Opinion
J. A21018/16 No. 3713 EDA 2015
10-18-2016
MOHAN KRISHNAN AND VASANTHALLAZMI KRISHNAN, Appellants v. DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, Appellee
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered December 3, 2015
In the Court of Common Pleas of Chester County
Civil Division at No.: 2013-07246-RC BEFORE: BENDER, P.J.E., DUBOW, J., and MUSMANNO, J. MEMORANDUM BY DUBOW, J.:
Appellants, Mohan Krishnan and Vasanthallazmi Krishnan, plaintiffs below, appeal from the December 3, 2015 Order entered in the Chester County Court of Common Pleas following a bench trial in this quiet title action. We affirm on the basis of the trial court's Opinion.
Appellants purport to appeal from the November 4, 2015 Order denying their Post-Trial Motion. Orders denying Post-Trial Motions are interlocutory and generally not appealable; rather, the subsequent Order entering Judgment is appealable. Prime Medica Associates v. Valley Forge Ins. Co., 970 A.2d 1149, 1154 n.6 (Pa. Super. 2009). The caption has been revised accordingly.
The relevant facts, as gleaned from the trial court's July 30, 2015 Decision and the certified record, are as follows. On August 6, 2004, Appellants sold the real property and home located at 1360 Shadow Oak Drive in Malvern, Pennsylvania to Joye McDonald-Hamer ("McDonald-Hamer") for $745,000.00. McDonald-Hamer funded the transaction with a $558,750.00 purchase money mortgage from Long Beach Mortgage Company ("Long Beach"), a $186,250.00 purchase money mortgage from Appellants, and a $39,389.32 cash assist from Appellants.
Long Beach Mortgage Company was a subsidiary of Washington Mutual Bank. Washington Mutual Bank failed, and both JPMorgan Chase and Deutsche Bank serviced the loan. Here, Appellee Deutsche Bank is trustee for Long Beach Mortgage Company.
Closing occurred, and the HUD-1 settlement statement reflected each of the mortgages. Appellants and Long Beach recorded their purchase money mortgages in the Chester County Recorder of Deeds Office on the same date and at the same time: at 2:11P.M. on August 11, 2004. Numerous documents compiled in connection with the sale indicated that Appellants' purchase money mortgage was second in lien priority. These included: (1) McDonald-Hamer's August 6, 2004 Uniform Residential Loan Application; (2) Long Beach Mortgage Company's broker loan submission dated July 30, 2004; (3) Long Beach Mortgage Company's underwriting approval sheet; (4) Long Beach Mortgage Company's pre-defined underwriting conditions worksheet; (5) the title commitment issued on August 4, 2004, indicating a first mortgage in favor of Long Beach; (6) McDonald-Hamer's USAA homeowner's insurance policy dated January 7, 2007; (7) Long Beach Mortgage Company's verification of recording dated August 6, 2004; (8) McDonald-Hamer's attorney's preliminary certificate and report on title dated August 4, 2004; and (9) the attorney's final certificates dated August 23, 2004. These documents, to which Appellants never objected, explicitly stated that Long Beach's mortgage had first priority.
After McDonald-Hamer defaulted on Appellants' mortgage, Appellant called Long Beach's successor at the time, Washington Mutual, four times during the period from June of 2005 to December of 2006 to determine whether McDonald-Hamer was making payments on that mortgage. Each time Appellant identified himself as the holder of a second mortgage on the property.
In August of 2007, Deutsche Bank ("Appellee") instituted a mortgage foreclosure action in Chester County Court of Common Pleas. On August 22, 2008, Appellants instituted their own mortgage foreclosure action. They subsequently obtained a Judgment by consent, entered on September 17, 2009, in the amount of $260,542.51. At a Sheriff's Sale of the property on June 27, 2011, Appellants bid successfully and obtained title to the property.
Appellants then commenced the instant quiet title action, claiming that Appellee's mortgage should have been divested at the Sheriff's Sale pursuant to 42 Pa.C.S. § 8152 because it was not first in priority.
At the bench trial, Appellant Mohan Krishnan testified. The court admitted into evidence the documents listed supra showing that Appellants were second in lien priority.
Following the trial, the court concluded that Appellee held a first mortgage lien on the property. The court also concluded that the evidence showed that Appellants had never objected to the documents supporting the sale to McDonald-Hamer, which indicated Long Beach had priority and that Appellants' mortgage was a secondary lien. See Trial Court Decision, dated 7/30/15, at 5.
In its Pa.R.A.P. 1925(a) Opinion, the court observed: "I will note only that I cited to the apparent agreement between the parties establishing that [Appellants] held the second mortgage. Such agreement was demonstrated by the evidence presented at trial, including testimony, that when faced with evidence, such as the title commitments or the homeowner's insurance, that the [Appellants] held a second mortgage, they did not protest, object or raise any concern." Trial Court Opinion, dated 1/14/16, at 3.
Appellants filed a Post-Trial Motion, which the trial court denied on November 4, 2015. On December 3, 2015, the trial court entered Judgment in favor of Appellee.
On December 3, 2015, Appellants filed a Notice of Appeal. Both Appellants and the trial court complied with Pa.R.A.P. 1925.
The trial court's Pa.R.A.P. 1925(a) Opinion dated January 14, 2016, incorporated and attached its July 30, 2015 Decision.
Appellants present the following issue for our review:
In the face of contrary language in: i) the final HUD-1 [settlement statement], ii) the title insurance policy, and iii) the single communication, from an institutional lender to an individual lender, addressing priority; and, where no actual evidence of any agreement to subordinate exists, may a Court, nevertheless, assume an agreement and promote the priority of an institutional lenders' Purchase Money Mortgage, over that of an individual lenders' Purchase Money Mortgage, simply because
the holder of the institutional mortgage is a bank, which desired a senior position?Appellants' Brief at 3.
In reviewing a judgment entered in a quiet title action, this Court is limited to determining "whether the findings of fact are supported by competent evidence, whether an error of law has been committed, and whether there has been a manifest abuse of discretion." Regions Mortg., Inc. v. Muthler , 889 A.2d 39, 41 (Pa. 2005) (citation and quotation marks omitted). This Court "will not reverse a determination of the trial court in a quiet title action absent an error of law or capricious disregard of the evidence." Birdsboro Mun. Authority v. Reading Co. and Wilmington & Northern R.R., 758 A.2d 222, 225 (Pa. Super. 2000) (citations and quotation marks omitted).
A sheriff's sale of an encumbered property affects mortgage liens on the property as follows:
§ 8152. Judicial sale as affecting lien of mortgage42 Pa.C.S. § 8152(c). See also Public Federal Sav. & Loan Ass'n v. Neumann , 483 A.2d 505, 507 (Pa. Super. 1984) (stating sale of real property does not affect lien if mortgage is prior to all other liens on property).
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(c) Sale on prior lien.—A judicial or other sale of real estate in proceedings under a prior ground rent, or in foreclosure of a prior mortgage, shall discharge a mortgage later in lien.
42 Pa.C.S. § 8141 governs the priority of competing purchase money mortgage liens against real property. See 42 Pa.C.S. § 8141 (entitled, "Time from which liens have priority"). "The priority of liens as they appear on record is prima facie evidence of the manner in which the proceeds are to be distributed." Farmers Trust Co. v. Bomberger , 523 A.2d 790, 792 (Pa. Super. 1987). See also First Citizens Nat. Bank v. Sherwood , 879 A.2d 178, 182 (Pa. 2005) (stating recording of mortgage serves as constructive notice of mortgage to subsequent purchasers).
In determining the rights of parties to a dispute, the trial court must consider "not only [] the recorded documents, but also [] any agreement by the parties which affects lien priorities between them." Farmers Trust , supra at 793 (citations omitted).
Here, Appellants aver that the trial court improperly concluded Appellants' lien was secondary to Appellee's lien. Appellants' Brief at 11-12, 17-29. Appellants argue that the trial court ignored some evidence while improperly crediting other evidence when finding the existence of an "agreement to subordinate." Appellants' Brief at 11-12. They essentially reargue their case and conclude that the trial court erred in reaching its conclusion.
Our review of the record and the relevant law indicates that the trial court's findings of fact are supported by competent evidence and the trial court did not err as a matter of law. The Honorable Jeffrey R. Sommer, who presided at trial, has authored a comprehensive, thorough, and well-reasoned opinion, citing to the record and relevant case law in addressing Appellants' challenge. We affirm on the basis of the trial court's Opinion. See Trial Court Opinion, dated 1/14/16, at 3-5 (incorporating the detailed analysis of the 7/30/15 Decision, and concluding that: (1) the trial court properly followed 42 Pa.C.S. § 8141 in determining mortgage priority and the trial court did not "greatly expand any basis for revising lien priority[;]" (2) the evidence at trial, including testimony from Appellant, established that Appellants held a second mortgage; (3) Appellants had not protested, objected, or raised any concern at the time of the McDonald-Hamer transaction when presented with documentary evidence that Appellants held a second mortgage; and, accordingly, (4) an agreement existed between the parties that set the statutory lien priority schedule).
The parties are instructed to attach a copy of the trial court's January 14, 2016 Opinion and the July 30, 2015 Decision to all future filings.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 10/18/2016
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