Hauser Holdings v. The Force Corp.
1696 MDA 2016
| Pa. Super. Ct. | Oct 18, 2017Background
- Force granted a 1994 mortgage on 501 East Street, Bloomsburg to secure $96,500 and Babb signed as president/secretary.
- Babb and Flaherty executed an Agreement in 1994 whereby Babb personally promised $96,500 plus 10% interest for Flaherty’s shares in Force and Bar-B Corporation.
- In 1999, there were extensions and a Mortgage-Promissory Note with Babb, plus a Subordination Agreement subordinating Flaherty’s 1994 mortgage to Equity One, Inc.
- Flaherty assigned all rights to Mountain View Financial, LLC in 2011; Mountain View filed foreclosure against Force in 2013.
- Mountain View assigned its rights to VAI Inc. in 2013, then Hauser in 2015; Hauser filed a substitution of successor in 2015; Hauser moved for summary judgment in 2016, Force cross-moved, and the court granted Hauser’s motion and denied Force’s, awarding Hauser $193,000 plus $5,000 in fees.
- Force timely appealed the September 19, 2016 order denying Force’s summary judgment and granting Hauser’s summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations and mortgage vs. note timing | Hauser’s action not time-barred on mortgage. | Note limitations affect mortgage action. | No bar to foreclosure; mortgage action survives note limitations. |
| Real party in interest/assignment validity | Hauser lacks standing due to defective assignment. | Hauser is real party in interest despite assignment issues. | Hauser proper plaintiff; assignment defects do not defeat standing. |
| Consideration under UWOA | Mortgage lacks consideration. | UWOA express intent to be bound supplies consideration. | There is adequate consideration under UWOA. |
| Enforcement and extinguishment of underlying debt | Extinguishment of note extinguishes mortgage. | Foreclosure separate in rem action; no extinguishment by note. | Mortgage action maintainable independent of note extinguishment. |
Key Cases Cited
- Brackenridge v. Cummings, 18 Pa.Super. 64 (Pa. Super. 1901) (mortgage right survives extinction of the note)
- In re Estate of Snyder, 13 A.3d 509 (Pa. Super. 2011) (20-year limitations under 42 Pa.C.S. § 5529(b) applies to instruments in writing under seal)
- Mowl, 705 A.2d 923 (Pa. Super. 1998) (extinguishment of underlying debt by payment releases mortgage unless otherwise intended)
- Insilco Corp. v. Rayburn, 543 A.2d 120 (Pa. Super. 1988) (foreclosure is in rem; in rem action; enforce debt via property sale)
- Gerber v. Piergrossi, 142 A.3d 854 (Pa. Super. 2016) (PUCC; negotiable instrument concept supports enforcement when instrument pledged)
- JP Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258 (Pa. Super. 2013) (note secured by mortgage; no double liability from defective assignment)
- Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) (express intent to be bound under UWOA suffices as consideration)
- Morgan’s Home Equipment Corp. v. Martucci, 136 A.2d 838 (Pa. 1957) (intent to be bound imports consideration under UWOA)