The opinion of the court was delivered by: FRANCIS X. CAIAZZA
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
It is recommended that plaintiffs' motion for remand at document #23 be denied.
Plaintiffs Joseph Skaro and Archangel P. Skaro (plaintiffs) filed a complaint on or about July 26, 1989 in the Court of Common Pleas of Allegheny County, Pennsylvania against Atlantic Financial Federal ("AFF"), requesting an accounting and other equitable and declaratory relief. AFF filed its answer on December 22, 1989. On December 18, 1992, Resolution Trust Corporation ("RTC") was appointed receiver for AFF and on January 8, 1993, RTC filed a notice of removal to the District Court for the Western District of Pennsylvania pursuant to 12 U.S.C. § 1441a(l)(1).
By Consent Order dated June 13, 1994, Eastern Savings Bank ("ESB") was substituted for RTC as the "real party in interest" because ESB had purchased the plaintiffs' loan from RTC on or about October 1, 1993, and RTC was dismissed from the case. On June 15, 1994, plaintiffs filed the instant Motion for Remand, to which ESB responded on August 22, 1994. In the meantime, ESB filed a motion for leave to file an amended answer with counterclaim and affirmative defenses on July 8, 1994, to which plaintiffs responded on July 18, 1994. Because ESB suggested that the statute of limitations on its counterclaim could have run on July 25, 1994, the Court issued an order on July 21, 1994 permitting ESB leave to file its amended answer without deciding the issue of the Court's jurisdiction either over plaintiffs' complaint or over ESB's proposed counterclaim. At this time, therefore, the Court should address both of these issues in order.
During February 1977, plaintiffs purchased real estate known as 61 Colonial Manor Road, Westmoreland County, Pennsylvania ("the property"). In order to purchase the property, plaintiffs borrowed $ 250,000.00 from West Penn Federal Savings & Loan Association ("West Penn") in exchange for a mortgage bond with a 9% fixed interest rate and an original principal amount of $ 250,000.00 ("bond"). To secure payment of the bond, plaintiffs gave West Penn a mortgage on the property. On October 29, 1982, plaintiffs sold the property to Mid Atlantic Properties Corporation (Mid Atlantic), conditioned upon West Penn's allowing Mid Atlantic to assume the plaintiffs' $ 250,000.00 bond. West Penn permitted the assumption subject to the execution by Mid Atlantic and plaintiffs of a Mortgage Loan Assumption and Modification Agreement ("modification"). The modification, which was signed on December 15, 1982, reamortized the bond's then principal balance of $ 235,552.73 over 20 years at an interest rate of 13%. To secure payment of the sales price, plaintiffs also took back from Mid Atlantic a second mortgage note in the amount of $ 132,800.00 ("second mortgage note") and obtained a second mortgage on the property.
West Penn was later succeeded in interest by AFF. In approximately mid 1987, Mid Atlantic defaulted on the bond and mortgage, and on the second mortgage note. As a result of Mid Atlantic's default on the second mortgage note, plaintiffs accepted from Mid Atlantic a Deed in Lieu of Foreclosure dated January 8, 1988, thus taking title to the property subject to AFF's first mortgage. On or about April 15, 1988, AFF made written demand on plaintiffs to bring Mid Atlantic's defaults on the bond current.
In response to AFF's demand, plaintiffs complained that they had not been given timely notice of Mid Atlantic's default on the bond and did not have sufficient funds to bring the bond current. In order to bring the bond current, plaintiffs entered into an Agreement with AFF dated July 25, 1988 (the "Side Agreement"). Pursuant to the Side Agreement, plaintiffs agreed to pay $ 48,286.35 in delinquent interest, late charges and negative escrow due under the bond, as modified, in monthly installments to be made separately from the monthly bond installment payments. Specifically, the Side Agreement required plaintiffs to repay the delinquent amounts by making an initial $ 10,000.00 payment to AFF and subsequent payments as follows: "$ 6,000 every six months after July 25, 1987.
Plaintiffs made the initial $ 10,000.00 payment and partial payments in January and July 1989 and January 1990. ESB asserts, however, that plaintiffs failed to make the July 25, 1990 payment and all payments thereafter.
ESB's counterclaim seeks to recover ...