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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LSF8 MASTER PARTICIPATION TRUST IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
SEAN P. HIGGINS
Appellants No. 1077 EDA 2016
Appeal from the Order Entered March 2, 2016
in the Court of Common Pleas of Bucks County
Civil Division at No(s): 2014-05665
BEFORE: OLSON, J., RANSOM, J., and STRASSBURGER, J.*
MEMORANDUM BY RANSOM, J.: FILED JANUARY 31, 2017
In this mortgage foreclosure action, Sean P. Higgins (“Appellant”)
appeals from the order entered March 2, 2016, granting LSF8 Master
Participation Trust (“Appellee”) summary judgment and awarding it
judgment in rem for $334,000.08, plus interest and costs. We affirm.
On July 3, 2003, Appellant executed a promissory note in favor of
Appellee for the amount of $251,250.00. See Promissory Note, 7/3/03, at
1-4. The note was secured by a mortgage concurrently executed by
Appellant, and delivered to Appellee on certain real property owned by
Appellant located at 142 Durham Road, Tinicum Township, Bucks County,
Pennsylvania, 18972-9768. See Mortgage, 7/3/03, at 1-14. The mortgage
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*
Retired Senior Judge assigned to the Superior Court.
J-S88019-16
was assigned three times, with all assignments properly recorded.1 In March
2012, Appellant defaulted on the obligations due under the note by failing to
make the required monthly payments. See Account Summaries.
Appellee commenced the instant action in August, 2014. Appellant
filed preliminary objections to the complaint in the nature of a demurrer,
arguing that Appellee was not the real party in interest, which the trial court
overruled. Appellant filed an answer to the complaint with new matter,
making general denials or demands for strict proof, again arguing Appellee
was not the real party in interest. Appellee filed a reply to the new matter.
In the course of discovery, Appellant admitted to signing the promissory
note and mortgage. See Objections and Response to Plaintiff’s Request for
Admissions, 6/29/15, at 4.
In November 2015, Appellee filed a motion for summary judgment.
Appellant timely responded in the form of a “motion to strike.” In this
motion, Appellant argued that the mortgage was not signed in the presence
of a notary, and was therefore fraudulent and void. See Appellant’s Motion
to Strike, 12/7/15, at 1. Appellant reiterated the argument, previously
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1
The mortgage was first assigned to Mortgage Electronic Registration
Systems, Inc. (“MERS”) and recorded in the Office of the Recorder of Deeds
for Bucks County in Book 4305, Page 1572. See Assignment of Mortgage,
7/3/03, at 1-2. It was then assigned to Household Finance Consumer
Discount Company and recorded as instrument number 2012076873. See
Assignment of Mortgage, 9/14/12, at 1-2. Finally, it was assigned to
Appellee and recorded as instrument number 2014008726. See Assignment
of Mortgage, 1/23/14, at 1-2.
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rejected by the trial court, that Appellee was not legally entitled to enforce
the note. The trial court granted the motion for summary judgment.
Appellant timely appealed and filed a court-ordered Pa.R.A.P. 1925(b).
The trial court issued a responsive opinion.
On appeal, Appellant raises the following issues:
1. Should the lower court have entered an order that granted
summary judgment to [Appellee] when the parties were still
engaged in discovery, and where [Appellee] failed to respond to
[Appellant’s] discovery, especially where there were material
facts in dispute?
2. Should the lower court have entered an order that granted
summary judgment to [Appellee] when there was no assignment
attached of either the note or the mortgage to [Appellee]
evidencing ownership or possession of the note or mortgage?
3. Should the lower court have entered an order that granted
summary judgment to [Appellee] where [Appellee] failed to
prove, and there was a dispute as to whether [Appellee] is a real
party in interest under the Pennsylvania Uniform Commercial
Code (“PUCC”) that entitled [Appellee] to enforce the note, and
therefore the mortgage?
4. Should the lower court have entered an order that granted
summary judgment to [Appellee] as [Appellee] never proved it
was the holder of the note, a nonholder in possession of the note
who has the rights of a holder, or a person not in possession of
the note who is entitled to enforce the instrument pursuant to
PUCC § 3309?
5. Should the lower court have entered an order that granted
summary judgment to [Appellee] where [Appellee] never
proved it was in possession of the original note and therefore,
was maintain [sic] in foreclosure. See J.P. Morgan Chase
Bank v. Murray, 63 A.3d 1258, 1268 (Pa. Super. 2013).
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Appellant’s Brief at 4-5 (unnecessary capitalization and quotation marks
omitted).
Our scope and standard of review of an order granting summary
judgment are well-settled.
[S]ummary judgment is properly granted where there is no
genuine issue as to any material fact and ... the moving party is
entitled to a judgment as a matter of law. Summary judgment
may be granted only where the right is clear and free from
doubt. The moving party has the burden of proving that there is
no genuine issue of material fact. The record and any inferences
therefrom must be viewed in the light most favorable to the
nonmoving party, and any doubt must be resolved against the
moving party. The trial court will be overturned on the entry of
summary judgment only if there has been an error of law or a
clear abuse of discretion.
First Wisconsin Trust Co. v. Strausser, 439 Pa. Super. 192, 198 (Pa.
Super. 1995) (internal citations and quotations omitted).
Under the Pennsylvania Uniform Commercial Code, 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). Enforcement is proper even if
questions remain as to the chain of possession, and questions as to that
chain are immaterial to its enforceability so long as the holder can prove it
holds said note. Id. 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,
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the mortgagor has failed to pay on the obligation, and the recorded
mortgage is in the specified amount. Id.
Appellant first claims that the court erred in entering an order granting
summary judgment where the parties were still engaged in discovery and
where genuine issues of material fact remained. Appellant’s Brief at 15-17.
Appellant points to three issues allegedly in dispute: 1) Appellee had not
produced the original note, was not the real party in interest, and had no
standing to bring the action; 2) Appellee had not complied with the notice
requirements of Act 91; and 3) Appellee could not rest on an affidavit to
support default.2 Appellant’s Brief at 18.
The trial court did not err in granting summary judgment prior to the
formal close of discovery. Pa.R.C.P. 1035.2 provides that a party may move
for summary judgment at any time whenever there is no genuine issue of
material fact as to a necessary element of the cause of action or defense
which could be established by additional discovery, or after the completion of
discovery relevant to the motion.
With regard to discovery, in the instant case, Appellant had over a
year in which to engage in discovery relevant to the case, or any issues he
wished to raise. Appellee commenced this action in August 2014, but the
record indicates that Appellant did not send discovery requests until October
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2
Citing in support Nanty-Glo v. American Surety Co., 163 A. 523 (Pa.
1932).
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2015. Thus, the trial court did not abuse its discretion in granting summary
judgment in favor of Appellee despite the fact that discovery had not closed.
See, e.g., Jacques v. Akzo Int'l Salt, Inc., 619 A.2d 748, 750–51 (Pa.
Super. 1993) (stating that a motion for summary judgment was not
premature where plaintiff failed to conduct any discovery during the six
month period between the plaintiff's filing of the complaint and the
defendant's motion for summary judgment).
With regard to material facts in dispute, Appellant first avers that
Appellee was not the real party in interest because it had not produced the
original note. The Pennsylvania Rules of Civil Procedure provide that, except
as otherwise provided, all actions shall be prosecuted by and in the name of
the real party in interest. Pa.R.C.P. 2002(a). A real party in interest is a
person who will be entitled to the benefits of the action if successful, and has
the legal right under the applicable substantive law to enforce the claim in
question. See U.S. Bank N.A. v. Mallory, 982 A.2d 986, 994 (Pa. Super.
2009). Where an assignment is effective, the assignee stands in the shoes
of the assignor and assumes all of his rights. CitiMortgage, Inc. v.
Barbezat, 131 A.3d 65, 69 (Pa. Super. 2016).
In a mortgage foreclosure action, the mortgagee is the real party in
interest. See Wells Fargo Bank, N.A. v. Lupori, 8 A.3d 919, 922 n. 3 (Pa.
Super. 2010); see also Pa.R.C.P. 1147 (requiring a plaintiff in a mortgage
foreclosure action to name the parties to the mortgage and any
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assignments). To establish standing in a mortgage foreclosure action, a
plaintiff must plead ownership of the mortgage under Rule 1147, as well as
possess the right to make demand upon the note secured by the mortgage.
Barbezat, 131 A.3d at 69. A mortgagee must hold the note secured by a
mortgage, as the note and mortgage are inseparable. Id. at 75 n.3.
Appellant relies upon Murray to support his argument that Appellee
does not hold the original note. Appellant argues that Murray held that a
plaintiff in a mortgage foreclosure action must provide requisite proof of its
right to maintain the action, and questionable documents do not furnish
sufficient proof. Appellant’s Brief at 22 (citing in support Murray, 63 A.3d
at 1268). Murray is distinguishable, as in that case, the plaintiff had not
filed of record a copy of the note including the allonge until after the trial
court granted summary judgment. Murray, 63 A.3d at 1266-1268. The
defendant’s assertions were based upon a visual inspection and
contradictory evidence of record. Id. The record here is not in question,
and the allonge was provided to the trial court for inspection prior to the
grant of summary judgment.
We reject Appellant’s contention that Appellee cannot establish
ownership of the note. The note produced by Appellee identifies Appellant
as the borrower and Equity Financial Inc. as the Lender. See Promissory
Note. The note was endorsed by Equity without recourse to the order of
Household Financial Consumer Discount Company. Id. The allonge
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attached to the note endorses the note to Appellee. See Allonge at 1.
Accordingly, the note, as negotiable instrument, entitles Appellee to
enforcement of the obligation. See 13 Pa.C.S. § 3109(a); 13 Pa.C.S. §
3301. It is incumbent upon Appellant to establish one or more issues of fact
arising from the evidence that controvert the evidence cited in support of the
motion, and he has not established such a fact. See Barbezat, 131 A.3d at
69-70.
Second, Appellant argues that Act 91 Notice was deficient, because
although Appellee attached an Act 91 notice to its motion, the certified mail
receipt was blank. Appellant’s Brief at 20. Thus, he avers he had no notice
of default. Id. Appellant did not raise this issue in his Pa.R.A.P. 1925(b)
statement, and thus, has waived it on appeal. See Commonwealth v.
Lord, 719 A.2d 306, 309 (Pa. 1998) (holding that any issues not raised in a
1925(b) statement will be deemed waived); see also Pa.R.A.P.
1925(b)(4)(vii).
Third, Appellant argues that the trial court erred in granting summary
judgment where Appellee relied solely on an affidavit, in violation of the
Nanty-Glo rule. This rule:
prohibits summary judgment where the moving party relies
exclusively on oral testimony, either through testimonial
affidavits or deposition testimony, to establish the absence of a
genuine issue of material fact except where the moving party
supports the motion by using admissions of the opposing party
or the opposing party's own witness.
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Lineberger v. Wyeth, 894 A.2d 141, 149 (Pa. Super. 2006) (citing First
Philson Bank, N.A. v. Hartford Fire Ins. Co., 727 A.2d 584, 587 (Pa.
Super. 1999), appeal denied, 747 A.2d 901 (Pa. 1999)). In the instant case,
the trial court properly concluded that the Nanty-Glo rule was not
implicated, as Appellant admitted particular facts and has not sufficiently
denied other facts.
Namely, Appellant admitted to signing the promissory note and that
his signature appears on the mortgage. See Appellant’s Responses to
Request for Admissions at 4. Further, in foreclosure actions, general denials
constitute admissions where specific denials are required. Bank of
America, N.A. v. Gibson, 102 A.3d 462, 466–67 (Pa. Super. 2014), appeal
denied, 631 Pa. 722 (2015); see also Pa.R.C.P. 1029(a), (b). Appellant did
not specifically deny default, but stated only that there was never a default
declared under the note by the mortgagee who is the holder of the note.
Accordingly, by his ineffective denials, Appellant admitted the material
allegations of the complaint. Id. Thus, the trial court properly entered
summary judgment on those admissions, and the Nanty-Glo rule did not
apply, as the affidavit was not the sole piece of evidence relied upon for
summary judgment.
Appellant’s remaining allegations are merely restatements of his
contention that Appellee was not the real party in interest, and did not hold
the note. As we have already determined that this assertion is unavailing,
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we need not address his remaining claims. Accordingly, the record shows
that Appellee held the promissory note and the mortgage. Enforcement of
that note was proper. See Mallory, 982 A.2d at 994. The trial court was in
compliance with the Nanty-Glo rule and correctly entered summary
judgment in favor of Appellee, as no material fact remained in issue as to
any element of the foreclosure action. See Cunningham, 714 A.2d at
1057.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/31/2017
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