Wykel, N. v. U.S. Bank Trust

2022 Pa. Super. 167

• Court: Superior Court of Pennsylvania
• Decided: September 30, 2022
• Docket: 2185 EDA 2021
• Status: Published

Opinion

J-A11035-22

2022 PA Super 167

NANCY A. WYKEL : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : WILLIAM N. KNAPP A/K/A WILLIAM : No. 2185 EDA 2021 A.N. KNAPP AND U.S. BANK TRUST : NATIONAL ASSOCIATION, AS : TRUSTEE OF THE CHALET SERIES III : TRUST :

Appeal from the Order Entered October 16, 2021 In the Court of Common Pleas of Chester County Civil Division at No(s): 2020-03823-RC

BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.

OPINION BY McLAUGHLIN, J.: FILED SEPTEMBER 30, 2022

Nancy A. Wykel (“Wife”) appeals from the order entering judgment in

favor of U.S. Bank Trust National Association, as Trustee of the Chalet Series

III Trust (“U.S. Bank”). The order directed that the mortgage at issue, held

by U.S. Bank, would continue to encumber Wife’s interest in the subject

property. We affirm.

This case involves Wife’s quiet title action and U.S. Bank’s counterclaim,

regarding whether U.S. Bank’s mortgage is defective because Wife did not

sign it. The following recitation of facts is taken from the trial court’s factual

findings, which Wife does not challenge. Wife married William N. Knapp

(“Husband”) in 2000. Thereafter, in February 2001, Husband conveyed a

home in Kennett Square, Pennsylvania (“Property”), to himself and Wife as J-A11035-22

tenants by the entireties. In 2002, both Husband and Wife executed a

mortgage against the Property (“2002 mortgage”).

Husband refinanced the Property on April 14, 2004, by executing a

mortgage in favor of World Savings Bank (“Refinanced Mortgage”). Wife did

not sign the documents securing the Refinanced Mortgage. The documents

referred to Husband as “William A. Knapp, A married man.” The proceeds of

the Refinanced Mortgage were used to pay off the 2002 Mortgage. At the time

Husband executed the Refinanced Mortgage, Husband handled the couple’s

finances.

Husband and Wife then obtained a home equity loan in July 2004,

secured by a mortgage to Countrywide Home Loans (“Countrywide

Mortgage”). In the Countrywide Mortgage documents, both parties

acknowledged that this new mortgage was subordinate to the Refinanced

Mortgage. Countrywide Mortgage at ¶ g. Later that year, the couple moved to

another home and rented the Property.

Husband continued making payments on the Refinanced Mortgage until

February 2016, when he defaulted. The couple divorced in April 2016. On

August 23, 2017, Wells Fargo Bank (World Savings Bank’s successor in

interest) filed a quiet title action seeking to reform the Refinanced Mortgage

to include Wife. In June 2019, U.S. Bank became Wells Fargo’s successor in

interest to the Refinanced Loan, and the court dismissed the suit.

Wife then instituted this action in June 2020, to quiet title against U.S.

Bank. U.S. Bank filed a counterclaim containing three counts, two of which

-2- J-A11035-22

are relevant here. One count sought to quiet title and asserted the “entireties

presumption,” which sets up a presumption that when a spouse takes action

regarding marital property titled as a tenancy by the entireties, the spouse

has acted on behalf of both spouses. U.S. Bank’s Answer and Counterclaim at

7 (unpaginated); R.R. 57a. As relief, this count sought a declaration that the

subject mortgage was perfected at the time of recordation, as a valid lien

against both Wife’s and Husband’s interests in the Property as tenants by the

entireties.

Another count alternatively sought reformation of the mortgage. It

asserted that “the Mortgage was not executed by Plaintiff as the result of a

mistake on the part of the parties to the transaction and/or the title agent

which closed the transaction.” Id. at 8 (unpaginated); ¶ 59; R.R. 58a. This

count sought a reformation of the mortgage to render it a valid lien

encumbering both spouses’ tenancy by the entireties interests.

The trial court conducted a trial in July 2021, at which Wife and a

representative of U.S. Bank testified. Following trial, the trial court applied the

entireties presumption and declared that the Refinanced Mortgage

“remain[ed] a lien against the entire” Property. Decision, entered 7/13/21, at

8. Wife filed a motion for post-trial relief, which the trial court denied after

oral argument.1 Wife filed the instant timely appeal and both the trial court

and Wife complied with Pa.R.A.P. 1925. ____________________________________________

1Following oral argument, the trial court granted Wife’s motion to dismiss Husband as a party in this case.

-3- J-A11035-22

Wife raises the following issues on appeal, which we have reordered for

ease for disposition:

1) Whether the trial court below erred in applying the “entireties presumption” where [Wife], the non-executing spouse to the [Refinanced Mortgage] did not consent to the mortgage or execute it as required by the Statute of Frauds?

2) Whether the trial court below erred in equitabl[y] reforming a mortgage in violation of the rule set forth by the Supreme Court of Pennsylvania’s decision in Regions Mortgage, Inc. v. Muthler that limits reformation to mistake, accident, fraud or bad faith?

3) Whether the trial court below erred in applying the doctrine of equitable subrogation where the original lender volunteered to lend the funds without [W]ife’s execution of the mortgage and application of the doctrine would be substantially unjust to [Wife]?

4) Whether the trial court below erred in failing to apply the doctrine of laches to bar equitable reformation of a 17-year[-]old mortgage or applying the four[-]year statute of limitations for unjust enrichment and/or the six[-]year statute of limitations for a quiet title action?

Wife’s Br. at 3.

In her first issue, Wife argues that the court erred by applying the

“entireties presumption” and thereby concluding that Husband acted on behalf

of Wife when executing the Refinanced Mortgage. Wife makes what is

essentially a public policy argument that the entireties presumption is

antiquated and allows spouses to act for each other without the other’s

knowledge. She argues that the statuTe of frauds should preclude the

application of this doctrine because the non-participating spouse’s interest in

real property is affected without that spouse’s assent in writing.

-4- J-A11035-22

When reviewing a judgment rendered after a bench trial, we 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.”

Bank of N.Y. Mellon v. Bach, 159 A.3d 16, 19 (Pa.Super. 2017) (quoting

Stephan v. Waldron Elec. Heating and Cooling LLC, 100 A.3d 660, 664-

65 (Pa.Super. 2014)). We give a judge’s findings of fact the same weight and

effect on appeal as a jury verdict, and we consider the evidence in a light most

favorable to the verdict winner. Id. We reverse the court’s factual findings

only if the record does not support them or if the court based them on an error

of law. Id. However, as to questions of law, our standard of review is de novo,

and our scope of review is plenary. Id.

A tenancy by the entireties exists when property, either real or personal,

is held jointly by a married couple. Clingerman v. Sadowski, 519 A.2d 378,

380-81 (Pa. 1986). “Neither spouse in a tenancy by the entireties may

independently appropriate property to his or her own use to the exclusion of

the other, and neither spouse, acting independently, may sever the estate by,

for example, conveying part of the property away.” Id. (citations omitted).

This form of ownership gives rise to the “entireties presumption,” which

provides that, “with respect to properties held by the entireties” during the

marriage, “either spouse has the power to act for both without specific

authority, so long as the benefits of such action inure to both.” J.R. Christ

Constr. Co. v. Olevsky, 232 A.2d 196, 199 (Pa. 1967). The entireties

presumption can be rebutted by establishing, by a preponderance of the

-5- J-A11035-22

evidence, that a spouse did not have the other spouse’s tacit authority to act

on both spouses’ behalf. Id.

In this case, the trial court properly considered Wife’s testimony when

concluding that the entireties presumption applied:

[Wife] deferred to [Husband] on matters concerning the family’s finances, including the mortgage at issue. [Wife] benefited from the mortgage as the proceeds repaid a prior mortgage on which she was obligated. The tenancy was not severed when [Husband] refinanced the existing joint mortgage. Given these circumstances, the presumption supplies implied authority that [Husband] was acting on [Wife’s] behalf. To overcome this presumption, [Wife] was required to establish, by a preponderance of the evidence, that [Husband] did not have her tacit authority to refinance the property, which she failed to do.

Order, entered 10/15/21, at n.1 (citations to record omitted).

We discern no error. The benefit of the Refinanced Mortgage inured to

Wife as her obligation on a prior mortgage was thereby extinguished. See J.R.

Christ, 232 A.2d at 199. Further, the trial court, as factfinder, was well within

its purview when finding that Wife’s testimony failed to establish that she

opposed the Refinanced Mortgage and that Husband did not have her

authority to execute the mortgage document. Id.

Wife also raises the issue of the application of the statute of frauds in

cases involving the entireties presumption. She contends that the

presumption cannot apply where only one spouse signed the mortgage. The

trial court cited Deutsche Bank National Trust Co. v. Evans, 421 B.R. 193,

200 (W.D. Pa. 2009), and concluded that the statute of frauds did not preclude

the application of the entireties presumption where Wife “does not contend

-6- J-A11035-22

that there was perjury or fraud in the transaction at issue and none is evident.”

See Tr. Ct. Order at n.1.

The trial court did not err in its reconciling of the statute of frauds with

the entireties presumption. “The entireties presumption can render a

mortgage enforceable even though only one spouse actually executed the

mortgage.” Wells Fargo Bank, N.A. v. Carnell, No. 3:16-cv-130, 2018 WL

2994393, at *7 (W.D. Pa. 2018) (citation and internal quotation marks

omitted)). In the case the trial court cited, Evans, the court faced a similar

question as the trial court faced here: whether a husband could grant a

mortgage on marital property without the wife’s signature. The federal district

court found that he could and rejected the husband and wife’s reliance on the

statute of frauds. The court explained that “where perjury or fraud is

impossible, there is no room for the statute.” Evans, 421 B.R. at 199 (citing

Schuster v. Pa. Turnpike, 149 A.2d 447, 451 n.11 (Pa. 1959)). Accordingly,

the court concluded that where a party asserts the statute of frauds as a

defense against the entireties presumption, the proper analysis requires “(1)

a determination of whether the entireties presumption is properly applicable;

and (2) if so, a determination that the specific application of the entireties

presumption complies with the purpose and policies of the [s]tatute of

[f]rauds.” Id.

The Evans court’s harmonization of the statute of frauds with the

entireties presumption is sound. We should reconcile seemingly conflicting

cases where possible. See Durante v. Pa. State Police, 809 A.2d 369, 372

-7- J-A11035-22

(Pa. 2002) (“[I]t would be improvident to conclude that Cunningham

overruled Palmeri sub silentio unless the two are irreconcilable.” (emphasis

in original)). As in Evans, here, Wife “does not contend that there was perjury

or fraud in the transaction at issue and none is evident.” See Tr. Ct. Order at

n.1. See also Carnell, 2018 WL 2994393, at *7. The trial court did not err

by concluding that the statute of frauds did not preclude the application of the

entireties presumption.

Wife’s citation to Del Borrello v. Lauletta, 317 A.2d 254, 255 (Pa.

1974), for the proposition that marriage does not extend general agency to a

spouse for purposes of entering into a written agreement without the other’s

consent, also affords her no relief. The court in Del Borrello considered

“whether an ‘option to purchase’ clause contained in a lease of realty is

enforceable against a husband and wife holding title to the premises as

tenants by the entireties, when only the now-deceased husband had signed

the lease.” Id. at 254-55. The Supreme Court noted the rule that neither

spouse’s independent actions may work a severance of the entireties estate.

It also stated that “no general agency” relationship arises from a marriage

“nor any presumption flowing therefrom that either spouse has authority to

convey real estate held by the entireties without the other’s joinder therein.”

Id. at 255. Applying these principles, and without any mention of the

entireties presumption, the Court found the option clause unenforceable.

Del Borrello does not require a finding of error. Just seven years before

that decision, the Supreme Court in J.R. Christ set forth the principles of the

-8- J-A11035-22

entireties presumption, which it has never overruled, including in Del

Borrello. Because the two decisions address different rules of law, we will not

find an implicit overruling. See Commonwealth v. Johnson, 582 A.2d 336,

339 (Pa.Super. 1990) (refusing to find a prior decision overruled sub silentio

when cases presented different issues). The Court in Del Borrello did not

comment on the entireties presumption, while in J.R. Christ, it explicitly set

forth the parameters for raising and rebutting the presumption, and applied

them. Moreover, it appears the presumption would not have applied in Del

Borrello, where the action would have worked a divestiture of the wife’s

interest and not inured to both spouses’ benefits. In contrast, in the instant

case, the trial court properly applied the entireties presumption because Wife

was not divested of a property interest by the Refinanced Mortgage. Rather,

she benefited by obtaining a refinancing of her obligations under the previous

mortgage. See Carnell, 2018 WL 2994393, at *7. Wife’s first issue warrants

no relief.

In her second issue, Wife contends that this case is analogous to

Regions Mortgage, Inc. v. Muthler, 889 A.2d 39 (Pa. 2005). In Muthler,

the Pennsylvania Supreme Court reaffirmed prior holdings limiting the remedy

of equitable reformation of a mortgage for mutual mistake to cases where the

party against whom reformation is sought had “knowledge of the mistake

sufficient to justify an inference of fraud or bad faith.” Id. at 42. Wife posits

that because U.S. Bank did not establish mistake or fraud, the Refinanced

-9- J-A11035-22

Mortgage should not have been deemed to be enforceable against her as a

non-signatory.

The trial court here found Muthler to be instantly unavailing, and we

agree. While our Supreme Court in Muthler declined to reform a mortgage

that was signed only by a husband, to include his wife, in that case the lender

had unilaterally removed the wife’s name from the mortgage. Most

significantly, the Court in Muthler merely restated the law regarding mutual

mistake as applied to a mortgage. It did not consider the entireties

presumption. It does not appear that the parties in Muthler even raised the

entireties presumption. Conversely, here, U.S. Bank asserted the

presumption, and the trial court properly applied it to conclude that the

Refinanced Mortgage encumbers Wife’s interest in the Property. Therefore,

Wife’s second issue also lacks merit.

In light of our disposition, we need not address Wife’s third issue. Wife

argues that the trial court erroneously applied the doctrine of equitable

subrogation as an alternative means of continuing to encumber her property

with the Refinanced Mortgage. Because we have held that the trial court

properly determined that the entireties presumption operates to continue

Wife’s obligations under the Refinanced Mortgage, we need not review the trial

court’s alternative basis for relief.

In her fourth and final issue, Wife presents several thinly developed

claims. First, she contends that the doctrine of laches should apply because

although Wells Fargo initiated this case back in 2017, assigning the mortgage

- 10 - J-A11035-22

to U.S. Bank delayed the matter until 2020. Wife claims that because she was

divorced in 2016, this delay caused her prejudice. In addition, Wife presents

the overarching contention that the four-year statute of limitations for claims

sounding in unjust enrichment and that the six-year general “catch-all” statute

of limitations should apply to preclude this action. She claims the breach of

contract occurred when Husband defaulted on the Refinanced Mortgage in

February 2016, and thus the instant action filed in 2020 should be deemed

too late. Wife also maintains that the quiet title action should have accrued in

2004 when the Refinanced Mortgage was executed, so the six-year catch-all

statute of limitations is also implicated.

The doctrine of laches is an affirmative defense that bars the prosecution

of stale claims and is the practical application of the maxim that “those who

sleep on their rights must awaken to the consequence that they have

disappeared.” Fulton v. Fulton, 106 A.3d 127, 131 (Pa.Super. 2014)

(quoting Kern v. Kern, 892 A.2d 1, 9 (Pa.Super. 2005)). We have explained

laches as follows:

Laches bars relief when the complaining party is guilty of want of due diligence in failing to promptly institute the action to the prejudice of another. Thus, in order to prevail on an assertion of laches, respondents must establish: a) a delay arising from petitioner’s failure to exercise due diligence; and, b) prejudice to the respondents resulting from the delay.

Id. (quoting Estate of Scharlach, 809 A.2d 376, 382-83 (Pa.Super. 2002)).

Evidence of prejudice may include evidence “that a witness has died or

become unavailable, that substantiating records were lost or destroyed, or

- 11 - J-A11035-22

that the defendant has changed his position in anticipation that the opposing

party has waived his claims.” Commonwealth ex rel. Baldwin v. Richard,

751 A.2d 647, 651 (Pa. 2000).

In this case, the court concluded that Wife failed to demonstrate

prejudice. It explained that even according to Wife’s evidence, “No witness

has died, no records are missing, no position has been changed in anticipation

that claims had been waived.” Tr. Ct. Or. at n.1. We discern no error. See

Fulton, 106 A.3d at 131; Baldwin, 751 A.2d at 651.

Wife’s related statute of limitations arguments are inadequately

developed and thereby waived. Wife presents limited argument and scant

legal authority, which she fails to connect to the facts of this case. See

Pa.R.A.P. 2119(a); Norman for Estate of Shearlds v. Temple Univ. Health

Sys., 208 A.3d 1115, 1119 (Pa.Super. 2019) (holding claims waived “because

they are undeveloped and lack citation to pertinent legal authority”). Wife fails

to explain how the statute of limitations for unjust enrichment is applicable

here. Wife further committed waiver by failing to include her “catch-all”

statute of limitations argument in her Rule 1925(b) statement. See Pa.R.A.P.

1925(b)(4)(vii) (“[i]ssues not included in the Statement and/or not raised in

accordance with the provisions of this paragraph (b)(4) are waived”). Hence,

Wife’s last issue also fails. Accordingly, we affirm.

Order affirmed.

- 12 - J-A11035-22

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 9/30/2022

- 13 -