Third Circuit fails to find issue of material fact in mortgage foreclosure fact against U.S. Bank

By Nicholas Malfitano | May 17, 2016

PHILADELPHIA – A federal appellate court determined a couple who filed suit against U.S. Bank did not raise a genuine material fact that documents were improperly submitted by the defense in their case.

Judge Michael A. Chagares authored an opinion on behalf of the U.S. Court of Appeals for the Third Circuit on Wednesday, which rebuffed an appeal filed by Debbie and Lawrence Zimmer against U.S. Bank, National Association. Chagares issued the decision on behalf of himself and fellow Third Circuit Judges Julio M. Fuentes and L. Felipe Restrepo.

On June 9, 2005, the Zimmers applied for a loan to refinance a mortgage from Ameriquest Mortgage Company on their home in Pennsylvania. The loan was approved. Furthermore, the Zimmers executed a note in favor of Ameriquest for $319,500. The mortgage was executed and recorded on June 15, 2005.

On April 15, 2010, the Zimmers entered into a Loan Modification Agreement with Ameriquest. The mortgage was subsequently assigned twice, but the Zimmers dispute whether these assignments were valid. U.S. Bank now claims it is the holder of the note and mortgage.

“There is no dispute that the Zimmers failed to make their monthly mortgage payments on the note and mortgage. The Zimmers failed to make their Aug. 1, 2010 monthly mortgage payment and failed to make every payment since,” Chagares said.

U.S. Bank initiated the instant foreclosure action against the Zimmers on April 6, 2012. During discovery, Lawrence Zimmer and his attorney inspected the note at the office of U.S. Bank’s counsel. Mr. Zimmer denied that it was the same note he signed in June 2005, and stated the rubber-stamped indorsements on the note were not dated and incomplete.

U.S. Bank filed a motion for summary judgment, which the court denied on Oct. 18, 2013. The court also extended discovery for 60 days. Both sides of the litigation later filed motions for summary judgment against each other.

“The District Court determined that the Zimmers failed to produce any affirmative evidence to support their argument that U.S. Bank did not possess the original note, and therefore did not possess standing. The Court found that throughout the action, U.S. Bank produced the same note and, therefore, denied the cross-motion for summary judgment,” Chagares said.

“Regarding U.S. Bank’s summary judgment motion, the District Court found there was no genuine issue of material fact because the Zimmers admitted they executed the mortgage of $319,500 in favor of Ameriquest, the Zimmers are record owners and the mortgage is in default, and the Zimmers have failed to make monthly payments on the loan due since Aug. 1, 2010,” Chagares added.

The Zimmers then appealed to the Third Circuit, believing there was “a genuine issue of material fact that U.S. Bank does not hold the note and, therefore, does not have standing to pursue this action.”

In their appeal, the Zimmers contended: “(1) The note is not valid because it was not properly dated, stamped, or notarized; (2) Their expert Javier Taboas opined that the note did not contain proper indorsements; and (3) U.S. Bank purportedly offered two different copies of the note in summary judgment filings.”

“In [Zimmer’s] declaration, he stated that because the rubber-stamped indorsements on the reverse of the note were undated, there is no indication of when they may have been placed there,” Chagares said.

“It is unclear how Mr. Zimmer’s statement calls into question the validity of the note, or U.S. Bank’s possession of it, because the presence of a date does not implicate the validity of a blank indorsement. These assertions do not raise a genuine issue of material fact,” Chagares said.

Chagares said the District Court “properly distinguished” the instant case because, “U.S. Bank has produced the same note that contains the blank indorsement throughout the proceedings.”

“As a result, we reject the Zimmers’ first argument,” Chagares said.

The Zimmers also believed the District Court erred in not considering the opinion of Taboas, another argument the Court rejected.

“Although the Zimmers state that Taboas did offer an opinion on the originality of the note, the documents Taboas stated he viewed did not include the original note. The District Court therefore correctly determined Taboas’ opinion did not concern the validity of the original note but the validity of the subsequent assignments, which is not relevant here,” Chagares stated.

Finally, Chagares found “no issue of material fact” on the point of U.S. Bank supposedly offering two different notes to the Court – one with an indorsement and another without one.

“The Zimmers had a chance to inspect the original note and also received a copy of it before the second motion for summary judgment was filed. Indeed, Mr. Zimmer’s declaration about inspecting the note refers to the ‘rubber-stamped endorsement on the reverse of the note,” Chagares said. “Moreover, the Zimmers attached a copy of the note with the indorsement on the reverse of page three to their cross-motion for summary judgment, filed after U.S. Bank’s second motion for summary judgment.”

According to Chagares, the Zimmers “cannot now argue that U.S. Bank has submitted two different notes to the Court when they have relied on the copy of the note with the indorsements in their own motion”, and affirmed the order of the District Court.

The appellants are represented by Tullio DeLuca in Scranton.

The appellee is represented by Caitlin M. Donnelly, Chandra M. Arkema, Christopher A. DeNardo and Leslie J. Rase of Shapiro & DeNardo, in King of Prussia.

U.S. Court of Appeals for the Third Circuit case 15-1510

U.S. District Court for the Middle District of Pennsylvania case 3:12-cv-00644

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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