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[U] Bank of New York Mellon v. Thayer

Superior Court of Pennsylvania

February 21, 2014

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as Indenture Trustee for the Registered Holders of ABFS Mortgage Loan Trust 2002-3, Mortgage-Backed Pass-Through Certificates, Series 2002-3
v.
JOSEPH A. THAYER (Mortgagor), and RENEE M. DiFRANCO-THAYER, Appellees APPEAL OF: UDREN LAW OFFICES, P.C.

NON-PRECEDENTIAL DECISION

Appeal from the Order entered on November 28, 2012 in the Court of Common Pleas of Erie County, Civil Division, No. 12339-10

BEFORE: PANELLA, OLSON and MUSMANNO, JJ.

MEMORANDUM

MUSMANNO, J.

Udren Law Offices, P.C. ("Udren Law"), [1] appeals from the Order that imposed sanctions of $1, 000.00 against Udren Law. Additionally, Renee M. DiFranco-Thayer ("DiFranco-Thayer") has filed a Motion to Dismiss the Appeal. Because we conclude that the trial court committed an error of law in imposing sanctions against Udren Law, we vacate the sanctions Order. Additionally, we deny DiFranco-Thayer's Motion to Dismiss.

The trial court set forth the relevant history underlying this appeal as follows:

The instant matter involves a mortgage foreclosure action, filed against Joseph A. Thayer and [] DiFranco-Thayer on May 28, 2010. The subject property was sold at Sheriff's Sale on August 17, 2012. On September 17, 2012, Plaintiff filed a Motion to Set Aside Sheriff's Sale.[FN] After a request for a scheduling order from … Di[F]ranco-Thayer [], [the trial c]ourt scheduled a Hearing on Plaintiff's Motion for November 21, 2012[, ] at 1:30 p.m. [(hereinafter "the Hearing")]. [] Di[F]ranco-Thayer filed a Brief in Opposition to Plaintiff's [Motion] on November 20, 2012.
[FN] [] Plaintiff offered no reasons why it requested to set aside the Sheriff's Sale. [John] Fessler[, Esquire ("Attorney Fessler")], who appeared on behalf of Plaintiff at the November 21, 2012 Hearing, also acknowledged that no reasons were provided in Plaintiff's Motion to Set Aside Sheriff's Sale.
According to defense counsel [for DiFranco-Thayer], [Susan] Fuhrer Reiter[, Esquire ("Attorney Reiter")], Plaintiff [informed Attorney Reiter that it] was unaware of the Hearing until 11:19 a.m. on November 21, 2012[, purportedly] because a paralegal did not give [] notice of the [H]earing to the scheduler. Plaintiff sent [its] local counsel, Attorney Fessler, to the Hearing with a Praecipe to Withdraw Motion to Set Aside Sheriff's Sale.[2] Attorney Fessler stated that he was contacted by Plaintiff around 11:00 that day, just a few hours before the Hearing.
At the Hearing, Attorney Fessler indicated that Plaintiff was withdrawing its Motion to Set Aside the Sheriff's Sale. [In response, ] Attorney [] Reiter stated that she felt Plaintiff's mismanagement was sanctionable conduct[, ] as her time and her client's money was wasted when Plaintiff notified her that it intended to withdraw its [M]otion just hours before the Hearing. [The trial c]ourt denied Plaintiff's Motion to Set Aside Sheriff's Sale in light of Plaintiff's withdrawal and directed Plaintiff to pay [Attorney Reiter] $1, 000.00 as a sanction for its conduct.[3][Notably, Attorney Fessler did not object to the trial court's imposition of sanctions against Plaintiff at the Hearing.]

Trial Court Opinion, 3/6/13, at 1-2 (citations to record and some footnotes in original omitted; footnotes added).

One week after the Hearing, on November 28, 2012, the trial court, sua sponte, entered an Amended Order (hereinafter "the Amended Sanction Order") specifically directing Udren Law to pay DiFranco-Thayer $1, 000 as a sanction for its improper conduct pertaining to the Motion to Set Aside Sheriff's Sale. In response to the Amended Sanction Order, on December 11, 2012, Udren Law filed a Motion for Reconsideration. In this Motion, Udren Law asserted that the imposition of sanctions against it was inappropriate because the trial court deprived it of due process by failing to provide it proper notice and an opportunity to respond prior to the imposition of sanctions. On December 28, 2012, Udren Law timely filed a Notice of Appeal from the Amended Sanction Order.[4] In response, the trial court filed a Pa.R.A.P. 1925(a) Opinion, recommending that this Court quash the appeal. The trial court opined that, since there was no objection made at the Hearing regarding the trial court's imposition of sanctions, any challenge to this ruling is waived on appeal. See Trial Court Opinion, 3/6/13, at 2. Subsequently, DiFranco-Thayer filed a Motion to Dismiss the Appeal with this Court, to which Udren Law filed a response.

Before addressing Udren Law's issues on appeal, we must first address DiFranco-Thayer's Motion to Dismiss. According to DiFranco-Thayer, "because [Udren Law] did not raise objections to the imposition of sanctions at the [H]earing, [it thereby] waived the issue below by failing to make a timely and specific objection at the appropriate stage of the proceedings." Motion to Dismiss, 7/3/13, at 3 (citing, inter alia, Fillmore v. Hill, 665 A.2d 514, 515-16 (Pa. Super. 1995) (stating that, "in order to preserve an issue for appellate review, a party must make a timely and specific objection at the appropriate stage of the proceedings before the trial court. Failure to timely object to a basic and fundamental error … will result in waiver of that issue." (internal citations omitted)); see also Pa.R.A.P. 302(a).

Udren Law disagrees, countering that

[t]he Motion to Dismiss [] ignores the fact that Udren Law [] was neither present nor represented at the November 21, 2012 [H]earing, and therefore[, ] had no voice in which to object to the [Amended S]anction[] Order, which was entered after-the-fact. … [T]he trial court committed an error of law by entering [the Amended Sanction Order and] imposing monetary sanctions upon Udren [Law, which] was not represented at the … [H]earing and did not receive any notice or an opportunity to defend same.

Brief in Opposition to Motion to Dismiss, 7/19/13, at 8-9 (citations omitted).

After review, we agree with the rationale advanced by Udren Law, as it is supported by the record. Although Udren Law sent its local counsel, Attorney Fessler, to appear at the Hearing as counsel for Plaintiff, Attorney Fessler was not an employee of Udren Law. Additionally, Udren Law was not separately represented at the Hearing and was not a party in that litigation. Accordingly, it was impossible for Udren Law to object to the trial court's imposition of sanctions at the time of the Hearing.

Moreover, we observe that the trial court's Original Sanction Order, which the court issued on the date of the Hearing, was not specifically directed at Udren Law. Rather, the Original Sanction Order stated only that "[DiFranco-]Thayer[] is entitled to a reimbursement of expenses incurred in the amount of $1, 000.00 …." Order, 11/21/12. Accordingly, Udren Law had no basis to object to this Order, as it did not name Udren Law or impose sanctions against it. The trial court did not specifically impose sanctions against Udren Law until the entry of the Amended Sanction Order, to which Udren Law timely objected via a Motion for Reconsideration. Therefore, Udren Law did not waive its challenge to the imposition of sanctions against it, and the trial court erred in finding to the contrary. See Trial Court Opinion, 3/6/13, at 2.

Next, we proceed to address Udren Law's issues presented on appeal, which are as follows:

1. Whether the trial court committed an error of law by sua sponte imposing sanctions of $1, 000.00 upon Udren Law [] after the challenged [M]otion had been voluntarily withdrawn and without first having issued a Rule to Show Cause pursuant to Pa.R.C[].P. 1023.3?
2. Whether the trial court committed an error of law by imposing sanctions of $1, 000.00 upon Udren Law [] upon verbal request of … DiFranco-Thayer, who did not first comply with the Notice/Demand and Motion requirements of Pa.R.C[].P. 1023.2, and who made the request for same after the challenged [M]otion had been voluntarily withdrawn?
3. Whether the trial court committed an error of law in denying due process to Udren Law [] by imposing monetary sanctions of $1[, ]000.00 and making a determination that the Motion was filed without proper purpose, [and] without first providing Notice and Opportunity to defend against same?

Brief for Appellant at 4 (emphasis and citations to record omitted).[5] We will address Udren Law's related issues simultaneously.

Because a trial court has significant discretion over whether to impose a sanction and its severity, this Court will not disturb a sanction order absent an abuse of that discretion or an error of law. Rohm and Haas Co. v. Lin, 992 A.2d 132, 142 (Pa. Super. 2010); see also Pa.R.C.P. 1023.1, Explanatory Comment III (stating that "[t]he [trial] court has significant discretion in determining what sanctions, if any, should be imposed for a violation, subject to the principle that the sanctions should not be more severe than reasonably necessary to deter repetition of the conduct by the offending person or comparable conduct by similarly situated persons.").

Udren Law argues that the trial court erred as a matter of law in sua sponte imposing sanctions against it because the court deprived it of due process, and violated the Pennsylvania Rules of Civil Procedure, by failing to give Udren Law proper notice and an opportunity to respond. Brief for Appellant at 15-17, 19-20. We agree.

The Rules of Civil Procedure provide that,

[i]f, after notice and a reasonable opportunity to respond, the court determines that subdivision (c)[6] has been violated, the court may, subject to the conditions stated in Rules 1023.2 through 1023.4, impose an appropriate sanction upon any attorneys, law firms and parties that have violated subdivision (c) or are responsible for the violation.

Pa.R.C.P. 1023.1(d) (emphasis and footnote added). Rule 1023.3 provides that, "[o]n its own initiative, the court may enter an order describing the specific conduct that appears to violate Rule 1023.1(c) and directing an attorney, law firm or party to show cause why it has not violated Rule 1023.1(c) with respect thereto." Pa.R.C.P. 1023.3. Additionally, Rule 1023.4 provides, in relevant part, that "[m]onetary sanctions may not be awarded on the court's initiative unless the court issues its order to show cause before a voluntary dismissal or settlement of the claims made by or against the party which is, or whose attorneys are, to be sanctioned." Pa.R.C.P. 1023.4(b)(2) (emphasis added).

Here, in violation of the above-mentioned Rules, the trial court never issued a rule upon Udren Law (or Plaintiff) prior to imposing sanctions against Udren Law in the Amended Sanctions Order. Because of the trial court's omission, Udren Law was deprived of an opportunity to defend against the request for sanctions made by counsel for DiFranco-Thayer at the Hearing. Accordingly, because the trial court deprived Udren Law of statutorily-mandated due process, the Amended Sanction Order cannot stand and must be vacated.[7]

Accordingly, we vacate the Amended Sanction Order imposing sanctions against Udren Law, and we deny DiFranco-Thayer's Motion to Dismiss the appeal.

Order granting sanctions vacated. Motion to Dismiss denied. Jurisdiction relinquished.

Judgment Entered.


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