River Station X, LLC v. River Station Land, LP ( 2017 )

J-A19026-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RIVER STATION X, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
RIVER STATION LAND, LP, HAYDEN :
ASSET, LLC AND ESSEX BANK AND :
CHESTER COUNTY OFFICE OF : No. 204 EDA 2017
SHERIFF AND NATIONAL PENN BANK :
AND MACELREE HARVEY, LTD AND :
HUNTINGDON EQUITIES, LLC AND :
HOLLENBACH CONSTRUCTION, INC. :
AND VIST BANK AND TOMPKINS :
VIST BANK AND JOHN W. LISTER :
AND FX BONNES ASSOCIATES, INC. :
AND ANTHEM PARTNERS LLC AND :
SONOCO PRODUCTS COMPANY AND :
DOWNINGTOWN MUNICIPAL WATER :
AUTHORITY AND NVR, INC. D/B/A :
RYAN HOME AND GMH RIVER :
STATION HOLDING, LP. AND :
CHESTER COUNTY TAX CLAIM :
BUREAU AND DOWNINGTOWN AREA :
SCHOOL DISTRICT AND BOROUGH :
OF DOWNINGTOWN AND EAST CALN :
TOWNSHIP AND TERRA TECHNICAL :
SERVICES, LLC :
:
:
APPEAL OF: TERRA TECHNICAL :
SERVICES, LLC :
Appeal from the Order Entered December 22, 2016
In the Court of Common Pleas of Chester County Civil Division at No(s):
2016-01550-RC
RIVER STATION X, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
J-A19026-17
RIVER STATION LAND, LP, HAYDEN :
ASSET, LLC AND ESSEX BANK AND :
CHESTER COUNTY OFFICE OF : No. 213 EDA 2017
SHERIFF AND NATIONAL PENN BANK :
AND MACELREE HARVEY, LTD AND :
HUNTINGDON EQUITIES, LLC AND :
HOLLENBACH CONSTRUCTION, INC. :
AND VIST BANK AND TOMPKINS :
VIST BANK AND JOHN W. LISTER :
AND FX BONNES ASSOCIATES, INC. :
AND ANTHEM PARTNERS LLC AND :
SONOCO PRODUCTS COMPANY AND :
DOWNINGTOWN MUNICIPAL WATER :
AUTHORITY AND NVR, INC. D/B/A :
RYAN HOME AND GMH RIVER :
STATION HOLDING, LP. AND :
CHESTER COUNTY TAX CLAIM :
BUREAU AND DOWNINGTOWN AREA :
SCHOOL DISTRICT AND BOROUGH :
OF DOWNINGTOWN AND EAST CALN :
TOWNSHIP AND TERRA TECHNICAL :
SERVICES, LLC :
:
:
APPEAL OF: TERRA TECHNICAL :
SERVICES, LLC :
Appeal from the Order Entered December 22, 2016
In the Court of Common Pleas of Chester County Civil Division at No(s):
2016-01552-RC
RIVER STATION X, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
RIVER STATION LAND, LP, HAYDEN :
ASSET, LLC AND ESSEX BANK AND :
CHESTER COUNTY OFFICE OF : No. 262 EDA 2017
SHERIFF AND NATIONAL PENN BANK :
AND MACELREE HARVEY, LTD AND :
HUNTINGDON EQUITIES, LLC AND :
HOLLENBACH CONSTRUCTION, INC. :
AND VIST BANK AND TOMPKINS :
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J-A19026-17
VIST BANK AND JOHN W. LISTER :
AND FX BONNES ASSOCIATES, INC. :
AND ANTHEM PARTNERS LLC AND :
SONOCO PRODUCTS COMPANY AND :
DOWNINGTOWN MUNICIPAL WATER :
AUTHORITY AND NVR, INC. D/B/A :
RYAN HOME AND GMH RIVER :
STATION HOLDING, LP. AND :
CHESTER COUNTY TAX CLAIM :
BUREAU AND DOWNINGTOWN AREA :
SCHOOL DISTRICT AND BOROUGH :
OF DOWNINGTOWN AND EAST CALN :
TOWNSHIP AND TERRA TECHNICAL :
SERVICES, LLC :
:
:
APPEAL OF: TERRA TECHNICAL :
SERVICES, LLC :
Appeal from the Order Entered December 22, 2016
In the Court of Common Pleas of Chester County Civil Division at No(s):
2016-01553-RC
BEFORE: BENDER, P.J.E., DUBOW, J., and MUSMANNO, J.
MEMORANDUM BY DUBOW, J.: FILED OCTOBER 17, 2017
In these consolidated appeals, Appellant, Terra Technical Services,
LLC, appeals from the December 22, 2016 Order denying its Petition to Set
Aside Sheriff’s Sale. We affirm.
Appellant is a business engaging in, among other things,
environmental remediation and general demolition work. River Station
Land, LLC (“RSL”), the owner of 18 contiguous parcels of land, hired
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Appellant to demolish certain structures on the property.1 Work commenced
on July 31, 2007. On June 23, 2009, Appellant filed mechanics’ lien claims
in an amount in excess of $1,000,000.00 against the property for unpaid
work. Appellant withdrew its claims on August 7, 2009. Almost 7 months
later, and allegedly pursuant to an agreement to toll the statute of
limitations, on March 3, 2010, Appellant purportedly filed a new set of
Mechanics’ Lien claims.2
After Hayden Asset, LLC, the owner of the mortgages held on RSL’s
land, obtained judgments in Mortgage Foreclosure actions against at least 3
of the 18 parcels, Appellant filed an emergency Motion for Stay of Sheriff’s
Sale and a Petition for Leave to Intervene as a Party in the consolidated
Mortgage Foreclosure cases. Appellant alleged in its Motion that it held
mechanics’ liens on the foreclosed properties and sought to stay the sheriff’s
____________________________________________
1 By way of further background, RSL obtained a loan from Malvern Federal
Savings and Loan (“MFSL”), secured by mortgages on the 18 parcels. At
some point, RSL defaulted on its MFSL loans, and MFSL sold the obligations
to Hayden Asset, LLC (“Hayden”), and Hayden foreclosed on the mortgages.
The foreclosure actions underlying this appeal, and in which Appellant is an
intervenor, arise from Hayden’s foreclosure on mortgages it held on 3
properties and for which it obtained judgments in the amounts of
$3,913,388.79; $2,162,480.57; and $4,780,558.39, respectively. Prior to
the sheriff’s sale, Hayden assigned its interest to Appellee, River Station X,
LLC.
2 These claims are those that Appellant identified in its Petition to Set Aside
Sheriff’s Sale as having lien priority over three mortgages held by Appellee,
River Station X, LLC, as assignee of Hayden Asset, LLC, and recorded on
November 13, 2007, June 24, 2008, and August 10, 2009.
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sale until the priorities of its liens could be judicially determined. Motion to
Stay, 10/6/16 at ¶¶ 8, 12. Appellant attached as exhibits to its Motion
copies of three Notices of Sheriff’s Sale of Real Property dated June 29,
2016.
On October 11, 2016, Appellant filed a separate Declaratory Judgment
action in which it sought a judicial determination as to the priority of its
mortgage liens and those being foreclosed upon by Hayden Asset, LLC. 3
See Case No. 2016-09675-MJ.
The court held a hearing on Appellant’s Motion and Petition and, on
October 18, 2016, permitted Appellant to intervene, but denied its
emergency Motion to Stay Sheriff’s Sale. In its Order denying Appellant’s
Motion, the court instructed Appellant that it could seek to establish the
priority of its liens by filing exceptions to the sheriff’s proposed schedule of
distribution within ten days of the sheriff’s sale as set forth in Pa.R.C.P. No.
3136.
On October 20, 2017, the properties were sold at the sheriff’s sale.
There were no bids at the sale, and River Station X (“Appellee”) took the
property back for costs. Appellant did not attend the sale and did not file
____________________________________________
3 Prior to the Sheriff’s Sale, Hayden assigned its interest to Appellee, River
Station X.
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exceptions to the sheriff’s proposed schedule of distribution within ten days
of the sale.
On November 16, 2016, Appellant filed a second Declaratory Judgment
action. See 2016-10841-MJ.4 In this action, Appellant sought a declaration
that its judgment liens on the property that had already been sold at
sheriff’s sale were superior to Appellee’s judgment liens, that the sheriff’s
sale did not discharge Appellant’s judgment liens, and that two of the parcels
in question were not sold at the sale.
On November 16, 2016, Appellant also filed an emergency Petition to
Enjoin the Chester County Sheriff from delivering and recording the deed for
the parcels following the sheriff’s sale pending final disposition of the
Declaratory Judgment actions. Appellee filed an answer to the Petition in
which it claimed that Appellant does not hold valid mechanics’ lien claims
because it withdrew them on August 7, 2009, did not timely file new claims,
and that any liens Appellant did hold were extinguished by the sheriff’s sale.
On November 17, 2016, Appellant filed the Petition to Set Aside
Sheriff’s Sale at issue in the instant appeal. Appellee filed an Answer on
December 7, 2016. Appellant filed a Brief in support of the Petition on
November 18, 2016.
____________________________________________
4The trial court sua sponte consolidated the Declaratory Judgment actions
under the common Docket Number 2016-01550-RC.
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On November 23, 2016, the trial court denied Appellant’s emergency
Petition to Enjoin delivery and recordation of the deed, concluding that
Appellant failed to satisfy all of the elements required for injunctive relief.
The court specifically found that Appellant had not filed its mechanics’ liens
within the statute of limitations and that any purported agreement to toll the
statute of limitations with respect to the mechanics’ liens was invalid as to
Appellee.
On December 5, 2016, the Sheriff delivered the deed to Appellee.
Appellee subsequently filed an Answer to Appellant’s Petition to Set Aside
Sheriff’s Sale. Appellee urged the court to deny the relief requested by
Appellant, arguing that, since the deed had been recorded and delivered, the
only bases for setting aside the sale are lack of authority or fraud, neither of
which Appellant alleged in its Petition.
On December 14, 2016, Appellee filed an Emergency Petition for
Expedited Consideration of Appellant’s Petition to Set Aside Sheriff’s Sale.
Appellee requested that the trial court deny the Petition and dismiss
Appellant’s Declaratory Judgment actions as moot. The court issued a Rule
to Show Cause to Appellant to file an Answer to Appellee’s Emergency
Petition within 48 hours. Appellant complied with this Rule and filed an
Answer on December 16, 2016.
On December 16, 2016, Appellant also filed a Motion for
Reconsideration of the November 23, 2016 Order denying its request for
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injunctive relief. On December 21, 2016, the trial court entered an Order
denying this Motion.
Also on December 21, 2016, the trial court granted Appellee’s request
for expedited consideration, without a hearing, of Appellant’s Petition to Set
Aside Sheriff’s Sale. On December 22, 2016, the trial court denied
Appellant’s Petition. This timely appeal followed. Both Appellant and the
trial court complied with Pa.R.A.P. 1925.
Appellant raises the following seven issues on appeal, which we have
reordered for ease of disposition:
1. Whether the [t]rial [c]ourt abused its discretion and
committed an error of law by finding that Appellant [] did
not show that proper cause exists or that it would be just
and proper to set aside the sheriff’s sale[?]
2. Whether the [t]rial court abused its discretion [] and
committed an error of law by finding that the arguments
raised by [Appellant] in its Petition to Set Aside the
Sheriff’s Sale were the same as those raised in its Petition
to Stay the Sheriff’s Sale[?]
3. Whether the [t]rial [c]ourt abused its discretion by
determining that equity did not favor setting aside the
[s]heriff’s [s]ale and ordering a resale after lien priority
was determined[?]
4. Whether the [t]rial [c]ourt abused its discretion in denying
[Appellant’s] Petition to Set Aside the Sheriff’s Sale
because equity requires that the sheriff’s sale be set aside
and it would be just and proper under the
circumstances[?]
5. Whether the [t]rial [c]ourt abused its discretion and
committed an error of law by finding that Pa.R.C.P. [No.]
3136 provided the exclusive process for [Appellant] to
challenge lien priority and assert its superior priority[?]
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6. Whether the [t]rial [c]ourt abused its discretion and
committed an error of law in not holding an evidentiary
hearing on disputed issues and mistaken or
misrepresented averments of [Appellee] that were
accepted or assumed to be true by the trial court despite
the requests of [Appellant] for an evidentiary hearing
before the trial court decided the Petition[?]
7. Whether the [t]rial [c]ourt abused its discretion and/or
committed an error of law by declining to decide either
Declaratory Judgment Action (2016-09675-MJ and 2016-
10841-MJ) prior to the sheriff’s sale and/or prior to
deciding the Petition[?]
Appellant’s Brief at 6-7.
Petition to Set Aside Sheriff’s Sale
In its first four issues Appellant essentially presents variations on the
same claim: that the trial court erred in denying its Petition to Set Aside
Sheriff’s Sale. Thus, we address these four issues together.
Appellant claims that the trial court erred in denying its Petition
because it demonstrated proper cause to set aside the sheriff’s sale.
Appellant’s Brief at 20. Specifically, Appellant avers that it pleaded proper
cause because: (1) it held valid liens on the property subject to sheriff’s
sale; (2) the divestment of its liens is in excess of $1,000,00.00; (3) it was
necessary that the parties have lien priority determined prior to the sale to
enable intelligent bidding at the sheriff’s sale; (4) the sheriff’s sale did not
generate sale proceeds to satisfy its liens; and (5) equity favors preserving
lienholders’ rights. Id. at 20-22, 26, 28, 41-45. Essentially, Appellant
claims that the court should have set aside the sheriff’s sale because it was
entitled to a determination of its lien priority prior to the sale. Id. at 21.
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We review the denial of a motion to set aside a sheriff’s sale for an
abuse of discretion. See Irwin Union Nat. Bank and Trust Co. v.
Famous, 4 A.3d 1099, 1102 (Pa. Super. 2010). “[T]he relevant inquiry is
whether proper cause has been shown to set aside the sheriff’s sale.” Id.(citation omitted); see also Pa.R.C.P. No. 3132. The burden of establishing
proper cause by clear and convincing evidence lies with the petitioner. See
id. “Sheriff’s sales have been set aside where the validity of the sale
proceedings is challenged, a deficiency pertaining to the notice of the sale
exists, or where misconduct occurs in the bidding process.” Id. (citation
omitted).
“[A] petition to set aside a sheriff’s sale may only be granted when the
petition is filed before the sheriff’s delivery of the deed.” Mortgage
Electronic Registration Systems, Inc. v. Ralich, 982 A.2d 77, 79 (Pa.
Super. 2009) (citation omitted). There is, however, an exception to the time
bar. See id. Under this exception, a trial court may set aside a sheriff’s
sale after delivery of the sheriff’s deed based upon fraud or lack of authority
to make the sale. See id.In Pennsylvania, a sheriff’s sale of real property discharges all liens
which are not satisfied of record at the time of sale. Boyer v. Walker, 714
A.2d 458, 462-63 (Pa. Super. 1988).
First, with respect to Appellant’s claim that it demonstrated proper
cause to set aside the sheriff’s sale, we note that Appellant has not
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challenged the validity of the sale proceedings, averred that it did not have
proper notice of the sale, or asserted that there was misconduct in the
bidding process. Likewise, Appellant has not argued that the sheriff’s deed
is based upon fraud or that the sheriff lacked authority to conduct the sale.
In sum, Appellant has not claimed that there was any defect in the sale itself
or the sheriff’s deed. Importantly, Appellant’s only real claim is that its liens
were entitled to priority, which ought to have been established prior to the
sheriff’s sale.
In light of our well-settled law, we conclude that the trial court did not
abuse its discretion in declining to set aside the sheriff’s sale when Appellant
failed to present clear and convincing evidence, let alone argument, that
there was some defect in the sale process.
In its fifth issue, Appellant asserts that the trial court erred as a matter
of law in holding that Pa.R.C.P. No. 3136 provides the exclusive remedy for
establishing lien priority. It argues instead that lien priority may also be
established through a declaratory judgment action. Appellant’s Brief at 46.
Appellant also claims that it could not pursue lien priority under Rule 3136
because no one bid against Appellee at the Sheriff’s sale. Id. at 47.
“Under Pennsylvania law, the priority of liens recorded against
foreclosed property is usually established by filing exceptions to the sheriff's
schedule of distribution after a sheriff’s sale has occurred.” Commerce
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Bank/Harrisburg, N.A. v. Kessler, 46 A.3d 724, 728 (Pa. Super. 2012)
(emphasis in original) ( citing Pa.R.C.P. No. 3136).
Pa.R.C.P. No. 3136 provides a mechanism for a party to establish the
priority of its liens on a property which has been sold at sheriff’s sale. This
process includes filing exceptions to the sheriff’s proposed schedule of
distribution within 10 days of the sale. The Rule states, in relevant part, as
follows:
(a) Not later than thirty days after the sale of real property and
not later than five days after the sale of personal property, the
sheriff shall prepare a schedule of proposed distribution of the
proceeds of sale which shall be filed in the prothonotary's office.
No schedule of distribution or list of liens need be filed when the
property is sold to the plaintiff for costs only.
***
(d) The sheriff shall distribute the proceeds of sale in accordance
with the proposed schedule of distribution, unless written
exceptions are filed with the sheriff not later than ten (10) days
after the filing of the proposed schedule.
(e) Upon the filing of exceptions, the sheriff shall transmit them
to the prothonotary together with a copy of the proposed
schedule of distribution.
Pa.R.C.P. No. 3136(a), (d), (e).
This Court has further explained that Rule 3136 provides the exclusive
method by which a court determines lien priority. Sklaroff v. Weiner, 203
A.2d 366, 368 (Pa. Super. 1964); see also Keystone Bank v. Nuclear
Magnetic Resonance Specialties, Inc., 366 A.2d 251, 254 (Pa. Super.
1976). This is the case even when the sale generates no proceeds to
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distribute to subordinate lienholders. State Street Bank v. Petrey, 819
A.2d 581, 584 (Pa. Super. 2003).
After careful review, we agree with the trial court that Rule 3136
provides the exclusive means by which Appellant could have had its lien
priority established. As instructed by the trial court, Appellant was required
to file exceptions to the sheriff’s schedule of distribution. We disagree with
Appellant’s claim that it could not pursue lien priority under Rule 3136
because no one bid against Appellee and Appellee took the property back for
costs. Appellant had notice of the sheriff’s sale. Thus, Appellant could have
attended the sale, as instructed by the trial court, and bid any amount above
costs in order to drive up the sale price and ensure that the sale generated
proceeds for distribution.5
Failure to Hold an Evidentiary Hearing
In its sixth issue, Appellant claims that the trial court erred in deciding
Appellant’s Petition to Set Aside Sheriff’s Sale without holding an evidentiary
hearing. Appellant’s Brief at 33-40.
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5 Appellant relies heavily on Kessler in support of many of its issues on
appeal. We find that Kessler is readily distinguishable from the instant
case. Importantly, although Kessler arose in the context of a mortgage
foreclosure action, the competing lienholders agreed to postpone the
sheriff’s sale so that the court could determine the priority of their liens.
Kessler, 46 A.3d at 727-28. Therefore, this Court determined that the
underlying dispute was in the nature of a declaratory judgment action. Id.
at 729. Here, the parties did not agree to stay the sheriff’s sale, the sale
took place, and yet Appellant failed to pursue the remedy provided in Rule
3136.
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“[I]t is within the discretion of the trial court to determine whether
briefs and/or oral argument are required to rule on a petition; it is also
within the discretion of the trial court to decide whether a matter can be best
disposed of from a review of the record alone.” GMAC Mortgage Corp. of
PA v. Buchanan, 929 A.2d 1164, 1169 (Pa. Super. 2007) (citation
omitted).
The trial court explained its decision to grant Appellee’s request for
expedited consideration of Appellant’s Petition to Set Aside Sheriff’s Sale as
follows:
As a result of the [ ] procedural history, the legal issues
presented by the [P]etition to [S]et [A]side [S]heriff’s [S]ale
have been fully briefed by the parties and the material facts
upon which each party relies have been developed and
presented to the court on more than one occasion. Reviewing
these facts once again, the court concludes that it can dispose of
the present matter [ ] on a review of the record alone, much of
which involves this court’s public records.
Trial Ct. Order, 12/21/16, at n.1.
Given our disposition of Appellant’s first five issues, and in light of the
record before the court at the time it decided Appellant’s Petition to Set
Aside the Sheriff’s Sale, we find that the trial court did not abuse its
discretion in deciding the Petition without holding an evidentiary hearing.
Having correctly held that the only means by which Appellant could obtain
the relief it sought, i.e. by filing exceptions pursuant to Rule 3136, it was
clear to the trial court from the record before it that Appellant had not
presented clear and convincing evidence of appropriate grounds for setting
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aside the sale. Simply, a petition to set aside a sheriff’s sale is not the
proper procedural mechanism for establishing lien priority, and an averment
that lien priority was not established prior to the sale is not a basis upon
which to order the sale set aside. Thus, the record did not contain “disputed
facts” and trial court had no reason to hold an evidentiary hearing.6
The Declaratory Judgment Actions
Last, Appellant claims that the trial court erred in declining to decide
its Declaratory Judgment Actions prior to denying its Petition to Set Aside
Sheriff’s Sale. This issue is waived for failure to comply with our briefing
requirements
Appellate briefs must conform to the Rules of Appellate Procedure.
Pa.R.A.P. 2101. Rule 2119 requires that the “argument shall be divided into
as many parts as there are questions to be argued” and include “such
discussion and citation of authorities as are deemed pertinent.” Id. at
2119(a). “Where an appellate brief fails to provide any discussion of a claim
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6 Appellant also argues that the court should have held a hearing on the
“disputed facts” it presented in its Petition pursuant to Pa.R.C.P. Nos.
208.4(a)(2)(v) and 208.4(b)(1). Appellant’s Brief at 33-34. The plain
language of the Rules belies this argument as both provide the trial court
with discretion as to whether to hold an evidentiary hearing or issue a rule to
show cause. See Pa.R.C.P. 208.4.(a)(2)(v) (“At the initial consideration of a
motion, the court may enter an order that . . . sets forth the procedures the
court will use for deciding the motion which may include . . . the holding of
an evidentiary hearing.”) (emphasis added); Pa.R.C.P. 208.4(b)(1) (“If the
moving party seeks relief based on disputed facts for which a record must be
developed, the court . . . may enter an order . . . providing for the issuance
of a rule to show cause.”) (emphasis added).
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with citation to relevant authority or fails to develop the issue in any other
meaningful fashion capable of review, that claim is waived.”
Umbelina v. Adams, 34 A.3d 151, 161 (Pa. Super. 2011), appeal denied,
47 A.3d 848 (Pa. 2012) (quoting In re W.H., 25 A.3d 330, 339 (Pa. Super.
2011), appeal denied, 24 A.3d 364 (Pa. 2011)); see also Pa.R.A.P. 2119(a).
Appellant has not supported its final issue on appeal with citation to
any relevant authority. Accordingly, it is waived.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/17/2017
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