Beneficial Consumer Discount Co. v. Vukman
621 Pa. 192
Pa.2013Background
- Beneficial (mortgagee) filed foreclosure in 2006 after sending an Act 91 (Homeowner’s Emergency Mortgage Act) notice; parties later entered a settlement and judgment by consent in 2009 conditioned on borrower’s continued payments.
- Beneficial alleged breach of the settlement in April 2010, obtained a writ of execution, and purchased the property at sheriff’s sale in August 2010.
- Borrower moved to set aside the judgment and sheriff’s sale, arguing the 2006 Act 91 notice was deficient because it did not inform her of the option to have a face-to-face meeting with the mortgagee (it only referenced counseling agencies).
- Trial court and the Superior Court found the Act 91 notice deficient and held that defective notice divested the court of subject matter jurisdiction, so they set aside the sale and vacated the judgment.
- The Pennsylvania Supreme Court granted review to decide whether a defective Act 91 notice affects subject matter jurisdiction and whether the PHFA-prescribed uniform notice sufficed; the Court ruled defective notice is procedural, not jurisdictional, and remanded.
Issues
| Issue | Plaintiff's Argument (Borrower) | Defendant's Argument (Beneficial) | Held |
|---|---|---|---|
| Whether a defective Act 91 pre-foreclosure notice deprives the court of subject matter jurisdiction | Act 91 makes proper pre-foreclosure notice a jurisdictional prerequisite; courts lack power to hear foreclosures commenced before compliant notice | Act 91 notice is a procedural condition precedent; defective notice affects remedies/power but not the court’s subject matter jurisdiction | Defective Act 91 notice is procedural and does not deprive the court of subject matter jurisdiction; case remanded |
| Whether the PHFA-prescribed uniform Act 91 notice must expressly offer a borrower a meeting with the mortgagee (versus counseling agency) | Statute requires the notice to advise borrower of 30-day option to meet with mortgagee or counseling agency, so omission renders notice deficient | PHFA’s uniform notice is reasonably construed to channel borrowers to counseling agencies; agency interpretation is entitled to deference when statute ambiguous | Majority did not decide PHFA deference question (remanded); Justice Saylor concurred finding PHFA’s interpretation reasonable and the notice adequate |
Key Cases Cited
- Mazur v. Trinity Area School Dist., 961 A.2d 96 (Pa. 2008) (standard for subject matter jurisdiction review)
- In re Melograne, 812 A.2d 1164 (Pa. 2002) (distinguishing subject matter jurisdiction from waivable procedural defects)
- Marra v. Stocker, 615 A.2d 326 (Pa. 1992) (notice requirements discussed; did not hold defective notice jurisdictional)
- Philadelphia Hous. Auth. v. Barbour, 592 A.2d 47 (Pa. Super. 1991) (intermediate court language treating foreclosure notice as jurisdictional, relied on by Superior Court)
- U.S. Bank Nat’l Ass’n v. Guillaume, 38 A.3d 570 (N.J. 2012) (persuasive authority holding defects in pre-foreclosure notice are not jurisdictional)