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EMC Mortgage Corp. v. Lentz

April 28, 2009


The opinion of the court was delivered by: Senior Judge Flaherty

Argued: March 31, 2009



Gregory K. Millen (Millen) appeals from the order of the Court of Common Pleas of York County (trial court) which vacated its prior grant of Millen's cross motion for summary judgment and granted EMC Mortgage Corporation's (EMC) motion for summary judgment. We affirm.

On September 28, 2000, Tara J. Lentz and Brandon J. Funk (Lentz and Funk) purchased a piece of property located at 102 Hutton Road in New Cumberland, York County (Property). Lentz and Funk mortgaged the Property with Bank of America (BoA); such mortgage was recorded in York County on October 10, 2000. Subsequently, Lentz and Funk defaulted on the mortgage.

On April 11, 2003, BoA instituted this action by filing a complaint in mortgage foreclosure against Lentz and Funk. BoA's complaint alleged a mortgage value of $84,945.70. On June 9, 2003, BoA took a default judgment in the amount of $86,113.90 against Lentz and Funk. On that same date, BoA filed a praecipe and writ of execution as to both parties with regard to the default judgment and a sheriff's sale was scheduled for November 24, 2003. On October 14, 2003, BoA cancelled that sale as a result of Lentz and Funk's bankruptcy filing on June 30, 2003.

While the bankruptcy was pending, on April 7, 2004, a writ of scire facias was praeciped by Fairview Township (Township) and entered by the trial court to collect on a municipal claim on the Property. The municipal claim was for the collection and disposal of sewer and refuse on the Property. On July 3, 2004, Township took a default judgment in the amount of $1,417.10. By August 10, 2004, a writ of execution, notice and affidavit of service were sent to all parties of interest, including BoA and EMC, regarding the sale of the Property to satisfy the judgment.*fn1 Township also supplied an affidavit of service certifying notice to EMC as a party in interest pursuant to Pa. R.C.P. No. 3129.2.

On October 18, 2004, a judicial sheriff's sale of the Property was conducted to satisfy the municipal lien. At that sale, Millen purchased the Property for $8,850.00, satisfying Township's lien. A deed was issued and recorded on December 7, 2004. Neither BoA nor EMC appeared at the sale, nor did they challenge the sale afterwards.

Following Millen's purchase of the Property, BoA, on December 30, 2004, obtained an order from the bankruptcy court granting relief to proceed with its foreclosure action. On January 26, 2005, BoA re-filed a writ of execution on its June 2003 default judgment. Millen, having acquired the Property by judicial sale, was made a party to the litigation on June 13, 2005. Millen filed an answer and new matter to BoA's complaint on June 17, 2005. On July 1, 2005, BoA responded to Millen's new matter. On September 29, 2005, BoA filed a voluntary substitution of parties pursuant to Pa. R.C.P. No. 2352, formally naming EMC as the substituted plaintiff.

On April 9, 2007, EMC filed a motion for summary judgment. On June 29, 2007, Millen answered EMC's motion and filed a cross-motion for summary judgment. On September 20, 2007, the trial court issued an order and opinion which denied EMC's motion and granted Millen's cross-motion for summary judgment. On October 10, 2007, EMC presented an emergency motion for reconsideration before the trial court's current business session. On January 10, 2008, the trial court issued an order vacating its prior grant of summary judgment to Millen and entered an order granting summary judgment on behalf of EMC. Millen appealed to our court.*fn2

Millen contends that the trial court erred in failing to conclude that the provisions pertaining to the discharge of a prior-in-time mortgage upon judicial sale of property established by Section 8152 of the Judicial Code, 42 Pa. C.S. §8152 were inapplicable to this action,*fn3 that 42 Pa. C.S. §8152, applies to this action, even if the Township proceeded under Section 31 of what is commonly known as the Municipal Claims and Tax Lien Act (MCTLA), Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §7281, because Section 20002(g) of the Judiciary Act Repealer Act (JARA), 42 P.S. §20002(g), displaced statutes and parts of statutes inconsistent with the Judicial Code.*fn4

Initially, both parties stipulate that this action arose under the MCTLA. A municipal claim is defined in pertinent part as, "[t]he claim arising out of, or resulting from, a tax assessed, service supplied, work done, or improvement authorized and undertaken, by a municipality.." Section 1 of MCTLA, 53 P.S. §7101. The Township's claim was for the collection and disposal of sewage and refuse on Property. Thus, the analysis used by the trial court was for a municipal claim, not a tax lien.

Under Section 3 of the MCTLA, 53 P.S. §7106, all municipal claims, "shall arise when lawfully imposed and assessed and shall have priority to and be fully paid and satisfied out of the proceeds of any judicial sale of said property, before any other obligation, judgment, claim, lien, or estate with which the said property may become charged, or for which it may become liable.." Therefore, the Township's municipal claim had priority to be paid in full over all other liens on the Property, including EMC's mortgage.

The MCTLA provides a two-step procedure for conducting judicial sales when executing upon a municipal lien. First, there is an initial upset sale and then, if the property is not sold at the upset sale, a judicial sale, free and clear of all liens and encumbrances is held. In the case of an upset sale, the upset price is the amount sufficient to pay all of the municipalities' claims in full. Section 29 of the MCTLA, 53 P.S. §7279. If the upset price is not obtained, the municipality may petition the trial court to issue a rule to show cause why the property should not be sold free and clear of all claims, mortgages, charges and estates. 53 P.S. §7281. If the court agrees, an order will be issued that the ...

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