Juniata Valley Bank v. Coffee Run Equity Assoc.

• Court: Superior Court of Pennsylvania
• Decided: February 13, 2018
• Docket: 285 MDA 2017
• Status: Unpublished

Opinion

J-A20024-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

THE JUNIATA VALLEY BANK : IN THE SUPERIOR COURT OF : PENNSYLVANIA : v. : : : COFFEE RUN EQUITY ASSOCIATES, : LP : : No. 285 MDA 2017 Appellant :

Appeal from the Order Entered January 18, 2017 In the Court of Common Pleas of Mifflin County Civil Division at No(s): CP-44-CV-488-2015

BEFORE: GANTMAN, P.J., PANELLA, J., and FORD ELLIOTT, P.J.E.

MEMORANDUM BY PANELLA, J. FILED FEBRUARY 13, 2018

In this mortgage foreclosure action, Appellant, Coffee Run Equity

Associates, LP (“CREA”), appeals from the order entered in the Mifflin County

Court of Common Pleas, granting summary judgment in favor of Appellee, The

Juniata Valley Bank (“JVB”), awarding judgment in rem for $1,472,728.33,

plus interest, costs, and attorneys’ fees. We affirm.

The relevant facts and procedural history of this case are as follows.

CREA purchased a tract of land in 2009, and executed a mortgage to JVB for

$1,300,000.00. The parties modified the mortgage agreement in 2010. CREA

stopped making monthly payments shortly thereafter, in February 2011. CREA

also failed to pay the full mortgage debt by the date of maturity.

Through an email sent on August 11, 2014, JVB demanded a payment

of $25,000.00 on the past-due mortgage. JVB’s email stated that it planned J-A20024-17

to exercise its right to the certificate of deposit it held as collateral to secure

the mortgage debt and to the option of foreclosure if CREA failed to return the

property deed to JVB. CREA’s lawyer paid JVB the $25,000.00.

JVB then filed a mortgage foreclosure complaint against CREA on March

30, 2015. CREA filed an answer with new matter and counterclaims, to which

JVB filed preliminary objections. The court granted JVB’s preliminary

objections, and dismissed CREA’s new matter and counterclaims. JVB later

filed a motion for summary judgment, which the court also granted. CREA’s

appeal is now before us.

On appeal, CREA challenges the trial court’s determination that its

$25,000.00 payment to JVB was an acknowledgment of the mortgage debt.

CREA argues the payment was in consideration of a wholly separate deal, not

an acknowledgment of CREA’s nonpayment. CREA theorizes that the payment

consequently did not toll the four-year statute of limitations. Thus, CREA

asserts that JVB filed its complaint after the statute of limitations expired for

mortgage foreclosure actions. CREA maintains the trial court erred in granting

JVB’s preliminary objections to CREA’s statute of limitations defense. CREA

concludes we must vacate the trial court’s order granting JVB’s preliminary

objections, as well as the order granting summary judgment in favor of JVB.

We disagree.

We review a challenge to a trial court’s order granting preliminary

objections by examining whether the trial court committed an error of law.

See Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa. Super. 2011).

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Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief. If any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections.

Id. (citation mitted).

“[A]n action upon an instrument in writing under seal must be

commenced within 20 years.” 42 Pa.C.S.A. § 5529(b)(1). Conversely, an

action such as a mortgage foreclosure, which is not under seal, must be

commenced within four years. See 42 Pa.C.S.A. § 5525(a)(7). Specifically,

“[w]here such an instrument is payable upon demand, the time within which

an action on it must be commenced shall be computed from the later of either

demand or any payment of principal of or interest on the instrument.” Id.

(emphasis added).

“Pursuant to the ‘acknowledgement doctrine,’ a statute of limitations

may be tolled or its bar removed by a promise to pay the debt.” Makozy v.

Makozy, 874 A.2d 1160, 1170 (Pa. Super. 2005) (citation omitted). “This

[Court] has recognized that there can be no more clear and unequivocal

acknowledgement of a debt than payment.” Cole v. Lawrence, 701 A.2d 987,

990 (Pa. Super. 1997) (citation omitted).

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The mortgage at issue in this action was not under seal. Consequently,

JVB was subject to a four-year statute of limitations to bring a mortgage

foreclosure action. See 42 Pa.C.S.A. § 5525(a)(7). CREA alleges that its

$25,000.00 payment to JVB was in consideration for a different agreement,

wherein JVB would agree not to foreclose while a group of investors raised

money to satisfy the mortgage. In an exhibit attached to its counterclaims and

affirmative defenses, CREA supplied an email sent from a representative of

JVB to David McNitt, the attorney for CREA. See CREA’s Second Amended

Answer, filed 7/29/15, at Exhibit A. That email was dated August 11, 2014.

In it, JVB does not reference any agreement not to foreclose. Instead,

it specifically states that it is “no longer able to entertain conceptual

possibilities” and demands payment of $25,000.00 on the past-due mortgage

by Friday, August 22, 2014. Id. The email also noted that JVB planned to

exercise its right to the certificate of deposit it held as collateral to secure the

mortgage debt, and requested that CREA return the property deed to JVB or

else face foreclosure.

CREA also attached as an exhibit a check dated August 22, 2014, in the

requested amount of $25,000.00, signed by David McNitt with “CREA LP” in

the memo line. See id., at Exhibit B.

Even viewing the record in the light most favorable to CREA, the

payment on August 22, 2014, was in response to JVB’s specific written

demand for payment on the mortgage. Nowhere does JVB state that it would

agree not to foreclose on the mortgage. Indeed, the email states precisely the

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opposite—that it planned to foreclose unless CREA offered the property deed

in lieu of foreclosure. JVB’s email also demands payment. CREA paid JVB

$25,000.00 in response to this email. Thus, CREA’s acknowledgment of that

debt by subsequent payment tolled the statute of limitations. See 42

Pa.C.S.A. § 5525(a)(7).

JVB’s complaint in mortgage foreclosure, filed on March 30, 2015, was

well within the four-year statute of limitations. Thus, the trial court did not err

in granting JVB’s preliminary objections, and we decline to reverse the order.

We turn next to an examination of the grant of summary judgment.

Summary judgment in a mortgage foreclosure action is subject to the

same rules as other civil actions. See Pa.R.C.P. 1141(b). We review a

challenge to the entry of summary judgment as follows:

[We] may disturb the order of the trial court only where it is established that the court committed an error of law or abused its discretion. As with all questions of law, our review is plenary.

In evaluating the trial court’s decision to enter summary judgment, we focus on the legal standard articulated in the summary judgment rule. See Pa.R.C.P., Rule 1035.2. The rule states that where there is no genuine issue of material fact and the moving party is entitled to relief as a matter of law, summary judgment may be entered. Where the nonmoving party bears the burden of proof on an issue, he may not merely rely on his pleadings or answers in order to survive summary judgment. 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. Lastly, we will review the record in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.

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E.R. Linde Const. Corp. v. Goodwin, 68 A.3d 346, 349 (Pa. Super. 2013)

(citation omitted; brackets in original).

The holder of a mortgage has the right, upon default, to bring a

foreclosure action. See Cunningham v. McWilliams, 714 A.2d 1054, 1056

(Pa. Super. 1998). The holder is entitled to summary judgment “if the

mortgagors admit that the mortgage is in default, that they have failed to pay

interest on the obligation, and that the recorded mortgage is in the specified

amount.” Id., at 1057 (citation omitted). Responsive pleadings in a mortgage

foreclosure action should include specific denials; general denials constitute

admissions. See Pa.R.C.P. 1029(b); Bank of America, N.A. v. Gibson, 102

A.3d 462, 466-67 (Pa. Super. 2014). “[G]eneral denials by mortgagors that

they are without information sufficient to form a belief as to the truth of

averments as to the principal and interest owing [on the mortgage] must be

considered an admission of those facts.” Id. at 467 (citation omitted).

Here, JVB’s complaint complied with Pa.R.C.P. 1147, and included as

exhibits copies of the original recorded mortgage, the modified mortgage, and

a description of the land. CREA’s answer admits that it is in default on the

mortgage. The answer states CREA is without sufficient knowledge or

information to calculate the amount owing on the mortgage. CREA offers only

general denials to JVB’s complaint, and, as such, admits the facts of JVB’s

complaint. See CREA’s Second Amended Answer, filed 7/29/15, at 1-2.

CREA failed to raise any material issues of fact or law that would refute

the averments in the complaint, and JVB established therein a prima facie

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case to institute foreclosure. Accordingly, the trial court’s grant of the motion

for summary judgment filed by JVB was proper.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 02/13/2018

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