Eaton, M. v. Bank of America (memorandum)

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J-A35020-14 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 MARY M. EATON, F/K/A MARY M. CAMPBELL, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellant v. BANK OF AMERICA, N.A. AND U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A. AS SUCCESSOR TO LASALLE BANK, N.A., AS TRUSTEE FOR THE MERRILL LYNCH FIRST FRANKLIN MORTGAGE LOAN TRUST, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-4, Appellees No. 347 WDA 2014 Appeal from the Order entered February 5, 2014, in the Court of Common Pleas of Beaver County, Civil Division, at No(s): 10939-2013 BEFORE: BENDER, P.J.E., BOWES, and ALLEN, JJ. MEMORANDUM BY ALLEN, J.: FILED DECEMBER 23, 2014 Mary M. Eaton, f/k/a Mary M. Campbell, (“Appellant”), appeals from the trial court’s order sustaining the preliminary objections in the nature of a demurrer which were filed by Bank of America, N.A. and U.S. Bank National Association, as successor trustee to Bank of America, N.A., as successor to LaSalle Bank, N.A., as trustee for the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-4, (collectively “Bank”). J-A35020-14 On June 18, 2013, Appellant filed a quiet title action against Bank. Under Count I, Appellant sought to strike the mortgage on her personal residence as invalid. Appellant averred that she did not sign the note relative to the purchase of the home, which had been executed solely by Appellant’s husband prior to his death. Appellant further averred that the mortgage was invalid against her because she only signed the mortgage as a non-borrower. Under Count II, Appellant sought to strike the recorded assignment of her mortgage. On August 16, 2013, Bank filed preliminary objections in the nature of a demurrer, asserting that Appellant’s action should be dismissed for failure to state a cause of action because Appellant had signed the mortgage, albeit as a non-borrower, and averring that Appellant lacked standing to challenge the assignment of the mortgage. In an order issued on February 4, 2014, and docketed on February 5, 2014, the trial court sustained Bank’s preliminary objections and dismissed Appellant’s complaint. Appellant filed a timely notice of appeal. The trial court did not order compliance with Pa.R.A.P. 1925. Appellant presents the following issues for our review: 1. Does Count I of [Appellant’s] Complaint properly state a cause of action for Quiet Title, taking the facts of the Complaint as true and given the Superior Court’s holding in Regions Mortgage, Inc. v. Muthler, 844 A.2d 580 (Pa. Super. 2004)? 2. Does a Plaintiff have standing to challenge assignments of a mortgage through a Quiet Title action? Appellant’s Brief at 3. -2- J-A35020-14 Appellant’s issues challenge the trial court’s order sustaining Bank’s preliminary objections in the nature of a demurrer. Our standard of review “is to determine whether the trial court committed an error of law.” Feingold v. Hendrzak, et al., 15 A.3d 937, 941 (Pa. Super. 2011). We are also mindful that: Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases which it is clear and free of doubt that the pleader will be unable to prove facts legally sufficient to establish the right of relief. If any doubts exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections. Id. citing Haun v Community Health Systems, Inc., 14 A.3d 120, 123 (Pa. Super. 2011). Mindful of the standard of review applicable to Appellant’s issues, we carefully examined the certified record and found Appellant’s claims of trial court error to be unavailing. The Honorable Deborah A. Kunselman filed a sound, comprehensive, well-reasoned, and well-written opinion, which we adopt and incorporate as our own. Citing prevailing and persuasive case law, Judge Kunselman addressed Appellant’s challenges regarding whether Appellant’s complaint failed to state a cause of action for quiet title, and whether Appellant lacked standing to challenge the assignment of her mortgage, such that further analysis by this Court would be redundant. We -3- J-A35020-14 therefore adopt the trial court’s February 4, 2014 opinion, which was docketed on February 5, 2014, as our own in affirming the trial court’s order sustaining Bank’s preliminary objections in the nature of a demurrer. Order affirmed. Judgment Entered. Joseph D. Seletyn, Esq. Prothonotary Date: 12/23/2014 -4- iilaal t ''Q f22 '9GQ , Q' 57 PH IN THE COURT OF COMMON PLEAS OF BEAVER COUNTY PENNSYLVANIA CML DIVISION MARY M, EATON, fIkIa Mary M. Campbell, Plaintiff, vs. No. BANK OF AMERICA and U,S. Bank National Association , as Successor Trustee to Bank of America, N.A., as Trustee for the Merrill lynch First Franklin Mortgage loan Trust Mortgage Loan Asset-Backed Certificates, Series 2007-4, Defendants. D, KUNSELMAN, J. FEBRUARY 4, 2014 MEMORANDUM OPINION AND ORDER Defendants Bank of America and U.S. Bank National Association asked thiS Court to grant their Preliminary Objections and dismiss Plaintiffs camp.Lnt In Quiet TIlle. Plainlit!. Mary M. Eaton. filed a Complaint in Quiet Ule seeIMg ~o have the mortgage and the assigrment of the mortgage on her property declared invalid. discharged •. and/or """".HeeI. Plaintiff claims !hat the mallgage should ~ d~red invalid or discharged because her husband, who passed away. was the sole signer on . the note, and her name appeared on the mortgage as a non-borrower. I · Plaintiff further . becau~e it JOlated date restrictions in the prospectus fur !he lDan trust at issue. Defendant argU~!hat neither claims that the assignment of the mortgage was invalid of these claims is cognizable as a matter of law, and the Complaint should be Ie preliminary drsmlssed. For the reasons set forth in this Opinion, the Court sus1ains objections. ..-- "7'•.·i;\-9·.·----·T O.l.· -'. ,I. I 019 • •• _ - • • •• • _ .~ • •< • __ • _• • _ . ' • • •• •• " .0..- -: . . • ._ .. 8irsltletul1PIQQ'SS1 f Sf 57 PH FACTS Plaintiff filed a CompJaint in Quiet Title against Defendants seeking to have a mortgage on the subject property discharged and an assignment of that mortgage declared invalid and stricken from the record. PreViously. the property in th~ case was 11 owned by PlainUff and her husband as tenants by the entireties. (Co,J.ainl Pla. ntiff's husband passed away some time after the closing, and upon i became the sole owner of the property. (Complaint ~ 6). h'l ~eath ' 5). she When the Plaintiff ancl her husband sought to purchase property in 2007, the loan financing was obtained through Arst Franklin Financial Corp. (ComJraint First Franklin did not . want Plaintiff on the note, even though husband would both be on the deed. {Complaint I . 11 20). it knew Plaintiff and ~ 1( 22-23}. The 'docomeJts prepared by First Franklin listed Plaintiff on the mortgage as a "non-borrower." FbnoWing her husband's death; Plaintiff tried to work With- First Franklin concerning the ,Jan, but they would not speak to h .... "because she was not on the note or other''se liable". (Complaint II) 29). The ~ortgage seems to have been transferred several times. It ap~rs from the caption of the Complaint that First Franklin placed the mortgage in a loan trust with the Merrill lynch First Franklin Mortgage loan Trust•. Mortgage Back.ed CertJfi~tes. Series. I . 2007-4. laSalle Bank. NA. held the mortgage as Trustee for Merrill Lynch First Franktin ~uccessor trustee for Lisa'le .Bank. According to the Complaint. "PJn an assig~ment of Mortgage dated Slptember 13. Loan Trust 2011 , Bank of America became the U . Bank claims it obtained the mortgage from Mortgage ElectroniJ Registration .S Systems, Inc., as nominee for the original lender first Franklin: (complaJt 1(43). 020 8i:sa1 t ''S'SS'QQ'' Q' According to the loan Trust's prospectus, the mortgages and mo must be held by the loan 5 7" age notes ~ by the closing date, after which no more roJns may be 'II 46). entered into \he 1rusI. (Complainl 2007 with a cutoff date of June 1. 2007. . The closing dale on Ihe (C~mplaint 1T . ~5). The 1rUs11 JUlIe 26, aSSlgnrent of the . mortgage In this case did not ocaJr until September 13, 2011. Following the assignment. Bank of America and U.S, Bank started treating Plaintiff as a party to the note and the mortgage. (Complaint 1f32). In this lawsuit, Plaintiff claims the mOrtgage should be stricken, ~Itematively, Plaintiff claims the assignment of the mortgage to U.S. Bank is therJre void or voidable, and must be striCken from the record, 1..EGAL ANALYSIS Pursuant to Rule 1028(a)(4) of the Pennsylvania Rules of Civil Procedure. a defendant can raise preliminary objections and a trial court may .dismiss faiure 10 stale a claim upon which relief can be granted when In action for .~ is clea! from daubl from all the facts pleaded that the pleader will be unable to prove facts Ieg,"y sufficient to establish a right to relief," Pennsylvania AFl-CIO v. CommonweaKh, 7h A2d 917 (Pa. 2000). Defendants COJTectly observe that the Court can take judicial olice of the mortgage documents, as they are court records, and judicial notice may be taken at any stage of the proceedings. Pa. R. Evid. 201 (b), (t). Plaintiff atleges. in Count I of the Complaint. that the mortgage should be declared invalid and discharged foOowlng Ihe dealh of her husband. bt,~se she rever signed the note, which accompanied the mortgage, Additionally. in Count 2 of tile Complaint. Plaintiff claims that Assigrvnent of Mortgage is invalid because it viol 'ted the date restrictions in 1he prospectus for the loan trust at iS$ue, - ... -. - - -~- - ... - - .. ... -.. -- ' ", . . ' ... . . .. .. '" - . _. .... ,- . .- .... _ . ... " .' . .. 021 """ ---.- '- ' - -'- ' - "ilulat 1'0199(821' 2' 57 7" IS Defendants disagree. Defendants argue that Plaintiffs Complaint does nDt state a valid cause of action; they argue that Plaintiffs attempt to strike.off the mortg~e fails as a matter of law. They also ctaim thatlPlaintiff does not have standing to chbllenge the . I asslg nment of. the mortgage. The Court WiD address each of these arguments. I. Does Count lof Plain1ill'a Complaint sla'" a valid cause strike the mortgage on her property 4 I action to · To support her argument that the mortgage Is invalid and must be stricken from the record, Plaintiff relies on the decision in Regions Mortgage, Inc. v. MUth,Jr, 844 A2d . 580 (Pa. Super, 2004)~ I I In that case, Mr. and Mrs. Muthler purchased property as . ·.. tenams by the entireties. The deed for real property was made out to the hUsband and wife, Along with this purchase, Mr. Muthter executed a note and mortgage kcunng the property deeded m~age. to him and his wife, however, Mrs. Muthler was nat on the note or Id. at 582. Mr. Muthler passed away after the purchase of the Mrs. Muthler took. legal title to the property. property, and She believed she did not have any obligations to Regions. because .title was exclusively in her name and she rver signed the mortgage the note. &d. The Superior Court held that absent a reformation, Mrs. Muthler had the right to take the property free and clear of !he mortgagt due to her husband's passing, and neither the mortgage or note were enforceable &tPinst her. .kt.t Bt563. The facts of this case are similar to the Regions case. In both ca s, husband and wife owned property as tenants by the entIreties, and only the hUsbald signed the note. However, in the current case, Plaintiff signed the mortgage as a Un · n-borrower." . whereas Mrs. Muthler did not sign the mortgage at all. J . To refute Plaintiffs argument, Defendants rely on a case from Wes Viminia. - ...- ~~ --- .....---- ...... 022 In . iii 1 .. 1 112199(83' ... AmoJd y. Palmer. 686 S .E.2d 725 (W. Va. 2009). the husband and wife bo1h igned the, deed to trust. and both were listed on the d~d. but only the husband signed the note. Id. at 729. The court in Arnold found that the deed of trus1 aJlowed the bank t6 foreclose on the home without any need to resort to the promissory note. ~ at 734. The Defendants specifically cite to Paragraph 13 of the mortgage, staMg that the language found within ~at particular paragraph .is a common clause in mo~age8, aod sJrrower who was the same language as that used in the Arnold case. It states that a co-signs the mortgage bUl does not exeaJte the note is <leo-signing .Instrument.only to·mortgage. grant and convey Jis Security ~igne(s i _ t n the pferty under . the terms of this Security Instru~" and is "not personally obligated to JY the sums secured by [the} Security Instrument." Mortgage, Paragraph 13, at page 10~1 Defendants argue that because Plaintiff signed the mortgage, sHe obJigated herself to the terms of that security instrument, and therefore has faHed to lte a 6egaUy cognizable reason for the mortgage to be discharged. The Plaintiff maintains 1hat the Amold case is inapposite here for tlNo reasons. First. the West Virginia case does not bind this Court. Also. the wife in , LokS I signed the- deed of trust knOWing that the property was to be used as collateral on the pmmissoly ·note. Plaintiff argues that In Pennsylvania. unlike West V;'lIlnt. the tender in a mortgage foreclosure is suing under the nole, and not merely under ,e mortgage . .ThuS, in Pennsylvania. for the mortgage to be en~ceab~, the borrower lust also sign the note. Plaintiff Is mistaken. We believe that the mortgage on the property is valid and enfon;eable and that . I Plaintiff cannot maintain an action for quiet tilJe. Our review of Pennsylvania law on 023 $ Q' 53 S!! 8iloulzt d 'Q1QQ'Q3£' 2' 57 (TUE:)MAft ::0:0'" 18 10:0e/ST. 'O:o./No . 7"":"~'_ P mortgages supports this CC?"Clusion. First. we observe that In Pennsylvania. a mortgage and a mortgage note are , separate obligations. Hagerty v-& Fetner, 481 A.2d 641, 646 (Pa. Super. 19841. de~ Th~ note Id. citing Is elridence of the debt and !he mortgage provides the seCI.rily for the Evanovich Estate, 408 A.2d 1092 (Pa. 1979). Although a note and a morage taken for 1he same debt are distinct securities and possess dissimilar attributes, they are neVelthe1ess so far one, in that !he payment of eRher disch~rges both, and rrelease or exting uishmenl of either. without payment, is discharge of the other unless the parties othelWise intend. Standard PA Practice 2d, to B § 121:2. When the property thlat is subject I mortgage is transferred withOut payment of the mortgage. the property in the hands 1 of the 1ransferee continues to be security for the performance of the obligation. and for any default tne mortgagee may seize and sell 'the property in the hindS of the transferee; the contractual relationship between mortgagee and transferee operation of law. Id at§ 121:3. c;nng Bank ~ntinues by Qf Pennsvlvanla v. GfN' EntJrruises, Inc. 463 A.2d 4, 6 (Pa. Super. 1983), The Pennsylvania Supreme Court held that d a mortgage conveys lthe property subject to the mortgage to the mortgagee until the obligations under the T0rtgage are The court obServed that a furtilled," Pin@s v. Farrell. 848 A .2d 94, 100 (Pa. 2004). mortgage has a dual nature. acting . s a conveyance of ptopefty between 1e mOl1gagor a and the mortgagee, while also acting as a lien between the mortgagor r mortgagee and third parties. Id. at 99. A mortgage is more than just a security interest for the payment on money; it is also a conveyance of title. The court observed: A mortgage Is a pledge of an estate in rear property as collateral security for payment of money or performance of - .. " . ... . . ._. 024 ....... ..- - -.- .. . . ~.. - ' . ' -.. . .. ... '. ~ 7" 7 eli aBlated lEi I2i I some other act. In form, it recites an obligation by the mortgagor to pay a certain sum of money to the mortgagee, and to keep certain other covenants... To secure performance of these obligations, the real property described In the mortgage is conveyed to the mortgagee, provided that the conveyam::e is defeasible (i.e. is to become void) if and when all of the covenants have been performed .... Id. quoting, Lader on Conveyancing in Pennsylvania (4th ed. 1979 & Supp. 2003). .. I In Pennsylvania. a lender Who holds both the Note and the Mortgage. may proceed with litigation under either one or both of these documents. The ttll Note is an in personam action, seeklng a personal judgment against repayment of the debt. a~on on the debtor for This can be followed by a writ of execution. An abon on the mortgage is an ;n rem, action that a judgment on against the property as collateral offered to secure !he Nole. If an action is I Wh~ was used ftlBd on both the trlg- 8nd the Note, there can be no double recovery for the lender; the mortgagee may' have only one satisfaction. We agree with Plaintiff that because she did not si,gn the Note, she was not a borrower. and cannot be personally responsible for the repayment of the Jbt under the . I Note. Thus. the lender cannot sue her for a personal judgment on the Note and cannot action. and does not sell forlhe balance due under the Note. . fo~osure I. require her to pay any shortfall, if the property is seized in a mortgag! However, we disagree that the mortgage should be stricken, or that the mortgage is invalid with respect to Plaintiff. Plaintiff signed the mortgage. Unlike the plaintiff In the Regions easeJ in this case, She is listed as a borrower in the body of and she signed the documenL Alhough her Signature identifies her as a t~e document, ~n-borrower. we believe thrs title has no effect on the validity or enforceabirlty of the mo~age. It only 025 • 8i:oslatod 10 OCl??£ 505 E3 7" f indicates that she is not a boITower under the Note and therefore cannot be pelsonaUy liable for the debt. We beJjeve that as co-signor of the mortgage, Plaintiff is bound by its terms. Like her husband. she is a mortgagor. She signed the mortgage, recoJniZing and accepting that the property was being pJaced as coUateral on the Note, in ekChange for the money the lender was providing for the purchase of .1 the property. Plaintiffs claim I there was no consideration given for her signature on the mortgage is without merit. The consideration was the money ,provided by the lender for the purchase If the Note is unpaid. the lender may foreclose on the property. orf her house. The lender could onJy obtain an in rem judgment, and c:ould not pursue any other action against 1he Plaintiff for any additional balance due on the Note. Pursuantto the mortgage, Plaintiff and her 'husband, as signors of tite mortgage, conveyed the propetty to the mDrtgage wm run with the property unbl n is paid. S .... e.g. PiQI!§ v. ba~k, and the Fain. 848 A,2.d 94,100 (pa. 2004). Plaintiff filed this action seekilg to strike the mortgage from the p,roperty, An action in quiet title. under the facts presented here. must fall. Therefore'. Count 1 of Plaintiff's Complaint does not state a valid cause of action and the preliminrlry objedJon wiD be sustained. Does Plaintiff have standing to challenge the assignment of the mortgage ~nder Count 20f the ComplaInt f 11. In Count 2 of her Complaint, the Plaintiff p,ed that the transfer of the mortgage to U.S. Bank was outside the timeline permitted by the Loan Trust. Acco[lrdingly, she argues that the transfer was invaUd and it places a cloud on her title. Defendants argue that Plaiptiff does not have standing to c aUenge the - -. ------ .... ~.---.- ... - ... . - ... . ", . .... . . ... . .. -.. , .. - .. ... ... ' - " .. - . ' 026 .... . ... _. - .. .. , ~ ~.- - . ... ..... .. . . ei:cslatsd II: II I. assignment of the mortgage because the Plaintiff is not a party to the contJa'ct and she - I I is not a third party beneficiary. See, Ira G. Steffy & Son v. Citizens Banis. 1 A.3d 278 {Pa. Super. 2010). . Defendanis cite .. lilany of cases to support 1heir argument. Notab~. 1he Court observed In Souders v. Bank of America, 2012 Wl 7009007 (M.D. Pa. Dec. 6, 2012). U[i}t is well~tablished that a borrower (in this case, Plaintiff) does not have standing to challenge the validity of mortgage assIgnments. because, according to 6A C.J.S. Assignments § 132, 'the only interest or right which an obligor or a clai instrument of asslg nment Is to insure him or has in the hersef that he or she wnt not the same claim twice .... 6A C.J.S. Assignments § 132~ (citations omitted). The Court agrees that the praintiff does not have standing to com lain of the validity of the assignment of the mortgage. Therefore, Defendanfs preliminary objections to Court 2 are sustained. 027 ".... ,. _. . .. ... . .. ,._- ..- ., . _.... _.. _... -. - CireUiaMa 1 2109} 26 14 M.5I , is' , . IN THE COURT OF COMMON PLEAS OF BEAVER COUNTY PENNSYLVANIA CIVIL DIVISION MARY M. EATON. fIkJa Mary M. Campbell Plaintiff, vs. No. 10939-2013 BANK OF AMERICA and U.S. Bank National Association, 8S Successor Trustee to Bank of America, NA, as Trustee ·forthe Merrill Lynch First Frankfin Mortgage Loan . Trust. Mortgage Loan Aliset-Backed Certificates. Series 2007-4 Defendants. D. KUNSELMAN, J. FEBRUARY 4,' 014 ORDER OF COURT NOW, 1his 'f~ay of February. 2014, upon consideration of 1 foregoing Preliminary Objections, it is 'hereby ORDERED that the Preliminary Obj . ions to the Complaint are sustained, and the Complaint is dismissed In its entirety. BV THE COURT: 028

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