Bank of America v. Ellsworth, W.

• Court: Superior Court of Pennsylvania
• Decided: December 17, 2015
• Docket: 1395 WDA 2014
• Status: Unpublished

Opinion

J-A23009-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

BANK OF AMERICA, N.A., S/B/M TO : IN THE SUPERIOR COURT OF BAC HOME LOANS SERVICING, L.P., : PENNSYLVANIA F/K/A COUNTRYWIDE HOME LOANS : SERVICING, L.P., : : Appellees : : v. : : WILLIAM C. ELLSWORTH, A/K/A : WILLIAM C. ELLSWORTH, JR., AND : TERESA A. ELLSWORTH, : : Appellants : No. 1395 WDA 2014

Appeal from the Order entered on August 4, 2014 in the Court of Common Pleas of Allegheny County, Civil Division, No. MG-13-000449

BEFORE: GANTMAN, P.J., LAZARUS and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.: FILED DECEMBER 17, 2015

William C. Ellsworth a/k/a William C. Ellsworth, Jr., and Theresa A.

Ellsworth (collectively “the Ellsworths”) appeal from the Order denying their

Petition to Set Aside Sheriff’s Sale and Default Judgment. We affirm.

The trial court set forth the relevant underlying facts as follows:

On March 27, 2013, Bank of America, N.A. (“BANA”) filed a Mortgage Foreclosure Action against the Ellsworths with respect to [a Federal Housing Administration (“FHA”)] Mortgage that had been assigned to BANA. [The subject property is located at 490 Herbst Manor Road, Coraopolis, Pennsylvania.] The Assignment to BANA was recorded in the Allegheny County Recorder of Deeds Office on April 18, 2012. [The Ellsworths failed to make their monthly payments beginning on September 1, 2012.] After commencing th[e] action, BANA assigned the mortgage to Nationstar Mortgage, LLC (“Nationstar”)[,] pursuant to an J-A23009-15

Assignment recorded in the Allegheny County Records of Deeds Office on July 23, 2013.

The Ellsworths did not respond to the mortgage foreclosure complaint and, on July 2, 2013, a[n in rem] default judgment was entered against them in the amount of $308,477.19. The judgment was assigned to Nationstar pursuant to an Assignment of Judgment recorded September 19, 2013. The Ellsworths filed an Emergency Motion to Stay the Sheriff Sale, which was scheduled to occur on October 7, 2013. The Emergency Motion to Stay was granted and the Sheriff’s Sale was continued. The Ellsworths’ home was ultimately sold at Sheriff’s Sale on January 6, 2014.

The Ellsworths filed a Petition to [S]et [A]side the Sheriff’s Sale and Default Judgment on February 4, 2014[,] arguing that [BANA] did not have jurisdictional standing to file this action, and thus, could not enter a judgment against the Ellsworths. [On April 28, 2014, BANA filed a Praecipe to Substitute Nationstar as the plaintiff of record. The Ellsworths did not object.] After argument and briefing by the parties, t[he trial c]ourt denied the Ellsworths’ Petition by Order dated August 4, 2014. The Ellsworths filed a Notice of Appeal[.]

Trial Court Opinion, 12/1/14, at 1-2 (unnumbered).

The trial court ordered the Ellsworths to file a Pennsylvania Rule of

Appellate Procedure 1925(b) concise statement. The Ellsworths filed a

timely Concise Statement and the trial court issued an Opinion.

On appeal, the Ellsworths raise the following questions for our review:

1. Did the lower court err when it held that [BANA’s] [S]heriff’s [S]ale should not be set aside?

2. Were [BANA] and Nationstar [] indispensable parties at the time of the Default Judgment and Sheriff’s Sale?

3. When the mortgage contract only authorizes a foreclosing plaintiff to collect unliquidated, reasonable foreclosure fees that are incurred for services performed, but the foreclosing plaintiff in the complaint demands fixed fees, does the

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Prothonotary have the Article V power to ignore the contract and enter a default judgment of a sum certain or is that judgment void?

4. Did the lower court err when it overlooked the correct FHA laws and non-record facts were deemed part of the record?

Brief for Appellants at 2.

The purpose of a sheriff’s sale in mortgage foreclosure proceedings is to realize out of the land, the debt, interest, and costs which are due, or have accrued to, the judgment creditor. Pursuant to Rule 3132 of the Pennsylvania Rules of Civil Procedure, a sheriff’s sale may be set aside upon petition of an interested party “upon proper cause shown” and where the trial court deems it “just and proper under the circumstances.” Pa.R.C.P. 3132. The burden of proving circumstances warranting the exercise of the court’s equitable powers is on the petitioner. Equitable considerations govern the trial court’s decision to set aside a sheriff’s sale, and this Court will not reverse the trial court’s decision absent an abuse of discretion. An abuse of discretion occurs where, for example, the trial court misapplies the law.

Nationstar Mortgage, LLC v. Lark, 73 A.3d 1265, 1267 (Pa. Super. 2013)

(some citations omitted).

In their first claim, the Ellsworths contend that the trial court erred in

failing to set aside the sheriff’s sale. Brief for Appellants at 9, 15. The

Ellsworths point out that because the property in question involved an FHA

mortgage, BANA and Nationstar was required to afford them pre-forclosure

rights as set forth in HUD regulations. Id. at 10-14. The Ellsworths argue

that these federal regulations preempt state pre-foreclosure laws and thus,

must be applied to save homes from foreclosure. Id. at 14-15. The

Ellsworths claim that BANA was required to plead compliance with HUD

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regulations in its Complaint, pursuant to Pa.R.C.P. 1147. Brief for Appellants

at 14. The Ellsworths primarily rely upon Everbank v. Chacon, Boston

Housing Court No. 13-SP-50 (June 19, 2013) (Winik, F.J.), and Fleet Real

Estate Funding Corp. v. Smith, 530 A.2d 919 (Pa. Super. 1987), to

support their argument. Brief for Appellants at 9-12.

Here, the trial court addressed the Ellsworths’ claims and correctly

determined that they are without merit. See Trial Court Opinion, 12/1/14,

at 2-4 (unnumbered); Smith, 530 A.2d at 922-23; see also Wells Fargo

Bank, N.A. v. Gilroy, 2015 WL 4680780, at *3 (Pa. Super. 2015)

(concluding that appellant’s claim that VA foreclosure law “trumps”

Pennsylvania law, requiring the bank to send her a pre-foreclosure notice

that complied with VA foreclosure laws and regulations was waived because

she waited five years after entry of judgment before filing her petition to

strike). Thus, we adopt the sound reasoning of the trial court for the

purpose of this appeal. See Trial Court Opinion, 12/1/14, at 2-4

(unnumbered).

As an addendum, we note that the plain language of Pa.R.C.P. 1147

contains an exhaustive list of what must be pleaded in a complaint for a

mortgage foreclosure action. See Pa.R.C.P. 1147. In point of fact,

compliance with HUD regulations is not an averment required under

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Pa.R.C.P. 1147.1 Here, BANA fulfilled all of the requirements of Rule 1147 in

its Complaint for mortgage foreclosure. Moreover, as noted by the trial

court, the Ellsworths could have asserted non-compliance with the HUD

regulations as a defense, but failed to do so. See Smith, 530 A.2d at 923

(holding that “a mortgagor of an FHA-insured mortgage may raise as an

equitable defense to foreclosure, the mortgagee’s deviation from compliance

with the forbearance provisions of the HUD Handbook and regulations.”);

see also Resolution Trust Corp. v. Copley Qu-Wayne Assocs., 683 A.2d

269, 275 (Pa. 1996) (noting that “it is improper to consider the equities of

the matter in a petition to strike[.]”); Gilroy, 2015 WL 4680780, at *3

(stating that while equitable defense raise important concerns, they are not

jurisdictional in nature and can be waived). Thus, we conclude that the

Ellsworths’ first claim is without merit.2

1 We also note that the HUD regulations were not a condition precedent that must be pleaded under Pa.R.C.P. 1019(c). 2 The Ellsworth also rely upon U.S. v. Buskell, 2014 WL 1765386 (E.D. Pa. 2014), to support their claims. However, it is well-settled that “[d]ecisions of the federal district courts are not binding authority for this Court[.]” Huber v. Etkin, 58 A.3d 772, 779 n.7 (Pa. Super. 2012). Nevertheless, upon our review of Buskell, we conclude that its reasoning is inapplicable to this case. In Buskell, the federal district court denied the mortgagee’s motion for default judgment without prejudice and directed the mortgagee to file a new motion with instructions to attach specific exhibits. Buskell, 2014 WL 1765386, at *8. In this case, default judgment had already been entered and the property in question had already been sold at a Sheriff’s Sale. Thus, the reasoning in Buskell cannot be applied to this case, as the Ellsworths failed to raise the issue of the HUD regulations in response to the mortgage foreclosure Complaint, and the Ellsworths have not met their burden to set aside the sale. See Smith, 530 A.2d at 923.

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In their second claim, the Ellsworths contend that BANA and

Nationstar are indispensable parties to this action as both had an

enforceable interest in the Ellsworths’ note and mortgage. Brief for

Appellants at 15, 17; see also id. at 15-16 (wherein the Ellsworths argue

that this claim is not waived because it involves the jurisdiction of the court).

The Ellsworths point out that while BANA assigned the mortgage and note to

Nationstar in June 2013, BANA continued to litigate its mortgage foreclosure

action without adding Nationstar as a party. Id. at 15. Id. at 15-16. The

Ellsworths claim that BANA and Nationstar have advanced conflicting and

overlapping interests with respect to which mortgagee is entitled to

foreclose. Id. at 17.

All actions shall be prosecuted by and in the name of the real party in

interest. Pa.R.C.P. 2002. “A real party in interest in any given contract or

chose in action is the person who can discharge the duties created and

control an action to enforce rights.” JP Morgan Chase Bank, N.A. v.

Murray, 63 A.3d 1258, 1263 (Pa. Super. 2013). However,

[i]f a plaintiff has commenced an action in his own name and thereafter transfers his interest therein, in whole or in part, the action may continue in the name of the original plaintiff, or upon petition of the original plaintiff or of the transferee or of any other party in interest in the action, the court may direct the transferee to be substituted as plaintiff or joined with the original plaintiff.

Pa.R.C.P. 2004. “The language of Rule 2004 is clear in not requiring that,

once a transfer of an interest occurs by a plaintiff after an action has

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commenced, a transferee be named as a co-plaintiff or substituted as

plaintiff.” Cole v. Boyd, 719 A.2d 311, 313 (Pa. Super. 1998).

BANA instituted the underlying foreclosure action on March 27, 2013.

Thereafter, BANA assigned the mortgage and note to Nationstar on June 19,

2013.3 On July 2, 2013, after the Ellsworths did not respond to the

mortgage foreclosure complaint, an in rem default judgment was entered

against them in the amount of $308,477.19. Prior to the Sheriff’s Sale, on

September 19, 2013, BANA filed a praecipe to assign the default judgment

to Nationstar. Thereafter, the Ellsworths home was sold by Sheriff’s Sale on

January 6, 2014.

Here, BANA was permitted to remain the named party in the action,

despite having assigned the mortgage to Nationstar. See Cole, 719 A.2d at

314 (stating that under “rule [2004], it is not mandatory for the assignee to

be substituted as plaintiff or joined as co-plaintiff, and the fact that the

plaintiff and assignee choose to continue the action in the name of the

original plaintiff cannot be construed as a fraud upon the court, nor does it

render the proceeding defective or create an infirmity in the judgment.”);

see also Pa.R.C.P. 2004. Further, the Ellsworths have not pointed to any

rule or case law that imposes a time limit within which Nationstar, as the

successor in interest, was required to substitute itself as a party in the

action. See, e.g., Pa.R.C.P. 2352, Substitution of Successor. Indeed,

3 The assignment of the mortgage was recorded on July 23, 2013.

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the Ellsworths, who were on notice of the assignment, never demanded that

Nationstar be substituted as a party. See Pa.R.C.P. 2352(b) (stating that

“[i]f the successor does not voluntarily become a party, the prothonotary,

upon praecipe of an adverse party setting forth the material facts[,] shall

enter a rule upon the successor to show cause why the successor should not

be substituted as a party.”). Moreover, contrary to the Ellsworths’ bald

argument, there is no evidence that Nationstar and BANA have conflicting

and overlapping interests. Based upon the foregoing, we conclude that the

fact that BANA continued as the named plaintiff in this case despite

assigning the mortgage to Nationstar did not affect the substantive rights of

the Ellsworths. See Cole, 719 A.2d at 314 (noting that the failure to

substitute the successor in interest as the plaintiff did not change the fact

that the plaintiff still had to prove his case, and the defendant had a full and

fair hearing to present its defense). Thus, the Ellsworths’ second claim is

without merit.4

In their third claim, the Ellsworths contend that the Prothonotary did

not have authority to enter default judgment in this case. Brief for

Appellants at 17, 19. The Ellsworths argue that the Prothonotary engaged in

judicial functions in determining attorneys’ fees when entering the judgment.

4 We note that the Ellsworths have cited to numerous Civil Rules as part of their argument. However, a review of the rules demonstrates that they do not entitle the Ellsworths to relief.

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Id. at 17-18. As a result, the Ellsworths assert that the default judgment

must be stricken. Id. at 18-19.

Default judgments generally are governed by the Pennsylvania Rules of Civil Procedure and are entered by prothonotaries and without judicial involvement. Such judgments are not judicial orders and are not subject to an immediate appeal after their entry; rather, to obtain relief, the party against whom the judgment was entered may either file a petition to strike the default judgment or file a petition to open the default judgment. Once a court of common pleas rules on one of these petitions, then the aggrieved party has a right to an appeal to a higher court pursuant to Pennsylvania Rule of Appellate Procedure 311(a)(1).

EMC Mortgage, LLC v. Biddle, 114 A.3d 1057, 1061 (Pa. Super. 2015)

(citations omitted).

Here, the Ellsworths did not file a petition to open or strike the default

judgment and did not raise this claim until filing their Petition to Set Aside

the Sheriff’s Sale. See Trial Court Opinion, 12/1/14, at 5 (unnumbered)

(stating that the Ellsworths claim regarding the Prothonotary’s entry of

default judgment was waived); see also Biddle, 114 A.3d at 1061 (stating

that “to obtain relief, the party against whom the judgment was entered

may either file a petition to strike the default judgment or file a petition to

open the default judgment.”); id. at 1063-64 (stating that a judgment

should only be stricken if it is defective on its face and that a judgment need

not be stricken where the only alleged error is the amount entered).

Nevertheless, our review of BANA’s Complaint and the entry of the in rem

default judgment discloses that BANA never sought attorneys’ fees in

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seeking judgment in the amount of $308,477.19.5 See Complaint, 3/27/13,

at 3 (unnumbered); see also Gilroy, 2015 WL 4680780, at *6 (stating that

there was no reason to modify the amount of judgment as “the prothonotary

entered judgment in the precise amount prayed for in the complaint.”).

Indeed, the Ellsworths have not cited to any place in the record

demonstrating that the default judgment included attorneys’ fees, or that

the Prothonotary made any calculations in entering the default judgment.

See Pa.R.A.P. 2119(a). Thus, the Ellsworths are not entitled to relief on

their third claim.

In their final claim, the Ellsworths contend that the trial court

improperly reached its decision by relying on incorrect HUD Handbook

provisions and facts that were not part of the record. Brief for Appellants at

19, 21. The Ellsworths argue that the trial court ignored the applicable HUD

regulations, which are binding on state courts. Id. at 21.

The Ellsworths failed to raise this claim in their Rule 1925(b) Concise

Statement. See Concise Statement, 9/17/14. Thus, the Ellsworths’ claim is

waived on appeal. See Hess v. Fox Rothschild, LLP, 925 A.2d 798, 803

(Pa. Super. 2007) (stating that “any issue not raised in an appellant’s Rule

1925(b) statement will be deemed waived for purposes of appellate

review.”).

5 On September 19, 2013, BANA assigned the default judgment to Nationstar in the amount of $308,477.19.

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Moreover, the Ellsworths reiterate their argument from their first claim

by asserting that the trial court erred in refusing to set aside the Sheriff’s

Sale. See Brief for Appellants at 19-22. However, as noted above, we have

already concluded that the trial court did not abuse its discretion in denying

the Ellsworths’ Petition to Set Aside the Sheriff’s Sale. Thus, we cannot

grant the Ellsworths relief on their final claim.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 12/17/2015

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