Mortgage Forclosure: PA Superior Court holds sheriff sale may be set aside when complaint fails to allege how plaintiff became proper owner of mortgage.

No. 540

A panel of the Superior Court of Pennsylvania reversed a Common Pleas Court order refusing to set aside a sheriff sale and strike a default judgment when the the record lacked any mention of how the Plaintiff acquired ownership of the mortgage.

In Wells Fargo Bank, NA as Trustee for MLMI Trust Series 2005 – FF6 (appellees) v. Lupori (appellants) 2010 Pa. Super 205 (2010), Wells Fargo entered default judgment in June 2007 and following a sheriff sale, a sheriff’s deed was recorded on July 18, 2008.

On March 10, 2009, some eight months following the recording of the sheriff’s deed, the Lupori’s filed a petition to set aside and strike the default judgment, which the lower court denied.

While the appellants asserted ten grounds for error, the Superior Court focused on one, which it deemed dispositive:

“Whether the lower court erred as a matter of law in denying the motion to set aside sale and strike the default judgment because the record of the case on the date of judgment lacked any evidence whatsoever that Wells Fargo was a real party in interest and possessed standing to prosecute the foreclosure action against the Leporis?”

The Court noted that the Complaint recited that the mortgage had been given to “First Franklin, a Division of National City Bank” and had then been assigned on the record to “First Franklin Financial Corporation”. But the chain of title recited in the complaint ended there, and it “makes no mention of any other assignment. Nowhere in the complaint did Wells Fargo identify itself as the owner of the Luporis mortgage.”

In its brief, the appellee asserted that it had in fact received an assignment of the mortgage, which had not been plead in the complaint. It argued that it had no duty to do so under US Bank, NA v.Mallory, 982 A.2d 986 (Pa. Super. 2009). In Mallory, the plaintiff stated that it was the legal owner of the mortgage, but was in the process of formalizing it at the time of preparation of the complaint. The Superior Court had held that this mode of pleading had been sufficient to put the defendant on notice of the claim of ownership of the mortgage and the averment of a yet-to-be-completed assignment was satisfactory under the Rules. Appellee argued that Mallory held that the Plainrtiff need not assert that the mortgage had been assigned to it.

The Superior Court panel disagreed, holding Mallory was distinguishable. Since the Plaintiff had not alleged ownership or an assignment to it, the Complaint did not comply with the Rules. Rule 2002(a) requires that the mortgage foreclosure be prosecuted by and in the name of the real party in interest.

It should be noted that the Superior Court struck the judgment and invalidated the sheriff’s sale and thus the sheriff’s deed pursuant to a petition filed months after delivery of the sheriff’s deed. This has rarely been done and then only for lack of notice (a constitutional ground) or in the case of fraud.

As noted in the post on the equity suit against the Goldbeck law firm, immediately below, defendants are likely to be looking for grounds to strike judgments and set aside sheriff’s sales and sheriff’s deeds. Poorly-plead complaints (perhaps due to lack of lawyer supervision), sharing the same defect as Lupori, will undoubtedly be a prime target.

CLT

Category: Civil Litigation, Mortgage Foreclosure
Tags: Superior Court

Goldbeck, McCafferty & McKeever PC, Philadelphia foreclosure law firm, faces serious charges in Allegheny County Equity Action.

No. 539

Goldbeck, McCafferty & McKeever PC is one of a handful of law firms in Philadelphia and Eastern Pennsylvania that has handled thousands of mortgage foreclosures throughout the State. However, the firm was delivered a severe blow in Bankruptcy Court this week. Coverage of that matter brought to light a suit recently filed in Allegheny County Common Pleas Court that is likely to have far-reaching consequences — to that firm, to numerous cases statewide and even to real estate previously sold in sheriff sales.

Earlier this week, the Pittsburgh Tribune Review reported that Chief Judge Agresti of the US Bankruptcy Court for the Western District of Pennsylvania sanctioned Attorney Leslie A. Puida and her firm, Goldbeck, McCafferty and McKeever (GMM), for the fabrication certain documents by Countrywide Mortgage relating to a foreclosure against Sharon D. Hill. The court determined that Puida had filed the fraudulent documents, lied about the fraud both to opposing counsel and in court and refused to take responsibility for her actions. Judge Agresti, according to press reports, gave Puida and GMM until Friday December 3 to self-report to the Pennsylvania Disciplinary Board.

While these developments constitute major trouble for GMM, the perfect storm appears to be coming up fast in the form of an equity suit filed by Pittsburgh Attorney Patrick J. Loughren against 33 non-lawyer employees of GMM and the firm itself in the Court of Common Pleas of Allegheny County at GD 10-021437.

The introduction to the Complaint states that it is an action to enjoin non-lawyers from the unauthorized practice of law, which is a crime in Pennsylvania. “These non-lawyers prepare complaints, sign lawyers’ names to those complaints, and file those complaints in county courts across this Commonwealth without an attorney ever having read the document. ” [Emphasis in original].

Then, according to the Complaint, the non-lawyers prosecute the actions by filing other documents purported to be signed by lawyers, but are signed by non-lawyers, frequently before notaries who improperly state that the documents were signed by the lawyers. Attorneys fees are improperly claimed for this unsupervised work by non-lawyers, usually paid by the foreclosing lender unless the loan is reinstated.

The plaintiff, Loughren, is member of the legal profession. The Complaint asserts that a member of a profession has standing to seek an injunction against the unauthorized practice of his profession without the necessity of being personally involved in the factual matters involved. In addition to criminal prosecution, a county court of common pleas may enjoin unauthorized practice and the party obtaining the injunction may be awarded costs and expenses, including reasonable attorneys fees, against the enjoined party.

According to the Complaint, all three named partners of GMM have admitted the main allegations of the Complaint in sworn testimony. Gary McCafferty testified in a deposition taken on September 21, 2010 in the ongoing US District Court case of Kimberley A. Robinson v. Countrywide Home Loans, Inc. et al. No. 08-cv-01563 in the Western District of Pennsylvania.

“Q: Was it the practice in 2006 that Complaints could be filed without an attorney reviewing the Complaint?

A: It could be, yes.

Q: Did the firm authorize its administrative staff, which I’ll just describe as non-lawyers, so inclusive of secretaries, paralegals, legal assistants, to sign attorneys’ names and file them, knowingly that the attorney had not read the document?

A: Yes.” [Emphasis in complaint.]

Joseph Goldbeck, former shareholder and of counsel to GMM, was, according to the Complaint deposed in the same case on the same day.

“Q: Back in 2006, you were an active practicing lawyer at the firm?

A: Yes.

Q: And did you authorize individuals who were employed at the firm who were not lawyers to write up Complaints and sign your name to them and file them without you reviewing them?

A: Yes I did.” [Emphasis in Complaint.]

In another Western District bankruptcy case, DeAngelis v. Countrywide Home Loans, Inc.,the Complaint states that Michael McKeever, the third name partner at GMM, testified at a hearing on December 8, 2009 that it was a standard practice at GMM in 2007 and up to the date of his testimony for non-lawyer staff to sign lawyers’ names to pleadings without the lawyers reviewing the document.

The Complaint goes on to allege that the firm filed suits without investigation by attorneys of the underlying facts in FHA cases, violating FHA Regulations, quoting additional testimony of McCafferty.

The Complaint alleges that the non-lawyers also prepared and filed pleadings in Bankruptcy Court without attorney supervision, which the Complaint states, is also the unauthorized practice of law.

The Complaint goes on to assert at paragraph 86: “Every foreclosure action pending in every Court of Common Pleas in this Commonwealth that has been prepared by and filed by the Non-Lawyer Defendants, without attorney review, should be dismissed on the basis that the Court lacks jurisdiction over the lawsuit.”

In addition, according to the Complaint, GMM should not be permitted to collect and retain attorneys fees for work performed by paraprofessionals without attorney supervision.

The Complaint goes on to display a large number of documents, both with and without the signature and seal of a notary, purportedly signed by others.

In his prayer for relief, Loughren requests that the the Court (1) declare that the conduct of non-lawyers at GMM constitutes the unauthorized practice of law, (2) grant an injunction barring non-lawyers at GMM from engaging in practice of law in Pennsylvania, (3) enjoin continued prosecution of cases filed by non-lawyers in violation of Pennsylvania law (4) issue a rule to show cause why all pending foreclosure actions filed by GMM should not be dismissed, (5) issue a rule to show cause why attorneys fees should not be accounted for and returned to homeowners, (6) issue a rule to show cause why every judgment entered in favor of defendant clients should not be opened or vacated, (7) enjoin defendants from supporting claims with false affidavits, (8) enjoining the notaries from notarizing documents in violation of statutory requirements, (9) enjoining all non-lawyers at GMM from signing their names to affidavits, (10) costs of suit and other relief the Court deems appropriate.

It should be borne in mind that only a complaint has been filed and there have been no responsive pleadings filed. Notwithstanding the testimony quoted in the complaint, these allegations may be difficult or impossible to prove in individual cases. Exactly where or how far this matter will go cannot be determined. However, the allegations in the Complaint involve so many cases that its potential impact could be sweeping. Moreover, the activities of other firms involved in the prosecution of mortgage foreclosure actions in bulk will undoubtedly receive increased scrutiny going forward.

Here is a link to the Complaint.

CLT

Category: Civil Litigation, Constitutional Law, Consumer Protection, Mortgage Foreclosure, News Commentary
Tags: Goldbeck > McCafferty & McKeever PC

Ron Paul and Wikileaks: The Emperor Has No Clothes.

No. 538

With leaders of his party calling for prosecution of Wikileak founder Julian Assange for treason, Ron Paul expresses the contrarian viewpoint. He wished out loud on Fox News for a wikileak report of all of the secret documents regarding the Federal Reserve — one of his particular targets. Since when is exposing the truth in the media treason?, he asks. Are the news outlets who reprint the Wikileak documents committing treason, too?

Good point. Remember the Pentagon Papers?

Truth is, secrets can be kept only so long. Eventually, the truth will out. Espionage consists of stealing secrets vital to national security and delivering them to the enemy in secret. But stealing secrets and telling the world — what do you call that?

You call it journalism.

CLT

Category: Uncategorized

The Cost of Incivility.

No. 537

An article in the New York Times talks about the growing prevalence of impolite behavior and its cost, financial and otherwise. For example, many people eventually quit jobs or don’t give as much effort because they have been treated badly. Such consequences are rarely reported to the wrongdoers, who are blissfully unaware that their bad behavior is costing them real money. But there is a price to pay for day-to-day impoliteness to others as well. The best thing about this article is the photo — a couple (maybe married, it doesn’t say) in a restaurant. She is talking on her cell phone and he is texting on his.

A great deal of incivility passes for normal and has become invisible. Other uncouth behavior is regarded as a virtue, at least by some. Periodically, I hear about people who want to hire a lawyer who behaves like mad dog — all of the time.

There is a time and place when it is very effective to display anger over an injustice. But by and large, lawyers who trade on continuous controlled rage are wasting their client’s money. Other lawyers don’t like it, opponents don’t like it and judges hate it. It is not too hard to imagine what unpleasant consequences follow. This includes judicial admonitions and sanctions. And, of course, when a lawyer who has behaved badly in the courtroom returns in a new case, the new client bears the burden of former misdeeds. Unfair, but definately human nature.

CLT

Category: Uncategorized

Goodbye “Adams Drafting”; Hello, “The Koncise Drafter”.

No. 536

One of our favorite blogs will no longer be updated. The last post went up on December 2 for Adams Drafting, a place where you could read about and comment on all of those lawyerly ideosynchrosies that found their way into contracts. But the discussion in that blog was always very serious — serious about making contract language readable and leading to a predictable legal outcome. Adams Drafting was named one of 2010’s 100 Best Blawgs by the ABA Journal, just in time to shut down.

But not to worry. Ken Adams also started blogging today at The Koncise Drafter. It is the venue which will explore issues raised in creating his new venture, Koncision Contract Automation.

We’ll be following The Koncise Drafter with a view to learning the future of contract drafting. It may be quite a while before lawyers are replaced by automation, but with The Koncise Drafter, that day just drew a little closer.

Category: Uncategorized

It Was A Good Year To Die Rich.

No. 535

AD 2010 has been a year to die for — sorry, we mean “in.” As we all know by now, the Federal Estate Tax went away this year, making it a once in a lifetime opportunity for billionaire Americans to expire and leave their empires to their heirs. So who were the biggest winners? Here’s a short list courtesy of Freakonomics.

AD 2011, however, is a story that has yet to be written. If there is gridlock in Congress, Cinderella’s carriage is scheduled to turn back into a pumpkin on Midnight, December 31.

CLT

Category: Uncategorized

What a Thoughtless Christmas Gift!

No. 534

When I was the lawyer for a small community bank (now evaporated through merger) I was asked to drop by the office of an important bank customer and deliver a business Christmas present to one of the corporate officers. I knew this customer very well, since I had referred it to the bank and had closed numerous loans for the bank with this customer. The office was located on my side of the city and it was December 23. The present was a large wicker basket full of fruit and nuts and boxes of hot chocolate and all of the usual stuff, wrapped up with big bows and covered with red or green cellophane to keep the contents inside the basket. It cost more than a few dollars.

So I arrived at my destination, but just in the nick of time. It was 4:30 in the afternoon when I ran into the object of our munificence in the traffic circle at the front door, about to leave for the holiday. More particularly, he was loading his car. He had the trunk open (it was a Lincoln, with a very large trunk) and as I pulled up he was carrying an armload of wicker Christmas baskets filled with the same stuff I was about to bestow. More such baskets were already in the trunk. A lot more.

I had no choice, it was too late. I handed over the present, which he couldn’t credibly pretend to be appreciated. I hope he drove straight to an orphanage.

Category: Uncategorized

When Buying Real Estate, Follow Your Nose.

No. 533

If you are looking at homes to purchase, pay close attention during the first few seconds after you open the door.

You may be able to detect a whiff of something bad when first walking in the front door or when you enter a closed room. Then the smell may seem to go away.

An extreme example is featured in the Consumerist. A house that was formerly a meth factory was sold to an unsuspecting couple who became sick and had to move out. But there are other substances that have distinctive odors that can be best detected in the first few minutes after entering a house or a room. This may include the musty damp smell of mold. Or the acrid small of cigarette smoke.

Category: Uncategorized

Black Clouds over Black Friday.

No. 532

The local TV news has so many minutes of air time to fill, even on non-news days like the day after Thanksgiving. So, it is not surprising that the annual ritual of getting up early to stand in line at big box stores leads, even when it doesn’t bleed. What is surprising is the proclaimed consumer optimism this year, hard on the heels of the midterm elections that were read by all to indicate dissatisfaction with the state of the economy.

Meanwhile, the Irish banking system was temporarily rescued this week from collapse with the promise of more to come. Portugal and Spain are rumored to be next amid street demonstrations in London and Rome over fiscal cuts to the bone. Then, on the other side of the planet, the Koreas are announcing themselves to be on the brink of hot war, with the United States standing in the ready. This crisis, with all of its nuclear weapon implications, sent the US stock market into a swan dive a few days ago.

In a preview of coming attractions, the US government is denouncing the upcoming round of Wikileaks, saying they will endanger people who helped Americans in world trouble spots and will cause US relations with other nations to suffer. That, of course, is not going to keep the leakers from leaking. So, brace for a crash landing.

Meanwhile, the lame duck Congress is poised to do nothing about critical matters like the sunset of the inheritance and income tax cuts.

So why are so many Americans carting home giant TVs? It must be a need for diversion.

Category: Uncategorized

Q: When is a Disclosure Not a Disclosure?

No. 531

A: When it is too long.

Once upon a time, not that long ago, a group people with good intentions decided that the best way to insure that other people made good choices was to give them information — lots and lots of information. Today, those other people don’t seem to be doing much better than they did when they were uninformed. Except for one thing: if they decided to sue somebody, they would have to contend with the fact that they were given all of the information they needed. They just didn’t read it.

Confused? Read the attached short link from Above the Law.

That’s why we have blogs: to explain what’s in the disclosure

Category: Uncategorized

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Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

Pittsburgh Legal Back Talk

Legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus.

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Categories

Mortgage Forclosure: PA Superior Court holds sheriff sale may be set aside when complaint fails to allege how plaintiff became proper owner of mortgage.

Goldbeck, McCafferty & McKeever PC, Philadelphia foreclosure law firm, faces serious charges in Allegheny County Equity Action.

Ron Paul and Wikileaks: The Emperor Has No Clothes.

The Cost of Incivility.

Goodbye “Adams Drafting”; Hello, “The Koncise Drafter”.

It Was A Good Year To Die Rich.

What a Thoughtless Christmas Gift!

When Buying Real Estate, Follow Your Nose.

Black Clouds over Black Friday.

Q: When is a Disclosure Not a Disclosure?

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