Deutsche Bank v. Banks, R. Appeal of: Banks, J. ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DEUTSCHE BANK TRUST COMPANY IN THE SUPERIOR COURT OF
AMERICAS, FORMERLY KNOWN AS PENNSYLVANIA
BANKERS TRUST COMPANY, AS A
TRUSTEE OF AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE
LOAN TRUST 1998-1, UNDER POOLING
AND SERVICING AGREEMENT DATED AS
FEBRUARY 1, 1998,
Appellee
v.
ROBERT BANKS AND JOANNE BANKS,
APPEAL OF: JOANNE BANKS,
Appellant No. 2037 WDA 2014
Appeal from the Judgment Entered December 3, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): MG-09-001802
BEFORE: SHOGAN, OTT, and STABILE, JJ.
MEMORANDUM BY SHOGAN, J.: FILED FEBRUARY 19, 2016
Appellant, Joanne Banks, appeals from the in rem judgment entered in
favor of Deutsche Bank Trust Company Americas (“Deutsche Bank”) in this
mortgage foreclosure action. We affirm.
The trial court summarized the facts and procedural history as follows:
On March [2], 2007, [Appellee] Deutsche Bank Trust
Company Americas filed a Complaint in Mortgage Foreclosure
against [Appellants,] Joanne Banks and Robert J. Banks,
regarding Property located at 610 Ridge Street, McKeesport, PA
15132. On March 20, 2008, [the trial court] entered an Order
dismissing the Complaint, with prejudice. The instant case
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involves a Complaint and an Amended Complaint in Mortgage
Foreclosure, filed on [July 15, 2009,] and June 27, 2012,1
respectively. By way of history, on December 10, 1997, in
consideration of a loan in the principal amount of $36,000,
[Appellant] Joanne Banks executed and delivered to AMRESCO
Residential Mortgage Corporation, an adjustable rate note with
interest, payable as to the principal and interest in equal
monthly installments of $360.08 commencing February 1, 1998.
[Appellants] are in default of their obligations pursuant to the
Note and to the Mortgage because payments of principal and
interest due May 1, 2006 and monthly thereafter are due and
have not been paid. [Deutsche Bank] seeks an in rem judgment
against [Appellants] for foreclosure and sale of the Property.
A non-jury trial was held and a verdict entered on June 12,
2014 in favor of [Deutsche Bank] in the amount of $39,489.00.
On June 17, 2014, [Appellant] Joanne Banks filed a Motion for
Post-Trial Relief and arguments were heard on July 31, 2014.
Trial Court Opinion, 9/10/14, at 1-2.
The trial court denied the motion for post-trial relief by order entered
September 10, 2014. On December 3, 2014, Deutsche Bank filed a praecipe
for in rem judgment, in favor of Deutsche Bank and against Joanne Banks,
as “Original Mortgagor and Real Owner.” Praecipe for Judgment, 12/3/14, at
1. Judgment on the verdict was entered the same day. Appellant timely
appealed.
Appellant presents the following issues for our review:
[I.] Whether the trial court improperly concluded that
Deutsche Bank met its burden to establish its standing to
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1
The record reflects that Deutsche Bank filed the complaint in mortgage
foreclosure at issue in this case on July 15, 2009. On September 13, 2010,
Deutsche Bank filed an amended complaint and on June 27, 2012, Deutsche
Bank filed a second amended complaint.
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prosecute the instant action where Deutsche Bank failed to prove
it was the successor in interest to Bankers Trust Company.
II. Whether the trial court improperly concluded that
Deutsche Bank met its burden to establish its standing to
prosecute the instant action where Deutsche Bank failed to prove
it had acquired the subject note prior to its commencement of
the instant lawsuit.
[III.] Whether the trial court improperly concluded that the
doctrine of res judicata did not bar Deutsche Bank from
prosecuting the instant mortgage foreclosure action where the
lower court previously dismissed with prejudice Deutsche Bank’s
materially identical first complaint in mortgage foreclosure.
Appellant’s Brief at 4 (full capitalization omitted).2
Our standard of review is as follows:
When reviewing the verdict from a bench trial, we must review
the evidence of record in the light most favorable to the verdict
winner to determine whether competent evidence supports the
trial court’s findings and whether it erred in reaching its
conclusions of law. We afford the same weight to the trial
court’s findings of fact as we do a jury’s verdict. We will only
reverse if the trial court’s findings of fact are unsupported by
competent evidence or if it erred as a matter of law.
Newman Dev. Grp. of Pottstown, LLC v. Genuardi’s Family Mkt., Inc.,
98 A.3d 645, 652 (Pa. Super. 2014) (en banc) (internal citations omitted).
We first address whether the trial court improperly concluded that
Deutsche Bank had standing to bring this mortgage foreclosure action.
Appellant’s Brief at 52. Appellant asserts that the original mortgage was
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2
We have renumbered Appellant’s issues raised on appeal for ease of
disposition and for purposes of first addressing Appellant’s claims regarding
Deutsche Bank’s standing to bring this foreclosure action.
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executed in favor of AMRESCO and was subsequently assigned to Bankers
Trust Company. Id. at 55. Appellant maintains that because Bankers Trust
Company was the sole assignee of the subject mortgage, and because
Deutsche Bank has failed to establish any legal relationship between it and
Bankers Trust Company, Deutsche Bank lacks standing to prosecute this
action. Id.
The holder of a mortgage has the right, upon default, to bring a
foreclosure action. Bank of Am., N.A. v. Gibson, 102 A.3d 462, 464 (Pa.
Super. 2014), appeal denied, 112 A.3d 648 (Pa. 2015). In a foreclosure
action, the plaintiff can prove standing either by showing that it (1)
originated or was assigned the mortgage, or (2) is the holder of the note
specially indorsed to it or indorsed in blank. J.P. Morgan Chase Bank, NA.
v. Murray, 63 A.3d 1258, 1267-1268 & n.6 (Pa. Super. 2013).
In this case, Deutsche Bank proved standing both ways. First,
Deutsche Bank owns Appellant’s mortgage via assignment. The complaint in
a mortgage foreclosure action must allege “the parties to and the date of the
mortgage, and of any assignments, and a statement of the place of record of
the mortgage and assignments.” Pa.R.C.P. 1147(a)(1). Here, Deutsche
Bank’s second amended complaint set forth the original parties and date of
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Appellant’s mortgage. It further asserted that the mortgage was assigned
from the original lender, AMRESCO, to Bankers Trust Company.3
The record includes evidence and testimony that Deutsche Bank was
“formerly known as Bankers Trust Company” and owned Appellant’s
mortgage via assignment. Specifically, Deutsche Bank produced a limited
power of attorney indicating that Deutsche Bank, formerly known as Bankers
Trust Company, contracted with Wendover Financial Services Corporation
(“Wendover”) to service its loans and mortgages. Stipulated Supplement to
Record: Trial Exhibits Pertinent to the Issues raised on appeal; Plaintiff
Exhibit 1. At trial, Allison Bielby testified that she worked for LoanCare LLC,
which is a sub-servicer for Wendover and that she had been servicing
Appellant’s loan. N.T., 6/2/14, at 7-9. Ms. Bielby, on behalf of LoanCare
LLC, identified a record of payments and documented history of the
mortgage executed by Appellant. Id. at 10-19. Additionally, her testimony
revealed that a modification was offered on this loan, and that Appellant
interacted with LoanCare, LLC in its capacity as Appellant’s mortgage
servicer. Id. at 51-52.
Thus, the record established that LoanCare LLC, on behalf of Deutsche
Bank, has been servicing Appellant’s loan. Further, Appellant engaged with
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3
The complaint also included a statement of the place of record of the
mortgage and assignment. The note, mortgage and assignment were
attached to Deutsche Bank’s second amended complaint.
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LoanCare LLC as her loan servicer without objection prior to initiation of this
litigation. Accordingly, the record reflects an unbroken chain from the
original lender, AMRESCO, to Deutsche Bank. Because Deutsche Bank is the
current mortgage owner via assignment, it has standing to enforce the
mortgage.
Second, Deutsche Bank is in possession of the promissory note which
was endorsed in blank.4
Under the Pennsylvania Uniform Commercial Code (PUCC), the
note securing a mortgage is a negotiable instrument. J.P.
Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258
(Pa.Super.2013). A note endorsed in blank is a “bearer note,”
payable to anyone on demand regardless of who previously held
the note. 13 Pa.C.S.A. §§ 3109(a), 3301.
Gibson, 102 A.3d at 466; see also PHH Mortg. Corp. v. Powell, 100 A.3d
611, 621 (Pa. Super. 2014) (“Evidence that some other entity may be the
“owner” or an “investor” in the Note is not relevant to this determination, as
the entity with the right to enforce the note may well not be the entity
entitled to receive the economic benefits from payments received thereon.”).
The record in this case reveals that Deutsche Bank holds the note
endorsed in blank, and therefore the mortgage. As holder of the note and
mortgage, Deutsche Bank has standing to pursue this foreclosure action as
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4
Appellant does not dispute the fact that Deutsche Bank possesses the
original note. Appellant’s Brief at 46-48.
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the proper party in interest. Gibson, 102 A.3d at 466. Appellant’s
assertions to the contrary are baseless.
In her next claim, Appellant contends that Deutsche Bank lacks
standing to prosecute this foreclosure action where it failed to prove that it
had acquired the promissory note prior to its commencement of the instant
lawsuit. Appellant’s Brief at 35. Notably, Appellant does not allege that
Deutsche Bank does not possess the original promissory note.5 Instead,
Appellant argues that the promissory note attached to the complaint differs
from the original note produced at trial. Id. at 48. Specifically, Appellant
contends that the allonge6 to the promissory note attached to the complaint
differs from the allonge to the original note because the original note’s
allonge includes a name stamp of “Aurora P. Cosme, Assistant [Secretary],”
and the copy does not. Id. Thus, Appellant argues that Deutsche Bank did
not possess the original note and allonge prior to the inception of the instant
foreclosure action and therefore, has failed to establish its standing as the
real party in interest to prosecute the instant foreclosure action. Id. at 51-
52.
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5
Both the copy and the original promissory note were introduced at trial. As
noted, Appellant does not dispute this fact.
6
An allonge is “[a] slip of paper sometimes attached to a negotiable
instrument for the purpose of receiving further indorsements when the
original paper is filled with indorsements.” Black’s Law Dictionary 88 (9th
ed. 2009).
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This Court recently held that a complaint in mortgage foreclosure does
not need to include the original promissory note. Bank of N.Y. Mellon v.
Johnson, 121 A.3d 1056, 1063 (Pa. Super. 2015). In Johnson, default
judgment had been entered against the appellant in a mortgage foreclosure
action. Id. at 1058-1059. The appellant argued that the default judgment
should have been struck on the basis that the complaint in foreclosure was
deficient because the bank did not attach the promissory note to the
complaint. Id. at 1062. The appellant further argued that the bank failed to
allege that a promissory note even existed or that it legally owned the
mortgage. Id. In affirming the trial court’s decision, this Court concluded
that a complaint in mortgage foreclosure does not need to include the
original promissory note. Id. at 1063. This Court emphasized that the
bank’s complaint fully complied with the requirements of Pa.R.C.P. 1147(a):
the complaint listed the parties to the mortgage, the date of execution, and
the assignment to the bank; an attachment to the complaint described the
land subject to the mortgage; the complaint set forth the name, address,
and interest of the appellant; the bank included a specific averment of
default, explaining that the appellant had failed to make her required
monthly payments; the bank also provided an itemized statement of the
amount due, and it demanded judgment for that amount. Id. at 1063.
Because the complaint fully complied with Rule 1147(a), this Court
determined that the appellant was not entitled to relief on her claim. Id.
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Thus, as this Court held in Johnson, there is no requirement that
Deutsche Bank attach the original note to the complaint. Furthermore, as in
Johnson, here Deutsche Bank’s complaint fully complied with the
requirements of Pa.R.C.P. 1147(a). Therefore, we cannot agree with
Appellant’s assertion that Deutsche Bank lacks standing to prosecute the
instant action and that the judgment entered against Appellant should be
vacated. Moreover, as noted, Deutsche Bank possesses the original
promissory note in this case. For reasons explained previously, it is of no
merit that the note was not attached to the complaint. Thus, Appellant’s
second claim challenging Deutsche Bank’s standing to proceed in this
foreclosure action lacks merit.
In her final issue, Appellant asserts that the trial court erred in
concluding that the doctrine of res judicata does not bar Deutsche Bank from
prosecuting the instant mortgage foreclosure action. Appellant’s Brief at 19.
Appellant contends that the order entered by the trial court on March 20,
2008, dismissing with prejudice Deutsche Bank’s first complaint in
foreclosure against Appellant “constitutes res judicata and operates as a bar
against any subsequent lawsuit by Deutsche Bank against [Appellant] on the
same cause of action.” Id. at 23.
“Pursuant to the doctrine of res judicata, a final judgment on the
merits by a court of competent jurisdiction will bar any future suit between
the parties or their privies in connection with the same cause of action.”
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Radakovich v. Radakovich, 846 A.2d 709, 715 (Pa. Super. 2004) (quoting
Yamulla Trucking & Excavating Co. v. Justofin, 771 A.2d 782, 784 (Pa.
Super. 2001)). This Court has previously explained the impact of a
judgment of non pros on the doctrine of res judicata:
It is settled law that where plaintiff has suffered a
judgment of non pros, he may later commence a new action
between the selfsame parties and alleging the selfsame cause of
action so long as the second action is commenced within the
applicable statute of limitations. Since a non pros is not a
judgment on the merits, it cannot have res judicata effect.
Hatchigian v. Koch, 553 A.2d 1018, 1020 (Pa. Super. 1989) (internal
citations omitted). Additionally, our Commonwealth Court has held that “a
dismissal, even with prejudice, for failure to prosecute a claim is not
intended to be res judicata of the merits to the controversy.” Municipality
of Monroeville v. Liberatore, 736 A.2d 31, 34 (Pa. Cmwlth. 1999)
(emphasis added).7 See also Moore v. John A. Luchsinger, P.C., 862
A.2d 631, 634 n.3 (Pa. Super. 2004) (“A non pros against a plaintiff is not
res judicata, and therefore, does not bar the plaintiff from commencing
another action based upon the same cause of action within the applicable
statute of limitations period.”); Gutman v. Giordano, 557 A.2d 782, 783
(Pa. Super. 1989) (“[A] non pros for failure to answer a trial listing is not an
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We note that “[t]his Court is not bound by decisions of the Commonwealth
Court. However, such decisions provide persuasive authority, and we may
turn to our colleagues on the Commonwealth Court for guidance when
appropriate.” Haan v. Wells, 103 A.3d 60, 68 n.2 (Pa. Super. 2014).
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adjudication on the merits and thus may not form the basis for application of
res judicata.”).
As noted, Appellant defaulted on the mortgage in May 2006. Deutsche
Bank initiated its first action in foreclosure against Appellant on March 2,
2007. That action was dismissed “with prejudice” by court order dated
March 20, 2008, as a result of “Plaintiffs not responding or appearing.”
Order, 3/20/08. Thus, Deutsche Bank’s initial action was dismissed due to
the failure to prosecute the claim. Because the first action was dismissed for
non pros, there was no final judgment on the merits. Accordingly, the
doctrine of res judicata does not bar the filing of the instant foreclosure
action.8
Judgment affirmed.
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8
This second action, filed July 15, 2009, was commenced within the
applicable statute of limitations. Hatchigan, 533 A.2d at 1020 (“It is
settled law that where plaintiff has suffered a judgment of non pros, he may
later commence a new action between the selfsame parties and alleging the
selfsame cause of action so long as the second action is commenced within
the applicable statute of limitations.”). An action under seal must be
commenced within twenty years. 42 Pa.C.S. § 5529(b)(1); In re Estate of
Snyder, 13 A.3d 509, 513 (Pa. Super. 2011).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/19/2016
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