Nationstar Mortgage, LLC v. Elsesser, M. ( 2016 )

J. A18018/16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
NATIONSTAR MORTGAGE, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
MARK JOSEPH ELSESSER, : No. 83 MDA 2016
:
Appellant :
Appeal from the Order Entered December 18, 2015,
in the Court of Common Pleas of Berks County
Civil Division at No. 2013-15154
BEFORE: FORD ELLIOTT, P.J.E., BENDER, P.J.E., AND STEVENS,* P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED SEPTEMBER 13, 2016
Mark Joseph Elsesser appeals from the order entered December 18,
2015, denying his Petition to Strike Judgment. We affirm.
This court summarized the history of this case in a prior memorandum
as follows:
On December 29, 2006, Elsesser executed a
promissory note (“Note”) and Mortgage on the
property at 3425 Fairchild Street, Alburtis, PA
18011[-]2632, in consideration of his borrowing
$173,000 from Countrywide Home Loans, Inc.
(Countrywide). Both the Note and Mortgage were
recorded in the Berks County Recorder of Deeds
Office. Countrywide’s nominee was Mortgage
Electronic Registration Systems, Inc. (“MERS”). On
April 26, 2012, MERS assigned the Mortgage and
Note and “all beneficial interest” thereunder to
“Bank of America, NA, Successor by merger to BAC
* Former Justice specially assigned to the Superior Court.
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Home Loans Servicing, LP FKA Countrywide Home
Loans Servicing, LP.”
The assignment was recorded in the Berks
County Recorder of Deeds Office on April 30, 2012.
The Mortgage and Note, and “all beneficial interest”
were again assigned on May 10, 2013, from Bank of
America to Appellee Nationstar. The assignment was
also recorded in the Berks County Recorder of Deeds
Office on June 6, 2013.
Nationstar alleged that Elsesser defaulted
under the Mortgage and Note by failing to make
payments due March 1, 2012, and each month
thereafter. Per the account statement, supplied by
Nationstar as Exhibit “C” to the motion for summary
judgment, the last payment applied to Elsesser’s
mortgage account was on March 27, 2012. Elsesser
has provided no affidavit or other proof of payment
since that time.
Bank of America issued a combined
Act 6[Footnote 1]/Act 91[Footnote 2] Notice (Notice)
to Elsesser, dated February 5, 2013. Proof of
mailing the Notice was attached to the Motion for
Summary Judgment as Exhibit “D.” It appears from
the United States Postal Service tracking sheet that
Elsesser failed to claim the mail. Elsesser, however
had been afforded the opportunity to avail himself of
the protections provided by the Homeowner’s
Emergency Mortgage Assistance Program[Footnote
3] (“HEMAP”). Despite this opportunity, he failed to
take advantage of HEMAP; consequently, Nationstar
proceeded with its foreclosure action.
[Footnote 1] 41 P.S. § 403(b).
[Footnote 2] 13 Pa.C.S. § 3205(b).
[Footnote 3] HEMAP is a state loan
program which offers remedies for
Pennsylvania citizens facing mortgage
foreclosure. Citizens either may receive
a short-term loan to cure default, or may
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opt for continuing subsidies to aid in
avoiding future default. See 35 P.S.
§§ 1680.401c-412c.
Nationstar filed its complaint in mortgage
foreclosure against Elsesser on June 17, 2013.
Service of the complaint and Notice regarding the
mortgage foreclosure diversion program was made
upon Elsesser on July 8, 201[3]. On August 13,
2013, Elsesser filed preliminary objections that
contained a demand for a jury trial. Nationstar’s
Motion to Strike Defendant’s Jury Trial Demand was
granted on September 26, 2013. On November 14,
2013, Elsesser’s preliminary objections were
overruled after argument. Elsesser filed his Answer
to the Complaint on December 3, 2013. On April 8,
2014, Nationstar filed its motion for summary
judgment. On May 6, 201[4], Elsesser filed a motion
in opposition to Nationstar’s motion for summary
judgment. After argument on July 7, 2014, the
Court granted Nationstar’s summary judgment
motion. Elsesser filed a timely Notice of Appeal on
July 30, 2014. On August 6, 2014, the Court
ordered Elsesser to file a Pa.R.A.P.1925(b) Concise
Statement of Errors Complained of on Appeal, which
he did on August 28, 2014.
Nationstar Mortg., LLC v. Elsesser, 2015 WL 7454141 at *1 (Pa.Super.
March 13, 2015) (unpublished memorandum).
In a memorandum decision filed March 13, 2015, this court affirmed
the order granting summary judgment in favor of Nationstar, concluding,
inter alia, that Nationstar had standing to commence foreclosure where it
produced the original Note. Id. at *4. This court also rejected appellant’s
argument regarding the chain of ownership of the loan:
Where the Note can be classified as a negotiable
instrument, and Nationstar can demonstrate
possession of that instrument, the validity of the
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transfer of the loan is ultimately not controlling.
There is no risk of double liability, as Elsesser
argues, because even if the assignment to Nationstar
was defective, his liability would nonetheless be
discharged by virtue of payment to Nationstar. See
J.P. Morgan [Chase Bank, N.A. v. Murray],
63 A.3d [1258] at [1265] [(Pa.Super. 2013)];
13 Pa.C.S. § 3602(a) (discharging liability after
payment to instrument holder). As such, with the
threat of double liability gone, Elsesser cannot
demonstrate that he has or will suffer injury if
Nationstar is permitted to proceed.
Id. (footnote omitted).
Appellant did not file a petition for allowance of appeal with the
Pennsylvania Supreme Court. However, on December 9, 2015, appellant
filed a Petition to Strike Judgment, alleging that the judgment was void and
unenforceable because the process of securitization of the Note stripped
Nationstar of any standing. Appellant’s Petition to Strike Judgment was
denied on December 18, 2015. Appellant filed a motion for reconsideration
which was denied on January 6, 2016. A timely notice of appeal was filed on
January 13, 2016. On January 21, 2016, appellant was ordered to file a
concise statement of errors complained of on appeal within 21 days pursuant
to Pa.R.A.P. 1925(b); appellant complied on February 6, 2016, and the trial
court filed a Rule 1925(a) opinion on February 16, 2016.
Appellant has raised the following issues for this court’s review:
(I)[.] Has the Promissory Note been destroyed
voluntarily within the meaning of the Uniform
Commercial Code through securitization?
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(II). At any point in the lifetime of this case, was
the Promissory Note ever a negotiable
instrument within the meaning of the Uniform
Commercial Code[?]
(III). Did the trial court err in failing to strike
(vacate) the judgment in this matter where
[appellant] made a showing of both fraud and
extraordinary cause (i.e. securitization of the
Note)?
(IV). Has the act of securitization of the Promissory
Note obliterated the Plaintiff’s standing and
status as a “real party in interest” (as
previously upheld by this Court and the
Superior Court) and can standing be lost by a
party, post-judgment, where a demonstration
is made, as here, that said judgment was
obtained on the basis of fraud?
Appellant’s brief at 9.
Initially, we note that appellant took an appeal from the order entering
summary judgment in favor of Nationstar, and this court affirmed that order
on the merits. Whether or not, as appellant argues, MERS voluntarily
destroyed the Note, by splitting it from the Mortgage during the process of
securitization, was an argument which could have been raised on the first
appeal. As Nationstar contends, appellant is asking for another “bite at the
apple,” essentially seeking reconsideration of this court’s decision affirming
summary judgment. (Appellee’s brief at 9.)
The law of the case doctrine refers to a
family of rules which embody the concept
that a court involved in the later phases
of a litigated matter should not reopen
questions decided by another judge of
that same court or by a higher court in
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the earlier phases of the matter . . . .
The various rules which make up the law
of the case doctrine serve not only to
promote the goal of judicial economy . . .
but also operate (1) to protect the
settled expectations of the parties; (2) to
insure uniformity of decisions; (3) to
maintain consistency during the course
of a single case; (4) to effectuate the
proper and streamlined administration of
justice; and (5) to bring litigation to an
end.
Commonwealth v. McCandless, 880 A.2d 1262,
1267 (Pa.Super. 2005), appeal dismissed as
improvidently granted, 593 Pa. 657, 933 A.2d 650(2007) (quoting Commonwealth v. Starr, 541 Pa.
564, 664 A.2d 1326, 1331 (1995)).
Commonwealth v. Gacobano, 65 A.3d 416, 419-420 (Pa.Super. 2013).
Thus, under the doctrine of the law of the case,
when an appellate court has considered
and decided a question submitted to it
upon appeal, it will not, upon a
subsequent appeal on another phase of
the case, reverse its previous ruling even
though convinced it was erroneous. This
rule has been adopted and frequently
applied in our own State. It is not,
however, inflexible. It does not have the
finality of the doctrine of res judicata.
“The prior ruling may have been followed
as the law of the case but there is a
difference between such adherence and
res judicata; one directs discretion, and
the other supercedes it and compels
judgment. In other words, in one it is a
question of power, in the other of
submission.” The rule of the “law of the
case” is one largely of convenience and
public policy, both of which are served by
stability in judicial decisions, and it must
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be accommodated to the needs of justice
by the discriminating exercise of judicial
power.
Commonwealth v. McCandless, supra at 1268
(Pa.Super. 2005) (quoting Benson v. Benson, 425
Pa.Super. 215, 624 A.2d 644, 647 (1993)).
Id. at 420.
As stated above, this court already determined that as bearer of the
Note, Nationstar had standing to bring a foreclosure action. See
CitiMortgage, Inc. v. Barbezat, 131 A.3d 65, 69 (Pa.Super. 2016) (“The
note as a negotiable instrument entitles the holder of the note to
enforcement of the obligation.”), citing 13 Pa.C.S.A. §§ 3109(a), 3301.
Nationstar produced both the original Note and Mortgage, showing that
appellant was granted $173,000 in exchange for an interest in his property.
As such, Nationstar had an enforceable security interest. Elsesser, 2015
WL 7454141 at *4-5. Appellant did not attempt to dispute that he was in
default. Id. at *2. Appellant has offered no compelling reason to revisit this
court’s prior determination.
Appellant cites case law for the proposition that a petition to strike a
judgment as void may be brought at any time. (Appellant’s brief at 16.)
See Helms v. Boyle, 637 A.2d 630, 632 n.2 (Pa.Super. 1994) (“Absent
fraud or extraordinary cause, a petition to open, vacate or for
reconsideration must be brought within thirty (30) days of the entry of
judgment in a contested proceeding, however, a motion to strike a judgment
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as void, may be brought at any time.” (citations omitted)). See also
Williams v. Wade, 704 A.2d 132, 134 (Pa.Super. 1997), appeal denied,
729 A.2d 1130 (Pa. 1998) (“void judgments should be stricken regardless of
the passage of time”).
Nevertheless, appellant’s argument that the process of securitization
somehow “destroyed” the Note and it ceased to be a secured asset or
negotiable instrument tied to any collateral or debt obligation is nonsense.
Notably, appellant cites no binding Pennsylvania authority for such a
proposition, and this court is aware of none. However, courts in other
jurisdictions, including the federal courts, have consistently rejected the
notion that securitization of mortgages separates the mortgage from the
note, thereby converting the note into a security which destroys its
negotiability:
Attempts to base claims on the securitization of a
mortgage and the alleged separation of the
mortgage and note have not been well received by
courts around the country. See Leone v.
Citigroup, No. 12-10597, 2012 WL 1564698, at *4
(E.D.Mich. May 2, 2012) (collecting cases); Mitchell
v. Mortgage Electronic Registration Systems,
Inc., No. 1:11-cv-425, 2012 WL 1094671, at *3
(W.D.Mich. Mar. 30, 2012); Bhatti v. Guild Mortg.
Co., No. C11-0480JLR, 2011 WL 6300229, at *5
(W.D.Wash. Dec. 16, 2011) (“Securitization merely
creates a separate contract, distinct from the
Plaintiffs’ debt obligations under the Note, and does
not change the relationship of the parties in any
way.”).
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Keyes v. Deutsche Bank Nat. Trust Co., 921 F.Supp.2d 749, 762-763
(E.D.Mich. 2013). See also Rodenhurst v. Bank of Am., 773 F.Supp.2d
886, 898 (D.Haw. 2011) (collecting cases and noting, “[C]ourts have
uniformly rejected the argument that securitization of a mortgage loan
provides the mortgagor with a cause of action.”); In re Williams, 395 B.R.
33, 47 (S.D.Ohio 2008) (securitization of indebtedness irrelevant to validity
of mortgage).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/13/2016
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