Court Opinion

ID: 4280480
Source: CourtListenerOpinion
Date Created: 2018-06-01 16:45:50.805555+00
Date Added: 2024-06-11T14:34:48.335634
License: Public Domain

J-A30019-17

                                 2018 Pa. Super. 141

EDELLA JOHNSON (A/K/A EDELLA               :    IN THE SUPERIOR COURT OF
ROBINSON A/K/A EDELLA ROBINSON             :         PENNSYLVANIA
JOHNSON), ERIC JOHNSON,                    :
INDIVIDUALLY AND ON BEHALF OF              :
OTHER SIMILARLY SITUATED                   :
FORMER AND CURRENT                         :
HOMEOWNERS IN PENNSYLVANIA.                :
                                           :
                       Appellants          :    No. 359 WDA 2017
                                           :
                                           :
               v.                          :
                                           :
                                           :
PHELAN HALLINAN & SCHMIEG, LLP             :

                  Appeal from the Order February 6, 2017
 In the Court of Common Pleas of Allegheny County Civil Division at No(s):
                              GD-12-005395

BEFORE: BOWES, J., STABILE, J., and FORD ELLIOTT, P.J.E.

OPINION BY BOWES, J.:                                     FILED JUNE 1, 2018

     EdElla Johnson (a/k/a EdElla Robinson a/k/a EdElla Robinson Johnson)

and Eric Johnson, individually and on behalf of other similarly-situated

former   and        current   homeowners   in   Pennsylvania   (collectively   “the

Johnsons”), appeal from the February 6, 2017 order sustaining the

preliminary objections in the nature of a demurrer filed by Phelan Hallinan &

Schmieg, LLP (“Phelan”). We affirm.

     The certified record reveals the following.        On May 23, 2002, the

Johnsons executed a mortgage and associated promissory note in the
J-A30019-17

amount of $74,000. The mortgage was secured by property located at 636

Collins Avenue, Pittsburgh, Allegheny County.1       That instrument was duly

delivered, recorded, and subsequently assigned to the Bank of New York

Mellon Trust Company (“Mellon”).

       In December 2008, the Johnsons defaulted on the mortgage.           On

March 31, 2009, Mellon, through its counsel, Phelan, filed a complaint in

mortgage foreclosure. In the complaint, Mellon asserted, inter alia, that the

Johnsons owed $1,300 in attorney fees. After a non-jury trial, the trial court

found in favor of Mellon.        The Johnsons appealed that decision, and this

Court affirmed.      Bank of New York Mellon Trust Co., Nat’l Ass’n v.

Johnson, 170 A.3d 1261 (Pa.Super. 2017) (unpublished memorandum).

       On March 23, 2012, while the foreclosure action was pending, the

Johnsons initiated the instant class action against Phelan.           In their

complaint, the Johnsons alleged, inter alia, that Phelan violated section 406

of the Pennsylvania Loan Interest and Protection Law, 41 P.S. §§ 101 et seq.

(“Act 6”), by pursuing and obtaining an award in the mortgage foreclosure

____________________________________________

1The note was executed solely by Mr. Johnson. The mortgage was executed
by both Mr. and Mrs. Johnson.

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action of attorney fees that were not actually incurred.2       The Johnsons

argued that the same harm had been suffered by other former and current

Pennsylvania homeowners against whom Phelan had filed foreclosure

complaints. In reliance on section 502 of Act 6,3 which provides remedies

____________________________________________

2 Article IV of Act 6 contains the statute’s protective provisions. Section 406
of the Act limits the attorney’s fees that a “residential mortgage lender” may
recover from a “residential mortgage debtor,” and provides as follows:

       With regard to residential mortgages, no residential mortgage
       lender shall contract for or receive attorney’s fees from a
       residential mortgage debtor except as follows:

       (1)    Reasonable fees for services included in actual settlement
              costs.

       (2)    Upon commencement of foreclosure or other legal action
              with respect to a residential mortgage, attorney’s fees
              which are reasonable and actually incurred by the
              residential mortgage lender may be charged to the
              residential mortgage debtor.

       (3)    Prior to commencement of foreclosure or other legal action
              attorneys’ fees which are reasonable and actually incurred
              not in excess of fifty dollars ($50) provided that no
              attorneys’ fees may be charged for legal expenses incurred
              prior to or during the thirty-day notice period provided in
              section 403 of this act.

41 P.S. § 406.

3 Article V of Act 6 provides remedies to “residential mortgage debtors” who
have been charged excessive costs and fees. Section 502 of the Act
provides, in relevant part: “a person who . . . has paid charges prohibited or
in excess of those allowed by this act . . . may recover triple the amount of
such excess . . . charges in a suit against the person who has collected such
excess . . . charges . . ..” 41 P.S. § 502.

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for violations of section 406, the Johnsons claimed that they and other

similarly-situated mortgagors were entitled to treble damages for excess

attorney fees assessed by Phelan. Phelan filed preliminary objections in the

nature of a demurrer, contending that section 406 applies solely to

“residential mortgage lenders,” and not to their foreclosure counsel. On May

2, 2012, the trial court sustained Phelan’s preliminary objections, and

consolidated the matter for appeal with another case raising similar issues,

Glover v. Udren Law Offices, P.C., docketed in the Allegheny County

Court of Common Pleas at GD-11-18015.

      In the consolidated appeal, this Court affirmed the trial court’s order,

and determined that a “residential mortgage debtor” can only maintain a

cause of action for a violation of section 406 against a “residential mortgage

lender,” and not against their foreclosure counsel.   Glover v. Udren Law

Offices, P.C., 92 A.2d 24, 28 (Pa.Super. 2014).           Subsequently, the

Pennsylvania Supreme Court reversed, holding that foreclosure counsel

constituted a “person” for purposes of section 502, and, thus, “a borrower

may recover under [s]ection 502 from any entity — not solely the residential

mortgage lender — that collects excessive attorney’s fees in connection with

a foreclosure.”   Glover v. Udren Law Offices, P.C., 139 A.3d 195, 200

(Pa. 2016). However, the High Court offered no opinion regarding the term

“collected,” as used in section 502, and remanded the matter for further

proceedings. Id. at 201.

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       On remand, Phelan again filed preliminary objections in the nature of a

demurrer. However, for the first time, it asserted that the Johnsons were

barred from pursuing relief under Act 6 because their $74,000 mortgage did

not qualify as a “residential mortgage” under section 101 of the Act, as their

mortgage exceeded the $50,000 statutory limit in effect at the time it was

executed in 2002.4       The Johnson’s maintained that the court should apply

the version of section 101 in effect in 2009, at the time the foreclosure

action was commenced, which raised the limit for a “residential mortgage

from $50,000 to $217,873.5 On February 6, 2017, the trial court sustained

Phelan’s preliminary objections on the basis that the version of section 101

in effect at the time the mortgage was executed was controlling, and the

Johnsons were precluded from bringing an action against Phelan under Act 6
____________________________________________

4 Section 101 of Act 6 provides all of the definitions through which Act 6 is
interpreted. In 2002, when the Johnsons executed their mortgage, section
101 defined a “residential mortgage,” in pertinent part, as “an obligation to
pay a sum of money in an original bona fide principal amount of fifty
thousand dollars ($50,000) or less, evidenced by a security document and
secured by a lien upon property located in this Commonwealth[.]” 41 P.S.
§ 101 (as amended April 6, 1979, effective until September 7, 2008).

5 In 2008, section 101 was amended, and the term “residential mortgage”
was redefined as “an obligation to pay a sum of money in an original bona
fide principal amount of the base figure or less, evidenced by a security
document and secured by a lien upon property located in this
Commonwealth[.]” 41 P.S. § 101 (as amended September 8, 2008). The
amended statute defined “base figure” as “two hundred seventeen thousand
eight hundred seventy-three dollars ($217,873), as adjusted annually for
inflation by the department through notice published in the Pennsylvania
Bulletin.” Id.

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because their mortgage was not a “residential mortgage” under the Act. In

so finding, the trial court determined that, when the legislature amended

section 101 in 2008, it did not manifest an intent that the amendment apply

retroactively.     See Trial Court Opinion, 2/6/17, at 2.     The trial court

observed that this conclusion was supported by the reasoning employed in

two federal district court cases, Murphy v. Bank of America, N.A., 2016
WL 1020969 (E.D. Pa., March 14, 2016),6 and Trunzo v. Citi Mortg., 43
F. Supp. 3d 517 (W.D. Pa. 2014),7 which it found persuasive. See Trial Court

Opinion, 2/6/17, at 2.

       The Johnsons filed a timely notice of appeal.   The trial court did not

order the Johnsons to file a Rule 1925(b) concise statement of errors

complained of on appeal.          However, the court authored a Rule 1925(a)

opinion relying on the reasoning it employed in its February 6, 2017 opinion

and order. This matter is now ready for our review.

____________________________________________

6 In Murphy, the United States District Court for the Eastern District of
Pennsylvania held that a mortgage executed in 2006 for $53,200 was not a
“residential mortgage” under Act 6, because the 2008 amendment to the Act
did not apply retroactively. In so ruling, the district court determined that
because “the Pennsylvania General Assembly made no clear and manifest
intention to make the 2008 Act 6 amendments retroactive, we must apply
the definition of ‘residential mortgage’ as it existed in 2006.” Murphy,
supra at *5-7.

7 In Trunzo, the United States District Court for the Western District of
Pennsylvania held that a mortgage executed in 2007 for $69,900 was not a
“residential mortgage” under Act 6, because the 2008 amendment to the Act
did not apply retroactively. Trunzo, supra at 535-37.

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       The Johnsons raise five questions for our consideration:

       1. Did the prior decisions of the Pennsylvania appellate courts,
          and the Pennsylvania agencies that were delegated by the
          Legislature to regulate Act 6, as amended in 2008[,]
          erroneous[ly] interpreted [sic] the statutory language of new
          Act 6?

       2. Did the lower court err when it concluded that a district court
          decision discussing considerably different issues under Act 6
          enacted in 1974, as amended, with respect to quite different
          loan transactions[,] constitute error as a matter of law?

       3. Did the lower court err in holding that the general rule that
          contracts cannot be regulated apply [sic] to the contracts of
          highly regulated banks engaged in mortgage financing?

       4. Did the lower court err in holding that the general rule that
          the attorney fee terms of a contract cannot be regulated
          although the Pennsylvania Supreme Court held that, because
          an attorney has no vested rights in the attorney fee terms,
          they can be regulated?

       5. Did the lower court err when it failed to follow Supreme
          [C]ourt’s earlier mandate and remand in [Glover, supra]?

Appellants’ brief at 2.8

       Our scope and standard of review following a trial court’s ruling on

preliminary objections in the nature of a demurrer is well settled:

             Our standard of review of an order of the trial court
       overruling or [sustaining] preliminary objections is to determine
____________________________________________

8 Notably, the issues raised in the Johnsons’ statement of the questions
involved do not correspond to the headings included in their brief.
Moreover, the fifth issue identified in the statement is not addressed in their
brief. Therefore, it is waived on appeal. See Pa.R.A.P. 2119(a) (stating that
the parties’ briefs must include a discussion of each question raised on
appeal and a citation of authorities as are deemed pertinent).

                                           -7-
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      whether the trial court committed an error of law.        When
      considering the appropriateness of a ruling on preliminary
      objections, the appellate court must apply the same standard as
      the trial court.

             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
      in which it is clear and free from doubt that the pleader will be
      unable to prove facts legally sufficient to establish the right to
      relief. If any doubt exists as to whether a demurrer should be
      sustained, it should be resolved in favor of overruling the
      preliminary objections.

Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa.Super. 2011) (internal

citation omitted).

      Moreover, this matter requires us to interpret certain provisions of Act

6. As statutory interpretation is a question of law, our standard of review is

de novo and our scope of review is plenary. See e.g., Roverano v. John

Crane, Inc., 177 A.3d 892, 903 (Pa.Super. 2017).

      The Johnsons contend that the trial court erred by applying the version

of section 101 in effect at the time their mortgage was executed in 2002,

rather than the version of section 101 in effect at the time the foreclosure

action was initiated in 2009. Because the prior version of section 101 had

been repealed and replaced, they claim the trial court was required to apply

the amended terms of section 101. They further claim that nothing in the

2008 amendment indicates an intent by the legislature that its terms should

not apply retroactively to mortgages executed prior to its effective date, and

                                     -8-
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maintain that the absence of such language indicates an intention that the

2008 amendment apply to all foreclosure actions upon its effective date.

Appellant’s brief at 13-14.

      In support of their position, the Johnsons highlight the protective

provisions contained in sections 403, 404, 406, and 407 of Act 6, which

utilize the term “residential mortgage” in concert with the commencement of

a foreclosure action, and claim that these provisions suggest that the

effective date of the amendment need only precede the commencement of

foreclosure proceedings. They further note that section 405, which prohibits

prepayment penalties, specifically exempts mortgages entered into prior to

the effective date of the amendment, and provides “[r]esidential mortgage

obligations contracted for on or after the effective date of this act may

be prepaid without penalty or other charge for such prepayment at any time

before the end of the period of the loan.” Appellants’ brief at 15 (citing 41

P.S. § 405) (emphasis in original). The Johnsons assert that the inclusion of

this language in section 405 supports their argument that the legislature

could have included provisions explicitly prohibiting retroactive application in

other sections of the Act, such as section 406, but declined to do so.

      The Johnsons also challenge the trial court’s reliance on Murphy,

supra, and Trunzo, supra, on the basis that those cases applied federal

                                     -9-
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decisional law that did not involve foreclosure actions.9         The Johnsons

further claim that the amendment to section 101 should apply retroactively

because it does not affect any substantive or contractual rights. Finally, the

Johnsons argue that the trial court’s interpretation of Act 6 fails to effectuate

the Act’s remedial purpose, and “would leave an enormous number of

homeowners without protection under Act 6.” Appellants’ brief at 24.

        The central question presented in this dispute is whether the trial court

should have construed Act 6 by employing the definition of “residential

mortgage” provided by the version of section 101 in effect at the time the

Johnsons executed their mortgage, or the version of section 101 in effect at

the time foreclosure proceedings were initiated. Under the version in effect

in 2002, the Johnsons’ $74,000 mortgage exceeded the $50,000 limit

imposed by Act 6, and hence did not constitute a “residential mortgage”

subject to the Act’s provisions. Conversely, if the 2008 version controls, the

Johnsons’ $74,000 mortgage qualifies as a “residential mortgage” under the

increased $217,873 limit of Act 6, thereby permitting the Johnsons to pursue

a cause of action against Phelan under section 406 for excessive attorney’s

fees.

____________________________________________

9 The Johnsons take issue with the district courts’ reliance on In re Harris-
Penna, 446 B.R. 178 (Bankr.E.D.Pa. 2009), and In re Grayboyes, 2006
WL 437546 (E.D.Pa. Feb. 22, 2006), for the proposition that, in determining
whether Act 6 applies, courts look to the principal amount set at the time
the mortgage transaction took place.

                                          - 10 -
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      Initially, we turn to the Statutory Construction Act for guidance. When

conducting     statutory   interpretation,    “our   object   is   to   ascertain   the

Legislature’s intent, giving effect to all of the relevant statutory provisions.”

Glover, supra at 199 (citing 1 Pa.C.S. § 1921(a)). “Generally, a statute’s

plain language provides the best indication of legislative intent.” Roverano,

supra at 903 (citation omitted).       However, we are also mindful that the

Pennsylvania legislature has expressly prohibited retroactive application of

statutory provisions unless it has clearly and manifestly provided for such

application.   See 1 Pa.C.S. § 1926 (“No statute shall be construed to be

retroactive unless clearly and manifestly so intended by the General

Assembly.”). Additionally, the legislature has clarified that amendments to

statutory provisions do not become effective until the date of their

enactment:

      Whenever a section or part of a statute is amended, the
      amendment shall be construed as merging into the original
      statute, become a part thereof, and replace the part amended,
      and the remainder of the original statute and the amendment
      shall be read together and viewed as one statute passed at one
      time; but the portions of the statute which were not altered by
      the amendment shall be construed as effective from the time of
      their original enactment, and the new provisions shall be
      construed as effective only from the date when the
      amendment became effective.

1 Pa.C.S. § 1953 (emphasis added).              Thus, Pennsylvania recognizes a

presumption against retroactive application of laws amending statutes.

      Notwithstanding      the   general     rule,   a   statute   may    be   applied

retroactively where it is merely procedural and does not alter any

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substantive rights. See Morabito’s Auto Sales v. Commonwealth Dep’t

of Transp., 715 A.2d 384, 386 (Pa. 1998). “In general terms, substantive

laws are those which affect rights, while procedural laws are those which

address methods by which rights are enforced.                 The demarcation between

substantive and procedural laws is, however, at times shadowy and difficult

to determine.”      Id. (internal citations omitted).           “A substantive right is

implicated when the retroactive application of a statute imposes new legal

burdens on past transactions.”           Giant Eagle, Inc. v. Workers' Comp.

Appeal Bd. (Weigand), 764 A.2d 663, 666 (Pa.Cmwlth. 2000) (citation

omitted).10     Conversely, “procedural statutes establish the method for

enforcing a right, but have no bearing on whether a claimant has a legal

entitlement to relief under the facts as they exist in the particular case.” Id.

(citation omitted).

       Additionally,    the   contracts        clauses   of   the   United   States   and

Pennsylvania Constitutions protect contracts freely entered into by the

parties thereto from subsequent legislative impairment or abridgment. First

Nat’l Bank of Pennsylvania v. Flanagan, 528 A.2d 134, 137 (Pa. 1987).

As our Supreme Court has noted:

       Any law which enlarges, abridges, or in any manner changes the
       intention of the parties as evidenced by their contract, imposing
____________________________________________

10 Although decisions by the Commonwealth Court are not binding on this
Court, they may be persuasive. See Estate of Brown, 30 A.3d 1200, 1204
n.2 (Pa.Super. 2011).

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      conditions not expressed therein or dispensing with the
      performance of those which are a part of it, impairs its
      obligation, whether the law affects the validity, construction,
      duration, or enforcement of the contract[.]

            ....

      The amount of impairment of the substantive obligation of a
      contract is immaterial. Any deviation from its terms, however
      slight, falls within the meaning of the constitution[.]

Beaver County Building and Loan Ass'n. v. Winowich, 187 A. 481, 485

(Pa. 1936) (citations omitted) (emphasis in original).

      Here, under the version of section 101 in effect when the Johnsons

executed their mortgage in 2002, a “residential mortgage” was defined, in

pertinent part, as “an obligation to pay a sum of money in an original bona

fide principal amount of fifty thousand dollars ($50,000) or less, evidenced

by a security document and secured by a lien upon property located in this

Commonwealth[.]” 41 P.S. § 101 (as amended April 6, 1979, effective until

September 7, 2008).

      In 2008, section 101 was amended, and the term “residential

mortgage” was redefined as “an obligation to pay a sum of money in an

original bona fide principal amount of the base figure or less, evidenced by a

security document and secured by a lien upon property located in this

Commonwealth[.]” 41 P.S. § 101 (as amended September 8, 2008). The

amended statute defined “base figure” as “two hundred seventeen thousand

eight hundred seventy-three dollars ($217,873), as adjusted annually for

                                    - 13 -
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inflation by the department through notice published in the Pennsylvania

Bulletin.” Id.

      We are mindful that Act 6 is a remedial statute, which should be

liberally construed to effectuate its aims. See Glover, supra at 200 (noting

that Act 6 is a usury law, designed to protect borrowers against improper

mortgage lending practices).      Nevertheless, our review of the 2008

amendment to Act 6 reveals no indication by the General Assembly that the

increased monetary limit for “residential mortgages” was “clearly and

manifestly” intended to apply retroactively to mortgages executed prior to

its effective date. See 1 Pa.C.S. § 1926. Accordingly, section 1953 requires

that we construe the amendment as taking effect on the date selected by

the General Assembly, i.e., September 8, 2008. See 1 Pa.C.S. § 1953.

      While the Johnsons argue that the 2008 amendment to Act 6 should

be applied retroactively because it is merely procedural in nature, and does

not affect substantive or contractual rights, we cannot agree with their

position.   Notably, in 2002 when the Johnsons executed their mortgage,

they were not entitled to the protections afforded by Act 6, as their

mortgage did not qualify as a “residential mortgage.” Therefore, when the

Johnsons’ mortgage was executed in 2002, their mortgage lender was not

subject to the limitations on attorney fees provided by section 406.     Nor

were the Johnsons afforded any of the rights provided by Act 6, including the

right to bring a direct action under section 502, or seek treble damages for

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any excess fees charged. See Glover, supra at 201 (holding that section

502 “specifically creates a cause of action.”).       In our view, these are

substantive rights not contemplated by the parties at the time the mortgage

was executed. Thus, retroactive application of the 2008 amendment would

impose new legal burdens on a past transaction. See Giant Eagle, Inc. v.

Workers'    Comp.    Appeal     Bd.   (Weigand),     supra.    As   the   2008

amendment to section 101 creates legal rights to which the Johnsons were

not entitled at the time they executed their mortgage, we conclude that the

amendment is substantive in nature, and may not be applied retroactively.

     The Johnsons’ reliance on Flanagan, supra, and Ministers and

Missionaries Benefit Board of the American Baptist Churches v.

Goldsworthy, 385 A.2d 358 (Pa.Super. 1978) (overruled by Marra v.

Stocker, 615 A.2d 326 (Pa. 1992)), is misplaced, as those cases support

our determination herein. In Flanagan, our Supreme Court considered two

amendments to section 101 of Act 6.            The first amendment, effective

October 5, 1978, altered the definition of “residential mortgage” in a manner

that excluded business loans.    The second amendment, effective April 6,

1979, restored the definition to its pre-1978 version, which made Act 6

applicable to business loans.    Plaintiffs secured a business loan in March

1979, during the period in which Act 6 did not apply to such loans. Notably,

the 1979 amendment included language which evidenced a specific intent by

the legislature that the amendment should apply retroactively: “This Act

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shall take effect immediately and shall be retroactive to and including

October 5, 1978.”        Flanagan, supra, at 137 (citing 41 P.S. § 101 (as

amended April 6, 1979)). Nevertheless, our Supreme Court ruled that the

amendment, if applied retroactively, would void the agreement of guaranty

securing the loan in question and, therefore, change the intentions of the

parties.    Id. at 138.        On this basis, the Court ruled that retroactive

application of the amendment “violate[d] the contracts clause and is

unconstitutional.” Id.

       The Flanagan Court also rejected the appellant’s argument that the

lender should be estopped from arguing that the amendment did not apply

retroactively because it had complied with certain notice requirements

imposed by the 1979 amendment.                 The High Court ruled that the notice

requirements in the amendment could be applied retroactively because they

were merely procedural in nature.                  Flanagan, supra at 138 (“The

requirement of notice of the lender’s intention to foreclose in § 403 of [Act

6] is . . . a procedural requirement and does not interfere with or deny any

substantive rights.”). Here, we are not dealing with an amendment which

imposes mere notice or disclosure requirements.11 Rather, we a dealing with

____________________________________________

11 For this reason we are unpersuaded by the Johnsons’ reference to a 2011
letter from the Pennsylvania Department of Banking and Pennsylvania
Housing Finance Agency to entities holding mortgages secured by
Pennsylvania real property, notifying them that of the requirement that they
comply with Act 6’s notice requirements.

                                          - 16 -
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an amendment which, like the one at issue in Flanagan, alters the parties

legal rights. Therefore, we find Flanagan supports our conclusion that the

2008 amendment to section 101 does not apply retroactively.

       In Ministers and Missionaries, we considered whether certain notice

requirements in Act 6 could be retroactively applied to mortgages executed

before the effective date of the Act.              Under sections 403 and 404, a

residential mortgage lender is precluded from accelerating the maturity date

of the mortgage debt and commencing foreclosure proceedings, despite the

existence of a default, until after the mortgagor is given notice of the default

and his right to cure it. We ruled that retroactive application of the notice

requirement did not impair the contractual rights of the mortgage lender

because it merely postponed the exercise of its right to accelerate until after

the mortgagor had received notice of and opportunity to cure a default.

Ministers and Missionaries, supra at 363.12                 Thus, Ministers and

Missionaries highlights the principle that, while procedural laws may be

applied retroactively, laws that affect the substantive rights of contracting

parties may not.
____________________________________________

12  In Ministers and Missionaries, supra, the notice provided by the
mortgage lender did not comply with sections 403 and 404. Nevertheless,
the court ruled that “where acceleration is predicated upon a default which
cannot be cured, the reason for and the necessity of the information
[required by Act 6] disappears.” Id. at 364. In Marra, supra, our
Supreme Court rejected the suggestion in Ministers and Missionaries that
strict compliance with the notice requirements of section 403 of Act 6 is not
mandated. See Marra, supra at 194.

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     We therefore conclude that the Johnsons’ mortgage is not a residential

mortgage protected by Act 6.     The mortgage simply did not meet section

101’s definition of a “residential mortgage” because the principal amount

exceeded the $50,000 limit for residential mortgages in place at the time the

transaction was consummated in 2002.         The 2008 amendment to Act 6

cannot be retroactively applied to their 2002 mortgage. Since the Johnson’s

mortgage is not a “residential mortgage” under the Act, they are without a

predicate violation of Act 6 for which they can recover under section 502.

     We therefore hold that the trial court did not err in sustaining Phelan’s

preliminary objections in the nature of a demurrer on the basis that the

Johnsons were precluded from bringing an action under the Act.

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/1/2018

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