ICON PSG 1 FL LLC v. Jenkins Court Realty CO LP

• Court: Court of Appeals for the Third Circuit
• Decided: July 16, 2026
• Docket: 25-2598
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 25-2598

ICON PSG 1 FL, LLC

v.

JENKINS COURT REALTY CO., L.P., Appellant _____________________________ Appeal from United States District Court, Eastern District of Pennsylvania Judge Gerald A. McHugh No. 2:25-cv-00044 Before: Porter, Matey, and Ambro, Circuit Judges Submitted Jun. 5, 2026; Decided Jul. 16, 2026 _____________________________

NONPRECEDENTIAL OPINION 1

AMBRO, Circuit Judge

This appeal arises from a commercial mortgage foreclosure action in which

Defendant-Appellant Jenkins Court Realty Co., L.P. (“Jenkins Court”) failed to make

required monthly payments on a $20.5 million commercial loan from Plaintiff-Appellee

ICON PSG 1 FL, LLC (“ICON”). After Jenkins Court failed to respond timely to the

complaint, the District Court denied its motion to set aside the entry of default and issued

a default judgment against the company for the outstanding debt. The Court also

permitted the modification of a lease that benefited one of Jenkins Court’s affiliates and

1 This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding precedent. held Jenkins Court and its principal in contempt for repeated noncompliance with court

orders. Jenkins Court appeals each of those rulings.

The District Court did not abuse its discretion by refusing to set aside the default

or by finding contempt, and it did not err in permitting the modification of the lease.

Therefore, we affirm the District Court’s orders in full.

I.

In September 2023, ICON issued a $20.5 million commercial loan to Jenkins

Court to refinance existing debt and fund construction projects related to a property in

Jenkintown, Pennsylvania. The loan agreement required Jenkins Court to make monthly

payments. After a five-day grace period, failure to make the monthly payment would

result in default.

Jenkins Court was repeatedly late on its monthly payments and failed entirely to

make the payments due on November 1, 2024, December 1, 2024, and January 1, 2025.

In December 2024, ICON issued an acceleration notice demanding immediate payment

of the unpaid principal, interest, fees, and expenses. The notice asserted that, after

crediting about $1.49 million in undisbursed construction funds, Jenkins Court owed

more than $20.4 million.

In January 2025, ICON initiated this mortgage foreclosure action in the District

Court and moved for the expedited appointment of a receiver. Jenkins Court opposed the

motion, contending that ICON had improperly withheld construction advances required

by the parties’ agreements and that ICON’s conduct contributed to Jenkins Court’s

financial difficulties.

2 In February 2025, the District Court granted ICON’s motion and appointed Trigild

IVL, LLC as Receiver, authorizing it to take control of the property and all revenues. The

Receivership Order further directed Jenkins Court to provide a “detailed accounting of all

income, expenses, receivables, and payables relating to the Property” within thirty days.

S. App. 4.

Although it opposed ICON’s motion, Jenkins Court did not file a timely answer,

request an extension, or otherwise respond to the complaint. Therefore, the Clerk of

Court entered Jenkins Court’s default in March 2025. Later that same day, Jenkins Court

moved to set aside the default and sought permission to file a proposed answer. It

asserted that its principal, Philip Pulley, had been hospitalized for six weeks and

undergone multiple surgeries, rendering him unable to assist counsel in preparing an

answer. In its proposed answer, Jenkins Court asserted several affirmative defenses based

on ICON’s alleged breaches of the loan agreement.

The District Court denied Jenkins Court’s motion in May 2025. It concluded that

Jenkins Court did not establish good cause for failing to answer the complaint and did not

assert a meritorious defense sufficient to justify setting aside the default.

Meanwhile, in April 2025, the Receiver moved to compel compliance with the

Receivership Order, asserting that Jenkins Court had failed to provide the required

accounting. The District Court granted the motion, directing Jenkins Court to provide the

accounting and certain documentation. The order “cautioned [Jenkins Court] that failure

to comply [would] be grounds for potential sanctions for contempt.” App. 749.

3 In June 2025, the Receiver moved to hold Jenkins Court and Pulley in contempt of

the order, alleging that the company had provided nothing more than a general ledger in

response. Jenkins Court claimed it did not have access to documents predating 2022 due

to flood damage.

The Receiver also sought modification of certain lease provisions affecting

Jenkins Court affiliates. Specifically, the Receiver asked the Court to replace a lease term

giving certain tenants 1000 days to cure payment defaults with an industry-standard term

giving them 10 days. Jenkins Court opposed the motion, arguing that the Receiver lacked

authority to modify the leases unilaterally without providing tenants notice and an

opportunity to respond. It relied on subordination, non-disturbance, and attornment

provisions executed in connection with the loan transaction, which required any lender or

successor that acquired the landlord’s interest to remain bound by the leases.

In July 2025, the District Court granted (1) ICON’s request for default judgment

against Jenkins Court for the full amount due, which had increased to $22,056,659.26,

(2) the Receiver’s motion to modify the lease with respect to SBG Management, a tenant,

and (3) the Receiver’s motion for contempt in part, concluding that Jenkins Court had

failed to comply with prior Court orders directing it to provide an accounting and transfer

records. Jenkins Court appeals those orders.

II.

The District Court had jurisdiction under 28 U.S.C. § 1332. We exercise appellate

jurisdiction under 28 U.S.C. § 1291. We review the District Court’s factual findings for

clear error and its legal conclusions de novo. Freeman v. Pittsburgh Glass Works, LLC,

4 709 F.3d 240, 251 (3d Cir. 2013). We review for abuse of discretion the denial of a

motion to set aside default, the entry of default judgment, and the finding of contempt.

Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73–74 (3d Cir. 1987); John T. ex rel. Paul T.

v. Del. Cnty. Intermediate Unit, 318 F.3d 545, 551 (3d Cir. 2003).

III.

On appeal, Jenkins Court contends that the District Court (1) abused its discretion

by refusing to set aside default and entering default judgment, (2) erred in allowing

modification of the SBG Management lease, and (3) abused its discretion in finding

Jenkins Court and Pulley in contempt. None of these issues warrants reversal.

A. The District Court did not abuse its discretion by refusing to set aside default and entering a default judgment against Jenkins Court.

When a defendant seeks to set aside an entry of default for good cause under

Federal Rule of Civil Procedure 55(c) or a default judgment under Rule 60(b)(1), courts

in the Third Circuit consider four factors: (1) prejudice to the plaintiff, (2) whether the

defendant has a meritorious defense, (3) the excusable or culpable nature of the

defendant’s conduct, and (4) the effectiveness of alternative sanctions. Budget Blinds,

Inc. v. White, 536 F.3d 244, 256–57 (3d Cir. 2008) (citing United States v. $55,518.05 in

U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)); Emcasco Ins., 834 F.2d at 73. A

meritorious defense must be supported by “specific facts beyond simple denials or

conclusionary statements” that, if proven at trial, constitute a complete defense.

$55,518.05 in U.S. Currency, 728 F.2d at 195.

5 Jenkins Court argues that it raised a meritorious defense in its proposed answer to

the complaint, where it asserted that ICON breached the parties’ agreements by failing to

approve tenants, interfering with leasing and construction activities, failing to fund

construction work, failing to approve sales of the property, and failing to timely fund loan

draws. But the proposed answer offered no factual allegations beyond those conclusory

assertions, much less “specific facts.” See id. Additionally, the loan agreement required

Jenkins Court to provide a notice of breach before claiming a lender default. The

proposed answer did not allege that Jenkins Court had done so. Therefore, the District

Court did not abuse its discretion by concluding that Jenkins Court’s defense was not

meritorious and refusing to vacate the default.

Likewise, the District Court did not abuse its discretion by entering a default

judgment against Jenkins Court in the amount of $22,056,659.26, reflecting the

outstanding loan balance and accrued interest. Jenkins Court argues that the Court should

have reduced the judgment by rents paid to the Receiver. However, the Court explicitly

deferred that issue in its order, which provided that “[a]ny credits or offsets shall be

appropriate for resolution at a later stage of this litigation.” App. 6. Given that the

receivership is still ongoing, the Court reasonably refused to offset the judgment amount

at this point.

Accordingly, the District Court’s refusal to set aside default and its entry of default

judgment were each a proper exercise of discretion.

6 B. The District Court did not err in permitting the modification of the SBG Management lease.

Jenkins Court argues the District Court committed four errors regarding the SBG

Management lease: (1) determining the bargain was not at arm’s length, (2) not enforcing

the attornment provision against the Receiver, (3) modifying the lease without a legal

basis to do so, and (4) modifying it without notice to the tenant.

The District Court correctly determined that the lease was not bargained for at

arm’s length. Pennsylvania law characterizes an “arm’s length transaction” as one

“untainted by any collusion or fraud,” Tech One Assocs. v. Bd. of Prop. Assessment,

Appeals, & Rev. of Allegheny Cnty., 53 A.3d 685, 703 n.30 (Pa. 2012). The contract

contained a 1000-day cure term, which the Court reasonably found to be unconscionable

because it provided the tenant with an extraordinarily favorable remedy that diverged

from the commercial standard. It further found that Pulley, who is also principal and

president of SBG Management, breached the duty of good faith and fair dealing by

signing the lease as both landlord and tenant. It would be difficult to argue that the lease’s

drafting did not involve collusion, given the lopsided term and Pulley’s self-dealing.

Therefore, under Pennsylvania law, it cannot have been bargained for at arm’s length.

Jenkins Court also cannot rely on the attornment provision, because it does not

apply to the Receiver. The provision triggers when a lender or its successor acquires the

landlord’s interest through foreclosure. But a court-appointed receiver acts as an officer

of the court and does not derive its authority from being a successor to the interests of

7 parties. See Trinh v. Fineman, 9 F.4th 235, 238–39 (3d Cir. 2021) (recognizing that a

receiver derives authority from the appointing court).

Finally, the Receivership Order expressly authorized the Receiver to “make,

cancel, enforce, or modify” leases relating to the property. S. App. 5. And there was no

clear error in the District Court’s finding that notice to Pulley, a party to the litigation,

sufficed for notice to SBG Management, given that he was also its principal.

Accordingly, the District Court reasonably allowed the Receiver to modify the

SBG Management lease.

C. The District Court did not abuse its discretion by holding Jenkins Court and Pulley in contempt.

Jenkins Court argues that either (1) it substantially complied with the District

Court’s orders compelling it to produce documents or (2) compliance was impossible

because it did not have the information requested. This issue turns on the credibility of

Pulley’s assertions about what documents he did or did not have, and the record does not

indicate the District Court erred in its determination.

The District Court noted that Jenkins Court provided no explanation for why it

failed to produce documents created after a 2022 flood that allegedly damaged its

records. It also found Pulley, who had been convicted of voter fraud, 2 to be an “evasive

witness who offered no credible explanation for how the property could have been

operated if in fact the documents requested by the Receiver did not exist.” App. 2.

2 The District Court was entitled to consider Pulley’s felony history as part of its credibility determination. See Fed. R. Evid. 609(a)(2). 8 Further, the District Court observed that “the tone and tenor of his testimony was

that the Receiver should have been able to obtain necessary information from what was

produced,” an accentuation that “strongly implie[d] he [was] being selective in his

compliance” with the Court’s order. App. 2–3. We defer to this credibility assessment,

which the District Court made after observing Pulley’s live testimony and was reasonable

in light of the record. See Travelers Cas. & Sur. Co. v. Ins. Co. of N. Am., 609 F.3d 143,

156–57 (3d Cir. 2010) (“To the extent that the District Court’s conclusions rested on

credibility determinations, our review is particularly deferential.”).

Therefore, the District Court properly exercised its discretion by holding Jenkins

Court and Pulley in contempt.

*****

For the reasons above, we affirm.