Bank of America, N.A. v. Scott

271 A.3d 897

BANK OF AMERICA, N.A., Appellant

v.Andre Freeman SCOTT, Known Heir of Bessie Emory a/k/a Bessie Lee Emory; Estate of Bessie Emory a/k/a Bessie Lee Emory; Evelyn Scott-Davis, Personal Representative of the Estate of Bessie Emory a/k/a Bessie Lee Emory; Unknown Heirs, Successors, Assigns and All Persons, Firms, or Associations Claiming Right, Title or Interest From or Under Bessie Emory a/k/a Bessie Lee Emory

No. 2167 EDA 2020

Superior Court of Pennsylvania.

Argued October 6, 2021

Filed March 03, 2022

Brandon D. Pack, Mt. Laurel, NJ, for appellant.

Rachel A. Labush, Philadelphia, for appellee.

Anthony B.E. Quinn, Philadelphia, for appellee.

BEFORE: KUNSELMAN, J., NICHOLS, J., and STEVENS, P.J.E.^*

OPINION BY NICHOLS, J.:

Appellant Bank of America, N.A. appeals from the judgment entered in favor of the Estate of Bessie Emory A/K/A Bessie Lee Emory (the Estate), Andre Freeman Scott, and Evelyn Scott-Davis, Personal Representative of the Estate (collectively, Appellees), following a non-jury trial in this mortgage foreclosure action. The trial court found in favor of Appellees because they exercised an option under a reverse mortgage to avoid foreclosure and Appellant rejected Appellees’ proposal. Appellant claims the trial court erred by concluding that said option applied in this case, finding in favor of Appellees, and admitting certain evidence. We affirm.

The decedent Bessie Emory (Mortgagor) took out a Federal Housing Authority-insured (FHA) reverse mortgage¹ on the real property located at 4540 North Camac Street in Philadelphia (Property) from Champion Mortgage Company (Champion), Appellant's predecessor in interest. R.R. at 79a-91a (the reverse mortgage), 93a-108a (assignment history of the reverse mortgage).²

The reverse mortgage set forth several grounds for default under which it would be come due and payable; one of these was the death of the Mortgagor. Id. at 82a. Also, the reverse mortgage set forth a number of alternatives to foreclosure which could be exercised under certain circumstances, including selling the Property for 95% of its appraised value and applying the proceeds of that sale against the balance of the mortgage. Id.

The trial court summarized the factual history as follows:

[Appellees] established that upon the death of Bessie Emory, Champion Mortgage, the mortgage servicer and [Appellant's] predecessor in interest, sent a letter to Evelyn Scott Davis, the appointed Executrix of the Estate of Bessie Emory. In that letter, dated November 7, 2016 ("the Letter"), Champion Mortgage made the following statements.

"The reverse mortgage is technically in default due to the death of [mortgagor]."

* * *

"This default must be resolved by any of the following methods:

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B. The mortgage will be released and no deficiency judgment filed if the property sells for the lesser of the debt, including shared appreciation, or 95% of the appraised value with the proceeds made payable to Champion Mortgage, even if the debt is greater than the appraised value.

> Please contact us for more information if you are interested in this option and believe that the property value is less than the outstanding principal balance.

* * *

The Mortgagor or the Mortgagor's estate may request[ ] an appraisal at his or her own expense if an estimate of the property's current value is desired. If none of the actions above are taken in thirty (30) days, Foreclosure will be initiated by the Servicer within three (3) months, but not less than one (1) month.

Whichever option that you choose, HUD^[3] guidelines require that we obtain a full appraisal on the property. You may be receiving a phone call from our appraisal vendor in the coming weeks to attempt to schedule an appointment to visit the property.

Notably, this portion of the Letter parrots the language in Paragraph 9(d) of the mortgage. This language is prescribed by and mandated for inclusion in reverse mortgages by the Department of Housing and Urban Development, 24 CFR § 206.125.

Upon receiving the Letter, Ms. Davis sought and obtained an appraisal. The appraisal Ms. Davis obtained is dated November 16, 2016. According to the appraisal obtained by Ms. Davis, the value of the property was $28,000. Ms. Davis credibly testified that the Estate ... was ready willing and able to pay [Champion] $26,600 for the property, which was 95% of the appraised value of the property per the terms of Paragraph B of the November 7, 2016 letter.

Ms. Davis testified that after she obtained the appraisal, she attempted to make payoff arrangements with Champion Mortgage. Shortly after contacting Champion Mortgage, Ms. Davis was advised that the loan had been sold to [Appellant].

After Ms. Davis learned that the loan had been sold to [Appellant], she was advised via telephone by [Appellant] and/or its mortgage servicer, Reverse Mortgage Solutions, that she had to obtain another appraisal, which she did. The second appraisal obtained by Ms. Davis valued the property at $30,000. Ms. Davis sent this appraisal to [Appellant]. [Appellant] obtained its own appraisal of the property, which also valued the property at $30,000. Ms. Davis offered to pay Bank of America $28,000, which is 95% of the $30,000 appraised value. According to Ms. Davis, [Appellant] never accepted [either $26,000 or] $28,000 and instead demanded payment of $35,000 to resolve the default. There is no evidence that [Appellant] had obtained its own appraisal to support the $35,000 payoff quote. [Appellant's] demand for $35,000 was the last Ms. Davis heard from [Appellant] before [Appellant] took steps to initiate this foreclosure action.

Trial Ct. Op., 9/23/20, at 2-4 (citations and footnote omitted, formatting altered).

Appellant filed a complaint in foreclosure on April 21, 2017. Appellees filed an answer and new matter on March 16, 2018, asserting, among other things, that Appellant refused to accept payment equal to 95% of the appraised value of the Property to prevent a foreclosure and this violated applicable federal regulations. R.R. at 61a-68a.

On November 25, 2019, Appellant filed a motion in limine seeking to preclude evidence and testimony regarding Champion's and Appellant's loss mitigation efforts. R.R. at 14a. The trial court denied that motion at the outset of the non-jury trial. N.T. Trial, 1/21/20, at 4, R.R. at 258a.

By way of further background, the trial court explained:

A non-jury trial was held before th[e trial c]ourt on January 21, 2020. The [c]ourt heard witness testimony and accepted documentary evidence. Following the presentation of all of the evidence and argument by both sides, the [c]ourt found in favor of [Appellees]. The [c]ourt determined that [Appellant] had failed to sustain its burden that it was entitled to foreclose on the property. As the fact finder, th[e trial c]ourt made witness credibility determinations and weighed the importance to give to the admitted evidence.

* * *

At trial, counsel for [Appellant] extensively cross[-]examined Ms. Davis and Andre Freeman Scott, who is Bessie Emory's heir, on the Estate's supposed (in)ability to pay the sums necessary to resolve the default. The [c]ourt concluded that [Appellees] testified credibly that they were financially in a position to resolve the default, but that [Appellant] never gave the Estate the opportunity to do so.

The [c]ourt concluded that the [Appellant's] "ability to pay" questions at trial were an attempt by [Appellant] to post hoc justify why [Appellant] short circuited its own process that it (through its predecessor Champion Mortgage) set out for [Appellees] to resolve the default. [Appellant] offered no testimony or documents showing that [Appellant] ever meaningfully participated in the process set forth in Paragraph B of the Letter.

Instead, [Appellees’] testimony at trial — and [Appellant's] own Complaint allegations — reflects that after [Appellant] had purchased the loan from Champion Mortgage, it promptly sent [Appellees] a foreclosure letter on March 7, 2017 and initiated this foreclosure action on April 21, 2017.

The Trial Worksheet prepared by the [trial c]ourt finding in favor of [Appellees] states that [Appellant] had failed to prove a condition precedent to Paragraph 9(d) of the mortgage.

Trial Ct. Op. at 4 (citations omitted).

Appellant filed a timely post-trial motion, which requested judgment notwithstanding the verdict (JNOV). In its post-trial motion, Appellant contended that the trial court erred in holding that Paragraph 9(d) of the mortgage was applicable to the default in this matter, i.e. , the death of the mortgagor. R.R. at 282a-84a. Appellant alternatively claimed that even if Paragraph 9(d) was applicable to the default resulting from the death of the mortgagor, Appellant had established that it and Champion had complied with requirements of that paragraph by providing Appellees with sufficient notice prior to filing the instant foreclosure action. Id. at 284a-85a.

On August 18, 2020, the trial court held a virtual oral argument on Appellant's post-trial motion. The trial court issued an opinion and order denying the post-trial motion on September 23, 2020.⁴ Judgment was entered on October 13, 2020. Appellant then filed a timely notice of appeal.

The trial court did not order Appellant to file a concise statement of errors pursuant to Pa.R.A.P. 1925(b). The trial court filed its September 23, 2020 opinion denying Appellant's post-trial motion in lieu of a separate Rule 1925(a) opinion.

Appellant raises the following issues for our review, which we reorder as follows:

1. Whether the trial court erred and abused its discretion in allowing testimony regarding loss mitigation by denying [Appellant's] motion in limine and overruling [Appellant's] objection where the loss mitigation testimony had no bearing on the execution of the loan documents, default, and amount due under mortgage.

2. Whether the trial court erred as matter of law and abused its discretion by entering a verdict in favor of [Appellees] based upon

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