Court Opinion

ID: 6341441
Source: CourtListenerOpinion
Date Created: 2022-05-17 16:11:43.052739+00
Date Added: 2024-06-11T08:47:17.539063
License: Public Domain

J-S11005-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 REVERSE MORTGAGE FUNDING, LLC             :   IN THE SUPERIOR COURT OF
                                           :        PENNSYLVANIA
                                           :
              v.                           :
                                           :
                                           :
 ARGIE LYERLY                              :
                                           :
                                           :   No. 1133 WDA 2021
              v.                           :
                                           :
                                           :
 CORNELIUS MARTIN                          :
                                           :
                    Appellant              :

               Appeal from the Order Entered August 24, 2021
              In the Court of Common Pleas of Allegheny County
                    Civil Division at No(s): GD-18-014967

BEFORE: PANELLA, P.J., OLSON, J., and SULLIVAN, J.

MEMORANDUM BY PANELLA, P.J.:                            FILED: May 17, 2022

      Cornelius Martin, intervenor in the underlying mortgage foreclosure

action, appeals from the order denying and dismissing, with prejudice, his

petition to set aside a sheriff’s sale. Martin claims he was not afforded

sufficient notice of the foreclosure action despite his equitable interest in the

subject property. Because we conclude Martin acquired his purported property

interest with constructive notice of the mortgage, and he had constructive

notice of the foreclosure and sheriff’s sale proceedings, we affirm.

      Argie Lyerly owned property located in Allegheny County. On April 24,

2013, Lyerly executed a home equity conversion mortgage in favor of
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Mortgage Electronic Recording Systems, Inc., as nominee for Liberty Home

Equity Solutions, Inc., as well as a promissory note securing the mortgage.

       On December 21, 2017, Mortgage Electronic Recording Systems

assigned the mortgage to Live Well Financial, Inc. (“Live Well”). Live Well

initiated a foreclosure action by filing a complaint on November 14, 2018. Live

Well alleged the mortgage was in default as of July 10, 2018, because Lyerly

no longer occupied the property as her principal place of residence, as required

by the mortgage agreement. Live Well also alleged an outstanding balance of

$25,144.35.

       Live Well assigned the mortgage to Reverse Mortgage Funding, LLC

(“RMF”) on January 9, 2019, and RMF was subsequently substituted as plaintiff

in the underlying action.1 Lyerly did not respond. RMF filed a praecipe for entry

of default judgment and judgment was entered in the amount of $25,740.82,

plus costs and interest. A writ of execution was subsequently issued, and

Lyerly was served with notice of the scheduled sheriff’s sale, via certified mail

at her last known address and by posting the notice at the subject property.2

____________________________________________

1 On September 4, 2019, RMF assigned the mortgage to RMF, as nominee for
Wilmington Trust, NA, not in its individual capacity but solely as trustee for
Broad Street Funding Trust, II, which was reflected by a substitution of the
plaintiff in the foreclosure action. For consistency, we will continue to address
this entity in its amended capacity as RMF.

2 Because the property was vacant, Live Well sought and was granted
permission to serve Lyerly in this manner.

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        Following several postponements, the sheriff’s sale was held on January

6, 2020, and RMF purchased the property. However, the Allegheny County

Recorder of Deeds Office could not record the sheriff’s deed because Lyerly

had transferred the property to Martin by a deed recorded on November 4,

2019.

        On March 23, 2021, RMF filed a motion to confirm the sheriff’s sale.

Therein, RMF argued that because Martin acquired an interest in the property

after the foreclosure proceedings were initiated and default judgment had

been entered, his interest was divested by the sheriff’s sale.

        On April 15, 2021, Martin filed a petition to intervene and set aside the

sheriff’s sale. Martin claimed he had entered into a land installment contract

with Lyerly on June 2, 2016; he had sent a total of $14,000.00 in mortgage

payments to Live Well; and he was in the process of negotiating a short sale.

Further, Martin claimed RMF failed to provide him with notice of the sheriff’s

sale. Martin also filed a counterclaim to quiet title. The trial court granted

Martin’s petition to intervene and added Martin to the action as a party in

interest.

        The trial court held oral argument on the parties’ respective petitions.

By orders entered August 24, 2021, the trial court confirmed the sheriff’s sale,

directed the Recorder of Deeds to accept the sheriff’s deed for recording, and

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denied and dismissed Martin’s petition to set aside the sheriff’s sale and

counterclaim. This timely appeal followed.3

       A petition to set aside a sheriff’s sale invokes a trial court’s equitable

powers. See Nationstar Mortg., LLC v. Lark, 73 A.3d 1265, 1267 (Pa.

Super. 2013). We review the trial court’s order for an abuse of discretion:

       The burden of proving circumstances warranting the exercise of
       the court’s equitable powers is on the petitioner, and the request
       to set aside a sheriff’s sale may be refused due to insufficient proof
       to support the allegations in the petition. Sheriff’s sales have been
       set aside where the validity of the sale proceedings is challenged,
       a deficiency pertaining to the notice of the sale exists, or where
       misconduct occurs in the bidding process. This [C]ourt will not
       reverse the trial court’s decision absent a clear abuse of discretion.

Irwin Union Nat’l Bank & Trust Co. v. Famous, 4 A.3d 1099, 1102 (Pa.

Super. 2010) (internal citations and quotation marks omitted).

       Martin argues he is the actual and equitable owner of the property, and

the trial court erred by failing to strike the foreclosure action as a result of

RMF’s failure to name Martin as a party and notify him of the proceedings.

See Appellant’s Brief at 16. Martin acknowledges the deed conveying the

property to him was not recorded until November 4, 2019, but contends he

and Lyerly executed a contract for deed on June 2, 2016.4 See id. at 18.

____________________________________________

3 On January 4, 2022, RMF filed a motion to dismiss Martin’s appeal for failure
to timely file a brief. This Court denied RMF’s motion to dismiss without
prejudice. RMF does not raise this issue again in its appellate brief.

4 The referenced contract between Lyerly and Martin does not appear in the
certified record before this Court. Martin asserts that he agreed to buy the
(Footnote Continued Next Page)

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Martin therefore argues he acquired an interest in the property in 2016, well

before Live Well initiated the instant foreclosure action. See id. at 19-21.

According to Martin, he did not receive notice of the foreclosure proceedings

and was in negotiations with RMF to purchase the property in 2019, during

the time RMF requested postponements of the sheriff’s sale. See id. at 18-

19. Martin asserts RMF had notice of Martin’s interest in the property. See id.

at 22.

         Martin argues, in part, that he should have been named as a party in

the foreclosure action as the “real owner” of the property. Pennsylvania Rule

of Civil Procedure 1144 requires a plaintiff in a mortgage foreclosure action to

name      as   defendants    (1)    the   mortgagor;   (2)   any   known   personal

representative, heir or devisee of a deceased mortgagor; and (3) “the real

owner of the property, or if the real owner is unknown, the grantee in the last

recorded deed.” Pa.R.C.P. 1144(a). This Court has explained that the term

“real owner” is limited to those individuals who have liability on the mortgage.

See U.S. Bank Nat’l Assoc. for Pa. Housing Fin. Agency v. Watters, 163

A.3d 1019, 1025-26 (Pa. Super. 2017); Bank of Pa. v. G/N Enters., Inc.,

463 A.2d 4, 6 (Pa. Super. 1983) (“one who takes title from the mortgagor is

a ‘real owner’” (citation omitted)).

____________________________________________

property from Lyerly for $25,000.00, reflecting the outstanding mortgage
balance. See Appellant’s Brief at 13.

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       Here, Martin does not argue that he assumed legal liability on the

mortgage. To the extent Martin contends the 2016 land installment contract

made him the real owner of the property, we note that the contract is

conspicuously absent from the certified record. See Brandon v. Ryder Truck

Rental, Inc., 34 A.3d 104, 106 n.1 (Pa. Super. 2011) (explaining that an

appellant has a duty to provide this Court with a complete record for appellate

review). Martin briefly states he “never missed a payment to the bank.”

Appellant’s Brief at 14. However, Martin fails to explain the basis upon which

these payments were made, and the record contains no evidence that Martin

assumed liability to RMF for payment on the mortgage or otherwise executed

an agreement with RMF which would negate RMF’s ability to initiate

foreclosure proceedings.5 Accordingly, Martin failed to establish that he was

required, or even entitled, to be named as a defendant in the mortgage

foreclosure action.

       Even assuming Martin had an equitable interest in the property, we

conclude that he had constructive notice of the mortgage, the foreclosure

action, and the sheriff’s sale. First, we again note that Martin himself alleges

that he never missed a payment to RMF. If we accept this assertion as true,

____________________________________________

5 To the extent Martin has any equitable claim against RMF for the recovery
of funds he paid toward the purchase of the property, the instant action is not
the appropriate vehicle for obtaining relief.

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Martin was clearly aware that the property was subject to the mortgage and

therefore had some responsibility to make himself aware of the terms.

       Even if we ignore this assertion, Martin was still legally presumed to be

aware of the terms of the mortgage. Properly recorded mortgages provide all

subsequent purchasers of the property with constructive notice of the

mortgage terms:

       The legal effect of the recording of such agreements [concerning
       real property, as defined in § 356,] shall be to give constructive
       notice to subsequent purchasers, mortgagees, and/or judgment
       creditors of the parties to said agreements of the fact of the
       granting of such rights or privileges and/or of the execution of said
       releases, and the rights of the subsequent purchasers,
       mortgagees, and/or judgment creditors of the parties to said
       agreements shall be limited thereby with the same force and
       effect as if said subsequent purchasers, mortgagees,
       and/or judgment creditors had actually joined in the
       execution of the agreement or agreements aforesaid.

21 P.S. § 357 (emphasis added); see also First Citizens Nat’l Bank v.

Sherwood, 879 A.2d 178, 181 (Pa. 2005) (concluding subsequent purchaser

had constructive notice of a properly recorded but improperly indexed

mortgage).

       Here, Martin claims he acquired an interest in the property on June 2,

2016.6 Martin expressly acknowledges the reverse mortgage and note were

____________________________________________

6Martin vaguely refers to statutes governing the recording of deeds; however,
he failed to include citation to those statutes. See Pa.R.A.P. 2119(a) (directing
an appellant’s argument to include appropriate discussion and citation of
authorities). We recognize that an unrecorded conveyance is rendered void
only to a subsequent bona fide purchaser who does not have actual or
(Footnote Continued Next Page)

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executed and recorded with the Recorder of Deeds in 2013. See Appellant’s

Brief at 10; see also Motion to Reassess Damages, 8/16/19, Exhibit A

(Mortgage) (reflecting Lyerly’s execution of the mortgage and accompanying

note on April 24, 2013). Thus, in accordance with 21 P.S. § 357, Martin

assumed any interest he acquired in the property with constructive notice of

the mortgage, including all its terms.

       The mortgage requires Lyerly to occupy the property as her principal

place of residence for the term of the agreement. See Motion to Reassess

Damages, 8/16/19, Exhibit A (Mortgage), ¶ 4. Further, the mortgage provides

for acceleration of the debt with immediate payment-in-full if Lyerly’s title is

sold or transferred. See id., ¶ 9(a)(ii). The lender may also require immediate

payment-in-full, with approval of the Secretary of Housing and Urban

Development, if the property ceases to be Lyerly’s principal residence for any

reason other than death. See id., ¶ 9(b)(i). Martin was therefore on

constructive notice of the mortgage at the time he entered into the land

installment contract with Lyerly and must be presumed aware of the

conditions constituting default.

       Martin also points to his negotiations for short sale of the property as

evidence that he did not receive notice of the foreclosure action. Martin

____________________________________________

constructive notice of the transfer. See MERSCORP, Inc. v. Del. County,
207 A.3d 855, 866 (Pa. 2019); see also 21 P.S. § 351. We also note that
Martin waited more than three years to record the deed to protect his interest.

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attached to his petition to intervene and set aside the sheriff’s sale several

email exchanges between his real estate agent, Gloria Potter, and a

representative of RMF’s short sale department. Once again, Martin’s own

allegations demonstrate that he was aware of the mortgage, the foreclosure

proceedings, and that a sheriff’s sale was imminent.

      Potter sent an offer for a short sale of the property on July 18, 2019,

several months after the foreclosure complaint had been filed, default

judgment had been entered in favor of RMF, a writ of execution had issued,

and RMF had notified Lyerly of the sheriff’s sale. See Petition to Intervene and

Set Aside Sheriff’s Sale, 4/15/21, Exhibit H. On August 29, 2019, Potter

requested an update on the status of the proposed short sale, and

acknowledged “the foreclosure is scheduled for Monday[.]” Id., Exhibit G. The

RMF representative responded that the request for postponement of the

sheriff’s sale was denied, and RMF would proceed with the sale as scheduled

on September 3, 2019. See id.

      In a subsequent email, the RMF representative advised Potter that the

sheriff’s sale had been postponed, and the property would be reviewed for a

possible insurance claim based upon issues identified during the appraisal

process. See id., Exhibit H. Potter acknowledged the postponement and

requested a payoff amount for the property. See id. These exchanges

evidence Martin’s knowledge, via his real estate agent, of the foreclosure

proceedings and the sheriff’s sale. Just as Martin claims RMF was on notice of

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his interest in the property, Martin was on constructive notice of the terms of

the mortgage, the foreclosure, and the sheriff’s sale.7 Under these

circumstances, the trial court was entitled to conclude Martin was not due

equitable relief from the sheriff’s sale. Accordingly, we affirm the order

denying and dismissing Martin’s petition to set aside the sheriff’s sale.

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 5/17/2022

____________________________________________

7 Notwithstanding his awareness of the foreclosure and the sheriff’s sale,
Martin did not file his petition to intervene and set aside the sheriff’s sale until
April 15, 2021, more than a year after the sale occurred.

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