J-A17032-14
2014 PA Super 217
BANK OF AMERICA, N.A., SUCCESSOR IN THE SUPERIOR COURT OF
BY MERGER TO BAC HOME LOANS PENNSYLVANIA
SERVICING, L.P., F/K/A COUNTRYWIDE
HOME LOANS SERVICING, L.P.
Appellee
v.
MATTHEW J. GIBSON
Appellant No. 2472 EDA 2013
Appeal from the Order entered July 30, 2013
In the Court of Common Pleas of Chester County
Civil Division at No: 12-09196-RC
BEFORE: GANTMAN, P.J., PANELLA, and STABILE, JJ.
OPINION BY STABILE, J.: Filed: October 2, 2014
In this mortgage foreclosure action, the trial court entered summary
judgment in favor of the mortgage holder, Appellee, Bank of America, N.A.,
successor by merger to BAC Home Loans Servicing, L.P., f/k/a Countrywide
Home Loans Servicing, L.P. (Bank of America). William Gibson, Appellant
and mortgagor, appeals from that order, arguing that disputed, genuine
issues of material fact exist regarding an assignment of the mortgage, thus
precluding entry of summary judgment. We affirm.
On April 26, 2007, Appellant mortgaged the subject property to
National Bank of Kansas City, the Lender, with Mortgage Electronic Systems
Inc. (MERS) “acting solely as nominee for Lender and Lender’s successors
and assigns.” Mortgage ¶ (C). The mortgage stated further:
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Borrower [i.e., Appellant] understands and agrees that MERS
holds only legal title to the interests granted by Borrower in this
Security Instrument, but, if necessary to comply with law or
custom, MERS (as nominee for Lender and Lender’s successors
and assigns) has the right: to exercise any or all of those
interests, including, but not limited to, releasing and cancelling
this Security Instrument.
Id. ¶ (Q). Appellant concurrently executed a promissory note in favor of
National Bank of Kansas City. MERS later assigned the mortgage to
Countrywide Home Loans, Inc., who then, in turn, assigned the mortgage to
BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing,
LP. Bank of America subsequently subsumed BAC Home Loans Servicing,
LP, by merger.1
Bank of America filed a complaint in foreclosure against Appellant on
August 29, 2012. Bank of America pled that it held Appellant’s mortgage,
and the mortgage was in default. In his answer with new matter, Appellant
responded with general denials and a claim that he never executed a
mortgage in favor of MERS. Bank of America moved for summary judgment,
which the trial court granted. This appeal followed.
Before this Court, Appellant assigns the following as error:
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1
In addition to being duly recorded, the mortgage was filed of record in this
case. See Plaintiff’s Motion for Summary Judgment, 2/13/13, Exhibit A.
The promissory note is Exhibit A-1. The two assignments, also filed with the
recorder of deeds, are Exhibits A-2 and A-3. The documents evincing the
merger of Countrywide Home Loans Servicing, LP, into Bank of America are
Exhibit A-4.
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Did the trial court commit an error of law in its grant of summary
judgment when there did not exist a note transfer through the
chain of loan title to [Bank of America], and the mortgage
assignment was effectuated by [MERS], and, in doing so, relied
on inadmissible claimed facts which otherwise created a genuine,
material issue?
Appellant’s Brief at 9. Appellant’s argument is two-pronged. First, he claims
that MERS lacked authority to assign the mortgage. Second, he contends
that Bank of America does not hold the note securing the mortgage.
We review an order granting summary judgment for an abuse of
discretion. Indalex, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA,
83 A.3d 418, 420 (Pa. Super. 2013). Our scope of review is plenary, and we
view the record in the light most favorable to the nonmoving party. Id. A
party bearing the burden of proof at trial is entitled to summary judgment
“whenever there is no genuine issue of any material fact as to a necessary
element of the cause of action or defense which could be established by
additional discovery or expert report[.]” Pa.R.C.P. No. 1035.2(1). In
response to a summary judgment motion, the nonmoving party cannot rest
upon the pleadings, but rather must set forth specific facts demonstrating a
genuine issue of material fact. Pa.R.C.P. No. 1035.3.
The holder of a mortgage has the right, upon default, to bring a
foreclosure action. Cunningham v. McWilliams, 714 A.2d 1054, 1056-57
(Pa. Super. 1998). The holder of a mortgage is entitled to summary
judgment if the mortgagor admits that the mortgage is in default, the
mortgagor has failed to pay on the obligation, and the recorded mortgage is
in the specified amount. Id.
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First, we reject Appellant’s contention that MERS lacked the authority
to assign the mortgage. Appellant cites no persuasive authority in support
of this contention. The mortgage expressly granted the right to exercise all
Lender’s interests to MERS.
Appellant cites three cases that are in accord with his contention. We,
however, find those cases wholly unpersuasive. In In re Agard, 444 B.R.
231, 250-54 (Bankr. E.D.N.Y. 2011), a federal bankruptcy court—applying
New York law—held that MERS lacks authority to assign mortgages. On
appeal, however, a federal district court vacated the bankruptcy court’s
decision as an unconstitutional advisory opinion.2 See Agard v. Select
Portfolio Serv’g, Inc., Nos. 11–CV–1826(JS), 11–CV–2366(JS), 2012 WL
1043690, at *4-5, 2012 U.S. Dist. LEXIS 43286, at *11-13 (E.D.N.Y. Mar.
28, 2012). In In re Wilhelm, 407 B.R. 392, 403-05 (Bankr. D. Idaho
2009), another bankruptcy court held that purported holders of mortgage
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2
In his brief, Appellant cites In re Agard as having been “vacated on other
grounds.” Appellant’s Brief at 13. That assertion is incorrect. See Agard,
2012 WL 1043690, at *4, 2012 U.S. Dist. LEXIS 43286 at *12 (“[The
bankruptcy judge’s] conclusion—that MERS did not have authority to assign
the Mortgage—had no effect on the parties or the bankruptcy. Accordingly,
this portion of the Stay Order constitutes an unconstitutional advisory
opinion and must be vacated.”) (paragraph break omitted). In addition, at
least one New York trial court has disavowed In re Agard’s reading of state
law. See Deutsche Bank Nat’l Tr. Co. v. Pietranico, 928 N.Y.S.2d 818,
835-36 (Sup. Ct. Suffolk County), aff’d, 957 N.Y.S.2d 868 (App. Div. 2d
Dep. 2013).
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notes lacked standing to move for relief from a bankruptcy stay, because the
mortgage notes did not grant MERS the power to assign under Idaho law.
In re Wilhelm, however, involved non-judicial foreclosures, and the Idaho
Supreme Court subsequently held that a trustee need not prove standing
under Idaho law prior to initiating a non-judicial foreclosure proceeding.
See Trotter v. Bank of N.Y. Mellon, 275 P.3d 857, 861-62 (Idaho 2012).
The third case, Bain v. Metro. Mortgage Group, Inc., 285 P.3d 34, 41-47
(Wash. 2010), concerned whether MERS can be a beneficiary under
Washington’s Deed of Trust Act.
Appellant’s other cases concern MERS’ ability to maintain a private
recording system—not its authority to assign mortgages under Pennsylvania
law. See MERSCORP, Inc. v. Romaine, 861 N.E.2d 81, 82, 85 (N.Y.
2006) (holding that New York county clerks are required to record and index
mortgages and assignments listing MERS as the lender’s nominee or
mortgagee of record); Montgomery County, Pa. Recorder of Deeds v.
MERSCORP, Inc., 298 F.R.D. 202 (E.D. Pa. 2014) (granting class action
status to Pennsylvania’s recorders of deeds seeking to compel MERS to
judicially record all mortgage assignments on MERS’ private recording
system).3
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3
In a subsequent reported opinion, the district court denied MERS’ motion
for summary judgment. Montgomery County, --- F. Supp. 2d ---, 2014
WL 1608394, 2014 U.S. Dist. LEXIS 55436 (E.D. Pa. Apr. 22, 2014). In a
second reported opinion, the district court granted in part the recorders’
(Footnote Continued Next Page)
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We find one of our own decisions, MERS v. Ralich, 982 A.2d 77 (Pa.
Super. 2009), to be instructive. In Ralich, the mortgagors attempted to
forestall a sheriff’s sale by arguing, inter alia, that MERS lacked the authority
to foreclose. Construing a mortgage with language identical to the mortgage
in this case, we held that the mortgage clearly gave MERS, as nominee, the
authority to enforce the loan. We reach the same result here. Appellant’s
mortgage granted MERS the right to exercise “any and all” interests
incidental to legal title. Those interests include the ability to assign the
mortgage.
Finally, we are persuaded by the fact that Appellant made payments
on his mortgage to Bank of America until his default. Only after Bank of
America began foreclosure proceedings did Appellant contend that the
mortgagee to whom he had been making payments was operating under an
improperly transferred mortgage.
We next turn to Appellant’s contention that Bank of America’s note is
“endorsed without date and not in favor of [Bank of America] as required.”
Appellant’s Brief at 13. The law is inapposite.
_______________________
(Footnote Continued)
motion for summary judgment and held that MERS must record its
mortgages and assignments in county recording offices. Montgomery
County, --- F. Supp. 2d ---, 2014 WL 2957494, 2014 U.S. Dist. LEXIS
89222 (E.D. Pa. July 1, 2014).
We note that the two assignments at issue in this case were recorded with
the Chester County Recorder of Deeds. See supra, note 1.
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Under the Pennsylvania Uniform Commercial Code (PUCC), the note
securing a mortgage is a negotiable instrument. J.P. Morgan Chase Bank,
N.A. v. Murray, 63 A.3d 1258 (Pa. Super. 2013). A note endorsed in blank
is a “bearer note,” payable to anyone on demand regardless of who
previously held the note. 13 Pa.C.S.A. §§ 3109(a), 3301. The note in this
case, therefore, is an unconditional promise by Appellant to pay a fixed
amount of money to Bank of America, with interest, at a definite time. The
record in this case clearly shows that Bank of America holds the note, and
therefore the mortgage. Appellant failed to put forth any evidence or legal
authority to the contrary. Instead he cited only general definition sections of
the PUCC and the section concerning lost or stolen instruments, which is
inapplicable. See Appellant’s Brief at 13 (citing 13 Pa.C.S.A. §§ 1201(21),
9109(a)(3), and 3309).
Finally, Appellant argues the entry of summary judgment violated the
rule of Nanty-Glo v. American Surety Co., 163 A. 523 (Pa. 1932),
because the trial court relied on an affidavit that was inadmissible hearsay.4
We agree with Bank of America that the Nanty-Glo rule is inapplicable
here.5 Nanty-Glo prohibits entry of summary judgment based on the
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4
We could consider this argument waived, because Appellant failed to
include it in his concise statement of errors complained of on appeal. See
Pa.R.A.P. 1925(b)(4)(vii).
5
In its brief, Bank of America cites an unreported memorandum decision of
this Court. See Appellee’s Brief at 21 (citing and quoting Bank of Am.,
(Footnote Continued Next Page)
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moving party’s oral testimony. See Sherman v. Franklin Regional Med.
Ctr., 660 A.2d 1370, 1372 (Pa. Super. 1995). “An exception to this rule
exists, however, where the moving party supports the motion by using
admissions of the opposing party . . . .” Id. Admissions include facts
admitted in pleadings. Durkin v. Equine Clinics, Inc., 546 A.2d 665, 670
(Pa. Super. 1988).
As noted above, Appellant responded with general denials to the
material portions of Bank of America’s complaint. General denials constitute
admissions where—like here—specific denials are required. See Pa.R.C.P.
No. 1029(b). Furthermore, “in mortgage foreclosure actions, general 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.” First Wis. Tr.
Co. v. Strausser, 653 A.2d 688, 692 (Pa. Super. 1995); see Pa.R.C.P. No.
1029(c) Note. By his ineffective denials and improper claims of lack of
knowledge, Appellant admitted the material allegations of the complaint,
which permitted the trial court to enter summary judgment on those
admissions. Finally, insofar as Appellant contends that the affidavit
_______________________
(Footnote Continued)
N.A. v. Rogers, 4 A.3d 670 (Pa. Super. 2010) (unpublished
memorandum)). We remind Bank of America that this Court’s Internal
Operating Procedures prohibit parties from citing unpublished memorandum
decisions except in limited circumstances not present here. 210 Pa. Code
§ 65.37(A).
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constitutes hearsay, we agree with Bank of America that the referenced loan
history documents are records of regularly conducted activity, or business
records, and would be admissible at trial with proper foundation. See
Pa.R.E. 803(6); 42 Pa.C.S.A. § 6108.
In sum, the trial court did not abuse its discretion in granting Bank of
America’s motion for summary judgment.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/2/2014
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