Opinion ID: 221613
Heading Depth: 2
Heading Rank: 2

Heading: The District Court had ancillary jurisdiction

Text: The District Court vacated its order setting aside the sale, reasoning as follows: [The motion to set aside the sale] appears merely to be another attempt to address problems with the title created by the plaintiff's actions in prosecuting this case. Such problems with title are an issue of state law, and a federal court has no interest in such issues. As the court previously informed the plaintiff, this case concerns a mortgage foreclosure. Plaintiff obtained the remedy it sought in this caseforeclosure of the mortgage on the property. The court closed the case after providing that remedy. Plaintiff then purchased that property in a marshal's sale. Plaintiff now seeks to have the court determine its rights vis-a-vis another party claiming an interest in the property. That question is an independent question of state law and not properly before the court. Despite closing the case after providing NCM with the foreclosure sale it sought and before NCM brought its first motion, the District Court's ancillary jurisdiction extended until the completion of the marshal's sale process it ordered to effect the judgment it had granted NCM. As NCM's error giving rise to the dispute took place before the sale process was completed, the Court had jurisdiction over the ensuing controversy. Ancillary enforcement jurisdiction is ... a creature of necessity, Peacock v. Thomas, 516 U.S. 349, 359, 116 S.Ct. 862, 133 L.Ed.2d 817 (1996), giving federal courts the power to enforce their judgments and ensuring that they are not dependent on state courts to enforce their decrees. IFC Interconsult, AG v. Safeguard Int'l Partners, LLC, 438 F.3d 298, 313 (3d Cir.2006). Ancillary jurisdiction is a common law doctrine that survived the codification of supplemental jurisdiction in 28 U.S.C. § 1367. Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 363 (4th Cir.2010) (§ 1367 governs ancillary jurisdiction over claims asserted in a case over which the district court has federal subject matter jurisdiction ... [but] does not affect common law ancillary jurisdiction over related proceedings ) (emphases in original) (quotation marks omitted); see generally Peacock, 516 U.S. at 354-56, 116 S.Ct. 862 (discussing the availability of ancillary jurisdiction after § 1367 was enacted but declining to extend it based on the facts of that case); Kokkonen v. Guardian Life. Ins. Co., 511 U.S. 375, 379-82, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (same). [A] district court acquires jurisdiction over a case or controversy in its entirety and, as an incident to the disposition of a dispute that is properly before it, may exercise jurisdiction to decide other matters raised by the case over which it would not have jurisdiction were they independently presented. Sandlin v. Corp. Interiors, Inc., 972 F.2d 1212, 1216 (10th Cir.1992) (quoting 6 Charles Alan Wright et al., Federal Practice and Procedure § 1444, at 316-17 (2d ed.1990)). In other words, a court may exercise jurisdiction over related matters arising out of the case in which it has initial jurisdiction. Holibaugh, 609 F.3d at 363 n. 2. Here, the dispute over NCM's alleged errors in sending notice of the marshal's sale to interested parties is a matter we can easily say is not only related, but closely related, to the Court's order of the sale. We thus have no doubt it had jurisdiction over the dispute. Chase is incorrect that the District Court cannot decide this controversy because its ancillary jurisdiction ended when the mortgage foreclosure judgment was entered in favor of NCM. The controversy arose while the District Court had jurisdiction over the marshal's sale, which it had ordered to give effect to the foreclosure remedy it granted NCM. Chase cites to the doctrine that once a judgment is entered in an action, a court needs separate jurisdictional grounds to hear factually intertwined issues. See Kokkonen, 511 U.S. at 380-82, 114 S.Ct. 1673 (declining to extend ancillary jurisdiction to an action to enforce terms of a settlement agreement because retaining jurisdiction over the settlement agreement was not in court's order and breach of a separate contract requires a separate jurisdictional basis); Sawka v. Healtheast, Inc., 989 F.2d 138, 141 (3d Cir.1993) (district court has no power to enforce a settlement agreement where it dismissed the case without retaining jurisdiction). Here, by contrast, NCM is trying to deal with a flaw in the foreclosure sale process caused by its failure to give notice. After overreaching in its attempt to divest Chase of its lien, NCM seeks to wipe the foreclosure sale slate clean and redo that sale correctly. The District Court here specifically ordered the marshal's sale of mortgaged property to recover on the debt due, and it needed to resolve disputes in that process. In addition, Pennsylvania Rule of Civil Procedure 3132 provides that a court ordering a foreclosure sale may, [u]pon petition of any party in interest before delivery of the personal property or of the sheriff's deed to real property, ... upon proper cause shown, set aside the sale and order a resale or enter any other order which may be just and proper under the circumstances. Pa. R. Civ. P. 3132. According to counsel for both parties at oral argument as well as an affidavit from NCM's counsel, the deed has not been delivered to NCM. The consequences of a ruling affirming the District Court support as well that it is the most appropriate forum to settle this matter. The remedy NCM seeks is the set-aside of the foreclosure sale. This remedy cannot be granted in state court without reversing the District Court's order approving the sale and thus abrogating that Court's disposition of the case. Cf. Kokkonen, 511 U.S. at 380, 114 S.Ct. 1673 (suggesting ancillary jurisdiction extends to controversies where a federal court's disposition of a case may be flouted or imperiled). Moreover, as we surmised and as counsel for Chase confirmed at oral argument, were we to affirm and the set-aside issue later brought before a Pennsylvania state court, Chase would argue that the state court is powerless to set aside a sale ordered by a federal court. Counsel for Chase conceded it would instead argue that the only remedy available to NCM would be an action to quiet title. He also agreed that the question in a quiet title action would be whether the marshal's sale divested Chase of its lien because of NCM's failure to provide Chase notice. Where state courts potentially are prevented from granting a remedy otherwise available to a party, the district court (where the matter started) is the best place to decide these issues, especially where the problem arose during a property sale it ordered. See, e.g., Colorado River, 424 U.S. at 819, 96 S.Ct. 1236 (rule requiring that jurisdiction be yielded to the court first acquiring control of property avoids the generation of additional litigation and inconsistent dispositions of property). In an effort to preserve its leverage, Chase argues that we can affirm the denial of the motion for reconsideration and the order vacating the set-aside motion because the clear consequence of failure to give notice to a junior lien holder is that the junior lien is not discharged by the sale and the purchaser takes the property subject to the lien. But this does not address the issue presented herewhether equity calls for putting aside the sale. See, e.g., First E. Bank, N.A. v. Campstead, Inc., 432 Pa.Super. 241, 637 A.2d 1364, 1367 (1994) (Olszewski, J., concurring) (agreeing that sale should be set aside upon motion of the party inadequately notified where proper notice was not given and adding that Pennsylvania rules of civil procedure should be interpreted liberally ... to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable) (quotation marks omitted). Pennsylvania courts sometimes grant requests to set aside a sale and sometimes do not, depending on the evidence presented by the parties. Compare Gambler v. Huyett, 451 Pa.Super. 351, 679 A.2d 831, 834-36 (1996) (where parties can be returned to the same positions they held prior to the sale, court may set aside the sale where there was a defect in the notice procedure because this cures any prejudice to the party that did not receive the notice), with Nat'l Penn Bank v. Shaffer, 448 Pa.Super. 496, 672 A.2d 326, 329-330 (1996) (sale does not necessarily have to be vacated if the mistake is the fault of the petitioning party who is a sophisticated financial lender whose counsel made a mistake of law and overbid at the sale, erroneously believing the sale would discharge the senior lender). [8] The record here is too incomplete for us to decide the merits of the motion, and thus we remand for the District Court to oversee the completion of that record and to decide whether a do-over is called for. All we decide is that it cannot deny that do-over on, in effect, abstention grounds. See, e.g., Kelsey-Barber Corp. v. Campbell, 252 Pa.Super. 321, 381 A.2d 938, 943 (1977) (remanding grant of set-aside petition for further completion of the record where there was an inadequate basis for the lower court reaching its conclusion).