Court Opinion

ID: 9376026
Source: CourtListenerOpinion
Date Created: 2023-03-01 17:07:07.446621+00
Date Added: 2024-06-11T17:17:03.704880
License: Public Domain

J-S27002-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SKW-B ACQUISITIONS SELLER C, LLC,              IN THE SUPERIOR COURT
AS SUCCESSOR TO FS RIALTO 2019-FL                 OF PENNSYLVANIA
1 HOLDER, LLC

                        Appellant

                   v.

STOBBA RESIDENTIAL ASSOCIATES,
L.P. AND STOBBA ASSOCIATES, L.P.

                        Appellees                  No. 73 EDA 2022

              Appeal from Order dated December 13, 2021
         In the Court of Common Pleas of Philadelphia County,
                    Civil Division, at No. 210501951
_____________________________________________________________

SKW-B ACQUISITIONS SELLER C, LLC,              IN THE SUPERIOR COURT
AS SUCCESSOR TO FS RIALTO 2019-FL                 OF PENNSYLVANIA
1 HOLDER, LLC

                        Appellee

                   v.

STOBBA RESIDENTIAL ASSOCIATES,
L.P. AND STOBBA ASSOCIATES, L.P.

                        Appellants                No. 101 EDA 2022

                Appeal from Order dated December 13, 2021
           In the Court of Common Pleas of Philadelphia County,
                      Civil Division, at No. 210501951

BEFORE: STABILE, J., NICHOLS, J., and SULLIVAN, J.

MEMORANDUM BY STABILE, J.:                        FILED MARCH 1, 2023

     FS-Rialto 2019-FL 1 Holder, LLC brought this action for breach of

contract against Stobba Residential Associates, L.P. and Stobba Associates

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(collectively “Borrower”), alleging that Borrower defaulted under a promissory

note and loan agreement. SKW-B Acquisitions Seller C, LLC (“Lender”) is the

successor in interest to FS-Rialto 2019-FL 1 Holder, LLC.      Borrower is the

owner of residential and commercial properties at 200-210 Lombard Street in

Philadelphia. Lender moved for appointment of a receiver, asserting, inter

alia, that Borrower failed to make monthly payments on the note and

instructed Borrower’s commercial tenants to pay rent into Borrower’s bank

account instead of the account specified in the loan agreement. On December

13, 2021, following two evidentiary hearings, the court issued a memorandum

and order in which it declined to appoint a receiver. The court did, however,

order alternative relief by directing Borrower to instruct commercial tenants

to pay ongoing rents into the account specified in the loan agreement and

instructing Borrower to account for all rents deposited into Borrower’s account.

      Lender appeals the portion of the order denying its motion for

appointment of a receiver. Borrower cross-appeals the portion of the order

granting Lender alternative relief.1 For the reasons provided below, we vacate

the court’s order and remand for further proceedings.

      On August 2, 2019, Borrower executed a loan agreement with FS CREIT

Originator LLC (“Original Lender”) evidencing a $24,250,000 loan to Borrower.

1The caption of Borrower’s notice of appeal listed FS-Rialto 2019-FL 1 Holder,
LLC as Appellee. The proper appellee in this appeal should be SKW-B
Acquisitions Seller C, LLC, successor in interest to FS-Rialto 2019-FL 1 Holder,
LLC. We have corrected the caption accordingly in Borrower’s appeal at 101
EDA 2022.
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The loan was evidenced by a promissory note dated August 2, 2019 that

Borrower executed in favor of Original Lender. The Loan is secured by an

open-end mortgage, assignment of leases and rents, security agreement and

fixture filing, dated July 30, 2019 and effective as of August 2, 2019, from

Borrower to Original Lender. The mortgage created a lien in favor of Original

Lender on multiple residential condominium unit numbers in the Headhouse

Flats Condominium located at 200-210 Lombard Street, Philadelphia,

Pennsylvania (“the Property”) and on commercial condominium unit B in the

Property.

      In connection with the Loan, Borrower executed a cash management

agreement with Wells Fargo Bank, National Association (“Wells Fargo”), and a

deposit account control agreement (“DACA”) with the Original Lender and

Wells Fargo.   We will refer to the loan agreement, note, mortgage, cash

management agreement, and DACA as the “Loan Documents.”

      Eric Blumenfeld is Borrower’s sole principal. Tenants at the Property

include Giant Food Stores, Wawa, Rita’s Water Ice, South Philadelphia

Pediatrics, LLC, Supercuts, TD Bank, and Target Park U.S. Inc.

      The loan agreement requires that “the Monthly Debt Service Payment

Amount shall be paid by Borrower to Lender on each Payment Date.” Loan

Agreement, § 2.2.3.     The loan agreement defines monthly debt service

payment amount as meaning, “with respect to each Payment Date, an amount

equal to all interest that is scheduled to accrue on the Outstanding Principal

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Balance during the Accrual Period in which each such Payment Date occurs.”

Loan Agreement, § 2.2.3.

      Pursuant to Section 1.1 of the mortgage, Borrower granted a security

interest in the Property. Pursuant to Section 1.1(f) of the mortgage, Borrower

also granted Lender a security interest in, inter alia, “all leases, subleases,

rental agreement, letting, licenses, concessions and other agreements,

whether or not in writing, affecting the use, enjoyment or occupancy of the

Premises (“Leases”) … and all rents, additional rents, payments in connection

with any termination, cancellation or surrender of any Lease, revenues, issues

or profits (“Rents”).” Mortgage, Exhibit C, Section 1(f).

      To protect the security interest, the Loan Documents have several

provisions requiring the deposit of rents and other revenues generated by the

Property into specific accounts created and held for the benefit of Lender.

Specifically, pursuant to the loan agreement, the DACA, and the cash

management agreement, Borrower was required to have all Tenants deposit

Rents into the DACA account at Wells Fargo. Rents in the DACA account would

then be disbursed daily into Lender’s cash management account at Wells

Fargo. See Loan Agreement, § 6.1.1; DACA §§ 1(a)-(b) and Sections 2-5;

Cash Management Agreement § C and §§ 1(a) and 7-8. Section 6.1.2 of the

loan agreement requires Borrower to deliver each commercial tenant a notice

instructing it to pay Rent into the appropriate account. Section 4.1.4 of the

loan agreement requires that Borrower provide monthly reports of Rents

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collected from tenants and monthly operating statements of, inter alia, gross

income, operating expenses and capital expenses.

      Section 7.1(i) of the Loan Agreement provides that it is an event of

default under the Loan “if any portion of the Debt is not paid on or before the

date same is due and payable or if the entire Debt is not paid on or before the

Maturity Date.” Section 7.1(xii) of the loan agreement provides that it is an

event of default under the loan “if Borrower shall continue to be in default

under any other term, covenant or condition of this Agreement, the Note, the

Security Instrument or the other Loan Documents not specified above [such

as the obligation to instruct Tenants to deposit Rents into the Cash

Management Account] for more than (y) ten (10) days after notice from

Lender, in the case of any default which can be cured by the payment of a

sum of money, or (z) thirty (30) days after notice from Lender, in the case of

any other default.”

      Under Section 8.1(g) of the Mortgage, Borrower agreed that upon an

Event of Default,

      Lender may take such action, without notice or demand, as it
      deems advisable to protect and enforce its rights against Borrower
      and in and to the Property, including, but not limited to, the
      following actions, each of which may be pursued concurrently or
      otherwise, at such time and in such order as Lender may
      determine, in its sole discretion, without impairing or otherwise
      affecting the other rights and remedies of Lender . . . apply for
      the appointment of a receiver, trustee, liquidator or conservator
      of the Property, without notice and without regard for the
      adequacy of the security for the Debt and without regard for the
      solvency of Borrower, any Guarantor or of any person, firm or
      other entity liable for the payment of the Debt.

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      Section 9.19 of the mortgage provides, “Borrower hereby waives the

right to assert a counterclaim, other than a compulsory counterclaim, in any

action or proceeding brought against it by Lender or its agents.” In addition,

Section 9.15 of the mortgage provides:

      Any assignee of Lender’s interest in and to this Agreement, the
      Note and the other Loan Documents shall take the same free and
      clear of all offsets, counterclaims or defenses which are unrelated
      to such documents which Borrower may otherwise have against
      any assignor of such documents, and no such unrelated
      counterclaim or defense shall be interposed or asserted by
      Borrower in any action or proceeding brought by any such
      assignee upon such documents and any such right to interpose or
      assert any such unrelated offset, counterclaim or defense in any
      such action or proceeding is hereby expressly waived by Borrower.

      The loan and loan documents were assigned several times between

2019 and 2021 and ultimately were assigned to Lender.

      On May 21, 2021, Lender filed an action for breach of contract against

Borrower alleging that Borrower defaulted on the loan by (1) failing to make

monthly payments required under the loan documents and (2) diverting its

tenants’ rents into its own account at TD Bank instead of depositing rents into

the DACA account specified in the loan documents. On June 4, 2021, Lender

filed a motion seeking appointment of a receiver. Lender did not request any

other form of relief in its motion.    Borrower filed an answer along with

counterclaims asserting that Lender committed the first material breach of

contract by causing one of Borrower’s tenants, Giant Food Stores, to stop

paying   rent   to   Borrower.   In   response   to   Borrower’s   answer   and

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counterclaims, Lender alleged that Section 9.15 of the mortgage precluded

Borrower from raising a counterclaim that Lender committed the first material

breach, and Section 9.19 precluded Borrower from raising a defense of first

material breach against an assignee such as Lender.

      The trial court held two days of evidentiary hearings on Lender’s petition

for appointment of a receiver. Lender furnished evidence that Borrower failed

to make loan payments in all but one month between December 2020 and

November 2021, and that at Borrower’s direction, two of Borrower’s tenants

(WaWa and TD Bank) paid rent into Borrower’s operating account instead of

the DACA account specified in the loan documents. Other tenants—Target

Park, Supercuts, Rita’s and South Philadelphia Pediatrics—paid less than the

full rent due for several months. During 2021, however, Borrower transferred

over $112,000.00 from its operating account into an account controlled by

Borrower’s president.     Borrower also made other payments out of the

operating account totaling almost $100,000.00 without divulging the reason

for these payments. Appellee’s Brief at 18-20 (summarizing evidence with

record citations).

      At the conclusion of the hearings, the court asked Lender what other

remedies it proposed besides appointment of a receiver, N.T., 11/18/21, at

42, even though a receivership was the only relief that Lender sought in its

motion.    Lender proposed that the court appoint a receiver or, in the

alternative, order Borrower to instruct its tenants to deposit all rents into the

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DACA account and direct Borrower to provide an accounting of all rents that

Borrower deposited into its own account at TD Bank. Subsequently, Lender

submitted proposed findings of fact and conclusions of law that made the same

requests for a receiver or alternative relief.

      On December 13, 2021, the trial court issued a memorandum and order

denying Lender’s motion for a receiver.          Although the court found that

Borrower failed to make monthly payments, it stated that appointment of a

receiver is a “drastic” remedy, and that Lender had “fallen extremely short”

of proving any need for a receiver. Trial Court Memorandum, 12/13/21, at 6.

With regard to Lender’s claim that Borrower had diverted all rents, the court

claimed that Borrower had paid part of the management fees due under the

loan documents. In addition, the court observed, “[Borrower] contends that

these payments are excused because of [Lender’s] breach on several fronts.

Reasons that debt service has not been paid is to be determined by another

court hearing and [is] the subject of another court proceeding.” Id.

      Although the court denied Lender’s request for a receiver, it accepted

Lender’s proposed alternate remedy because it “recogniz[ed] the fundamental

unfairness of [Borrower] not paying the interest due and sporadically

providing financial and other information that is required under the loan

documents while simultaneously having the tenants pay rent into [Borrower’s]

operating account.” Id. at 7. The court entered the following order:

      [Borrower shall]

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     a. Within 20 business days of the docketing of this Order, instruct
     all Tenants to pay Rents pursuant to the requirements of the Loan
     Agreement, the Deposit Account Control Agreement (the “DACA”),
     and the Cash Management Agreement (including but not limited
     to requiring the Tenants pay their Rents into the DACA Account at
     Wells Fargo), and provide proof to [Lender] and the Court that
     this instruction has been given;

     b. Within 30 business days of the docketing of this Order, provide
     [Lender] and the Court an accounting of all Rents paid directly into
     [Borrower’s] operating account at TD Bank since January 1, 2021
     (the “Accounting”), and within fifteen (15) business days of
     submission of the Accounting, transfer all such Rents previously
     paid to [Borrower’s] operating account at TD Bank into the Cash
     Management Account at Wells Fargo, and provide proof that this
     transfer has been completed;

     c. For the month of October 2021 and forward, provide [Lender]
     with the financial information required by Section 4.1.4 of the
     Loan Agreement, as well as monthly operating activity reports
     regarding the rent collections, leasing activity, and the most
     current rent rolls to be provided on the fifteenth (15th) day of
     each month (starting with December 15, 2021) regarding the rent
     collections, leasing activity, and rent roll for the prior month.

Order, 12/13/21.

     Borrower timely appealed the order to this Court, and Lender timely

cross-appealed. One day after Lender’s appeal, the court granted Borrower’s

motion for stay of the court’s order pending the outcome of the appeals.

Lender and Borrower complied with Pa.R.A.P. 1925, but the court did not file

a Pa.R.A.P. 1925 opinion.

     On January 24, 2023, during the pendency of these appeals, the court

entered an order granting Lender’s motion for summary judgment on

Borrower’s counterclaims on the ground that Section 9.19 of the mortgage

prohibited Borrower from raising these counterclaims in this action.

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      Borrower raises the following issues in its appeal:

      1. Did the trial court err as a matter of law and/or abuse its
      discretion by awarding [Lender] relief where, as the trial court
      found, [Lender] (i) “has fallen extremely short of meeting its
      burden in appointing a receiver,” (ii) “did not present evidence of
      any emergency, loss, waste, injury, dissipation of the property or
      abuse of funds”, and (iii) its allegations of default based upon the
      “divergence and misappropriation of rented from the Property”
      were “incorrect, inaccurate, and unproven”?
      2. Did the trial court err as a matter of law and/or abuse its
      discretion by awarding [Lender] equitable relief where [Lender]
      has adequate remedies at law available?
      3. Did the trial court err as a matter of law and/or abuse its
      discretion in ordering [Borrower] to direct the tenants to pay their
      rents to the DACA Account and ordering appellants to transfer all
      rents previously paid to it into the Cash Management Account on
      the grounds that (i) such relief constitutes prejudgment
      attachment which is not permitted under Pennsylvania law, (ii)
      even if it was permitted, such relief is not warranted given that
      (a) there is no allegation/claim of fraud and (b) the trial court
      expressly found that [Lender] “did not present evidence of any
      emergency, loss, waste, injury, dissipation of the property or
      abuse of funds”, and (iii) awarding such relief substantially
      interferes with appellants’ ability to effectively manage the subject
      property and would negatively impact the tenants of the property?
      4. Did the trial court err as a matter of law and/or abuse its
      discretion by entering an order, in the nature of a mandatory
      injunction, compelling [Borrower’s] performance under loan
      documents where (i) there exists an adequate remedy of law for
      appellee, (ii) this is not a “clear case” for contract enforcement,
      (iii) [Lender’s] averments of default under the loan documents is
      the ultimate issue in the case, and (iv) [Borrower’s] performance
      under the loan documents was/is excused by [Lender’s] pre-
      occurring material breaches of the loan documents?
Borrower’s Brief at 4-5.
      Lender raises the following issues in its cross-appeal:

      1. Whether the appointment of a receiver was warranted, where
      the governing loan documents specifically provide for the

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      appointment of a receiver upon default, and the Borrower
      admitted to payment default.
      2. Whether the appointment of a receiver was warranted, where
      the Borrower admitted to diverting Rents and other proceeds from
      the Property to the Borrower’s own operating account rather than
      the Cash Management Account as required, thereby threatening
      the Lender’s security interest in the Property and Rents?
      3. Whether the appointment of a receiver was warranted based
      upon the Borrower’s mismanagement of the Property?

      4. Whether in light of the Borrower’s demonstrated and admitted
      payment default, and the recognized “fundamental unfairness of
      [Borrower] not paying the interest due and sporadically providing
      financial and other information that is required under the loan
      documents while simultaneously having the tenants pay rent into
      [Borrower’s] operating account,” the trial court appropriately
      exercised its discretion in awarding alternative relief?
Lender’s Brief at 6-7.
      In essence, Lender appeals the portion of the order denying its motion

for receivership, and Borrower appeals the portion of the order requiring the

alternate remedies directing ongoing deposits of rents into the DACA account,

an accounting, and monthly financial reports. Pa.R.A.P. 311(a)(2) provides

that an interlocutory appeal may be taken as of right from “an order

confirming . . . or refusing to confirm [a] . . . receivership or similar matter

affecting the possession or control of property,” except for matters arising in

divorce proceedings not relevant here.       Under Rule 311(a)(2), we have

jurisdiction over Lender’s appeal as one from an order refusing to confirm a

receivership, and we have jurisdiction over Borrower’s appeal as one from an

order affecting the possession or control of property.

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          At the outset, we vacate the court’s determination to award alternative

relief.     The only relief requested in Lender’s motion was an order for a

receivership. Therefore, the court should have limited its decision to granting

or denying this request. By asking Lender for alternative remedies during the

hearings, the court deprived Borrower of its right to file written objections to

alternative relief in advance of the hearings. More importantly, the court failed

to explain what doctrine it applied—equitable, legal or otherwise—as the basis

for awarding relief.      Perhaps the court intended to award Lender specific

performance under the Loan Documents, but we cannot tell for certain,

because there was no claim of specific performance before the court, and

because the court’s justification for its decision, “fundamental fairness,” is

untethered to any specific principle.          We hold that there is no proper

foundation in the record for alternative relief.

          Turning to the court’s decision to deny a receiver, our first step is to

determine the proper standard of review.             Lender contends that it is

contractually entitled to a receiver under the terms of the loan agreement;

Borrower contends that common law standards for appointment of a receiver

apply. We agree with Borrower that common law standards apply.

          At common law, the appointment of a receiver is a “severe, and may be

termed an heroic, remedy,” and “the court . . . will act with the utmost caution”

before making this appointment. McDougall v. Huntingdon & Broad Top

R. & C. Co., 143 A. 574, 577-78 (Pa. 1928).            Receivership of a solvent

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corporation is a “drastic remedy,” and should only be granted when “(1) the

right to a receivership is free from doubt, and (2) a receivership is clearly

required by the facts and circumstances and equities of the case.” Tate v.

Phila. Transp. Co., 190 A.2d 316, 317 (Pa. 1963). Appointment of a receiver

“is not to be undertaken lightly,” and “the decision to appoint is within the

sound discretion of the trial court.” Abrams v. Uchitel, 806 A.2d 1, 8 (Pa.

Super. 2002).    Despite this demanding standard, the trial court has the

discretion to appoint a receiver when assets are wasted or dissipated, Hankin

v. Hankin, 493 A.2d 675, 677 (Pa. 1985), or when a borrower defaults on its

loan payments. See Metropolitan Life Insurance Co. v. Liberty Center

Venture, 650 A.2d 887, 890-91 (Pa. Super. 1994) (mortgagee entitled to

appointment of receiver where mortgagor unilaterally made payments at

interest rate of 10% instead of 14½ and 15% required under notes).

      Lender argues that Section 8.1(g) of the mortgage governs instead of

common law. Section 8.1(g) states that “[u]pon the occurrence of any Event

of Default, Borrower agrees that Lender may . . . apply for the appointment

of a receiver, trustee, liquidator or conservator of the Property . . .” [emphasis

added]. Lender reads this text too expansively. “May apply” merely entitles

Lender to request appointment of a receiver in the event of default, but it does

not automatically entitle Lender to appointment of a receiver without more.

The court retains the discretion to grant or deny Lender’s request. Authority

relied upon by Lender does not require a different result. In three of the cases

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cited by Lender, the parties expressly agreed that in the event of a default,

the lender “shall have” the right “to apply [for] . . . and obtain” a receiver, or

“shall be entitled to” appointment of a receiver, or are entitled to a receiver

“as a matter of right,” materially different language from the text in this case.

See Metropolitan Life Ins. Co., 650 A.2d at 891 (“If an Event of Default

shall have occurred and be continuing, Mortgagee, upon application to a court

of competent jurisdiction, shall be entitled . . . to the appointment of a

receiver(s) . . . ”); Wells Fargo Bank, N.A. v. InSite Dunmore (O’Neil),

LLC, 2015 WL 5074421, *5 (CCP Lackawanna Cty. 2015) (mortgage entitled

lender to appointment of receiver “as a matter of right” and borrower

“irrevocably consent[s]” to appointment); City Nat. Bank v. 728 Market

Street, LP, 2012 WL 781185, *5 (CCP Philadelphia Cty. 2012) (“The Lender

[City National Bank] shall have the absolute and unconditional right to apply

to any court having jurisdiction and obtain the appointment of a receiver or

receivers of the Property”).   In the fourth case, MSCI 2006-IQ11 Logan

Boulevard Ltd. P’ship v. Greater Lewistown Shopping Plaza, L.P., 2017

WL 485958 (M.D. Pa. 2017), the loan agreement provided that “[Lender] may

apply for the appointment of a receiver to manage and operate the property,”

but it also provided that the borrower “consents, to the extent permitted by

applicable law, to the appointment of a receiver.” Id. at *2; see also City

Nat. Bank, 2012 WL 781185, at *5 (borrower “irrevocably consent[s]” to

appointment). Here, in contrast, Lender does not identify any text in which

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Borrower consents to the appointment of a receiver without more; nor can we

find any. The final two cases cited by Lender are unpublished decisions of this

Court from 2014 and 2016. The Rules of Appellate Procedure prohibit us from

taking into account any unpublished decision from this Court filed before May

2, 2019. Pa.R.A.P. 126(b).

      Without a contractual entitlement or right to have a receiver appointed

here, Lender may still seek appointment of a receiver but bears the burden of

satisfying common law standards to obtain this relief. Although there are no

citations to relevant law in the trial court’s memorandum, it appears that the

court applied common law standards to this case, given its use of such terms

as “waste, injury, dissipation of the property or abuse of funds.” Trial Court

Memorandum at 6; see Hankin, 493 A.2d at 677 (waste or dissipation of

assets provides cause for appointment of receiver). Several aspects of the

court’s decision, however, create concern that it misapplied these standards.

      First, it appears that the court misinterpreted the evidence. The court

stated that Lender failed to prove the need for a receiver because it could not

demonstrate that Borrower diverted or mismanaged funds.         Borrower, the

court continued, did not divert or mismanage funds, because it “presented

testimony of a sum of partial management fees being paid to the manager,

EB Management Corp. (“EBRM”), for providing management services at the

Property.”   Trial Court Memorandum at 6.       The evidence demonstrates,

however, that EBRM is solely owned by Blumenfeld, Borrower’s sole principal.

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Tr., 11/18/21, at 19. Between January and September 2021, Borrower paid

EBRM $112,686.13 in management fees. Tr. 11/12/21, at 31-33. By paying

EBRM, Blumenfeld effectively paid himself at the same time he failed to pay

the debt service owed on the loan. Tr. 11/12/21, at 36-37 (“Q: You’re paying

the alleged arrearages to your management company, but not your lender,

correct? A: (No answer.) Q: Is that correct? A: That is correct”). This evidence

suggests that Borrower diverted monies to a company owned by its principal

instead of making payments towards the loan.

        Next, there appears to be an inconsistency in the court’s analysis. On

page 6 of its memorandum, the court denied a receivership because it found

no abuse of funds or diverting of rents by Borrower. Trial Ct. Memorandum

at 6.    On page 7, however, the court found that Borrower refrained from

paying the loan while “simultaneously having the tenants pay rent . . . into

[Borrower’s] operating account,” id. at 7, text which indicates that Borrower

intentionally failed to pay the loan while simultaneously diverting or

mismanaging rents. Additionally, on page 6, the court denied a receivership

because it found that Borrower might have viable defenses, such as

Borrower’s contention that Lender committed the first material breach by

interfering with Borrower’s business relationship with Giant.    Id. at 6. On

page 7, however, the court “recogniz[ed] the fundamental unfairness” of

Borrower not paying the loan.      Id. at 7.   It is difficult to harmonize the

determination that non-payment by Borrower is “fundamentally unfair” with

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the determination that Borrower might have meritorious defenses for non-

payment.

      Next, the court’s statement that Lender failed to present evidence of the

proposed receiver’s qualifications or course of action is belied by the record.

Lender’s petition (1) recommended Stephen Resinski and his organization,

Colliers International, as the receiver, (2) listed Resinski’s qualifications, (3)

proposed a plan for improving tenant satisfaction, maintaining and upgrading

the Property, reducing costs, and otherwise improving the operation of the

Property, and (4) submitted a schedule of Resinski’s and Colliers’ proposed

fees. Lender’s Petition For Appointment of Receiver, ¶¶ 57-58 & exhibits 5,

6.

      Finally, the court’s decision on January 24, 2023 to dismiss Borrower’s

counterclaims calls into question whether Borrower has any viable defenses

to Lender’s action, since Borrower’s defenses appear to rest on the same

theory as its counterclaims (namely, Lender committed the first material

breach).

      These concerns require remand for further proceedings as to whether

appointment of a receiver is warranted under common law.

      Order vacated. Case remanded for further proceedings in accordance

with this memorandum. Jurisdiction relinquished.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 3/01/2023

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