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HomeMy WebLinkAbout2005-3175 Civil DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE OF AMERIQUEST MORTGAGE SECURITIES: INC., ASSET BACKED PASS-THROUGH CERTIFICATE SERIES 2003-11 UNDER THE POOLING AND SERVICING AGREEMENT: DATED AS NOVEMBER 1,: 2003, 505 CITY PARKWAY WEST, SUITE 100, ORANGE, CA 92868, Plaintiff v. DIANA K. KINA VEY, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 05-3175 CIVIL TERM IN RE: PLAINTIFF'S PRELIMINARY OBJECTIONS TO DEFENDANT'S AMENDED NEW MATTER BEFORE HESS and OLER, JJ. OPINION and ORDER OF COURT OLER, 1., February 8, 2006. For disposition in this mortgage foreclosure case are preliminary objections in the nature of a demurrer filed by Plaintiff to various affirmative defenses set forth in Defendant's amended new matter. The preliminary objections were argued on November 23,2005. For the reasons stated in this opinion, Plaintiff's preliminary objections will be sustained in part and denied in part. STATEMENT OF FACTS The allegations of Plaintiff s complaint, in pertinent part, may be summarized as follows: Plaintiff is assignee of a mortgagee, and Defendant is mortgagor, with respect to a mortgage dated September 11, 2003, in the principal amount of $92,195.05, on certain realty in Cumberland County. 1 Plaintiffs assignor, the original mortgagee, was Ameriquest Mortgage Company. 2 Defendant defaulted on the mortgage by failing to make a monthly payment by a due date on December 1, 2004.3 The default ultimately resulted in an acceleration of the amount due under the mortgage. 4 To the extent required by law, Notice of Default, Notice of Intent To Foreclose and Notice of Homeowner's Emergency Assistance Program were sent to Defendant. 5 The period of a temporary stay of the foreclosure expired. 6 The amount due and secured by the mortgage as of the filing of the complaint on June 21, 2005, was $102,073.66, plus interest and other costs and charges associated with the suit and prospective sheriff s sale.7 The allegations of Defendant's amended answer with new matter, In pertinent part, may be summarized as follows: The mortgaged property IS Defendant's residence. 8 The loan in question from Plaintiff s assignor, Ameriquest, to Defendant, arose out of a desire by Defendant to borrow 1 Complaint in Mortgage Foreclosure, ~~1-3, 6, filed June 21,2005 (hereinafter CompI. ~. 2 CompI. ~3. 3 CompI. ~5. 4Id. 5 CompI. ~8. 6Id. 7 CompI. ~~6-7. 8 Defendant's Amended Answer to Plaintiffs Complaint with New Matter and Affirmative Defenses, ~~15-l7, filed August 18,2005 (hereinafter Def.'s Amended Answer ~. 2 $20,000.00 to purchase a mobile home;9 existing liens on Defendant's residence were paid off with the bulk of the loan, in order for Ameriquest to be secured by a fi 10 Irst mortgage. Defendant was induced to enter into the transaction by a promIse by Ameriquest that a line of credit in the amount of $10,000.00 would be made available to Defendant to supplement the net proceeds of the loan ($8,255.00) for purposes of facilitating the mobile home purchase11 and assurances that the loan in question would have a lower interest rate than her present mortgage. 12 The line of credit was not provided by Ameriquest following settlement,13 the interest rate on the new loan was substantially higher than that of the prior mortgage 10an,14 the three-day rescission period applicable to the transaction was rendered illusory by Ameriquest's conduct in pre-dating the applicable provision by three days on the loan documents,15 and the nature of the loan was transformed from an instrument of investment into a mere refinancing of personal indebtedness.16 A representative of Ameriquest told Defendant "that she was stuck with the loan product that she gOt.,,17 Affirmative defenses to the mortgage foreclosure, raised by Defendant in her pleading, are based upon ( a) a right to rescind the transaction pursuant to the federal Truth-in-Lending Act and regulations pursuant thereto as they relate to notice of the three-day rescission period, IS (b) deceptive practices under the 9 Def.' s Amended Answer ~~ 12, 17. 10 Def.'s Amended Answer ~20. 11 Def.'s Amended Answer ~~2l-22, 24. 12 Def.'s Amended Answer ~9. 13 Def.'s Amended Answer ~~26-28. 14 Def.'s Amended Answer ~~13-l4, 21, 24. 15 Def.'s Amended Answer ~25. 16 Def.'s Amended Answer ~~2l-22, 30. 17 Def.'s Amended Answer ~28. 18 Def.'s Amended Answer ~~42-44. 3 Pennsylvania Consumer Protection Law, 19 (c) unconscionability,20 and (d) common law fraud?l Plaintiffs preliminary objections to Defendant's new matter assert that (a) the federal Truth-in-Lending Act can not be used as a defense in a mortgage foreclosure action,22 (b) the Pennsylvania Consumer Protection Law does not apply to the business-purpose loan herein and does not contemplate attribution of an assignor's violations of the act to an assignee,23 (c) the elements of adhesion and umeasonable benefit to the other party requisite to a defense of unconscionability are lacking in the transaction,24 and (d) fraud of an assignor of a mortgage is not a defense to a claim by the assignee against the mortgagor. 25 DISCUSSION Demurrers. In reviewing a preliminary objection in the nature of a demurrer, which challenges the legal sufficiency of a pleading, the court "must accept all material facts set forth in the [pleading,] as well as all the inferences reasonably deducible therefrom as true." Powell v. Drumheller, 539 Pa. 484, 489, 653 A.2d 619, 621 (1995) (citations omitted). A preliminary objection in the form of a demurrer should be sustained only when, "on the facts averred, the law says with certainty that" the position challenged by the demurrer can not prevail. Id at 489, 653 A.2d at 621. If any lingering doubt remains as to whether to sustain the demurrer, "this doubt should be revolved in favor of [the nonmoving party]." Presbyterian Medical Center v. Budd, 2003 P A Super. 323, ,-r6, 832 A.2d 1066, 1070 (2003). 19 Def.'s Amended Answer ~~5l-54. 20 Def.'s Amended Answer ~~56-63. 21 Def.'s Amended Answer ~~65-70. 22 Plaintiffs Preliminary Objections to Defendant's New Matter, ~~5-6, filed August 29, 2005 (hereinafter PI.'s Prelim. Obj. ~. 23 PI.'s Prelim. Obj. ~7. 24 PI.'s Prelim. Obj. ~8. 25 PI.'s Prelim. Obj. ~9. 4 Federal Truth-in-Lending Act. Under Cumberland County Rule of Procedure 1028(c)(6), "[i]ssues raised, but not briefed, shall be deemed abandoned." In the present case, the issue of whether a violation of the federal Truth-in-Lending Act can be used as a defense in a mortgage foreclosure action has not been briefed by Plaintiff. As a consequence, for purposes of Plaintiff s preliminary objections the issue has been waived. Pennsylvania Consumer Protection Law. "The rule is that the assignee of a mortgage takes it subject to all defenses available against the assignor. . . ." Kepler v. Kepler, 330 Pa. 441, 447, 199 A. 198, 203 (1938) (citations omitted). Given this principle, and the dispute in the pleadings as to whether, as events transpired, the loan to Defendant can fairly be characterized as for business purposes, the court is not in a position at this stage of the case to resolve the issue of whether Defendant's affirmative defense under Pennsylvania's Consumer Protection Law is devoid of merit. Unconscionability. "Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are umeasonably favorable to the other party." Germantown Manufacturing Co. v. Rawlinson, 341 Pa. Super. 42, 55, 491 A.2d 138, 145 (1985) (citations omitted). In the present case, the requisite element of adhesion does not appear from the averments in Defendant's pleading and Plaintiff s preliminary objection as to this defense will be sustained. Fraud As previously noted, "[t]he rule is that the assignee of a mortgage takes it subject to all defenses available against the assignor. . .." Kepler v. Kepler, 330 Pa. 441, 447, 199 A. 198, 203 (1938) (citations omitted). Plaintiffs argument as to the defense of fraud herein, premised upon a contrary theory, therefore can not prevail. F or the foregoing reasons, the following order will be entered: 5 ORDER OF COURT AND NOW, this 8th day of February, 2006, upon consideration of Plaintiffs Preliminary Objections to Defendant's [Amended] New Matter, and for the reasons stated in the accompanying opinion, it is ordered and directed as follows: 1. Plaintiff s preliminary objection in the nature of a demurrer to Defendant's affirmative defense of unconscionability is sustained, and that defense is dismissed; 2. In all other respects, Plaintiff s preliminary objections are denied. BY THE COURT, s/ 1. Wesley Oler, Jr. 1. Wesley Oler, Jr., 1. Henry F. Reichner, Esq. Peggy B. Greenfeld, Esq. Reed Smith, LLP 2500 One Liberty Place 1650 Market Street Philadelphia, P A 19103 Attorneys for Plaintiff Patrick Cicero, Esq. 213A North Front Street Harrisburg, P A 17101 Attorney for Defendant 6 7 DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE OF AMERIQUEST MORTGAGE SECURITIES: INC., ASSET BACKED PASS-THROUGH CERTIFICATE SERIES 2003-11 UNDER THE POOLING AND SERVICING AGREEMENT: DATED AS NOVEMBER 1,: 2003, 505 CITY PARKWAY WEST, SUITE 100, ORANGE, CA 92868, Plaintiff v. DIANA K. KINA VEY, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 05-3175 CIVIL TERM IN RE: PLAINTIFF'S PRELIMINARY OBJECTIONS TO DEFENDANT'S AMENDED NEW MATTER BEFORE HESS and OLER, JJ. ORDER OF COURT AND NOW, this 8th day of February, 2006, upon consideration of Plaintiffs Preliminary Objections to Defendant's [Amended] New Matter, and for the reasons stated in the accompanying opinion, it is ordered and directed as follows: 1. Plaintiff s preliminary objection in the nature of a demurrer to Defendant's affirmative defense of unconscionability is sustained, and that defense is dismissed; 9 2. In all other respects, Plaintiff s preliminary objections are denied. BY THE COURT, 1. Wesley Oler, Jr., 1. Henry F. Reichner, Esq. Peggy B. Greenfeld, Esq. Reed Smith, LLP 2500 One Liberty Place 1650 Market Street Philadelphia, P A 19103 Attorneys for Plaintiff Patrick Cicero, Esq. 213A North Front Street Harrisburg, P A 17101 Attorney for Defendant