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Wilmington Trust v. Unknown Heirs

Superior Court of Pennsylvania

September 19, 2019


          Appeal from the Order Entered March 9, 2017 In the Court of Common Pleas of Luzerne County Civil Division at No(s): 2985 of 2012

          BEFORE: BOWES, J., DUBOW, J., and MUSMANNO, J.


          BOWES, J.

         James M. Brolley appeals from the March 9, 2017 in rem judgment in mortgage foreclosure entered in favor of Wilmington Trust, National Association, as Trustee for VM Trust Series 3, a Delaware Statutory Trust ("Mortgagee"). We vacate the judgment and dismiss the action with prejudice.

         The following facts are relevant to our review. On February 7, 2003, Helen Brolley executed a mortgage and note in the principal amount of $65,000, in favor of Wells Fargo Home Mortgage, Inc., on her property at 150 Laurel Drive, Mountain Top, Pennsylvania 18707 ("the Property"). The mortgage was duly recorded with the Recorder of Deeds of Luzerne County. The note provided for interest at an annual rate of 8.250%. On November 13, 2003, she transferred her interest to her son via deed, which was duly recorded. Helen Brolley died on March 15, 2006.

         It is undisputed that no monthly payments of principal and interest were made on or after April 1, 2006. On August 8, 2007, Wells Fargo filed a complaint in mortgage foreclosure against James Brolley, seeking the amount owing from April 1, 2006, and each month thereafter. That action was docketed at No. 8805 of 2007. By order dated September 9, 2009, an in rem summary judgment was entered in favor of Wells Fargo and against Mr. Brolley.[1] That judgment was subsequently amended on September 27, 2010, to $99,263.92 plus interest from August 6, 2010 through the date of sale at six percent per year. There was no sale of the Property.

         On October 28, 2011, Residential Credit Solutions, Inc., the servicer of the mortgage, sent notice of intent to foreclose on the mortgage addressed to the Estate of Helen Brolley at the Property. That notice recited that the mortgage was in serious default, no monthly payment having been made since April 1, 2006. On March 12, 2012, EMC Mortgage LLC commenced the instant action at No. 2985 of 2012, by filing a complaint in mortgage foreclosure. Mr. Brolley filed a pro se answer to the complaint in which he pled that, "a legal judgment has already been rendered in this matter by Judge Peter Paul Olszewski." Answer in Mortgage Foreclosure, 5/17/12, at 1.

         On April 22, 2013, EMC Mortgage Corporation filed a praecipe to vacate and discontinue the prior judgment at No. 8805 of 2007 "without prejudice," and thereafter the Mortgagee herein filed two motions for summary judgment, which the court denied. After a bench trial, the court entered judgment in favor of EMC Mortgage LLC.

         Mr. Brolley filed post-trial motions, which were denied, and a timely appeal to this Court. In his Rule 1925(b) statement, he asserted that the trial court erred in failing to consider the affirmative defenses of collateral estoppel and res judicata that he raised in his pro se answer. The trial court, in its Rule 1925(a) opinion, found the defenses waived as Mr. Brolley failed to plead them as new matter pursuant to Pa.R.C.P. 1030(a). This Court disagreed, vacated the judgment, and remanded the matter to the trial court "for consideration on the merits of [Mr. Brolley's] affirmative defenses." EMC Mortgage, LLC v. Unknown Heirs, 153 A.3d 1110 (Pa.Super. 2016) (unpublished memorandum at 4).

         Following remand, the trial court held a status conference. It issued an order directing the parties to brief the legal issues and ordering that "the transcript, evidence, and stipulations of March 31, 2015" be made part of the new record. Order, 7/13/16, at 1. The order further stated that if the parties subsequently determined that they needed to present additional evidence, they could either stipulate to that evidence or request a phone conference with the court. Id.

         Following submission of briefs and argument, the trial court ruled that the defense of res judicata applied to the prior judgment in mortgage foreclosure at No. 8805 of 2007, but not to subsequent defaults under the mortgage. Order, 12/8/16. That same day, the court issued a trial management order scheduling a non-jury trial for February 3, 2017, and ordering the parties to submit witness lists, expert reports, exhibit lists, proposed findings of fact and conclusions of law, and designating portions of depositions that they intended to offer.

         Mr. Brolley filed a motion for reconsideration, alleging that the trial court erred in not finding the action barred based on res judicata and collateral estoppel, as well as the lack of Act 91 notice. The court ruled that the motion was premature as it had not ruled on the specific dates of alleged defaults, and that the arguments were more appropriate for the scheduled trial. See Order, 12/29/16, at 1. The parties complied with the pretrial order, and the caption was corrected to reflect EMC Mortgage LLC's earlier assignment of the mortgage to Wilmington Trust, National Association, not in its Individual Capacity, but solely as Trustee for VM Trust Series 3, a Delaware Statutory Trust.

         Trial proceeded on February 3, 2017, although Mr. Brolley was not present. N.T., Bench Trial, 2/3/17, at 7. Mortgagee called Kimberly Harmstad from Shellpoint Mortgage Servicing, the servicer of the loan at issue. Id. at 8. She testified regarding the preparation of a document setting forth the payment history for the subject loan post-judgment on September 1, 2010, which was a screenshot marked and admitted as Plaintiff's Exhibit 9. It showed that the principal balance as of that date would be $59,859.75 as of the new default date, for a total payoff of $128,313.64. Mr. Brolley offered no testimony. Counsel argued, however, that as a result of the res judicata ruling, the Act 91 notice included with the instant complaint provided incorrect amounts, and was thus defective. Id. at 29-30. He urged that the complaint be dismissed on that basis as well.

         Shortly after the conclusion of the trial, the court issued an order directing Mr. Brolley to brief his argument that Mortgagee had failed to comply with the notice requirements of Act 91 in its October 28, 2011 notice. Order, 2/8/17, at 1. Mr. Brolley complied, representing therein that although he received Act 91 notice on or about October 28, 2011, the Mortgagee failed to adduce any evidence that a proper Act 91 notice was sent with the correct deficiencies and amounts remaining on the mortgage after the court ruled that res ...

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