Dalfonso, T. v. Benson, R., 62 WDA 2016

Omni Capital lent $200,000 to United Business Enterprises (UBE) in 1994; UBE’s owners (the Robidouxs) personally guaranteed the debt. After default, parties entered a 1997 settlement requiring payment of $273,435, secured by mortgages on several Robidoux properties, including McKean County oil, gas, and mineral (OGM) rights.
Omni obtained a judgment on the 1997 obligation after continued default. Benson later purchased the McKean County OGM rights at tax sale in 2000, subject to the 1997 mortgages.
In 2002 Omni and the Robidouxs/UBE executed a new settlement (the 2002 Agreement) that substituted the parties’ obligations and provided for a reduced payment plan, contained an integration clause, and stated that on breach the 1997 judgment would be "deemed to be in full effect" (but did not reinstate the 1997 agreement’s mortgage provisions).
After breach of the 2002 Agreement, Omni assigned the debt to Dalfonso in 2004; Dalfonso later sought foreclosure on the mortgages he claimed to have acquired.
The trial court found the 2002 Agreement operated as a novation that supplanted the 1997 Agreement and its mortgage security; it concluded there were no valid mortgages for Dalfonso to foreclose and entered judgment for Benson. Dalfonso appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2002 Agreement invalidated/extinguished the 1997 mortgages (novation)	Dalfonso: 1997 Agreement merged into the judgment, so 2002 could not novate it; alternatively, mortgages survive because debt and mortgage are separate	Benson: 2002 Agreement was a substituted contract (novation) that replaced the 1997 Agreement and thereby extinguished the mortgage security absent express reservation	Court: Issues waived for inadequate Pa.R.A.P. 1925(b) statement; alternatively, on merits court affirmed that 2002 was a novation and mortgages were extinguished
Whether the mortgages were transferable/foreclosable by Dalfonso	Dalfonso: He purchased Omni’s rights and mortgages in 2004 and thus can foreclose	Benson: Omni no longer held mortgage security to assign after the 2002 Agreement; Dalfonso did not obtain the underlying note/1997 agreement	Court: No valid mortgages existed for Dalfonso to purchase; foreclosure denied

First Lehigh Bank v. Haviland Grille, Inc., 704 A.2d 135 (Pa. Super. Ct. 1997) (elements and intent-focused analysis for novation)
Lynn v. Pleasant Valley Country Club, 54 A.3d 915 (Pa. Super. Ct. 2012) (standard of review in non-jury civil cases)
Weir v. Potter Title & Mortgage Guarantee Co., 185 A. 630 (Pa. 1936) (if underlying debt is extinguished, mortgage security is likewise extinguished)
Kaylor v. Central Trust Co. of Harrisburg, 36 A.2d 825 (Pa. 1944) (note and mortgage are distinct but payment or extinguishment of one discharges the other absent contrary intent)
Nernberg & Laffey v. Patterson, 601 A.2d 1237 (Pa. Super. Ct. 1991) (substituted contract bars revival of pre-existing duty after breach)
Majorsky v. Douglas, 58 A.3d 1250 (Pa. Super. Ct. 2012) (Rule 1925(b) statements that are vague can result in waiver of appellate issues)
Commonwealth v. Reeves, 907 A.2d 1 (Pa. Super. Ct. 2006) (application of Lord waiver principles to unclear concise statements)