First Federal v. Zeglen, J. ( 2021 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
FIRST FEDERAL SAVINGS & LOAN : IN THE SUPERIOR COURT OF
ASSOCIATION OF GREENE COUNTY, : PENNSYLVANIA
A CORPORATION :
:
:
v. :
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JOHN M. ZEGLEN AND DIANE L. : No. 729 WDA 2020
ZEGLEN, HIS WIFE AND UNITED :
STATES OF AMERICA :
:
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APPEAL OF: JOHN M. ZEGLEN AND :
DIANE L. ZEGLEN :
Appeal from the Order Entered June 24, 2020
In the Court of Common Pleas of Fayette County Civil Division at No(s):
2613 of 2017, GD
BEFORE: McLAUGHLIN, J., KING, J., and McCAFFERY, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED: OCTOBER 29, 2021
John M. Zeglen and Diane L. Zeglen appeal from the order denying their
Petition to Set Aside Sheriff’s Sale. They maintain the lower court should have
set aside the sale because the sale price was grossly inadequate and an
affidavit in support of a notice of continued sale contained “false, misleading
and, and or incorrect information.” Zeglens’ Br. at 4. They further argue that
the court should have entered a rule to show cause, allowed discovery, or held
a hearing before ruling on their petition. We affirm.
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The Zeglens previously appealed the grant of summary judgment. In
our decision affirming the order, we set forth the factual and procedural
history of this matter as follows:
This case arises from mortgage foreclosure proceedings. In April
2003, the Zeglens executed a mortgage with [First Federal
Savings and Loan Association of Greene County (“FFSL”)] for
$285,000, secured by real estate on which the Zeglens have since
resided. Because they ceased making those payments in April
2017, the Zeglens were in default on their monthly mortgage
payments. On July 3, 2017, as required by Pennsylvania’s
Emergency Mortgage Assistance Program (Act 91 of 1983, or
“HEMAP”), FFSL sent both of the Zeglens an “Act 91 Notice.” See
FFSL’s Complaint, 12/13/2017, at Paragraph 7 (Exhibits B, C and
D).
Receiving no timely payments to cure the default, on December
13, 2017, FFSL filed a foreclosure complaint. See id. The case
docket reflects that after two reinstatements, the Zeglens were
served with the complaint on March 23, 2018.
The Zeglens filed two motions to stay the proceedings, both of
which were denied. They then filed preliminary objections on May
30, 2018, and FFSL filed a response in opposition. On July 17,
2018, the Zeglens responded to FFSL’s response. The trial court
denied the Zeglens’ preliminary objections with prejudice on July
24, 2018. The trial court then ordered the Zeglens to file an
answer to FFSL’s complaint within 20 days from that date.
On August 13, 2018, the Zeglens filed their “Preliminary
Objections and/or Alternatively Answer and New Matter,” and the
trial court granted FFSL’s motion to strike them because Diane
Zeglen had not signed the document. The Zeglens filed a nearly
identical pleading on September 12, 2018. On all three occasions
that the Zeglens filed preliminary objections, they raised an
essentially identical claim that FFSL had failed to attach its
mortgage note to its complaint. FFSL filed a reply to the Zeglens’
new matter and moved to strike their preliminary objections on
September 28, 2018.
The trial court held a hearing on the Zeglens’ preliminary
objections, answer and new matter on October 4, 2018. At that
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hearing, the Zeglens never objected to a lack of a briefing
schedule as to their preliminary objections.
The trial court issued an opinion and order on November 9, 2018,
overruling all of the Zeglens’ preliminary objections. The trial court
noted in the opinion that the Zeglens had repeatedly raised the
same preliminary objections even after their denial with prejudice.
FFSL then filed a motion for summary judgment. The Zeglens filed
a response but did not argue that the pleadings were still open
due to a lack of a briefing schedule on preliminary objections. After
holding a hearing, the trial court granted FFSL’s summary
judgment motion. The Zeglens timely appealed and both they and
the trial court complied with Pa.R.A.P. 1925.
First Fed. Sav. & Loan Ass’n of Greene Cty. v. Zeglen, 226 A.3d 621(Pa.Super. 2020).
While the appeal was pending,1 Zeglens then sought a stay of execution,
which the trial court initially denied. Despite the initial denial, FFSL agreed to
continue the sale. FFSL filed an affidavit identifying those with liens and
interests in the property, pursuant to Pa.R.C.P. 3129.1, and the sheriff served
notice of continued sale on those identified, pursuant to Pa.R.C.P. 3129.3. The
continued sale took place as scheduled, and bidding opened at costs. FFSL bid
that amount and acquired the property for an alleged sale price of $1,248.90.
The Zeglens petitioned to set aside the sale, and the court denied relief. The
Zeglens filed this timely appeal.
The Zeglens raise the following issues:
I. Whether the court erred and/or abused its discretion in denying
Defendants’ Petition to Set Aside Sheriff’s Sale of Real Property on
the basis that “the appeal filed by the Defendants was denied by
the Superior Court on February 26, 2020, and as a result of which
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1 This Court ultimately affirmed the summary judgment. See id.-3-
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there is no cognizable reason to set aside the sale” because there
are reasons with merit contained in the defendants’ petition to set
aside sheriff’s sale.
II. Whether the court erred and/or abused its discretion in denying
Appellants’ Petition to Set Aside Sheriff’s Sale of Real Property
because of gross inadequacy of price given the price at Sheriff’s
Sale and the value of the property and the price/value ratio
between the price at sheriff’s sale and the value of the property?
III. Whether the court erred and/or abused its discretion in
denying Appellant’s Petition to Set Aside Sheriff’s Sale of Real
Property because of the irregularities involving the sheriff’s sale
where the affidavit pursuant to Pa.R.C.P. 3129.1 filed by Appellee
contains false, misleading, and/or incorrect information pertaining
to judgment and/or lien creditors; contains false, misleading
and/or incorrect names of persons who have a record lien on the
property; and contains false, misleading and/or incorrect
information pertaining to who has any legal interest in the
property?
IV. Whether the court erred and/or abused its discretion in
denying Appellant’s Petition to Set Aside Sheriff’s Sale of Real
Property without following proper procedure and/or adhering to
due process by not entering a rule to show cause, by not providing
a reasonable period of discovery where for example Appellants
could obtain [thorough] discovery[,] copies of appraisals in
possession of Appellee[,] or other evidence of value in possession
of Appellee, and/or by not holding a hearing and giving the
Appellants an opportunity to be heard and provide additional
evidence of value or otherwise to provide an even stronger case
to set aside the sheriff’s sale.
Zeglens’ Br. at 4-5.
A petition to set aside a sheriff’s sale is a request for equitable relief
addressed to the sound discretion of the Court of Common Pleas. Blue Ball
Nat’l Bank v. Balmer, 810 A.2d 164, 167 (Pa.Super. 2002); Greater
Pittsburgh Bus. Dev. Corp. v. Braunstein, 568 A.2d 1261, 1263 (Pa.Super.
1989). The petitioner bears the burden of proof. Id. We will reverse the denial
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of such a petition only for a clear abuse of discretion. Kaib v. Smith, 684
A.2d 630, 631-32 (Pa.Super. 1996).
The Zeglens’ first issue contends that the trial court erred because their
petition to set aside raised meritorious issues. See Zeglens’ Br. at 10-12. This
issue merely bundles the Zeglens’ other issues and affords them no
independent basis for relief. As we find the Zeglens’ remaining issues
meritless, this issue warrants no further discussion.
In the Zeglens’ second issue, they contend that the sale should be set
aside due to the alleged inadequacy of the sale price. See Zeglens’ Br. at 13.
The Zeglens argue that the price was 0.2% of the value of the home and thus
grossly inadequate. Id. at 15. Although proof of the sale price is not of record,
the parties both allege that the bid was $1,248.90. This claim fails.
Where a sale is challenged based on alleged inadequacy of the price, a
low price standing alone is not a sufficient basis for setting aside a sheriff’s
sale. Bank of Am., N.A. v. Est. of Hood, 47 A.3d 1208, 1211 (Pa.Super.
2012) (citing Blue Ball Nat’l Bank v. Balmer, 810 A.2d 164, 166–67
(Pa.Super. 2002)). Rather, the petitioner must show that the price was
“grossly inadequate.” Id. Each case turns on its own facts, and for this reason
the term “grossly inadequate price” has never been fixed at any given
percentage or amount. Id. In determining whether the sale price in a
mortgage foreclosure sale was grossly inadequate, the court must consider
the outstanding mortgage balance. Id. (citing Cont’l Bank v. Frank, 495
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A.2d 565, 569 (Pa.Super. 1985)). A price received at a duly advertised public
sale is presumed to be the highest and best obtainable. Id.The trial court concluded that the Zeglens had failed to establish that
the sale price was grossly inadequate:
[The Zeglens] have had the property listed for sale for at
least a year without concluding a sale, and the property
remains listed for sale for $449,000.00. While [John M.
Zeglen] assert[s] previous appraisals of over $600,000 and
an assessed value of almost $500,000, those values are
unreliable and irrelevant.
In addition to the remaining principal balance, [FFSL]
represented that it is owed approximately $60,000 in real
estate taxes, an assertion that [Zeglen] acknowledged. At
the time of the writ issuance, the principal balance was listed
as $243,309.34, plus an HOA lien of $1,225.00 and a
Commonwealth lien of $3,225.84. With the current taxes,
[FFSL] is owed well over $300,000.00, plus interest,
penalties and attorney’s fees. Under those circumstances,
the claim that the price garnered at the Sheriffs Sale was
"grossly inadequate" is simply false.
Trial Ct. Op., filed 11/10/20, at 3-4.
The court did not abuse its discretion. When we consider that FFSL is
owed more than $300,000, we cannot say that the court improperly rejected
the Zeglens’ argument, even assuming FFSL can resell the property for
something approaching the Zeglens’ asking price.
In their third issue, the Zeglens argue that the court abused its
discretion in refusing to set aside the sale because of alleged irregularities
with the notice and affidavit of sale. Zeglens’ Br. at 17. They contend that the
affidavit inaccurately identified those who had liens on and legal interests in
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the property. They claim that the alleged inaccuracies “may have had the
effect of persuading potential bidders to not bid or reduce the amount of any
prospective bids. . . .” Id. at 18.
The trial court opined that the Zeglens’ Pa.R.A.P. 1925(b) statement
failed to specify the allegedly inaccurate information and that, accordingly, it
could not formulate a response and the Zeglens had waived the issue. It also
found that, even if the Zeglens properly preserved this issue, it lacks merit.
Pennsylvania Rule of Civil Procedure 3129.1 requires that before a
sheriff’s sale may take place, the plaintiff must file an affidavit identifying,
among others, those with an “interest” in the property that “may be affected
by the sale,” “to the best of the affiant’s knowledge or information and belief”:
Rule 3129.1. Sale of Real Property. Notice. Affidavit
(a) No sale of real property upon a writ of execution shall be
held until the plaintiff has filed with the sheriff the affidavit
required by subdivision (b) and the notice required by Rule
3129.2 has been served.
(b) The affidavit shall set forth to the best of the affiant’s
knowledge or information and belief as of the date the
praecipe for the writ of execution was filed the name and
address or whereabouts of
(1) the owner or reputed owner of the real property and
of the defendant in the judgment; and
(2) every other person who has any record lien on that
property; and
(3) every other person who has any record interest in
that property which may be affected by the sale; and
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(4) every other person who has any interest in that
property not of record which may be affected by the sale
and of which the plaintiff has knowledge.
If the name and address or whereabouts of the persons in
subparagraph (1) through (4) cannot be reasonably
ascertained, the affidavit shall so state.
Pa.R.C.P. 3129.1(a), (b). For purposes of this Rule, the term “interest” is given
a “very broad” meaning. Id., Explanatory Comment.
Even if some “interest” holders were improperly identified, we cannot
agree that their inclusion was an irregularity requiring the setting aside of the
sale. We are not convinced that the Zeglens sustained prejudice. As FFSL
points out, notice – even to those without an “interest” in the property –
serves to encourage competitive bidding. Furthermore, the affidavit merely
named those thought to have an “interest” in the property, “to the best of the
affiant’s knowledge or information and belief.” Those wishing to bid were
merely on notice of potential “interest” holders and could determine the extent
of any such “interest.” We are not convinced, absent further evidence and
discussion, that the naming of such persons depressed bidding or otherwise
prejudiced the Zeglens.
In their final issue, the Zeglens argue that the court erred by not
adhering to due process by failing to enter a rule to show cause and hold a
hearing on their petition to set aside the sale. They also contend the court
similarly erred by not providing them a reasonable period of discovery.
Zeglens’ Br. at 19-20. The Zeglens contend that, since the trial court required
briefs, it should have held argument as well.
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“[T]he general rule is that it 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
Mortg. Corp. of PA v. Buchanan, 929 A.2d 1164, 1169 (Pa.Super. 2007)
(quoting Thomas v. Elash, 781 A.2d 170, 177 (Pa.Super. 2001)). An
examination of the Rules of Civil Procedure relating to sheriff’s sales reveals
no rule requiring a hearing on said petitions.
The court stated:
As noted in this [c]ourt’s June 23, 2020 Order, however,
[the Zeglens] never obtained a stay of the Sheriff’s sale
despite the pendency of the previous appeal. As noted
above, it is obvious from all of the proceedings in this case
that [John Zeglen]—a recently suspended attorney—is
interposing every possible meritless delay tactic. Requiring
[FFSL] to show cause why the sale should not be
invalidated, providing discovery, and conducting a hearing
would only have caused the desired delay. From the time
the sale was held—September 11, 2019—until the Order
denying the Petition to Set Aside the Sale—June 23, 2020—
constituted a period of over nine months. [The Zeglens] had
all the time reasonably necessary to obtain appraisals, and
failed to do so. [The Zeglens] have held and occupied the
mortgaged home for more than three years without paying
a single payment while [FFSL] continues to pay the real
estate taxes and other expenses to preserve the value of
their collateral.
Trial Ct. Op., filed 11/10/20, at 3-4.
Although the Zeglens attempt to distinguish Buchanan, where this
Court found the trial court did not abuse its discretion in declining to conduct
a hearing on a petition to set aside a sheriff’s sale, by arguing that the matter
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does not refer to a sheriff’s sale and that in Buchanan there were no issues
of fact, their attempt is unavailing. Zeglens’ Br. at 20. Contrary to the Zeglens’
argument, Buchanan did clearly refer to a sheriff’s sale. See Buchanan, 929
A.2d at 1169. Further, the Zeglens have not pointed to any authority requiring
the court to issue a rule to show cause and hold a hearing.
The Zeglens’ additional citations to Jefferson Bank v. Newton
Assocs., 686 A.2d 834 (Pa.Super. 1996) and Irwin Union Nat’l Bank &
Trust Co. v. Famous, 4 A.3d 1099 (Pa.Super. 2010), are likewise inapposite.
Newton Assocs. concerned a petition to set aside a sheriff’s sale based upon
allegations of fraud and does not address whether or not the court must hold
a hearing or allow discovery. 686 A.2d at 664-65. In Famous, a third-party
purchaser sought to set aside a sheriff’s sale and receive discovery. 4 A.3d at
1101. This Court determined that the petitioner was not entitled to discovery
where its motion did not identify, with specificity, the discovery sought and
how it would affect its arguments. Id. at 1103. Neither case stands for the
proposition that hearings are required and do not demonstrate any error here.
Here, the court could dispose of the Zeglens’ two main issues—the sale
price and the affidavit—without further evidence or argument. Thus, the court
in the instant case was within its discretion to decide that the matter was best
considered on the record alone. Buchanan, 929 A.2d at 1169; Trial Ct. Op.,
filed 11/10/20, at 3-4. Accordingly, we affirm.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/29/2021
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