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[U] JP Morgan Chase Bank, N.A. v. Thrower

Superior Court of Pennsylvania

February 28, 2014

JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF ABFS MORTGAGE LOAN TRUST 2001-2, MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2001-2, Appellee
v.
MARLENE THROWER, Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Order entered February 11, 2011, Court of Common Pleas, Allegheny County, Civil Division at No. GD 2005-2907

BEFORE: MUSMANNO, DONOHUE and COLVILLE [*], JJ.

MEMORANDUM

DONOHUE, J.

Appellant, Marlene Thrower ("Thrower"), appeals form the trial court's order denying her "Verified Emergency Petition to Strike Void Default Judgment Entered Without Jurisdiction" (hereinafter, the "Petition to Strike"). This Court originally decided this case by a memorandum decision dated January 30, 2012, reversing the trial court's order and remanding the case with instructions to strike the judgment and dismiss without prejudice the complaint in foreclosure of Appellee JP Morgan Chase Bank, N.A. ("Chase"). On January 3, 2014, subsequent to its decision in Beneficial Consumer Discount Co. v. Vukman, __ Pa. __, 77 A.3d 547 (2013), our Supreme Court vacated this Court's memorandum decision and remanded the case to this Court for consideration of Thrower's non-jurisdictional issues (previously unaddressed). After careful review, on remand we affirm the trial court's order denying the Petition to Strike.

In our January 30, 2012 memorandum decision, we summarized the procedural background of this case until that time as follows:

In November of 2005, [JP Morgan Chase Bank, N.A. ('Chase')] filed a complaint in mortgage foreclosure against [Thrower]. According to the complaint, [Thrower] owns a home subject to a mortgage. The complaint lists as the mortgagee 'American Business Mortgage Services, Inc.' The mortgagee assigned the mortgage to [Chase]. [Chase] averred that [Thrower's] mortgage was in default due to [Thrower's] failure to pay her monthly mortgage costs.
In July of 2006, a default judgment was entered in favor of [Chase]. [Thrower] eventually filed a document which she entitled [the Petition to Strike]. The trial court denied the petition, and [Thrower] appealed to this Court. In a memorandum opinion, this Court concluded that, in denying [Thrower's] petition, the trial court failed to consider all of the arguments [she] raised in her petition. The Court, therefore, vacated the trial court's order and remanded the matter in order to allow that court to consider [Thrower's] petition in full.
On remand, the trial court entertained arguments regarding [Thrower's] petition. Thereafter, the [trial] court again denied [Thrower's] petition. [Thrower] timely filed a notice of appeal.

JP Morgan Chase Bank, N.A. v. Thrower, 347 WDA 2011, at 1-2 (Pa. Super. January 30, 2012) (unpublished memorandum).

On appeal, Thrower raised the following three issues for our review and consideration:

I. Whether [Chase's] Act 91 notice contained the statutory mandated notice contents that must be provided [Thrower] as a pre-condition to filing a foreclosure complaint? Is the default judgment void for lack of jurisdiction when:
i. The Act 91 notice written by the Pennsylvania Housing Finance Agency (PHFA), a public corporation, and sent by the Servicer ("OCWEN") to [Thrower], failed to advise her of her right to meet with her lender in derogation of Act 91.
ii. The Act 91 notice sent by the Servicer to [Thrower] lacked the statutorily mandated information that [Chase] was required to provide [Thrower] about how to contact a real conciliatory agency.
iii. The Act 91 notice sent by the Servicer to [Thrower], provided [Thrower] less than 30 days' notice before [Chase] filed its foreclosure complaint. The [c]ourt lacked jurisdiction because [Chase] must provide [Thrower] at least 30 days advance notice before filing a foreclosure complaint, and the [c]ourt lacks jurisdiction until this pre-condition is satisfied.
II. Whether [Chase] has standing to maintain a foreclosure action without initially pleading and thereafter demonstrating, before the time of the default judgment, that it is the owner of the note?
III. Whether the prothonotary, a non-judicial branch of the Commonwealth, lacks judicial power to enter a judgment for unliquidated damages and therefore the default judgment here entered by the prothonotary, not the [c]ourt, [(]which included unliquidated damages i.e., 'reasonable attorneys' fees[)] was void?

Thrower's Brief at 4.

In our January 30, 2012 memorandum decision, we disposed of the appeal solely on the first issue. We concluded that we were bound by our prior opinions holding that the notice provisions of the Homeowner's Emergency Mortgage Act, 35 P.S. §§ 1680.403 ("Act 91"), are jurisdictional, and that a failure to comply with these requirements deprives courts of subject matter jurisdiction. Id. at 5-6 (citing, inter alia, Phi ladelphia Housing Authority v. Barbour, 592 A.2d 47, 48 (Pa. Super. 1991)). Concluding that Chase's Act 91 notice did not comply with the notice provisions of Act 91, we reversed the trial court's order, holding that the trial court lacked subject matter jurisdiction to enter default judgment in favor of Chase. Id. at 9-10. We remanded the case to the trial court with instructions to enter an order striking the default judgment and dismissing Chase's complaint in foreclosure without prejudice. Id. at 10.

Chase filed a timely petition for allowance of appeal with our Supreme Court, which stayed it pending its resolution of Vukman. In its opinion in Vukman, our Supreme Court overruled prior decisions of this Court (including Barbour), and held that a mortgagee's failure to comply with the statutory notice requirements under Act 91 does not deprive the courts of subject matter jurisdiction to hear the matter. Id. at __, 77 A.3d at 553. By per curium order dated January 3, 2014, the Supreme Court granted Chase's petition for allowance of appeal, vacated our memorandum decision dated January 30, 2012, and remanded the case to this Court for consideration of Thrower's remaining issues on appeal. JP Morgan Chase Bank, N.A. v. Thrower, __ A.3d __, 2014 WL 27963 (Pa. January 3, 2014)

Thrower's remaining two issues on appeal (items II and III listed herein above) both involve non-jurisdictional arguments that the entry of default judgment in favor of Chase was improper. To address these two issues, we must first distinguish between a petition to strike a default judgment and a petition to open a default judgment. In Cintas Corp. v. Lee's Cleaning Services, Inc., 549 Pa. 84, 700 A.2d 915 (1997), our Supreme Court explained the distinction between these two remedies as follows:

A petition to strike a default judgment and a petition to open a default judgment are generally not interchangeable. A petition to strike does not involve the discretion of the court. Instead, it operates as a demurrer to the record. A demurrer admits all well-pleaded facts for the purpose of testing conclusions of law drawn from those facts. Because a petition to strike operates as a demurrer, a court may only look at the facts of record at the time the judgment was entered to decide if the record supports the judgment. A petition to strike can only be granted if a fatal defect appears on the record.
In contrast, a petition to open a judgment is an appeal to the equitable powers of the court. It is committed to the sound discretion of the hearing court and will not be disturbed absent a manifest abuse of that discretion. Ordinarily, if a petition to open a judgment is to be successful, it must meet the following test: (1) the petition to open must be promptly filed; (2) the failure to appear or file a timely answer must be excused; and (3) the party seeking to open the judgment must show a meritorious defense.... In making this determination, a court can consider facts not before it at the time the judgment was entered. Thus, if a party seeks to challenge the truth of factual averments in the record at the time judgment was entered, then the party should pursue a petition to open the judgment, not a petition to strike the judgment.

Id. at 93-94; 700 A.2d at 918-919 (internal citations omitted).

Although titled as a petition to strike ("Verified Emergency Petition to Strike Void Default Judgment Entered Without Jurisdiction"), in her appellate brief Thrower contends that her Petition to Strike "implicates aspects of both a petition to strike a default judgment and a petition to open a default judgment." Thrower's Brief at 3 (quoting Erie Ins. Co. v. Bullard, 839 A.2d 383, 386 (Pa. Super. 2003)). To the extent that the Petition to Strike may also be considered as a petition to open, however, it clearly failed to satisfy the basic requirements for such a remedy. The default judgment at issue here was entered on November 27, 2006 and Thrower did not file the Petition to Strike until August 14, 2008, almost two years later. As such, the Petition to Strike was not promptly filed, and it includes no reasonable explanation or excuse for her failure to appear and file an answer to Chase's complaint in foreclosure.

To the contrary, in the Petition to Strike, Thrower essentially admits that it was not timely filed and that she has no reasonable excuse for the failure to answer, arguing only that these requirements do not apply because a lack of jurisdiction may be raised at any time. Petition to Strike, 8/14/2008, at 1 n.1. Even if a petition to open a default judgment need not be promptly filed on a matter of subject matter jurisdiction, [1] this argument clearly does not apply to Thrower's second and third issues on appeal here (neither of which involves jurisdictional challenges). Thrower has cited to no authority suggesting that a motion to open a default judgment on non-jurisdictional grounds is not subject to the basic requirements of prompt filing and excuse for failure to appear and answer. As such, we conclude that the trial court did not err in refusing to open Chase's default judgment based upon Thrower's second and third issues. Thus, in addressing these two issues, we will limit our considerations to whether the trial court erred in refusing to strike Chase's default judgment.

Thrower's second issue on appeal challenging the entry of the default judgment attacks the sufficiency of Chase's pleadings in its complaint in foreclosure. In particular, Thrower argues that Chase lacked standing to file its mortgage foreclosure action against her because Chase is not the real party in interest. Thrower's Brief at 26. According to Thrower, "the note owner, not the mortgagee, is the party with the legally enforceable interest in the mortgage property that secures the note." Id. at 27. Thrower alleges that because Chase did not plead or demonstrate that it owned the note, it lacked standing to maintain an action in mortgage foreclosure against her. Id. at 27-28.

We disagree. The real party in interest in a mortgage foreclosure action is the mortgagee. Wells Fargo Bank, N.A., v. Lupori, 8 A.3d 919, 922 n.3 (Pa. Super. 2010) (citing US Bank N.A. v. Mallory, 982 A.2d 986, 994 (Pa. Super. 2009)). It is, therefore, sufficient for the plaintiff to allege in a mortgage foreclosure complaint that the plaintiff is the owner of the mortgage and/or has been assigned the mortgage from the original owner. See Lupori, 8 A.3d at 922 (denial of petition to strike was improper because the bank's mortgage foreclosure complaint failed to allege that it was the assignee of the mortgage or that the Bank owned the mortgage); Mallory, 982 A.2d at 994 (finding no error in denying the petition to strike where the bank averred that it was the owner of the mortgage and that it was the assignee of the mortgage).

In this case, Chase averred the following in its complaint in foreclosure:

Plaintiff, JPMorgan Chase Bank, N.A., as Trustee for the registered holders of ABFS Mortgage Loan Trust 2001-2, Mortgage Pass-Through Certificates, Series 2001-2, the address of which is, 1665 Palm Beach Lakes, Suite 105, West Palm Beach, FL 33401, brings this action of mortgage foreclosure upon the following cause of action:
1. (a) Parties to Mortgage:
Mortgagee: American Business Mortgage Services, Inc Mortgagor(s): Marlene Thrower
(b) Date of Mortgage: April 15, 2001
(c) Place and Date of Record of Mortgage:
Recorder of Deeds Allegheny County Mortgage Book 20778 Page 273 Date: April 27, 2001
The Mortgage is a matter of public record and is incorporated herein as provided by Pa. R.C.P. No. 1019(g). A true and correct copy of the Mortgage is attached hereto and marked as Exhibit 'A' and incorporated herein by reference.
(d) Assignments:
Assignor: American Business Mortgage Services, Inc Assignee: JPMorgan Chase Bank, N.A., as Trustee for the registered holders of ABFS Mortgage Loan Trust 2001-2, Mortgage Pass-Through Certificates, Series 2001-2 Date of Assignment: As Recorded Recording Date: As Recorded
2. Plaintiff is, therefore, either the original Mortgagee named in the Mortgage, the legal successor in interest to the original Mortgagee, or is the present holder of the mortgage by virtue of the above-described Assignment(s).

Foreclosure Complaint, 11/4/05, at ¶¶ 1-2. In our view, Chase clearly alleged that it was both the legal owner of the mortgage and the assignee of the mortgage from the original owner. Thus, we find no merit to Thrower's second issue on appeal.

For her third issue on appeal, Thrower contends that Chase's default judgment should be stricken because the prothonotary had no authority to enter a default judgment in a residential mortgage foreclosure action containing an award of attorneys' fees. Thrower's Brief at 28. Thrower argues that Rule 1037(b) of the Pennsylvania Rules of Civil Procedure provides that when entering a default judgment, a prothonotary may enter an amount of damages only if said damages are a sum certain or can be made certain by computation. Pa.R.C.P. 1037(b)(1). Where damages are not a sum certain or otherwise calculable by computation, Rule 1037(b) provides that "the damages shall be assessed at a trial at which the issues shall be limited to the amount of the damages." Id. Here, Thrower argues that the amount of attorneys' fees was neither a sum certain nor calculable by computation, since pursuant to section 406(2) of the Loan Interest and Protection Law ("Act 6"), 41 P.S. § 101 et seq., a residential mortgage lender may only charge attorney's fees that are "reasonable and actually incurred, " which amount must be assessed by the trial court after the presentation of evidence. Thrower's Brief at 28 (citing 41 P.S. § 406(2)). Thus, Thrower contends that the prothonotary exceeded its authority under Rule 1037(b)(1) by entering a default judgment that included attorneys' fees to a residential mortgage lender.

In Maiorana v. Farmers and Merchants Bank, 466 A.2d 188 (Pa. Super. 1983), a prothonotary, pursuant to directions in the praecipe, entered a default judgment in a contract action in the amount of $225, 000, even though the plaintiff's complaint did not specify any particular amount of loss or injury. Id. at 190. This Court concluded that the prothonotary's action clearly exceeded its authority under Rule 1037, since the complaint did not establish an amount of damages in a sum certain or that could be made certain by calculation. Id. We also determined, however, that a petition to strike the judgment was not an appropriate remedy for this violation of Rule 1037, since "it does not appear from the record that the judgment is irregular on its face and [thus] we cannot agree that it should be stricken." Id. at 191. Instead, we held that the proper remedy was for the trial court to grant a motion to open the judgment, and we affirmed the trial court's decision on that basis. Id.

Our decision in Maiorana remains good law in this Commonwealth and governs in this situation. Thrower makes a compelling argument that the prothonotary exceeded its authority under Rule 1037 by entering a default judgment in this case that includes an award of attorneys' fees. The proper remedy, however, was a petition to open the judgment. Even to the extent that Thrower's Petition to Strike could also be considered a petition to open (as she now argues), it was not timely filed and offered no reasonable excuse for her failure to appear and answer Chase's complaint in foreclosure. Accordingly, we cannot conclude that the trial court erred in denying the Petition to Strike with respect to Thrower's third issue on appeal.

Order affirmed.

Judgment Entered.


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