Wells Fargo Bank N.A. v. James

90 A.3d 813, 2014 WL 1711487, 2014 Pa. Commw. LEXIS 243

• Court: Commonwealth Court of Pennsylvania
• Decided: May 1, 2014
• Status: Published

Opinions

OPINION BY

Judge COHN JUBELIRER.¹

Before this Court is the appeal of Land Tycoon, Inc. (Land Tycoon) from the March 7, 2013 Order of the Court of Common Pleas of Monroe County (trial court) denying Land Tycoon’s Petition to Intervene (Petition) in the mortgage foreclosure action instituted by Wells Fargo Bank N.A., as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset-Backed Pass-Through Certificates (Wells Fargo). On appeal, Land Tycoon argues that the trial court erred in denying its Petition.² In addition, by Order dated June 5, 2013, this Court directed the parties to address the questions of whether this Court has jurisdiction over Land Tycoon’s appeal and whether the trial court’s Order is an appealable order under the Pennsylvania Rules of Appellate Procedure.³, ⁴

On January 7, 2011, Wells Fargo filed a mortgage foreclosure complaint against Faye E. James, Credit Based Asset Servicing and Securitization, LLC, and Pledged Property II LLC for the property located at 28 Eagle Drive in East Stroudsburg, Pennsylvania (the Property). On September 12, 2012, Land Tycoon purchased the Property at an upset tax sale. On October 22, 2012, Land Tycoon filed its Petition with the trial court, seeking to intervene in the mortgage foreclosure action. After argument from Wells Fargo and Land Tycoon, the trial court, on March 7, 2013, issued its Order denying Land Tycoon’s Petition. In support, the trial court cited Financial Freedom, SFC v. Cooper, 21 A.3d 1229 (Pa.Super.2011). Land Tycoon filed a Motion for Reconsideration on March 21, 2013, which the trial court did not address. On April 5, 2013, Land Tycoon appealed to this Court.⁵

We first address the issue of whether the trial court’s Order denying the Petition is an appealable order. Rule 313(a) of the Pennsylvania Rules of Appellate Procedure provides that, generally, appeals may be taken from collateral orders, stating “[a]n appeal may be taken as of right from a collateral order of an administrative agency or lower court.” Pa. R.A.P. 313(a). Rule 313(b) defines a collateral order as “an order separable from and collateral to the main cause of action where the right involved is too important to be denied review and the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost.” Pa. R.A.P. 313(b). In this case, the main cause of action presented in the underlying case is whether Wells Fargo may foreclose on its mortgage. The question of whether Land Tycoon may intervene is separable from and collateral to this question. This Court has held that the rights of a landowner in its property are rights too important to be denied review, stating:

[T]he criteria for determining whether an appeal falls within the definition of [Pa. R.A.P.] 313(b) requires that the issues raised on appeal transcend the particular interests of the parties and involve rights deeply rooted in public policy. We further note[], however, that public policy rights include those rights of landowners seeking to protect their interests in their homes.... [T]he property interests of intervening neighboring homeowners in a zoning matter were too important to be denied review. ...

Township of Radnor v. Radnor Recreational, LLC, 859 A.2d 1, 4 (Pa.Cmwlth. 2004). Finally, if postponed until the resolution of Wells Fargo’s foreclosure action, the question of whether Land Tycoon may intervene in that action will be irreparably lost. Therefore, the trial court’s Order denying Land Tycoon’s Petition is a collateral order appealable as of right.

Next, we address the question of whether this Court has jurisdiction over Land Tycoon’s appeal. Section 762 of the Judicial Code, 42 Pa.C.S. § 762, sets forth this Court’s jurisdiction, stating, in relevant part:

(a) General rule. — Except as provided in subsection (b), the Commonwealth Court shall have exclusive jurisdiction of appeals from final orders of the courts of common pleas in the following cases:

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(4) Local government civil and criminal matters.

(i) All actions or proceedings arising under any municipality, institution district, public school, planning or zoning code or under which a municipality or other political subdivision or municipality authority may be formed or incorporated or where is drawn in question the application, interpretation or enforcement of any:

(A) statute regulating the affairs of political subdivisions, municipality and other local authorities or other public corporations or of the officers, employees or agents thereof, acting in their official capacity;

42 Pa.C.S. § 762(a)(4)(i)(A). In this case, Land Tycoon seeks to intervene in Wells Fargo’s foreclosure action based upon its purchase of the Property at an upset tax sale. In- order to resolve this issue, this Court must examine the Real Estate Tax Sale Law (Tax Sale Law).⁶ This Court and the Superior Court have both recognized that interpretation of the Tax Sale Law falls within Section 762(a)(4)(i)(A) of the Judicial Code. Pitti v. Pocono Business Furniture, Inc., 859 A.2d 523, 525 n. 1 (Pa.Cmwlth.2004); Donaldson v. Ritenour, 354 Pa.Super. 568, 512 A.2d 686, 687 (1986). Therefore, because Land Tycoon’s appeal deals with the effect of its purchase of the Property at an upset tax sale under the Tax Sale Law on Land Tycoon’s right to intervene in Wells Fargo’s foreclosure action, this Court has subject matter jurisdiction under Section 762(a)(4)(i)(A).

Finally, we address Land Tycoon’s argument that the trial court erred in denying its Petition. Rule 2327(4) of the Pennsylvania Rules of Civil Procedure provides that a party shall be permitted to intervene if “the determination of such action may affect any legally enforceable interest of such person whether or not such person may be bound by a judgment in the action.” Pa. R.C.P. No. 2327(4). Land Tycoon has an interest in the Property that will be bound by the foreclosure action because it has title to the Property. Section 609 of the Tax Sale Law, 72 P.S. § 5860.609; see also Pitti, 859 A.2d at 527 n. 5 (“[A]n upset tax sale will convey title subject to all recorded liens and mortgages”).⁷ Wells Fargo’s foreclosure action, if successful, will operate to extinguish Land Tycoon’s title and transfer title to Wells Fargo. Florida First Bon Capital Corp. v. Zoning Hearing Board of the Borough of Lansdale, 40 Pa.Cmwlth. 448, 397 A.2d 838, 841 (1979) (“The effect of a mortgage foreclosure and sale thereunder is to extinguish the mortgagor’s interest in the property and to transfer the estate to the purchaser as fully as it existed in the mortgagor at the date of the mortgage”). Thus, Land Tycoon has an interest in the Property that will be extinguished by Wells Fargo’s foreclosure action and, therefore, falls within Rule 2327(4).⁸

In denying Land Tycoon’s Petition, the trial court relied upon the Superior Court’s decision in Cooper. In Cooper, Financial Freedom, SFC (Financial Freedom) filed a mortgage foreclosure action against the estate of a deceased homeowner. Cooper, 21 A.3d at 1230. Financial Freedom filed an amended complaint in its foreclosure action on November 4, 2009. Id. The purchaser purchased the home at a tax sale held pursuant to the Tax Sale Law and recorded the deed on November 30, 2009. Id. After its amended complaint was not answered, default judgment was entered in favor of Financial Freedom on December 14, 2009. Id. The purchaser then filed a petition to intervene in Financial Freedom’s foreclosure action on March 26, 2010. Id. The trial court denied the purchaser’s petition. Id. at 1231. On appeal, the Superior Court looked to the language of Rule 2327, stating “[t]he right to intervene in an action is governed by Pa.[ ]R.C.P. [No.] 2327, which states that a person who has a certain recognized interest in the outcome of the litigation shall be permitted to intervene ‘[a]t any time during the pendency of an action.’ ” Id. (third alteration in original). However, because the purchaser did not seek to intervene until after the default judgment had been entered in Financial Freedom’s foreclosure action, the Superior Court held that the trial court did not err in denying the purchaser’s petition to intervene because that foreclosure action was no longer pending. Id.

Since the purchaser could not intervene because he did not file “during the pen-dency” of the foreclosure action, the purchaser then argued that he was an indispensable party to Financial Freedom’s foreclosure action pursuant to Rule 1144(a)(3) of the Pennsylvania Rules of Civil Procedure, Pa. R.C.P. No. 1144(a)(3),⁹ after he had purchased the property. Cooper, 21 A.3d at 1231-32. While a plaintiff in a foreclosure action must name the owner of the property as a defendant, under the rules, it is not the plaintiffs burden to continue to name any future owners of the property. Thus, the Superior Court stated that “ ‘[o]nce a foreclosure has been commenced, any person or entity acquiring an interest in the property will be bound by decree and need not be joined.’ ” Id. at 1232 (quoting First Union Mortgage Corporation v. Frempong, 744 A.2d 327, 336 (Pa.Super.1999)) (emphasis in original). The requirement in Rule 1144(a)(3) that a plaintiff name the owner of the property at issue in a foreclosure action as a defendant, applies only to the original complaint, not to amended filings filed after purchaser’s acquisition of the property. Id.

The current matter is distinguishable from Cooper on both issues. Land Tycoon filed its intervention while Wells Fargo’s foreclosure action was still pending, unlike the purchaser in Cooper, who did not seek to intervene until after the resolution of the mortgage foreclosure action. Therefore, because Land Tycoon filed “during the pendency” of the mortgage foreclosure action, its filing falls squarely within the requirements of Rule 2327. Thus, we do not need to reach the second issue, which involves whether a person who becomes an owner after a foreclosure action has been commenced also becomes a necessary party to that mortgage foreclosure action. Land Tycoon is not arguing on appeal,¹⁰ nor does it need to argue, that it is a necessary party to the foreclosure action pursuant to Rule 1144(a)(3) or that Wells Fargo erred in failing to name it as a defendant after Land Tycoon purchased the Property. Had Land Tycoon not filed its Petition, any determination in the mortgage foreclosure action would not have been subject to challenge because Wells Fargo did not name Land Tycoon as a defendant. Under the rules, it is not the responsibility of a mortgagor to constantly check the records to determine whether there has been any ownership change in the property during the pendency of its action. However, that is a different inquiry from whether such a subsequent owner must be permitted to intervene when it affirmatively files a petition to do so during the pendency of the action. Because Land Tycoon did file its Petition during the pendency of the foreclosure action, the issue raised here is not the issue raised in Cooper; therefore, Cooper is not controlling.

For these reasons, we reverse the Order of the trial court and remand this matter to allow Wells Fargo’s foreclosure action to continue with Land Tycoon as an inter-venor.

ORDER

NOW, May 1, 2014, the Order of the Court of Common Pleas of Monroe County in the above-captioned matter is hereby REVERSED and this matter is REMANDED in accordance with the foregoing opinion.

Jurisdiction relinquished.

1 . This matter was reassigned to the majority writer on January 31, 2014.

2 . In its brief, Land Tycoon also raises arguments that Wells Fargo improperly discontinued the foreclosure action as to less than all defendants without leave of court and that Wells Fargo’s mortgage lien was extinguished by the doctrine of merger of lien and title when Wells Fargo received a deed to 28 Eagle Drive in East Stroudsburg, PA (the Property). These issues go to the merits Land Tycoon wishes to raise in Wells Fargo's foreclosure action rather than Land Tycoon’s right to intervene in that action. Thus, it would be premature for this Court to address these issues where the trial court has not yet issued a final order in the underlying case.

3 . This Court may raise these issues sua sponte. City of Pittsburgh v. Silver, 50 A.3d 296, 299 n. 9 (Pa.Cmwlth.2012) (subject matter jurisdiction may be raised sua sponte); Board of Public Education v. Goldstein, 43 Pa.Cmwlth. 643, 403 A.2d 176, 177 (1979) (issue of appealability may be raised sua sponte).

4 . By this Court's order dated September 20, 2013, Faye E. James and Pledged Property II LLC were precluded from filing briefs and participating in oral argument in this matter. Wells Fargo discontinued its foreclosure action as to Credit Based Asset Servicing and Securitization, LLC by praecipe docketed in the trial court on September 19, 2011; therefore, this entity is not participating in this appeal.

5 ."Our scope of review from the denial of a petition to intervene is limited to determining whether the trial court abused its discretion or committed an error of law.” Vartan v. Reed, 677 A.2d 357, 360 n. 4 (Pa.Cmwlth. 1996).

6 . Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101-5860.803.

7 . As noted, Section 609 of the Tax Sale Law and this Court’s precedent state that a purchaser at an upset tax sale takes title "subject to all recorded liens and mortgages.” Pitti, 859 A.2d at 527 n. 5 (citing Section 609). The dissent appears to equate taking subject to a mortgage with acquiescing to foreclosure. That Land Tycoon took title to the Property subject to any existing mortgages does not affect the validity of Wells Fargo’s existing mortgage or any right Wells Fargo would otherwise have to foreclose on such mortgage.

8 . The dissent argues that Rule 2329 of the Pennsylvania Rules of Civil Procedure permitted the trial court to refuse Land Tycoon’s Petition on the grounds that the issues Land Tycoon seeks to raise are "not in subordination to and in recognition of the propriety of the action.” Pa. R.C.P. No. 2329(1). Because the trial court denied Land Tycoon’s Petition pursuant to Pa. R.C.P. No. 2327, the trial court did not cite this provision in its Order, nor does Wells Fargo raise it in its brief. Because the issue of whether Land Tycoon's defenses to Wells Fargo's foreclosure action are in subordination to and recognition of the action was raised neither by the trial court nor the parties, we do not believe this Court may raise this issue sua sponte. See Barna v. Pennsylvania Board of Probation and Parole, 8 A.3d 370, 372 n. 2 (Pa.Cmwlth. 2010) (noting that this Court "may not review questions that were never raised”). However, even had this issue been relied upon by the trial court or raised by one of the parties, it would not provide an alternative basis for affirming the trial court under the circumstances of this case. Land Tycoon's arguments that the original mortgagee must give evidence regarding the authenticity of the mortgage documents, (Land Tycoon’s Proposed Answer, New Matter and Counterclaim ¶ 16, R.R. at 91), and that Wells Fargo improperly discontinued that action as to less than all parties are in subordination to and recognition of the propriety of Wells Fargo’s foreclosure action. Therefore, the trial court did not have the discretion to deny Land Tycoon’s intervention on the basis of Rule 2329(1).

9 . Rule 1144(a)(3) provides that, in a foreclosure action, the plaintiff must name the owner of the property in question as a defendant. Pa. R.C.P. No. 1144(a)(3).

10 . In its Petition to Intervene, Land Tycoon argued that it had a right to intervene pursuant to the Pennsylvania Rules of Civil Procedure governing intervention. (Petition to Intervene ¶¶ 3, 9, R.R. at 79-80.) It also argued, as the dissent points out, that it was an indispensable party pursuant to Rule 1032(b) of the Pennsylvania Rules of Civil Procedure, Pa. R.C.P. No. 1032(b) (requiring that indispensable parties be joined). (Petition to Intervene ¶ 11, R.R. at 80.) On appeal, however, Land Tycoon has abandoned the argument that it is an indispensable party but still maintains its argument that it has a right to intervene under Rule 2327.