J-A29020-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

THE BANK OF NEW YORK MELLON TRUST              IN THE SUPERIOR COURT OF
COMPANY, NATIONAL ASSOCIATION                        PENNSYLVANIA
F/K/A/THE BANK OF NEW YORK TRUST
COMPANY, N.A. AS SUCCESSOR TO
JPMORGAN CHASE BANK, N.A., AS
TRUSTEE FOR RASC 2002KS6

                         Appellee

                    v.

EDELLA JOHNSON, A/K/A EDELLA
ROBINSON, A/K/A EDELLA ROBINSON
JOHNSON; ERIC R. JOHNSON, A/K/A
ERIC JOHNSON

                         Appellants                 No. 302 WDA 2016


           Appeal from the Judgment Entered February 10, 2016
            In the Court of Common Pleas of Allegheny County
                   Civil Division at No(s): MG-09-000736


BEFORE: DUBOW, J., MOULTON, J., and MUSMANNO, J.

MEMORANDUM BY MOULTON, J.:                            FILED MAY 26, 2017

      Edella Johnson, a/k/a Edella Robinson, a/k/a Edella Robinson Johnson

and Eric R. Johnson, a/k/a Eric Johnson (collectively, “the Johnsons”) appeal

from the February 10, 2016 judgment entered in favor of the Bank of New

York Mellon Trust Company, National Association f/k/a/the Bank of New York

Trust Company, N.A. as successor to JPMorgan Chase Bank, N.A., as trustee

for RASC 2002KS6 (“BNY Mellon”) in the Allegheny County Court of Common

Pleas following a non-jury trial. We affirm.
J-A29020-16



      The trial court summarized the relevant factual and procedural history

of this matter as follows:

             On May 23, 2002, [the Johnsons] entered into a
         Mortgage Contract with EquiFirst Corporation.            The
         Mortgage was assigned to JPMorgan Chase Bank as
         Trustee of Residential Funding Corporation on or about
         March 17, 2003. The land subject to the Mortgage is
         located at 636 Collins Avenue, Pittsburgh, PA 15206. The
         Johnsons defaulted under the Mortgage by failing to make
         payments due. On March 31, 2009, BNY Mellon filed the
         instant in rem mortgage foreclosure action against the
         Johnsons. The Johnsons filed an Answer with New Matter
         and then [BNY Mellon] filed a Motion for Summary
         Judgment.      The Johnsons filed a response and Judge
         Timothy Patrick O'Reilly denied [BNY Mellon’s] Motion for
         Summary Judgment. After a non-jury trial on September
         22, 2015, this Court found in favor of [BNY Mellon] and
         against the Johnsons in the amount of $116,788.28. The
         Johnsons filed a Motion for Post-Trial Relief requesting that
         this Court vacate its verdict and dismiss the action without
         prejudice. That Motion was denied and then the Johnsons
         filed the instant Appeal.

Opinion, 4/7/16, at 1-2 (“1925(a) Op.”).

      The Johnsons raise the following issues on appeal:

         1) Did the lower court err in entering a judgment based on
         unauthenticated business records?

         2) Did the lower court err in entering a judgment against
         the Johnsons although they had not been mailed a true Act
         91 Notice and [BNY Mellon’s] trial testimony was less than
         candid?

         3) Did the lower court err in entering a judgment against a
         married person, [Edella] Johnson, not obligated under the
         Note?

         4) Did the lower court err in entering a judgment where
         the mortgage assignments contained a fatal gap?



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           5) Did the lo[w]er court err in entering a judgment
           although BNY Mellon failed to join an indispensable party?

Johnsons’ Br. at 1-2.

       First, the Johnsons contend that the trial court erred in relying on

unauthenticated business records.              Specifically, the Johnsons argue that

Loretta Poch, an analyst with their current mortgage servicer, Specialized

Loan Servicing (“SLS”), could not properly authenticate the business records

of the prior mortgage servicers.1

       It is well-settled that

           [q]uestions concerning the admissibility of evidence lie
           within the sound discretion of the trial court, and we will
           not reverse the court’s decision absent a clear abuse of
           discretion.   An abuse of discretion may not be found
           merely because an appellate court might have reached a
           different   conclusion,    but     requires     a   manifest
           unreasonableness, or partiality, prejudice, bias, or ill-will,
           or such lack of support so as to be clearly erroneous.

Keystone Dedicated Logistics, LLC v. JGB Enter., Inc., 77 A.3d 1, 11

(Pa.Super. 2013) (internal citations and quotations omitted). This Court has

previously discussed the admission of business records pursuant to the

Pennsylvania Rules of Evidence as follows:
____________________________________________


       1
         At trial, the trial court first admitted the records for the limited
purpose of showing the principal balance due and that the Johnsons were in
default.    N.T., 9/22/15, at 25.       With that qualification, the Johnsons
withdrew their objection to the admission of the records. Id. The court
went on to explain that the documents were also admissible to show the
interest due and owing. Id. at 26. Later, when BNY Mellon inquired
whether the loan payment history was introduced for a limited purpose, the
trial court replied, “No, it is in evidence.” Id. at 32. The Johnsons did not
renew their objection to the admission of the records.



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       “Hearsay” is an out of court statement offered in court for
       the truth of the matter asserted. Pa.R.E. 801(c). A
       writing constitutes a “statement” as defined by Rule
       801(a).    See Pa.R.E. 801(a).        Subject to certain
       exceptions, hearsay is inadmissible at trial. Pa.R.E. 802.
       One such exception is contained in Rule 803(6), which
       permits the admission of a recorded act, event or condition
       if:

              (A) the record was made at or near the time
              by—or from information transmitted by—
              someone with knowledge;

              (B) the record was kept in the course of a
              regularly conducted activity of a “business”,
              which term includes business, institution,
              association, profession, occupation, and calling
              of every kind, whether or not conducted for
              profit;

              (C) making the record was a regular practice of
              that activity;

              (D) all these conditions are shown by the
              testimony of the custodian or another qualified
              witness, or by a certification that complies with
              Rule 902(11) or (12) or with a statute
              permitting certification; and

              (E) neither the source of information nor
              other circumstances indicate a lack of
              trustworthiness.

       Pa.R.E. 803(6) (emphasis added). Furthermore,               the
       Uniform Business Records as Evidence Act states:

              A record of an act, condition or event shall,
              insofar as relevant, be competent evidence if
              the custodian or other qualified witness
              testifies to its identity and the mode of its
              preparation, and if it was made in the regular
              course of business at or near the time of the
              act, condition or event, and if, in the opinion of
              the tribunal, the sources of information,
              method and time of preparation were such as
              to justify its admission.

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        42 Pa.C.S.A. § 6108(b). “As long as the authenticating
        witness can provide sufficient information relating to the
        preparation and maintenance of the records to justify a
        presumption of trustworthiness for the business records of
        a company, a sufficient basis is provided to offset the
        hearsay character of the evidence.” Boyle v. Steiman,
        429 Pa.Super. 1, 631 A.2d 1025, 1032–33 (1993) (internal
        citations omitted), appeal denied, 538 Pa. 663, 649 A.2d
        666 (1994).

U.S. Bank, N.A. v. Pautenis, 118 A.3d 386, 401 (Pa.Super. 2015).

     The Johnsons rely in part on Pautentis, in which this Court considered

whether the business records exception to hearsay applied to loan history

documents. The trial court in Pautentis found that the witness testifying on

behalf of the homeowner’s current mortgage servicer could not authenticate

the documents or establish their trustworthiness.    Id. at 401.   The court

reasoned that:    (1) the witness explained his company’s process for

validating and adopting the prior loan servicer’s records, but had no

knowledge as to how the prior servicer created or maintained its records; (2)

the records of payment activity provided at trial dated back only to February

1, 2008, which was more than a year after the loan originated; (3) the

document presented indicated the principal loan amount was over $6,000

more than at the time of the loan’s inception, the witness could not explain

this difference, and the homeowner testified she had been making payments

prior to her default, which would have decreased the loan principal amount;

(4) the witness admitted that he did not review the qualified written request

sent by the homeowner’s attorney to her mortgagee to obtain information



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J-A29020-16


about the mortgage; and (5) the loan servicer did not investigate the

accuracy of the amount purportedly due, other than reviewing the

incomplete payment history information received from the prior servicer.

Id. at 400-02. We concluded that the trial court did not abuse its discretion

in finding the bank “failed to present complete, accurate and trustworthy

records evincing the actual amount due and owing from [Home Owner] on

this loan obligation.” Id. at 402 (quotation omitted) (alteration in original).

We affirmed the trial court’s exclusion of the loan history documents

presented as proof of the amount owed by the homeowner on the loan. Id.

      In contrast, here we are reviewing the trial court’s decision to admit

the business records. Further, BNY Mellon’s witness Poch testified that: the

loan payment history was complete and “record[ed] all financial transactions

related to this loan from June 27[], 2002 and ending [July 31, 2014]”; the

Johnsons did not contend the prior servicers’ payment history failed to

include all prior payments made; based on her review of the records the

prior servicers’ records were “in compliance with the industry standards for

keeping financial records on mortgage loans”; and the records contained “no

unusual entries.” N.T., 9/22/15, at 20, 41. We conclude that the trial court

did not abuse its discretion in admitting the records in question.

      The Johnsons next claim that the trial court erred “in entering a

judgment against the Johnsons although they had not been mailed a true

Act 91 Notice and Plaintiff’s trial testimony was less than candid.” Johnsons’


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J-A29020-16


Br. at 2.     The Johnsons contend that they received a defective notice

because the “mandated list of credit counseling agencies was not attached.”

Id. at 8. According to the Johnsons, while the Act 91 notice stated that a

list of such agencies was attached, no such list was in fact included with the

notice.2

       This Court has explained:

           Act 91 requires a mortgagee who desires to foreclose to
           send notice to the mortgagor “advis[ing] the mortgagor of
           his delinquency ... and that such mortgagor has thirty (30)
           days to have a face-to-face meeting with the mortgagee
           who sent the notice or a consumer credit counseling
           agency to attempt to resolve the delinquency . . . by
           restructuring the loan payment schedule or otherwise.”
           Beneficial Consumer Disc. Co. v. Vukman, 621 Pa.
           192, 77 A.3d 547, 550 (2013) (quoting 35 P.S. §
           1680.403c(a)-(b)(1) (emphasis added), amended by P.L.
           841, No. 60, § 2 (July 8, 2008)). “[T]he purpose of an Act
           91 notice is to instruct the mortgagor of different means
           he may use to resolve his arrearages in order to avoid
           foreclosure on his property and also gives him a timetable
           in which such means must be accomplished.” [Wells
           Fargo Bank, N.A. ex rel. Certificate Holders of Asset
           Backed Pass-through Certificates Series 2004-MCWI
           v. Monroe], 966 A.2d [1140,] 1142 (Pa.Super.2009)
____________________________________________


       2
        The notices admitted into evidence did contain an attached list of
credit counseling agencies. The trial court noted that the list was dated
February 23, 2009, while the notices were dated February 3, 2009. N.T.,
9/22/15, at 30-31. The trial court nonetheless overruled the Johnsons’
objection to admission of the notices, leaving the meaning of the notices
open to cross-examination.

      BNY Mellon, at trial and on appeal, maintains that the notices did
include the list of credit counseling agencies.




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           (quoting [Fish v. Pennsylvania Housing Fin. Agency,
           931 A.2d 764], 767 [(Pa.Cmwlth. 2007)] (citing 35 P.S. §
           1680.403c)).

Wells Fargo Bank N.A. v. Spivak, 104 A.3d 7, 15 (Pa.Super. 2014). Act

91 also requires that the notice include “the telephone number and the

address of a local consumer credit counseling agency.”               35 P.S. §

1680.403c(b)(1).

       Under Pennsylvania law, a homeowner is not entitled to relief unless

he or she was prejudiced by the failure to comply with Act 91.

                 If there has been a failure to comply with the
                 notice requirements of [Act 91], and such
                 failure has been properly raised in a legal
                 action, including an action in foreclosure . . .,
                 the court may dismiss the action without
                 prejudice, order the service of a corrected
                 notice during the action, impose a stay on any
                 action or impose other appropriate remedies in
                 the action to address the interests, if any, of
                 the mortgagor who has been prejudiced
                 thereby.

35 P.S. § 1681.5(1) (emphasis added).3           This Court has concluded that

prejudice cannot be presumed and a homeowner must show actual

prejudice. Monroe, 966 A.2d at 1143.

       The Johnsons argue that the mortgagee’s failure to include a list of

credit counseling agencies prevented them from meeting with a credit


____________________________________________


       3
         Although the General Assembly enacted 35 P.S. § 1681.5(1) in 2012,
it is applicable retroactively to June 5, 1999.




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J-A29020-16


counseling agency prior to the acceleration of the mortgage. 4             The trial

court, however, concluded that they failed to offer evidence to support that

claim. 1925(a) Op. at 2. That conclusion is supported by the record. The

Johnsons aver that

           [t]he failure to send the required Act 91 notice before the
           loan is accelerated and a foreclosure complaint is filed
           causes prejudice to the homeowner. First, the homeowner
           is deprived of their state-provided opportunity to cure their
           pre-foreclosure commencement deficiency with financial
           assistance. In addition, it also provides the homeowner
           assistance from the Pennsylvania Housing Finance Agency
           loans [sic] free of charge. After the loan is accelerated
           and a foreclosure complaint is filed the homeowner incurs
           additional and substantial loss.

Johnsons’ Sub. Rep. Br. at 6. Here, however, Act 91 notice was sent, and

the issue is whether the alleged failure to include the list of credit counseling

agencies prejudiced the Johnsons.              The Johnsons do not explain how the

absence of the list prevented the Johnsons from meeting with a credit

counseling agency pre-acceleration.            Accordingly, the Johnsons have failed

to meet their burden to show that they were actually prejudiced by the

defective notice.


____________________________________________


       4
        The trial court opined that “[t]he testimony established that the
Johnsons met with housing counselors which remedied any alleged
prejudice.” Id. Edella Johnson testified that she and her husband met with
several credit counseling agencies. N.T., 9/22/15, at 58. The Johnsons’
counsel later stated to the court that these meetings occurred after the
acceleration of the mortgage. Id. at 73.




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     The Johnsons next claim that the trial court erred in entering judgment

against Edella Johnson because she did not sign the note accompanying the

mortgage. We disagree.

     In Pennsylvania, a mortgagee may foreclose on property so long as

both spouses who own the property sign the mortgage. We find persuasive

the bankruptcy court’s analysis of Pennsylvania law in In re Farris, 194

B.R. 931 (Bankr. E.D. Pa. 1996).              As that court explained, “having

[Debtor’s] signature on the Mortgage gave the bank the right to proceed

against the Residence. . . .       [U]nder Pennsylvania state law, a valid

mortgage can be created without requiring the mortgagor to assume

personal liability under a note.” Id. at 939, 940; cf. Easton Theatres, Inc.

v. Wells Fargo Land and Mortgage Co., Inc., 449 A.2d 1372, 1375

(1982) (quoting In re Hartje’s Estate, 28 A.2d 908, 910 (Pa. 1942)) (“It is

well settled in Pennsylvania that a mortgage may be executed without

personal liability: ‘A mortgage may be created as well without as with an

accompanying personal obligation of the mortgagor to pay the debt secured,

or attempted to be secured, thereby.’”). In other words, a mortgagee may

foreclose   without   obtaining   both   spouses’    signatures   on   the   note

accompanying the mortgage.




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       Here, it is undisputed that while Edella Johnson did not sign the note,

she did sign the mortgage.          See Mortgage at 1, 15.   Therefore, the trial

court did not err in entering judgment against Edella Johnson.5

       The Johnsons next argue that that the mortgage assignments contain

a fatal gap because the June 5, 2009 assignment did not name the trust

beneficiary on whose behalf the assignee trust was acting.         The Johnsons

contend that a “trustee who fails to identify the beneficiary for whom it

intends to act is a legal nullity.” Johnsons’ Br. at 9.

       Whatever the merits of this claim, the Johnsons lack standing to raise

it. This Court has previously stated:

           The court [in In re Walker, 466 B.R. 271, 285
           (Bankr.E.D.Pa.2012), found] that the debtor lacked
           standing to question the validity of the assignment(s) of
           the note:

                 [The threshold inquiry in analyzing a party's
                 standing is to evaluate whether the party can
                 demonstrate that the party has suffered or will
                 suffer “injury in fact.”]. If a borrower cannot
                 demonstrate      potential   injury  from   the
                 enforcement of the note and mortgage by a

____________________________________________


       5
       The Johnsons’ reliance on Klebach v. Mellon Bank, N.A., 565 A.2d
448 (Pa.Super. 1989) is misplaced. In that case, this Court held that a
judgment creditor could not execute a lien on property held by a husband
and wife as tenants by the entirety to satisfy a judgment against the
husband as the sole debtor. Id. at 450. Here, in contrast, the issue is
whether, in a mortgage foreclosure action, the mortgagee may foreclose on
property where both spouses are parties to the mortgage, but only one
spouse is obligated under the note accompanying the mortgage.




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               party acting under a defective assignment, the
               borrower lacks standing to raise the issue.

JP Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258, 1264–65

(Pa.Super. 2013) (quoting Walker, 466 B.R. at 285). Furthermore,

         a note secured by a mortgage is a negotiable instrument,
         as that term is defined by the [Pennsylvania Uniform
         Commercial Code], and . . . “[p]ursuant to the PUCC, a
         debtor who satisfies his obligations under a negotiable
         instrument cannot be required to do so again, even if the
         recipient of the debtor's performance is not the holder of
         the note in question.”

Gerber v. Piergrossi, 142 A.3d 854, 862 (Pa.Super. 2016) (quoting

Murray, 63 A.3d at 1263), app. denied, 142 A.3d 854 (Pa. 2017).

Accordingly, “a borrower is not in peril of double liability or injury by an

allegedly defective assignment, for if the assignment to the foreclosing party

had been defective, the borrower would not have to pay on the note to

another party.” Id. Because the Johnsons have not demonstrated potential

injury from the enforcement of the note and mortgage even if the

assignment was defective, the Johnsons lack standing to challenge the

validity of the assignment.

      The Johnsons’ final contention is that BNY Mellon failed to join the

trust beneficiary as an indispensable party.   “Under Pennsylvania law, the

failure to join an indispensable party implicates the trial court's subject

matter jurisdiction. Failure to join an indispensable party goes absolutely to

the court's jurisdiction and the issue should be raised sua sponte.” Orman




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v. Mortg. I.T., 118 A.3d 403, 406 (Pa.Super. 2015) (internal citation and

quotation omitted).

      At the outset, we note that the Johnsons misstate Pennsylvania law

when they contend that an indispensable party is merely “another who may

have an interest involving money or property,” Johnsons’ Br. at 12.       We

have explained that

         [a] party is indispensable when his or her rights are so
         connected with the claims of the litigants that no decree
         can be made without impairing those rights. If no redress
         is sought against a party, and its rights would not be
         prejudiced by any decision in the case, it is not
         indispensable with respect to the litigation.      We have
         consistently held that a trial court must weigh the following
         considerations in determining if a party is indispensable to
         a particular litigation.

               1. Do absent parties have a right or an interest
               related to the claim?

               2. If so, what is the nature of that right or
               interest?

               3. Is that right or interest essential to the
               merits of the issue?

               4. Can justice be afforded without violating the
               due process rights of absent parties?

         In determining whether a party is indispensable, the basic
         inquiry remains whether justice can be done in the
         absence of a third party.

Orman, 118 A.3d at 406–07 (internal citations and quotations omitted).

      Here, the Johnsons failed to identify the alleged trust beneficiary or

how that party’s rights or interests are essential to the claim.    Moreover,

even if there was an unidentified beneficiary with an interest in this action,


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the Johnsons have failed to demonstrate that said beneficiary would be

prejudiced by the decision in this matter.

      Judgment affirmed.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 5/26/2017




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