Court Opinion

ID: 9368655
Source: CourtListenerOpinion
Date Created: 2023-02-06 16:07:14.069467+00
Date Added: 2024-06-11T17:16:09.509669
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

R&A, LLC,                                         :
                       Appellant                  :
                                                  :
               v.                                 :   No. 1221 C.D. 2020
                                                  :   ARGUED: December 12, 2022
Wyoming Valley Sanitary                           :
Sewer Authority                                   :

BEFORE:        HONORABLE PATRICIA A. McCULLOUGH, Judge
               HONORABLE MICHAEL H. WOJCIK, Judge
               HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
SENIOR JUDGE LEADBETTER                                           FILED: February 6, 2023

               R&A, LLC appeals from an order of the Court of Common Pleas of
Luzerne County granting Wyoming Valley Sanitary Sewer Authority’s motion for
summary judgment and directing that judgment be entered in favor of the Authority
in the amount of $2,189.21 for delinquent sewer and water fees. For the following
reasons, we reverse.
               The relevant background of this matter is both succinct and undisputed.
Frank Puglisi and Daniel Marra (Prior Owners) owned property located at 16-18-20
Pine Street, Wilkes-Barre, Pennsylvania (Property). R&A purchased the Property
at a sheriff’s sale pursuant to a mortgage foreclosure action instituted by Wells Fargo
Bank, N.A. against Prior Owners.1 R&A acquired title to the Property via sheriff’s

    1
      In its merits brief to this Court, R&A indicates that it purchased the Property at the sheriff’s
sale for the sum of $3,700.00, and at that time its county assessed value was $80,600.00. R&A’s
Brief at 29 (citing Reproduced Record (R.R.) at 41a, 43a).
deed issued December 1, 2015, and this deed was subsequently recorded in the
Luzerne County Record Book.
                The parties agree that at the time of the sheriff’s sale, there were
delinquent fees for water and sewer services provided to the Property. Of particular
importance herein, at the time of the sale the Authority had not yet formally filed a
lien against the Property for the delinquent fees pursuant to what is commonly
known as the Municipal Claims and Tax Liens Act (MCTLA).2 Because the lien
was not formally recorded, the delinquent fees were not satisfied from the proceeds
of the sheriff’s sale. The Authority attempted to collect the delinquent fees from
R&A following its purchase of the Property. R&A responded by claiming it was
not responsible for the delinquent fees, which then prompted the Authority to
formally file a lien against the Property.
                R&A responded by filing a two-count complaint in the trial court
against the Authority with respect to its collection efforts. In Count I, R&A seeks
to restrain the Authority from any further collection efforts regarding the lien. In
essence, R&A maintains that the delinquent fees were discharged by the sheriff’s
sale because they had not yet been filed or “perfected” prior to the sale, and the lien
cannot reattach to the Property because R&A is a bona fide purchaser without notice.
Count II purports to assert a claim against the Authority for violation of the Unfair
Trade Practices and Consumer Protection Law (UTPCPL).3
                Shortly thereafter, R&A filed a motion for special injunction without
hearing pursuant to Pa.R.Civ.P. 1531(a) because the Authority had since shut off
water service to the Property. On May 22, 2017, the trial court issued an order

    2
        Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101-7455.

    3
        Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-1 – 201-10.

                                                2
directing R&A to pay into Court the sum of $2,189.21, the amount of the delinquent
fees at issue, and instructing the Authority to cause water service to the Property to
be restored upon such payment. The trial court’s order further states: “When a final
unappealable Order is entered by the Court in this matter, the successful party shall
be entitled to receive said sum from the Prothonotary without any further Order of
the Court.” Original Record (O.R.), Item No. 5, Trial Ct. Order dated May 22, 2017.
                The Authority subsequently filed preliminary objections to Count II of
the complaint on grounds that the UTPCPL does not apply to political subdivisions
and the Authority is immune from civil liability pursuant to what is referred to as the
Political Subdivision Tort Claims Act, 42 Pa.C.S. §§ 8541-8542.                  Following
argument, the trial court issued an order sustaining the Authority’s preliminary
objections and dismissing Count II of the complaint.4
                The Authority then filed an answer to the complaint with new matter,
asserting that municipal claims are liens on real estate from the date the charges are
imposed, and the relevant municipality or authority then has three years in which to
file the lien with the prothonotary. The Authority first points to Section 3(a)(1) of
the MCTLA which provides, in pertinent part:

                (a)(1) All municipal claims . . . shall be and they are hereby
                declared to be a lien on said property, together with all
                charges, expenses, and fees incurred in the collection of
                any delinquent account, including reasonable attorney fees
                under subsection (a.1), added thereto for failure to pay
                promptly; and municipal claims and municipal liens
                shall arise when lawfully imposed and assessed and
                shall have priority to and be fully paid and satisfied out of
                the proceeds of any judicial sale of said property, before
                any other obligation, judgment, claim, lien, or estate with
                which the said property may become charged, or for which

    4
        R&A does not challenge this order on appeal.

                                                3
             it may become liable, save and except only the costs of the
             sale and of the writ upon which it is made, and the taxes,
             tax claims and tax liens imposed or assessed upon said
             property.

53 P.S. § 7106(a)(1) (emphasis added). Here, since the delinquent fees had been
assessed and were unpaid at the time of the sheriff’s sale, they constituted a valid
lien at that time. The Authority goes on to note the language in Section 9 of the
MCTLA, which provides that municipal claims, including those for water and sewer
rates, “shall be filed on or before the last day of the third calendar year after that in
which the taxes or rates are first payable[.]” 53 P.S. § 7143. It is undisputed that
the Authority formally filed its lien with the prothonotary within three years of when
the delinquent fees were imposed; therefore, the Authority maintains that the lien
remains against the Property and is enforceable against R&A. The Authority
subsequently filed a motion for summary judgment asserting this same argument.
The trial court granted the Authority’s motion and this appeal followed.
             R&A raises the following two questions on appeal, which we
paraphrase for clarification: (1) whether the trial court erred or abused its discretion
by finding that the Authority’s unperfected statutory lien, of which neither R&A nor
Wells Fargo was aware, was not discharged by the sheriff’s sale at which R&A
purchased the Property; and (2) whether the trial court erred or abused its discretion
by finding that the lien reattached to the Property when the lien was not filed until
after the Property was transferred to R&A, a bona fide purchaser without notice of
the lien.
             Both parties concede the well established principle that municipal liens
generally arise when the charge is imposed or assessed rather than when the claim
is formally filed with the prothonotary. See Section 3(a)(1) of the MCTLA, 53 P.S.

                                           4
§ 7106(a)(1) (“municipal claims and municipal liens shall arise when lawfully
imposed and assessed”);5 see also U.S. v. Oswald and Hess Co., 225 F. Supp. 607
(W.D. Pa. 1964) [citing Twp. of Lower Merion v. Manning, 95 Pa. Super. 322
(1928)]. What the Authority and the trial court fail to account for, however, is the
additional language of the MCTLA with respect to a judicial sale of the subject
property and the effect of an intervening bona fide purchaser without notice.
Specifically, Section 3(a)(1) of the MCTLA provides that municipal liens

               shall have priority to and be fully paid and satisfied out
               of the proceeds of any judicial sale of said property,
               before any other obligation, judgment, claim, lien or estate
               with which the said property may become charged, or for
               which it may become liable, save and except only the costs
               of the sale and of the writ upon which it is made[.]

53 P.S. § 7106(a)(1) (emphasis added). Here, while the Authority’s lien arose at the
time the water and sewer fees were assessed, the fees were not “paid and satisfied
out of the proceeds” of the sheriff’s sale given the Authority’s failure to timely
perfect its lien by filing it with the prothonotary. Put simply, none of the parties
were aware of the delinquent fees given the Authority’s failure to file its lien prior
to the sheriff’s sale.
               Further, the language of Section 3(a)(1) does not state, or even suggest,
that a municipal lien will survive such a sale. This absence is telling especially
considering the language found in Section 1 of the Act of September 23, 1959, P.L.
955, as amended, 53 P.S. § 7432, which states:

    5
       We say “generally” here because, in contrast, Section 3(b) of the MCTLA specifies that
municipal claims and liens “imposed by a city of the first class, shall be a judgment only against
the said property when the lien has been docketed by the prothonotary.” 53 P.S. § 7106(b)
(emphasis added). Since we are not dealing here with a lien imposed by a city of the first class,
i.e. Philadelphia, Section 3(b) does not apply.

                                                5
               [w]henever, heretofore or hereafter, any county, city,
               borough, incorporated town, township, school district,
               poor district, county institution district or municipality
               authority has failed to file in the office of the prothonotary
               of the county, any tax claim or municipal claim assessed
               against any property within the time limit required by law
               for such filing, whereby the lien of such tax or municipal
               claim is lost; . . . Provided, That the lien of any such claim
               or judgment shall not reattach against any real estate
               transferred to any purchaser before such claim is filed
               or during the time when the lien of any such tax or
               municipal claim or judgment was lost . . . .

               In reading these provisions together, as we must,6 it seems clear that the
three-year window to file municipal liens only keeps them alive for that period if
there is no intervening judicial sale to a bona fide purchaser. Because the Authority
here admittedly did not formally file its lien with the prothonotary prior to the
sheriff’s sale, the delinquent fees were not paid out of the proceeds of that sale and
the Authority lost its right to payment against R&A as a bona fide purchaser without
notice of the lien.
               Accordingly, we reverse.

                                               _____________________________________
                                               BONNIE BRIGANCE LEADBETTER,
                                               President Judge Emerita

    6
      “[S]tatutory language must be read in context, that is, in ascertaining legislative intent, every
portion of statutory language is to be read together and in conjunction with the remaining statutory
language, and construed with reference to the entire statute as a whole.” MERSCORP, Inc. v.
Delaware Cnty., 207 A.3d 855, 865 (Pa. 2019) (citation and internal quotation omitted).

                                                  6
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

R&A, LLC,                             :
                  Appellant           :
                                      :
            v.                        :   No. 1221 C.D. 2020
                                      :
Wyoming Valley Sanitary               :
Sewer Authority                       :

                                 ORDER

            AND NOW, this 6th day of February, 2023, the order of the Court of
Common Pleas of Luzerne County is hereby REVERSED.

                                    _____________________________________
                                    BONNIE BRIGANCE LEADBETTER,
                                    President Judge Emerita