In Re: Dauphin County TCB Midd Penn Bank v. Dauphin County TCB Parcel No. 34-001-065-000-0000 ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Dauphin County Tax : CASES CONSOLIDATED
Claim Bureau :
:
Mid Penn Bank :
:
v. : No. 1401 C.D. 2021
:
Dauphin County Tax Claim Bureau :
Parcel No. 34-001-065-000-0000 :
:
v. :
:
Kusic Capital Group, VI, LLC :
:
v. :
:
Rent A Lot, LLC, :
Appellant :
In Re: Dauphin County Tax :
Claim Bureau :
:
Mid Penn Bank, :
Appellant :
:
v. : No. 1475 C.D. 2021
: Argued: December 15, 2022
Dauphin County Tax Claim Bureau :
Parcel No. 34-001-065-000-0000 :
:
v. :
:
Kusic Capital Group, VI, LLC :
:
v. :
:
CJD Group, LLC :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE LORI A. DUMAS, Judge
HONORABLE MARY HANNAH LEAVITT, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE DUMAS FILED: April 19, 2023
Rent A Lot, LLC (Rent A Lot) appeals from an order entered November
15, 2021, in the Court of Common Pleas of Dauphin County (trial court), which
denied Mid Penn Bank’s amended petition to set aside the judicial sale of certain
property but held further that Rent A Lot acquired title to the property subject to a
mortgage held by Mid Penn Bank. On appeal, Rent A Lot asserts that notice of the
judicial sale was proper and, therefore, seeks title free and clear of the mortgage.
Mid Penn Bank cross-appeals, asserting a violation of its due process rights.1 Upon
review, the Sheriff of Dauphin County (Sheriff) properly served notice of the judicial
sale upon Mid Penn Bank. Further, Mid Penn Bank is due no relief for its cross-
appeal. For these reasons, while the trial court properly denied the bank’s petition,
it erred in holding that Rent A Lot took title subject to Mid Penn Bank’s mortgage.
We therefore affirm in part and reverse in part.
I. BACKGROUND2
Kusic Capital Group, VI, LLC owned a property located at 4000 Vine
Street, Middletown, Dauphin County (Kusic Property). Mid Penn Bank held a
recorded mortgage on the Kusic Property. The mortgage listed Mid Penn Bank’s
1
The Court sua sponte consolidated these appeals. Order, Nos. 1401 & 1475 C.D. 2021,
5/12/22.
2
The relevant facts herein are undisputed. See generally Joint Statement of Undisputed
Facts, 10/25/21; Hr’g Tr., 10/26/21.
address as 5500 Allentown Boulevard, Harrisburg, Dauphin County (Allentown
Blvd. Branch).
The Dauphin County Tax Claim Bureau (Bureau) sought to recoup
unpaid taxes due on the Kusic Property via an “upset tax” sale but was unsuccessful.
Therefore, on March 16, 2021, pursuant to Section 610 of the Real Estate Tax Sale
Law (Tax Sale Law),3 the Bureau petitioned the trial court to sell the property free
and clear of liens and other encumbrances via judicial tax sale (Petition for Sale).4
On March 18, 2021, the trial court issued a Rule to Show Cause why
the Kusic Property (and others) should not be sold at a judicial tax sale. The Rule
stated that it was returnable in 90 days but scheduled a hearing on June 2, 2021, i.e.,
76 days into the returnable period.
On April 1, 2021, the Sheriff personally served the Petition for Sale and
Rule on Pam Keefer, a manager at Mid Penn Bank’s branch located at 349 Union
Street, Millersburg (Millersburg Branch), i.e., not the Allentown Blvd. Branch. The
Sheriff also attempted service at the Allentown Blvd. Branch, in person on April 12,
3
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101–5860.803. Section 610
of the Tax Sale Law provides, in relevant part, that when a property is not sold at an upset tax sale,
a tax claim bureau may file a petition with a trial court to sell the unsold property at a judicial tax
sale. 72 P.S. § 5860.610. The bureau’s petition must be accompanied with evidence that it
searched the record and ownership documents of the property and a list of all “tax and municipal
claims, liens, mortgages, ground rents, charges and estates against” the property. Id. The trial
court will then grant a rule upon the interested parties “to appear and show cause why a decree
should not be made” to allow the sale of the property free and clear of all the claims, liens,
mortgages, etc. Id.
4
Indices attached to the Petition for Sale identified three properties in which Mid Penn
Bank held an interest. For each identified property, the corresponding bank address was different.
In other words, a different location of Mid Penn Bank was associated with each of the three
properties identified in the Petition for Sale. For example, regarding a property identified as
“Parcel No. 09-079-061-000-0000” and located at “1931 Zarker Street,” Mid Penn Bank’s address
is listed as “349 Union Street, Millersburg, PA 17061.” Pet. for Sale, 3/16/21, at 51. As noted,
supra, the Allentown Blvd. Branch of Mid Penn Bank was associated with the Kusic Property. Id.
at 72. A third property identified is irrelevant to these proceedings.
2
2021, and by mail on April 16, 2021, but service was unsuccessful. Mid Penn Bank
has not maintained a branch at this location since May 31, 2019.
Mid Penn Bank did not file a response challenging the Bureau’s Petition
for Sale, nor did it attend the Rule returnable hearing. On June 2, 2021, the trial
court granted the Bureau’s petition. On July 10, 2021, Rent A Lot’s predecessor-in-
interest purchased the Kusic Property at the judicial tax sale.5
Thereafter, Mid Penn Bank petitioned the trial court to set aside the
judicial sale, asserting that (1) it had not received proper notice that the Kusic
Property was being sold because service at the Allentown Blvd. Branch had been
unsuccessful and (2) the Rule relating to the judicial tax sale was procedurally
flawed, thus depriving Mid Penn Bank of due process. See Mid Penn Bank’s Am.
Pet. to Set Aside Jud. Sale, 9/2/21.6 The trial court agreed that service was improper
but denied the bank’s petition. Trial Ct. Order, 11/15/21.
According to the trial court, when service on Mid Penn Bank at the full
address listed in the lien documents to the Kusic Property was unsuccessful, i.e., at
the Allentown Blvd. Branch, the Bureau was required but failed “to take reasonable
steps to discover the whereabouts of that party.” Id. at 2 (citing In re Monroe Cnty.
Tax Claim Bureau, 91 A.3d 265 (Pa. Cmwlth. 2014)). The trial court dismissed the
Bureau’s service on Mid Penn Bank at its Millersburg Branch on two grounds: (1)
this service occurred before the Bureau discovered that the Allentown Boulevard
address was no longer correct; and (2) there was no apparent connection between
the Millersburg Branch and the Kusic Property. Id. For these reasons, the trial court
5
CJD Group, LLC initially purchased the property. Rent A Lot acquired title, and this
Court substituted Rent A Lot as appellant. Order, 2/11/22.
6
Mid Penn Bank premised its due process claim on the discrepancy in the Rule language,
i.e., stating that the Rule was returnable in 90 days but scheduling a hearing in 76 days.
3
determined that the Bureau’s service did not strictly comply with the notice
requirements of the Tax Sale Law. Id. However, rather than set aside the judicial
sale, the trial court held that Rent A Lot took the Kusic Property subject to Mid Penn
Bank’s mortgage. See id. at 2-3 (citing Plank v. Monroe Cnty. Tax Claim Bureau,
735 A.2d 178, 182 n.10 (Pa. Cmwlth. 1999)).
Rent A Lot timely appealed, and Mid Penn Bank timely cross-appealed;
both parties filed court-ordered Pa. R.A.P. 1925(b) statements. Rent A Lot
challenged the trial court’s conclusion that the Bureau had not properly served Mid
Penn Bank. See Rent A Lot’s Pa. R.A.P. 1925(b) Statement, 1/31/22. For its part,
Mid Penn Bank preserved a claim that the trial court “could have set aside the
judicial sale” on due process grounds. Mid Penn Bank’s Pa. R.A.P. 1925(b)
Statement, 2/3/22, at 1. The trial court issued a responsive opinion. As for Rent A
Lot’s appeal, the trial court relied on its prior order. See Trial Ct. Pa. R.A.P. 1925(a)
Op., 2/7/22, at 1. With respect to Mid Penn Bank’s cross-appeal, the trial court
observed that all recipients had specific notice of the date and time of the hearing
held on June 2, 2021. Id. Therefore, the court rejected Mid Penn Bank’s due process
claim. See id.II. ISSUES
Rent A Lot asserts that the service upon a branch manager at the
Millersburg Branch was proper because (1) the branch is a regular place of business
for the bank, (2) the Bureau had no duty to locate an additional address for the bank,
and (3) a single copy of the Bureau’s petition was sufficient even though it sought
to divest three mortgages held by the bank at three separate properties. Rent A Lot’s
Br. at 5-6. Thus, according to Rent a Lot, the trial court erred in holding that Rent
A Lot took title to the Kusic Property subject to Mid Penn Bank’s mortgage. See id.4
In its cross-appeal, Mid Penn Bank preserves an alternative argument.
Mid Penn Bank’s Br. at 1. According to the bank, if service was proper, then the
sale should have been set aside on due process grounds because the Rule returnable
hearing was held before the returnable period had expired. See id.III. ANALYSIS7
A. Service upon Mid Penn Bank was Proper
Rent A Lot asserts that service upon Mid Penn Bank was proper and,
therefore, seeks title to the Kusic Property free and clear of the mortgage. See Rent
A Lot’s Br. at 18. Rent A Lot advances three arguments in support of this assertion,
which we will briefly address. Upon review, Rent A Lot is entitled to relief.
First, according to Rent A Lot, service upon a corporate defendant is
properly made upon the person in charge at any regular place of business. See id. at
18, 24-26. Rent A Lot rejects the trial court’s suggestion that the Bureau was
required to serve Mid Penn Bank at its Allentown Blvd. Branch, asserting that any
such requirement would “essentially amend[] the Rules of Civil Procedure. Id. at 27
(referencing Pa. R.Civ.P. 402, 424). Further, Rent A Lot asserts that the purpose of
notice under the Tax Sale Law is to inform an interested party of the pendency of
the action and to afford that party an opportunity to challenge the judicial tax sale.
Id. at 28. According to Rent A Lot, service of the Petition for Sale and Rule at the
Millersburg Branch achieved that purpose.
Second, Rent A Lot asserts the trial court further erred in concluding
that the Bureau was required to investigate an alternative address for Mid Penn Bank.
7
In tax sale cases, we review whether the trial court abused its discretion, rendered a
decision that lacked supporting evidence, or clearly erred as a matter of law. 777 L.L.P. v. Luzerne
Cnty. Tax Claim Bureau, 111 A.3d 292, 296 n.3 (Pa. Cmwlth. 2015). The construction and
application of the Rules of Civil Procedure presents a question of law. Ligonier Twp. v. Nied, 161
A.3d 1039, 1046 (Pa. Cmwlth. 2017).
5
Id. at 34. According to Rent A Lot, an investigation is only required when personal
service is unsuccessful. Id. (citing, inter alia, In re Monroe Cnty. Tax Claim
Bureau). Moreover, Rent A Lot suggests, an investigation would have merely
confirmed the Millersburg Branch to be a proper address for serving Mid Penn Bank,
and thus it would essentially be a meaningless exercise. See id. at 34-35.
Third, to the extent the trial court held that the Bureau was required to
serve three copies of the Petition for Sale and Rule upon Mid Penn Bank, one for
each of the properties subject to sale in which it had an interest, Rent A Lot notes
that this Court has held previously that a single notice was sufficient where a
lienholder held multiple mortgages on a single subject property. See id. at 31-33.
Further, according to Rent A Lot, Mid Penn Bank introduced neither evidence nor
presented argument that it had been prejudiced by the Bureau’s service of a single
copy of the Rule. See id. at 36-40.8
In response to these arguments, Mid Penn Bank concedes that the
Sheriff personally served its branch manager at its Millersburg Branch. Mid Penn
Bank’s Br. at 4. Nevertheless, Mid Penn Bank contends that this service was
inconsistent with the Tax Sale Law, and therefore, its mortgage lien should not be
divested by the tax sale. See id. at 3-10. According to Mid Penn Bank, service at a
branch location not listed on the relevant mortgage documents was insufficient.
8
The Court need not address this argument. At the hearing on its petition, Mid Penn Bank
advanced an argument that the Bureau should have served three copies of the Petition for Sale and
Rule, one for each property subject to the judicial tax sale. See Hr’g Tr. at 18-21, 51. However,
the bank cited no authority in support of this argument. See id.; see also Mid Penn Bank’s Br. at
8-10. We note further that Mid Penn Bank did not premise its petition on this argument. See Mid
Penn Bank’s Am. Pet. to Set Aside Jud. Sale. Finally, the trial court did not address this claim in
its disposition, nor did Mid Penn Bank preserve this claim in its cross-appeal. See Trial Ct. Order;
Mid Penn Bank Pa. R.A.P. 1925(b) Statement, 2/3/22; see also Trial Ct. Pa. R.A.P. 1925(a) Op.,
2/7/22.
6
Moreover, upon failing to serve Mid Penn Bank, in person or by mail, at its closed
branch location, the Bureau was required to exercise reasonable efforts to discover
its whereabouts. See id. at 6-7 (citing Section 607.1(a) of the Law, added by Act of
July 3, 1986, P.L. 351, 72 P.S. § 5860.607a(a)).
The purpose of the notice provisions of the Tax Sale Law is not to strip
away citizens’ property rights but to collect taxes. See 777 L.L.P., 111 A.3d at 297.
In any tax sale case, the taxing bureau must prove compliance with the statutory
provisions of the law. See id. There must be strict compliance with the notice
provisions of the Tax Sale Law. Mfrs. & Traders Tr. Co. v. Luzerne Cnty. Tax Claim
Bureau, 56 A.3d 36, 39 (Pa. Cmwlth. 2012). Absent proper notice to a mortgagee
of a judicial tax sale, the purchaser at the sale takes title to the property subject to
that mortgage. Plank, 735 A.2d at 182 n.10.
Section 611 of the Tax Sale Law governs service of the Rule and
provides that it “shall be made in the same manner as writs of scire facias are served
in this Commonwealth.” 72 P.S. § 5860.611.9 As original process, service of the
Rule is governed by the Pennsylvania Rules of Civil Procedure. See Simmons v.
Delaware Cnty. Tax Claim Bureau, 796 A.2d 400, 403-05 (Pa. Cmwlth. 2002). Rule
402 provides that “[o]riginal process may be served . . . by handing a copy . . . at any
office or usual place of business of the defendant to his agent or to the person for the
time being in charge thereof.” Pa. R.Civ.P. 402(a)(1)(iii). Similarly, Rule 424
provides that “[s]ervice of original process upon a corporation or similar entity shall
be made by handing a copy to . . . the manager, clerk or other person for the time
9
A writ of scire facias is personal process, serving as summons and complaint, which
directs a defendant to appear and show cause why a plaintiff should not be permitted to take some
step ordinarily related to sums due on a recorded lien. See In re Sale of Real Est. by Lackawanna
Cnty. Tax Claim Bureau, 22 A.3d 308, 311 n.2 (Pa. Cmwlth. 2011).
7
being in charge of any regular place of business or activity of the corporation or
similar entity[.]” Pa. R.Civ.P. 424(2).
When service by mail on an interested party is unsuccessful, Section
607.1(a) of the Tax Sale Law requires that a tax claim bureau “exercise reasonable
efforts to discover the whereabouts” of that party. 72 P.S. § 5860.607a(a).10 There
is no such obligation, however, when personal service has been successful. In re
Sale of Real Est. by Lackawanna Cnty. Tax Claim Bureau, 255 A.3d 619, 633 (Pa.
Cmwlth. 2021) (recognizing that “the requirements of Section 607.1(a) were
triggered” when “the [b]ureau received permission from common pleas to provide
alternative service of the pending tax sale by publication and by mail”); In re
Monroe Cnty. Tax Claim Bureau, 91 A.3d at 270.
The trial court rejected service at the Millersburg Branch in part
because it found no apparent connection between that branch and the Kusic Property.
See Trial Ct. Order at 2. The court cited no authority in support of this reasoning. It
is unclear what further connection there needs to be when it is undisputed that (1)
Mid Penn Bank held a mortgage on the Kusic Property and (2) the Millersburg
Branch is a regular place of business for the bank. The connection is readily
apparent. The court’s additional concern that the Bureau failed to investigate a new
address for Mid Penn Bank, see id., is also unfounded. Upon personally serving Mid
Penn Bank with the Rule, the Bureau had complied with the notice requirements of
the Tax Sale Law. It was unnecessary for the Bureau to investigate alternate service
locations.
Here, the Sheriff personally served the Rule upon the branch manager
of the Millersburg Branch, a regular place of business for Mid Penn Bank. This
10
Section 607.1(a) applies to both upset tax sales and judicial tax sales. In re Sale No. 10,
801 A.2d 1280, 1288 (Pa. Cmwlth. 2002).
8
service was consistent with Section 611 of the Tax Sale Law and the Rules of Civil
Procedure. 72 P.S. § 5860.611; Pa. R.Civ.P. 402(a)(1)(iii), 424(2). Accordingly,
the trial court’s conclusion that service was improper constitutes a clear error of law.
See Ligonier, 161 A.3d at 1046.
B. The Rule Provided Sufficient Notice to Mid Penn Bank
In its cross-appeal, Mid Penn Bank asserts that the judicial tax sale
should be set aside on due process grounds because the Rule returnable hearing was
held before the returnable period had expired. Mid Penn Bank’s Br. at 11.
According to Mid Penn Bank, the inconsistency or apparent contradiction in the Rule
returnable is concerning because it could limit an interested party’s ability to protect
against the deprivation of property without due process. See id. at 12.11
In response, Rent A Lot asserts that “[d]ue process is about notice and
an opportunity to be heard and Mid Penn [Bank] had both.” Rent A Lot’s Br. in
Resp. to Cross-Appeal at 3. According to Rent A Lot, Mid Penn Bank chose not to
exercise its right to be heard and cannot now argue that it was deprived of due
process. Id. at 4 (citing In re Serfass, 651 A.2d 677 (Pa. Cmwlth 1994)). Rent A
Lot further observes that Mid Penn Bank does not assert that it incurred any
prejudice because the hearing was held on the very date set forth in the Rule. See
id. at 4-5.
11
The case law cited by Mid Penn Bank in support of its claim is not persuasive. See, e.g.,
City of Phila. v. Manu, 76 A.3d 606 (Pa. Cmwlth. 2013) (setting aside a tax sale when the record
established that the city did not serve the petition for sale and rule until months after the trial court
had approved a sale pursuant to the act commonly referred to as the Municipal Claims and Liens
Act of 1923, Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101–7455); In re Sale of
Real Est. by Lackawanna Cnty. Tax Claim Bureau, 255 A.3d 619 (Pa. Cmwlth. 2021) (holding
that a bureau’s failure to comply with notice requirements deprives a trial court of jurisdiction to
authorize a tax sale and renders any subsequent sale void ab initio).
9
“It is, of course, a cornerstone of our legal system that persons will not
be deprived of their property without notice and an opportunity to be heard.” In re
Serfass, 651 A.2d at 681 (citing Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S.
306 (1950)); see also Hess v. Westerwick, 76 A.2d 745, 748 (Pa. 1950).
This Court’s decision in In re Serfass is instructive. The Northampton
County Tax Claim Bureau was unable to serve a property owner with notice that his
property was subject to an upset tax sale. In re Serfass, 651 A.2d at 678. The sale
proceeded as scheduled, but no bids were received for the property. Id. Thereafter,
the common pleas court entered a rule to show cause why the property should not
be sold at a judicial tax sale, with a return date specifically provided. Id. The sheriff
personally served the rule upon the property owner, but the owner did not appear or
respond to the rule. Id. Subsequently, the property was sold at a judicial tax sale.
Id.The property owner filed a petition to set aside the sale, in relevant part
challenging the sale on due process grounds. Id. at 678-79. The common pleas court
denied the petition, and on appeal, this Court affirmed. Id. This Court recognized
the lack of service prior to the upset tax sale but concluded that personal service of
the rule prior to the judicial tax sale had cured any defect. Id. at 680-81. Further,
the notice had provided the property owner “a full opportunity to be heard, but for
whatever reason, [the owner] did not exercise his rights. He cannot now argue that
he did not receive due process.” Id. at 681.
Here, there is no dispute that the Rule served on Mid Penn Bank
provided specific notice of the date and time of the hearing held on June 2, 2021.
Mid Penn Bank neither appeared at the hearing nor otherwise challenged the
Bureau’s Petition for Sale. Whatever the reason, its decision to forgo a challenge to
10
the judicial sale of the Kusic Property negates any due process argument. See id.Accordingly, this claim lacks merit.
IV. CONCLUSION
Mid Penn Bank received personal service of the Rule at a regular place
of business. This service was proper and in accordance with Section 611 of the Tax
Sale Law and the Rules of Civil Procedure. 72 P.S. § 5860.611; Pa. R.Civ.P.
402(a)(1)(iii), 424(2). Despite notice of the Rule returnable hearing, Mid Penn Bank
chose not to appear to challenge the scheduled judicial sale. Accordingly, Mid Penn
Bank may not assert a due process challenge. See In re Serfass, 651 A.2d at 681.
For these reasons, while the trial court properly denied the bank’s
amended petition to set aside the judicial sale of the Kusic Property, it erred in
holding that Rent A Lot took title subject to Mid Penn Bank’s mortgage. Rather, the
judicial sale divested Mid Penn Bank of its lien on the Kusic Property, and Rent A
Lot holds title to the property free and clear of the mortgage. See Section 610 of the
Tax Sale Law, 72 P.S. § 5860.610. We therefore affirm in part and reverse in part.
LORI A. DUMAS, Judge
11
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Dauphin County Tax : CASES CONSOLIDATED
Claim Bureau :
:
Mid Penn Bank :
:
v. : No. 1401 C.D. 2021
:
Dauphin County Tax Claim Bureau :
Parcel No. 34-001-065-000-0000 :
:
v. :
:
Kusic Capital Group, VI, LLC :
:
v. :
:
Rent A Lot, LLC, :
Appellant :
In Re: Dauphin County Tax :
Claim Bureau :
:
Mid Penn Bank, :
Appellant :
:
v. : No. 1475 C.D. 2021
:
Dauphin County Tax Claim Bureau :
Parcel No. 34-001-065-000-0000 :
:
v. :
:
Kusic Capital Group, VI, LLC :
:
v. :
:
CJD Group, LLC :
ORDER
AND NOW, this 19th day of April, 2023, the order entered November
15, 2021, in the Court of Common Pleas of Dauphin County (trial court), which
denied Mid Penn Bank’s amended petition to set aside the judicial sale of a property
located at 4000 Vine Street, Middletown, Dauphin County, PA 17057, is
AFFIRMED in part and REVERSED in part. The order is REVERSED to the extent
the trial court held Rent A Lot took title to the property subject to Mid Penn Bank’s
mortgage. The order is otherwise AFFIRMED.
Following proper notice and an opportunity to challenge the scheduled
judicial sale, which Mid Penn Bank declined, Rent A Lot’s predecessor-in-interest
purchased the property. Accordingly, the judicial sale divested Mid Penn Bank of
its lien on the property, and Rent A Lot holds title to the property free and clear of
the mortgage. See Section 610 of the Real Estate Tax Sale Law, Act of July 7, 1947,
P.L. 1368, as amended, 72 P.S. § 5860.610.
LORI A. DUMAS, Judge