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HomeMy WebLinkAbout2009-5756 Civil FARMERS AND MERCHANTS TRUST : IN THE COURT OF COMMON PLEAS COMPANY OF CHAMBERSBURG, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, : : v. : CIVIL DIVISION : GORDON HOLL a/k/a GORDON D. HOLL : NO. 09-5756 and AMY HOLL a/k/a AMY D. HOLL : Defendants : IN RE: PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT BEFORE OLER, J. and EBERT, J. ORDER OF COURT rd AND NOW this 3 day of August, 2010, upon consideration of Plaintiff’s Motion for Summary Judgment, the briefs filed by the parties and after oral argument; IT IS HEREBY ORDERED AND DIRECTED that Plaintiff’s Motion for Summary DENIED Judgment is . By the Court, M. L. Ebert, Jr., J. Scott A. Dietterick, Esquire Kimberly A. Bonner, Esquire Attorneys for Plaintiff James, Smith, Dietterick & Connelly, LLP P.O. Box 650 Hershey, PA 17033 Sally J. Winder, Esquire Attorney for Defendants P.O. Box 341 Newville, PA 17241 FARMERS AND MERCHANTS TRUST : IN THE COURT OF COMMON PLEAS COMPANY OF CHAMBERSBURG, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, : : v. : CIVIL DIVISION : GORDON HOLL a/k/a GORDON D. HOLL : NO. 09-5756 and AMY HOLL a/k/a AMY D. HOLL : Defendants : IN RE: PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT BEFORE OLER, J. and EBERT, J. OPINION AND ORDER OF COURT EBERT, J., August 3, 2010 - Plaintiff, Farmers and Merchants Trust Company, commenced a mortgage foreclosure action against Defendants, Gordon Holl and Amy Holl, because of Defendants’ failure to pay monthly installments or principal and interest on their mortgaged property when due. Defendants subsequently made a payment of $261,758.04 to Plaintiff and filed an Answer to Plaintiff’s Complaint. Plaintiff then filed a Motion for Summary Judgment alleging that the Defendants failed to pay the total amount due and owing on the Mortgage and failed to establish a defense to Plaintiff’s Complaint in Mortgage Foreclosure. For the reasons stated below, Plaintiff’s Motion for Summary Judgment is denied. STATEMENT OF FACTS The following facts from the record are not in dispute. Defendants are the record and real 1 owners of the property located at 355 Hunters Road, Newville, PA (“Property”). On June 1, 2000, the Defendants executed a Note in favor of the Plaintiff in the principal amount of 1 Pl.’s Compl. in Mortgage Foreclosure, filed Aug. 20, 2009, ¶ 5, 2. 1 2 $430,000 and entered a Mortgage on the Property to secure the Note. The Mortgage went into 3 default when Defendants failed to pay several monthly installments of the principal and interest. The Plaintiff filed a Complaint in Mortgage Foreclosure on August 20, 2009, to commence an action in foreclosure. Plaintiff also mailed to Defendants a combined Notice of Homeowners’ Emergency Assistance Act of 1983 and Notice of Intention to Foreclose Mortgage, purportedly 4 in compliance with Act 91 of 1983 and Act 6 of 1974, 41 P.S. §101, et. seq. Defendants then filed Preliminary Objections to Plaintiff’s Complaint alleging that the Plaintiff failed to comply 5 with the statutory notice requirements, but the Objections were overruled on January 12, 2010. 6 Thereafter, the Defendants made a payment of $261,758.04 to the Plaintiff on January 28, 2010. Defendants also filed an Answer and New Matter to Plaintiff’s Complaint on February 1, 2010, 7 contending that the January 28 payment cured their default. Plaintiff filed a Motion for Summary Judgment on June 7, 2010, arguing that the Defendants are still in default and that they 8 owe the full remaining balance on the principal plus interest and fees. DISCUSSION Summary Judgment Standard In Pennsylvania, a court may grant summary judgment only when there is no genuine issue of any material fact as to a necessary element of the cause of action or a defense that could be established by additional discovery. Pa. R. C. P. 1035.2. The court must view the record in the light most favorable to the non-moving party and must resolve all doubts as to the existence of a genuine issue of material fact against the moving party. Fine v. Checcio, 870 A.2d 850, 2 Pl.’s Compl. at ¶ 3, 4. 3 Pl.’s Compl. at ¶ 6. 4 Pl.’s Compl. at ¶ 7. 5 Pl.’s Mot. for Summ. J., filed June 7, 2010, ¶ 2, 3. 6 Defs.’ Answer and New Matter to Pl.’s Compl. in Mortgage Foreclosure, filed Feb. 1, 2010, ¶ 6. 7 Defs.’ Answer and New Matter at ¶ 6. 8 Pl.’s Mot. for Summ. J., filed June 7, 2010, ¶ 12, 13. 2 857 (Pa. 2005). Furthermore, the court may grant summary judgment only where the right to summary judgment is clear and free from doubt. Marks v. Tasman, 589 A.2d 205, 206 (Pa. 1991). In an action for foreclosure due to Defendants’ failure to pay a debt, summary judgment is proper where the Defendant admits that he has failed to make the payments due and fails to sustain a cognizable defense to the Plaintiff’s claim. Gateway Towers Condominium Ass’n v. Krohn, 845 A.2d 855 (Pa.Super. 2004). Analysis At issue then is whether the Defendants are in default under the terms of the Mortgage and Note and/or do they have a cognizable defense. Plaintiff alleges in the Complaint that the Defendants are in default of their Note and Mortgage since the Defendants failed to pay several months’ installment payments. Plaintiff maintains that the full amount of the Note is due and owing, arguing that foreclosure is appropriate. Plaintiff further contends that an award of summary judgment is proper, arguing from case law that summary judgment is properly granted when a mortgagor admits to being in default under the terms of the note and mortgage. Defendants counter that they are no longer in default, having cured the default with a lump sum payment of $261,758.04 on January 28, 2010. Defendants further argue that since Plaintiff chose to be governed by the provisions of Act 91 and Act 6, but has not complied with the Act 91 and Act 6 notice requirements they have a cognizable defense. As a preliminary matter, we note that Act 6 Notices are only required in cases where the principal amount is $217,873 or less. 41 P.S. §101; 41 P.S. § 403. Because the original amount for the Note in the instant case was $430,000, Act 6 Notice requirements would not ordinarily govern. If Act 6 were to apply to the instant proceeding, Plaintiff would be required to grant a 3 period of time for Defendants to cure their default before accelerating the loan amount. 41 P.S. § 403. The record clearly shows that Plaintiff sent a combined Act 91 and Act 6 Notice to the 9 Defendants. In fact Plaintiff avers in the Complaint that the combined Notices were mailed “in compliance with the Homeowners’ Emergency Mortgage Assistance Act, Act 91 of 1983 and 10 Act 6 of 1974.” Plaintiff later included a copy of the Notice in the Reply to Defendants’ Preliminary Objections. The Notice contains provisions which seemingly allow Plaintiff to cure 11 the default prior to acceleration of the debt. Equally clear in the record is evidence that the Defendants believed that the Act 91 and Act 6 Notice requirements were binding on the foreclosure proceedings. The Defendants’ Preliminary Objections focus on whether the Act 91 12 and Act 6 Notices were properly sent and served. All of the subsequent documents on record filed by Defendants are replete with references to the applicability of the Act 91 and Act 6 Notices. Furthermore, it is not until after the Defendants made the payment to cure the default 13 that Plaintiff clearly denies that the Act 6 Notice requirements even apply to Defendants’ loan. Thus, the evidence on record raises the question of whether the Act 6 Notice requirements should apply in the instant foreclosure proceedings. One court has noted that an “erroneously sent Act Six Notice may well have misled the defendants and certainly the retention of the money sent which was only sent for the purpose of curing the default establishes a contract between defendants and plaintiff which cannot be unilaterally abrogated by the latter while it still retains the money.” The Fidelity Bank v. 9 Pl.’s Reply to Defs.’ Prelim. Objections, filed Sept. 21, 2009, Exhibit A. See also Pl.’s Compl. at ¶ 7. 10 Pl.’s Compl. at ¶ 7. 11 The combined Notices sent to Defendants contain the following language: “If you do not cure the default within the lender intends to exercise its rights to accelerate the THIRTY (30) DAYS of the date of this Notice, mortgage debt ” (emphasis in the original). See Pl.’s Reply to Defs.’ Prelim. Objections, Exhibit A. 12 See generally, Defs.’ Prelim. Objections to Pl.’s Comp. in Mortgage Foreclosure, filed Sept. 9, 2009. 13 Pl.’s Reply to Defs.’ New Matter, filed Feb. 12, 2010, ¶ 9. 4 McAlinden, 30 Pa. D. & C.3d 298, 299-300 (Pa. Com. Pl. 1982). While the facts in Fidelity Bank dealt with the opening of a judgment by confession in a mortgage case, they are in many ways nearly identical to the instant case. The court in Fidelity Bank concluded that principles of equity “support the position of defendants who have received an erroneous notice, paid a considerable amount of the mortgage and sent the amount they reasonably thought might cure the default and then find the plaintiff has taken such money and nevertheless failed to cure the default.” Id. Similarly, in the instant case Defendants maintain that they relied on the Plaintiff’s 14 combined Act 91 and Act 6 notices which appeared to allow them to cure their default. In that belief they paid the sum of $261,758.04 to the Plaintiff who kept the money but maintains that the payment did not cure the default. While this Court realizes that the opinion in Fidelity Bank, being a Philadelphia Common Pleas Court opinion, is not binding upon this Court, at least for the purposes of Summary Judgment, we find the reasoning used by Judge Lord in Fidelity Bank to be compelling and accordingly find that the Plaintiff’s right to Summary Judgment is not clear and free from doubt. CONCLUSION A genuine issue of material fact exists as to whether the Defendants’ Mortgage is in default or whether Plaintiff’s error with regard to the Act 6 and Act 91 notices afford them a cognizable defense. Accordingly, Plaintiff’s Motion for Summary Judgment is denied. Accordingly, the following order will be entered. ORDER OF COURT rd AND NOW this 3 day of August, 2010, upon consideration of Plaintiff’s Motion for Summary Judgment, the briefs filed by the parties and after oral argument; 14 Defs. Answer, ¶ 6, 7. 5 IT IS HEREBY ORDERED AND DIRECTED that Plaintiff’s Motion for Summary DENIED Judgment is . By the Court, M. L. Ebert, Jr., J. Scott A. Dietterick, Esquire Kimberly A. Bonner, Esquire Attorneys for Plaintiff James, Smith, Dietterick & Connelly, LLP P.O. Box 650 Hershey, PA 17033 Sally J. Winder, Esquire Attorney for Defendants P.O. Box 341 Newville, PA 17241 6