Court Opinion

ID: 4653301
Source: CourtListenerOpinion
Date Created: 2021-01-21 19:12:51.467599+00
Date Added: 2024-06-11T07:50:11.872343
License: Public Domain

J-S45017-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 AMERICAN LOAN 2, LLC                     :   IN THE SUPERIOR COURT OF
                                          :        PENNSYLVANIA
                                          :
              v.                          :
                                          :
                                          :
 3006 BALTZ ST LLC                        :
                                          :
                    Appellant             :   No. 60 EDA 2020

           Appeal from the Judgment Entered January 15, 2020,
           in the Court of Common Pleas of Philadelphia County,
                  Civil Division at No(s): No. 180405042.

BEFORE: BOWES, J., KUNSELMAN, J., and MURRAY, J.

MEMORANDUM BY KUNSELMAN, J.:                         Filed: January 21, 2021

      The defendant in this action to quiet title, 3006 Baltz St LLC, appeals

from the judgment entered in favor of American Loan 2, LLC. Following a

bench trial, the court found a third party that sold the subject property to

3006 Baltz St LLC had forged a mortgage-satisfaction piece. The trial court

voided that fraudulent instrument and reinstated American Loan 2’s $110,000

Mortgage on the subject property, in Philadelphia. We affirm.

      American Loan 2 is a closely held corporation. Its sole member, Alan

Candell, Esq. founded American Loan 2 in 2006 to provide loans to investors

in the Philadelphia rental and house-flipping markets. Mr. Candell’s company

has processed over 500 loans and mortgages. American Loan 2 obtained and

recorded mortgages on the properties that its borrowers owned, so it could

foreclose upon the properties in cases of default.
J-S45017-20

      A third party, RBA Capital L.P., funded American Loan 2. RBA Capital

would secure its line of credit by recording security interests in the mortgages

that American Loan 2 and similar lending companies had on properties. As

part of that arrangement, RBA Capital did not service the loans or mortgages

and had no connection to the property owners. However, if American Loan 2

defaulted on its obligations to RBA Capital, RBA Capital could use the security

interest to substitute itself as the mortgagee of the properties. There is no

evidence that such a substitution ever occurred.

      On June 25, 2007, Songhai Partners LLC borrowed $65,000 from

American Loan 2, LLP to improve the subject property. Songhai executed a

promissory note and mortgage in favor of American Loan 2 on the property.

The Recorder of Deeds of Philadelphia County recorded that mortgage within

the property’s chain of title. Three days later, American Loan 2 assigned that

mortgage to RBA Capital “to grant RBA Capital a security interest in the

$65,000 Mortgage.” Trial Court Findings of Fact, 10/31/19, at 2. “Under the

RBA Line of Credit, [American Loan 2] was authorized to modify the $65,000

loan” with Songhai. Id. at 3.

      American Loan 2 granted Songhai additional funds on April 1, 2008.

American Loan 2 therefore received a new promissory note from Songhai and

a modified mortgage for $110,000 on the subject property.         Songhai also

executed an assignment of rents to American Loan 2, so American Loan 2

could assume the right to collect the rents from the subject property if Songhai

                                     -2-
J-S45017-20

defaulted. The Recorder of Deeds recorded both instruments within the chain

of title.

        In March of 2017, Songhai still owed the full principle and accumulated

interest on its loan.   Even so, Songhai forged a satisfaction piece for the

$110,000 Mortgage and the assignment of rents. Those documents bore the

falsified signatures of Mr. Candell, and they failed to identify him as an officer

and agent of American Loan 2. Songhai presented its forgeries to the Recorder

of Deeds, who recorded them. On the same day, Songhai presented a forged

satisfaction for the $65,000 Mortgage, which purported to be executed by

Timothy Bricker on behalf of RBA Capital. Mr. Bricker testified that, on the

date Songhai forged the $65,000 Satisfaction, he no long worked at RBA

Capital, and RBA Capital was defunct. The Recorder recorded that forgery as

well.

        Then, by an April 26, 2017 deed, Songhai conveyed the subject property

to 3006 Baltz St LLC for $75,000.       The next week, Songhai attempted to

convey the same property to Eleventh Street LLC for $50,000. Finally, by a

November 8, 2017 deed, Eleventh Street LLC attempted to convey its interest

in the property to 3006 Baltz St LLC for $1. Mr. Candell testified that the

subject property is in a desirable neighborhood and was worth $300,000 at

the time of the three conveyances.

        The parties agree that 3006 Baltz St LLC has title to the property. Upon

discovering the forged satisfactions pieces in the chain of title, American Loan

                                      -3-
J-S45017-20

2 filed this suit to determine whether its $110,000 Mortgage encumbers 3006

Baltz St LLC’s title.

      At trial, American Loan 2 called two witnesses, Mr. Candell and Mr.

Bricker. The trial court deemed them credible.          American Loan 2 also

submitted various documents. 3006 Baltz St LLC presented no evidence or

testimony. The trial court filed extensive Findings of Fact and Conclusions of

Law and an order granting American Loan 2 full relief. Specially, it granted

American Loan 2 (1) declaratory judgment that the $110,000 Satisfaction is

null and void; (2) an order striking the forgery from the chain of title; and (3)

declaratory judgment that the $110,000 Mortgage is reinstated.

      The trial court denied post-trial motions, and this appeal followed. The

court issued its 1925(a) Opinion, incorporating the Findings of Fact and

Conclusions of Law by reference.

      In this Court, 3006 Baltz St LLC asserts the trial court erred when (a) it

found that the $110,000 Mortgage was a valid lien, (b) that American Loan 2

could modify the mortgage after assigning the mortgage to RBA Capital, (c)

that the $110,000 Satisfaction is a forgery, and (d) that 3006 Baltz St LLC is

not a subsequent, bona fide purchaser. See 3006 Baltz St LLC’s Brief at 1-2.

      We afford the factual findings from a bench trial “the same weight and

effect on appeal as a verdict of a jury . . . .” Zuk v. Zuk, 55 A.3d 102, 106

(Pa. Super. 2012).      We view the evidence “in the light most favorable to the

victorious party below and all evidence and proper inferences favorable to that

party must be taken as true . . . .” Hart v. Arnold 884 A.2d 316, 330–31

                                       -4-
J-S45017-20

(Pa. Super. 2005), appeal denied, 897 A.2d 458 (Pa. 2006). On questions of

law, however, our standard of review is de novo, and “our scope of review is

plenary, as it is with any review of questions of law.” Zuk, 55 A.3d at 106.

      American Loan 2 presented the only evidence at the trial. Based on that

uncontradicted evidence, the factual findings of the trial court have support in

the record and bind this Court. As for the trial court’s Conclusions of Law, we

fully agree with the analysis of that court. The learned Judge Giovanni O.

Campbell of the Court of Common Pleas of Philadelphia County fully disposed

of the issues now on appeal following trial, and we adopt his Conclusions of

Law as our own.

      The trial court ruled that the $110,000 Mortgage is valid, because

American Loan 2 perfected and recorded it while Songhai owned the property

in issue. The assignment of the $65,000 Mortgage to RBA Capital did not limit

American Loan 2’s right to modify its loan with Songhai, because there was

testimony that RBA Capital had no dealings with end borrowers. Instead, RBA

Capital acquired a security interest in the hundreds of mortgages American

Loan 2 held and serviced. Regarding the finding that the satisfactions were

forgeries, the trial court was free to believe Mr. Candell and Mr. Bricker that

they did not sign those documents. Combined with the exhibits of record,

their testimony was clear and convincing evidence of forgery.

      Finally, 3006 Baltz St LLC failed to prove its affirmative defense that it

was a subsequent, bona fide purchaser for value, because it presented no

evidence supporting that claim. Moreover, equity will not permit such a result.

                                     -5-
J-S45017-20

By forging the satisfactions, Songhai eliminated the possibility that a

subsequent purchaser could be bona fide in the eyes of equity. A defrauded

mortgagee (i.e., American Loan 2) retains greater equity in the property than

a purported, subsequent, bona fide purchaser (i.e., 3006 Baltz St LLC), even

if the subsequent purchaser was ignorant of the fraud.1

       The parties are directed to attach a copy of Judge Campbell’s Findings

of Fact and Conclusions of Law to this Memorandum in all future proceedings

concerning this property. Based upon the foregoing and the other reasoning

in Judge Campbell’s decision, we affirm the order denying post-trial motions.

       Judgment affirmed.

       Judge Murray joins the memorandum.

       Judge Bowes concurs in the result.

____________________________________________

1  The Supreme Court of Pennsylvania has long held a subsequent party’s
“equity does not rise higher, nor as high, as that of [a defrauded party in the
chain of title,] who was in complete ignorance of the fraud . . . .” Thees v.
Prudential Ins. Co. of Am. of Newark, 190 A. 895, 896 (Pa. 1937). Where,
as here, the Recorder of Deeds has recorded a satisfaction “without the
authority of the mortgagee[, i]t is immaterial whether the want of authority is
the result of fraud or of mistake.” Brown v. Henry, 106 Pa. 262, 268 (1884).
“The authority to enter satisfaction is lacking in either case, and because of
its absence the satisfaction is worthless.” Id. As the $110,000 satisfaction
was worthless, the trial court correctly held that 3006 Baltz St LLC could not
be a subsequent, bona fide purchaser for value by relying upon that forged
document.

                                           -6-
J-S45017-20

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/21/21

                          -7-