U.S. Bank National Ass'n Ex Rel. Pennsylvania Housing Finance Agency v. Watters
163 A.3d 1019
| Pa. Super. Ct. | 2017Background
- In 2006 Bryan J. Watters (Husband) executed a note and mortgage on a Girard, Erie County property; Diane Watters (Wife) was married to Husband at the time but was not on the deed, note, or mortgage.
- Husband defaulted in 2013; the Bank (U.S. Bank Nat’l Ass’n, assignee) filed a foreclosure complaint in Feb. 2014; Wife was served as an occupant, Husband was personally served.
- Default judgment against Husband was entered April 25, 2014; sheriff’s sale occurred Oct. 17, 2014 and Bank obtained title (deed recorded Nov. 10, 2014).
- Divorce between Husband and Wife was pending (not finalized) during the foreclosure; Wife claimed an equitable marital interest under the Divorce Code but had no record title or mortgage liability.
- Wife attempted to stave off sale informally and later sought to intervene and, together with Husband, filed a petition (Dec. 3, 2015) to open/strike the default judgment and set aside the sheriff’s sale; trial court denied intervention and the petition as untimely and lacking meritorious defense.
- On appeal the Superior Court affirmed: Wife was not a “real owner” under Pa.R.C.P. 1144(a)(3), intervention was untimely (filed after final judgment/sale), and the petition to open default was not promptly filed (over 19 months after notice) and failed other prongs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a spouse with an equitable marital interest is a "real owner" under Pa.R.C.P. 1144(a)(3) required to be named in foreclosure | Wife: marital equitable interest (Divorce Code) makes her a real owner who must be joined | Bank: "real owner" limited to record/title owner or mortgagor liable on mortgage; equitable marital interest insufficient | Court: "real owner" limited to those having title/mortgage liability; Wife not a real owner |
| Whether the term "real owner" should include non-record equitable interests (scope of Rule 1144) | Appellants: Rule should be read to include equitable interests created by divorce statutes | Bank: historical/scire facias construction limits "real owner" to present title owner at time of mortgage | Court: interpret Rule per Supreme Court's historical construction; excludes marital equitable interest |
| Whether Wife's application to intervene should have been granted | Wife: she was entitled to be joined/served and may intervene to protect marital interest | Bank: intervention was sought only after foreclosure and sale; intervention must be during pendency | Court: denial affirmed — intervention untimely (filed after final judgment/sale), discretion properly exercised |
| Whether petition to open/strike default judgment was timely and meritorious | Appellants: default judgment should be opened because Wife was not made a party and had an equitable interest | Bank: petition filed 19+ months after notice; no prompt filing or adequate excuse; no meritorious defense asserted timely | Court: petition untimely (delay ~584 days), no adequate explanation; petition to open denied |
Key Cases Cited
- Orient Bldg. & Loan Ass'n v. Gould, 86 A. 863 (Pa. 1913) (defines "real owner"/terre-tenant as present title owner at time of mortgage)
- Bradley v. Price, 152 A.2d 904 (Pa. 1959) (holders of equitable/unrecorded contracts are not "real owners" for Rule 1144 purposes)
- Bank of Pa. v. G/N Enters., Inc., 463 A.2d 4 (Pa. Super. 1983) (interpretations of "real owner" follow scire facias-era decisions)
- Myers v. Wells Fargo Bank, N.A., 986 A.2d 171 (Pa. Super. 2009) (timeliness standard for petitions to open default judgments; prompt filing normally within days to weeks)
- Smith v. Morrell Beer Distributors, Inc., 29 A.3d 23 (Pa. Super. 2011) (petition to open default judgment is equitable; denial reviewed for abuse of discretion)
- Klebach v. Mellon Bank, N.A., 565 A.2d 448 (Pa. Super. 1989) (tenancy by the entireties/entireties protection principles discussed)
- Frantz v. Frantz, 972 A.2d 525 (Pa. Super. 2008) (discusses in custodia legis effect of divorce on entireties property)