Sovereign Bank v. Harper

674 A.2d 1085, 449 Pa. Super. 578, 1996 Pa. Super. LEXIS 322
CourtSuperior Court of Pennsylvania
DecidedMarch 7, 1996
Docket04235; 00412
StatusPublished
Cited by25 cases

This text of 674 A.2d 1085 (Sovereign Bank v. Harper) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sovereign Bank v. Harper, 674 A.2d 1085, 449 Pa. Super. 578, 1996 Pa. Super. LEXIS 322 (Pa. Ct. App. 1996).

Opinion

CERCONE, Judge:

This is an interlocutory appeal and cross-appeal as of right from an order which granted a preliminary injunction and directed a Revocation of Deed to be stricken. See Pa.R.A.P., Rule 311(a)(4), 42 Pa.C.S.A. (interlocutory appeals from orders granting injunctions). We affirm.

The instant case had its inception in November of 1988 when plaintiff/appellee Sovereign Bank (Sovereign) made a loan in the sum of $2,775,000.00 to Quail Run Homes, Ltd. (Quail Run), a Pennsylvania corporation. Defendant/appellant Richard A. Harper was the sole shareholder of Quail Run, a residential subdivision located in Franklin Township, Chester County, Pennsylvania. Mr. Harper and his wife, defendant/appellant Dianne C. Harper, both signed a written agreement with Sovereign to act as sureties for the Quail Run loan. The Harpers’ suretyship obligations were secured by second mortgage liens on nine separate tracts of land. These premises (the Turkey Hill properties), are subject to leases with Turkey Hill Minit Markets, Inc. and all are used for running convenience stores. The Turkey Hill properties are located in five different Pennsylvania counties: Berks, Lancaster, York, Lebanon and Dauphin. Before the suretyship agreement was signed, these properties had been encumbered by a blanket first lien mortgage with an outstanding balance of more than $700,000.00 in favor of Elverson National Bank. See Trial Court Opinion dated January 24, 1995, docketed January 25, 1995 at 2-5 (factual findings 1-7).

*584 The subdivision at Quail Run was not as financially successful as the parties had hoped. In order to avoid defaulting on the loan with Sovereign, Mr. Harper auctioned all unsold lots at Quail Run on April 3,1993. Later that month, the Harpers and Sovereign entered into a written loan modification agreement with a subsequent amendment which was signed on May 24, 1993. Defendant/appellant Robert J. Carey, Esquire, represented the Harpers during their loan renegotiations with Sovereign. The written loan modification agreement provided, inter alia, that Mr. Harper would pay over the net proceeds of the Quail Run auction sale to Sovereign. Pursuant to the amendment, the Harpers executed “deeds in lieu of foreclosure” for the Turkey Hill properties. The deeds named appellee New Home Financial Services (New Home), Sovereign’s wholly owned subsidiary, as the “designated grantee.”

The Harpers delivered the deeds to Sovereign to be held in escrow until Sovereign could properly investigate the Turkey Hill properties and determine ■ whether environmental problems existed, and whether there was pending litigation or some other defect of title. Sovereign agreed to release the Harpers from any further liability if they complied with all of the terms and conditions of the original loan modification agreement signed on April 27, 1993 and the May 24th amendment. These agreements also indicated that upon delivery of the deeds in lieu of foreclosure to Sovereign or its designated grantee, the Harpers were to have no further right, title or interest in or to the deeds or any right to control the use or disposition of the properties by either Sovereign or New Home. Id. (factual findings 8-15). 1

*585 On September 9, 1994, Paul J. Schmidt, entered into an agreement of sale with Sovereign to purchase the nine Turkey Hill properties for the price of $1,080,000.00. 2 Settlement was scheduled for 9:30 a.m. on November 23, 1994, the day before the Thanksgiving holiday. However, approximately forty-five minutes before the closing, Attorney Carey telephoned counsel for Sovereign and New Home to say that on the previous day he had recorded a “Revocation of Deed” for each of the nine Turkey Hill properties. Not surprisingly, the purchaser’s title insurance company refused to issue title insurance coverage for any of the nine properties. The buyer thereupon declined to proceed with settlement. 3 Mr. Schmidt also threatened to exercise the rescission clause in the agreement of sale if the cloud to marketable title could not be quickly cleared. Id. (factual findings 16-22).

*586 The following Wednesday, November 30, 1994, Sovereign and New Home commenced the action underlying this appeal by filing a complaint in equity with an accompanying motion requesting injunctive relief against the Harpers and Mr. Carey. The filings specifically sought protection from any interference with the sale of the Turkey Hill properties. The lower court’s docket indicates that on that date, the Honorable Scott D. Keller, acting on behalf of the Honorable Thomas J. Eshelman, scheduled a preliminary injunction hearing for December 5, 1994. Judge Keller issued a Rule Returnable which assigned the matter to the Honorable Frederick Edenharter. The Rule also directed Mr. Carey either to disclose the Harpers’ address within five hours of his receipt of the complaint, or to accept service of the complaint on behalf of the Harpers. Rule Returnable dated 11/30/94. Additionally, Judge Keller granted appellees permission to serve the Harpers by Federal Express instead of certified mail if Mr. Carey chose to reveal their location rather than accept service on their behalf. Id. 4

On December 5, 1994, Judge Edenharter recused. The hearing on the preliminary injunction was rescheduled for *587 December 9, 1994 and the case was reassigned to the Honorable Albert A. Stallone. See orders docketed 12/5/94 and 12/6/94. When the hearing convened on the 9th, Mr. Carey indicated that he had spoken with the Harpers on an unspecified date, and that they did not intend to come to Pennsylvania from South Carolina unless it was “necessary.” N.T. 12/9/94 at 8-9. Mr. Carey also stated that the Harpers had agreed to authorize him to act on their behalf, but only if plaintiffs permanently dismissed him as a party defendant. Id. at 9-10. Sovereign and New Home declined to permanently dismiss Mr. Carey, who would not accede to a temporary dismissal “without prejudice.” Id. at 13-14.

Judge Stallone considered the fact that the plaintiffs’ difficulties in effectuating service were initially created by the Harpers’ failure to notify their mortgage holder, Sovereign, of their forwarding address. This problem was compounded when Mr. Carey refused to comply with Judge Keller’s order and disclose the Harpers’ whereabouts. Furthermore, neither Mr. Carey nor the Harpers had notified the court that the Harpers would not be present and had not retained new counsel. In light of these circumstances, because several witnesses were waiting to testify, and also because he had deliberately rearranged the court’s calendar to accommodate the preliminary injunction hearing, Judge Stallone decided to proceed in order to develop an understanding of the issues at stake in the case. Id. at 9, 15-17, 136-37.

When the hearing concluded shortly after 4:00 p.m. that Friday afternoon, Judge Stallone stated that the evidence clearly supported Sovereign’s petition. N.T. 12/9/94 at 137-38.

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Bluebook (online)
674 A.2d 1085, 449 Pa. Super. 578, 1996 Pa. Super. LEXIS 322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sovereign-bank-v-harper-pasuperct-1996.