AS Peleus LLC v. 1328 Unity Corp.

• Court: Superior Court of Pennsylvania
• Decided: June 9, 2015
• Docket: 1624 EDA 2014
• Status: Unpublished

Opinion

J-A06006-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

AS PELEUS, LLC, A DELAWARE LIMITED IN THE SUPERIOR COURT OF LIABILITY COMPANY PENNSYLVANIA

Appellee

v.

1328 UNITY CORP

Appellant No. 1624 EDA 2014

Appeal from the Judgment Entered August 4, 2014 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): July Term, 2012 No. 120700926

BEFORE: PANELLA, J., OTT, J., and JENKINS, J.

MEMORANDUM BY PANELLA, J. FILED JUNE 09, 2015

Appellant, 1328 Unity Corp (“Unity”), appeals from the judgment

entered after a non-jury verdict granting foreclosure to Appellee, AS Peleus,

LLC (“Peleus”). Unity challenges the trial court’s finding that Peleus was a

holder in due course of the underlying Note. After careful review, we affirm.

In 2006, Unity executed and delivered a promissory note (“Note”)

and associated mortgage in favor of Greenpoint Mortgage Funding, Inc., on

a property located in the City of Philadelphia (“the Property”). It is

undisputed, for purposes of this appeal, that Unity made no payments on

the note from 2009 to the time of trial in 2014.

In the intervening years, the Note and mortgage were transferred

multiple times, and as has become evident over the years, the formalities of J-A06006-15

these transfers were not well respected or documented by the mortgage

industry as a whole. In this instance, the mortgage was purportedly

transferred by an entity known as Waterfall Victoria Mortgage Trust 2011-

SBC1 to Citibank, N.A., as trustee for CMLTI Asset Trust. Unfortunately, at

that time, Waterfall Victoria Mortgage Trust 2011-SBC1 was not the

recorded assignor of the mortgage; Waterfall Victoria Master Fund, Ltd.,

was.

Nevertheless, shortly thereafter, on July 6, 2012, Citibank, N.A.,

instituted the instant mortgage foreclosure action against Unity. While the

litigation was pending, it is apparent that Citibank recognized the fault in the

recorded chain of title. Corrective assignments were therefore filed,

demonstrating a chain of transfers from Waterfall Victoria Master Fund, Ltd.

to Citibank, N.A., as trustee for CMLTI Asset Trust. Citibank, N.A.

subsequently transferred the Note and mortgage to Peleus, and Peleus was

substituted as plaintiff in the foreclosure action.

At trial, Peleus presented testimony and documentary evidence of the

chain of transfers that led to Peleus’s possession of the Note and mortgage.

Unity objected to the admission of one purported page of the Note, which

allegedly contained an indorsement in blank, on the grounds that it was

unauthenticated. The trial court, observing that pages of the Note were

numbered 1 through 6 of 6, and that this purported page contained no

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pagination, sustained Unity’s objection and admitted the Note without the

contested page.

At the conclusion of trial, the trial court found that Peleus had

established its standing to foreclose, as well as its right to foreclose, and

entered a verdict in favor of Peleus. Unity filed post-trial motions, which the

trial court denied. Judgment was entered on the verdict, and this timely

appeal followed.

On appeal, Unity raises two interrelated issues for our review. First,

Unity argues that the record does not support the trial court’s finding that

Peleus is a holder in due course of the Note and mortgage. In the

alternative, Unity contends that the trial court’s finding on Peleus’s status

was against the weight of the evidence at trial. Ultimately, we find neither

argument persuasive, and agree with the trial court that Peleus has

established itself as a holder in due course.

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 fact of the trial judge must be given the same weight and effect on appeal as the verdict of a jury. We consider the evidence in a light most favorable to the verdict winner. We will reverse the trial court only if its findings of fact are not supported by competent evidence in the record or if its findings are premised on an error of law. However, where the issue … concerns a question of law, our scope of review is plenary.

Stephan v. Waldron Elec. Heating and Cooling, LLC, 100 A.3d 660,

664-664 (Pa. Super. 2014) (citation and brackets omitted). In contrast, “a

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new trial will be granted on the basis that it is against the weight of the

evidence only when the [fact-finder’s] verdict is so contrary to the evidence

as to shock one’s sense of justice, and a new trial is necessary to remedy

the situation.” Pittsburgh Construction Company v. Griffith, 834 A.2d

572, 584 (Pa. Super. 2003) (citation omitted). We, as an appellate court, do

not review the record to determine whether our sense of justice is shocked;

we determine only whether the trial court’s analysis and conclusion on this

question constitute an abuse of discretion. See Zeffiro v. Gillen, 788 A.2d

1009, 1012 (Pa. Super. 2001).

Unlike a sufficiency of the evidence claim, we need not view all the

evidence in a light most favorable to the verdict winner. See id. Instead,

we must review all the evidence. See Lanning v. West, 803 A.2d 753, 766

(Pa. Super. 2002). We will not grant a new trial if the evidence presented at

trial was conflicting and the fact-finder could have decided in favor of either

party. See id. It is well established that the fact-finder is free to accept or

reject the testimony of both expert and lay witnesses, and to believe all,

part or none of the evidence. See Terwilliger v. Kitchen, 781 A.2d 1201,

1210 (Pa. Super. 2001).

Under either standard of review, Unity is due no relief on appeal.

Unity concedes that the Note and mortgage in this case are negotiable

instruments and are therefore governed by the Uniform Commercial Code

(“UCC”). See Appellant’s Brief, at 10. This Court has held that, under the

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UCC, a debtor does not have standing to challenge defects in the chain of

possession of a valid note. See J.P. Morgan Chase Bank, N.A. v. Francis

X. Murray, 63 A.3d 1258, 1266 (Pa. Super. 2013). This is due to the fact

that such a debtor’s liability under the note is completely discharged by

paying the holder, even if another party is ultimately determined to be the

real party in interest. See id., at 1265.

Here, Unity does not challenge the validity of the Note or mortgage,

only that Peleus has established that it is the real party in interest. See

Appellant’s Brief, at 9; 12-13. Under Murray, Unity does not have standing

to raise this challenge. We therefore conclude that the trial court did not err

in entering judgment in favor of Peleus.

Judgment affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 6/9/2015

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