Court Opinion

ID: 6496258
Source: CourtListenerOpinion
Date Created: 2022-06-29 15:11:18.784973+00
Date Added: 2024-06-11T08:48:43.984158
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Iron and Steel Realty                           :
Investments, LLC, Douglas Dolan                 :
and Vicki Dolan                                 :
                                                :
                       v.                       :    No. 893 C.D. 2021
                                                :    Argued: May 16, 2022
Westmoreland County Tax Claim                   :
Bureau and Hoberman Homes, LLC                  :
                                                :
Appeal of: Hoberman Homes, LLC                  :

BEFORE:        HONORABLE RENÉE COHN JUBELIRER, President Judge
               HONORABLE ANNE E. COVEY, Judge
               HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
PRESIDENT JUDGE COHN JUBELIRER                      FILED: June 29, 2022

      Hoberman Homes, LLC (Purchaser) appeals from the Order of the Court of
Common Pleas of Westmoreland County (common pleas) that granted the Amended
Petition to Set Aside and/or Strike (Petition to Set Aside) the September 9, 2019
upset tax sale conducted by the Westmoreland County Tax Claim Bureau (Bureau1)
of 1100 Willowbrook Road, Belle Vernon, Pennsylvania 15012 (Property), a
residential property, filed by the Property’s owner, Iron and Steel Realty
Investments, LLC, (Iron and Steel), and Douglas and Vicki Dolan (the Dolans), Iron
and Steel’s principals. Common pleas set aside the tax sale, finding it was void
because the Bureau acknowledged that it failed to abide by the statutory notice
requirements set forth in Section 602 of the Real Estate Tax Sale Law2 (Tax Sale
Law), 72 P.S. § 5860.602. In granting the Petition to Set Aside on this basis,
      1
          The Bureau is not participating in the appeal.
      2
          Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. § 5860.602.
common pleas did not first address Purchaser’s argument that Iron and Steel, a
Nevada limited liability company (LLC) not registered in Pennsylvania, lacked the
capacity to file the Petition to Set Aside pursuant to Section 411(b) of the
Associations Code, 15 Pa.C.S. § 411(b).3
       On appeal, Purchaser argues that common pleas erred in concluding that Iron
and Steel’s lack of corporate registration in Pennsylvania was not relevant and/or
did not preclude it from obtaining relief. Purchaser contends the legal capacity to
sue issue should have been resolved in its favor prior to reaching the merits of the
Petition to Set Aside. Iron and Steel responds that: its Motion to Quash the appeal
should be granted4 because Purchaser did not request a stay of common pleas’
orders; Purchaser waived its challenge to Iron and Steel’s legal capacity to sue; its
corporate status is not relevant because the only issue in a challenge to a tax sale is
whether notice was provided; and, even if its status was relevant, it was not doing
business in Pennsylvania pursuant to Section 403 of the Associations Code, 15
Pa.C.S. § 403. After review, we will not grant the Motion to Quash the appeal, nor
will we find that Purchaser waived the issue of Iron and Steel’s capacity to sue.
Although common pleas should have technically addressed the issue of capacity to
sue as a threshold matter, based on the credibility findings, and the facts of this case,
we affirm common pleas’ granting of the Petition to Set Aside.

   I. FACTS
       The Property was sold in an upset tax sale on September 9, 2019, for
nonpayment of taxes for the 2017 tax year. Iron and Steel, along with the Dolans,

       3
          Section 411(b) of the Associations Code provides that foreign filing associations “doing
business in this Commonwealth may not maintain an action or proceeding in this Commonwealth
unless it is registered to do business under this chapter.” 15 Pa.C.S. § 411(b).
        4
          Iron and Steel’s Motion to Quash is assigned to be resolved with the merits.

                                                    2
filed a Petition to Set Aside, followed shortly by the Amended Petition to Set Aside.
The Bureau filed responses to both Petitions to Set Aside. Purchaser filed a Petition
to Intervene, which was granted, and an answer to the original Petition to Set Aside.
Purchaser subsequently filed, with leave of court, an Amended Answer with New
Matter to the Amended Petition to Set Aside (Amended Answer), in which it
asserted, inter alia, that Iron and Steel was not registered to do business in
Pennsylvania. Common pleas held an evidentiary hearing on April 26, 2021, at
which the Bureau presented exhibits without objection showing their efforts to
satisfy the Tax Sale Law’s notice requirements, the Dolans testified, and Purchaser
cross-examined them and presented a memorandum of law outlining why Iron and
Steel did not have the legal capacity to file the Petition to Set Aside.
      The Dolans testified as follows. The Dolans denied receiving any notice from
the Bureau regarding delinquent taxes or the tax sale of the Property. They likewise
denied having any actual knowledge of the tax sale. As to Iron and Steel, they
testified it is an LLC formed in Nevada because they “talked to people that said it
was the best place to form [an] LLC.” (Hearing Transcript (Hr’g Tr.) at 18.)5
Pursuant to its operating agreement, Iron and Steel’s business purpose is to engage
in “business development.” (Id. at 37.) Prior to creating Iron and Steel, the Dolans
drove by the Property and thought it would “be a good investment property to repair
and flip for profit.” (Id. at 14.) In 2015, Iron and Steel purchased the Property for
$25,000 at a sheriff’s sale. No one told them that they could not purchase the
property with an out of state LLC, and they did not consult with an attorney when
setting up Iron and Steel. The Property’s deed, recorded on October 30, 2015,
indicated that tax bills were to be mailed to “Iron and Steel Realty Investments,

      5
        The April 26, 2021 Hearing Transcript can be found at pages 141a-232a of the
Reproduced Record.

                                              3
LLC” at 410 Cowan Drive, Elizabeth, Pennsylvania 15037 (the Dolans’ home
address). (Id. at 13, 16.)
      The Dolans had never bought an investment property prior to this and have
not bought another since; however, it was Mr. Dolan’s intention at the time to invest
in more properties. Iron and Steel has no assets other than the Property. The Dolans
intended to “refurbish [the Property] within six months and put it on the market,”
and hired four contractors through Iron and Steel; this timeframe was not met,
however, and the fourth contractor finished around May or June of 2018. (Id. at 19-
22.) Iron and Steel spent approximately $305,000.00 to renovate the Property, using
some of the Dolans’ money and taking out loans (guaranteed by the Dolans), some
of which are still outstanding. The Dolans engaged a realtor to sell the Property at
some point. When asked if this property purchase was a “one and done,” Mr. Dolan
testified “[w]e were looking at the potential of purchasing other properties to do this
again maybe.” (Id. at 37.)
      Purchaser cross-examined Mr. Dolan, asking if he had registered Iron and
Steel to do business in Pennsylvania, to which Mr. Dolan initially responded that he
had in 2016 but later agreed that he did not know that as a fact. Ms. Dolan
acknowledged, on cross-examination, that, to her knowledge, Iron and Steel was not
registered in Pennsylvania. Purchaser submitted a search from the Pennsylvania
Department of State’s website, performed the day prior to the hearing, indicating
that Iron and Steel was not registered in Pennsylvania. Purchaser asked common
pleas to take judicial notice of various judicial admissions in the pleadings and
representations made in depositions regarding Iron and Steel’s lack of registration
to do business in Pennsylvania. Purchaser further represented to common pleas that

                                              4
it had paid $8,313.68 for the Property at the tax sale and spent a total of $24,845.60
to date on the Property. (Id. at 85.)
      At the conclusion of that hearing, common pleas asked the parties to submit
proposed findings of fact and conclusions of law, as well as legal memoranda. These
filings were timely submitted. For its part, the Bureau agreed that the notices were
sent to an address not listed on the Property’s deed, that the notices were returned to
it unclaimed, and that there was no testimony that would support that there was
actual notice of the tax sale. (Bureau Proposed Findings of Fact and Conclusions of
Law at 4.6) Thus, it “would have to concede that there was a notice defect.” (Id.)

   II. COMMON PLEAS’ DECISIONS
      Common pleas credited the Dolans’ testimony, and, after considering that
testimony, the other evidence, the relevant law, and the Bureau’s concession,
common pleas concluded that “the purported upset tax sale [was] void for defective
notice” because the notice requirements of the Tax Sale Law were not satisfied.
(Common Pleas’ July 6, 2021 Opinion at 8.)7 As to Purchaser’s argument that Iron
and Steel could not obtain relief pursuant to Section 411(b) of the Associations Code,
common pleas appreciated the argument but nevertheless held that, because the sale
was void, “as ‘to render of no validity or effect; null,’” Iron and Steel’s “corporate
registration [was] of no import.”        (Id. at 9 (quoting Black’s Law Dictionary
definition of “Void”).) Common pleas also explained that pursuant to Section 411(c)
of the Associations Code, 15 Pa.C.S. § 411(c), failure of a foreign limited liability
company to register to do business in this Commonwealth does not “preclude it from

      6
        The Bureau’s Proposed Findings of Fact and Conclusions of Law can be found at pages
233a-38a of the Reproduced Record.
      7
        Common pleas’ July 6, 2021 Opinion can be found at pages 239a-50a of the Reproduced
Record.

                                                5
defending an action or proceeding in this Commonwealth.” (Id. at 9 (internal
quotations omitted).) It further indicated, citing Section 403(a)(1), (7)-(10) of the
Associations Code, 15 Pa.C.S. § 403(a)(1), (7)-(10), that there are some activities
performed within Pennsylvania that do not constitute doing business. “Based on the
evidence and testimony before [the c]ourt,” common pleas stated that Iron and Steel
and the Dolans were “not precluded from being in this court. However, . . . this
[c]ourt need[] not reach this issue, as the failure to provide notice as required by
[Section 602 of the Tax Sale Law] . . . render[ed] the tax sale void, [and] moot[ed]
the issue.” (Id. at 10.)
       Purchaser appealed to this Court, and filed, as directed, a Concise Statement
of Errors Complained of on Appeal (Statement) pursuant to Pennsylvania Rule of
Appellate Procedure 1925(b), Pa.R.A.P. 1925(b). Therein, Purchaser raised the
same issues it asserts in this appeal. Thereafter, common pleas issued an order on
August 3, 2021, amending its July 6, 2021 Order to direct Iron and Steel to pay
$9,311.32 to Purchaser by September 2, 2021, and allow Iron and Steel to record the
July 6, 2021 Order showing that the deed naming Purchaser is now null and void. 8
(R.R. at 282a-83a.) Purchaser did not seek a stay or supersedeas of the original July
6, 2021 Order or the August 3, 2021 Amended Order.

       8
          Prior to the appeal, Iron and Steel filed a Motion for Special Injunctive Relief for Return
of Property/Replevin on July 14, 2021, requesting common pleas grant it and the Dolans
immediate possession of the Property. (R.R. 251a-56a.) The Bureau filed a Motion to Amend
common pleas’ Order on July 21, 2021, seeking the addition of language “that declares the deed
recorded by the Tax Claim Bureau to Hoberman Homes, LLC as null and void.” (Id. at 271a.)
The Bureau’s Motion to Amend also indicated that it could not make a full refund to Purchaser
because some of the money that was paid for the purchase price was sent to Harrisburg to cover
transfer tax payments and was unable to be recouped. (Id.) Iron and Steel agreed with the Bureau
that the order needed to reflect that the deed on behalf of Purchaser should be void; however, it
disagreed with shifting the burden to it to refund Purchaser for the tax sale. Instead, Iron and Steel
argued that it should only have to pay the tax due, and the Bureau should issue a refund to
Purchaser. (Id. at 276a-77a.) The August 3, 2021 order granted the Bureau’s Motion to Amend.

                                                      6
      In response to the Statement and in support of granting the Petition to Set
Aside, common pleas issued a 1925(a) Opinion.9 Common pleas reiterated the legal
principles it relied on in the July 6, 2021 Opinion to find the tax sale void, and added
that “if the entire legal proceeding is void and any and all legal proceedings at this
case number in effect did not legally exist, Iron and Steel did not maintain any legal
action in the Commonwealth, whether it is doing business or not doing business in
Pennsylvania.” (1925(a) Op. at 10.) Regarding Purchaser’s claims that common
pleas “found” that Iron and Steel was not doing business in Pennsylvania and was
not precluded from obtaining affirmative relief in the trial court, common pleas
stated that it “made no such ‘findings.’” (Id. at 11.)

   III.        PARTIES’ ARGUMENTS
      Before this Court, Purchaser argues that common pleas erred in holding that
Iron and Steel’s corporate registration was of no consequence due to the tax sale
being void and in finding that Iron and Steel did not lack the legal capacity to sue.
Purchaser argues that pursuant to Section 411(a) and (b) of the Associations Code,
Iron and Steel’s failure to register in Pennsylvania meant it could not “do business”
in the Commonwealth and could not “maintain an action or proceeding in this
Commonwealth unless it is registered to do business under this chapter.”
(Purchaser’s Brief (Br.) at 20-21 (citing 15 Pa.C.S. § 411(a), (b)) (emphasis added).)
While Purchaser concedes that Iron and Steel did not maintain an “action,” it argues
Iron and Steel did maintain a “proceeding” under Section 411(b).                  Purchaser
contends that “proceeding” is broader than “action” and “[i]ncludes every
declaration, petition or other application which may be made to a court under law or
usage or under special statutory authority, but the term does not include an action or

      9
          The 1925(a) Opinion can be found at pages 306a-17a of the Reproduced Record.

                                                  7
an appeal.” (Id. at 23 (citing Section 102 of the Judicial Code, 42 Pa.C.S. § 102).)
Purchaser also cites the Committee Comment-2014 to Section 411(b) as support for
its argument that common pleas erred in not resolving this issue first. Purchaser
argues that American Housing Trust, III v. Jones, 696 A.3d 1181 (Pa. 1997), and
Drake Manufacturing Company, LLC v. PolyFlow, Inc., 109 A.3d 250, 257 (Pa.
Super. 2015), set forth the legal analysis that must be applied to determine whether
a foreign business entity has the capacity to sue in the first instance, an analysis that
common pleas did not perform before concluding that Iron and Steel was not
precluded from filing the Petition to Set Aside. In short, “Iron and Steel’s corporate
registration is important because its failure to register directly affects its capacity to
sue.” (Purchaser’s Br. at 24 (emphasis omitted).)
      Purchaser also argues that, to the extent common pleas found Iron and Steel
was not “doing business” in Pennsylvania, it erred in doing so without making
findings of fact or analyzing that issue to support those conclusions. Even absent
those findings or that analysis, Purchaser argues that the record here would not
support a finding that Iron and Steel was not doing business in Pennsylvania as
defined by Section 403 of the Associations Code and interpreted in American
Housing Trust and Drake Manufacturing. It notes that, from common pleas’
opinions, it appears that the court treated the Dolans as also bringing the Petition to
Set Aside and considered the hardship on the Dolans if the tax sale was not set aside.
(Id. at 32 n.15.) However, the Dolans were not the record owner of the Property and
the equities of the situation are not a consideration in determining whether an entity
is subject to Section 411(b) of the Associations Code. (Id. (citing Drake Mfg., 109
A.3d at 257).)

                                               8
      Iron and Steel argues that the appeal is moot and its Motion to Quash should
be granted pursuant to Deutsche Bank National Co. v. Butler, 868 A.2d 574 (Pa.
Super. 2005), because Purchaser has no interest in the Property having not requested
a stay or supersedeas to protect its property rights. Iron and Steel relies on common
pleas’ August 3, 2021 Amended Order, which voided and nullified the sale and
allowed for the order to be filed with the Recorder of Deeds resulting in it, not
Purchaser, being the current legal owner of the Property. Iron and Steel next asserts
that Purchaser waived the issue of Iron and Steel’s corporate registration because it
did not raise the issue in its original Petition to Intervene and did not file preliminary
objections to the Petition to Set Aside as required by Pennsylvania Rule of Civil
Procedure 1028(a), Pa.R.Civ.P. 1028(a). Instead, Iron and Steel asserts Purchaser
raised this issue in its Amended Answer on July 6, 2020, to which Iron and Steel
filed a reply asserting the issue was waived. Iron and Steel further argues that, even
if preliminary objections were not required, the argument should still be waived
because it was raised after discovery had been completed.
      Iron and Steel next argues there was no error in common pleas finding that its
corporate status is not relevant because the only issue in a tax sale challenge is
whether the taxing authority complied with the notice requirements of Section 602
of the Tax Sale Law. Iron and Steel posits that its own negligence does not provide
an exception to those requirements that would relieve a taxing authority from strictly
complying with the statute, citing cases where the taxpayers’ negligence or inaction
could not be used by a purchaser to oppose their petitions to set aside. (Iron and
Steel’s Br. at 16.) Iron and Steel additionally asserts that, even if its corporate status
is relevant, its actions fall within several of the exceptions to “doing business” set
forth in Section 403 of the Associations Code, and, therefore, it is not subject to

                                               9
Section 411(b)’s penalty. Iron and Steel contends that American Housing Trust
recognized that, under Section 403, “passive owning of real estate for investment or
fiduciary purposes does not constitute transacting business in this state,” and that its
ownership of the Property is an isolated transaction that does not constitute “doing
business.” (Id. at 21 (internal quotations omitted).) Even if it were and registration
was required, Iron and Steel maintains that it would place a cost on foreign
businesses to access the court system to defend their rights. Moreover, Iron and
Steel asserts that equitable factors weigh in favor of upholding the finding that the
tax sale should be set aside because the Dolans spent approximately $305,000.00 to
renovate the Property, and Purchaser would receive a windfall if the tax sale were
not set aside, particularly where due process was violated by the lack of notice.
      In its Reply Brief, Purchaser responds that this appeal is not moot and should
not be quashed because this situation is distinguishable from Deutsch Bank where,
unlike in that case, an order from this Court reversing would return the Property to
Purchaser. The recording of common pleas’ Amended Order, declaring the tax sale
void, by Iron and Steel did not end this controversy or Purchaser’s appeal, and could
be struck if this Court reversed. That it did not request a stay similarly does not
render the appeal moot. As to waiver, Purchaser asserts it timely raised and
preserved the issue of Iron and Steel’s capacity to sue and, therefore, the issue is not
waived. The lack of capacity to sue can be raised either in preliminary objections or
in an answer to a complaint, and while Purchaser did not file preliminary objections,
it did raise the issue in paragraph 42 of its Amended Answer, filed with leave of
court, and during the hearing. This is sufficient to preserve the issue. (Purchaser’s
Reply Br. at 7-8 (citing McGuire on behalf of Naidig v. Pittsburgh, 250 A.3d 516
(Pa. Cmwlth. 2021) (citing Drake Mfg., 109 A.3d at 257)).)

                                              10
   IV.       DISCUSSION
      A. Whether Purchaser’s appeal should be quashed due to its failure to request
         a stay to preserve its interests in the Property.
      Iron and Steel’s argument that Purchaser’s appeal should be quashed is based
on its belief that the recording of common pleas’ August 3, 2021 Amended Order
which transferred the Property back into its name, and Purchaser’s failure to request
a stay or supersedeas of that order, results in Purchaser no longer having any legal
interest in the Property. Without this legal interest, the appeal is moot and should
be quashed. Iron and Steel analogizes this situation to that in Deutsche Bank and
claims that as in that case, this Court’s order would have no impact on the title to the
Property.    However, it appears that, as Purchaser asserts, Deutsche Bank is
distinguishable, this matter is not moot, and the Motion to Quash should, therefore,
be denied.
      An appeal is moot if a court’s order cannot have any force or practical effect
on the controversy. Chruby v. Dep’t of Corr., 4 A.3d 764, 770-71 (Pa. Cmwlth.
2010). In Deutsche Bank, a mortgagee filed a petition to set aside a sheriff’s sale of
a mortgaged property after its representative mistakenly failed to increase the bid to
the upset amount, which was granted. The trial court directed that the property be
rescheduled for sheriff’s sale three months later. The successful bidder appealed,
requested that the second sale be stayed, offered a bond to operate as a supersedeas,
but did not post the bond resulting in the order not being stayed. At the rescheduled
sheriff’s sale, the mortgagee purchased the property, and the sheriff delivered the
deed to the mortgagee during the pendency of the appeal. The mortgagee filed a
motion to dismiss the appeal for mootness, which the Superior Court granted
because “the property was sold at the second sale, and now an order declaring the
first sale valid would have no effect.” Deutsche Bank, 868 A.2d at 577. The
Superior Court rejected arguments that a motion to strike the deed would solve the

                                              11
problem because “there [was] nothing in the record that indicate[d] whether [the
mortgagee] still own[ed]” the property, and the appeal of the first sale could not be
treated as a petition to set aside of the second sale because the deed had already been
delivered, which precluded the filing of a petition to set aside. Id.
       Here, unlike in Deutsche Bank, there has been no subsequent, valid sale of the
Property, and there is no dispute that Iron and Steel still has ownership of the
Property. Indeed, that is the basis of the Motion to Quash – that the ownership of
the Property has returned to Iron and Steel and it is as though the tax sale never
happened.     Further, the transfer of the Property is based on the order being
challenged on appeal, and it is not a situation where Purchaser’s appeal is an attempt
to assert an invalid petition to set aside. Thus, under these circumstances, an order
by this Court would have force or practical effect as to the ownership of the Property.
Therefore, the Court will not quash the appeal.

       B. Whether Purchaser waived the issue of Iron and Steel’s capacity to sue.
       Iron and Steel argues that Purchaser has waived this argument because it did
not raise this issue in preliminary objections, did not raise this issue in its Petition to
Intervene, and waited six months to raise this issue with an Amended Answer on
July 6, 2020, after discovery was complete. In response, Purchaser asserts it timely
raised the issue of Iron and Steel’s lack of legal capacity, which, pursuant to
McGuire and Drake Manufacturing, can be raised in an answer, rather than in
preliminary objections. Reviewing the rules that govern tax sale cases and McGuire
and Drake Manufacturing, we agree that Purchaser timely raised the issue of Iron
and Steel’s lack of registration in Pennsylvania.
       First, the Pennsylvania Rules of Civil Procedure, which includes Rule 1028
regarding the filing of preliminary objections, “do not apply to statutory proceedings

                                               12
brought under the . . . Tax Sale Law.” Battisti v. Tax Claim Bureau of Beaver Cnty.,
76 A.3d 111, 115 (Pa. Cmwlth. 2011). Accordingly, that Purchaser did not raise the
issue in a pleading (preliminary objections) that is not required, nor authorized, to
be filed in a tax sale case does not render the issue waived. Second, this Court, in
McGuire held that “a defendant timely objects to a plaintiff’s lack of capacity to sue
if the defendant raises this issue in preliminary objections or in its answer to the
complaint.” 250 A.3d at 525 (quoting Drake Mfg., 109 A.3d at 257) (emphasis
added; internal quotations omitted). Purchaser raised Iron and Steel’s lack of
registration in paragraph 42 of its Amended Answer, stating that Iron and Steel had
not registered as a foreign corporation in Pennsylvania. (R.R. at 100a.) Iron and
Steel denied this assertion as being irrelevant because it had purchased the Property
and was the owner on the deed in paragraph 10 of its response. (Id. at 115a.)
Purchaser then submitted its memorandum of law during the April 26, 2021 hearing
to explain the import of that lack of registration on Iron and Steel’s capacity to sue.
Pursuant to McGuire and Drake Manufacturing, Purchaser timely asserted Iron and
Steel’s lack of registration in Pennsylvania, and, therefore, Purchaser did not waive
the issue.

      C. Whether Iron and Steel lacked capacity to sue such that the Petition to Set
         Aside in this case should have been denied.
      “Our scope of review in tax sale cases is limited to determining whether the
trial court abused its discretion, rendered a decision with a lack of supporting
evidence, or clearly erred as a matter of law.” Shipley v. Tax Claim Bureau of
Delaware Cnty., 74 A.3d 1101, 1104 n.3 (Pa. Cmwlth. 2013). It is well settled that
“[t]he primary purpose of tax sale laws is to ensure ‘the collection of taxes, and not
to strip away citizens’ property rights.’” In re Consol. Reps. & Return by Tax Claims
Bureau of Northumberland Cnty. of Properties, 132 A.3d 637, 650 (Pa. Cmwlth.

                                             13
2016) (quoting Rice v. Compro Distrib., Inc., 901 A.2d 570, 575 (Pa. Cmwlth.
2006)). Our Supreme Court has held that tax sale laws “were never meant to punish
taxpayers who omitted through oversight or error (from which the best of us are
never exempt) to pay their taxes.” In re Return of Sale of Tax Claim Bureau (Ross
Appeal), 76 A.2d 749, 753 (Pa. 1950). In all tax sale cases, the tax claim bureau
“has the burden of proving compliance with the statutory notice provisions.”
Krawec v. Carbon Cnty. Tax Claim Bureau, 842 A.2d 520, 523 (Pa. Cmwlth. 2004).
In general, Section 602 of the Tax Sale Law, 72 P.S. § 5860.602, requires three forms
of notice to an upset tax sale: publishing the notice in newspapers; posting notice
on the property; and mailing notice by certified mail to the owner or others with a
legal interest in the property. “If any of the three types of notice is defective, the tax
sale is void.” Gladstone v. Fed. Nat’l Mort. Ass’n, 819 A.2d 171, 173 (Pa. Cmwlth.
2003) (emphasis added).
      Purchaser does not argue that notice of the tax sale of the Property was
sufficient. Instead, Purchaser essentially argues that common pleas had to resolve
the issue of whether Iron and Steel had the legal capacity to file the Petition to Set
Aside before it addressed the merits. Iron and Steel contends that its corporate
registration, or lack thereof, is of no moment because the focus in a challenge to a
tax sale is on the sufficiency of the Bureau’s actions, not on any action or inaction
(negligence) of the property owner. It further argues that, even if its corporate
registration was relevant to the inquiry, it was not precluded from filing the Petition
to Set Aside because it was not doing business in Pennsylvania and the equities
support affirming common pleas’ order.
      As noted, the purpose of the Tax Sale Law is to ensure the payment of taxes
and not to punish taxpayers for their nonpayment of taxes due to oversight or error.

                                               14
Further, as Iron and Steel argues, the Court has held that the lack of compliance with
the notice provisions in Section 602 of the Tax Sale Law render the upset tax sale
void.    Gladstone, 819 A.2d at 173.         Iron and Steel cites three cases, In re
Consolidated Return of Lackawanna County Tax Claim Bureau (Pa. Cmwlth., No.
462 C.D. 2017, filed January 19, 2018),10 Santarelli Real Estate, Inc. v. Tax Claim
Bureau of Lackawanna County, 867 A.2d 717 (Pa. Cmwlth. 2005), and Smith v. Tax
Claim Bureau, 834 A.2d 1247 (Pa. Cmwlth. 2003), as support for its argument that
its negligence in not registering in Pennsylvania cannot be held against it because
the burden was on the Bureau to establish strict compliance with the Tax Sale Law’s
notice provisions, which “cannot be waived due to the actions of the owner.” (Iron
and Steel’s Br. at 14 (citing In re Consol. Return of Lackawanna Cnty. Tax Claim
Bureau, slip op. at 4) (emphasis omitted).) In each of these cases, this Court held
that the actions of the taxpayers, including negligence, was not relevant because the
issue is whether the tax claim bureaus met their burden of proving proper notice. In
In re Consol. Return of Lackawanna Cnty. Tax Claim Bureau, slip op. at 3-4, we
rejected the argument that taxpayer’s status as realtor and failure to inquire about the
lack of tax bills for six years should have been considered. In Santarelli Real Estate,
Inc., 867 A.2d at 722, a case where the tax claim bureau acknowledged lack of
notice, we rejected the argument that taxpayer’s “‘knowing failure’ to pay the taxes
provided her with notice that there w[ould] be a public sale of the [p]roperty,” so as
to provide implied actual notice. Finally, in Smith, 834 A.2d at 1251, we rejected
the argument that the tax claim bureau’s efforts to find a taxpayer were reasonable
where the taxpayer, who owned the property with their estranged spouse as tenants

        10
         Pursuant to Pennsylvania Rule of Appellate Procedure 126(b), Pa.R.A.P. 126(b), and
Section 414(a) of this Court’s Internal Operating Procedures, 210 Pa. Code § 69.414(a), an
unreported opinion of this Court is not precedential but can be cited as persuasive.

                                               15
by the entirety, failed to provide an updated address because the focus is not on the
neglect of the owner. These cases support, at least in part, Iron and Steel’s argument
that a taxpayer’s actions, inaction, or negligence is not relevant to the determination
as to whether the taxing authority met its burden of proving proper notice. However,
these cases involve a taxpayer’s actions/neglect in relation to their obligation to pay
taxes or in their interaction with a tax claim bureau. They do not involve questions
related to the legal capacity to sue – to file a petition to set aside challenging the tax
sale – which could be viewed as a separate and threshold inquiry.
      Generally, “capacity to sue refers to the legal ability of a person to come into
court, and ‘[w]ant of capacity to sue has reference to or involves only a general legal
disability, . . . such as infancy, lunacy, idiocy, coverture, want of authority, or a
want of title in plaintiff in the character in which he or she sues.’” In re Estate of
Sauers, 32 A.3d 1241, 1248 (Pa. 2011) (quoting 67A C.J.S. Parties § 11) (emphasis
and alteration in original). Our Supreme Court has explained that it views capacity
to sue issues as “threshold matter[s] that should be resolved prior to answering
the [main legal] question.” Id. at 1245 n.2 (emphasis added). This is because
objections based on a lack of legal capacity, if sustained, “could lead to the dismissal
of an action in whole alleviating the need to consider the larger issue[.]” Id. See
also Am. Hous. Trust, III, 696 A.2d at 1184 (holding that a preliminary objection
challenging a party’s capacity to sue may lead to “the end result of . . . dismissal of
the action”).
      Purchaser challenges Iron and Steel’s legal capacity to sue under Section
411(b) of the Associations Code alleging that it was doing business in Pennsylvania
without being registered which defeated its capacity to sue. A foreign business
entity’s capacity to sue under Section 411(b) has not been addressed in the context

                                               16
of an upset tax sale. However, given our Supreme Court’s statements in Estate of
Sauers and American Housing Trust that the capacity to sue is a threshold issue, it
would have been prudent to resolve the issue prior to addressing the merits of the
Petition to Set Aside.
        Purchaser argues Iron and Steel was doing business in Pennsylvania without
registering and, therefore, it was precluded from filing the Petition to Set Aside as a
penalty for that failure. Purchaser further asserts that common pleas did not engage
in the kind of analysis of the evidence that is required to make a determination under
Sections 403 and 411(b) of the Associations Code because, while common pleas
cited some of the statutory provisions, it made no findings of fact and provided no
analysis on the issue. Iron and Steel asserts that it was not precluded by Section
411(b) from filing the Petition to Set Aside based on the record because its activities
do not constitute “doing business” in Pennsylvania under Section 403 of the
Associations Code.
        Section 411 of the Associations Code, 15 Pa.C.S. § 411, provides, in relevant
part:

        (a) Registration required.—Except as provided in section 401 (relating
        to application of chapter) or subsection (g), a foreign filing association
        or foreign limited liability partnership may not do business in this
        Commonwealth until it registers with the department under this chapter.

        (b) Penalty for failure to register.—A foreign filing association or
        foreign limited liability partnership doing business in this
        Commonwealth may not maintain an action or proceeding in this
        Commonwealth unless it is registered to do business under this
        chapter.

        (c) Contracts and acts not impaired by failure to register.—The failure
        . . . to register to do business in this Commonwealth does not . . .
        preclude it from defending an action or proceeding in this
        Commonwealth.

                                               17
      ....
      Committee Comment – 2014
      ....
      The purpose of subsection (b) is to induce foreign associations to
      register without imposing harsh or erratic sanctions. Often the
      failure to register is a result of inadvertence or bona fide disagreement
      as to the scope of 15 Pa.C.S. § 403 which is necessarily imprecise; and
      the imposition of harsh sanctions in those situations is
      inappropriate.
      ....
      Subsection (b) does not prevent a foreign association that has failed to
      register from “defending” an action or proceeding. The distinction
      between “maintaining” and “defending” an action or proceeding under
      subsection (b) is determined on the basis of whether affirmative relief
      is sought. . . .

15 Pa.C.S. § 411(a)-(c), Committee Comment – 2014, (emphasis added). Section
403 of the Associations Code, 15 Pa.C.S. § 403, states, in pertinent part:

      (a) General rule.—Activities of a foreign filing association or
      foreign limited liability partnership that do not constitute doing
      business in this Commonwealth under this chapter shall include the
      following:

      (1) Maintaining, defending, mediating, arbitrating or settling an
      action or proceeding.
      ....
      (7) Creating or acquiring indebtedness, mortgages or security interests
      in property.

      (8) Securing or collecting debts or enforcing mortgages or security
      interests in property securing the debts and holding, protecting or
      maintaining property so acquired.

      (9) Conducting an isolated transaction that is not in the course of similar
      transactions.

      (10) Owning, without more, property.
      ....
      Committee Comment – 2014

                                             18
      ....
      This section does not attempt to formulate an inclusive definition of
      what constitutes doing business in Pennsylvania. Rather, the concept
      is defined in a negative fashion by subsections (a) and (b), which state
      that certain activities do not constitute doing business. In general terms,
      any conduct more regular, systematic, or extensive than that described
      in subsection (a) constitutes doing business and requires the foreign
      association to register to do business. Typical conduct requiring
      registration includes maintaining an office to conduct local intrastate
      business, selling personal property not in interstate commerce, entering
      into contracts relating to the local business or sales, and owning or using
      real estate for general purposes. But the passive owning of real estate
      for investment purposes does not constitute doing business. See
      subsection (a)(10).
      ....
      The list of activities set forth in subsection (a) is not exhaustive.
      1. Engaging in Litigation
      A foreign association is not “doing business” solely because it resorts
      to the courts of Pennsylvania to recover an indebtedness, enforce an
      obligation, recover possession of personal property, obtain the
      appointment of a receiver, intervene in a pending proceeding, bring a
      petition to compel arbitration, file an appeal bond, or pursue appellate
      remedies. Similarly, a foreign association is not required to register
      merely because it files a complaint with a governmental agency or
      participates in an administrative proceeding within Pennsylvania.
      ....
      5. Isolated Transactions
      The concept of “doing business” involves regular, repeated, and
      continuing business contacts of a local nature.

15 Pa.C.S. § 403(a)(1), (7)-(10), Committee Comment – 2014 subparagraphs 1, 5
(emphasis added).
      In American Housing Trust, our Supreme Court addressed lack of capacity to
sue regarding a foreign business “doing business” in the Commonwealth and
described the type of analysis that must be performed on a case-by-case basis to

                                             19
resolve the issue.11 In that case, the court of common pleas determined that
American Housing Trust, III (the appellant), at the preliminary objection stage,
lacked the capacity to sue because it was “doing business” within Pennsylvania
without registering. Although the Superior Court affirmed, the Supreme Court
reversed.    It found that the facts developed at the preliminary stage of the
proceedings did not enable the court to make a determination as to facts pertaining
to the corporation’s regular, repeated business contacts, which were critical in
determining whether the corporation was required to register. The Supreme Court
noted that “it is well-established that the test for whether a corporation is ‘doing
business’ in [Pennsylvania] is a question of fact, to be resolved on a case-by-case
basis.” Am. Hous. Tr. III, 696 A.2d at 1184. The Supreme Court explained that:

       Where this factual dispute was raised by the pleadings, in order for the
       trial court to properly rule on . . . preliminary objections to [the]
       complaint, there must be of record, all of the facts necessary for the trial
       court to determine whether [the corporation] is statutorily excluded
       from the requirement to obtain a certificate of authority. This
       necessarily entails facts going to both the nature and the extent of [the
       corporation’s] activities in [Pennsylvania]. The trial court may not
       reach a determination based upon its view of the controverted facts, but
       must resolve the dispute by receiving evidence thereon through
       interrogatories, depositions, or an evidentiary hearing.

Id. at 1185 (citation omitted).
       In this case, after a hearing in which common pleas heard the testimony, it
found that “the testimony of the Petitioners [Iron and Steel and the Dolans] was
detailed and credible.” (Common Pleas’ July 6, 2021 Opinion at 8.) The credible
testimony is that Iron and Steel owns one property, purchased as an investment,

       11
          American Housing Trust considered the requirements of Sections 4121(a) and 4141 of
the former Foreign Business Corporations Law, formerly 15 Pa.C.S. §§ 4121, 4141, which were
replaced by Section 411 of the Associations Code.

                                                20
which it intended to sell, but has not. When its Property was sold at tax sale, without
Iron and Steel receiving notice, it filed the Petition to Set Aside. This required the
Bureau to meet its burden of proving that the sale complied with the Tax Sale Law,
which the Bureau could not do. Under these circumstances, we conclude that Iron
and Steel is not precluded from contesting the tax sale of its Property. Passive
ownership of real property does not constitute doing business, and Iron and Steel’s
ownership and rehabilitation of one property is, under these facts, an isolated
transaction. Iron and Steel was protecting its ownership of real property, which
according to the credited evidence here, does not constitute “doing business.”
      This determination is consistent with the purpose of Section 411(b), which is
to induce registration “without imposing harsh or erratic sanctions” and that
where “the failure to register is a result of inadvertence or bona fide disagreement as
to the scope of 15 Pa.C.S. § 403 which is necessarily imprecise; . . . the imposition
of harsh sanctions in those situations is inappropriate.” 15 Pa.C.S. § 411(b),
Committee Comment 2014 (emphasis added). Here, where Iron and Steel is not
doing business, as defined by Section 403 of the Associations Code, it would be a
harsh sanction to preclude it from challenging the tax sale of its property without
notice. But see Drake Mfg., 109 A.3d at 265 (Superior Court rejected an equitable
argument that it was unfair to preclude an action due to nonregistration because
doing so would allow the defendant to get away with not paying for $300,000 in
merchantable goods).

   V. CONCLUSION
      Based on the evidence found credible by common pleas, Iron and Steel was
not doing business in accordance with Section 403 of the Associations Code and,
therefore, was not precluded from filing the Petition to Set Aside. That Petition to

                                             21
Set Aside was properly granted where the Bureau conceded that it did not comply
with the notice requirements of the Tax Sale Law. Accordingly, we affirm.

                                     __________________________________________
                                     RENÉE COHN JUBELIRER, President Judge

                                          22
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Iron and Steel Realty                :
Investments, LLC, Douglas Dolan      :
and Vicki Dolan                      :
                                     :
                 v.                  :   No. 893 C.D. 2021
                                     :
Westmoreland County Tax Claim        :
Bureau and Hoberman Homes, LLC       :
                                     :
Appeal of: Hoberman Homes, LLC       :

                                  ORDER

     NOW, June 29, 2022, the Motion to Quash filed by Iron and Steel Realty
Investments, LLC, Douglas Dolan, and Vicki Dolan is DENIED, and the Order of
the Court of Common Pleas of Westmoreland County, entered in the above-
captioned matter, is AFFIRMED.

                                   __________________________________________
                                   RENÉE COHN JUBELIRER, President Judge