Beneficial Consumer Disc. Co. v. Vukman

• Decision Date: 25 September 2013
• Citation: 77 A.3d 547
• Parties: BENEFICIAL CONSUMER DISCOUNT COMPANY d/b/a Beneficial Mortgage Company of Pennsylvania, Appellant v. Pamela A. VUKMAN, Appellee.
• Court: Pennsylvania Supreme Court

77 A.3d 547

BENEFICIAL CONSUMER DISCOUNT COMPANY d/b/a Beneficial Mortgage Company of Pennsylvania, Appellant

v.Pamela A. VUKMAN, Appellee.

Supreme Court of Pennsylvania.

Argued April 9, 2013.

Decided Sept. 25, 2013.

Paul Arthur Adams, Esq., Keith Allen Clark, Esq., Shumaker Williams, P.C., Camp Hill, for Pennsylvania Association of Community Bankers, Amicus Curiae.

David Evenhuis, Esq., Harrisburg, for Pennsylvania Association of Realtors, Amicus Curiae.

Michael Steven O'Neil, Esq., for Pennsylvania Housing Finance Agency, Amicus Curiae.

Raymond Paul Pepe, Esq., K & L Gates, L.L.P., Harrisburg, Pennsylvania Bankers Association, Amicus Curiae.

David James Bird, Esq., Pittsburgh, Mark S. Melodia, Esq., Henry Falkner Reichner, Esq., Philadelphia, Reed Smith, LLP, Andrew K. Stutzman, Esq., Stradley, Ronon, Stevens & Young, L.L.P., Philadelphia, for Beneficial Consumer Discount Company.

Lauren P. McKenna, Esq., Fox Rothschild, L.L.P., Philadelphia, for Pennsylvania Land Title Association, Appellant Amicus Curiae.

Michael P. Malakoff, Esq., Malakoff and Brady, P.C., Pittsburgh, Jeffrey L. Suher, Esq., Jeffrey Suher, P.C., for Pamela Vukman.

Ellen Mary M. Doyle, Esq., Stember Feinstein Doyle Payne & Kravec, Pittsburgh, Julie Nepveu, Esq., for AARP & National Association of Consumer Advocates, Appellee Amicus Curiae.

Devon E. Sanders, Esq., Community Legal Services, for Community Legal Services, Inc., Appellee Amicus Curiae.

Eileen D. Yacknin, Esq., Neighborhood Legal Services Association, for Neighborhood Legal Services Association, Appellee Amicus Curiae.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice EAKIN.

This is an appeal from the order of the Superior Court affirming the order of the Court of Common Pleas of Allegheny County, which granted appellee's motion to set aside judgment and sheriff's sale, and dismissed appellant Beneficial Consumer Discount Company's praecipe without prejudice. Upon review, we reverse and remand.

In October, 2006, mortgagee Beneficial filed a complaint in mortgage foreclosure against mortgagor appellee, alleging appellee was in default. Prior to the filing, Beneficial provided appellee an “Act 91” notice, discussed below. The parties eventually agreed to a settlement whereby Beneficial received judgment for the accelerated amount due on the mortgage; in turn, Beneficial agreed not to execute on the judgment so long as appellee made regular payments. The trial court approved this settlement in May, 2009.

On April 5, 2010, Beneficial filed an affidavit alleging appellee had defaulted on her obligations under the settlement agreement. The following day, Beneficial filed a praecipe for writ of execution. On August 2, 2010, the property was sold at sheriff's sale; Beneficial was the successful bidder.

On August 31, 2010, appellee filed a document titled “Motion to Set Aside Judgment and Sheriff's Sale,” in which she contended Beneficial failed to comply with the requirements of the Homeowner's Emergency Mortgage Act (Act 91), 35 P.S. §§ 1680.401c et seq. Specifically, appellee alleged the Act 91 notice in 2006 failed to inform her of the option of a face-to-face meeting with Beneficial. Following a hearing, the trial court found the Act 91 notice was deficient based on this omission. See Combined Act 91/Act 6 Notice, 5/17/06. The court concluded this stripped it of subject matter jurisdiction, which cannot be waived; therefore, the court set aside the sheriff's sale and judgment, and dismissed Beneficial's original complaint. Trial Court Order, 12/7/11, at 3 (quoting HSBC Bank v. Carter, GD–08–006055, 6/2/10 (Allegheny County), affirmed, No. 1073 WDA 2010, unpublished memorandum (Pa.Super. filed January 30, 2012)) (“proper notice was an essential prerequisite,a jurisdictional prerequisite to filing a mortgage foreclosure action”).

Beneficial filed a timely appeal asserting that the notice sent to appellee was not deficient, that appellee was barred from challenging the notice's adequacy at this stage, and that even if the notice was deficient, this fact did not extinguish the trial court's subject matter jurisdiction over this case. Beneficial Consumer Discount Company v. Vukman, 37 A.3d 596, 598–99 (Pa.Super.2012).¹

The Superior Court held the Act 91 notice was deficient as contended. Id., at 602. Concerning subject matter jurisdiction, the Superior Court noted, although “[a]ppellee's complaints regarding the deficiencies in the Act 91 notice sound more in the nature of a jurisdictional challenge based upon procedural matters[,]” which “can be waived,” it was bound by its previous decision in Philadelphia Housing Authority v. Barbour, 405 Pa.Super. 140, 592 A.2d 47, 48 (1991), affirmed per curiam,532 Pa. 212, 615 A.2d 339 (1992). Beneficial Consumer Discount Company, at 599–600 (citation omitted). There, the court agreed with the trial court's holding that foreclosure notice requirements are jurisdictional. Id.; see Philadelphia Housing, at 48 (citing Main Line Federal Savings and Loan Association v. Joyce, 632 F.Supp. 9, 10 (E.D.Pa.1986)) (“[T]he notice requirements pertaining to foreclosure proceedings are jurisdictional, and, where applicable, a failure to comply therewith will deprive a court of jurisdiction to act.”); ²Commonwealth v. Hull, 705 A.2d 911, 912 (Pa.Super.1998) (citation omitted) (“It is beyond the power of a panel of the Superior Court to overrule a prior decision of the Superior Court.”). ³ “For [that] reason, [the court] conclude[d] that the trial court properly considered whether the pertinent Act 91 notice was deficient.” Beneficial Consumer Discount Company, at 600.

Beneficial petitioned for allocatur; this Court granted review of the following issue: ⁴

Does a lender's use of the Uniform Act 91 Notice divest a trial court of subject matter jurisdiction and require setting aside a completed Sheriff's Sale, vacating a consent judgment, and dismissing a foreclosure action where any claimed defect in the notice implicates only jurisdiction based on a procedural matter, the lender had no discretion in the form of notice it used, the notice was prescribed by the PHFA consistent with express statutory authorization, and the record shows that the borrower-in-default suffered no prejudice from the lender's use of the Uniform Act 91 Notice, received all the protections contemplated by Act 91, and waived any claim of a procedural defect concerning Act 91?

Beneficial Consumer Discount Company v. Vukman, ––– Pa. ––––, 55 A.3d 100, 100–01 (2012) ( per curiam ). We also requested additional briefing regarding “Whether the recently-enacted Homeowner Assistance Settlement Act, 35 P.S. § 1681.1 et seq., affects our disposition. See Greenough v. Greenough, 11 Pa. 489 (1849). See also Commonwealth v. Shaffer, 734 A.2d 840, 843–844 ( [Pa.] 1999).” Id., at 101.

First, Beneficial contends improper notice simply goes to the court's power to act, not its subject matter jurisdiction. Because we determine defective Act 91 notice does not implicate the jurisdiction of the court, the other issues raised need not be addressed, and we remand to the trial court without considering them.

The test for whether a court has subject matter jurisdiction inquires into the competency of the court to determine controversies of the general class to which the case presented for consideration belongs. Thus, as a pure question of law, the standard of review in determining whether a court has subject matter jurisdiction is de novo and the scope of review is plenary.

Mazur v. Trinity Area School District, 599 Pa. 232, 961 A.2d 96, 101 (2008) (citation omitted).

In 2006, Act 91 required a mortgagee who desired to foreclose to send notice to the mortgagor “advis[ing] the mortgagor of his delinquency ... and that such mortgagor has thirty (30) days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency ... by restructuring the loan payment schedule or otherwise.” 35 P.S. § 1680.403c(a)-(b)(1) (emphasis added), amended by P.L. 841, No. 60, § 2 (July 8, 2008). As the notice sent lacked this clause, the notice was deficient under the statute.

Appellant's contention is that Act 91 notice is “a procedural requirement or condition precedent that does not impact the general subject matter jurisdiction of the Courts of Common Pleas to hear foreclosure actions.” Appellant's Brief, at 20 (citing Bell Tel. Co. v. Philadelphia Warwick Co., 355 Pa. 637, 50 A.2d 684, 688 (1947) (court not without subject matter jurisdiction merely because condition precedent to recovery has not been satisfied); Skelton v. Lower Merion Tp., 298 Pa. 471, 148 A. 846, 847 (1930) (“Whether or not there are statutory or contractual conditions, compliance with which is essential to [the plaintiff's] recovery, and whether or not he is obliged to aver that he has complied with them, if there are any, are matters of substance, not of jurisdiction[.]”)). The Superior Court, appellant contends, confused the distinction between jurisdiction and power, improperly concluding it was bound by the comment in Philadelphia Housing, which was dicta based on dicta in a non-binding federal case. Appellant further avers the Superior Court misapprehendedthis Court's holding in Marra, see supra n. 2, and that no case from the Superior Court or this Court has held a court is deprived of subject matter jurisdiction in a foreclosure action where the Act 91 notice was defective.

Appellee does not question the competency of the courts to entertain foreclosure actions. Instead, she argues, “Act 91 mandates that no foreclosure cause of action exists prior to proper Notice[,]” which is “a prerequisite for the foreclosure action to even be cognizable at law[;]” therefore, “jurisdiction has been specifically removed by a statute or rule of law over pre or defective notice actions[,]” and “subject matter jurisdiction over such...