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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
AS PELEUS, A DELAWARE LIMITED IN THE SUPERIOR COURT OF
LIABILITY COMPANY PENNSYLVANIA
v.
ALSON ALSTON, UNITED STATES C/0 US
ATTORNEY
APPEAL OF: ALSON ALSTON
No. 3394 EDA 2015
Appeal from the Order Entered September 22, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 080803084 August Term, 2008
BEFORE: BOWES, PANELLA AND FITZGERALD,* JJ.
MEMORANDUM BY BOWES, J.: FILED DECEMBER 21, 2016
Alson Alston appeals pro se from the September 22, 2015 order
granting the post-trial motion and entering judgment in favor of AS Peleus,
A Delaware Limited Liability Company (“Peleus”). We affirm.
On July 25, 2007, Mr. Alston executed a mortgage and associated
promissory note in the amount of $337,500.00, and secured by the
commercial property located at 2836-38 West Girard Avenue, Philadelphia,
Pennsylvania. The mortgage, recorded on August 2, 2007, was originally
provided to Green Point Funding, Inc., which subsequently merged with
Capital One Bank (“Capital One”). On April 1, 2008, Mr. Alston defaulted on
* Former Justice specially assigned to the Superior Court.
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the note and mortgage by failing to make his monthly payment. Shortly
thereafter, Capital One supplied Mr. Alston with notice of its intent to
foreclose. The trial court relayed the relevant history of this protracted
litigation as follows:
On August 23, 2008, Capital One Bank, S/B/M to Green
Point Mortgage Funding, Inc. . . . commenced a civil action
against [Mr. Alston] for a defaulted mortgage on [the
abovementioned property]. The United States of America was
also named as a defendant on the basis of two federal tax liens
filed against [Mr. Alston] by the Internal Revenue Service.
[Peleus] filed a praecipe for voluntary substitution of plaintiff
under Pa.R.C.P. No. 2352 on February 8, 2013 and March 12,
2013, naming Peleus LLC and subsequently AS Peleus LLC, a
Delaware Limited Liability Company as the substituted Plaintiff
based on the assignment of the mortgage in default.
...
Throughout the seven-year long litigation, the parties filed
a number of motions, which are not at issue in this appeal. Of
note the Honorable Idee Fox of the Court of Common Pleas of
Philadelphia County granted summary judgment to [Capital One]
on February 19, 2010, and ordered judgment in rem in the
amount of $360,300.29, plus interests and costs. [Mr. Alston]
filed an appeal and the Superior Court reversed and remanded
the matter for trial on April 18, 2011, with the order docketed on
March 27, 2012. See Capital One Bank v. Alston, et al., No.
835 EDA 2010 (Pa.Super.Ct. Apr. 18, 2011) [(unpublished
memorandum)]. The reversal and remand was based on the
pleading of a genuine issue of material fact as to fraudulent
misrepresentation.
Due to pending bankruptcy actions, this matter was placed
in deferred status and ultimately listed for trial on June 30, 2014
with appropriate notice given to the parties on June 12, 2014.
Following the one-day bench trial, this Court found in favor of
[Mr. Alston] based on an apparent lack of standing by [Peleus]
to pursue this mortgage foreclosure action. On July 10, 2014,
[Peleus] filed a Motion for Post-Trial Relief. Prior to the Court’s
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ruling on the post-trial motion, the matter was again deferred
based on the pending bankruptcy action. Following the
resolution of the bankruptcy matter, the matter was removed
from deferred status on August 6, 2015. The Court granted
post-trial relief to [Peleus] and further ordered judgment in rem
against [Mr. Alston] in the amount of $537,088 plus interest,
costs and other collectible charges on August 28, 2015. Due to
a processing error by a Court Administrative Officer, the
requisite notice was not sent to parties until September 22,
2015. [Mr. Alston] filed a Motion for Reconsideration, which was
denied on October 28, 2015.
Trial Court Opinion, 9/22/15, at 1-2.
Mr. Alston filed a notice of appeal and complied with the trial court’s
order to file a Rule 1925(b) concise statement of errors complained of on
appeal. The court then authored its Rule 1925(a) opinion. This matter is
now ripe for our review. Mr. Alston presents two issues for our
consideration:
1. Whether the trial court abused its discretion or committed an
error at law when it reversed its Verdict and granted the
[post]-trial motion in favor of AS Peleus LLC[?]
2. Whether the trial court abused its discretion or committed an
error at law in its interlocutory rulings because they represent
clear due process violations?
Appellant’s brief at 4.
Mr. Alston first contends the trial court erred in granting Peleus’ post-
trial motion seeking entry of judgment in its favor. A trial court can grant
judgment notwithstanding the verdict (“JNOV”) on two grounds: (1) Where
the movant is entitled to judgment as a matter of law; and/or, (2) the
evidence was such that no two reasonable minds could disagree that the
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verdict should have been rendered for the movant. Ely v. Susquehanna
Aquacultures, Inc., 130 A.3d 6, 10 (Pa.Super. 2015) (citation omitted).
When reviewing a trial court’s decision regarding a motion for JNOV, we
must consider all the evidence admitted to decide if there was sufficient
competent evidence to sustain the verdict. Id. We must view this evidence
in the light most favorable to the verdict winner, giving the victorious party
the benefit of every reasonable inference arising from the evidence and
rejecting all unfavorable testimony and inference. Id. With regards to
questions of law, our scope of review is plenary. Id. As for questions
concerning credibility and weight accorded the evidence at trial, we will not
substitute our judgment for that of the finder of fact. Id.
Mr. Alston’s initial argument is multi-faceted. Notably, he does not
directly challenge the trial court’s finding that he entered into the mortgage
in question, or subsequently defaulted on that obligation. 1 First, Mr. Alston
argues the trial court erred in granting the post-trial motion filed by Peleus
since it violated Pa.R.C.P. 227.1. That provision reads in pertinent part:
(b) except as otherwise provided by Pa.R.E. 103(a), post-trial
relief may not be granted unless the grounds therefor,
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1
In this regard, the trial court highlighted Mr. Alston’s testimony that he
executed a mortgage note in July of 2007, and that he could not recall the
last time he made a payment on that mortgage. N.T. Trial, 6/30/14, at 24.
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(1) if then available, were raised in pre-trial proceedings
or by motion, objection, point for charge, request for
findings of fact or conclusions of law, offer of proof,
or other appropriate method at trial; and,
(2) are specified in the motion. The motion shall state
how the grounds were asserted in pre-trial
proceedings or at trial. Grounds not specified are
deemed waived unless leave is granted upon cause
shown to specify additional grounds.
Pa.R.C.P. 227.1(b). Mr. Alston asserts that Peleus did not specify how it
preserved its issues in earlier proceedings.
Peleus’s post-trial motion avers that the trial court erred in finding it
lacked standing and that Mr. Alston had presented sufficient evidence to
support an action for fraudulent misrepresentation. As these findings were
first presented in the trial court’s verdict on July 2, 2014, Peleus’s post-trial
motion, which was otherwise timely, did not violate Pa.R.C.P. 227.1. Hence,
we find the trial court did not abuse its discretion in considering Peleus’s
post-trial motion.
Next, Mr. Alston lodges several attacks upon the trial court’s finding
that Peleus had standing to pursue this action. Mr. Alston argues that
Peleus is not the holder in due course of the original promissory note, and
that the note contains fraudulent or inconsistent indorsements. In addition,
Mr. Alston maintains that Peleus is not the real party in interest as a result
of a purported break in the chain of assignments. Finally, Mr. Alston alleges
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that Peleus was not properly substituted as a party to this matter pursuant
to Pa.R.C.P. 2352.2
The trial court relied on JP Morgan Chase Bank, N.A. v. Murray, 63
A.3d 1258 (Pa.Super. 2013), and PHH Mortg. Corp. v. Powell, 100 A.3d
611 (Pa.Super. 2014), in determining that Peleus was the holder in due
course of the original note and allonges.3 In Murray, this Court observed
that a promissory note was a negotiable instrument, and held that, as a
result, it was enforceable against a debtor even where defects in the chain of
assignment are present. Murray, supra at 1267. Furthermore, in Powell,
this Court found that the party in possession of the note may enforce it so
long as the holder took the instrument for value and in good faith, and could
produce the original note and allonges to the court for inspection. Powell,
supra at 621.
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2
Section 2352 of the rules of civil procedure reads, in pertinent part:
(a) The successor may become a party to a pending action by
filing of record a statement of the material facts on which
the right to substitution is based.
Pa.R.C.P. 2352.
3
An allonge is “[a] slip of paper sometimes attached to a negotiable
instrument for the purpose of receiving further indorsements when the
original paper is filled with indorsements.” JP Morgan Chase Bank, N.A.
v. Murray, 63 A.3d 1258, 1259 n.2 (Pa.Super. 2013).
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The trial court noted that Peleus had produced the original note and
allonges for inspection at trial. After indicating that the original blank
indorsement had been converted into a special indorsement, the court found
that any inconsistencies in the various assignments did not “bear such
apparent evidence of forgery or alteration [and were not] otherwise so
irregular or incomplete as to call into question its authenticity.” Trial Court
Opinion, 2/3/16, at 8 (citation omitted). It concluded that Peleus was the
holder in due course of the mortgage note, and thus, Peleus was entitled to
enforce the note regardless of any defects that may be present in the chain
of ownership. We find the court did not err in this regard.
The trial court inspected the note and allonges at issue herein and
determined that Peleus possessed the original note and allonges evidencing
the chain of ownership. Thereafter, the court properly applied our law as
delineated in Murray, supra, and Powell, supra, and found that Peleus
was the holder in due course of a negotiable instrument, and therefore had
standing to pursue this matter.
Mr. Alston next alleges Peleus lacked standing since another entity,
“Peleus, LLC” was improperly substituted as a party in this matter. He
claims that the original motion to substitute a party listed “Peleus, LLC” as
the plaintiff, and that Peleus, LLC remains the plaintiff. Our review of the
record reveals no error in this regard. After purchasing Mr. Alston’s
mortgage in default, Peleus filed a praecipe for voluntary substitution under
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Pa.R.C.P. 2532 wherein it erroneously listed itself as “Peleus, LLC A
Delaware Limited Liability Company.” Praecipe, 2/8/13, at unnumbered 2.
Upon recognizing this error, Peleus again filed a praecipe for voluntary
substitution, this time entering the proper entity, “AS Peleus LLC, A
Delaware Limited Liability Company.” Praecipe, 3/12/13, at unnumbered 2.
Peleus then filed a praecipe to correct the caption on October 10, 2013,
again referencing the correct party to this matter. Hence, Mr. Alston is not
entitled to relief on this ground.
Mr. Alston also contends the trial court abused its discretion in failing
to find that the complaint initiating this matter was insufficient since the
blank indorsements demonstrating the transfer of ownership were not
attached to the complaint. We disagree. It is well-settled that there is no
requirement that a complaint in mortgage foreclosure must include the
original promissory note and associated allonges. See Pa.R.C.P. 1147;4
____________________________________________
4
The rules of civil procedure require that a complaint in mortgage
foreclosure include:
(1) the parties to and the date of the mortgage, and of any
assignments, and a statement of the place of record of the
mortgage and assignments;
(2) a description of the land subject to the mortgage;
(3) the names, addresses and interest of the defendants in the
action and that the present real owner is unknown if the real
owner is not made a party;
(Footnote Continued Next Page)
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Bank of New York Mellon v. Johnson, 121 A.3d 1056, 1063 (Pa.Super.
2015) (finding that a party does not need to incorporate the original
promissory note to comply with Pa.R.C.P. 1147). Thus, this claim is without
merit.
Next, Mr. Alston avers that the trial court erred in failing to reject
Peleus’s post-trial motion as untimely since Peleus filed its memorandum of
law in support of its motion after the ten-day filing period enunciated by
Pa.R.C.P. 227.1(c)(1). Rule 227.1(c)(1) states that “Post-trial motions shall
be filed within ten days after (1) verdict, discharge of the jury because of
inability to agree, or nonsuit in the case of a jury trial[.]” Pa.R.C.P.
227.1(c)(1). We observe that the provision cited by Mr. Alston governs the
timeliness of post-trial motions and does not specify that a party must file a
memorandum in support of that motion within that same timeframe. As Mr.
Alston provides no other legal authority supporting his position, we find this
argument waived. In re Estate of Whitley, 50 A.3d 203, 209 (Pa.Super.
_______________________
(Footnote Continued)
(4) a specific averment of default;
(5) an itemized statement of the amount due; and
(6) a demand for judgment for the amount due.
Pa.R.C.P. 1147(a).
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2012) (finding that the failure to cite relevant legal authority constitutes
waiver of the claim on appeal).
Mr. Alston next assails the trial court’s finding that the mortgage was
in default. He maintains that this Court, in a prior appeal in this matter,
remanded the case for trial after finding that Mr. Alston had raised a genuine
issue of material fact regarding fraud in the inducement in connection with
the formation of his mortgage. See Capital One Bank v. Alson Alston, 29
A.3d 836 (Pa.Super. 2011) (unpublished memorandum). Mr. Alston asserts
this fraud in the inducement claim required the court to find the underlying
contract void, and thus, the court could not find him in to be in default.
In finding that Mr. Alston had not sustained his burden of proof
regarding fraud in the inducement, the trial court noted that Pennsylvania
law “limits a borrowers’ fraud defense against a holder in due course to
fraud in the factum not fraud in the inducement.” Trial Court Opinion,
2/3/16, at 8. It reasoned that Mr. Alston’s defense for fraudulent
misrepresentation focused on his alleged inability to inspect an appraisal of
his property prior to executing the mortgage note. The inability to review
such an appraisal, according to the court, did not “equate with the requisite
lack of ‘knowledge [and] reasonable opportunity to obtain knowledge of [the
instrument’s] character or its essential terms,’ as is required for a successful
fraud in the factum defense.” Id. at 9. We agree.
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The defenses available to an obligor are outlined in 13 Pa.C.S. § 3305.
That provision reads as follows:
(a) General rule.– Except as stated in subsection (b), the right
to enforce the obligation of a party to pay an instrument is
subject to the following:
(1) a defense of the obligor based on:
(i) infancy of the obligor to the extent it is a defense
to a simple contract;
(ii) duress, lack of legal capacity or illegality of the
transaction which, under other law, nullifies the
obligation of the obligor;
(iii) fraud that induced the obligor to sign the
instrument with neither knowledge nor reasonable
opportunity to learn of its character or its
essential terms; or
(iv) discharge of the obligor in insolvency
proceedings;
...
(b) Right of holder in due course to enforce obligation.—The
right of a holder in due course to enforce the obligation of
a party to pay the instrument is subject to defenses of the
obligor stated in subsection (a)(1)[.]
13 Pa.C.S. § 3305 (a). Notably, the comments to this provision clarify that
“Subsection (a)(1)(iii) refers to ‘real’ or ‘essential’ fraud, sometimes called
fraud in the essence or fraud in the factum, as effective against a holder in
due course.” See Comments to 13 Pa.C.S § 3305(a)(1)(iii).
Our prior holding in this matter, that Mr. Alston raised a genuine issue
of material fact regarding fraud in the inducement, is of no moment since
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that holding pertained to the available defenses against Capital One as the
successor by merger to the original mortgagee, Green Point Funding, Inc.
Under § 3305(b), the right of a holder in due course to enforce an
instrument is only subject to a defense arising under § 3305(a)(iii), which
does not contain a fraud in the inducement claim.5 Thus, fraud in the
factum pursuant to § 3305(a)(iii) was the only fraud-based claim effective
against Peleus as a holder in due course.
Herein, Mr. Alston did not present evidence that the appraisal was an
essential term of the mortgage. Rather, the record reveals that the original
lender utilized the appraisal simply to determine the value of the property,
and thereafter, offered Mr. Alston a loan in the amount of $337,000. The
agreement was not subject to the appraisal, nor was the appraisal
incorporated into it. Mr. Alston agreed to the amount of the loan,
notwithstanding the appraisal, when he signed and executed the note. The
trial court properly held that Mr. Alston’s fraud in the inducement claim was
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5
A claim of fraud in the inducement requires a party to prove: (1) a
representation; (2) which is material to the transaction at hand; (3) made
falsely, with knowledge of its falsity or recklessness as to whether it is true
or false; (4) with the intent of misleading another into relying on it; (5)
justifiable reliance on the misrepresentation; and (6) the resulting injury was
proximately caused by the reliance.” Eigen v. Textron Lycoming
Reciprocating Engine Div., 874 A.2d 1179, 1185 (Pa. Super. 2005)
(citation omitted).
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not available against Peleus, and that he failed to sufficiently support a
defense for fraud in the factum. Therefore, his claim is without merit.
Finally, Mr. Alston alleges the trial court erred when it failed to find
Peleus and its counselors had engaged in a “pattern of deception.”
Appellant’s brief at 30. Mr. Alston does not cite to legal authority in support
of his position, and thus, it is waived. Whitley, supra.
Having determined that Peleus was entitled to judgment as a matter of
law, we turn to Mr. Alston’s second issue. In this vein, Mr. Alston contends
that the trial court violated his right to due process in granting two
interlocutory orders.
Mr. Alston first challenges an order by the court dated June 10, 2014,
directing Mr. Alston to show cause as to why an emergency motion to strike
a praecipe to discontinue this matter should not be granted. The court
required Mr. Alston to reply by 1:30 a.m. on June 11, 2014, an interval of
twenty-five and one-half hours. Mr. Alston argues that such a short time
frame violated his due process rights since it did not leave him adequate
time to respond or to prepare a defense for his upcoming trial.
Under the Philadelphia rules of civil procedure, an emergency petition,
such as the one filed herein, does not require the court to file a rule to show
cause as of course pursuant to Pa.R.C.P. 206.6. See Phila. Co. Civil Rule
206.1(a)(2). Upon review of an emergency petition, “the assigned judge will
issue an appropriate order setting forth the manner in which the petition will
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be answered, heard, and disposed.” Id. As the rule to show cause in this
matter was discretionary, we review the court’s issuance of that order for an
abuse of discretion. An abuse of discretion “is not merely an error of
judgment, but if in reaching a conclusion the law is overridden or
misapplied, or the judgment exercised is manifestly unreasonable, or the
result of partiality, prejudice, bias or ill-will, as shown by the evidence of
record, discretion is abused.” In re Estate of Talerico, 137 A.3d 577, 581
(Pa.Super. 2016) (citation omitted).
In the case sub judice, the rule returnable issued in this matter
pertained to a second emergency petition to vacate an order to discontinue
the action erroneously filed by prior counsel, after prior counsel had
withdrawn from this matter. Prior counsel filed a first praecipe to
discontinue this action on March 20, 2014. The court subsequently granted
that motion, and this dispute was discontinued. However, shortly thereafter,
prior counsel filed an emergency petition to strike the order vacating and
discontinuing the instant matter. On May 12, 2014, the court granted the
motion to strike the mistaken order discontinuing this case, and scheduled it
for a bench trial on June 30, 2014. Inexplicably, on May 14, 2014, prior
counsel again moved to discontinue this matter. Before the court could rule
on the second motion to discontinue, prior counsel filed a second emergency
petition to strike the motion to discontinue. In response, on June 10, 2014,
the court issued a rule returnable requiring Mr. Alston to show cause as to
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why the court should not grant the emergency petition by 1:30 a.m. on June
11, 2014.
We find the rule returnable issued by the trial court set forth an
appropriate manner for disposing the emergency petition. Mr. Alston did not
challenge the first order granting prior counsel’s emergency motion to strike
the discontinuance of this matter, nor does he challenge that order on
appeal. Notably, each of prior counsel’s emergency motions were premised
upon mistakenly-submitted petitions to discontinue after that counsel had
withdrawn from this matter.
Since Mr. Alston did not object to the trial court’s first order granting
prior counsel’s emergency petition, it was reasonable for the trial court to
believe Mr. Alston could not, or would not, levy a defense against its
granting of the second motion. This belief is bolstered by Mr. Alston’s failure
to present any argument on appeal as to why the trial court erred in
granting the second emergency petition. Rather, he contends that the
short-time frame presented in the rule returnable violated his right to due
process as it did not afford him an opportunity to respond to the rule and
prepare for trial. At the time the court issued the order in question, Mr.
Alston’s case had been in litigation for over six years. Mr. Alston had ample
time to prepare his defense, and the record reveals he demonstrated an
intimate knowledge of his dispute, and the documents involved, at trial.
Hence, no relief is due.
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Finally, Mr. Alston argues the trial court erred in granting a motion
permitting alternative service on January 29, 2009. Mr. Alston did not
object to the service of process in his preliminary objections. Thus, we find
this issue waived. Silver v. Thompson, 26 A.3d 514, 517 n.6 (Pa.Super.
2011) (finding that a party that fails to object to service of process in
preliminary objections waives that claim).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/21/2016
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