J-A25023-17


                                   2018 PA Super 27

    WELLS FARGO BANK, N.A.                            IN THE SUPERIOR COURT
                                                                OF
                                                           PENNSYLVANIA
                             Appellee

                        v.

    CARL A. JOSEPH AND OCTAVIA JOSEPH

    APPEAL OF CARL A. JOSEPH                            No. 636 EDA 2017


                Appeal from the Order entered January 17, 2017
                In the Court of Common Pleas of Monroe County
                       Civil Division at Nos: 2014 CV 3953

BEFORE: OTT, STABILE, JJ., and STEVENS, P.J.E.*

OPINION BY STABILE, J.:                           FILED FEBRUARY 13, 2018

        Appellant, Carl A. Joseph, appeals from an order entered in the Monroe

County Court of Common Pleas, Civil Division, granting summary judgment to

Wells Fargo Bank, N.A. in this mortgage foreclosure action. We affirm.

        The factual and procedural history of this case is as follows. On March

3, 2010, Appellant and his wife, Octavia Joseph, executed a promissory note

in the principal amount of $205,321.00 (the “Note”) in favor of Wells Fargo

Bank, N.A. (“the Bank”) evidencing their obligation to repay a loan made to

them by the Bank in that same amount (the “Loan”). The Note stated in bold

letters: “Notice: this loan is not assumable without the approval of the



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*   Former Justice specially assigned to the Superior Court.
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Department of Veteran Affairs or its authorized agent.” The Bank endorsed

the Note in blank making it a bearer instrument.

      On the same date, to secure payment of their obligations under the

Note, the Josephs executed a mortgage (the “Mortgage”) granting the Bank

and its successors and assignees a first lien security interest on real property

located at 198 White Pine Trail, Tannersville, Pennsylvania, 18372 (the

“Property”). The Bank recorded the Mortgage in the Office of the Recorder of

Deeds for Monroe County.

      The Josephs defaulted on the Mortgage by failing to make the monthly

payment due on July 1, 2013 and thereafter. On October 29, 2013, the Bank

sent a combined notice pursuant to the Homeowners Emergency Mortgage

Assistance Act, commonly known as Act 91, 35 P.S. §§ 1680.401c, et seq.

(“Act 91”), and the Loan Interest Protection Law, commonly known as Act 6,

41 P.S. §§ 101 et seq. (“Act 6”) (collectively, the “Act 91 Notices”), to the

Josephs. The Act 91 Notices advised that the Mortgage was in default due to

the Josephs’ failure to make monthly payments from July 1, 2013 through

October 1, 2013 and the total amount due to cure the default. The Act 91

Notices also informed the Josephs of the procedures for applying for assistance

to avoid foreclosure. The Josephs failed to cure their payment defaults under

the Note and Mortgage.

      On May 13, 2014, the Bank filed a complaint in mortgage foreclosure

against the Josephs seeking judgment in the amount of $242,593.26. The


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Bank averred that it was the payee of the Note, was in possession of the Note,

and was the current mortgagee.

      Thereafter, Appellant applied to Wells Fargo for mortgage assistance.

In a letter to Appellant dated May 11, 2016, Paul Gruber, an Executive

Resolution Specialist for Wells Fargo Home Mortgage, advised that the Bank

considered Appellant for five assistance programs but denied Appellant’s

request for assistance because his income was too low to “create an affordable

mortgage payment” in accordance with program requirements.             Gruber

expressly stated that Wells Fargo Home Mortgage is a division of the Bank.

      On August 8, 2016, Appellant filed a one-paragraph answer to the

Bank’s complaint alleging that the total amount due “was in dispute

significantly” and that the Bank “is not the legal possessor[] of said original

and is therefore not legally able to bring any action against Defendants.”

      In a letter dated November 10, 2016, Appellant requested that the Bank

identify the current owner of the Loan. On November 22, 2016, Gruber sent

Appellant a letter advising that Wells Fargo Home Mortgage was the servicer

and owner of the Loan and that Wells Fargo Home Mortgage was a division of

the Bank.

      On November 21, 2016, the Bank filed a motion for summary judgment

and attached as exhibits, inter alia, copies of the loan history, the recorded

Mortgage, the original blank endorsed Note, the affidavit of Cynthia A.




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Thomas, the Bank’s Vice President of Loan Documentation, and the Act 91

Notices sent to the Josephs.

        On January 10, 2017, Appellant filed a response to the Bank’s motion

for summary judgment. He argued that the Bank (a) lacked standing because

the Mortgage was allegedly transferred to Wells Fargo Home Mortgage; (b)

failed to comply with a federal regulation relating to veterans affairs, 38 C.F.R.

§ 36.4278(g); and (c) failed to comply with 15 U.S.C. § 1641(g) of the Truth

in Lending Act ("TILA") by not providing notice of a transfer or assignment of

the Mortgage.       Appellant also filed his own cross-motion for summary

judgment and a motion for leave to file an amended answer to the Bank’s

complaint that added the TILA defense and the defense that the Bank failed

to comply with 38 C.F.R. § 36.4278(g). Nowhere in these filings, however,

did Appellant dispute that the Mortgage was in default.

        On January 17, 2017, the trial court granted the Bank’s motion for

summary judgment, denied Appellant’s cross-motion for summary judgment,

denied Appellant’s motion for leave to file an amended answer, and entered

judgment of $281,274.75 in favor of the Bank. Appellant filed a timely appeal

to this Court,1 and both Appellant and the trial court complied with Pa.R.A.P.

1925.

        In this appeal, Appellant raises the following issues:



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1   Octavia Joseph did not appeal.

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      1. Did the trial court err in granting summary judgment to [the
      Bank] when it relied upon the testimonial affidavit of Cynthia A.
      Thomas, when such affidavit was based upon information and
      belief, rather than personal knowledge?

      2. Did the trial court err in entering summary judgment in [the
      Bank]’s favor when a genuine issue of material fact was raised by
      [Appellant] in opposition to [the Bank’s] motion regarding the
      ownership of the [M]ortgage, based upon exhibits produced by
      the defendant, including correspondence from the servicer Wells
      Fargo Home Mortgage?

      3. Did the trial court err in granting summary judgment to [the
      Bank] when [Appellant’s] response raises an issue of material fact
      whether [the Bank] complied with the Veterans' Administration
      regulations, which are specifically referenced in the promissory
      [N]ote?

      4. Did the trial court err in granting summary judgment to [the
      Bank] when it determined that the subject [M]ortgage was not
      subject to Veterans' Administration regulations despite an
      acknowledgment by [the Bank], which was attached as an exhibit
      to [Appellant’s] response in opposition to summary judgment, to
      the contrary?

      5. Did the trial court err in denying [Appellant’s] motion to amend
      [his] answer and new matter to include affirmative defenses of
      lack of standing to sue and failure to meet several conditions
      precedent, including [TILA] requirements and Veterans'
      Administration regulations; and to include a counterclaim for
      violation of section 131(g) of the [TILA], when judgment had not
      yet been entered on [the Bank]’s motion for summary judgment,
      when [Appellant] raise a potentially meritorious defense, and
      when amendment would have served the interests of justice and
      would not have prejudiced [the Bank]?

Appellant’s Brief at 4-5.

      The Pennsylvania Rules of Civil Procedure authorize parties to move for

summary judgment “whenever there is no genuine issue of any material fact




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as to a necessary element of the cause of action or defense which could be

established by additional discovery or expert report[.]” Pa.R.C.P. 1035.2(1).

      As has been oft declared by this Court, summary judgment is
      appropriate only in those cases where the record clearly
      demonstrates that there is no genuine issue of material fact and
      that the moving party is entitled to judgment as a matter of law.
      When considering a motion for summary judgment, the trial court
      must take all facts of record and reasonable inferences therefrom
      in a light most favorable to the non-moving party. In so doing,
      the trial court must resolve all doubts as to the existence of a
      genuine issue of material fact against the moving party, and, thus,
      may only grant summary judgment where the right to such
      judgment is clear and free from all doubt.

      On appellate review, then, an appellate court may reverse a grant
      of summary judgment if there has been an error of law or an
      abuse of discretion. But the issue as to whether there are no
      genuine issues as to any material fact presents a question of law,
      and therefore, on that question our standard of review is de novo.
      This means we need not defer to the determinations made by the
      lower tribunals. To the extent that this Court must resolve a
      question of law, we shall review the grant of summary judgment
      in the context of the entire record.

Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (internal

citations and quotation marks omitted). The party opposing the motion for

summary judgment must produce evidence essential to the cause of action,

without merely resting upon the allegations or denials in the pleadings.

Pa.R.C.P. 1035.3(a).

      In his first argument on appeal, Appellant contends that the entry of

summary judgment violated the rule of Nanty–Glo v. American Surety Co.,

163 A. 523 (Pa. 1932), because the trial court relied solely on the testimonial

affidavit of Cynthia Thomas, an officer at the Bank.     Nanty–Glo prohibits


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entry of summary judgment based solely on the moving party’s oral

testimony. See Sherman v. Franklin Regional Med. Ctr., 660 A.2d 1370,

1372 (Pa. Super. 1995).    Nanty-Glo is inapplicable here for two reasons.

First, the Bank did not seek summary judgment based on Thomas’ affidavit

alone; it also submitted a loan report demonstrating that the Josephs

defaulted on mortgage payments from July 1, 2013 onward. The loan history

is admissible as a record of regularly conducted activity or a business record.

See Pa.R.E. 803(6); 42 Pa.C.S.A. § 6108. Second, Nanty-Glo does not apply

when the moving party supports its motion with admissions of the opposing

party. Sherman, 660 A.2d at 1372. Here, the Bank reasserted the Josephs’

default in its motion for summary judgment, and Appellant did not dispute this

allegation in his response. Thus, the Bank’s allegation of default is deemed

admitted. See Sherman, 660 A.2d at 1372.

      In his second argument, Appellant contends that the Bank lacks

standing to prosecute this action because Wells Fargo Home Mortgage owns

the mortgage and the loan instead of the Bank. According to Appellant, the

fact that the May 11, 2016 and November 22, 2016 letters were from Wells

Fargo Home Mortgage instead of the Bank demonstrates that the Bank no

longer owns the Mortgage or Loan and lacks standing to bring this action. We

disagree. Both letters expressly state that Wells Fargo Home Mortgage is a

division of the Bank. A bank division is part of the bank, not a separate legal

entity capable of bringing an action on its own.      Cf. AK Steel Corp. v.


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Viacom, Inc., 835 A.2d 820, 824 (Pa. Super. 2003) (citation omitted) (“a

division of a corporation is not a separate legal entity capable of being sued”).

Because, as a matter of law, Wells Fargo Home Mortgage is part of the Bank

itself, the Bank did not sell or transfer the mortgage to another party, and it

has standing to bring this foreclosure action.

      We consider Appellant’s third and fourth arguments together, because

they both concern whether the Bank violated 38 C.F.R. § 36.4278(g), a

regulation governing veterans affairs, and a TILA statute, 15 U.S.C. § 1641(g).

First, Appellant fails to demonstrate that 38 C.F.R. § 36.4278(g) applies to

him. Section 36.4278 falls within the section 36.4200 series of regulations, a

series “applicable to each loan entitled to guaranty under 38 U.S.C. 3712.”

38 C.F.R. § 36.4201. Section 3712 in turn governs loans to veterans for the

purpose of purchasing “manufactured homes” and “lots.” A “manufactured

home” is defined as “[a] movable dwelling unit designed and constructed for

year-round occupancy on land by a single family, which dwelling unit contains

permanent eating, cooking, sleeping, and sanitary facilities.”      38 C.F.R. §

36.4202. A “lot” is defined as “[a] parcel of land acceptable to the Secretary

[of Veterans Affairs] as a manufactured home site.” Id. Section 36.4278(g)

prescribes the procedures that creditors should follow in collection actions

against veterans who default on payments for manufactured homes or lots.

Here, Appellant failed to present any evidence that the Property has a

manufactured home or is a parcel of land acceptable to the Secretary of


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Veterans Affairs as a manufactured home site.        Thus, as a matter of law,

section 36.4278(g) is inapposite.

       Neither did the Bank violate 15 U.S.C. § 1641(g), which provides that

“[within thirty days] after a mortgage loan “is sold or otherwise transferred or

assigned to a third party, the creditor that is the new owner or assignee of the

debt shall notify the borrower in writing of such transfer.” Appellant claims

that this statute was violated because he was not notified that the Bank

transferred or assigned the Loan to Wells Fargo Home Mortgage within thirty

days after the transfer or assignment. As discussed above, however, Wells

Fargo Home Mortgage is a division of the Bank, not a “new owner or assignee”

of the Loan subject to section 1641(g). Thus, as a matter of law, there was

no violation of section 1641(g).2

       Finally, Appellant argues that the trial court erred by denying his motion

to amend his answer to include (1) affirmative defenses of lack of standing to

sue and violations of the aforementioned TILA statute and Veterans’

Administration regulations, and (2) a counterclaim for violation of the TILA

statute. Although the court generally should exercise its discretion to permit

amendments, it need not permit amendments where they would be an

exercise in futility, that is, “where a party will be unable to state a claim on



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2 Because we hold that these defenses fail as a matter of law, we need not
address the Bank’s argument that Appellant waived these defenses by failing
to raise them in his answer to the complaint.

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which relief could be granted . . .” Schwartzwaelder v. Fox, 895 A.2d 614,

621 (Pa. Super. 2006) (citation omitted). As explained above, the defenses

and claims Appellant sought leave to add—lack of standing, violation of the

TILA statute, and violation of the Veterans Administration regulations—fail as

a matter of law. Therefore, the trial court properly denied Appellant’s motion

to amend.

      Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 2/13/18




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