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Rhedrick v. Option One Mortgage Corp.

September 16, 2009

TIANA RHEDRICK
v.
OPTION ONE MORTGAGE CORPORATION



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM RE: OUTSTANDING MOTIONS

I. Background and Procedural History

A. Factual Background

The focus of these tangled proceedings is the property at 54 High Street, Sharon Hill, Delaware County, Pennsylvania ("the Property"). Most of the facts are undisputed. On or around June 17, 2005, Tiana Rhedrick ("Rhedrick") and Kevin Andrews ("Andrews") purchased the Property, subject to a mortgage with Option One Mortgage Corporation ("Option One").*fn1

According to Rhedrick, her mortgage provided that Option One had the responsibility to put a certain portion of her payments into escrow for the purpose of paying the taxes and insurance on the Property. Option One allegedly failed to do so, and on December 12, 2007, the Delaware County Tax Bureau auctioned off the Property to recover the unpaid taxes.

The successful bidder in that tax auction was Keith Bentrup ("Bentrup"),*fn2 and he therefore purchased the property. Records concerning this sale reveal that, in bidding at the auction, Bentrup was actually bidding on behalf of Icarus Enterprises, LLC ("Icarus").*fn3 (Oral Arg. Option One's Ex. 1). Documents produced by Option One during the current litigation indicate that Raul Jauregui, Esq. ("Mr. Jauregui") is presently the president of Icarus. (Oral Arg. Option One's Ex. 4).*fn4

B. Procedural History

Bentrup filed suit against Rhedrick and Andrews in the Court of Common Pleas of Delaware County, Pennsylvania on April 18, 2008. In the litigation, Bentrup was represented by Mr. Jauregui.*fn5 Bentrup's first claim against Rhedrick and Andrews was for ejectment. In that claim, Bentrup alleged that he was the owner of the Property,*fn6 and he sought "judgment against defendant [sic] restoring plaintiff to the possession of the above described real property, for costs and such relief as the Court may deem just." Bentrup's second claim, for mesne profits, alleges that Bentrup was deprived of rents and profits due to Rhedrick and Andrew's unlawful possession of the Property, and he sought damages in the sum of $4,000.

After serving the complaint on both Rhedrick and Andrews and no answer being filed by the defendants, Bentrup filed a motion for default judgment on July 1, 2008. Bentrup's memo and proposed order specifically requested default judgment on both the ejectment claim and the mesne profits claim. In the motion, Bentrup, represented by Mr. Jauregui, again stated that he was the genuine owner of the property. Because Rhedrick and Andrews had failed to answer the complaint, default was entered on August 11, 2008 as to the ejectment claim. The judge entering the order directed that "said Motion is GRANTED to the extent that a default judgment is entered in favor of Plaintiff and against Defendants for possession of the premises known as 54 High Street, Sharon Hill, Pennsylvania." There is no judgment in the state court docket as to the mesne profits claim. After default judgment was entered as to ejectment, the only action taken by Bentrup was a praecipe for possession filed on August 13, 2008. Rhedrick never filed anything in state court in defense of the two claims brought by Bentrup, and Rhedrick voluntarily left the Property on September 18, 2008.

C. Third Party Complaint by Rhedrick Against Option One

Seven months after default was entered and without moving to open the default as provided by the Pennsylvania Rules of Civil Procedure, Rhedrick (only) filed a "third party complaint and new matter" against Option One on March 17, 2009. Mr. Jauregui also represented Ms. Rhedrick in her third party complaint against Option One.*fn7

Rhedrick's third party complaint alleges that she entered into her mortgage under duress and undue influence, and that Option One breached the mortgage agreement by not putting a portion of Rhedrick's payments into escrow to pay off her taxes. Rhedrick sought redress for the harms she allegedly suffered in having her home auctioned off, for the emotional and reputational harms arising from the auction, any resulting financial harm, and sought to "quiet title" on both the property and Rhedrick's liability on the mortgage. On the basis of these allegations, Rhedrick brought claims for breach of contract, violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), common law fraud, duress and undue influence, improper execution, and for punitive damages (the last of which was later withdrawn). The third party complaint did not contain an independent quiet title claim.

There is some dispute between the parties as to when Rhedrick's third party complaint was served on Option One. The state court docket discloses that Rhedrick's third party complaint was filed on March 17, 2009, with "proof of service by U.S. mail" entered on the same date. In support of Rhedrick's Motion to Remand filed with this Court, Mr. Jauregui attaches a receipt from the U.S. Postal Service indicating that the third party complaint was mailed on March 17, and he includes a printout from the U.S. Postal Service's website indicating that the third party complaint arrived at Option One's address on March 19, 2009 at 10:09am. (Doc. 30 Ex. A).*fn8

Option One, on the other hand, contends in its Response to the Motion to Remand that it did not receive the third party complaint on March 19, 2009, but instead received it on April 9, 2009. Option One relies in particular on the state court docket, which records the filing of an "Affidavit of Defendants Return of Service" on April 21, 2009, and also relies on the date stamp on its copy of the third party complaint, received by its legal department, which states that the third party complaint was received on April 9. (Doc. 32 Ex. A). Option One also challenges Rhedrick's method of service, which will be discussed below.

Option One filed a Notice of Removal on April 23, 2009 with this Court and with the state court, asserting that subject matter jurisdiction is proper due to diversity and that the amount in ...


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