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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
NATIONSTAR MORTGAGE, LLC IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
MARK ELSESSER A/K/A
MARK JOSEPH ELSESSER
Appellant No. 1300 MDA 2014
Appeal from the Order July 7, 2014
In the Court of Common Pleas of Berks County
Civil Division at No(s): 13-15154
BEFORE: LAZARUS, J., WECHT, J., and JENKINS, J.
MEMORANDUM BY LAZARUS, J.: FILED MARCH 13, 2015
Mark Elsesser appeals pro se from an order, entered in the Court of
Common Pleas of Berks County, granting summary judgment to Nationstar
Mortgage, LLC (Nationstar). After careful review, we affirm.
On December 29, 2006, Elsesser executed a promissory note (“Note”)
and Mortgage on the property at 3425 Fairchild Street, Alburtis, PA 18011-
2632, in consideration of his borrowing $173,000 from Countrywide Home
Loans, Inc. (Countrywide). Both the Note and Mortgage were recorded in
the Berks County Recorder of Deeds Office. Countrywide’s nominee was
Mortgage Electronic Registration Systems, Inc. (“MERS”). On April 26,
2012, MERS assigned the Mortgage and Note and “all beneficial interest”
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thereunder to “Bank of America, NA, Successor by merger to BAC Home
Loans Servicing, LP FKA Countrywide Home Loans Servicing, LP.”
The assignment was recorded in the Berks County Recorder of Deeds
Office on April 30, 2012. The Mortgage and Note, and “all beneficial
interest” were again assigned on May 10, 2013, from Bank of America to
Appellee Nationstar. The assignment was also recorded in the Berks County
Recorder of Deeds Office on June 6, 2013.
Nationstar alleged that Elsesser defaulted under the Mortgage and
Note by failing to make payments due March 1, 2012, and each month
thereafter. Per the account statement, supplied by Nationstar as Exhibit “C”
to the motion for summary judgment, the last payment applied to Elsesser’s
mortgage account was on March 27, 2012. Elsesser has provided no
affidavit or other proof of payment since that time.
Bank of America issued a combined Act 61/Act 912 Notice (Notice) to
Elsesser, dated February 5, 2013. Proof of mailing the Notice was attached
to the Motion for Summary Judgment as Exhibit “D.” It appears from the
United States Postal Service tracking sheet that Elsesser failed to claim the
mail. Elsesser, however had been afforded the opportunity to avail himself
of the protections provided by the Homeowner’s Emergency Mortgage
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1
41 P.S. § 403(b).
2
13 Pa.C.S. § 3205(b).
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Assistance Program3 (“HEMAP”). Despite this opportunity, he failed to take
advantage of HEMAP; consequently, Nationstar proceeded with its
foreclosure action.
Nationstar filed its complaint in mortgage foreclosure against Elsesser
on June 17, 2013. Service of the complaint and Notice regarding the
mortgage foreclosure diversion program was made upon Elsesser on July 8,
2014. On August 13, 2013, Elsesser filed preliminary objections that
contained a demand for a jury trial. Nationstar’s Motion to Strike
Defendant’s Jury Trial Demand was granted on September 26, 2013. On
November 14, 2013, Elsesser’s preliminary objections were overruled after
argument. Elsesser filed his Answer to the Complaint on December 3, 2013.
On April 8, 2014, Nationstar filed its motion for summary judgment. On May
6, 2013, Elsesser filed a motion in opposition to Nationstar’s motion for
summary judgment. After argument on July 7, 2014, the Court granted
Nationstar’s summary judgment motion. Elsesser filed a timely Notice of
Appeal on July 30, 2014. On August 6, 2014, the Court ordered Elsesser to
file a Pa.R.A.P. 1925(b) Concise Statement of Errors Complained of on
Appeal, which he did on August 28, 2014.
Elsesser raises the following issues on appeal:
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3
HEMAP is a state loan program which offers remedies for Pennsylvania
citizens facing mortgage foreclosure. Citizens either may receive a short-
term loan to cure default, or may opt for continuing subsidies to aid in
avoiding future default. See 35 P.S. §§ 1680.401c-412c.
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1. Whether the trial court considered the requirements of 41 P.S.
§ 101 et seq. (“Act 6”) in ruling that it had jurisdiction to hear
the complaint thereby allowing the court to award summary
judgment to Nationstar.
2. Whether the trial court erred in ruling that Nationstar had
standing to file its foreclosure complaint against Elsesser,
thereby allowing the court to award summary judgment to
Nationstar.
3. Whether the trial court erred in ruling that the mortgage
assignments were also evidence of an assignment of the note,
and that Nationstar produced the original note, thereby allowing
the court to award summary judgment to Nationstar.
4. Whether the trial court applied 13 Pa.C.S.A. § 9203 properly
in ruling that Nationstar conformed to 13 Pa.C.S.A. § 9203(b),
thereby allowing the court to award summary judgment to
Nationstar.
Appellant’s Brief, at 11.
Our standard of review of an order granting summary judgment is
well-settled:
A reviewing court 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. Pa.R.C.P. 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 non-moving 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 it bears the burden of proof
establishes the entitlement of the moving party to judgment as a
matter of law. Lastly, we will view the record in the light most
favorable to the non-moving party, and all doubts as to the
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existence of a genuine issue of material fact must be resolved
against the moving party.
JP Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258, 1261-62 (Pa.
Super. 2013) (citations omitted).
Initially, we must acknowledge that Elsesser has not attempted to
dispute that he is in default. Rather, his arguments center around
Nationstar’s standing to bring the instant cause of action. Elsesser
challenges the lower court’s grant of summary judgment on the grounds that
he never received proper notice of the foreclosure action, as mandated by
Act 6 and Act 91. Rule 403 (“Act 6”) plainly states:
Notice of intention to take action as specified in subsection (a) of
this section [referring to foreclosure] shall be in writing, sent to
the residential mortgage debtor by registered or certified mail at
his last known address and, if different, at the residence which is
the subject of the residential mortgage.
41 P.S. § 403(b). The record reflects, however, that Bank of America did
provide such notice, via certified mail, to Elsesser’s home address. See
Exhibit “D” to Plaintiff’s Brief in Support of Motion for Summary Judgment.
Further, Exhibit “D” shows that Elsesser received notice of his certified mail,
and never acted to claim that mail. We read this evidence in conjunction
with 35 P.S. § 1680.403c(e) (“Act 91”), which states, in pertinent part:
All parties requiring notice pursuant to this article [debtors] shall
be deemed to receive notice on the third business day following
the date of the mailing of the notice as documented by a
certificate of mailing obtained from the United States Postal
Service.
35 P.S. § 1680.403c(e)
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In response to the record, Elsesser produces nothing to dispute this
record evidence, instead arguing that “[t]he trial court conspicuously failed
to address Defendant’s averment at the hearing and merely assumed facts
not in evidence regarding the Act 6 Notice being sent to Defendant, when
Defendant has said all along that he did not receive the Notice.” Appellant’s
Brief, at 17. We do not find, therefore, that Elsesser has demonstrated a
question of fact, such that summary judgment was not appropriate.
Elsesser argues concomitantly that because Nationstar, as the only
party to this action, did not, itself, send the Act 6/Act 91 Notice, then
Nationstar lacks standing to bring the instant suit. In support of that
argument, Elsesser cites to Bankers Trust Co. v. Foust, 621 A.2d 1054
(Pa. Super. 1993), which we do not find controlling or on point.
In Bankers Trust, the trial court dismissed a foreclosure action for
defective notice. That dismissal, however, was overturned, by this Court, on
the grounds that such a foreclosure notice need not contain complex
formulations of debt and interest, but merely the amount owed by the
debtor. Id. at 1058. As such, we find no legal precedent to support
Elsesser’s argument that Notice must come directly from the party
commencing a foreclosure action. So long as notice “enables a financially
troubled residential homeowner to learn exactly what sum of money is
necessary to cure the mortgage default,” we do not find the purpose of Act 6
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and Act 91 offended. Wells Fargo Bank, N.A. v. Spivak, 104 A.3d 7, 14
(Pa. Super. 2014).
Next, Elsesser challenges the validity of the chain of assignments of
the Mortgage and Note, and ultimately argues that there is a question of fact
as to the owner of the loan. Appellant’s Brief, at 19. Recently, this Court
has held that a promissory note to a mortgage that has been indorsed in
blank, constitutes a negotiable instrument, such that the Pennsylvania
Uniform Commercial Code (“PUCC”) dictates its use and enforceability. In
J.P. Morgan Chase Bank v. Murray, 63 A.3d 1258 (Pa. Super. 2013), our
Court set forth a two-prong approach to determine if a foreclosing party has
standing to commence a foreclosure action. First, the court must determine
if the note in question can be considered an indorsed in blank note, thus
rendering it a “negotiable instrument” such that the PUCC applies. Id. at
1262-63. Second, the court must determine whether the party seeking
foreclosure can demonstrate possession of the note, as under the PUCC, that
is sufficient to prove standing. Id. at 1266.
Turning to the instant case, then, we must first ascertain whether
Elsesser’s mortgage and note can be considered indorsed in blank.
Pennsylvania statute defines an indorsement as “a signature. . . that alone
or accompanied by other words is made on an instrument for the purpose of
. . . incurring liability on the instrument.” 13 Pa.C.S. § 3204(a). An
indorsement in blank, then, is defined as, “[i]f an indorsement is made by
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the holder of an instrument and it is not a special indorsement, it is a blank
indorsement. When indorsed in blank, an instrument becomes payable to
bearer and may be negotiated by transfer of possession alone until specially
indorsed.” 13 Pa.C.S. §3205(b).
Instantly, Nationstar submitted the original mortgage and note, which
bore Elsesser’s signature, as evidence to support its summary judgment
motion. See Exhibits “A-A1” of Plaintiff’s Brief in Support of Motion for
Summary Judgment. The original Note contains a stamp, however, stating
“Pay to the Order of Countrywide Home Loans, Inc.” As such, per the PUCC,
the Note is specially indorsed, see 13 Pa.C.S. § 3205(a).4 This Court has
recently, ruled, however, that where a Note has a special indorsement, and
not an indorsement in blank, it may still satisfy the prongs set forth in J.P.
Morgan. See PHH Mortgage Corp. v. Powell, 100 A.3d 611 (Pa. Super.
2014). In PHH Mortgage, this Court considered a pro se challenge to a
mortgage default, and held that even when the note had been specially
indorsed to a specific party, the ultimate bearer of that Note had standing to
bring a foreclosure action. Id. at 617; see 13 Pa.C.S. § 3104(a) (emphasis
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4
PUCC defines a special indorsement as:
If an indorsement is made by the holder of an instrument,
whether payable to an identified person or payable to bearer,
and the indorsement identifies a person to whom it makes the
instrument payable, it is a special indorsement.
13 Pa.C.S. § 3205(a).
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added) (“[N]egotiable instrument means an unconditional promise or order
to pay a fixed amount of money, with or without interest or other charges
described in the promise or order, if it: (1) is payable to bearer or to order
at the time it is issued or first comes into possession of a holder.”); see also
18 Pa.C.S. § 3109(b) (promise is payable to order if it is indorsed as payable
to identified person). We apply the reasoning of PHH Mortgage, therefore,
to conclude that although the instant Note was specially indorsed, it can still
be construed as a negotiable instrument under the PUCC. As such, because
Nationstar also satisfied possession, through producing the original Note, we
find that Nationstar has standing to commence foreclosure.
Based upon this recent jurisprudence, therefore, Elsesser’s argument
as to the chain of ownership of the loan fails as a matter of law. Where the
Note can be classified as a negotiable instrument, and Nationstar can
demonstrate possession of that instrument, the validity of the transfer of the
loan is ultimately not controlling. There is no risk of double liability, 5 as
Elsesser argues, because even if the assignment to Nationstar was defective,
his liability would nonetheless be discharged by virtue of payment to
Nationstar. See J.P. Morgan, 63 A.3d at 1258; 13 Pa.C.S. § 3602(a)
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5
Although Elsesser terms this argument as one involving “double jeopardy”
concerns, J.P. Morgan, citing In re Walker, 466 B.R. 271, 285-85 (Bankr.
E.D.Pa. 2012), explains the issue as one where the debtor, due to 13 Pa.C.S.
§ 3602(a), “is in no danger of being subjected to double liability.” 63 A.3d
1265 (emphasis added).
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(discharging liability after payment to instrument holder). As such, with the
threat of double liability gone, Elsesser cannot demonstrate that he has or
will suffer injury if Nationstar is permitted to proceed.
Finally, Elsesser challenges Nationstar’s security interest. Under
Pennsylvania law, a security interest is enforceable only if: “(1) [v]alue has
been given[;] (2) [t]he debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party[; and] (3) [t]he debtor has
authenticated a security agreement[.]” 13 Pa.C.S.A. § 9203(b). Elsesser’s
argument attacks prongs (1) and (3) of section 9203(b).
Elsesser first contends that Nationstar cannot demonstrate that value
was given. He grounds that argument not in any cited legal authority, but
on the bald assertion that “the only way for Plaintiff to prove value was
given is to provide its books and records showing the recordation of the
transaction, as well as a transfer receipt for the debt it purports to own.”
Appellant’s Brief, at 25. We agree with the lower court, however, that
Elsesser has not raised a question of fact as to the value given. Nationstar
produced both the mortgage and note, showing that Elsesser was granted
$173,000 in exchange for an interest in his property. Furthermore, the
record reflects that value was given through each assignment of the
mortgage and note, from Countrywide through Nationstar. Elsesser has
simply failed to demonstrate a lack of value given, beyond merely stating
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that he never received $173,000, and that Nationstar has not produced its
accounting.
Elsesser also challenges Nationstar’s security interest on the grounds
that he never authenticated the agreement. We are similarly unpersuaded
by this argument. Nationstar produced the original mortgage and note, each
bearing Elsesser’s signature. Further, as the trial court acknowledged,
Elsesser was given the opportunity to inspect those documents at the court
proceedings below, and at no time voiced a challenge as to the validity of his
signature. See Pa.R.A.P. 302(a) (issues not raised in lower court are waived
and cannot be raised for first time on appeal). Again, Elsesser baldly asserts
that “[t]here has been no explicit admission by the Defendant that could
plausibly be construed as an authentication for purposes of § 9203(b)(3).”
Appellant’s Brief, at 27. We are unpersuaded by Elsesser’s argument, and
we do not find a question of fact exists as to the existence of Nationstar’s
security interest. Therefore, the trial court properly concluded that summary
judgment should be entered in favor of Nationstar. J.P. Morgan, supra.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/13/2015
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