Court Opinion

ID: 3183649
Source: CourtListenerOpinion
Date Created: 2016-03-08 23:26:03.519557+00
Date Added: 2024-06-11T14:35:51.060053
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JP MORGAN CHASE BANK, N.A.                  :      IN THE SUPERIOR COURT OF
                                            :            PENNSYLVANIA
             v.                             :
                                            :
FRANCIS X. MURRAY,                          :
                                            :
                     Appellant              :           No. 615 EDA 2015

                       Appeal from the Order February 4, 2015
                  in the Court of Common Pleas of Chester County,
                           Civil Division, No. 2010-05712

BEFORE: GANTMAN, P.J., MUNDY and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.:
                                             FILED MARCH 08, 2016
      Francis X. Murray (“Murray”) appeals from the Order granting

summary judgment against him and in favor of JP Morgan Chase Bank., N.A.

(“JPM”), in this mortgage foreclosure action. We affirm.

      In a prior appeal, this Court summarized the history of this case as

follows:

      The original plaintiff that commenced this action on May 6,
      2010[,] was Deutsche Bank National Trust Co.[,] as Trustee for
      Washington Mutual Mortgage Securities Corp. 2000-1 (“Deutsche
      Bank”).    The Complaint identified the mortgagee as Great
      Western Bank d/b/a Sierra Western Mortgage Company.
      Complaint in Mortgage Foreclosure (“Complaint”) at 1 ¶1(a).
      The Complaint alleged that the parties entered into the Mortgage
      on August 22, 1997. Id. at 1 ¶1(b). The Mortgage was
      recorded in Chester County on October 2, 1997. Id. at 2 ¶1(c).

      The Complaint listed a pair of assignments of the Mortgage as
      follows:

           Assignor: Great Western Bank dba Sierra Western Mortgage
           Company
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            Assignee: Deutsche Bank National Trust Company Americas
            Date of Assignment: August 15, 2000
            Recording Date: July 27, 2007
            Book: 7223
            Page: 955

            Assignor: Deutsche Bank National Trust Company Americas
            Assignee: [Deutsche Bank].     The assignment is in the
            process of being formalized.

     Id. at 2 ¶1(d) (for sake of convenience, hereinafter we refer to
     these assignments, respectively, as the “Deutsche Bank
     Assignment” and the “WaMu Assignment”). [Deutsche Bank]
     identified itself in the alternative as “either the original
     Mortgagee named in the Mortgage, the legal successor in
     interest to the original Mortgagee, or . . . the present holder of
     the [M]ortgage by virtue of the above-described Assignment(s).”
     Id. at 2 ¶2.

     The Complaint also averred that “[e]ach Mortgagor named in
     paragraph 1 executed a note as evidence of the debt secured by
     the Mortgage (the “Note”),” id. at 2 ¶4, and attached the Note
     to the Complaint as [E]xhibit B. The Note was executed to the
     benefit of “Great Western Bank, a Federal Savings Bank [d]oing
     [b]usiness as Sierra Western Mortgage Company.” Id. Exh. B.
     In the form in which it was attached to the Complaint, the Note
     showed no indorsements, nor was any allonge[FN] attached for
     the purpose of noting any indorsements or assignments.

     [FN]
         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 76 (Deluxe 7th ed.).

     The Complaint alleged that Murray as mortgagor had defaulted
     on his obligations under the Mortgage as of September 1, 2009,
     and remained in default through April 30, 2010. Id. at 2 ¶7.
     The Complaint alleged damages in default consisting of
     installment payments, interest, late charges, escrow advances,
     and other costs and fees totaling $763,113.02. The Complaint
     further asserted ongoing interest ... with additional fees, costs,
     and expenses collectible under the Mortgage and Note. Id. at 3

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     ¶¶ 8-9.

     On June 8, 2010, Murray filed a “Preliminary Objection in the
     Form of [a] Motion to Dismiss the Complaint” (“PO”)….

     The trial court denied Murray’s PO in its entirety by an order
     entered on September 27, 2010. Therein, the trial court denied
     Murray’s challenge to standing ….

     …

     On October 18, 2010, Murray filed his Verified Answer to
     Complaint in Mortgage Foreclosure, with New Matter (“Answer &
     New Matter”)….

     Thereafter, the parties engaged in discovery, following which[,
     on January 12, 2012,] [JPM] filed a motion for summary
     judgment. Murray filed his response to same. [On March 8,
     2012, JPM filed a Praecipe to substitute itself for Deutsche
     Bank.] On March 26, 2012, the trial court entered [an] order …
     granting [JPM’s] motion for summary judgment and entering the
     aforesaid judgment in rem against Murray.

J.P. Morgan Chase Bank. N.A. v. Murray, 63 A.3d 1258, 1258-60 (Pa.

Super. 2013) (footnote in original).   Murray filed an appeal of the trial

court’s grant of summary judgment. That appeal, docketed at number 980

EDA 2012 (“the prior appeal”), was assigned to a three-judge panel of this

Court. See id.

     In the prior appeal, Murray claimed that JPM lacked standing to

continue the foreclosure action and that JPM’s verification of the Complaint

was defective pursuant to Pa.R.C.P. 1024(c).    Murray, 63 A.3d at 1261.

Upon review, the panel reversed the grant of summary judgment in favor of

JPM, concluding that

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     [JPM] has failed to establish possession of the original Note,
     indorsed in blank, and therefore has failed to establish that it or
     any of its putative predecessor holders of the Note have or had
     the right to maintain an action in foreclosure upon Murray’s
     alleged default of his obligations under the Note. The parties
     disagree as to whether the Note produced for Murray’s
     inspection in fact was the original Note, and, if so, whether the
     loose allonge also provided for Murray’s inspection was, itself, an
     original, and in fact purported to indorse the original Note in
     blank. This presents a genuine issue of material fact that,
     absent further discovery sufficient to resolve the conflict as a
     matter of law (upon whatever basis might apply), must be
     resolved by a fact-finder following the presentation of the
     available documentary and testimonial evidence. Accordingly,
     we reverse the trial court’s entry of summary judgment in favor
     of [JPM] and remand for further proceedings.

     …

     [I]in addition to reversing the trial court’s order granting [JPM]
     summary judgment, we must vacate the trial court’s order
     permitting [JPM] to substitute itself as a party for the alleged
     predecessor holders of the Mortgage and Note, without prejudice
     to [JPM] to seek Rule 2352(a) substitution thereafter upon due
     confirmation that [JPM] is the party in interest in this action,
     whether by succession or otherwise.

Id. at 1268-69 (footnote omitted).     Regarding Murray’s challenge to the

verification attached to the Complaint, the panel concluded as follows:

     [T]he verification’s omission of all material requirements of Rule
     1024(c) not only is deficient, but approaches the level of
     deficiency identified in [Atlantic Credit & Finance v.]
     Giuliana[, 829 A.2d 340 (Pa. Super. 2003),] as perhaps not
     even warranting an opportunity to amend the pleading to correct
     the error, based upon the fact that no effort whatsoever was
     made to satisfy Rule 1024(c). However, given the various
     uncertainties in this case, and even in the presence of such an
     obvious violation of both the letter and the spirit of Rule 1024,
     we are loath to deny ex cathedra [JPM’s] opportunity to amend
     its verification. Thus, on remand the trial court may, in its
     discretion, furnish any plaintiff deemed proper in this matter the
     opportunity to offer a new verification under Rule 1024, either by

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      a representative of the duly named plaintiff or by any other
      person who is qualified to attest to the satisfaction of Rule
      1024(c)’s precisely delineated requirements.           However, the
      Complaint must duly be verified if this litigation is to proceed.

Id. at 1270.    Thus, the panel reversed the Order of the trial court and

remanded the matter for further proceedings. Id. at 1271.

      Upon remand, on June 28, 2013, the original plaintiff, Deutsche Bank

petitioned to substitute JPM as the plaintiff. Murray filed an Answer to the

Petition.   After an evidentiary hearing,1 the trial court granted Deutsche

Bank’s Petition, substituting JPM as the plaintiff in the mortgage foreclosure

action.

      On January 29, 2014, JPM filed a Petition for leave to amend the

Complaint (“Petition to Amend”) to correct the verification and revise the

amounts claimed due and owing by Murray. Murray filed an Answer to the

Petition to Amend. On April 29, 2014, the trial court granted the Petition to

Amend, after which JPM filed its Amended Complaint and verification.

      On October 16, 2014, JPM filed a Motion for Summary Judgment. On

February 4, 2015, the trial court granted JPM’s Motion, and entered an in

rem judgment against Murray in the amount of $1,056,222.96, plus interest,

1
   In its Opinion, the trial court explained that “[t]he original collateral file
was in court for the [evidentiary] hearing, was used by the witnesses during
testimony, and was inspected by Murray and his attorney. The original
collateral file was identified and admitted as [Exhibit] P-2, but was returned
to JPM’s attorney at the end of the hearing.” Trial Court Opinion, 4/13/15,
at 4 n.9. This file included the original Note and Mortgage. Id. at 4. The
trial court further observed that “[t]he original allonge, indorsed in blank,
was stapled to the original Note at the hearing.” Id. at 4 (footnote omitted).

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costs and charges.      Thereafter, Murray filed the instant timely appeal,

followed by a court-ordered Pa.R.A.P. 1925(b) Concise Statement of matters

complained of on appeal.

      Murray now presents the following issues for our review:

      A. Did the trial court follow the Superior Court’s instruction to
      require [JPM] to duly verify its Complaint in conformance to
      Pa.R.C.P. 1024 before the case could move forward?

      B. Because [Deutsche Bank] did not duly verify its Complaint
      before making its Petition to Substitute, should [Deutsche
      Bank’s] Petition to Substitute have been dismissed because its
      averments were new, and as such, required [v]erification
      pursuant to Pa.R.C.P. 206.3?

      C. Do the following constitute disputed or established issues of
      fact which preclude summary judgment: 1) [JPM’s] Petition
      [that] states the captioned plaintiff trust is incorrect; 2) [t]he
      purported original Note provided for Murray’s inspection was not
      indorsed in blank; 3) [n]o evidence [that] a loose allonge
      provided for Murray’s inspection is [the] original or appurtenant
      to the purported original Note; 4) [c]ounsel spoliated Note
      evidence, representing [an] invalid endorsement; 5) [t]he copy
      of the Note attached to the Complaint …, and[] and three other
      pleadings, represented in each case to be a true and correct
      copy of the original, is not indorsed in blank and not identical to
      the purported original Note presented to the trial court at the
      hearing … ;] and[] 6) [a] non-party was in possession of the
      purported original Note on the date of the Complaint? Further,
      do the following constitute errors of law which preclude summary
      judgment: [(a) t]he [trial c]ourt found an allonge affixed by
      [c]ounsel following Murray’s inspection (and prior to the
      evidentiary hearing) constituted a valid indorsement of the Note,
      making JPM [the] holder of the Note, and [(b) t]he [trial c]ourt
      found, alternatively, JPM was [a] non[-]holder with the rights of
      a holder?

Brief for Appellant at 4-5.

      Initially, we are cognizant of our scope and standard of review:

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      A reviewing court may disturb the order of the trial court only
      where it is established that the court committed an error of law
      or abused its discretion. As with all questions of law, our review
      is plenary.

      In evaluating the trial court’s decision to enter summary
      judgment, we focus on the legal standard articulated in the
      summary judgment rule. Pa.R.C.P. 1035.2. The rule states that
      where there is no genuine issue of material fact and the moving
      party is entitled to relief as a matter of law, summary judgment
      may be entered. Where the non-moving party bears the burden
      of proof on an issue, he may not merely rely on his pleadings or
      answers in order to survive summary judgment. Failure of a
      non-moving party to adduce sufficient evidence on an issue
      essential to his case and on which it bears the burden of proof
      establishes the entitlement of the moving party to judgment as a
      matter of law. Lastly, we will view the record in the light most
      favorable to the non-moving party, and all doubts as to the
      existence of a genuine issue of material fact must be resolved
      against the moving party.

Murray, 63 A.3d at 1261-62 (citation omitted).

      Judicial discretion requires action in conformity with law on facts
      and circumstances before the trial court after hearing and
      consideration. Consequently, the court abuses its discretion if,
      in resolving the issue for decision, it misapplies the law or
      exercises its discretion in a manner lacking reason. Similarly,
      the trial court abuses its discretion if it does not follow legal
      procedure.

DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 586 (Pa. Super. 2013).

      Murray first claims that the trial court, on remand, ignored this Court’s

directives. Brief for Appellant at 7.   Murray asserts that the Superior Court

had directed the then-named plaintiff, Deutsche Bank, to correct its deficient

verification. Id. According to Murray, the trial court improperly entertained

JPM’s Motion to Substitute, conducting an evidentiary hearing “to determine

the rights of a non-party[, JPM,] whose substitution foundation is an alleged

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transaction occurring nine months after this action was filed[.]” Id. Murray

contends JPM’s Petition to Substitute should not have been considered prior

to Deutsche Bank filing a new verification and, accordingly, the case should

have been dismissed. Id.

      Our review of the record of the prior appeal discloses no such narrow

directive from this Court.   In fact, the panel expressly anticipated further

development of the record, so as to establish the appropriate plaintiff, and to

allow the appropriate plaintiff to establish possession of the original Note and

the original allonge, indorsed in blank.2    Murray, 63 A.3d at 1268.        The

panel reversed the Order granting summary judgment, “without prejudice to

[JPM]’s right to seek summary judgment following further development of

the record.” Id. (emphasis added). Further, the panel explained that

      a question necessarily remains as to whether [JPM] properly was
      permitted to substitute itself as plaintiff-successor in the
      underlying action pursuant to Pa.R.C.P. 2352(a). A successor is
      “anyone who by operation of law, election or appointment has
      succeeded to the interest or office of a party to an action.”
      Pa.R.C.P. 2351. If [JPM] were unable to establish its possession
      of the Note on remand, it would have to establish successor
      status by other means. Accordingly, in addition to reversing the
      trial court’s order granting [JPM] summary judgment, we must
      vacate the trial court’s order permitting [JPM] to substitute itself
      as a party for the alleged predecessor holders of the Mortgage
      and Note, without prejudice to [JPM] to seek Rule 2352(a)
      substitution thereafter upon due confirmation that [JPM] is the
      party in interest in this action, whether by succession or
      otherwise.

2
  As this Court concluded in the prior appeal, the Note at issue is a
negotiable instrument governed by Pennsylvania’s Uniform Commercial
Code, 1101-9809 (“PUCC”). Murray, 63 A.2d at 1266.

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Id. at 1268-69 (footnote omitted).

      In addressing the sufficiency of Deutsche Bank’s verification, the panel

again recognized that the appropriate plaintiff must be ascertained on

remand:

      [O]n remand the trial court may, in its discretion, furnish any
      plaintiff deemed proper in this matter the opportunity to
      offer a new verification under Rule 1024, either by a
      representative of the duly named plaintiff or by any other
      person who is qualified to attest to the satisfaction of Rule
      1024(c)’s precisely delineated requirements. However, the
      Complaint must duly be verified if this litigation is to proceed.

Murray, 63 A.3d at 1271 (emphasis added).

      Thus, this Court expressly recognized that on remand, the trial court

must ascertain the appropriate plaintiff, and that further proceedings may be

necessary to do so. See id. The trial court’s consideration of the Petition to

Substitute in no way violated this Court’s directive upon remand.      As we

discern no error or abuse of discretion by the trial court in this regard, we

cannot grant Murray relief on his claim.

      Murray next claims that the trial court improperly granted summary

judgment where Deutsche Bank’s Petition for substitution was “deficiently

verified.” Brief for Appellant at 23. Murray presents a circular argument in

this regard:   “Because Deutsche Bank did not duly verify its Complaint

before filing its Petition [to Substitute], the averments in its Complaint are

mere narration and amount to nothing, making averments in its Petition

technically new.” Id. Murray argues that he preserved this issue by filing

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an Answer denying that JPM had the right to pursue substitution or to move

the litigation forward. Id. at 25.

         In its Opinion, the trial court addressed this claim and concluded that

it lacks merit.    Trial Court Opinion, 4/13/15, at 6-8.    We agree with the

sound reasoning of the trial court, as expressed in its Opinion, and affirm on

this basis with regard to Murray’s claim.3 See id.

         Finally, Murray challenges the trial court’s grant of summary judgment

in favor of JPM. Murray claims that the chain of mortgage assignments is

“irregular.” See Brief for Appellant at 32. Murray asserts that the allonge

was loose during his inspection of the Note in 2011, see id. at 36; there is

no evidence that the allonge existed before his December 2011 inspection,

see id. at 42; the re-stapling of the allonge to the Note by JPM’s counsel is

spoliation of the evidence, see id. at 46; JPM is a non-holder in possession

of the Note, see id. at 50; the Note in the collateral file is not identical to

the Note attached to Deutsche Bank’s Complaint, see id. at 53-54; and that

on the date of Deutsche Bank’s Complaint, it did not hold the Note, see id.

at 56.

3
  Our review of the record discloses that Murray did not object to the
verification attached to the Petition to Substitute, or raise this issue in his
Answer to the Petition. Rather, Murray first raised this specific objection in
his Pa.R.A.P. 1925(b) Concise Statement. We therefore discern no error by
the trial court in concluding that this issue is waived. See Pa.R.A.P. 302(a)
(stating that an issue cannot be raised for the first time on appeal).

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      In its Opinion, the trial court addressed this claim and concluded that

it lacks merit.   Trial Court Opinion, 4/13/15, at 4-6.    We agree with the

sound reasoning of the trial court, as set forth in its Opinion, and affirm on

this basis. See id. We additionally observe the following.

      As this Court previously held, the Note in this case is a negotiable

instrument and subject to the PUCC. Murray, 63 A.3d at 1265. “The note

as a negotiable instrument entitles the holder of the note to enforcement of

the obligation.” CitiMortgage, Inc. v. Barbezat, 2016 Pa. Super. 7, 2016

Pa. Super. LEXIS 8, *9 (citing 13 Pa.C.S.A. §§ 3109(a), 3301).

      Should [JPM] successfully establish that it holds the original
      Note, and that it is indorsed in blank [or specially indorsed],
      under the [PUCC] it will be entitled to enforce the Note [as a
      negotiable instrument] ... even if there remain questions as to
      the chain of possession of the [n]ote from the time of its making
      to its arrival in [JPM’s] figurative hands.

Murray, 63 A.3d at 1268.       Therefore, Murray’s challenges to the chain of

possession and assignments of the Note are immaterial to the Note’s

enforceability. Id. at 1266.

      At the evidentiary hearing on the Petition to Substitute, William

Rodriguez (“Rodriguez”) the lending research officer for JPM, testified

regarding the original Note and the allonge.          N.T., 10/25/13, at 8.

Rodriguez testified that he had inspected the “collateral file,” which included

the original Note and original Mortgage.       Id. at 9.     The collateral file

presented to Murray and examined by the trial court included the original

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Note. Id. at 12-13. Further, an audit form in the collateral file identified the

Note in the collateral file as the original Note. Id. at 13.

      Rodriguez explained that the contents of the collateral file are

scanned, and that the allonge could not be scanned unless detached from

the original Note.    Id. at 14.     Rodriguez testified that an allonge in a

collateral file belongs with the Note in that file. Id.

      Rodriguez expressly testified that the allonge at issue “has always

been affixed to the [N]ote in different forms [and] in different fashions.” Id.

at 29-30.    Rodriguez explained that in all scans, the Note included the

allonge. Id. at 32. Rodriguez testified, “[a]ll our systems show all copies of

the [N]ote are with the allonge.      So when they were scanned, they were

scanned together…. When [JPM was] in possession of the file, the allonge

was affixed according to the scanning of the loan.” Id.

      Murray disputes whether the allonge was always stapled or attached to

the Note, but has presented no evidence disputing that the Note and allonge

in the collateral file are the original Note and allonge. Further, Murray does

not dispute that the allonge in the collateral file is indorsed in blank.   Our

review discloses no evidence disputing that JPM is the holder of the Note

indorsed in blank.    See Murray, 63 A.3d at 1266-67 (stating that, in a

foreclosure action, where a plaintiff establishes that it is the holder of a

promissory note, indorsed in blank, it has standing to enforce the note and

any accompanying mortgage).          As there remained no genuine issue of

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material fact, and because the trial court’s legal conclusions are sound, we

discern no abuse of discretion or error by the trial court in granting summary

judgment in favor of JPM.

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 3/8/2016

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