U.S. Bank National Assoc. v. Schraven, D. ( 2016 )

J-A16013-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
U.S. BANK NATIONAL ASSOCIATION, AS IN THE SUPERIOR COURT OF
TRUSTEE FOR J.P. MORGAN MORTGAGE PENNSYLVANIA
ACQUISITION TRUST 2006-CH2, ASSET
BACKED PASS-THROUGH CERTIFICATES,
SERIES 2006-CH2,
v.
DAVID SCHRAVEN, KELLY SCHRAVEN,
THE UNITED STATES OF AMERICA C/O
THE UNITED STATES ATTORNEY FOR
THE WESTERN DISTRICT OF
PENNSYLVANIA,
APPEAL OF: DAVID SCHRAVEN AND
KELLY SCHRAVEN
No. 1153 WDA 2015
Appeal from the Order July 16, 2015
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): MG-09-001176
BEFORE: SHOGAN, OLSON, and STRASSBURGER,* JJ.
MEMORANDUM BY SHOGAN, J.: FILED SEPTEMBER 28, 2016
Appellants, David and Kelly Schraven (“the Schravens”), appeal from
the July 16, 2015 order that denied their petition to set aside a sheriff’s sale
and open/strike a default judgment in this mortgage foreclosure action.
After careful review, we dismiss the appeal for mootness.
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
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The relevant facts and procedural history of this matter were set forth
by the trial court as follows:
On May 14, 2009, [U.S. Bank National Association, as
trustee for J.P. Morgan Mortgage Acquisition Trust 2006-Ch2,
Asset Backed Pass-Through Certificates, Series 2006-Ch2
(“Appellee”)] filed a Complaint in Mortgage Foreclosure against
the Schravens. Paragraph 6 of the Complaint avers the
Schravens were served with the proper notices required prior to
filing such a complaint. The docket reveals, and the Schravens
do not deny, they were served with the Complaint.1 The
Schravens did not file an answer to the Complaint and on July
21, 2009, were sent notice of [Appellee’s] intention to take a
default judgment.
1
The docket entries reveal, and the Schravens do
not deny, that they were served with every pleading
and document filed by [Appellee] in this action.
[Appellee] filed a Praecipe for a Default Judgment on
August 4, 2009. At that time, judgment was entered in the
amount of $141,660.32. On September 29, 2009, [Appellee]
filed a Praecipe for Writ of Execution. Upon motion of [Appellee],
on April 27, 2010, the sale was postponed for settlement
purposes. On April 29, 2010, [Appellee] presented a Motion to
Reassess Damages, requesting damages be adjusted to reflect
current interest, real estate taxes, insurance premiums, cost of
collection and other expenses. The Court reassessed damages at
$149,189.87, plus 6% interest from May 3, 2010, until the date
of sale. The Schravens did not appeal the Order. [Appellee] filed
an Affidavit of Stay on May 7, 2010, as a result of a loan
modification and having received a payment from the Schravens.
On July 22, 2010, [Appellee] filed a Praecipe to Reissue
Writ of Execution. On March 11, 2011, [Appellee] filed another
Affidavit of Stay because the Schravens filed for bankruptcy on
October 1, 2010. The Schravens were represented by counsel
and [Appellee] was listed as a creditor. The bankruptcy was
dismissed without prejudice and on November 14, 2013,
[Appellee] filed a Praecipe to Reissue Writ of Execution. The sale
was again continued until May 5, 2014. [Appellee] filed another
Affidavit of Stay, on May 7, 2014, as a result of a loan
modification. On June 17, 2014, [Appellee] filed a Praecipe to
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Reissue Writ of Execution. The sheriff’s sale finally occurred
December 1, 2014.
Although Attorney Michael P. Malakoff entered his
appearance on behalf of the Schravens on October 2, 2014, no
action was taken of record prior to the sheriff’s sale. On January
6, 2015, approximately three months after Attorney Malakoff
entered his appearance and one month after the Sheriff’s Sale,
the Schravens filed a Petition to Set Aside Sheriff’s Sale and to
Strike/Open Default Judgment. Even though the Schravens were
served with every pleading and document filed of record by the
[Appellee], this was the first filing by the Schravens since being
served with the Complaint on June 30, 2009.
The Schravens contend in their Petition filed January 6,
2015, that various praecipes for writs of execution and
reissuance of the writs were not verified despite the fact that
“non-liquidated fees and costs were demanded in addition to
liquidated interest.”2 They additionally assert the Complaint in
Mortgage Foreclosure fails to plead compliance with the notice
requirements of Act 6, 41 P.S. §403(a), and Act 91, 35 P.S.
§1680.403c, because the Complaint fails to plead the date
notice(s) were sent.3 The Schravens aver the default judgment
and sheriff’s sale are void/fatally defective because the
Complaint fails to set forth the date notice was sent and they are
unable to determine whether the Note was properly accelerated
or whether the Complaint was filed prematurely. The Petition
fails to allege (1) why the Schravens failed to file preliminary
objections or an answer to the Complaint in Mortgage
Foreclosure; (2) that the Petition to Strike/Open Default
Judgment was promptly filed; or (3) that they had a reasonable
explanation or excuse for the default.
2
See paragraphs 5,7,12, and 14 of the Petition.
3
The Complaint avers the required notices were
sent. The Schravens do not aver that they failed to
receive the Act 6/Act 91 notice. In fact, at paragraph
13 of their petition they acknowledge notice was sent
on April 3, 2009.
On February 9, 2015, the Honorable Alan D. Hertzberg
denied the Petition to Strike/Open Default Judgment. The
Schravens neither appealed this ruling nor requested
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reconsideration. Judge Hertzberg issued a rule to show cause
“why Petitioners are not entitled to the relief requested relative
to the Petition to Set Aside Sheriff’s Sale only.” [Appellee] filed
an Answer and New Matter to the petition on March 16, 2015. In
footnote 1, [Appellee] emphasizes the Petition to Strike/Open
Default Judgment had already been denied by the Court. As to
the Schravens’ contention that they did not learn the date the
Act 6/Act 91 notice was sent until May 14, 2014, [Appellee]
avers it submitted this with the Notice of Sheriff’s Sale filed not
only on May 14, 2014, but also with the Notice of Sheriff’s Sale
filed four years previously, on May 20, 2010. This was not
refuted by the Schravens. The Schravens filed no reply to
[Appellee’s] New Matter.4
4
Since [Appellee’s] New Matter did not contain
averments of fact, the Schravens’ failure to reply
thereto did not result in any admissions.
On May 15, 2015, without leave of Court, the Shravens
filed a Motion to Strike. Neither the caption nor the body of the
Motion clarify what the Shravens were asking the Court to strike.
The prayer for relief requests that “... this Motion to Strike be
granted and the Sheriff’s Sale be set aside until it can be
determined what amounts [Appellee] is entitled to recover post
April 29, 2010.” This Motion acknowledges the prior Petition to
Strike/Open Default Judgment had been denied on February 9,
2015. The grounds in support of this Motion are essentially the
same as those in the Schravens’ Petition to Set Aside Sheriff’s
Sale and to Strike/Open Default Judgment. The only difference is
the Schravens allege [Appellee] had refused to provide
discovery5 in order for them to determine the basis for
foreclosure related attorney’s fees, costs and interest that
[Appellee] demanded, citing EMC Mortgage, LLC v. Biddle, 114
A.3d 1057 (Pa. Super. 2015). It is clear from paragraph 8 of
their Motion filed May 15, 2015, that the Schravens are not
contesting the Order of April 29, 2010, wherein the default
judgment was reassessed to include interest through May 3,
2010; late fees; legal fees; costs of suit and title search;
payment of the escrow deficiency; and interest at 6% per annum
from May 3, 2010, until the date of sale.
5
Despite the assertion that [Appellee] failed to
comply with discovery requests, the Schravens failed
to file a motion for sanctions or other appropriate
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relief. See, e.g., Irwin Union National Bank and Trust
v. Famous, 4 A.3d 1099 (Pa. Super. 2010).
On June 18, 2015, the Schravens, without leave of Court,
filed an Amended Motion to Strike. In the body of the motion the
Schravens state[d] it was an Amended Motion to Strike Default
Judgment, thus clarifying that both the May 15th and June 18th
motions were motions to strike the default judgment. The
grounds in support of this Amended Motion are identical to those
asserted in their June 18th Motion to Strike.
Pa.R.C.P. 206.1(b) provides:
A petition shall specify the relief sought and state the
material facts which constitute the grounds
therefore. All grounds for relief, whether to strike or
open a default judgment, shall be asserted in one
petition.
On July 16, 2015, I denied the Petition to Set Aside Sheriff’s Sale
and, in an abundance of caution, the previously filed petitions to
strike and/or open. As previously noted, the Schravens did not
appeal Judge Hertzberg’s Order of February 9, 2015, which
denied their original Petition to Strike/Open Default Judgment.
There was no petition to open before me, as the Schravens’
motions filed after February 9, 2015, sought only to strike the
default judgment. They were denied because they violated
Pa.R.C.P. 206.1(b) and the coordinate jurisdiction rule.
Moreover, the Schravens did not establish grounds to warrant
striking the default judgment.
Trial Court Opinion, 12/4/15, at 1-5.
As noted, the trial court entered an order on July 16, 2015, that
denied the Schravens’ petition to set aside sheriff’s sale and reiterated the
denial of the petition to open and strike, which had been denied five months
earlier in an order filed on February 9, 2015. The Schravens filed their
notice of appeal on July 27, 2015.
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In their appeal to this Court, the Schravens purport to raise the
following issues:
1. Did the lower court err when it held that the Default Judgment
should not be stricken/opened?
2. Did the lower court err when it failed to consider the
Schravens’ Amended Motion to Strike on the merits?
3. Did the lower court err when it held that the sheriff’s sale
should not be set aside?
4. Did the lower court err in failing to follow this Court’s holdings
in EMC Mortgage, LLC v. Biddle, 114 A.3d 1057 (Pa.Super.
2015)?
The Schravens’ Brief at 2-3.
Before we may address the issues raised by the Schravens, we must
determine whether this appeal is moot due to the Schravens’ failure to file a
bond pursuant to Pa.R.A.P. 1733.1
Rule 1733 provides as follows:
Requirements for Supersedeas on Agreement or Application
(a) General rule. An appeal from an order which is not subject
to Rule 1731 (automatic supersedeas of orders for the payment
of money) shall, unless otherwise prescribed in or ordered
pursuant to this chapter, operate as a supersedeas only
upon the filing with the clerk of the court below of
appropriate security as prescribed in this rule. Either court
may, upon its own motion or application of any party in interest,
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1
“Generally, an actual claim or controversy must be present at all stages of
the judicial process for the case to be actionable or reviewable.... If events
occur to eliminate the claim or controversy at any stage in the process, the
case becomes moot.” Deutsche Bank Nat. Co. v. Butler, 868 A.2d 574,
576 (Pa. Super. 2005) (citation omitted).
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impose such terms and conditions as it deems just and will
maintain the res or status quo pending final judgment or will
facilitate the performance of the order if sustained.
(b) Tangible property. When the order determines the
disposition of the property in controversy as in real actions,
replevin, and actions to foreclose mortgages or when such
property is in the custody of the sheriff, or when the proceeds of
such property or appropriate security for its value is in the
possession, custody or control of the court, the amount of the
additional security shall be fixed by agreement of the parties, or
by the court, at such sums only as will secure any damages for
the use and detention of the property, interest, the costs of the
matter and costs on appeal.
Pa.R.A.P. 1733 (emphases added).
Here, it is undisputed that the Schravens failed to file a bond, and the
deed to the subject property was delivered to Appellee, acknowledged by the
Sheriff, and recorded in the Allegheny County Department of Real Estate on
October 6, 2015.2 However, the Schravens contend that this appeal is not
moot based on Jefferson Bank v. Newton Associates, 686 A.2d 834 (Pa.
Super. 1996). The Schravens’ Reply Brief at 1-3.
In Jefferson Bank, Newton Associates was the record owner of
condominium units. Id. at 836. Jefferson Bank held a first mortgage on the
units. Id. In December of 1991, the Middleton Condominium Association
filed suit against Newton Associates alleging that it had failed to pay its
assessment dues. Id. at 836-837. In May of 1993, Middleton Condominium
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2
A copy of the Sheriff’s Deed was filed of record in the instant matter on
November 3, 2015. Certified Record at 59.
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Association obtained a judgment against Newton Associates. Id. Middleton
Condominium Association then commenced an action against the primary
mortgage holder, Jefferson Bank. Id. Middleton Condominium Association’s
theory of recovery was that Jefferson Bank was a mortgagee in possession
and liable for the debt. Id.
Thereafter, Jefferson Bank initiated mortgage-foreclosure actions
against Newton Associates due to their failure to pay taxes. Jefferson
Bank, 686 A.2d at 837. Newton Associates did not challenge the actions.
Id. Jefferson Bank secured a $254,783.89 judgment and filed a writ of
execution in order to sell the units at a sheriff’s sale. Id. However, before
the sheriff’s sale was held, Jefferson Bank assigned its interest to a company
named Shell Real Estate. Id. Shell Real Estate had agreed to re-sell
the units to third parties, and to accomplish this goal, Shell assigned
its interest to the third-party buyers, and issuance of title would be
directly from the sheriff to the buyer. Id. After the sheriff’s sale to
Shell Real Estate, the Middleton Condominium Association’s liens were
extinguished by operation of law. Id.
Middleton Condominium Association filed petitions to set aside the
sheriff’s sale due to fraud. On that basis, and without further discussion,
this Court concluded the sheriff’s issuance of deeds to the prospective third
party buyers was automatically stayed. Jefferson Bank, 686 A.2d at 837.
Additionally, in its petitions, Middleton Condominium Association argued that
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Shell Real Estate was simply the alter ego of Jefferson Bank and was created
to act as Jefferson Bank’s agent at the sale. Id.
Jefferson Bank filed motions to strike. Jefferson Bank, 686 A.2d at
837. The motions to strike the petitions were partially granted, and
Middleton Condominium Association’s motions to strike the sheriff’s sale
were denied. Id. Middleton Condominium Association appealed and
challenged the order partially granting Jefferson Bank’s motions to strike the
petitions and the order denying the petitions to strike the sheriff’s sale. Id.
On appeal, Jefferson Bank and Shell Real Estate claimed that the
appeal was moot because the titles to the properties had been transferred to
third parties after the condominium association filed its appeal. Jefferson
Bank, 686 A.2d at 837. This Court addressed that claim of mootness as
follows:
This is a specious argument, for it ignores the essential fact that,
in the present appeal, it was appellees who transferred the
properties after appellant took its appeal. This is a distinction
with a difference, because our courts have never held that an
adverse party may create mootness through deliberate factual
manipulation.
Jefferson Bank, 686 A.2d at 838. Importantly, however, that prior panel
of this Court never discusses Pa.R.A.P. 1733 and the ramifications of the
failure to file a bond or obtain a stay.
After reviewing the relevant authority, we are satisfied that this matter
is not controlled by our decision in Jefferson Bank. Therein, there was an
accusation of manipulation in that it was alleged that Jefferson Bank created
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Shell Real Estate for the sole purpose of acting as the bank’s agent at sale.
This resulted in the transfer of the sheriff’s deeds directly to third parties.
Jefferson Bank, 686 A.2d at 837. More importantly, and as noted above,
the Jefferson Bank Court never addressed Pa.R.A.P. 1733 and the question
of how a failure to obtain a bond and supersedeas impacts a determination
of mootness. See Deutsche Bank, 868 A.2d at 578 n.1 (directly
addressing mootness caused by a party’s failure to obtain a stay). As such,
we agree with Appellee that Jefferson Bank is readily distinguishable, and
we conclude this appeal is moot. Ultimately, the Schravens are asserting
that the mere filing of an appeal acts as a supersedeas; however, there is no
support for this argument, and such a conclusion would render Pa.R.A.P.
1733 a nullity.3
For the reasons set forth above, we conclude that the Schravens’
failure to file a bond and stay the proceedings render the instant matter
moot. Accordingly, we hereby dismiss the appeal.
Appeal dismissed as moot.
Judge Olson Concurs in the Result.
Judge Strassburger files a Dissenting Memorandum.
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3
Despite their protestations (The Schravens’ Reply Brief at 1-4), the
Schravens have provided no authority that any issue or challenge raised
below overcomes mootness.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/28/2016
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