Wells Fargo Bank v. Joseph, C. , 183 A.3d 1009 ( 2018 )

J-A25023-17
2018 Pa. Super. 27
WELLS FARGO BANK, N.A. IN THE SUPERIOR COURT
OF
PENNSYLVANIA
Appellee
v.
CARL A. JOSEPH AND OCTAVIA JOSEPH
APPEAL OF CARL A. JOSEPH No. 636 EDA 2017
Appeal from the Order entered January 17, 2017
In the Court of Common Pleas of Monroe County
Civil Division at Nos: 2014 CV 3953
BEFORE: OTT, STABILE, JJ., and STEVENS, P.J.E.*
OPINION BY STABILE, J.: FILED FEBRUARY 13, 2018
Appellant, Carl A. Joseph, appeals from an order entered in the Monroe
County Court of Common Pleas, Civil Division, granting summary judgment to
Wells Fargo Bank, N.A. in this mortgage foreclosure action. We affirm.
The factual and procedural history of this case is as follows. On March
3, 2010, Appellant and his wife, Octavia Joseph, executed a promissory note
in the principal amount of $205,321.00 (the “Note”) in favor of Wells Fargo
Bank, N.A. (“the Bank”) evidencing their obligation to repay a loan made to
them by the Bank in that same amount (the “Loan”). The Note stated in bold
letters: “Notice: this loan is not assumable without the approval of the
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* Former Justice specially assigned to the Superior Court.
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Department of Veteran Affairs or its authorized agent.” The Bank endorsed
the Note in blank making it a bearer instrument.
On the same date, to secure payment of their obligations under the
Note, the Josephs executed a mortgage (the “Mortgage”) granting the Bank
and its successors and assignees a first lien security interest on real property
located at 198 White Pine Trail, Tannersville, Pennsylvania, 18372 (the
“Property”). The Bank recorded the Mortgage in the Office of the Recorder of
Deeds for Monroe County.
The Josephs defaulted on the Mortgage by failing to make the monthly
payment due on July 1, 2013 and thereafter. On October 29, 2013, the Bank
sent a combined notice pursuant to the Homeowners Emergency Mortgage
Assistance Act, commonly known as Act 91, 35 P.S. §§ 1680.401c, et seq.
(“Act 91”), and the Loan Interest Protection Law, commonly known as Act 6,
41 P.S. §§ 101 et seq. (“Act 6”) (collectively, the “Act 91 Notices”), to the
Josephs. The Act 91 Notices advised that the Mortgage was in default due to
the Josephs’ failure to make monthly payments from July 1, 2013 through
October 1, 2013 and the total amount due to cure the default. The Act 91
Notices also informed the Josephs of the procedures for applying for assistance
to avoid foreclosure. The Josephs failed to cure their payment defaults under
the Note and Mortgage.
On May 13, 2014, the Bank filed a complaint in mortgage foreclosure
against the Josephs seeking judgment in the amount of $242,593.26. The
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Bank averred that it was the payee of the Note, was in possession of the Note,
and was the current mortgagee.
Thereafter, Appellant applied to Wells Fargo for mortgage assistance.
In a letter to Appellant dated May 11, 2016, Paul Gruber, an Executive
Resolution Specialist for Wells Fargo Home Mortgage, advised that the Bank
considered Appellant for five assistance programs but denied Appellant’s
request for assistance because his income was too low to “create an affordable
mortgage payment” in accordance with program requirements. Gruber
expressly stated that Wells Fargo Home Mortgage is a division of the Bank.
On August 8, 2016, Appellant filed a one-paragraph answer to the
Bank’s complaint alleging that the total amount due “was in dispute
significantly” and that the Bank “is not the legal possessor[] of said original
and is therefore not legally able to bring any action against Defendants.”
In a letter dated November 10, 2016, Appellant requested that the Bank
identify the current owner of the Loan. On November 22, 2016, Gruber sent
Appellant a letter advising that Wells Fargo Home Mortgage was the servicer
and owner of the Loan and that Wells Fargo Home Mortgage was a division of
the Bank.
On November 21, 2016, the Bank filed a motion for summary judgment
and attached as exhibits, inter alia, copies of the loan history, the recorded
Mortgage, the original blank endorsed Note, the affidavit of Cynthia A.
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Thomas, the Bank’s Vice President of Loan Documentation, and the Act 91
Notices sent to the Josephs.
On January 10, 2017, Appellant filed a response to the Bank’s motion
for summary judgment. He argued that the Bank (a) lacked standing because
the Mortgage was allegedly transferred to Wells Fargo Home Mortgage; (b)
failed to comply with a federal regulation relating to veterans affairs, 38 C.F.R.
§ 36.4278(g); and (c) failed to comply with 15 U.S.C. § 1641(g) of the Truth
in Lending Act ("TILA") by not providing notice of a transfer or assignment of
the Mortgage. Appellant also filed his own cross-motion for summary
judgment and a motion for leave to file an amended answer to the Bank’s
complaint that added the TILA defense and the defense that the Bank failed
to comply with 38 C.F.R. § 36.4278(g). Nowhere in these filings, however,
did Appellant dispute that the Mortgage was in default.
On January 17, 2017, the trial court granted the Bank’s motion for
summary judgment, denied Appellant’s cross-motion for summary judgment,
denied Appellant’s motion for leave to file an amended answer, and entered
judgment of $281,274.75 in favor of the Bank. Appellant filed a timely appeal
to this Court,1 and both Appellant and the trial court complied with Pa.R.A.P.
1925.
In this appeal, Appellant raises the following issues:
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1 Octavia Joseph did not appeal.
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1. Did the trial court err in granting summary judgment to [the
Bank] when it relied upon the testimonial affidavit of Cynthia A.
Thomas, when such affidavit was based upon information and
belief, rather than personal knowledge?
2. Did the trial court err in entering summary judgment in [the
Bank]’s favor when a genuine issue of material fact was raised by
[Appellant] in opposition to [the Bank’s] motion regarding the
ownership of the [M]ortgage, based upon exhibits produced by
the defendant, including correspondence from the servicer Wells
Fargo Home Mortgage?
3. Did the trial court err in granting summary judgment to [the
Bank] when [Appellant’s] response raises an issue of material fact
whether [the Bank] complied with the Veterans' Administration
regulations, which are specifically referenced in the promissory
[N]ote?
4. Did the trial court err in granting summary judgment to [the
Bank] when it determined that the subject [M]ortgage was not
subject to Veterans' Administration regulations despite an
acknowledgment by [the Bank], which was attached as an exhibit
to [Appellant’s] response in opposition to summary judgment, to
the contrary?
5. Did the trial court err in denying [Appellant’s] motion to amend
[his] answer and new matter to include affirmative defenses of
lack of standing to sue and failure to meet several conditions
precedent, including [TILA] requirements and Veterans'
Administration regulations; and to include a counterclaim for
violation of section 131(g) of the [TILA], when judgment had not
yet been entered on [the Bank]’s motion for summary judgment,
when [Appellant] raise a potentially meritorious defense, and
when amendment would have served the interests of justice and
would not have prejudiced [the Bank]?
Appellant’s Brief at 4-5.
The Pennsylvania Rules of Civil Procedure authorize parties to move for
summary judgment “whenever there is no genuine issue of any material fact
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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).
As has been oft declared by this Court, summary judgment is
appropriate only in those cases where the record clearly
demonstrates that there is no genuine issue of material fact and
that the moving party is entitled to judgment as a matter of law.
When considering a motion for summary judgment, the trial court
must take all facts of record and reasonable inferences therefrom
in a light most favorable to the non-moving party. In so doing,
the trial court must resolve all doubts as to the existence of a
genuine issue of material fact against the moving party, and, thus,
may only grant summary judgment where the right to such
judgment is clear and free from all doubt.
On appellate review, then, an appellate court may reverse a grant
of summary judgment if there has been an error of law or an
abuse of discretion. But the issue as to whether there are no
genuine issues as to any material fact presents a question of law,
and therefore, on that question our standard of review is de novo.
This means we need not defer to the determinations made by the
lower tribunals. To the extent that this Court must resolve a
question of law, we shall review the grant of summary judgment
in the context of the entire record.
Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (internal
citations and quotation marks omitted). The party opposing the motion for
summary judgment must produce evidence essential to the cause of action,
without merely resting upon the allegations or denials in the pleadings.
Pa.R.C.P. 1035.3(a).
In his first argument on appeal, Appellant contends that the entry of
summary judgment violated the rule of Nanty–Glo v. American Surety Co.,
163 A. 523 (Pa. 1932), because the trial court relied solely on the testimonial
affidavit of Cynthia Thomas, an officer at the Bank. Nanty–Glo prohibits
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entry of summary judgment based solely on the moving party’s oral
testimony. See Sherman v. Franklin Regional Med. Ctr., 660 A.2d 1370,
1372 (Pa. Super. 1995). Nanty-Glo is inapplicable here for two reasons.
First, the Bank did not seek summary judgment based on Thomas’ affidavit
alone; it also submitted a loan report demonstrating that the Josephs
defaulted on mortgage payments from July 1, 2013 onward. The loan history
is admissible as a record of regularly conducted activity or a business record.
See Pa.R.E. 803(6); 42 Pa.C.S.A. § 6108. Second, Nanty-Glo does not apply
when the moving party supports its motion with admissions of the opposing
party. Sherman, 660 A.2d at 1372. Here, the Bank reasserted the Josephs’
default in its motion for summary judgment, and Appellant did not dispute this
allegation in his response. Thus, the Bank’s allegation of default is deemed
admitted. See Sherman, 660 A.2d at 1372.
In his second argument, Appellant contends that the Bank lacks
standing to prosecute this action because Wells Fargo Home Mortgage owns
the mortgage and the loan instead of the Bank. According to Appellant, the
fact that the May 11, 2016 and November 22, 2016 letters were from Wells
Fargo Home Mortgage instead of the Bank demonstrates that the Bank no
longer owns the Mortgage or Loan and lacks standing to bring this action. We
disagree. Both letters expressly state that Wells Fargo Home Mortgage is a
division of the Bank. A bank division is part of the bank, not a separate legal
entity capable of bringing an action on its own. Cf. AK Steel Corp. v.
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Viacom, Inc., 835 A.2d 820, 824 (Pa. Super. 2003) (citation omitted) (“a
division of a corporation is not a separate legal entity capable of being sued”).
Because, as a matter of law, Wells Fargo Home Mortgage is part of the Bank
itself, the Bank did not sell or transfer the mortgage to another party, and it
has standing to bring this foreclosure action.
We consider Appellant’s third and fourth arguments together, because
they both concern whether the Bank violated 38 C.F.R. § 36.4278(g), a
regulation governing veterans affairs, and a TILA statute, 15 U.S.C. § 1641(g).
First, Appellant fails to demonstrate that 38 C.F.R. § 36.4278(g) applies to
him. Section 36.4278 falls within the section 36.4200 series of regulations, a
series “applicable to each loan entitled to guaranty under 38 U.S.C. 3712.”
38 C.F.R. § 36.4201. Section 3712 in turn governs loans to veterans for the
purpose of purchasing “manufactured homes” and “lots.” A “manufactured
home” is defined as “[a] movable dwelling unit designed and constructed for
year-round occupancy on land by a single family, which dwelling unit contains
permanent eating, cooking, sleeping, and sanitary facilities.” 38 C.F.R. §
36.4202. A “lot” is defined as “[a] parcel of land acceptable to the Secretary
[of Veterans Affairs] as a manufactured home site.” Id. Section 36.4278(g)
prescribes the procedures that creditors should follow in collection actions
against veterans who default on payments for manufactured homes or lots.
Here, Appellant failed to present any evidence that the Property has a
manufactured home or is a parcel of land acceptable to the Secretary of
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Veterans Affairs as a manufactured home site. Thus, as a matter of law,
section 36.4278(g) is inapposite.
Neither did the Bank violate 15 U.S.C. § 1641(g), which provides that
“[within thirty days] after a mortgage loan “is sold or otherwise transferred or
assigned to a third party, the creditor that is the new owner or assignee of the
debt shall notify the borrower in writing of such transfer.” Appellant claims
that this statute was violated because he was not notified that the Bank
transferred or assigned the Loan to Wells Fargo Home Mortgage within thirty
days after the transfer or assignment. As discussed above, however, Wells
Fargo Home Mortgage is a division of the Bank, not a “new owner or assignee”
of the Loan subject to section 1641(g). Thus, as a matter of law, there was
no violation of section 1641(g).2
Finally, Appellant argues that the trial court erred by denying his motion
to amend his answer to include (1) affirmative defenses of lack of standing to
sue and violations of the aforementioned TILA statute and Veterans’
Administration regulations, and (2) a counterclaim for violation of the TILA
statute. Although the court generally should exercise its discretion to permit
amendments, it need not permit amendments where they would be an
exercise in futility, that is, “where a party will be unable to state a claim on
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2 Because we hold that these defenses fail as a matter of law, we need not
address the Bank’s argument that Appellant waived these defenses by failing
to raise them in his answer to the complaint.
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which relief could be granted . . .” Schwartzwaelder v. Fox, 895 A.2d 614,
621 (Pa. Super. 2006) (citation omitted). As explained above, the defenses
and claims Appellant sought leave to add—lack of standing, violation of the
TILA statute, and violation of the Veterans Administration regulations—fail as
a matter of law. Therefore, the trial court properly denied Appellant’s motion
to amend.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/13/18
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