Court Opinion

ID: 4092939
Source: CourtListenerOpinion
Date Created: 2016-10-26 16:20:55.520125+00
Date Added: 2024-06-11T14:36:16.980499
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Nicholas O. Brown,                        :
                 Appellant                :
                                          :
              v.                          : No. 359 C.D. 2016
                                          : Submitted: September 30, 2016
City of Philadelphia and Sheriff of       :
Philadelphia County                       :

BEFORE:       HONORABLE P. KEVIN BROBSON, Judge
              HONORABLE JULIA K. HEARTHWAY, Judge
              HONORABLE DAN PELLEGRINI, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
SENIOR JUDGE PELLEGRINI                                  FILED: October 26, 2016

              Nicholas O. Brown (Brown) appeals from the final order of the Court of
Common Pleas of Philadelphia County (trial court) dismissing his breach of contract
action to rescind the sale of property that he acquired through sheriff sale because the
sheriff’s deed was not recorded until nine months after the prescribed time limitation
set forth in Section 31.2 of the Municipal Claims and Tax Liens Act (Tax Liens
Law).1, 2 For the following reasons, we affirm.

       1
       Act of May 16, 1923, P.L. 207, added by the Act of March 15, 1956, P.L. (1955) 1274, as
amended, 53 P.S. § 7283. Section 31.2 of the Tax Liens Law, 53 P.S. § 7283(b), provides:

              (b) The deed to the purchaser shall be executed, acknowledged and
              delivered as in other real estate sales by the sheriff. Deeds for
(Footnote continued on next page…)
               Brown was the successful bidder at a sheriff sale for the purchase of real
property located at 1001 and 1003-1007 North Bodine Street Philadelphia,
Pennsylvania (Property).         The sheriff sale was the result of foreclosure actions
(Foreclosure Action) initiated by U.S. Bank National Association (U.S. Bank),3 a
non-party to this action, who filed a tax sale petition on February 3, 2010, to sell the
Property in execution of tax liens that it held as trustee. (Reproduced Record (R.R.)
at 163a-167a.) Neither the City of Philadelphia nor the Sheriff of Philadelphia
County (collectively, “Sheriff”) was a party to the Foreclosure Action.

(continued…)

               property exposed for any sale under this section shall not be
               executed, acknowledged and delivered any sooner than thirty
               days nor later than one hundred and twenty days after the
               purchaser pays the balance due to the sheriff for any sale held
               under this section. Any person interested may at any time prior to the
               proposed sale pay all the costs of the proceedings, including the cost
               for the title search or title insurance policy, and all tax and municipal
               claims, penalties and interest thereon, charged against the property
               whereupon the proceedings on petition shall at once determine.

(Emphasis added.)

       2
          A motion to set aside a sheriff sale is governed by the Pennsylvania Rules of Civil
Procedure, which provide that “[u]pon petition of any party in interest before delivery of the . . .
sheriff’s deed to real property, the court, may 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.C.P.
No. 3132.

       3
         In 1997, the City and the School District of Philadelphia securitized over 100 million
dollars of real estate tax liens to the Philadelphia Authority for Industrial Development (PAID),
which PAID used to collateralize bonds that were sold. U.S. Bank is the trustee for those bond
holders.

                                                  2
              A tax sale decree was then entered by the Philadelphia County Court of
Common Pleas on May 11, 2010, authorizing the judicial sale of the Property and
specifying that the Property shall be sold by the Sheriff at a tax sale free and clear of
encumbrances and “[t]he proceeds realized from said sale shall be distributed in
accordance with the priority of such claims. . . .” (R.R. at 169a-171a.) Pursuant to
judicial order, the Sheriff publicly advertised the sale of the Property. At the May 18,
2011 sheriff sale, Brown’s bid of $360,000.00 was the highest. He paid $60,000.00
on the same day as the sheriff sale and, approximately one month later, paid the
remaining $300,000.00 balance due, along with a processing fee of $145.00 made out
to the Sheriff’s Department. He also submitted a form to the Sheriff’s Department
requesting the Property deed.

              In May 2012, because the Sheriff had failed to file with the Philadelphia
County Recorder of Deeds4 a deed to the Property as required, Brown filed an action

       4
         For properties sold at sheriff sale, the Sheriff is charged with acknowledgement and
delivery of a deed to the Recorder of Deeds, who then physically records the deeds. 53 P.S. §
7283(b) (Section 31.2 of the Tax Liens Law states “[t]he deed to the purchaser shall be executed,
acknowledged and delivered as in other real estate sales by the sheriff”). Acknowledgement of a
deed occurs when the grantor(s) or bargainer(s) named in the deed take an oath that he or she is
conveying the property. Section 2 of the Act of May 28, 1715, 1 Sm.L. 94, as amended, 21 P.S. §
42. Regarding proof of acknowledgement in sheriff sales, the statute provides:

              The certificate of the prothonotary of any court of this commonwealth
              to an acknowledgement of a sheriff’s deed, heretofore made, although
              not under seal of office, shall be sufficient evidence of such
              acknowledgement, notwithstanding no other record was made thereof
              at the time of such acknowledgement: Provided, That the provisions
              of this section shall not be construed to affect any bona fide holder or
(Footnote continued on next page…)

                                                 3
averring that the Sheriff was “in breach of contract . . . elect[ing] his remedy of
rescission and restitution” of the full amount of the purchase price of the Property
with interest and costs of suit. (R.R. at 2a-3a.) On July 13, 2012, the Sheriff filed an
Answer and New Matter admitting that the deed to the Property had not yet been
delivered but denying that a contractual relationship exists between Brown and the
Sheriff. The Sheriff also contended that, in any event, a breach of contract action is
improper because the sheriff sale is exclusively governed by the Tax Liens Law and,
to the extent Brown was seeking to undo the purchase of the Property, he must
instead file a petition to set aside the Foreclosure Action.5 On or around July 17,
2012, the Sheriff acknowledged the deed and it was recorded. Brown nonetheless
filed a motion for summary judgment again seeking “the remedy of rescission . . . and
restitution,” which the trial court denied. (R.R. at 149a.) The case proceeded to
bench trial on October 15, 2014.6

(continued…)

                  purchaser, who had neither actual or constructive notice of the
                  execution of such sheriff’s deed.

Section 1 of the Act of April 4, 1844, P.L. 188, as amended, 21 P.S. § 47.

         5
             The Sheriff also filed preliminary objections that were later withdrawn. (R.R. at 178a-
192a.)

         6
         The almost two-year delay in proceedings resulted from this matter being discontinued on
June 7, 2013, after the trial court was advised that the matter had been settled. However, Brown
later moved to restore the case to the trial list after an apparent breakdown in the settlement, which
was granted by the trial court on June 25, 2014.

                                                   4
               Before the trial court, Brown testified that after successfully bidding for
the Property at the sheriff sale, “in the ensuing weeks after . . . June of 2011” he went
to the Sheriff’s Department “a couple of times” and “called also by phone” asking, at
first, for the Property deed and then the return of his purchase money. (R.R. at 36a-
37a.) He explained that although he retained counsel soon thereafter, because he did
not receive his reimbursement for almost a year, he retained new counsel in June
2012 and then filed the underlying action against the Sheriff.

               When asked about the damages resulting from the Sherriff’s dilatory
behavior, Brown explained that because he did not receive the deed, he had to finance
his purchase of the Property through a commercial loan with an interest rate of
“[a]bout three and-a-half percent,” which he had been paying interest on for three-
and-a-half years. (R.R. at 37a.) Brown testified that the interest he pays on the loan
varies from month to month and that it is “usually between $750 and $800 a month
for three and-a-half years.” (R.R. at 39a.) He did not know what the mortgage rate
was at the time he received the commercial loan or whether the mortgage’s interest
rate was lower than the rate that he obtained. Brown also stated that acquiring the
commercial loan deprived him of an investment opportunity “to buy another project
all together on . . . North Franklin Street . . . in the 1100 block” because he “couldn’t
get the financing for it because [his credit] was overextended.” (R.R. at 38a.).7

       7
        After Brown rested his case, the Sheriff presented Daniel Bucher, who worked in the Real
Estate Department of the Sheriff’s Office for approximately three years and testified as it relates to
purchases of real property made at a sheriff sale, how payments are made and how deeds are
acknowledged and recorded.

                                                  5
               Acknowledging that Brown filed a breach of contract action, the trial
court treated it as a petition to set aside a sheriff sale. The trial court found that the
Sheriff’s 12-month delay in deeding the Property to Brown was not sufficient to set
aside the sheriff sale because Brown failed to demonstrate more than a “vague
alleged harm” resulting from the delayed conveyance of the Property deed. (R.R. at
8a.) The trial court did, however, determine that pursuant to Section 31.2 of the Tax
Liens Law, 53 P.S. § 7283(b), the Sheriff was required to acknowledge the Property
deed after 120 days. Because the Sheriff failed to acknowledge the Property deed
until nine months after the prescribed 120-day period, the trial court awarded Brown
delay damages in the amount of $7,200.00, which is equivalent to nine monthly
$800.00 commercial loan interest payments.8 Brown filed post-trial motions9 which,
after Brown failed to appear for argument, the trial court denied. The trial court
entered a final judgment against the Sheriff in the amount of $7,200.00. Brown then
filed this appeal.10

       8
          In addition to seeking the rescission of his purchase of the Property, Brown also averred
that the Property deed he received was invalid as a matter of law because the elected Sheriff himself
did not personally sign the conveyance. The trial court found this argument to be without merit and
Brown does not reassert this argument on appeal.

       9
          Brown filed two substantially identical post-trial motions with the trial court, only one of
which provides a supportive memorandum. Brown also filed a premature notice of appeal of the
trial court order with the Superior Court on December 3, 2014.

       10
          Despite the trial court noting that this appeal “should be in the Commonwealth Court,”
(R.R. at 6a), Brown filed this appeal with the Superior Court of Pennsylvania. Because the question
presented directly involves the interpretation, application and enforcement of the Tax Liens Act,
exclusive jurisdiction of this appeal is vested in the Commonwealth Court of Pennsylvania. See
Brown v. City of Philadelphia (Pa. Super., No. 3515 EDA, filed January 19, 2016) (citing 42
Pa.C.S. § 762(a)(4)(i)(A)).

                                                  6
               On appeal,11 Brown does not contend that the trial court abused its
discretion in finding that the evidence presented was insufficient to set aside the
sale.12 Instead, apparently contending that the trial court erred in treating his action as
a petition to set aside instead of a breach of contract action, he contends that he can
seek to rescind the purported contract that he entered into with the Sheriff for the
purchase of the Property. He contends that the Sheriff’s failure to timely record the
deed was a clear breach of the duty that the Sheriff owed to him with resulting
damages. However, even if Brown incurred damages as a result of the Sheriff’s
failure to carry out his prescribed duties, a contract does not exist between a
purchaser at a sheriff sale and the Sheriff because the Sheriff is carrying out a
ministerial function that he is already legally bound to perform pursuant to judicial
order and Section 31.2 of the Tax Liens Law, 53 P.S. § 7283. See, e.g., Petticord v.
Joyce, 578 A.2d 632, 634 (Pa. Cmwlth. 1990) (“[T]here was no bargained-for
exchange in the case before us because Prothonotary was obligated by statute to
perform a search of the docket and issue a lien certificate to anyone who paid the

       11
          Our scope of review of an order denying a petition to set aside a tax sale of real property
is limited to determining whether the trial court abused its discretion, rendered a decision
unsupported by the evidence or erred as a matter of law. McElvenny v. Bucks County Tax Claim
Bureau, 804 A.2d 719 (Pa. Cmwlth. 2002), appeal denied, 819 A.2d 549 (Pa. 2003).

       12
           In any event, a petition to set aside a sheriff sale is an “equitable proceeding, governed by
equitable principles[,] [a]ppellate review . . . is limited to a determination of whether the trial court
committed an error of law or abused its discretion.” Allegheny County v. Golf Resort, Inc., 974
A.2d 1242, 1245 (Pa. Cmwlth. 2009) (citing Sack v. Feinman, 413 A.2d 1059 (Pa. 1980)). The trial
court did not err when finding that Brown’s testimony that he had to obtain a commercial loan
because he could not obtain a mortgage for the Property without a deed and his testimony of a
resulting inability to buy another property because his credit was overextended, without more, was
insufficient to set aside the sale.

                                                   7
requisite fee.”); see also Department of Transportation v. First Pennsylvania Bank,
466 A.2d 753, 754 (Pa. Cmwlth. 1983) (“There can obviously be no such bargained
for exchange if one of the parties is already legally bound to render the performance
promised”) (citing Chatham Communications, Inc. v. General Press Corp., 344 A.2d
837 (Pa. 1975); Cohen v. Sabin, 307 A.2d 845 (Pa. 1973)).13

               Accordingly, because Brown cannot maintain a contract action against
the Sheriff, the trial court’s order is affirmed.

                                              ___________________________________
                                              DAN PELLEGRINI, Senior Judge

       13
           Even though it was styled as a breach of contract action, the trial court treated Brown’s
Complaint as a petition to set aside a sheriff sale. When there is a challenge to a sheriff sale brought
by a private lienholder, “[t]aken together, Rule 3132 and 3135(a) make clear a party must raise a
challenge to a sheriff’s sale within a [20 day] period of time after the sale, but before the deed is
delivered.” Mortgage Electronic Registration Systems, Inc. v. Ralich, 982 A.2d 77, 80 (Pa. Super.
2009) (citing Pa. R.C.P. Nos. 3132 and 3135(a)). However, when a sale is for tax liens, the
procedure for the sale is governed by the Tax Liens Law, which is “a complete and exclusive
system in itself, so far as relates to tax and municipal claims.” Section 41 of the Tax Liens Law, 53
P.S. § 7112. As it pertains to the amount of time a party has to file a petition to set aside a sheriff
sale, Section 39.3 of the Tax Liens Law, 53 P.S. § 7193.3, added by the Act of December 14, 1992,
P.L. 859, No. 135, provides that it must be taken “within three months of the acknowledgement of
the deed” to the premises by the sheriff. Because of the way we have resolved this matter, we need
not address this issue.

                                                   8
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Nicholas O. Brown,                     :
                 Appellant             :
                                       :
            v.                         : No. 359 C.D. 2016
                                       :
City of Philadelphia and Sheriff of    :
Philadelphia County                    :

                                      ORDER

            AND NOW, this 26th day of October, 2016, it is hereby ordered that
the final order of the Court of Common Pleas of Philadelphia County dated
November 3, 2014, at No. 2028, is affirmed.

                                       ___________________________________
                                       DAN PELLEGRINI, Senior Judge