Commerce Bank/Harrisburg, N.A. v. Kessler

46 A.3d 724, 2012 Pa. Super. 100, 2012 WL 1610139, 2012 Pa. Super. LEXIS 540
CourtSupreme Court of Pennsylvania
DecidedMay 9, 2012
StatusPublished
Cited by24 cases

This text of 46 A.3d 724 (Commerce Bank/Harrisburg, N.A. v. Kessler) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commerce Bank/Harrisburg, N.A. v. Kessler, 46 A.3d 724, 2012 Pa. Super. 100, 2012 WL 1610139, 2012 Pa. Super. LEXIS 540 (Pa. 2012).

Opinions

OPINION BY OLSON, J.

Appellant, Metro Bank, f.k.a. Commerce Bank of Harrisburg, N.A. (“Metro Bank”), appeals from the order determining that, pursuant to the Mechanics’ Lien Law, 49 Pa.C.S.A. § 1101 et seq., a judgment entered in favor of Appellee, Michael Ricker (“Ricker”), and against Stephen F. Kessler and Lisa K. Kessler (the “Kesslers”), takes priority over a judgment entered in favor of Metro Bank and against the Kesslers. Upon review, we affirm the trial court’s declaratory judgment, but on other grounds.

The record reflects relevant factual and procedural background of this matter as follows:

On October 10, 2006, the Kesslers contracted with Ricker to build a luxury home in Harrisburg, Pennsylvania. On October 18, 2006, Ricker started excavation on the Kesslers’ lot. On January 12, 2007, the Kesslers contracted with Commerce Bank of Harrisburg, N.A. (“Commerce Bank”), now Metro Bank, for a construction loan of up to $435,000 with an open-ended mortgage, which was recorded on January 24, 2007. The home was substantially complete as of August 1, 2007.

Because the Kesslers were unable to make their mortgage payments, Metro Bank filed a mortgage foreclosure action on May 22, 2008, against the Kesslers. On July 24, 2008, Metro Bank obtained a default judgment against the Kesslers for $403,994.84. The Kesslers also failed to make their payments to Ricker. Consequently, on February 24, 2009, Ricker obtained a default judgment against the Kes-sler’s in the amount of $411,304.14. On February 26, 2009, the Kesslers filed for bankruptcy. On November 24, 2009, Metro Bank obtained relief from the automatic stay provision of the Bankruptcy Code1 to proceed to a sheriffs sale.

On July 13, 2010, Metro Bank and Rick-er filed a “Joint Emergency Motion To Stay Sheriffs Sale And Adjudicate Lien Priority Dispute.” The trial court ordered that the sheriffs sale be stayed pending briefing and argument. On February 25, 2011, the trial court entered an order holding that the judgment entered in favor of Ricker enjoys priority over the judgment entered in favor of Metro Bank. On March 7, 2011, Metro Bank filed a motion for post-trial relief, and on March 10, 2011, Metro Bank filed a notice of appeal to this Court attempting to initiate an appeal of the trial court’s February 25, 2011 order. The trial court did not issue an order disposing of Metro Bank’s motion for post-trial relief. Therefore, the motion was denied by operation of law. See Pa. R.Civ.P. 227.4.

On March 23, 2011, the trial court issued an order requiring Metro Bank to file a concise statement of matters complained of on appeal pursuant to Pa.R.A.P.1925. Metro Bank complied with the trial court’s order, and on May 13, 2011 the trial court issued its opinion pursuant to Rule 1925.

Metro Bank presents three issues for appeal:

Under the Mechanics’ Lien Law, 49 P.S. § 1508(c)(2), as amended June 29, 2006, effective January 1, 2007, does an open-end mortgage dated January 12, 2007 have priority over a statutory mechanics’ lien based on construction begun on October 18, 2006?
Did the trial court err as a matter of law in assigning priority to a statutory mechanics’ lien, where the construction contract did not provide for a mechanics’ lien to be perfected at the time the contract was executed?
[728]*728Did the trial court err as a matter of law in assigning priority to a statutory mechanics’ lien, where the lien claim failed to contain the statutorily mandated statement of the kind and nature of the labor and materials furnished?

Metro Bank’s Brief at 2.

Prior to considering the merits of Metro Bank’s appeal, we address whether the trial court’s February 25, 2011 order is interlocutory. Our Court may reach the merits of an appeal taken from “(1) a final order or an order certified as a final order (Pa.R.A.P. 341);2 (2) an interlocutory order [appealable] as of right (Pa.R.A.P. 311); (3) an interlocutory order [appeal-able] by permission (Pa.R.A.P. 312, 1311, 42 Pa.C.S.A. § 702(b)); or (4) a collateral order (Pa.R.A.P. 313).” Stahl v. Redcay, 897 A.2d 478, 485 (Pa.Super.2006) (citation omitted).

Under Pennsylvania law, the priority of liens recorded against foreclosed property is usually established by filing exceptions to the sheriffs schedule of distribution after a sheriffs sale has occurred. See Pa.R.Civ.P. 3136; Metro. Fed. Sav. & Loan Ass’n of E. Pennsylvania v. Bailey, 244 Pa.Super. 452, 368 A.2d 808, 811-812 (1976). Therefore, orders in foreclosure actions establishing lien priority are generally not final until after the sheriffs sale has occurred. Metro. Fed. Sav. & Loan Ass’n of E. Pennsylvania, 368 A.2d at 811-812.

Given that there has yet to be a sheriffs sale of the subject property in this action, at first glance the trial court’s February 25, 2011 order appears to be interlocutory. Metro Bank, however, argues that, “although the procedural posture of the case was somewhat unusual, the proceeding below was in the nature of a declaratory judgment on the lien priority issue, and the decision was therefore final and appealable.” Metro Bank’s Application for Reargument or Reconsideration at p. 2. We agree.

Specifically, 42 Pa.C.S.A. § 7532 defines declaratory judgment actions. Pursuant to that statute:

Courts of record, within their respective jurisdictions, shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.

42 Pa.C.S.A. § 7532. Furthermore, given that Section 7532 expressly defines declaratory judgments as final orders, our Courts have held that orders resolving declaratory judgments are immediately ap-pealable. See Motorists Mut. Ins. Co. v. Pinkerton, 574 Pa. 333, 830 A.2d 958, 964 (2003).

In this matter, a sheriffs sale was originally scheduled, however, given a recent change in the Mechanics’ Lien Law, a dispute arose regarding lien priority. Considering the uncertainty of the law, and the parties’ need to intelligently bid at the sheriffs sale, the parties agreed to stay the matter and obtain a decision on the lien priority statute. In so doing, the parties initiated a proceeding in the nature of a declaratory judgment action.3

[729]*729On July 13, 2010, the trial court issued the stay and ordered discovery and briefing on the lien priority issue. On February 11, 2011, the trial court heard oral argument on the lien priority issue, and on February 25, 2011, the trial court issued its order. That order established the priority of liens recorded against the subject property. Therefore, we agree with Metro Bank that the order issued on February 25, 2011 was in the nature of a declaratory judgment and is therefore immediately ap-pealable.4

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46 A.3d 724, 2012 Pa. Super. 100, 2012 WL 1610139, 2012 Pa. Super. LEXIS 540, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commerce-bankharrisburg-na-v-kessler-pa-2012.