In Re: Sale of Real Estate by Lackawanna County TCB, Judicial Tax Sale Property Situate At: 238 Main Street, Moosic, Pa. 18507 ~ Appeal of: Lackawanna County TCB ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Sale of Real Estate by :
Lackawanna County Tax Claim :
Bureau, Judicial Tax Sale Property :
Situate At: 238 Main Street :
Moosic, Pa. 18507 :
Tax Map No. 18416-020-012 : No. 1708 C.D. 2016
Real Owner: Swinka Realty : Argued: April 12, 2018
Investments, LLC :
:
Appeal of: Lackawanna County Tax :
Claim Bureau :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE PELLEGRINI FILED: May 8, 2018
The Lackawanna County Tax Claim Bureau (Bureau) appeals the
order of the Court of Common Pleas of Lackawanna County (trial court) granting
Swinka Realty Investments, LLC’s (Swinka) petition to set aside the judicial sale
and vacating the sale of the property at issue to Frederick J. Bunt (Bunt). For the
following reasons, we affirm.
I.
James and Loretta McAndrew (the McAndrews), the prior owners of
238 Main Street, Moosic, Lackawanna County, Pennsylvania 18507 (Property),
failed to pay the real estate taxes owed on the Property; therefore, on September
26, 2011, the Property was exposed to an upset tax sale. At that sale, Swinka
purchased the Property for $18,000 and paid the full purchase price to the Bureau.
In November 2011, the McAndrews filed a petition to set aside the upset tax sale
and, for unknown reasons, a hearing on the petition was not held until May 12,
2014. Immediately following the hearing, the trial court denied the McAndrews’
petition and sustained the sale of the Property to Swinka, issuing an order stating,
“[t]he September 26, 2011 upset tax sale of the property . . . to Swinka Realty
Investments, LLC is hereby SUSTAINED.” (Reproduced Record (R.R.) at 360a.)
This order was not appealed or challenged by any party.
Notwithstanding that there were no longer any impediments to
issuance of a deed, a deed to the Property was never recorded. The parties dispute
why this did not occur – the Bureau claims Swinka failed to pick up the deed while
Swinka claims the Bureau failed to provide it with a deed despite its repeated
requests for the Bureau to do so.
On July 14, 2014, Ronald Koldjeski (Koldjeski), the Bureau’s Deputy
Director, issued a letter to Swinka, stating:
A while ago, you or your representative put a bid on the
above-identified properties. It has been some time and as
of this date we have not heard from you concerning the
above. This letter is to inform you that you have seven
(7) business days from the date of this notice to respond
or the sale will be deemed abandoned and will be
considered null and void. Please govern yourself
accordingly.
2
(R.R. at 145a.) The letter did not indicate that the upset tax sale was going to be
declared null and void because Swinka representatives had failed to “pick up” the
deed. Because Swinka failed to respond to the notice, the Bureau deemed the 2011
upset tax sale of the Property abandoned and void.
On February 3, 2016, the Bureau petitioned the trial court for
permission to sell the Property, this time at a 2016 judicial tax sale.1 After a
hearing on March 14, 2016, at which time Swinka did not appear, the trial court
granted the petition. On March 28, 2016, the Property was sold at the Bureau’s
judicial tax sale to Bunt for $55,000. Swinka then filed a petition to set aside the
judicial tax sale.
II.
At a hearing on the petition, Koldjeski testified that he instructed his
staff to prepare a deed to the Property after the McAndrews failed to appeal from
the trial court’s May 12, 2014 order. Koldjeski told his staff to contact Swinka by
phone and instruct Swinka’s representative to pick up the deed. He then sent the
July 14, 2014 letter outlined above to Swinka’s P.O. Box in Olyphant,
1
Curiously, the Bureau’s February 3, 2016 petition to sell the Property at its 2016
judicial tax sale claims the Bureau fixed an upset price and the Property was exposed to an upset
tax sale in 2011, but the Bureau “was unable to obtain a bid sufficient to pay said Upset Price” at
that 2011 upset sale. (R.R. at 148a.) This petition makes no mention of Swinka’s $18,000 bid
on the Property, the fact that Swinka paid the $18,000 at the time of the upset tax sale, the
McAndrews’ petition to set aside the upset tax sale, or the trial court’s order sustaining the upset
tax sale to Swinka. The petition lists the McAndrews as the assessed and record owners of the
Property and lists Swinka as an interested party with an address of 624 Boulevard Avenue,
Dickson City.
3
Pennsylvania, via First-Class Mail, which was not returned as undeliverable.
Because no one from Swinka responded to the letter, the Bureau deemed the prior
upset tax sale abandoned and void.
Koldjeski also testified that, before the Property was exposed to the
judicial tax sale, the Sheriff’s Office attempted to serve Swinka with a copy of that
petition and the trial court’s rule to show cause. This time, the Bureau used the
address of 624 Boulevard Avenue, Dickson City, Pennsylvania, which Koldjeski
believed was Swinka’s address of record with the Pennsylvania Department of
State. Even though the Sheriff’s Office noted this address was not found and they
were unable to effectuate service, the trial court issued an order on March 16,
2016, authorizing the judicial tax sale of the Property. Koldjeski testified, though,
that prior to the sale, his counsel informed him that Swinka requested the Property
be removed from the judicial tax sale.
On cross-examination, Koldjeski admitted that a copy of the judicial
tax sale petition and rule to show cause were not served on Swinka. He stated that
Swinka paid $18,000 for the Property in 2011, which was still being held in an
account with the Bureau. Koldjeski testified that Cathy Chelland, a Bureau
employee, would have prepared the deed to Swinka, but he did not know where the
deed was at the time of the hearing. Koldjeski admitted that Swinka’s
representatives are at the Bureau’s office regularly, but he personally did not
attempt to notify them of the judicial tax sale.
4
George Slack (Slack) testified that he rented the Property from
Swinka for approximately 26 months beginning in February 2014 and paid his rent
to Marcella Gawron, the mother of one of Swinka’s principals. When individuals
from the Sheriff’s Office came to the Property in February 2016, Slack testified
that he signed for certain paperwork and then called Marcella Gawron who asked
him to take pictures of the documents and send them to her, which he did.
Mark Gawron (Gawron), who owns Swinka along with his family
members Jerome and Gerald Gawron, testified that Slack never provided him with
any notice or documents related to the March 2016 judicial tax sale. Gawron
became aware that the Property was scheduled to be sold at an upset tax sale in
2015, and once he informed the Bureau that he had purchased the Property at a
previous sale and was awaiting a deed, the Property was removed from that sale.
Gawron testified that he exchanged email messages with Bureau employee Lynn
Kobeski about obtaining a copy of the deed to the Property but never received a
response other than being told that Cathy Chelland and Koldjeski were currently
out of the office. Gawron stated that neither he nor Swinka ever received a copy of
Koldjeski’s July 14, 2014 letter, and he was not informed that the Bureau deemed
the upset tax sale void until a week prior to the June 16, 2016 hearing.
On cross-examination, Gawron testified that Swinka maintains a
mailing address of P.O. Box 461, Olyphant, Pennsylvania; its physical address is in
Greentown; and Swinka did not report the 624 Boulevard Avenue, Dickson City,
address to the Department of State. Gawron admitted that his mother, Marcella
Gawron, informed him of a text she received from Slack stating that the Property
5
was slated for Sheriff’s sale, not a judicial tax sale. He investigated but could not
find the Property listed anywhere for the Sheriff’s sale, but admitted that he did not
inquire whether the Property was listed for judicial tax sale or an upset tax sale
because he previously provided the Bureau with a copy of the trial court’s May 12,
2014 order and told it that Swinka was awaiting the deed. When he later learned
that the Property was listed for judicial tax sale, he testified that he had his attorney
contact the Bureau just prior to the judicial tax sale to have it removed from the
sale. Gawron testified that the taxes are paid on all properties he owns in the
county, yet the Bureau has refused to give him deeds to other properties as well as
this one.
The trial court granted Swinka’s petition and vacated the judicial tax
sale to Bunt, finding that the Bureau failed to strictly comply with the statutory
notice requirements for a tax sale. The Real Estate Tax Sale Law (RETSL)2
imposes a series of notification requirements – including publication, certified
mail, posting and personal service – before a county tax claim bureau can sell real
property for delinquent taxes. It noted that the Bureau admitted Swinka was never
given notice of the March 28, 2016 judicial tax sale, and the Sheriff’s Office’s
attempt to effect personal service on Swinka was unsuccessful. The trial court also
noted that the Bureau failed to make a reasonable effort to put Swinka on notice of
the impending judicial tax sale because Swinka was well known to the Bureau, as
its representatives frequently conducted business in the Bureau’s office. See In re
2
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101–5860.803.
6
Sale No. 10, 801 A.2d 1280, 1288 (Pa. Cmwlth. 2002) (citing Section 607.1 of the
RETSL, 72 P.S. § 5860.607a(a)).3
In addition, the trial court stated the Bureau is required to hold an
upset tax sale before it conducts a judicial tax sale where a property is sold free and
clear of all claims, liens, mortgages, etc. See Section 610 of the RETSL, 72 P.S. §
5860.610; Murphy v. Monroe County Tax Claim Bureau, 784 A.2d 878 (Pa.
3
Added by the Act of July 3, 1986, P.L. 351. That section provides:
When any notification of a pending tax sale or a tax sale subject to
court confirmation is required to be mailed to any owner,
mortgagee, lienholder or other person or entity whose property
interests are likely to be significantly affected by such tax sale, and
such mailed notification is either returned without the required
receipted personal signature of the addressee or under other
circumstances raising a significant doubt as to the actual receipt of
such notification by the named addressee or is not returned or
acknowledged at all, then, before the tax sale can be conducted or
confirmed, the bureau must exercise reasonable efforts to
discover the whereabouts of such person or entity and notify
him. The bureau’s efforts shall include, but not necessarily be
restricted to, a search of current telephone directories for the
county and of the dockets and indices of the county tax assessment
offices, recorder of deeds office and prothonotary’s office, as well
as contacts made to any apparent alternate address or telephone
number which may have been written on or in the file pertinent to
such property. When such reasonable efforts have been exhausted,
regardless of whether or not the notification efforts have been
successful, a notation shall be placed in the property file describing
the efforts made and the results thereof, and the property may be
rescheduled for sale or the sale may be confirmed as provided in
this act.
72 P.S. § 5860.607a(a) (emphasis added).
7
Cmwlth. 2001). Because the Bureau was required to expose the Property to an
upset tax sale after the trial court’s May 12, 2014 ruling – prior to exposing the
Property to a judicial tax sale in 2016 – the trial court found the judicial tax sale of
the Property to Bunt was null and void. This appeal followed.4
III.
The Bureau argues that the trial court erred in finding that the judicial
tax sale of the Property to Bunt was null and void because the Property was
required again to be exposed to an upset tax sale before a judicial tax sale could
take place.5 Acknowledging that Section 610 of the RETSL, 72 P.S. § 5860.610,
provides that a judicial tax sale may take place only if the property is first exposed
to an upset tax sale and notwithstanding that the Bureau declared that sale was
abandoned, the Bureau still argues that the September 26, 2011 upset tax sale at
which Swinka was the successful purchaser satisfied the Section 610 requirement.
4
Our review in a tax sale case is limited to determining whether the trial court abused its
discretion, rendered a decision lacking supporting evidence, or clearly erred as a matter of law.
In re Sale No. 10, 801 A.2d at 1282.
5
The Bureau argues that property interests are specifically created and defined by state
law and that the RETSL does not confer protected property interests upon upset tax sale
purchasers. Because Swinka, as a purported upset tax sale purchaser, did not have any interest in
the Property protected by the federal and state constitutions, the Bureau argues that the judicial
tax sale of the Property was proper. However, the Bureau failed to raise this issue at the hearing
before the trial court or in its 1925(b) statement of errors complained of on appeal; therefore, this
issue is waived. See Pa. R.A.P. 1925(b); Lancaster County Tax Claim Bureau v. Valenti, 601
A.2d 445, 446 (Pa. Cmwlth. 1991).
8
Assuming that the Bureau could unilaterally consider the 2011 upset
tax sale abandoned, especially when the trial court’s May 12, 2014 order sustained
the upset tax sale of the Property to Swinka, the issue then becomes whether a new
upset tax sale had to occur before a judicial tax sale could occur. Section 607(a) of
the RETSL requires that once a property is sold at an upset tax sale, “[w]ithin
thirty (30) days of presentation of the consolidated return, if it shall appear to said
court that such sale has been regularly conducted under the provisions of this act,
the consolidated return and the sales so made shall be confirmed nisi.” 72 P.S. §
5860.607(a). Again, assuming that the Bureau could say that the sale was null and
void, we agree with the trial court that a new “upset tax sale” had to occur before
the Property could be exposed to a judicial tax sale because the Bureau’s action
made the initial upset tax sale null and void.
For these reasons, we find no error or abuse of discretion in the trial
court’s determination that the judicial tax sale was null and void for failure to first
expose the Property to an upset tax sale.6
6
The Bureau also argues that the trial court erred in declaring the judicial tax sale null
and void because it did not strictly comply with the statutory notice requirements for a tax sale.
Initially, we note that there is conflicting evidence in the record as to whether and when
Swinka may have received actual notice of the judicial tax sale of the Property. Koldjeski
admitted that the Sheriff was unable to effect service on Swinka of the rule to show cause or the
petition for the judicial tax sale because the address the Bureau provided to the Sheriff could not
be found. We also note, as did the trial court, that the Bureau was required to make reasonable
efforts to notify Swinka of the judicial sale of the Property after this attempted service was
unsuccessful. See In re Sale No. 10, 801 A.2d at 1288 (citing Section 607a of the RETSL, 72
P.S. § 5860.607a; Tracy v. Chester County Tax Claim Bureau, 489 A.2d 1334 (Pa. 1985));
Murphy, 784 A.2d at 883. Swinka was an entity well known to the Bureau, as it frequently
conducted business with the Bureau and appeared at its offices. The record contains numerous
instances of communications between Swinka and the Bureau leading up to the judicial tax sale,
(Footnote continued on next page…)
9
Accordingly, the trial court’s order is hereby affirmed.
________________________________
DAN PELLEGRINI, Senior Judge
(continued…)
including phone calls and emails. Except for Koldjeski’s vaguely worded July 14, 2014 letter –
which was not sent to a valid address and made no mention of picking up a deed to the Property
– the Bureau failed to notify Swinka during any of these communications that it considered the
2011 upset tax sale abandoned and void and failed to request a valid address for Swinka. In
addition, the Bureau failed to present any evidence that it searched its records for a valid address
despite the fact that it admittedly had regular contact with Swinka’s representatives regarding
numerous properties throughout Lackawanna County.
However, whether Swinka received actual notice of the sale is somewhat irrelevant. The
Property’s sale to Swinka was confirmed by two court orders -– the May 12, 2014 order
sustaining the upset tax sale of the Property to Swinka, and the trial court’s decree nisi
confirming the sale pursuant to 72 P.S. § 5860.607. Not only does the Bureau cite to no
authority that it can revoke a sale that has already been confirmed by court order, it cites to no
authority that it can file a petition to set aside those orders after the time for appeal has passed. If
someone fails to pick up a deed for property purchased at an upset tax sale, the Bureau’s remedy
is to file a civil action for specific performance.
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Sale of Real Estate by :
Lackawanna County Tax Claim :
Bureau, Judicial Tax Sale Property :
Situate At: 238 Main Street :
Moosic, Pa. 18507 :
Tax Map No. 18416-020-012 : No. 1708 C.D. 2016
Real Owner: Swinka Realty :
Investments, LLC :
:
Appeal of: Lackawanna County Tax :
Claim Bureau :
ORDER
AND NOW, this 8th day of May, 2018, the order of the Court of
Common Pleas of Lackawanna County in the above-captioned matter is hereby
affirmed.
________________________________
DAN PELLEGRINI, Senior Judge