Wykel v. Knapp
| Decision Date | 20 December 2022 |
| Docket Number | 2185 EDA 2021 |
| Citation | 288 A.3d 889 |
| Parties | Nancy A. WYKEL, Appellant v. William N. KNAPP a/k/a William A.N. Knapp and U.S. Bank Trust National Association, as Trustee of The Chalet Series III Trust |
| Court | Pennsylvania Superior Court |
Mark A. Cronin, West Chester, for appellant.
Scott M. Rothman, West Chester, for appellee.
BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.
OPINION BY McLAUGHLIN, J.:
Nancy A. Wykel ("Wife") appeals from the order entering judgment in favor of U.S. Bank Trust National Association, as Trustee of the Chalet Series III Trust ("U.S. Bank"). The order directed that the mortgage at issue, held by U.S. Bank, would continue to encumber Wife's interest in the subject property. We affirm.
This case involves Wife's quiet title action and U.S. Bank's counterclaim, regarding whether U.S. Bank's mortgage is defective because Wife did not sign it. The following recitation of facts is taken from the trial court's factual findings, which Wife does not challenge. Wife married William N. Knapp ("Husband") in 2000. Thereafter, in February 2001, Husband conveyed a home in Kennett Square, Pennsylvania ("Property"), to himself and Wife as tenants by the entireties. In 2002, both Husband and Wife executed a mortgage against the Property ("2002 mortgage").
Husband refinanced the Property on April 14, 2004, by executing a mortgage in favor of World Savings Bank ("Refinanced Mortgage"). Wife did not sign the documents securing the Refinanced Mortgage. The documents referred to Husband as "William A. Knapp, A married man." The proceeds of the Refinanced Mortgage were used to pay off the 2002 Mortgage. At the time Husband executed the Refinanced Mortgage, Husband handled the couple's finances.
Husband and Wife then obtained a home equity loan in July 2004, secured by a mortgage to Countrywide Home Loans ("Countrywide Mortgage"). In the Countrywide Mortgage documents, both parties acknowledged that this new mortgage was subordinate to the Refinanced Mortgage. Countrywide Mortgage at ¶ g. Later that year, the couple moved to another home and rented the Property.
Husband continued making payments on the Refinanced Mortgage until February 2016, when he defaulted. The couple divorced in April 2016. On August 23, 2017, Wells Fargo Bank (World Savings Bank's successor in interest) filed a quiet title action seeking to reform the Refinanced Mortgage to include Wife. In June 2019, U.S. Bank became Wells Fargo's successor in interest to the Refinanced Loan, and the court dismissed the suit.
Wife then instituted this action in June 2020, to quiet title against U.S. Bank. U.S. Bank filed a counterclaim containing three counts, two of which are relevant here. One count sought to quiet title and asserted the "entireties presumption," which sets up a presumption that when a spouse takes action regarding marital property titled as a tenancy by the entireties, the spouse has acted on behalf of both spouses. U.S. Bank's Answer and Counterclaim at 7 (unpaginated); R.R. 57a. As relief, this count sought a declaration that the subject mortgage was perfected at the time of recordation, as a valid lien against both Wife's and Husband's interests in the Property as tenants by the entireties.
Another count alternatively sought reformation of the mortgage. It asserted that "the Mortgage was not executed by [Wife] as the result of a mistake on the part of the parties to the transaction and/or the title agent which closed the transaction." U.S. Bank's Answer and Counterclaim at 8 (unpaginated); ¶ 59; R.R. 58a. This count sought a reformation of the mortgage to render it a valid lien encumbering both spouses’ tenancy by the entireties interests.
The trial court conducted a trial in July 2021, at which Wife and a representative of U.S. Bank testified. Following trial, the trial court applied the entireties presumption and declared that the Refinanced Mortgage "remain[ed] a lien against the entire" Property. Decision, entered 7/13/21, at 8. Wife filed a motion for post-trial relief, which the trial court denied after oral argument.1 Wife filed the instant timely appeal and both the trial court and Wife complied with Pa.R.A.P. 1925.
Wife raises the following issues on appeal, which we have reordered for ease for disposition:
In her first issue, Wife argues that the court erred by applying the "entireties presumption" and thereby concluding that Husband acted on behalf of Wife when executing the Refinanced Mortgage. Wife makes what is essentially a public policy argument that the entireties presumption is antiquated and allows spouses to act for each other without the other's knowledge. She argues that the statute of frauds should preclude the application of this doctrine because the non-participating spouse's interest in real property is affected without that spouse's assent in writing.
When reviewing a judgment rendered after a bench trial, we determine "whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in any application of the law." Bank of N.Y. Mellon v. Bach , 159 A.3d 16, 19 (Pa.Super. 2017) (quoting Stephan v. Waldron Elec. Heating and Cooling LLC , 100 A.3d 660, 664-65 (Pa.Super. 2014) ). We give a judge's findings of fact the same weight and effect on appeal as a jury verdict, and we consider the evidence in a light most favorable to the verdict winner. Id . We reverse the court's factual findings only if the record does not support them or if the court based them on an error of law. Id . However, as to questions of law, our standard of review is de novo , and our scope of review is plenary. Id .
A tenancy by the entireties exists when property, either real or personal, is held jointly by a married couple. Clingerman v. Sadowski , 513 Pa. 179, 519 A.2d 378, 380-81 (1986). "Neither spouse in a tenancy by the entireties may independently appropriate property to his or her own use to the exclusion of the other, and neither spouse, acting independently, may sever the estate by, for example, conveying part of the property away." Id. (citations omitted).
This form of ownership gives rise to the "entireties presumption," which provides that, "with respect to properties held by the entireties" during the marriage, "either spouse has the power to act for both without specific authority, so long as the benefits of such action inure to both." J.R. Christ Constr. Co. v. Olevsky , 426 Pa. 343, 232 A.2d 196, 199 (1967). The entireties presumption can be rebutted by establishing, by a preponderance of the evidence, that a spouse did not have the other spouse's tacit authority to act on both spouses’ behalf. Id.
In this case, the trial court properly considered Wife's testimony when concluding that the entireties presumption applied:
[Wife] deferred to [Husband] on matters concerning the family's finances, including the mortgage at issue. [Wife] benefited from the mortgage as the proceeds repaid a prior mortgage on which she was obligated. The tenancy was not severed when [Husband] refinanced the existing joint mortgage. Given these circumstances, the presumption supplies implied authority that [Husband] was acting on [Wife's] behalf. To overcome this presumption, [Wife] was required to establish, by a preponderance of the evidence, that [Husband] did not have her tacit authority to refinance the property, which she failed to do.
Trial Court Order, entered 10/15/21, at n.1 ().
We discern no error. The benefit of the Refinanced Mortgage inured to Wife as her obligation on a prior mortgage was thereby extinguished. See J.R. Christ , 232 A.2d at 199. Further, the trial court, as factfinder, was well within its purview when finding that Wife's testimony failed to establish that she opposed the Refinanced Mortgage and that Husband did not have her authority to execute the mortgage document. Id.
Wife also raises the issue of the application of the statute of frauds in cases involving the entireties presumption. She contends that the presumption cannot apply where only one spouse signed the mortgage. The trial court cited Deutsche Bank National Trust Co. v. Evans , 421 B.R. 193, 200 (W.D. Pa. 2009), and concluded that the statute of frauds did not preclude the application of the entireties presumption where Wife "does not contend that there was perjury or fraud in the transaction at issue and none is evident." See Trial Ct. Order at n.1.
The trial court did not err in its reconciling of the statute of frauds with the entireties presumption. "The entireties presumption can render a mortgage enforceable even though only one spouse actually executed the mortgage." Wells Fargo Bank, N.A. v. Carnell , No. 3:16-cv-130, 2018 WL 2994393, at *7 (W.D. Pa. 2018) (citation and internal quotation marks omitted)). In the case the trial court cited, Evans , the court faced a similar question as the...
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