M & T Bank v. ACLI Trading, LLC

Superior Court of Pennsylvania·Decided February 13, 2017·No. M & T Bank v. ACLI Trading, LLC No. 816 EDA 2016·Unpublished

Opinion

J-S89004-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

M & T BANK, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellant

v.

ACLI TRADING, LLC AND CORESTATES GROUP LLC,

Appellees No. 816 EDA 2016

Appeal from the Order Entered March 3, 2016 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): 150201107

BEFORE: SHOGAN, MOULTON, and FITZGERALD,* JJ.

MEMORANDUM BY SHOGAN, J.: FILED FEBRUARY 13, 2017

Appellant, M & T Bank, appeals from the order denying its petition to

set aside sheriff’s sale in this mortgage foreclosure action initiated against

Appellee, ACLI Trading, LLC, at which the foreclosed property was sold to

Appellee, Corestates Group, LLC (“Corestates”). After careful review,

we affirm.

The trial court summarized the history of this case as follows:

This case commenced [on] February 2, 2015, with the filing of a complaint in mortgage foreclosure against ACLI Trading Company and the Property located at 4640 Large Street, Philadelphia Pennsylvania, 19124.

____________________________________________

* Former Justice specially assigned to the Superior Court. J-S89004-16

On April 20, 2015, [M & T Bank] filed a Motion for Alternative Service, which was granted May 5, 2015.

On May 21, 2015 and May 22, 2015, [M & T Bank] filed Affidavits of Service of the Praecipe to Reinstate the Complaint as well as the Complaint on ACLI Trading, Inc.

On June 18, 2015, [M & T Bank] filed a Praecipe to Entry of Judgment by Default.

On July 23, 2015, [M & T Bank] filed an Affidavit of Service of Notice of Sale by posting the premises.

On July 24, 2015, [M & T Bank] filed an Affidavit of Service of Notice of Sale by Posting Premises, Certified Mail, and First Class Regular Mail.

On October 6, 2015, the Property was sold at Sheriff’s Sale to [Corestates] for $180,000.00.

On October 7, 2015, [M & T Bank] filed a [Petition] to Set Aside Sheriff’s Sale. The petition averred that [M & T Bank’s] counsel had received bidding instructions for a maximum of $318,967.30; that the fair market value of the Property was $425,000.00; that a representative of [M & T Bank] attended the sale; that there were multiple third party bidders bidding on the Property; that [M & T Bank’s] representative followed standard and customary procedure to bid; that the auctioneer sold the Property despite [M & T Bank’s] representative remaining standing and indicating she was prepared to bid $319,000.00; that the manner in which the sale was conducted was highly irregular and prejudicial as the final bid was grossly inadequate given the fair market value of the Property. [M & T Bank] provided an Affidavit from its representative who had attended the sale. Thus, [M & T Bank] requested this court set aside the sale on an equitable basis.

On October 27, 2015, [Corestates] filed a Motion to Intervene, and an Answer in Opposition to the Motion to Set Aside Sheriff’s Sale. In its Motion to Intervene, [Corestates] averred that it was the successful third party bidder on the Property, and that it sought leave to intervene to protect its interest in the Property. In its Answer in Opposition, [Corestates] argued that the sale was conducted properly; that

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the auctioneer knocked down the Property by the fall of the hammer and allowed for and provided a verbal three (3) count; that the sale price was not grossly inadequate as courts had concluded that “grossly inadequate” meant ten (10) per cent or less of the established market value and in the instant case the sale price was 42.35% of the fair market value; that the competitive bidding process was not impacted as no other third party bidders had complained.

On November 18, 2015, [the trial] court scheduled an evidentiary hearing on the Motion to Set Aside Sheriff’s Sale.

On December 18, 2015, [M & T Bank] filed a Reply in Support of its Motion to Set Aside Sheriff’s Sale, arguing that [Corestates’s] brief relied on unpublished case law; that [Corestates’s] answer was not properly verified; that [Corestates] had provided no evidence; and that the sale price was grossly inadequate because it was below both the market value of the Property and the outstanding debt to which the sale was intended to satisfy.

On December 22, 2015, [Corestates] filed a Praecipe to Supplement its Motion to Intervene and a Praecipe to Supplement its Answer in Opposition to the Motion to Set Aside, namely, to add proper verifications.

On March 2, 2016, following a number of continuances, [the trial] court heard oral argument and considered testimony on the Motion to Set Aside.

***

On March 3, 2016, [the trial] court denied [M & T Bank’s] Motion to Set Aside.

Trial Court Opinion, 5/27/16, at 1-3, 7. This timely appeal by M & T Bank

followed. On March 10, 2016, M & T Bank filed a motion to stay proceedings

seeking to stay delivery of a sheriff’s deed to Corestates pending the

outcome of this appeal, which the trial court granted on April 25, 2016.

Both M & T Bank and the trial court have complied with Pa.R.A.P. 1925.

-3- J-S89004-16

M & T Bank presents the following issues for our review:

I. Did the trial court abuse its discretion in denying M & T’s petition to set aside the sheriff’s sale under Pa.R.C.P. 3132 where there is evidence showing the sale was abruptly cut off, hindering competitive bidding and rendering the sale void?

II. Did the trial court abuse its discretion in denying M & T’s petition to set aside the sheriff’s sale under Pa.R.C.P. 3132 due to the gross inadequacy of the sale price in comparison to the underlying judgment amount and the market price of the subject property?

III. Did the trial court fail to appropriately exercise its equitable discretion in denying Appellant’s petition to set aside the sheriff’s sale pursuant to Pa.R.C.P. 3132 where the resulting unfair prejudice to M & T far outweighs the absence of any harm whatsoever to Appellee if the sale was reset?

M & T Bank’s Brief at 3 (renumbered for ease of discussion).

Initially, we observe that each of M & T Bank’s issues challenge

whether the trial court erred in denying its petition to set aside the sheriff’s

sale. Pennsylvania Rule of Civil Procedure 3132 governs petitions to set

aside sheriff’s sales and provides as follows:

Upon petition of any party in interest before delivery of the personal property or 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. 3132.

Our Supreme Court has long held that a petition to set aside a sheriff’s

sale is governed by equitable principles. Doherty v. Adal Corp., 261 A.2d

311, 313 (Pa. 1970). Equitable principles are applied to sheriff’s sales

because “[t]he purpose of a sheriff’s sale in mortgage foreclosure

-4- J-S89004-16

proceedings is to realize out of the land, the debt, interest, and costs which

are due, or have accrued to, the judgment creditor.” Kaib v. Smith, 684

A.2d 630, 632 (Pa. Super. 1996). Moreover, we are mindful that the

petitioner has the burden of proving circumstances warranting the exercise

of the trial court’s equitable powers. Bornman v. Gordon, 527 A.2d 109,

111 (Pa. Super. 1987). As a general rule, the burden of proving

circumstances warranting the exercise of the court’s equitable powers is on

the applicant, and the application to set aside a sheriff’s sale may be refused

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