here the non-moving party bears the burden of proof on an issue, he

may not merely rely on his pleadings or answers to survive summary

judgment.” Krauss v. Trane U.S. Inc., 104 A.3d 556, 563 (Pa. Super.

2014) (citation omitted). “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.” Id.

-6-

J-A23021-16

Instantly, based on our review of the pleadings, we agree with the trial

court that no dispute existed as to the whether Appellants defaulted on the

mortgage. As noted earlier, Appellants responded with general denials to

the material portions of Bank of America’s complaint, especially to paragraph

7 where default was alleged. In Bank of America, N.A. v. Gibson, 102

A.2d 462 (Pa. Super. 2014), appeal denied, 112 A.3d 648 (Pa. 2015), we

explained that “general denials constitute admissions where—like here—

specific denials are required.” Gibson, 102 A.2d at 466-67; see Pa.R.C.P.

No. 1029(b) (“Averments in a pleading to which a responsive pleading is

required are admitted when not denied specifically or by necessary

implication. A general denial or a demand for proof . . . shall have the effect

of an admission.”). Here, Appellants’ general denial relating to mortgage

default constitutes an admission. Accordingly, we agree with the trial court’s

decision to enter summary judgment on the issue of default.4, 5

____________________________________________

4

We note that the trial court did not violate the rule of Nanty-Glo v.

American Surety Co., 163 A. 523 (Pa. 1932), in granting Bank of

America’s summary judgment motion on the issue of mortgage default

because the trial court relied on Appellants’ admission as contained in their

amended answer. See Gibson, 102 A.3d at 466 (noting that the Nanty-

Glo rule may be circumvented when the moving party supports its summary

judgment motion by using admissions of the opposing party, which may

include facts admitted in pleadings) (citations omitted).

5

Because we conclude that Appellants’ general denials constituted

admissions, we need not look to Appellants’ new matter and counterclaims

to search for admissions on the issue of mortgage default.

-7-

J-A23021-16

Appellants next argue that the trial court erred in granting Bank of

America’s summary judgment motion because Bank of America lacked

standing to bring the underlying foreclosure action. In support of its

standing argument, Appellants claim that Bank of America did not establish

it possessed a valid assignment of the mortgage and that the note was

never assigned or otherwise transferred to Bank of America. We disagree.

As we recently explained in CitiMortgage, Inc. v. Barbezat, 131

A.3d 65 (Pa. Super. 2016):

Pennsylvania Rule of Civil Procedure 2002 provides,

“[e]xcept as otherwise provided . . . all actions shall be

prosecuted by and in the name of the real party in interest,

without distinction between contracts under seal and parol

contracts.” Pa.R.C.P. No. 2002(a); see also J.P. Morgan

Chase Bank, N.A. v. Murray, 63 A.3d 1258, 1258 (Pa. Super.

2013) (finding a debtor’s claim that appellee bank was not a real

party in interest to bring foreclosure action was a challenge to

appellee’s standing). “[A] real party in interest is a [p]erson

who will be entitled to benefits of an action if successful. . . . [A]

party is a real party in interest if it has the legal right under the

applicable substantive law to enforce the claim in question.”

U.S. Bank, N.A. v. Mallory, 982 A.2d 986, 993–994 (Pa.

Super. 2009) (citation and quotation marks omitted; some

brackets in original).

In a mortgage foreclosure action, the mortgagee is the real

party in interest. See Wells Fargo Bank, N.A. v. Lupori, 8

A.3d 919, 922 n. 3 (Pa. Super. 2010). This is made evident

under our Pennsylvania Rules of Civil Procedure governing

actions in mortgage foreclosure that require a plaintiff in a

mortgage foreclosure action specifically to name the parties to

the mortgage and the fact of any assignments. Pa.R.C.P. No.

1147. A person foreclosing on a mortgage, however, also must

own or hold the note. This is so because a mortgage is only the

security instrument that ensures repayment of the indebtedness

under a note to real property. See Carpenter v. Longan, 83

U.S. 271, 275, 16 Wall. 271, 21 L.Ed. 313 (1872) (noting “all

-8-

J-A23021-16

authorities agree the debt is the principal thing and the

mortgage an accessory.”). A mortgage can have no separate

existence. Id. When a note is paid, the mortgage expires. Id.

On the other hand, a person may choose to proceed in an action

only upon a note and forego an action in foreclosure upon the

collateral pledged to secure repayment of the note. See Harper

v. Lukens, 112 A. 636, 637 (Pa. 1921) (noting “as suit is

expressly based upon the note, it was not necessary to prove the

agreement as to the collateral.”). For our instant purposes, this

is all to say that to establish standing in this foreclosure action,

appellee had to plead ownership of the mortgage under Rule

1147, and have the right to make demand upon the note

secured by the mortgage.[FN]

[FN]

The rules relating to mortgage foreclosure actions do not

expressly require that the existence of the note and its holder be

pled in the action. Nonetheless, a mortgagee must hold the note

secured by a mortgage to foreclose upon a property. “The note

and mortgage are inseparable; the former as essential, the latter

as an incident.” Longan, 83 U.S. at 274.

Barbezat, 131 A.3d at 68.

Instantly, based upon our review of the record evidence produced by

Bank of America in support of its summary judgment motion, we reject

Appellants’ standing argument. Bank of America not only averred, but also

produced evidence that it was indeed the holder of the mortgage.

Specifically, Bank of America alleged in its complaint that it “is the

Mortgagee by Assignment by virtue of an Assignment of Mortgage recorded

on November 1, 2011 in the Office of Recorder of Deeds of Jefferson County

on Book: 597, Page 0413.” Complaint, 5/30/12, ¶ 3. Bank of America

produced copies of the original recorded mortgage and its recorded

assignment to Bank of America. As we noted in Barbezat, “[w]here an

assignment is effective, the assignee stands in the shoes of the assignor and

-9-

J-A23021-16

assumes all of his rights.” Barbezat, 131 A.3d at 69 (citations omitted).

Thus, the undisputed evidence of record, as recited earlier, indicates that

Bank of America properly held the mortgage by way of assignment from

MERS.

To the extent Appellants argue that Bank of America cannot establish

ownership of the note because it was never assigned or otherwise

transferred to it, we reject such argument for want of merit. It is well-

settled that when the original mortgage company merges with another

company, the surviving corporation becomes the mortgagee under the

mortgage agreement, as it “succeeds to both the rights and obligations of

the constituent corporations.” See Park v. Greater Delaware Valley Sav.

& Loan Ass’n, 523 A.3d 771, 775-76 (Pa. Super. 1987). As a result, the

surviving corporation becomes the real party in interest in a mortgage

foreclosure action. See 12 U.S.C.A. § 215a(e).6 No assignment or

____________________________________________

6

Section 215a(e) of the Bank Act provides:

The corporate existence of each of the consolidating banks or

banking associations participating in such consolidation shall be

merged into and continued in the consolidated national banking

association and such consolidated national banking association

shall be deemed to be the same corporation as each bank or

banking association participating in the consolidation. All rights,

franchises, and interests of the individual consolidating banks or

banking associations in and to every type of property (real,

personal, and mixed) and choses in action shall be transferred to

and vested in the consolidated national banking association by

virtue of such consolidation without any deed or other transfer.

The consolidated national banking association, upon the

(Footnote Continued Next Page)

- 10 -

J-A23021-16

endorsement is necessary to confer upon the surviving bank the status of

the real party in interest to enforce a debt owed to its predecessor. Id. The

surviving corporation, however, has only the same rights with respect to the

debt that its predecessor had at the time of merger. If the predecessor in

interest was entitled to enforce the note at the time of merger, then the

surviving corporation may do the same. Differently put, unless the

predecessor in interest has the right to enforce the note, the successor by

merger does not acquire the right to enforce the note. See Murray, 63

A.3d at 1267-68 n.6 (implying that succession by merger is sufficient proof

to show ownership of note and mortgage); see also 13 Pa.C.S.A. § 3302(c).

Here, Appellants do not argue that Bank of America is not the holder in

due course of the note or that the note attached to the complaint was less

_______________________

(Footnote Continued)

consolidation and without any order or other action on the part

of any court or otherwise, shall hold and enjoy all rights of

property, franchises, and interests, including appointments,

designations, and nominations, and all other rights and interests

as trustee, executor, administrator, registrar of stocks and

bonds, guardian of estates, assignee, and receiver, and in every

other fiduciary capacity, in the same manner and to the same

extent as such rights, franchises, and interests were held or

enjoyed by any one of the consolidating banks or banking

associations at the time of consolidation, subject to the

conditions hereinafter provided.

12 U.S.C.A. § 215a(e). The record here indicates that, on April 27, 2009,

Countrywide converted to a national bank under the name Countrywide

Bank, National Association. See Bank of America’s Motion for Summary

Judgment, 10/17/14, at Exhibit “I.”

- 11 -

J-A23021-16

than genuine. Rather, Appellants argue only that Bank of America could not

enforce the note because Countrywide never assigned or otherwise

transferred the note to Bank of America. As explained above, given the fact

that Bank of America is the surviving corporation that succeeded

Countrywide, it stands in the shoes of Countrywide to collect the debt owed

to Countrywide, including the mortgage at issue here.7

In sum, given Bank of America’s uncontested ownership of the

mortgage and possession of the note by way of merging with Countrywide,

the trial court did not err in concluding that Bank of America had standing as

a real party in interest to bring the underlying foreclosure action.

Appellants next argue that the trial court abused its discretion in

denying their Motion in Limine.8 In support of this argument, Appellants

____________________________________________

7

With respect to Bayview, our review of the record reveals that it also had

standing to pursue the foreclosure action because it held the note.

Specifically, Bank of America endorsed the note in blank. N.T. Trial,

10/29/15, at 74-76; see Barbezat, 131 A.3d at 69 (“A note endorsed in

blank becomes payable to bearer and may be negotiated by transfer of

possession alone until specifically endorsed.”). Also, Appellants’ suggestion

that ownership of the note cannot be established in Bayview because there

was no formal assignment or transfer is unavailing because “the chain of

possession by which a party comes to hold the note is immaterial to its

enforceability by the party.” Murray, 63 A.3d at 1266.

8

To the extent Appellants argue that the trial court erred in denying their

Motion in Limine until after trial, such argument is waived because

Appellants failed to raise it in their motion for post-trial relief. See

Sovereign Bank v. Valentino, 914 A.2d 415, 426 (Pa. Super. 2006)

(stating that issues not raised in a post-trial motion are waived for appeal

purposes); see also Pa.R.A.P. 302(a) (providing that “issues not raised in

(Footnote Continued Next Page)

- 12 -

J-A23021-16

point out that Bayview failed to comply with the requirements of Rule

2352(a) because they failed to file a statement of material facts. See

Appellants’ Brief at 42.

Rule 2352, relating to substitution of successor, provides in relevant

part, that “[t]he successor may become a party to a pending action by filing

of record a statement of the material facts on which the right to substitution

is based.” Pa.R.C.P. No. 2352(a).

Here, we agree with the trial court that Appellants’ argument lacks

merit because the documents appended to the Praecipe served as a

“sufficient statement of material facts on which the right to substitution

[was] based.” Trial Court Opinion, 1/26/17, at 6. As the trial court found,

the attachment to the Praecipe referenced Bayview’s receipt of the

“mortgage” and the “promissory note.” Id. In other words, the trial court

found that the Praecipe sufficiently stated the material facts upon which

Bayview’s substitution was based in accord with Rule 2352(a). Therefore,

Appellants’ argument does not merit any relief.

Lastly, Appellants argue that the trial court abused its discretion in

allowing Bayview to present the testimony of Terrence Schonleber

(“Schonleber”). Appellants argue that Schonleber lacked personal

knowledge to authenticate business records Bayview introduced at trial and

_______________________

(Footnote Continued)

the lower court are waived and cannot be raised for the first time on

appeal.”).

- 13 -

J-A23021-16

that Schonleber’s testimony about those records was hearsay. Appellants’

Brief at 46.

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:

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

- 14 -

J-A23021-16

information, method and time of preparation were such as

to justify its admission.

42 Pa.C.S.A. § 6108(b). “As long as the authenticating witness

can provide sufficient information relating to the preparation and

maintenance of the records to justify a presumption of

trustworthiness 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), appeal denied, 649

A.2d 666 (Pa. 1994).

Pautenis, 118 A.3d at 401. In other words,

[i]t 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, 631 A.2d at 1032-33 (internal citations omitted).

With the foregoing in mind, we agree with the trial court’s conclusion

that Schonleber’s testimony falls within the exception to hearsay and that he

was qualified to authenticate the business records produced at trial. Relying

on Pautenis, the trial court reasoned that Schonleber “could authenticate

and verify the accuracy of the relevant records such that the [trial court] did

not need to find that he had personal knowledge of the underlying facts in

order to testify.” Trial Court Opinion, 1/26/17, at 7. Accordingly, we discern

no abuse of discretion by the trial court.

- 15 -

J-A23021-16

Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 5/17/2017

- 16 -