J-A15017-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WELLS FARGO BANK, N.A., S/B/M TO IN THE SUPERIOR COURT OF
WELLS FARGO HOME MORTGAGE, INC. PENNSYLVANIA
Appellee
v.
GEORGE MIRKOV
Appellant No. 2273 EDA 2014
Appeal from the Judgment Entered July 1, 2014
In the Court of Common Pleas of Monroe County
Civil Division at No(s): No. 1869 CV 2012
BEFORE: BOWES, J., MUNDY, J., and FITZGERALD, J.*
MEMORANDUM BY MUNDY, J.: FILED JUNE 23, 2015
Appellant, George Mirkov, appeals from the July 1, 2014 in rem
judgment entered in favor of Appellee, Wells Fargo Bank, N.A., s/b/m to
Wells Fargo Home Mortgage, Inc. (Wells Fargo), pursuant to the order
granting Wells Fargo’s motion for summary judgment in its action for
mortgage foreclosure. After careful review, we affirm.
The trial court set forth the relevant facts of this case, in the light most
favorable to Mirkov, as follows.
On August 2, 2001, [Mirkov] executed and delivered
a mortgage and note to BNY Mortgage Company,
LLC [(BNY Mortgage)]. The mortgage was recorded
on August 10, 2001 in the [o]ffice of the [r]ecorder
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*
Former Justice specially assigned to the Superior Court.
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of Monroe County, in [m]ortgage [b]ook [n]o. 2102,
[p]age 3226. The mortgage was assigned to the
Mortgage Electronic Registration System (“MERS”)
on August 10, 2001 as nominee. The mortgage was
then assigned to Alliance Mortgage Company
[(Alliance Mortgage)] evidenced by the intervening
[a]ssignment of [m]ortgage. The intervening
[a]ssignment of [m]ortgage was executed on
January 18, 2011 but the effective date of the
[a]ssignment to Alliance Mortgage [] was November
17, 2002. The mortgage was assigned, again, to
Alliance Mortgage [] by the [c]orrective [a]ssignment
of [m]ortgage. The mortgage was assigned to Wells
Fargo Home Mortgage, Inc. on November 18, 2002.
[Wells Fargo] merged with Wells Fargo Home
Mortgage and became the successor by merger, the
legal owner of the mortgage. The mortgage secures
property located in East Stroudsburg, Pennsylvania.
[Mirkov] [twice] modified the terms of the mortgage
by executing [two separate] [l]oan [m]odification
[a]greement[s] [with] [Wells Fargo] [in 2006 and
2009,] signed by [Mirkov].
[Mirkov] is in default of his obligation because
monthly payments of principal and interest due as of
September 1, 2009 are due and owing, whereby
causing the entire balance of principal and interest to
become due. [On March 6, 2012, Wells Fargo] filed
this action in mortgage foreclosure seeking an in rem
judgment and also served [Mirkov] [n]otice of
[i]ntention to [f]oreclose as set forth in Act 6 of
1974.
Trial Court Opinion, 7/1/14, at 4-5 (italics in original) (citations omitted).
On February 3, 2014, Wells Fargo filed a motion for summary
judgment against Mirkov, and Mirkov filed an answer thereto and brief in
opposition on April 2, 2014. On July 1, 2014, the trial court granted Wells
Fargo’s summary judgment motion and entered an in rem judgment in favor
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of Wells Fargo in the amount of $291,999.98, together with interest and
costs. On July 31, 2014, Mirkov filed a timely notice of appeal. 1
On appeal, Mirkov presents the following issue for our review.
Did the trial court commit an error of law in its grant
of summary judgment where there did not exist a
pre-judgment negotiated note and assignment of
mortgage through the chain of loan title in favor of
[Wells Fargo]?
Mirkov’s Brief at 8. Specifically, Mirkov argues that Wells Fargo did not have
standing because it was not the real party in interest due to defects in the
assignment of the negotiated note by MERS from BNY Mortgage to Alliance
Mortgage, and from Alliance Mortgage to Wells Fargo. Id. at 12-13.
We begin by noting our standard and scope of review.
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. 1035.2(1). In response to a
summary judgment motion, the nonmoving party
cannot rest upon the pleadings, but rather must set
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1
The trial court and Mirkov have complied with Pennsylvania Rule of
Appellate Procedure 1925. On September 18, 2014, the trial court filed a
statement pursuant to Rule 1925(a), referring this Court to its opinion dated
June 30, 2014 and addressing the additional issue of Wells Fargo’s standing.
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forth specific facts demonstrating a genuine issue of
material fact. Pa.R.C.P. 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.
Bank of Am., N.A. v. Gibson, 102 A.3d 462, 464-465 (Pa. Super. 2014),
appeal denied, 112 A.3d 648 (Pa. 2015).
In this appeal, Mirkov argues that the chain of assignment of the
mortgage and note is defective and does not establish Wells Fargo as the
real party in interest. Mirkov’s Brief at 13. Assuming there is a defect in the
chain of assignment,2 we conclude that any purported defects in the chain of
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2
The chain of assignment is not defective. On August 2, 2001, Mirkov
executed the mortgage and promissory note in favor of BNY Mortgage.
Wells Fargo’s Motion for Summary Judgment, 2/3/14, at Ex. A (“Mortgage”),
Ex. A1 (“Note”). The mortgage was recorded on August 10, 2001 in
mortgage book 2102, at page 3226. Id. On August 2, 2001, BNY assigned
the mortgage and note to MERS. Id. at Ex. A2 (“Assignment of Security
Interest”). This was recorded on August 10, 2001 in mortgage book 2102,
at page 3246. Id. On November 18, 2002, Alliance Mortgage assigned the
mortgage and note to Wells Fargo Home Mortgage, Inc. Id. at Ex. A5
(“Assignment of Security Instrument”). On December 10, 2002, this
assignment was recorded in mortgage book 2139, at page 196. Id. Wells
Fargo is the successor by merger to Wells Fargo Home Mortgage, Inc. Id. at
Ex. A6.
Mirkov contends there is a gap in the chain of assignment from when
MERS acquired the mortgage to when Alliance Mortgage assigned it to Wells
Fargo Home Mortgage. In other words, there is no record of the mortgage
(Footnote Continued Next Page)
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assignment do not prevent Wells Fargo from enforcing the note because it is
undisputed that Wells Fargo is the current holder of the original note that
has been specially indorsed. In JP Morgan Chase Bank, N.A. v. Murray,
63 A.3d 1258, 1268 (Pa. Super. 2013), this Court concluded that under the
Pennsylvania Uniform Commercial Code (PUCC), 13 Pa.C.S.A. §§ 1101-
9809, the note securing a mortgage is a negotiable instrument. Id. at 1265,
_______________________
(Footnote Continued)
being assigned by MERS to Alliance Mortgage. Mirkov’s Brief at 12. The
record belies this assertion. On January 18, 2011, MERS filed an intervening
assignment of mortgage, indicating it assigned the mortgage and note to
Alliance Mortgage with an effective date of November 17, 2002 to correct
the chain of title. Wells Fargo’s Motion for Summary Judgment, 2/3/14, at
Ex. A3 (“Intervening Assignment of Mortgage”). This was recorded on
February 10, 2011 in mortgage book 2382, at page 9479. Id. MERS again
recorded its assignment of the mortgage and note to Alliance Mortgage on
June 19, 2013 in mortgage book 2422, at page 2207. Id., at Ex. A4
(“Corrective Assignment of Mortgage”).
Mirkov contends that the June 19, 2013 assignment somehow negated
the assignment of the mortgage and note from Alliance Mortgage to Wells
Fargo Home Mortgage. Mirkov’s Brief at 13. However, the June 19, 2013
corrective assignment specifically states that it replaces only the assignment
recorded on February 10, 2011. Wells Fargo’s Motion for Summary
Judgment, 2/3/14, at Ex. A4 (“Corrective Assignment of Mortgage”,
6/19/13). It has no effect on the November 18, 2002 assignment from
Alliance Mortgage to Wells Fargo Home Mortgage. Id. Moreover, Mirkov
admits that he twice entered into loan modification agreements with Wells
Fargo in 2006 and 2009. See id. at Ex. A7 (“Loan Modification Agreement,”
5/23/06); Mirkov’s Answer to Motion for Summary Judgment, 4/2/14, at ¶ 9
(admitting to entering into 5/23/06 loan modification with Wells Fargo);
Wells Fargo’s Motion for Summary Judgment, 2/3/14, at Ex. A8 (“Loan
Modification Agreement,” 1/15/09); Mirkov’s Answer to Motion for Summary
Judgment, 4/2/14, at ¶ 10 (admitting entering into 1/15/09 loan
modification with Wells Fargo). Therefore, we agree with the trial court that
Appellant has failed to create a genuine issue of material fact as to defects in
the chain of title. See Gibson, supra.
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citing 13 Pa.C.S.A. § 3104. The PUCC states that a person entitled to
enforce an instrument includes the following.
§ 3301. Person entitled to enforce instrument
“Person entitled to enforce” an instrument means:
(1) the holder of the instrument;
(2) a nonholder in possession of the
instrument who has the rights of a holder; or
(3) a person not in possession of the
instrument who is entitled to enforce the
instrument pursuant to section 3309 (relating
to enforcement of lost, destroyed or stolen
instrument) or 3418(d) (relating to payment or
acceptance by mistake).
13 Pa.C.S.A. § 3301. Significantly, “[a] person may be a person entitled to
enforce the instrument even though the person is not the owner of the
instrument or is in wrongful possession of the instrument.” Id. Thus,
applying the PUCC, this Court has held that if a mortgagee can “establish
that it holds the original Note, and that it is indorsed in blank [or specially
indorsed], under the [PUCC] it will be entitled to enforce the Note [as a
negotiable instrument] … even if there remain questions as to the chain of
possession of the [n]ote from the time of its making to its arrival in
[a]ppellee’s figurative hands.” Murray, supra at 1268, citing, 13 Pa.C.S.A.
§ 3109(a). Accordingly, if Wells Fargo can establish both that it was (1) the
holder in due course of the original note, and (2) the note is indorsed in
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blank or specially indorsed, it is entitled to enforce the note regardless of the
alleged deficiencies in the assignments. See id.
A “holder in due course” of a negotiable instrument is defined by the
PUCC as the holder of an instrument if “the instrument when issued or
negotiated to the holder does not bear such apparent evidence of forgery or
alteration or is not otherwise so irregular or incomplete as to call into
question its authenticity[,]” and “the holder took the instrument … for value
… [and] in good faith.” 13 Pa.C.S.A. § 3302(a)(1)-(2). Regarding
indorsement, the PUCC provides as follows.
§ 3205. Special indorsement; blank
indorsement; anomalous indorsement
(a) Special indorsement.--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.” When specially indorsed, an
instrument becomes payable to the identified person
and may be negotiated only by the indorsement of
that person. The principles stated in section 3110
(relating to identification of person to whom
instrument is payable) apply to special
indorsements.
(b) Blank indorsement.--If an indorsement is
made by 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.
…
Id. § 3205.
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Here, there is no genuine issue of material fact that Wells Fargo is the
holder of the original note and the note is specially indorsed to Wells Fargo.
The note was originally payable to BNY Mortgage. Wells Fargo’s Motion for
Summary Judgment, 2/3/14, at Ex. A1 (“Note”), at 1; Mirkov’s Answer to
Motion for Summary Judgment, at ¶ 3. The note contains the three following
indorsements.
PAY TO THE ORDER OF
ALLIANCE MORTGAGE COMPANY
WITHOUT RECOURSE
BY: BNY MORTGAGE COMPANY LLC
SIGNED: [signature of Jayne M. Evatte]
JAYNE M. EVATTE
ASST. VICE PRESIDENT
PAY TO THE ORDER OF
__________________________
WITHOUT RECOURSE
BY: ALLIANCE MORTGAGE COMPANY
SIGNED: [signature of Bobbi O’Brien]
BOBBI O’BRIEN
ASST. VICE PRESIDENT
WITHOUT RECOURSE
PAY TO THE ORDER OF
Wells Fargo Home Mortgage, Inc.
By [signature of Angela R. Dodson]
Angela R. Dodson
Assistant Secretary
Id. at 3. These indorsements show BNY Mortgage specially indorsed the
note to Alliance Mortgage, who then issued a blank indorsement to Wells
Fargo Home Mortgage, and Wells Fargo Home Mortgage specially indorsed it
by identifying itself as the bank to which it became payable. 13 Pa.C.S.A.
§ 3205(a)-(b). Wells Fargo, as the successor in interest to Wells Fargo
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Home Mortgage, is the current holder of the specially indorsed note.
Therefore, Wells Fargo is entitled to enforce the note despite any alleged
deficiencies in the chain of assignments of the mortgage, and Mirkov’s
assertion that the assignment was defective does not raise a genuine issue
of material fact. See id. § 3301; Murray, supra.
Moreover, the trial court found that “[Mirkov] has effectively admitted
he is a party to the mortgage, that the mortgage is in default, that he has
not made each and every monthly payment when due nor paid interest on
the obligation, and that the mortgage is in the specified amount.” After
careful review, we conclude that the record supports the trial court’s
findings. Significantly, Mirkov executed two loan modification agreements
with Wells Fargo in 2006 and 2009, wherein Mirkov acknowledged that Wells
Fargo was the “lender,” that he had an outstanding principal balance plus
interest owing to Wells Fargo, and that his obligations to Wells Fargo under
the mortgage would continue. See Wells Fargo’s Motion for Summary
Judgment, 2/3/14, at Ex. A7 (“Loan Modification Agreement,” 5/26/06, at 1-
2); Mirkov’s Answer to Motion for Summary Judgment, 4/2/14, at ¶ 9
(admitting to entering into May 23, 2006 loan modification with Wells
Fargo); Wells Fargo’s Motion for Summary Judgment, 2/3/14, at Ex. A8
(“Loan Modification Agreement,” 1/15/09, at 1-2); Mirkov’s Answer to
Motion for Summary Judgment, 4/2/14, at ¶ 10 (admitting entering into
January 15, 2009 loan modification with Wells Fargo). Mirkov does not
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dispute that he is in default, that he failed to pay on the obligation, or that
the recorded mortgage is in the specified amount. Therefore, Mirkov failed
to raise a genuine issue of material fact to preclude summary judgment in
favor of Wells Fargo. See Gibson, supra.
Based on the foregoing, we conclude Appellant’s issues lack merit and
the trial court did not abuse its discretion or err as a matter of law in
awarding summary judgment in favor of Wells Fargo. See id. Accordingly,
we affirm the trial court’s July 1, 2014 judgment.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/23/2015
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