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Pentlong Corporation v. GLS Capital, Inc.

Commonwealth Court of Pennsylvania

July 15, 2013

Pentlong Corporation, a Pennsylvania Corporation, and Weitzel, Inc., a Pennsylvania Corporation, individually and on behalf of themselves all others similarly situated, Appellants
GLS Capital, Inc.
County of Allegheny

Argued: April 16, 2013




In this appeal, we address questions involving the authority of private companies who purchase government liens to collect from delinquent taxpayers certain fees in addition to the lien amount owed. In so doing, we must address the effect and reach of two Pennsylvania Supreme Court decisions.

In Pentlong v. GLS Capital, Inc., 573 Pa. 34, 820 A.2d 1240 (2003) (Pentlong II), the Pennsylvania Supreme Court, on allowance of appeal from our decision in the case, held, inter alia, that because Allegheny County (County) lacked the statutory authority to collect attorneys' fees from delinquent taxpayers, its assignee of those tax liens likewise lacked the authority to do so. In response to Pentlong II, the General Assembly amended the Municipal Claims and Tax Liens Act ("MCTLA")[1] in 2003 to authorize municipalities to collect reasonable attorneys' fees from delinquent taxpayers. The General Assembly made the law retroactive to January 1, 1996. In Konidaris v. Portnoff Law Associates, 598 Pa. 55, 953 A.2d 1231 (2008) (Konidaris II), the Pennsylvania Supreme Court held that the 2003 amendment to the MCTLA was constitutional.

On remand from the Supreme Court in Pentlong II, the Court of Common Pleas of Allegheny County ("trial court"), on summary judgment, held that notwithstanding Pentlong II, in light of the retroactive amendment to the MCTLA and Konidaris, the plaintiffs in this class action litigation ("Class") cannot prevail on their claim that GLS Capital, Inc. ("GLS"), as assignee of the County's tax liens, is not authorized to collect from the Class their reasonable attorneys' fees. In addition, the trial court held that GLS could collect assignment and revival fees from the Class. The Class has appealed both decisions. For the reasons set forth below, we will affirm the trial court's decision, but only in part, and will remand for further proceedings.


A. Pentlong I

This matter was last before us prior to class certification in Pentlong v. GLS Capital, Inc., 780 A.2d 734 (Pa. Cmwlth. 2001) (Pentlong I), aff'd in part and rev'd in part, 573 Pa. 34, 820 A.2d 1240 (2003). At that time, we heard an appeal by the named plaintiffs, Pentlong Corporation ("Pentlong") and Weitzel, Inc. ("Weitzel"), of the trial court's order dismissing their lawsuit against the County and GLS. In our opinion in Pentlong I, we summarized the nature of GLS's business, as it related to the collection of County tax liens. We explained that the County and GLS entered into

a Purchase and Servicing Agreement . . . on September 29, 1997, in which the County assigned all of its rights, title and interest to over 125, 000 property tax liens it had filed through the 1995 tax year to GLS in consideration of approximately $35 million. The County later assigned the 1996 matching liens for the same properties for an additional amount in excess of $2.5 million. In collecting on the delinquent taxes, GLS required that the taxpayer pay, by certified or cashier's check, the full face amount of the tax, penalties and interest, attorneys' fees, lien filing fees, lien satisfaction fees, lien assignment fees and lien revival fees. The accrued interest as determined by GLS included interest for the entire month in which payment in full was made regardless of the day within the month that the taxes were paid in full.

Pentlong I, 780 A.2d at 736 (footnotes omitted). On March 18, 1998, Pentlong paid, under protest, the full lien amount, plus other costs and added interest that GLS assessed through the end of March 1998. Weitzel similarly paid its tax lien payoff under protest.

On April 3, 1998, Pentlong and Weitzel commenced this action for themselves and on behalf of all County property owners who had been assessed or billed by GLS for delinquent taxes. In their initial complaint, Pentlong and Weitzel asserted a claim against GLS for unjust enrichment. They also alleged that GLS was guilty of fraudulent conduct, and they sought declaratory and injunctive relief, the imposition of a constructive trust, an accounting, and damages. Following the filing of preliminary objections by GLS, Pentlong and Weitzel ultimately filed a second amended complaint.

When the pleadings were closed, but before the trial court certified a class, the parties filed cross-motions for judgment on the pleadings. The trial court ultimately issued a decision, which included factual findings and conclusions of law. Without specifying the disposition of a particular motion(s), the trial court simply dismissed the second amended complaint with prejudice, concluding, in part, that the matter could not proceed as a class action, because the members of the putative class failed to exhaust statutory remedies.

Pentlong and Weitzel appealed from that order to this Court. We reversed the trial court, holding that: (1) Pentlong and Weitzel could maintain their equity action because the statutory remedy to challenge a municipality's calculation of individual tax liability (i.e., scire facias procedures)[2] was not adequate to address the issues raised in the equity action; (2) GLS could only charge an interest rate of ten percent, rather than twelve percent; (3) GLS could not collect attorneys' fees from the delinquent taxpayers; (4) GLS could only collect record costs that the County actually incurred; and (5) GLS was not liable to delinquent taxpayers for expenses incurred by paying liens with certified funds. We thus affirmed the trial court in part, reversed in part, and remanded for further proceedings.

GLS appealed our order to the Pennsylvania Supreme Court. The Supreme Court affirmed in part. Of particular interest to the present appeal is the Supreme Court's affirmance of our decision that, because the County lacked the authority to collect attorneys' fees from the delinquent taxpayers, GLS, as the assignee of the County's rights, similarly lacked that authority. Pentlong II, 573 Pa. at 54-57, 820 A.2d at 1252-54. The Supreme Court also held that, with respect to lien-docketing costs, "GLS can collect not only any costs that the County could have added to the lien prior to assignment, but also . . . any costs that may accrue post-assignment." Id. at 59, 820 A.2d at 1255. The Supreme Court, however, declined to review claims about the appropriateness of certain costs that GLS desired to collect from the delinquent taxpayers. Instead, the Supreme Court, like this Court, remanded the matter to the trial court to consider those issues, along with the threshold question of whether the case should proceed as a class action. Id.

B. Trial Court Proceedings on Remand

The Supreme Court remanded the record to the trial court on May 22, 2003. (Reproduced Record (R.R.) 10a.) On October 17, 2003, the trial court scheduled a status conference for later that month. (Certified Record (C.R.) No. 129.) On the day of the status conference, ...

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