Sampathkumar v. Chase Home Finance, LLC

241 A.3d 1122

Padmashri SAMPATHKUMAR, Srikanth Raghunathan, and NGX, Inc. Appellants

v.CHASE HOME FINANCE, LLC; Phelan, Hallinan & Schmieg; Safeguard Properties, Inc. a.k.a. Safeguard Properties, LLC; and Mortgage Electronic Registration System, Inc.

No. 544 WDA 2019

Superior Court of Pennsylvania.

Submitted February 24, 2020

Filed October 19, 2020

Reargument Denied December 28, 2020

Timothy G. Wojton, Pittsburgh, for appellant.

Stacey Main, Glenside, for Safeguard, appellees.

Daniel S. Bernheim, Philadelphia, for Phelan, Hallinan & Schmieg, appellee.

John K. Gisleson, Pittsburgh, and Franco A. Corrado, Philadelphia, for Chase, appellee.

BEFORE: NICHOLS, J., MURRAY, J., and MUSMANNO, J.

OPINION BY NICHOLS, J.:

Appellants Padmashri Sampathkumar, Srikanth Raghunathan, and NGX, Inc., appeal from the judgment in favor of Appellees Chase Home Finance, LLC (Chase), Phelan, Hallinan & Schmieg (PHS), Safeguard Properties, Inc., also known as Safeguard Properties, LLC (Safeguard), and Mortgage Electronic Registration System, Inc. (MERS), following a bifurcated jury and bench trial resolving multiple claims.¹ On appeal, Appellants challenge the trial court's pretrial rulings and grant of partial summary judgment. We grant in part and deny in part the motions to quash filed by Chase and Safeguard, quash Appellants’ appeals in part as set forth below, and affirm.

This civil case has a complex, lengthy factual background, which resulted in multiple lawsuits. We state the facts as presented by the trial court:

BACKGROUND

This case concerns foreclosure proceedings involving a property located at 406 Lorenzo Lane, Irwin, PA 15642 (the "Residence"). On or around March 27, 2002, Sampathkumar purchased the residence, utilizing a mortgage obtained through Flagstar Bank, FSB. The property was refinanced through Flagstar Bank, FSB on March 5, 2003, and the loan was then purchased by Federal National Mortgage Association ("Fannie Mae"). The instant mortgage (the "Mortgage") was executed by Sampathkumar and her husband, Srikanth Raghunathan as "Borrowers;" the loan was evidenced by a promissory note (the "Note") which was executed by Sampathkumar only. Chase began servicing the Mortgage on behalf of Fannie Mae in September 2003.

The text of the Mortgage provides in Paragraph 9:

Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender's interest in the Property and/or rights under this Security Instrument...then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property... Securing the Property includes but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off...

The Mortgage additionally provides in Paragraph 15 that "[t]he notice address shall be the Property Address unless Borrower has designated a substitute notice address by notice to Lender.... Any notice to Lender shall be given by delivering it or by mailing it by first class mail to Lender's address stated herein unless Lender has designated another address by notice to Borrower." All payments were made timely by Sampathkumar between September 2003 and July 2007.

In September 2006, Sampathkumar pleaded guilty to a felony count of making false statements in connection with a loan application to a federally insured financial institution in a criminal action unrelated to the mortgage on the Residence. Her husband Raghunathan pleaded guilty to making a fraudulent representation in connection with a loan application to a federally insured financial institution. A judgment in restitution totaling approximately $10.7 million dollars was entered against Sampathkumar and Raghunathan. Around May 4, 2007, Sampathkumar and Raghunathan were sentenced to prison and taken into federal custody. In August 2007, a lien was placed against the Residence for over ten million dollars, based on the previously ordered restitution.

Upon Sampathkumar and Raghunathan's incarceration, keys to the Residence were given to Sampathkumar's sister, Lakshmi Karan. According to Sampathkumar at time of trial, arrangements were made for Sampathkumar's cousin's husband, Kris Alladi, to reside in the home and pay the mortgage and all utilities until Sampathkumar was released from prison. In his testimony, Alladi denied this, and stated that he agreed to pay the mortgage and utilities only if he was able to raise funding for a nanotechnology company that was seeking to purchase patents and applications from Sampathkumar and Raghunathan's nanotechnology company and plaintiff to this action, NGX, Inc. Alladi failed to obtain this funding and did not make any payments. In approximately August of 2007[,] Alladi left the Residence and it became unoccupied. No mortgage payments were made after Sampathkumar's last payment dated for July 2007. Alladi and Sampathkumar stopped communicating in September 2007. While residing in the Residence, Midi did not open or read any mail addressed to Sampathkumar and Raghunathan, and he testified that he was not asked to do so.

As noted above, the Mortgage required that Sampathkumar notify the lender in the event that notice should be provided to an address other than the residence, and it required that she "promptly" provide the lender with a "substitute notice address." Sampathkumar did not do so at any time between her May 2007 incarceration and early 2008. In approximately February or March 2008 Sampathkumar changed her mailing address with the USPS when her sister Karan filed a notice with the USPS directing that all mail should be forwarded from the Residence to Karan's home in California. Sampathkumar still failed to provide Fannie Mae and/or Chase with a substitute notice address at this time.

THE FORECLOSURE PROCEEDING

Chase began the foreclosure process after the Mortgage had been delinquent for sixty days. Chase sent an Act 91 Notice, dated October 2, 2007, to Sampathkumar at the Residence. The notice was returned as undeliverable and marked "Moved, left no forwarding address." A second notice, dated November 21, 2007, was sent to the Residence and similarly returned as undeliverable and marked "Moved, left no forwarding address." On December 11, 2007, a Complaint in Mortgage Foreclosure was filed against Sampathkumar and the United States of America in the Westmoreland County Court of Common Pleas at Civil Case Number 10708 of 2007. Chase utilized the services of the law firm of Phelan, Hallinan and Schmieg ("PHS") in pursuing the foreclosure action. The Sheriff's Office of Westmoreland County made three unsuccessful attempts to serve the complaint on Sampathkumar at the Residence.

PHS filed a Motion for Service Pursuant to Special Order on February 18, 2008, and on March 4, 2008 the Honorable Daniel J. Ackerman granted the motion. The Motion outlined the efforts put forth to locate Sampathkumar and included an "Affidavit of Good Faith Investigation." The Order allowed for service on Sampathkumar by first class mail and certified mail sent to the Residence. On March 7, 2008, PHS sent the complaint by regular and certified mail to Sampathkumar at the Residence. Chase's internal records showed service "completed" on March 7, 2008; Chase was not aware at this time that Sampathkumar was residing in federal prison.

As Sampathkumar's mail began being forwarded to Karan in California in March 2008, the Complaint was delivered to and signed for at Karan's residence. Karan testified that she chose not to read Sampathkumar's legal mailings; instead she sent "what [she] thought were important legal documents" to Alladi, who was then residing at his home in Phoenixville, Pennsylvania. Alladi testified that he collected this mail without opening or reading it. Although Karan maintained twice monthly phone contact with both Sampathkumar and Raghunathan, she testified that neither mentioned that Alladi was no longer communicating with them.

Twenty one (21) days after the mailing of the Complaint, PHS sent a notice of default addressed to Sampathkumar at the Residence, providing for ten days in which to respond to the Complaint. Sampathkumar did not file a response to the Complaint, and on April 15, 2008, PHS entered a default judgment with the Westmoreland County Prothonotary, eighteen days after the notice of default was sent. PHS filed a writ of execution, and a Sheriff's Sale was scheduled for September of 2008. Sampathkumar was later successful in getting the Sale continued to November 2008.

After the entry of the default judgment in June 2008, Chase utilized a contractor, Mortgage Contracting Services ("MCS"), to determine that the Residence was vacant. On June 10, 2008, Chase issued a work order to MCS to change one lock on the Residence for the purpose of allowing Chase to maintain the property, pursuant to Paragraph 9 of the Mortgage. On June 16, 2008, the rear door lock on the Residence was changed; the main entrance door lock as well as the garage door opener remained unchanged. On June 16, 2008, MCS photographed the interior of the Residence and its contents. Neither MCS nor Chase ever removed any items from the property.

No evidence was presented to suggest that Chase told Sampathkumar, Raghunathan or any of their family and/or friends that they were not allowed full access to the residence for the removal of personal property. Alladi testified that he retained the garage door opener for the Residence as well as a key to the front door. Karan also retained a key to the front door since May of 2007. The changing of

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