J-S45017-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
AMERICAN LOAN 2, LLC : IN THE SUPERIOR COURT OF : PENNSYLVANIA : v. : : : 3006 BALTZ ST LLC : : Appellant : No. 60 EDA 2020
Appeal from the Judgment Entered January 15, 2020, in the Court of Common Pleas of Philadelphia County, Civil Division at No(s): No. 180405042.
BEFORE: BOWES, J., KUNSELMAN, J., and MURRAY, J.
MEMORANDUM BY KUNSELMAN, J.: Filed: January 21, 2021
The defendant in this action to quiet title, 3006 Baltz St LLC, appeals
from the judgment entered in favor of American Loan 2, LLC. Following a
bench trial, the court found a third party that sold the subject property to
3006 Baltz St LLC had forged a mortgage-satisfaction piece. The trial court
voided that fraudulent instrument and reinstated American Loan 2’s $110,000
Mortgage on the subject property, in Philadelphia. We affirm.
American Loan 2 is a closely held corporation. Its sole member, Alan
Candell, Esq. founded American Loan 2 in 2006 to provide loans to investors
in the Philadelphia rental and house-flipping markets. Mr. Candell’s company
has processed over 500 loans and mortgages. American Loan 2 obtained and
recorded mortgages on the properties that its borrowers owned, so it could
foreclose upon the properties in cases of default. J-S45017-20
A third party, RBA Capital L.P., funded American Loan 2. RBA Capital
would secure its line of credit by recording security interests in the mortgages
that American Loan 2 and similar lending companies had on properties. As
part of that arrangement, RBA Capital did not service the loans or mortgages
and had no connection to the property owners. However, if American Loan 2
defaulted on its obligations to RBA Capital, RBA Capital could use the security
interest to substitute itself as the mortgagee of the properties. There is no
evidence that such a substitution ever occurred.
On June 25, 2007, Songhai Partners LLC borrowed $65,000 from
American Loan 2, LLP to improve the subject property. Songhai executed a
promissory note and mortgage in favor of American Loan 2 on the property.
The Recorder of Deeds of Philadelphia County recorded that mortgage within
the property’s chain of title. Three days later, American Loan 2 assigned that
mortgage to RBA Capital “to grant RBA Capital a security interest in the
$65,000 Mortgage.” Trial Court Findings of Fact, 10/31/19, at 2. “Under the
RBA Line of Credit, [American Loan 2] was authorized to modify the $65,000
loan” with Songhai. Id. at 3.
American Loan 2 granted Songhai additional funds on April 1, 2008.
American Loan 2 therefore received a new promissory note from Songhai and
a modified mortgage for $110,000 on the subject property. Songhai also
executed an assignment of rents to American Loan 2, so American Loan 2
could assume the right to collect the rents from the subject property if Songhai
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defaulted. The Recorder of Deeds recorded both instruments within the chain
of title.
In March of 2017, Songhai still owed the full principle and accumulated
interest on its loan. Even so, Songhai forged a satisfaction piece for the
$110,000 Mortgage and the assignment of rents. Those documents bore the
falsified signatures of Mr. Candell, and they failed to identify him as an officer
and agent of American Loan 2. Songhai presented its forgeries to the Recorder
of Deeds, who recorded them. On the same day, Songhai presented a forged
satisfaction for the $65,000 Mortgage, which purported to be executed by
Timothy Bricker on behalf of RBA Capital. Mr. Bricker testified that, on the
date Songhai forged the $65,000 Satisfaction, he no long worked at RBA
Capital, and RBA Capital was defunct. The Recorder recorded that forgery as
well.
Then, by an April 26, 2017 deed, Songhai conveyed the subject property
to 3006 Baltz St LLC for $75,000. The next week, Songhai attempted to
convey the same property to Eleventh Street LLC for $50,000. Finally, by a
November 8, 2017 deed, Eleventh Street LLC attempted to convey its interest
in the property to 3006 Baltz St LLC for $1. Mr. Candell testified that the
subject property is in a desirable neighborhood and was worth $300,000 at
the time of the three conveyances.
The parties agree that 3006 Baltz St LLC has title to the property. Upon
discovering the forged satisfactions pieces in the chain of title, American Loan
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2 filed this suit to determine whether its $110,000 Mortgage encumbers 3006
Baltz St LLC’s title.
At trial, American Loan 2 called two witnesses, Mr. Candell and Mr.
Bricker. The trial court deemed them credible. American Loan 2 also
submitted various documents. 3006 Baltz St LLC presented no evidence or
testimony. The trial court filed extensive Findings of Fact and Conclusions of
Law and an order granting American Loan 2 full relief. Specially, it granted
American Loan 2 (1) declaratory judgment that the $110,000 Satisfaction is
null and void; (2) an order striking the forgery from the chain of title; and (3)
declaratory judgment that the $110,000 Mortgage is reinstated.
The trial court denied post-trial motions, and this appeal followed. The
court issued its 1925(a) Opinion, incorporating the Findings of Fact and
Conclusions of Law by reference.
In this Court, 3006 Baltz St LLC asserts the trial court erred when (a) it
found that the $110,000 Mortgage was a valid lien, (b) that American Loan 2
could modify the mortgage after assigning the mortgage to RBA Capital, (c)
that the $110,000 Satisfaction is a forgery, and (d) that 3006 Baltz St LLC is
not a subsequent, bona fide purchaser. See 3006 Baltz St LLC’s Brief at 1-2.
We afford the factual findings from a bench trial “the same weight and
effect on appeal as a verdict of a jury . . . .” Zuk v. Zuk, 55 A.3d 102, 106
(Pa. Super. 2012). We view the evidence “in the light most favorable to the
victorious party below and all evidence and proper inferences favorable to that
party must be taken as true . . . .” Hart v. Arnold 884 A.2d 316, 330–31
-4- J-S45017-20
(Pa. Super. 2005), appeal denied, 897 A.2d 458 (Pa. 2006). On questions of
law, however, our standard of review is de novo, and “our scope of review is
plenary, as it is with any review of questions of law.” Zuk, 55 A.3d at 106.
American Loan 2 presented the only evidence at the trial. Based on that
uncontradicted evidence, the factual findings of the trial court have support in
the record and bind this Court. As for the trial court’s Conclusions of Law, we
fully agree with the analysis of that court. The learned Judge Giovanni O.
Campbell of the Court of Common Pleas of Philadelphia County fully disposed
of the issues now on appeal following trial, and we adopt his Conclusions of
Law as our own.
The trial court ruled that the $110,000 Mortgage is valid, because
American Loan 2 perfected and recorded it while Songhai owned the property
in issue. The assignment of the $65,000 Mortgage to RBA Capital did not limit
American Loan 2’s right to modify its loan with Songhai, because there was
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J-S45017-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
AMERICAN LOAN 2, LLC : IN THE SUPERIOR COURT OF : PENNSYLVANIA : v. : : : 3006 BALTZ ST LLC : : Appellant : No. 60 EDA 2020
Appeal from the Judgment Entered January 15, 2020, in the Court of Common Pleas of Philadelphia County, Civil Division at No(s): No. 180405042.
BEFORE: BOWES, J., KUNSELMAN, J., and MURRAY, J.
MEMORANDUM BY KUNSELMAN, J.: Filed: January 21, 2021
The defendant in this action to quiet title, 3006 Baltz St LLC, appeals
from the judgment entered in favor of American Loan 2, LLC. Following a
bench trial, the court found a third party that sold the subject property to
3006 Baltz St LLC had forged a mortgage-satisfaction piece. The trial court
voided that fraudulent instrument and reinstated American Loan 2’s $110,000
Mortgage on the subject property, in Philadelphia. We affirm.
American Loan 2 is a closely held corporation. Its sole member, Alan
Candell, Esq. founded American Loan 2 in 2006 to provide loans to investors
in the Philadelphia rental and house-flipping markets. Mr. Candell’s company
has processed over 500 loans and mortgages. American Loan 2 obtained and
recorded mortgages on the properties that its borrowers owned, so it could
foreclose upon the properties in cases of default. J-S45017-20
A third party, RBA Capital L.P., funded American Loan 2. RBA Capital
would secure its line of credit by recording security interests in the mortgages
that American Loan 2 and similar lending companies had on properties. As
part of that arrangement, RBA Capital did not service the loans or mortgages
and had no connection to the property owners. However, if American Loan 2
defaulted on its obligations to RBA Capital, RBA Capital could use the security
interest to substitute itself as the mortgagee of the properties. There is no
evidence that such a substitution ever occurred.
On June 25, 2007, Songhai Partners LLC borrowed $65,000 from
American Loan 2, LLP to improve the subject property. Songhai executed a
promissory note and mortgage in favor of American Loan 2 on the property.
The Recorder of Deeds of Philadelphia County recorded that mortgage within
the property’s chain of title. Three days later, American Loan 2 assigned that
mortgage to RBA Capital “to grant RBA Capital a security interest in the
$65,000 Mortgage.” Trial Court Findings of Fact, 10/31/19, at 2. “Under the
RBA Line of Credit, [American Loan 2] was authorized to modify the $65,000
loan” with Songhai. Id. at 3.
American Loan 2 granted Songhai additional funds on April 1, 2008.
American Loan 2 therefore received a new promissory note from Songhai and
a modified mortgage for $110,000 on the subject property. Songhai also
executed an assignment of rents to American Loan 2, so American Loan 2
could assume the right to collect the rents from the subject property if Songhai
-2- J-S45017-20
defaulted. The Recorder of Deeds recorded both instruments within the chain
of title.
In March of 2017, Songhai still owed the full principle and accumulated
interest on its loan. Even so, Songhai forged a satisfaction piece for the
$110,000 Mortgage and the assignment of rents. Those documents bore the
falsified signatures of Mr. Candell, and they failed to identify him as an officer
and agent of American Loan 2. Songhai presented its forgeries to the Recorder
of Deeds, who recorded them. On the same day, Songhai presented a forged
satisfaction for the $65,000 Mortgage, which purported to be executed by
Timothy Bricker on behalf of RBA Capital. Mr. Bricker testified that, on the
date Songhai forged the $65,000 Satisfaction, he no long worked at RBA
Capital, and RBA Capital was defunct. The Recorder recorded that forgery as
well.
Then, by an April 26, 2017 deed, Songhai conveyed the subject property
to 3006 Baltz St LLC for $75,000. The next week, Songhai attempted to
convey the same property to Eleventh Street LLC for $50,000. Finally, by a
November 8, 2017 deed, Eleventh Street LLC attempted to convey its interest
in the property to 3006 Baltz St LLC for $1. Mr. Candell testified that the
subject property is in a desirable neighborhood and was worth $300,000 at
the time of the three conveyances.
The parties agree that 3006 Baltz St LLC has title to the property. Upon
discovering the forged satisfactions pieces in the chain of title, American Loan
-3- J-S45017-20
2 filed this suit to determine whether its $110,000 Mortgage encumbers 3006
Baltz St LLC’s title.
At trial, American Loan 2 called two witnesses, Mr. Candell and Mr.
Bricker. The trial court deemed them credible. American Loan 2 also
submitted various documents. 3006 Baltz St LLC presented no evidence or
testimony. The trial court filed extensive Findings of Fact and Conclusions of
Law and an order granting American Loan 2 full relief. Specially, it granted
American Loan 2 (1) declaratory judgment that the $110,000 Satisfaction is
null and void; (2) an order striking the forgery from the chain of title; and (3)
declaratory judgment that the $110,000 Mortgage is reinstated.
The trial court denied post-trial motions, and this appeal followed. The
court issued its 1925(a) Opinion, incorporating the Findings of Fact and
Conclusions of Law by reference.
In this Court, 3006 Baltz St LLC asserts the trial court erred when (a) it
found that the $110,000 Mortgage was a valid lien, (b) that American Loan 2
could modify the mortgage after assigning the mortgage to RBA Capital, (c)
that the $110,000 Satisfaction is a forgery, and (d) that 3006 Baltz St LLC is
not a subsequent, bona fide purchaser. See 3006 Baltz St LLC’s Brief at 1-2.
We afford the factual findings from a bench trial “the same weight and
effect on appeal as a verdict of a jury . . . .” Zuk v. Zuk, 55 A.3d 102, 106
(Pa. Super. 2012). We view the evidence “in the light most favorable to the
victorious party below and all evidence and proper inferences favorable to that
party must be taken as true . . . .” Hart v. Arnold 884 A.2d 316, 330–31
-4- J-S45017-20
(Pa. Super. 2005), appeal denied, 897 A.2d 458 (Pa. 2006). On questions of
law, however, our standard of review is de novo, and “our scope of review is
plenary, as it is with any review of questions of law.” Zuk, 55 A.3d at 106.
American Loan 2 presented the only evidence at the trial. Based on that
uncontradicted evidence, the factual findings of the trial court have support in
the record and bind this Court. As for the trial court’s Conclusions of Law, we
fully agree with the analysis of that court. The learned Judge Giovanni O.
Campbell of the Court of Common Pleas of Philadelphia County fully disposed
of the issues now on appeal following trial, and we adopt his Conclusions of
Law as our own.
The trial court ruled that the $110,000 Mortgage is valid, because
American Loan 2 perfected and recorded it while Songhai owned the property
in issue. The assignment of the $65,000 Mortgage to RBA Capital did not limit
American Loan 2’s right to modify its loan with Songhai, because there was
testimony that RBA Capital had no dealings with end borrowers. Instead, RBA
Capital acquired a security interest in the hundreds of mortgages American
Loan 2 held and serviced. Regarding the finding that the satisfactions were
forgeries, the trial court was free to believe Mr. Candell and Mr. Bricker that
they did not sign those documents. Combined with the exhibits of record,
their testimony was clear and convincing evidence of forgery.
Finally, 3006 Baltz St LLC failed to prove its affirmative defense that it
was a subsequent, bona fide purchaser for value, because it presented no
evidence supporting that claim. Moreover, equity will not permit such a result.
-5- J-S45017-20
By forging the satisfactions, Songhai eliminated the possibility that a
subsequent purchaser could be bona fide in the eyes of equity. A defrauded
mortgagee (i.e., American Loan 2) retains greater equity in the property than
a purported, subsequent, bona fide purchaser (i.e., 3006 Baltz St LLC), even
if the subsequent purchaser was ignorant of the fraud.1
The parties are directed to attach a copy of Judge Campbell’s Findings
of Fact and Conclusions of Law to this Memorandum in all future proceedings
concerning this property. Based upon the foregoing and the other reasoning
in Judge Campbell’s decision, we affirm the order denying post-trial motions.
Judgment affirmed.
Judge Murray joins the memorandum.
Judge Bowes concurs in the result.
____________________________________________
1 The Supreme Court of Pennsylvania has long held a subsequent party’s “equity does not rise higher, nor as high, as that of [a defrauded party in the chain of title,] who was in complete ignorance of the fraud . . . .” Thees v. Prudential Ins. Co. of Am. of Newark, 190 A. 895, 896 (Pa. 1937). Where, as here, the Recorder of Deeds has recorded a satisfaction “without the authority of the mortgagee[, i]t is immaterial whether the want of authority is the result of fraud or of mistake.” Brown v. Henry, 106 Pa. 262, 268 (1884). “The authority to enter satisfaction is lacking in either case, and because of its absence the satisfaction is worthless.” Id. As the $110,000 satisfaction was worthless, the trial court correctly held that 3006 Baltz St LLC could not be a subsequent, bona fide purchaser for value by relying upon that forged document.
-6- J-S45017-20
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 1/21/21
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