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HomeMy WebLinkAbout2006-4786 WELLS FARGO BANK, N.A. : IN THE COURT OF COMMON PLEAS OF as Trustee for ABFC Asset-Backed : CUMBERLAND COUNTY, PENNSYLVANIA Certificates, Series 2005-HE1, : Plaintiff : CIVIL ACTION – LAW : vs. : NO. 06-4786 CIVIL : DON L. CASEY and : : UNITED STATES OF AMERICA, : Defendants : : JP MORGAN CHASE BANK, N.A. : Intervenor : IN RE: OPINION PURSUANT TO RULE 1925 In this case, the defendant, Don L. Casey, defaulted on two mortgages. One was with the plaintiff, Wells Fargo Bank, N.A., as Trustee for ABFC Asset-Backed Certificates, Series 2005- HI1 (Wells Fargo). The other was with JP Morgan Chase Bank, N.A. (JP Morgan). An in rem judgment was entered in favor of JP Morgan on July 26, 2006 in the amount of $22,655.93. An in rem judgment was also entered in favor of Wells Fargo in a mortgage foreclosure action on October 13, 2006. The judgment in favor of Wells Fargo was eventually assessed at $144,238.61. Pursuant to the Writ of Execution issued on October 20, 2006 to enforce the judgment, the mortgaged premises located at 1471 Pine Road, Carlisle, PA 17013 was scheduled to be sold at the July 11, 2007 Cumberland County Sheriff’s sale. JP Morgan intended to bid on the premises at the sheriff’s sale. On July 2, 2007, an employee of the bidding department of Phelan, Hallinan & Schmieg, LLP, attorneys for JP Morgan, emailed an employee of the bidding department of Udren Law Offices, P.C., attorneys for Wells Fargo, making Wells Fargo aware that JP Morgan wanted to bid at the foreclosure sale. NO. 06-4786 CIVIL On July 9th, a Wells Fargo employee sent a short, one line email to a JP Morgan employee stating that the foreclosure sale was being postponed until August 8, 2007. However, Wells Fargo decided on July 10th that the foreclosure sale could proceed, even though its pending Motion to Reassess Damages had not yet been ruled upon, and the sheriff’s sale took place as originally scheduled on July 11, 2007. At the sale, the subject property was sold to third party bidders, James Goodhart and Susan Houghton, for $140,000. After the sale, the Sheriff issued a proposed Schedule of Distribution, which listed Wells Fargo as receiving $135,722.50, and JP Morgan receiving nothing. According to 42 Pa.C.S.A. § 8152(c), “a] judicial or other sale of real estate in proceedings under a prior judgment or a prior [ ground rent, or in foreclosure of a prior mortgage, shall discharge a mortgage later in lien.” Therefore, JP Morgan’s junior lien was divested by operation of law. JP Morgan subsequently intervened in the captioned Wells Fargo foreclosure action. James Goodhart and Susan Houghton also intervened in this action. JP Morgan filed Exceptions to Sheriff’s Sale and a Motion to Set Aside Sale, which were both denied on order after hearing and argument. JP Morgan has appealed the order. “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 1 order a resale and any other order which may be just and proper under the circumstances.” 1th As an alternative to setting aside the sale, JP Morgan requests that we divide the proceeds of the July 11 sale in some manner which is fair to both sides. We know of no authority for this procedure nor do we believe that the reallocation of the proceeds of a sheriff’s sale, between bidding and non-bidding parties, is a proper judicial function under Pa.R.C.P. 3132. 2 NO. 06-4786 CIVIL Pa.R.C.P. 3132. “A petition to set aside a sheriff’s sale is grounded in equitable principles and , is addressed to the sound discretion of the hearing court.”Kaib v. Smith 684 A.2d 630, 631 (Pa. Super. Ct. 1996) “The burden of proving circumstances warranting the exercise of the . court’s equitable powers rests on the petitioner, as does the burden of showing inadequate notice resulting in prejudice, which is on the person who seeks to set aside the sale.” GMAC Mortgage Corporation of PA vs. Buchanan, 929 A.2d 1164, 1167 (Pa. Super. Ct. 2007). “It is settled that whether the order be the setting aside or the refusing to set aside a sheriff’s sale, the order of the court below will not be disturbed unless there be a manifest and gross abuse of discretion.” First National Bank of Koppel v. Mount, 1 A.2d 547, 548 (Pa. Super. Ct. 1938). In GMAC Mortgage Corporation of PA vs. Buchanan, a mortgagor relied upon an oral representation from an employee at the Sheriff’s Office that the sale of the mortgagor’s real property was going to be “removed from the sale list.” GMAC Mortgage Corporation of PA vs. Buchanan, 929 A.2d 1164, 1166 (Pa. Super. Ct. 2007). The property was not removed from the sale list and was sold at the sheriff’s sale, with the mortgagor absent. Id. The mortgagor petitioned to set aside the sheriff’s sale. Id. The Pennsylvania Superior Court held that the mortgagor could not rely upon the representation from the unnamed employee at the Sheriff’s Office, and the sale would not be set aside. Id. at 1169. The court reasoned that “Appellant was properly notified of the date and time of the sheriff’s sale, and neither he nor counsel appeared at the sale to verify that the property was removed from the list.” Id. at 1168. Furthermore, the court reasoned that “the Appellant had not cited to any case law, statutory provision or rule of procedure, either statewide or local, that entitled him to rely on oral representations by an unnamed person given over the telephone that a property will be removed from the list for a 3 NO. 06-4786 CIVIL scheduled sheriff’s sale,” or “that absolved him from the responsibility of verifying that his real property was removed from the sheriff’s sale list.” Id. at 1169. In the present case, JP Morgan, like the Appellant in GMAC, was notified of the date and time of the sheriff’s sale in which the mortgaged property would be auctioned. JP Morgan received notice on November 15, 2006 that the sheriff’s sale would take place on July 11, 2007. JP Morgan, like the Appellant in GMAC, did not make reasonable efforts to verify that the sale of the property would not take place after receiving information that it had been postponed. Neither counsel for JP Morgan nor any JP Morgan representative appeared at the July 11 sheriff’s sale to verify that the property was no longer being auctioned. Furthermore, JP Morgan did not call the Cumberland County Sheriff’s Office, and did not call counsel or any representative of JP Morgan to verify that the email message it received was accurate and that the sale had been postponed. December 4, 2007 _________________________________ Kevin A. Hess, J. Mark J. Udren, Esquire For the Plaintiff Don L. Casey, Defendant Susan Hartman, Esquire For Third Party Purchaser Joseph P. Schalk, Esquire For JP Morgan Chase Bank :rlm 4