Wells Fargo Bank v. Spivak, L. , 104 A.3d 7 ( 2014 )

J-S36029-14
2014 Pa. Super. 250
WELLS FARGO BANK N.A. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
LOUIS I. SPIVAK
Appellant No. 2913 EDA 2013
Appeal from the Order Entered September 19, 2013
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): 2012-123721
BEFORE: GANTMAN, P.J., JENKINS, J., and FITZGERALD, J.*
OPINION BY JENKINS, J.: FILED OCTOBER 31, 2014
Louis I. Spivak (“Spivak”) appeals from the order of the Court of
Common Pleas of Montgomery County granting Wells Fargo Bank, N.A.’s
(“Wells Fargo”) motion for summary judgment in a mortgage foreclosure
action. We reverse and remand. We conclude that when a residential
mortgagee delivers an Act 6 notice, commences a foreclosure action against
a mortgagor (“first action”), discontinues that foreclosure action, and re-files
another foreclosure action against a mortgagor for the same premises
(“second action”), the lack of a new notice prior to the second action is fatal
to the second action.
____________________________________________
*
Former Justice specially assigned to the Superior Court.
J-S36029-14
On or about March 29, 2007, Spivak secured a mortgage loan from
Trident Mortgage Company, L.P. (“Trident”) in the amount of $223,750.00
(“Loan”). Plaintiff’s Reply to Defendant’s New Matter, Exhibit A, Assignment
of Mortgage, p. 1 (page number supplied). To evidence his obligation to
repay the Loan, Spivak executed a promissory note in favor of Trident, its
successors and assigns (the “Note”). Id. at Exhibit C, Note, pp. 1-2 (page
numbers supplied). To secure his obligations under the Note, Spivak
executed a purchase money mortgage (the “Mortgage”) in favor of Mortgage
Electronic Registration Systems, Inc. (“MERS”), as mortgagee and nominee
for Trident, its successors and assigns, granting Trident a lien and security
interest in the Property. Id. at Exhibit B, Mortgage, generally. On April 19,
2007, MERS recorded the Mortgage in the Office of the Recorder of Deeds
for Montgomery County (the “Recorder of Deeds”).
After the Loan closing, on December 14, 2010, MERS sold the Note
and assigned the Mortgage to Wells Fargo. See id. at Exhibit A, Assignment
of Mortgage, p. 1 (page number supplied). On February 10, 2011, Wells
Fargo recorded the assignment of Mortgage with the Recorder of Deeds.
In January 2010, Spivak defaulted on his obligations due under the
Note and Mortgage by failing to make timely payments due under the Note
on January 1, 2010 and each month thereafter. On October 30, 2010, Wells
Fargo sent Spivak the combined notice of intention to foreclose in
accordance with the Loan Interest and Protection Law, 41 P.S. §§ 101 et
-2-
J-S36029-14
seq. (“Act 6”), and the Homeowner’s Emergency Mortgage Assistance Act of
1983, 35 P.S. §§ 1680.401c et seq. (“Act 91”) (the “Notice” or the “2010
Notice”). See generally, Plaintiff’s Brief in Support of its Motion For
Summary Judgment, Exhibit F, Act 91 Notice Take Action to Save Your Home
From Foreclosure.1
Spivak failed to cure his default under the Note and Mortgage. In
December 2010, Wells Fargo filed a foreclosure action, which it subsequently
discontinued in 2011 due to mortgage assignment deficiencies. Appellant’s
Brief at 7.
On May 24, 2012, Wells Fargo commenced the instant action, 2 its
second in rem mortgage foreclosure action. On July 16, 2012, Spivak filed
an answer with new matter wherein he admitted that he defaulted on his
obligations under the Mortgage, and that Wells Fargo served him with the
Notice in October 2010 — approximately two years earlier, before instituting
its prior action, and before it had any ownership interest in the Note or the
____________________________________________
1
We note that Wells Fargo sent Spivak the Notice before MERS assigned the
mortgage to it.
2
Act 91’s pre-foreclosure notice requirements were temporarily suspended
from August 27, 2011 until October 2012. See 42 Pa. Bull. 5447 (Aug. 18,
2012). During that time period, mortgagees were not required to provide
notice under Act 91 prior to commencing a foreclosure action. Id. Wells
Fargo commenced this action in May 2012. Spivak argues only that the
Notice failed to comply with Act 6 presumably because Wells Fargo
commenced this action during the time period in which Act 91 was
suspended. See Wells Fargo’s Brief at 10, 12.
-3-
J-S36029-14
property. See Notes 1 & 2; R.12b. On July 25, 2012, Wells Fargo filed its
reply to the new matter.
On April 25, 2013, Wells Fargo filed a motion for summary judgment,
attaching a copy of the Notice along with proof of mailing of the Notice and
the affidavit of Jeremiah Herberg, Vice President of Loan Documentation at
Wells Fargo Bank, N.A. (the “Affidavit”). Herberg averred that: (a) Spivak
had defaulted on his obligations under the Mortgage by failing to make the
monthly payments due on January 1, 2010 and thereafter, (b) Wells Fargo
provided Spivak with the Notice in 2010, and (c) Spivak had failed to cure
the default under the Mortgage or take the necessary steps to avoid
foreclosure.
On May 24, 2013,3 Spivak filed a response to the motion, asserting
that the motion should be denied because the Notice: (a) failed to accurately
state the amounts due and owing or to properly identify the lender 4 and (b)
____________________________________________
3
On June 17, 2013, Spivak filed a “Praecipe to Substitute Response”,
attaching a revised Opposition to Plaintiff’s Motion for Summary Judgment in
place of the May 24, 2013 response. Because the relevant arguments
appeared in his original filing, the substitution is immaterial for our
purposes.
4
Spivak also argued Wells Fargo “failed to cure the mortgage assignment
deficiencies before filing the within foreclosure action.” Defendant’s
Opposition to Plaintiff’s Motion for Summary Judgment, ¶ 9. He has waived
this issue by failing to raise it in this Court.
Although Spivak argued Wells Fargo was not the legal owner at the time it
commenced the instant matter, Spivak has not argued – either in the trial
(Footnote Continued Next Page)
-4-
J-S36029-14
had not been provided to him “within the prescribed one year period
preceding the filing of the foreclosure action.” R.186b-187b.5 Additionally, he
argued that he was never provided a notice of intention to foreclose in
connection with the pending foreclosure action; rather, the Notice was sent
in connection with Wells Fargo’s prior foreclosure action. Id.
On September 19, 2013, the trial court granted summary judgment to
Wells Fargo and entered an in rem judgment in its favor. On October 14,
2013, Spivak filed a timely notice of appeal. On January 2, 2014, the trial
court, without ordering Spivak to file a concise statement of errors
complained of on appeal pursuant to Pennsylvania Rule of Appellate
Procedure 1925(b), issued its opinion pursuant to Pennsylvania Rule of
Appellate Procedure 1925(a).6
_______________________
(Footnote Continued)
court or on appeal – that the 2010 Notice was deficient because Wells Fargo
was not the legal owner at the time it sent the Notice. Accordingly, this issue
is waived. See Irwin Union Nat. Bank and Trust Co. v. Famous, 4 A.3d
1099, 1103 (Pa.Super.2010) (“This Court will not act as counsel and will not
develop arguments on behalf of an appellant”).
5
As the trial court notes in its 1925(a) opinion, neither Act 6 nor Act 91
contains a one-year notice requirement. Trial Court Opinion 1/2/2014
(“Opinion”, at 2-3). See 35 P.S. §§ 1680.402, 1680.403; 41 P.S. §§ 403,
404.
6
Although Spivak did not file the Designation of the Contents of the
Reproduced Record as required by Pennsylvania Rule of Appellate Procedure
2188, we decline to quash the appeal, because we have engaged in a
meaningful review by referring to the contents of the certified record and of
Wells Fargo’s Supplemental Reproduced Record. See, e.g., Downey v.
Downey, 582 A.2d 674, 678 (Pa.Super.1990) (citing O’Neill v. Checker
Motors Corp., 567 A.2d 680, 681-82 (Pa.Super.1989)) (appellate court will
decline to quash an appeal where effective appellate review is not precluded
(Footnote Continued Next Page)
-5-
J-S36029-14
Spivak now raises the following issue for our review:
I. Whether [], Wells Fargo Bank, which previously sued
[Spivak] in a mortgage foreclosure action which was
voluntarily withdrawn, should be required to send a
new Notice of Intention to Foreclose to [Spivak] prior
to filing a second mortgage foreclosure lawsuit
against [Spivak].
Appellant’s Brief at 4.7 For the reasons that follow, we find Wells Fargo was
required to send a new Act 6 notice to Spivak prior to commencing the
second foreclosure action against him.
When reviewing an order granting summary judgment we must
determine whether the trial court abused its discretion or committed an
error of law. Mee v. Safeco Ins. Co. of Am., 908 A.2d 344, 347
(Pa.Super.2006).8 “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
_______________________
(Footnote Continued)
by the deficiencies of reproduced record). Further, Wells Fargo has not
moved for dismissal on this basis. See Pa.R.A.P. 2188.
7
Because Spivak does not raise or brief the remaining issues discussed by
the trial court in its 1925(a) opinion, they are waived. Famous, 4 A.3d at
1103 (“This Court will not act as counsel and will not develop arguments on
behalf of an Spivak”).
8
While post-trial motions typically are required to preserve an issue on
appeal, no post-trial motions are permitted where a trial court grants a
motion for summary judgment. Thus, Spivak has not waived his argument
on appeal by appealing directly from the grant of Wells Fargo’s motion for
summary judgment. See Pa.R.C.P. 227.1 Note; Tohan v. Owens-Corning
Fiberglass Corp., 696 A.2d 1195 (Pa.Super.1997).
-6-
J-S36029-14
result of partiality, prejudice, bias or ill-will, as shown by the evidence or the
record, discretion is abused.” Roth v. Ross, 85 A.3d 590, 592-93
(Pa.Super.2014) (citing Grossi v. Travelers Pers. Ins. Co., 79 A.3d 1141,
1163 (Pa.Super.2013)). A grant of summary judgment “presents a question
of law, for which our scope of review is plenary.” Sevast v. Kakouras, 915
A.2d 1147, 1152 (Pa.2007) (citation omitted).
In analyzing a trial court’s grant of summary judgment, we review the
evidence in the light most favorable to the non-moving party, Spivak, and
resolve all doubts as to the existence of a genuine issue of material fact
against the moving party, Wells Fargo. Erie Ins. Exchange v. Weryha,
931 A.2d 739, 741 (Pa.Super.2007).
Spivak argues that Act 6 requires a mortgagee to send a new Notice
prior to commencing its second foreclosure action where it withdrew its prior
foreclosure action.9 Spivak reasons that because Wells Fargo sent the
____________________________________________
9
Although he failed to raise this defense in his answer to Wells Fargo’s
complaint, see Defendant’s Answer to Plaintiff’s Complaint with New Matter
¶ 8, Spivak has not waived the Act 6 issue because this defense was raised
in the answer to Wells Fargo’s motion for summary judgment. See Grasso
v. Thimons, 559 A.2d 925, 929 n. 5 (Pa.Super.1989) (equitable estoppel
issue first raised in answer to motion for summary judgment preserved for
appeal); Adelphia Cablevision Associates of Radnor, L.P. v. University
City Housing Company, 755 A.2d 703, 709 (Pa.Super.2000)
(constitutional issue first raised in cross-motion for summary judgment
preserved for appeal); Norris v. Wood, 485 A.2d 817, 819 (Pa.Super.1984)
(constitutional issue first raised in motion for partial summary judgment
preserved for appeal); Pa.R.Civ.P. 1032; Defendant’s Opposition to Plaintiff’s
Motion for Summary Judgment ¶ 8. Further, both parties have briefed the
issue and the trial court has addressed the issue in its 1925(a) opinion.
(Footnote Continued Next Page)
-7-
J-S36029-14
Notice before commencing and withdrawing its prior suit, its failure to
provide a new Notice prior to the second action “deprived [] [him] of an
opportunity to know how much money was needed to cure the default[,]
which is the very reason the [Notice] is required in the first place.”
Appellant’s Brief at 7.10
Section 403 of Act 6 sets forth the pre-foreclosure notice requirements
imposed upon residential mortgage lenders for certain residential mortgages
as follows:
Before any residential mortgage lender may
accelerate the maturity of any residential
mortgage obligation, commence any legal action
including mortgage foreclosure to recover under
such obligation, or take possession of any security of
the residential mortgage debtor for such residential
mortgage obligation, such person shall give the
residential mortgage debtor notice of such intention
at least thirty days in advance as provided in this
section.
41 P.S. § 403(a) (emphasis added).
Section 403(c) of Act 6 states:
(c) The written notice shall clearly and conspicuously
state:
_______________________
(Footnote Continued)
Wells Fargo did not argue waiver in its brief in support of its motion for
summary judgment and does not argue waiver in its brief before this Court.
See Plaintiff’s Brief in Support of its Motion for Summary Judgment at IV.C.;
Wells Fargo’s Brief, generally.
10
Wells Fargo does not dispute that Spivak falls within the definition of a
“residential mortgage debtor,” see 41 P.S. § 101 and therefore is entitled to
the protections of Act 6.
-8-
J-S36029-14
(1) The particular obligation or real estate
security interest;
(2) The nature of the default claimed;
(3) The right of the debtor to cure the
default as provided in section 404 of this
act and exactly what performance
including what sum of money, if any,
must be tendered to cure the default;
(4) The time within which the debtor must
cure the default;
(5) The method or methods by which the
debtor's ownership or possession of the real
estate may be terminated; and
(6) The right of the debtor, if any, to transfer the
real estate to another person subject to the
security interest or to refinance the obligation
and of the transferee's right, if any, to cure
the default.
41 P.S. § 403(c) (emphasis added).
Section 404 of Act 6 permits a residential mortgage debtor to cure his
default, “after a notice of intention to foreclose has been given pursuant to
section 403 of this act, at any time at least one hour prior to the
commencement of bidding at a sheriff sale or other judicial sale . . . by
tendering the amount or performance specified in subsection (b) of this
section.” 41 P.S. § 404(a). Statutory notice, including the amount of
default and the debtor’s right to cure the default, is mandatory and
must precede any action by a residential mortgage lender whereby it
accelerates the maturity of the obligation, institutes legal action including
foreclosure, or repossesses any security of the debtor. General Elec.
Credit Corp. v. Slawek, 409 A.2d 420, 422-23 (Pa.Super.1979).
-9-
J-S36029-14
Federal and state courts—in explaining and applying
the provisions of Act 6 . . . —have consistently
defined the Act in the following manner. Act 6 is a
comprehensive interest and usury law with
numerous functions, one of which is that it offers
homeowners with residential mortgages a measure
of protection from overly zealous residential
mortgage lenders.
Benner v. Bank of Am., N.A., 917 F. Supp. 2d 338, 357 (E.D.Pa.2013)
(quoting In re Graboyes, 223 Fed.Appx. 112, 114 (3d Cir.2007)) (internal
quotation marks omitted). “The comprehensive statutory scheme
demonstrates an extensive program designed to avoid mortgage
foreclosures.” Id. (quoting Bennett v. Seave, 554 A.2d 886, 891
(Pa.1989)). In the residential mortgage context, Act 6 is typically raised as a
defense to mortgage foreclosure proceedings. Id.
Remedies for a defective Act 6 notice include setting aside the
foreclosure or denying a creditor the ability to collect an impermissible fee.
See, e.g., In re Smith, 866 F.2d 576, 578, 586 (3d Cir.1989) (holding
lender’s failure to properly send pre-foreclosure notice to debtor’s new
address before initiating foreclosure suit gave rise to debtor’s cause of action
for damages under Section 504 of Act 6); id. (citing In re Sharp, 24 B.R.
817, 821 (Bankr.E.D.Pa.1982) (setting aside foreclosure where lender failed
to determine debtor's last known address)); In re Burwell, 107 B.R. 62,
67–68 (Bankr.E.D.Pa.1989) (denying creditor ability to collect property
inspection fees on foreclosed mortgage in debtor's bankruptcy proceeding).
“The purpose of Act 6, as shown by the cases above, is to help residential
- 10 -
J-S36029-14
homeowners reacquire property that has been lost, or to prevent the
imminent loss of money or property, because of the impermissible actions of
residential mortgage lenders.” Benner, 917 F. Supp. 2d at 357.
On October 30, 2010, Wells Fargo provided Spivak notice under Acts 6
and 91, which advised him of his right to cure the default by paying the
appropriate costs at that time.11 In December 2010, Wells Fargo filed a
foreclosure action, which it subsequently withdrew in 2011. On May 24,
2012, Wells Fargo filed a new foreclosure action without providing Spivak a
new Act 6 notice specifying how much he owed at that time.
The plain language of Section 403(a) of Act 6 requires a new notice
before a second action. Section 403(a) states: “Before any residential
mortgage lender may . . . commence any legal action including mortgage
foreclosure to recover under [any residential mortgage obligation] . . ., such
____________________________________________
11
The 2010 Notice stated that Spivak could cure the default before a
sheriff’s sale by:
paying the total amount then past due, plus any late
or other charges then due, reasonable attorney's
fees and costs connected with the foreclosure sale
and any other costs connected with the Sheriff’s Sale
as specified in writing by the lender and by
performing any other requirements under the
mortgage.
Plaintiff’s Brief in Support of its Motion For Summary Judgment, Exhibit F,
Act 91 Notice Take Action to Save Your Home From Foreclosure, p. 4 (page
number supplied). Well Fargo itemized the total amount past due at that
time at $14,364.23. Id. at 3.
- 11 -
J-S36029-14
person shall give the residential mortgage debtor notice of such intent at
least thirty days in advance as provided in this section.” 41 P.S. § 403(a)
(emphasis added). Consistent with the Pennsylvania rules of statutory
construction,12 we apply the common and approved usage of the term “any”
to define those legal actions which cannot be commenced without a
preceding Act 6 notice. Merriam-Webster provides that “any”, when utilized
as an adjective, is “used to indicate a person or thing that is not particular or
specific.” Merriam-Webster Dictionary, http://www.merriam-
webster.com/dictionary/any (last visited October 2, 2014). Merriam-Webster
further describes its synonyms as “each” and “every.” Id.
Under the common and approved usage, Section 403(a) of Act 6
reads: “Before any residential mortgage lender may . . . commence [a] legal
action including mortgage foreclosure to recover under [any residential
mortgage obligation] . . ., such person shall give the residential mortgage
debtor notice of such intent at least thirty days in advance as provided in
this section.” A second foreclosure action is “[a] legal action . . . to recover
under [a residential mortgage obligation]”; thus, the mailing of an Act 6
notice is a prerequisite to its commencement.
____________________________________________
12
See 1 Pa.C.S. § 1903 (providing courts shall construe words and phrases
according to the rules of grammar and according to their common and
approved usage). See also Commonwealth v. Crawford, 24 A.3d 396,
401 (Pa.Super.2011) (applying common and approved usage of various
terms to define prohibited acts under statute).
- 12 -
J-S36029-14
Further, the only adjective preceding the term “legal action” in the
statute is “any” — not “first,” “original,” or some other term providing that
one notice is satisfactory for multiple foreclosure actions. To the contrary,
the indefinite article “a” indicates that every mortgage foreclosure action
must be preceded by a lender sending notice to a debtor.
The synonyms of “any” — “each” and “every” — also support our
interpretation of Act 6. When each synonym is inserted into the statute, it
reads: “Before any residential mortgage lender may . . . commence
[each/every] legal action including mortgage foreclosure to recover under
[any residential mortgage obligation] . . ., such person shall give the
residential mortgage debtor notice of such intent at least thirty days in
advance as provided in this section.” Phrased this way, the statute does not
distinguish between the first and second foreclosure actions: a notice is
required before each action.
Therefore, by including the word “any” in the Section 403(a) of Act 6,
the legislature intended that a lender send a notice to a debtor before each
and every foreclosure action. Only this construction gives Section 403 its
intended meaning.
An Act 6 notice enables a financially troubled residential homeowner to
learn exactly what sum of money is necessary to cure the mortgage default.
Since compounded interest accrues on a mortgage loan based on the
passage of time between the first notice and the second notice (along with
- 13 -
J-S36029-14
unpaid monthly loan payments and any additional reasonable charges), the
sum of money necessary to cure the default at the time of the second notice
will be greater, and likely substantially so, than the amount of money
needed at the time of the first notice.13 Even if the amount at the time of
the second notice is only slightly greater, this is immaterial under Act 6
because Section 403(c)(3) affords the debtor the right to know the exact
amount required to cure the default.14
We find further support for our construction of “any” in the persuasive
reasoning of the United States Bankruptcy Court for the Eastern District of
Pennsylvania in In re Miller, 90 B.R. 762 (Bankr.E.D.Pa.1988):
In [In re] Mosley, [85 B.R. 942, 954
(Bankr.E.D.Pa.1988),] we pointed out that the most
important consideration in the notice, for purposes of
41 P.S. § 403(c)(3), is whether the borrower can
ascertain the precise amount due to the lender to
____________________________________________
13
For example, in the approximately eight and a half months that passed
between when Wells Fargo calculated the total amount due for purposes of
its complaint in the second foreclosure action and when Wells Fargo
calculated the interest due for purposes of its motion for summary judgment
in the second foreclosure action, the interest due on the premises increased
$10,019.19 from $33,493.97 to $43,513.16. Compare Plaintiff’s Complaint
in Mortgage Foreclosure ¶ 6 with Plaintiff’s Motion for Summary Judgment,
Exhibit B, Plaintiff’s Affidavit in Support of its Motion for Summary Judgment,
p. 1 (page number supplied)).
14
Wells Fargo asserts that Spivak does not allege to have made any
payments after the Notice was sent. See Spivak’s Brief, generally; Wells
Fargo’s Brief at 16. We emphasize that the debtor’s actions are irrelevant to
whether a second Act 6 notice was necessary in this case; the requirement
for an additional notice under Act 6 flows from the statute’s purpose and
Section 403’s mandate regarding the required information in the notice.
- 14 -
J-S36029-14
cure the default at any given point in time by
reference only to the notice. We should add that the
important consideration in the notice, for purposes of
41 P.S. § 403(c)(2), is whether it communicates to
the borrower how the precise amount of the default
claimed is calculated.
***
We believe that the [lender]’s failure to articulate the
nature of the default of its arrangement with the
[d]ebtor and its failure to explain, by any
comprehensible ma[nn]er, how it calculated the
default renders the notice in issue grossly violative of
41 P.S. § 403(c)(2) and (c)(3).
Id. at 768.
Similarly, a second notice is also necessary to effectuate Sections
404(a) and 403(c)(4) of Act 6, which address the time period within which to
cure the default. If the debtor is not apprised of the exact sum of money
necessary to cure the default, Sections 403(c)(4) and 404(a) of Act 6 lack
effect because a time period to pay serves no purpose if the debtor is not
aware of the amount necessary to accomplish the cure. See 1 Pa.C.S. §
1921(a) (“Every statute shall be construed, if possible, to give effect to all
its provisions”). Here, in addition to not being advised of the exact amount
of money necessary to cure the default, Spivak was not advised of the time
- 15 -
J-S36029-14
or manner in which to pay, because Wells Fargo advised him to pay it at a
time when it owned neither the note nor the mortgage. See Notes 1 and 2.15
Wells Fargo’s reliance on Fish v. Pennsylvania Housing Fin.
Agency, 931 A.2d 764 (Pa.Cmwlth.2007), is misplaced. As a
Commonwealth Court opinion, Fish is not binding on this Court, and it
addresses the requirements of Act 91 (rather than Act 6) before the General
Assembly amended the required content of an Act 91 notice in 2008. Act 6
and Act 91 both relate to the notice requirements of a residential mortgagee
seeking to institute a foreclosure action against a mortgagor.
Act 91 requires a mortgagee who desires to foreclose to send notice to
the mortgagor “advis[ing] the mortgagor of his delinquency . . . and that
such mortgagor has thirty (30) days to have a face-to-face meeting with the
mortgagee who sent the notice or a consumer credit counseling agency to
attempt to resolve the delinquency . . . by restructuring the loan payment
schedule or otherwise.” Beneficial Consumer Disc. Co. v. Vukman, 77
A.3d 547, 550 (Pa.2013) (quoting 35 P.S. § 1680.403c(a)-(b)(1) (emphasis
added), amended by P.L. 841, No. 60, § 2 (July 8, 2008)). “[T]he purpose of
an Act 91 notice is to instruct the mortgagor of different means he may use
____________________________________________
15
By way of illustration rather than limitation, what appears evident to us is
that the height of overzealousness – the precise type of activity that the
legislature enacted Act 6 to curb – is when a lender attempts to collect a
debt it does not yet own, which is exactly what occurred in the instant
matter. See generally 41 P.S. §§ 101 et seq.
- 16 -
J-S36029-14
to resolve his arrearages in order to avoid foreclosure on his property and
also gives him a timetable in which such means must be accomplished.”
Wells Fargo Bank, N.A. ex rel. Certificate Holders of Asset Backed
Pass-through Certificates Series 2004-MCWI v. Monroe, 966 A.2d
1140, 1142 (Pa.Super.2009) (quoting Fish, 931 A.2d at 767 (citing 35 P.S.
§ 1680.403c)).
Interpreting Act 91’s pre-foreclosure requirements in Fish, 931 A.2d at
767, the Commonwealth Court held that a mortgagee was not required to
send the mortgagor a new Act 91 notice of default under the Homeowner’s
Emergency Mortgage Assistance Loan Program (“HEMAP”) after withdrawing
its initial foreclosure action. Id. The mortgagor espoused a similar argument
to the one here, namely that “the [mortgagee] was required to send a new
Act 91 Notice after the prior action in foreclosure was withdrawn by
praecipe.” Id. Rejecting this argument, the Commonwealth Court opined:
The purpose of an Act 91 notice is to instruct the
mortgagor of different means he may use to resolve
his arrearages in order to avoid foreclosure on his
property and also gives him a timetable in which
such means must be accomplished. 35 P.S. §
1680.403c. Specifically, the Act 91 notice informs
the mortgagor of the availability of financial
assistance through HEMAP. 35 P.S. §
1680.403c(b)(1). Act 91 further states that if the
mortgagor and mortgagee reach an agreement and
thereafter the mortgagor is again unable to make
payment, “[t]he mortgagee shall not be required to
send any additional notice pursuant to this article.”
35 P.S. § 1680.403c(d).
- 17 -
J-S36029-14
Id. Finding the mortgagee was not required to send another notice after
withdrawing the first foreclosure action, the Commonwealth Court reasoned:
. . . it does not follow that the Act 91 notice would
have been withdrawn as well, as the Act 91 notice
merely places a mortgagor on notice that if the
mortgagor does nothing, a foreclosure action
will follow. As [the mortgagor] had done nothing
upon receipt of the Act 91 notice, it should not have
been a surprise to him when the second foreclosure
action was filed. The lender was not required to send
any additional notice under Act 91.
Id. (emphasis added).
First, we note that the Fish holding, as a “decision[] by the
Commonwealth Court[, is] not binding on this Court . . . .” Little Mountain
Cmty. Ass'n, Inc. v. S. Columbia Corp., 2014 Pa. Super. 91, at *5 n. 14, –
–– A.3d –––– (Pa.Super.2014), reargument denied, July 8, 2014 (quoting In
re Barnes Foundation, 74 A.3d 129, 134 n. 2 (Pa.Super.2013), appeal
denied, ––– Pa. ––––, 80 A.3d 774 (Pa.2013)) (internal quotations omitted).
Second, an Act 6 notice—unlike an Act 91 notice in 2007 (when Fish
was decided)—does more than place a mortgagor on notice that a
foreclosure action will follow if the mortgagor does nothing; it contains more
detailed notice requirements, e.g., the exact amount owed to cure the
default. Act 6’s notice requirements are consistent with its “comprehensive
statutory scheme . . . designed to avoid foreclosures” and its broader
purpose to “offer[] homeowners with residential mortgages a measure of
- 18 -
J-S36029-14
protection from overly zealous residential mortgage lenders.” Benner, 917
F. Supp. 2d at 357.
Third, Fish was decided before a 2008 amendment to Section
1860.403c(b)(1) of Act 91, which added a requirement that the Act 91
notice specify the amount of the default. See , P.L. 841, No. 60, § 2 (July 8,
2008) (inserting “including an itemized breakdown of the total amount past
due” in Section 1860.403c(b)(1)). Therefore, it would now be impossible to
comply with Act 91’s notice requirements unless a lender sent a new notice.
Fourth, Fish notes that Section 1860.403c(d) of Act 91 states if the
lender and debtor reach an agreement, and thereafter the debtor is again
unable to make payment, another notice is not necessary. Fish, 931 A.2d at
767 (quoting 35 P.S. § 1860.403c(d)). By its plain terms, Section
1860.403c(d) requires a prior agreement between a debtor and lender, a
condition absent from the present case. See 35 P.S. § 1860.403c(d).
Fifth, the stated purpose of Act 91—to provide emergency mortgage
assistance16—is markedly different from the purpose of Act 6—to offer
homeowners with residential mortgages a measure of protection from overly
zealous residential mortgage lenders. See Benner, 917 F. Supp. 2d at 357.
____________________________________________
16
See Preamble to P.L. 385, No. 91 (Dec.23, 1983) (“It is the purpose of
this act to establish a program which will, through emergency mortgage
assistance payments, prevent widespread mortgage foreclosures and
distress sales of homes which result from default caused by circumstances
beyond a homeowner’s control”).
- 19 -
J-S36029-14
Under the pre-2008 version of Act 91, once a lender notifies the debtor of
the emergency mortgage assistance programs available, a second notice
would not serve any useful purpose because the debtor is already on notice
of the alternative financing options available. See 35 P.S. § 1860.403c;
Fish, 931 A.2d at 767. On the other hand, if a lender withdraws a
foreclosure action, it only makes sense that the Act 6 notice is likewise
withdrawn, since the debtor would need a greater amount to cure a later
default. See 41 P.S. § 403(c)(3) (requiring notice state exact amount
needed to cure default).
In light of the foregoing, logic dictates that it is not only practical and
reasonable to require a second notice, but necessary to effectuate the
debtor’s statutory right to cure the default under Act 6.17 Accordingly, Wells
Fargo was obliged to deliver a new Act 6 notice to Spivak before proceeding
____________________________________________
17
On June 22, 2012, Governor Corbett signed into law Senate Bill 1433,
which is commonly known as Act 70 of 2012 (“Act 70”). Section 5(1) of Act
70 states that the mortgagor must show that he or she was prejudiced by
the mortgagee’s failure to comply with Section 1860.402c and 1860.403c of
Act 91 for the trial court to impose a remedy. Since this decision rests on
our interpretation of Act 6, Act 70 does not pose an impediment to our
disposition. Even if Act 70 did apply, it would not impact our holding. The
prejudice that Spivak suffered from Wells Fargo’s failure to furnish a second
notice is palpable, most notably, from Spivak’s inability cure the default by
virtue of his lack of knowledge regarding the amount necessary to do so.
Wells Fargo had a legal obligation to provide Spivak notice of the amount
necessary to cure the default before instituting the foreclosure action.
Without Wells Fargo fulfilling this obligation, Spivak was unable to take
ameliorative action to prevent foreclosure.
- 20 -
J-S36029-14
with a second foreclosure action.18 The trial court erred by overriding Act 6’s
notice requirement and interpreting Act 6 not to require an additional notice
under these circumstances. See Roth, 85 A.3d at 592-93 (“[I]f in reaching
a conclusion the law is overridden or misapplied, . . . discretion is
abused[]”).
Order reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/31/2014
____________________________________________
18
Wells Fargo argues that requiring an additional notice under Act 6 would
render Section 1680.403c(a) of Act 91 meaningless because notice under
Act 91 satisfies the notice requirements of Act 6. See 35 P.S. §
1680.403c(b)(1). This is inaccurate.
Pursuant to Section 1680.403c(a) of Act 91, when both the Act 6 and Act 91
notices are required, it is sufficient to issue a combined Act 6/91 notice. See
35 P.S. § 1680.403c (authorizing a lender to issue a combined notice that
contains the information required under Act 91 and Act 6). Section
1680.403c(a), however, does not govern when only an Act 6 notice is
required.
- 21 -