J-A24019-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BAYVIEW LOAN SERVICING, LLC IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
ADEL ETREIH AND RAID ALBARKAWI
Appellants No. 3278 EDA 2015
Appeal from the Judgment Entered November 4, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): No. 130801821 August Term, 2013
BEFORE: BOWES, J., OTT, J., and SOLANO, J.
MEMORANDUM BY OTT, J.: FILED NOVEMBER 01, 2016
Adel Etreih and Raid Albarkawi appeal from the in rem judgment,
entered on November 4, 2015, in the Court of Common Pleas of Philadelphia
County, pursuant to the court’s May 18, 2015 order, finding in favor of
Bayview Loan Servicing, LLC (“Bayview”), and entering an in rem judgment
in the amount of $178,657.07, with a foreclosure and sale of the mortgaged
property, against Appellants. Appellants claim (1) the trial court erred in
entering the in rem judgment in the amount of $178,657.07 in favor of
Bayview and against Albarkawi, as Bayview’s claim was based on a Note,
Mortgage and Loan Modification Agreement, and Albakawi was not a
signatory to the Note or Loan Modification Agreement, and (2) the trial court
erred in entering the in rem judgment in the amount of $178,657.07 in favor
of Bayview and against Appellants, as Bayview’s claim for counsel fees was
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not properly proven. See Appellants’ Brief at 2. Based upon the following,
we affirm.
The trial court has summarized the facts and procedural history
underlying this appeal:
A. FACTS
On August 28, 2007, in consideration of a loan in the principal
amount of $87,500.00, Defendant Adel Etreih (“Defendant
Etreih”) executed and delivered to Interbay Funding, LLC
(“Interbay”) a Note (the “Note”). The Note specified an interest
rate at 12.375% per annum, payable as to the principal and
interest in equal monthly installments of $997.53 commencing
October 1, 2007.
That same day, in order to secure the obligations under the
Note, both Defendant Etreih and Defendant Raid Albarkawi
(“Defendant Albarkawi”) executed and delivered a mortgage (the
“Mortgage”) via a Mortgage and Security Instrument (“Security
Instrument”) to Interbay. The Mortgage was dated August 28,
2007 and recorded on September 4, 2007 in the Department of
records for the County of Philadelphia as Mortgage Instrument
51765624. The Mortgage secures the real property commonly
known as 431 East Wyoming Avenue, Philadelphia, PA 19120.[1]
Interbay transferred the Note and assigned the Mortgage to
Plaintiff on November 14, 2007.
On November 19, 2009, Defendant Etreih and Plaintiff agreed
to a Loan Modification Agreement (“Modification”). The
Modification increased the unpaid principal balance due on the
Note to $105,635.24, consisting of the amounts loaned to
Defendants [sic] by Plaintiff, including past due principal
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1
Etreih and Albarkawi are the owners of the subject property, which is a
commercial property. See Bayview’s Amended Complaint in Mortgage
Foreclosure, 12/4/2013, at ¶¶2, 13; Appellants’ Answer, New Matter, and
Counterclaim, 2/26/2014, at ¶¶2, 13.
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payments, interest, fees and costs capitalized. The interest rate
decreased to 6% per annum effective December 1, 2009.
The Defendants are in default of their obligations pursuant to
the Note and Mortgage because due payments have not been
made since November 1, 2012.
B. PROCEDURAL HISTORY
On May 6, 2015, following a non-jury trial,[2] this Court[, on
May 18, 2015,] entered an in rem judgment in favor of Plaintiff
against Defendants in the amount of $178,657.07.[3] On [May
28, 2015], 2015, Defendants filed a Motion for Post-Trial Relief,
which [Bayview] opposed. On September 16, 2015, this Court
heard oral argument on Defendants’ Motion for Post-Trial Relief,
which was denied that same day.
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2
Albarkawi did not appear at the trial.
3
At trial, Bayview presented a Pay Off Statement and History, Exhibit P-6,
showing total indebtedness in the amount of $178,652.07, as of the date of
the May 6, 2015 hearing. The in rem judgment in the amount of
$178,657.07 reflects a $5.01 difference that appears to be a scrivener’s
error, and is de minimus. The Notes of Testimony reflects the following
amounts:
Unpaid Principal Balance $ 101,810.15
Interest $ 16,086.00
Outstanding Late Charges $ 551.60
Default Interest $ 25,791.90
Prepayment Penalties $ 19,428.77
Property Inspections $ 671.00
Property Appraisals $ 250.00
Property Preservation Fees $ 70.00
Advanced Legal Fees $ 8,253.46
Advanced Taxes $ 2,733.96
Advanced Insurance $ 3,005.22
Total Debt $ 178,652.06
See, N.T. 5/6/2015 at 23-24.
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Trial Court Opinion, 1/21/2016, at 1–2 (unnumbered) (record citations
omitted).
On October 16, 2015, Appellants filed their Notice of Appeal. 4 On
November 4, 2015, Appellants filed a praecipe for entry of judgment, which
was entered on the docket pursuant to the trial court’s May 18, 2015 order,
entering an in rem judgment in favor of Bayview against Appellants in the
amount of $178,657.07, with a foreclosure and sale of the mortgaged
property.
At the outset, we state our standard of review:
Our appellate role in cases arising from non-jury trial verdicts is
to determine whether the findings of the trial court are
supported by competent evidence and whether the trial court
committed error in any application of the law. The findings of the
trial judge in a non-jury case must be given the same weight
and effect on appeal as the verdict of a jury, and the findings will
not be disturbed on appeal unless predicated upon errors of law
or unsupported by competent evidence in the record.
Furthermore, our standard of review demands that we consider
the evidence in a light most favorable to the verdict winner.
Levitt v. Patrick, 976 A.2d 581, 588-89 (Pa. Super. 2009) (citation
omitted). “If we conclude the trial court abused its discretion or committed
an error of law, then we may reverse the denial of a motion for a new trial.”
Id. (citation omitted).
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4
On October 21, 2015, the trial court issued a Pa.R.A.P. 1925(b) order,
directing Appellants to file a concise statement of errors complained of on
appeal, and Appellants filed a concise statement on November 18, 2015.
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In the first issue raised in this appeal, Appellants contend that the in
rem judgment in the amount of $178,657.07 cannot stand as to Albarkawi.
Appellants make three arguments.
First, Appellants contend that Bayview’s claim was based on the
Mortgage, Note and Loan Modification Agreement, and Albarkawi has no
liability as he was not a party to the Note or Loan Modification Agreement
and had only signed the Mortgage. Appellants further argue the Mortgage
required any modification to be in writing and signed by the party against
whom it is asserted. Appellants maintain that as Albarkawi was not a
signatory nor gave consent for the Loan Modification Agreement, his liability
and any security posted by Albarkawi in the form of the Mortgage is
discharged.
Second, Appellants argue the trial court erred in finding that Albarkawi
ratified the Loan Modification Agreement. In this regard, Appellants
acknowledge that the trial court correctly cited relevant case law dealing
with ratification. See Trial Court Opinion, 1/21/2016, at 4 (“An agreement
can be ratified by a party through his actions when he shows an acceptance
or adoption of the agreement with intent to ratify and knowledge of the
material consequences. Allegany Gas Co., to Use of E. Pennsylvania v.
Kemp, 174 A. 289 (Pa. 1934)[.]”). Appellants argue, however, that Etreih’s
testimony regarding Alkarkawi’s knowledge of the Loan Modification
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Agreement was “rather equivocal”5 and cannot support a finding of
ratification. See Appellant’s Brief at 13–14 (citing N.T., 5/6/2015, at 57–
58). Appellants also claim that the evidence falls short of showing that
Albarkawi made any payments following the Loan Modification Agreement.
In this regard, Appellant contend Plaintiff’s Exhibit P-6, cited by the trial
court, “is without any information whatsoever indicating that Albarkawi
made the payments nor even that he had knowledge of them.” Appellants’
Brief at 15.
Third, Appellants state that “if [] Albarkawi’s interest in the subject
property secures the debt created by the Note, said liability can only extend
to his interest securing the original [$87,000.00] loan created by the Note.”
Appellant’s Brief at 16 (emphasis in original). Appellants maintain any
judgment based in whole or in part on the Loan Modification Agreement
cannot be entered against Albarkawi. Appellants claim “[i]t is immaterial
that [Bayview] cannot proceed against Albarkawi personally as a result of
the judgment.” Id. at 17. Appellants reason that the judgment amount
“fixes an amount which [Bayview] may recover through the sale of the
subject property, including Albarkawi’s interest therein,” that “[a]ny amount
recovered at [the] sale of the property in excess of the proper amount due
to Bayview would be returned to [Appellants],” and “[a]s such, Albarkawi is
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5
Appellants’ Brief at 13.
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being deprived of his interest in the property to the extent that the
judgment amount exceeds any proper liability under the original Mortgage.”
Id. at 17.
Our review confirms the determination of the trial court that
Appellants’ position is meritless. Because Albarkari co-signed the mortgage,
Bayview had the right to seek an in rem judgment against Albarkawi for the
debt due under the Note and Modification Agreement. As the Honorable
Denis P. Cohen ably explained:
The Security Instrument[6] stated that: “By its execution hereof,
Borrower desires to secure the payment of the Debt (hereinafter
defined) and the performance of all of its obligations under the
Note and the Other Obligations (hereinafter defined) and any
and all other indebtedness now or hereafter owing by the
Borrower to Lender.” The Security Instrument defined “debt” as
“all sums advanced and costs and expenses incurred by the
Lender in connection with the Debt or any part thereof, any
renewal, extension, or change or substitution for the Debt or any
part thereof, or the acquisition or perfection of the security
thereof, whether made or incurred at the request of Borrower or
Lender.” Finally, the Security Instrument provided that: “If
Borrower consist of more than one person, the obligations and
liabilities of each person hereunder shall be joint and several.”
By the plain language of the Security Instrument, Defendant
Albarkawi was bound to the obligations of the Mortgage, even
when those obligations were slightly altered by the Modification.
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6
“Security Instrument” refers to the Mortgage. As the trial judge stated
earlier in his opinion, “both Defendant Etreih and Defendant Raid Albarkawi
(“Defendant Albarkawi”) executed and delivered a mortgage (the
“Mortgage”) via a Mortgage and Security Instrument (“Security
Instrument”)[.] Trial Court Opinion, 1/21/2016, at 1 (unnumbered).
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The Defendants’ claim that the Modification created separate and
additional obligations for which Defendant Albarkawi was not a
party is meritless. The Modification incorporated only debt which
was previously due under the original loan documents.
Specifically, the Modification incorporated the “unpaid interest
late charges, fees and costs” and “if applicable, any advances for
unpaid property taxes, insurance premiums” that was explicitly
contemplated by the Security Instrument.
****
Assuming arguendo that Defendant Albarkawi was not bound by
the terms of the Note or Modification, the judgment amount is
irrelevant because [Bayview] cannot pursue a deficiency action
against Defendant Albarkawi. An action in mortgage foreclosure
is strictly an in rem proceeding, and the purpose of a judgment
in mortgage foreclosure is solely to effect a judicial sale of the
mortgaged property. Meco Realty Co., v. Burns, 200 A.2d
869, 871 (Pa. 1964); U.S. Bank, N.A. v. Pautenis, 118 A.[3]d
386, 394 (Pa. Super. 2015). Once a default has been
established under the terms of the mortgage, the court must
enter a judgment in a certain amount. Landau v. W.
Pennsylvania National Bank, 282 A.2d 335, 340 (Pa. 1971)
(“Judgment in a mortgage foreclosure action must be entered for
a sum certain or no execution could ever issue on it”). However,
an in rem judgment can be issued even when personal liability
cannot be established. See Meco, 200 A.2d at 871.
If Defendant Albarkawi is not bound by the Note or Modification,
then he cannot be held liable for any additional judgments. He
can only be held to an in rem judgment under the original
Mortgage and not held to be personally liable in this matter or
any deficiency action. At trial, Plaintiff’s counsel conceded this
point and reiterated their request for solely an in rem judgment
against Defendant Albarkawi. Thus, Defendant Albarkawi could
only be held liable for an in rem judgment under the original
Mortgage and not an in personam judgment in a deficiency
action.
Trial Court Opinion, 1/21/2016, at 4–7 (unnumbered) (emphasis supplied).
We agree with the trial court’s sound analysis. Although Albarkawi did
not sign the Note or Modification Agreement, he signed the Mortgage. Under
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the terms of the Mortgage, Albarkawi, as a “Borrower,” agreed to secure the
payment of the debt “evidenced by the Note,” and “any and all indebtedness
now or hereafter owing by Borrower to Lender.” Mortgage and Security
Agreement, 8/28/2007, §§ 2.1(a); 2.2(d). The Mortgage provides: “If
Borrower consists of more than one person, the obligations and liabilities of
each such person hereinunder shall be joint and several.” Id., § 18.2.
When payments on the indebtedness ceased, default occurred under the
Mortgage, Note and Loan Modification Agreement. Therefore, although
Albarkawi is not personally liable on the Note or Modification Agreement,
Bayview can proceed against Albarkawi to seek foreclosure and sell the
property to satisfy the outstanding debt.7
Finally, Appellants argue the trial court erred in entering judgment in
the amount of $178,657.07 in favor of Bayview and against Appellants
because Bayview’s claim for counsel fees was not properly proven.
In Pennsylvania, “a mortgagee is entitled on foreclosure to recover
reasonable expenses, including attorney’s fees.” Citicorp Mortgage, Inc. v.
Morrisville Hampton Vill. Realty Ltd. Partnership, 662 A.2d 1120, 1123
(Pa. Super. 1995). “The test of a legal fee must be its reasonableness,
determined by the circumstances of the particular case.” Id., citing Federal
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7
In light of our agreement with the trial court’s analysis that Albarkawi can
be held to the in rem judgment based upon the Mortgage, there is no need
to address the issue of Albarkawi’s ratification of the Modification
Agreement.
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Land Bank of Baltimore v. Fetner, 410 A.2d 344 (Pa. Super. 1979).
“[R]elevant Pennsylvania law finds attorney’s fees of 10% to be reasonable.”
Citicorp Mortgage, Inc., supra at 1123.
Here, the trial court concluded:
The instant case is similar to other cases that have found a 10%
fee to be reasonable. In Federal Land Bank, a 10% fee on a
judgment of $137,194.45 on a case that involved “preliminary
objections, briefs, depositions, a trial and this appeal” was found
to be reasonable. 410 A.2d at 347. Likewise, the instant case
saw the Defendant file two sets of Preliminary Objections, a
counterclaim requiring further Preliminary Objections, briefs for
Summary Judgment, trial preparation and attendance, and
Motions Post-Trial Relief on an outstanding balance of
$101,810.15.[8] See id. Thus, the 10% fee here is similarly
reasonable and should be upheld. See id.
Trial Court Opinion, 1/21/2016, at 8 (unnumbered).
We find no basis upon which to disturb the determination of the trial
court. In support of its claim for attorneys’ fees in the amount of $8,253.46,
Bayview presented a document that itemized the “total debt owed” and
showed, inter alia, “legal fees advanced,” in the amount of “8,253.46.” See
Exhibit P-6. Appellants complain that because Bayview failed to produce any
fee agreement or time sheets evidencing attorney hours rates or time spent
on the case, Bayview failed to produce sufficient and proper evidence in
support of the amount claimed. However, the amount claimed by Bayview is
reasonable under the above-cited Pennsylvania law regarding mortgage
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8
See Footnote 3, supra.
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foreclosure and Appellants do not challenge the amount as unreasonable.
Therefore, Appellants’ final claim fails.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/1/2016
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Bayview Loan Servicing v. Etreih, A.
Combined Opinion