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Debra Porter v. Td Bank

August 27, 2012

DEBRA PORTER, PLAINTIFF,
v.
TD BANK, N.A., ET AL., DEFENDANTS.



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

MEMORANDUM

Plaintiff, Debra Porter, sues defendant, TD Bank, N.A. ("TD Bank"),*fn1 seeking a judicial declaration that she holds a mortgage that has priority over TD Bank's mortgage on certain real property. A failed business venture to develop the property has spawned extensive litigation in Pennsylvania state court in addition to this federal action. TD Bank and Pardes Group, Inc. ("Pardes"), which intervened as a defendant in this matter, argue that plaintiff is collaterally estopped from claiming priority over TD Bank's mortgage by virtue of the state-court litigation. Defendants seek summary judgment under Federal Rule of Civil Procedure 56 on this basis. For the reasons set forth below, I will grant defendants' motion.

I. Factual Background and Procedural History*fn2

A. Factual Background*fn3

Plaintiff and her husband, James Porter, owned property at 1039-55 Frankford Avenue, Philadelphia, Pennsylvania (the "Property"). (Am. Compl. ¶ 6.) James Porter and Nunzio Terra, who is not a party to this federal action, formed Porterra, LLC ("Porterra"), in order to develop the Property and another neighboring parcel of land (the "Development Project") owned by Nunzio Terra and his wife, Laura Terra. (Id. at ¶¶ 6-7; Pardes Group, Inc.'s Mot. for Summ. J. ("Summ. J. Mot.") Ex. B at 2; Pardes Group, Inc.'s Br. in Supp. of Mot. for Summ. J. ("Pardes Br.") at 2.) Nunzio Terra and James Porter, the only members of Porterra, executed a Joint Venture Agreement (the "JVA") on July 20, 2005, in which each agreed to contribute their respective parcels of land to Porterra. (Am. Compl. ¶ 8; Summ. J. Mot. Ex. B at 2; id. Ex. P at 15-24.) Nunzio Terra, however, never transferred his land to Porterra. (Summ. J. Mot. Ex. B at 2.)

According to plaintiff, James Porter signed a deed transferring the Property to Porterra on May 20, 2005. (Id. at 2 n.2; Am. Compl. ¶ 9; id. Ex. A.) However, plaintiff claims that she refused to sign the deed until she was granted a mortgage on the Property. (Am. Compl. ¶ 10; Summ. J. Mot. Ex. B at 2 n.2.) She maintains that Porterra acquiesced to her demands, so she executed the deed and received a mortgage on the Property securing a note for $2,800,000 from Porterra ("plaintiff's mortgage") on July 20, 2005, the same day the JVA was executed. (Am. Compl.¶¶ 10-13; Summ. J. Mot. Ex. B at 3.) Plaintiff claims that she entrusted the original copy of her mortgage to United Land Transfer, LLC ("ULT"), a title company that handled the closing, for recording and that she retained a copy for herself. (Am. Compl. ¶ 15; Summ. J. Mot. Ex. B at 3.) Unbeknownst to plaintiff, ULT was owned and operated by Nunzio Terra at the time and the title company never recorded her mortgage.*fn4 (Am. Compl.¶ 14; Summ. J. Mot. Ex. B at 3.)

TD Bank agreed to provide financing for the Development Project, but upon discovering plaintiff's mortgage it requested that plaintiff sign a subordination agreement allowing TD Bank to assume a senior lien position. (Am. Compl. ¶¶ 16-17; id. Ex. D; Summ. J. Mot. Ex. B at 3; Pardes Br. at 2.) Plaintiff never signed the subordination agreement but Nunzio Terra, acting for Porterra, obtained a construction loan for $5,860,000 from TD Bank on August 24, 2005. (Am. Compl. ¶¶ 18-19; Summ. J. Mot. Ex. B at 3; Pardes Br. at 2.) The loan is secured by an "Open- End Mortgage and Security Agreement"*fn5 ("TD Bank's mortgage") on the Property that was recorded on August 25, 2005.*fn6 (Am. Compl.¶ 14; id. Ex. E; Summ. J. Mot. Ex. B at 3; Pardes Br. at 2.)

The Development Project ultimately failed, leading to several state-court actions and this federal action. (Am. Compl. ¶ 23.)

B. Procedural History

i. The Porterra Action

On July 17, 2006, plaintiff and her husband brought a legal action (the "Porterra Action") against Porterra, Nunzio Terra, Laura Terra, ULT, and others in the Philadelphia Court of Common Pleas. (Id. ¶ 23; Summ. J. Mot. Ex. B at 3-4; id. Ex. I at 5-6.) In the Porterra Action, plaintiff and her husband sought, inter alia, to have plaintiff's mortgage recorded, or alternatively, money damages for the deprivation of plaintiff's security interest in the Property. (Am. Compl. ¶ 24; Summ. J. Mot. Ex. H at 42, 48-49.)

Plaintiff and her husband did not initially name TD Bank as a defendant in the Porterra Action. (Am. Compl. ¶ 25.) TD Bank, however, intervened in the action for limited purposes on January 8, 2008. (Id. ¶ 26; Summ. J. Mot. Ex. I at 22.) On November 16, 2009, plaintiff and her husband moved to join TD Bank as a defendant in the Porterra Action, but their motion was denied as untimely by order of the state court dated December 10, 2009, because it was made more than three years after the commencement of the suit and after discovery had concluded. (Summ. J. Mot. Ex. I at 44-45.)

On December 23, 2009, the Court of Common Pleas ordered that default judgments be entered against Porterra, ULT, and two other defendants in the Porterra Action. (Id. at 47.) After a damages hearing on January 11, 2010, the Court of Common Pleas awarded damages of $3,696,001 in favor of plaintiff and her husband. (Id. at 50; Am. Compl ΒΆ 44.) Plaintiff and her husband did not appeal this damages award or the failure of ...


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