Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Sheriff's Excess Proceeds Litig.

Commonwealth Court of Pennsylvania

July 31, 2014

In Re: Sheriff's Excess Proceeds Litigation. Appeal of: Joseph O'Hara and Finn Land Corp

Argued May 13, 2014

Page 707

[Copyrighted Material Omitted]

Page 708

[Copyrighted Material Omitted]

Page 709

[Copyrighted Material Omitted]

Page 710

[Copyrighted Material Omitted]

Page 711

[Copyrighted Material Omitted]

Page 712

Appealed from No. March Term, 2011, No. 01141 and May Term, 2011, No. 00387. Common Pleas Court of the County of Philadelphia. Glazer, J.

Christy Adams, Philadelphia, for Appellants.

Jane L. Istvan, Philadelphia, for Appellee City of Philadelphia Stephanie L. Kosta, Philadelphia, for Appellee Robert McCord and Treasury Department of the Commonwealth of PA.

BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE ANNE E. COVEY, Judge. OPINION BY JUDGE COVEY. Judge Leadbetter did not participate in the decision in this case.

OPINION

Page 713

ANNE E. COVEY, Judge

Joseph O'Hara (O'Hara) and Finn Land Corporation (Finn Land) (collectively, Plaintiffs) appeal from the Philadelphia County Common Pleas Court's (trial court) March 12, 2013 order denying their motion for class certification in litigation against the Philadelphia County Sheriff's Office (Sheriff's Office). Before we address this Court's jurisdiction,[1] we set forth the facts that led to the instant litigation.

On October 25, 2010, the City of Philadelphia's (City) Controller released a routine report auditing the Sheriff's Office's finances for fiscal years 2007-2009. See Reproduced Record (R.R.) at 71a-85a. In the executive summary, the Controller recommended a forensic audit because

[t]he Controller's Office has concerns about the potential for errors or irregularities with respect to nearly $53 million in custodial funds being held by the Sheriff's Office. Repeated requests . . . for accounting records involving some of these funds[] went unanswered through the end of our fieldwork. Coupled with poor control procedures that provide ample opportunity to misappropriate and conceal a theft of funds, in our opinion, the Sheriff's Office is highly at risk for fraud.

R.R. at 72a. Specifically concerning undisbursed excess proceeds from Sheriff foreclosure, tax lien and delinquent tax sales, the Controller found that the Sheriff's Office failed to remit these funds to the City's Finance Department within 15 months and, as of July 2009, the Sheriff's unclaimed funds list " showed well over $8 million that the Sheriff's Office allowed to accumulate in its account -- some of it as far back as 2004 -- which should have been transferred to the [C]ity." [2] R.R. at 80a.

Page 714

Robert McCord, in his official capacity as Treasurer of the Commonwealth of Pennsylvania, and the Treasury Department of the Commonwealth of Pennsylvania (collectively, State Treasurer) audited the Sheriff's Office in December 2010. The audit revealed that, between May 23 and August 10, 2011, the Sheriff's Office remitted a total of $11,417,898.00 to the State Treasurer's Bureau of Unclaimed Property (Bureau).[3] Pursuant to the Controller's October 2010 recommendation, in October 2011, Deloitte Financial Advisory Services, LLP (Deloitte) conducted a forensic investigation of the City's finances. The investigation revealed that between 2006 and 2010, the Real Estate Division of the Sheriff's Office conducted over 61,500 property sales (consisting of mortgage foreclosure, tax lien and delinquent tax sales) and failed to distribute millions of dollars in excess proceeds from the real property sales to the property owners.[4] See R.R. at 48a-69a. Deloitte reported, inter alia :

The average monthly balance in the Sheriff's Office['s] three unclaimed fund bank accounts from 2006 through 2010 totaled $5,172,805[.00]. A primary source of these unclaimed funds was undistributed excess sales proceeds. These monies belonged to the evicted homeowner who was unaware of the existence of the monies, and the Sheriff was unable to locate the homeowner after eviction.

R.R. at 56a.[5]

Plaintiffs owned City properties sold at Sheriff's sale.[6] Plaintiffs filed a complaint

Page 715

with the trial court, wherein they claimed that excess proceeds remained with the Sheriff's Office after the tax liens were paid and, despite numerous requests, the Sheriff's Office did not remit the excess monies. In the spring of 2011, Michelle Pingitore (Pingitore) (Docket No. 1103-1141) and Marie Virelli (Virelli) (Docket No. 1105-0387) filed class action complaints with the trial court against the City, the Sheriff's Office and two former Sheriffs - John Green (who resigned effective December 31, 2010) and Barbara Deeley (former Chief Deputy under Green, and acting Sheriff when the complaints were filed). In June 2011, O'Hara and Virelli filed an amended class action complaint against the same above-named defendants for restitution/unjust enrichment, conversion and fraudulent concealment. The trial court consolidated the cases in August 2011, with Docket No. 1105-0387 as the lead case.

In July 2011, the State Treasurer filed with the trial court a petition for leave to intervene. The State Treasurer asserted that it had an interest in the action under The Fiscal Code (referred to herein as the Disposition of Abandoned and Unclaimed Property Act (DAUPA)),[7] which sets forth when and how funds held by the Sheriff's Office escheat to the State Treasurer who is then responsible for disbursing them.[8] Plaintiffs[9] opposed the petition to intervene. The State Treasurer also filed preliminary objections to Plaintiffs' amended complaint, seeking to have it dismissed on grounds that DAUPA is the exclusive statutory remedy to recover excess sale proceeds unclaimed after 5 years. The trial court granted the State Treasurer's petition to intervene on August 3, 2011,

Page 716

thereby making the State Treasurer a defendant in the action.[10] The trial court overruled the State Treasurer's preliminary objections on November 14, 2011. Thereafter, discovery was undertaken.

In March 2012, the City/Sheriff's Office and the State Treasurer entered into a Settlement Agreement reflecting that the Sheriff's Office had a $15,002,076.00 balance in its civil database. See R.R. at 349a-351a. According to Appendix A of the Settlement Agreement, after reconciling adjustments (including remittances already made to the City's Department of Revenue) and accounting for properties not sold, the Sheriff's Office owed the State Treasurer $11,986,319.00. See R.R. at 351a. The Sheriff's Office reserved the right to claim refunds from the State Treasurer if the Sheriff's Office made payments on pending claims after the funds were transmitted. See R.R. at 315a.

On July 20, 2012, Plaintiffs filed a Second Amended Consolidated Class Action Complaint including mandamus, due process, unjust enrichment, equitable conversion and fraudulent concealment claims. Plaintiffs listed the following questions of fact in common with the putative class members:

a. Whether the [City's] Sheriff's Office had a process in place for the return of Excess Proceeds generated by mortgage and tax foreclosure sales conducted by the Sheriff's Office . . . to the property owner?
b. Whether the [City's] Sheriff's Office failed to follow any process that it had in place for the return of Excess Proceeds generated by mortgage and tax foreclosure sales conducted by the Sheriff's Office . . . to the property owner?
c. Whether the [City's] Sheriff's Office failed to return Excess Proceeds arising from mortgage and tax foreclosure sales conducted by the Sheriff's Office . . . to former owners of the subject properties[?]; and
d. [T]he nature and extent of class-wide injury and the measure of damages for the injury.

Plaintiffs' Second Amended Consolidated Class Action Complaint at ¶ 54. Plaintiffs enumerated the following common questions of law:

a. Whether Defendants fraudulently concealed from Plaintiffs their entitlement to receive Excess Proceeds;
b. Whether Defendants were unjustly enriched by their retention of the Excess Proceeds;
c. Whether Defendants converted to their own use the monies that should have been returned to Plaintiffs as Excess Proceeds;
d. Whether Plaintiffs will suffer an injustice if recovery is denied?

Plaintiffs' Second Amended Consolidated Class Action Complaint at ¶ 54. For each claim, Plaintiffs seek " judgment in the amount of excess proceeds that should have been remitted to Plaintiffs and each such class member, together with interest, damages, costs, attorney's fees, and such other relief as is permitted by law and is deemed appropriate by the Court." Plaintiffs' Second Amended Consolidated Class Action Complaint at 18-24.

On October 1, 2012, Plaintiffs filed a motion requesting the trial court to certify a class comprised of the following two subclasses:

Page 717

a. Each real property owner(s) within the County of Philadelphia during the time period January 1, 2006 to December 31, 2011 whose real property was sold at a Philadelphia Sheriff's sale and who is entitled to, but did not receive, payment from the Philadelphia Sheriff's Office, of the excess Sheriff's sale proceeds after satisfaction of the judgment lien(s) creditor's obligation, other applicable encumbrances, and the Sheriff's costs and fees, and whose money has not been transferred from the Sheriff unclaimed funds escrow accounts to the State Treasurer's escrow account; [] [Excess Funds Class -- seeks excess funds].
b. Each real property owner(s) within the County of Philadelphia during the time period January 1, 1999 to December 31, 2005 whose real property was sold at a Philadelphia Sheriff's sale and who was entitled to, but did not receive payment form [sic] the Philadelphia Sheriff's Office, of the excess Sheriff's sale proceeds after satisfaction of the judgment lien(s) creditor's obligation, other applicable encumbrances, and the Sheriff's costs and fees, and who was damaged by the wrongful acts committed by the Sheriff, and does not include claims for the actual moneys which were or have been transferred from the Sheriff unclaimed funds escrow accounts to the State Treasurer's escrow account pursuant to DAUPA. [Escheated Funds Class -- seeks interest on funds escheated to the State Treasurer].

Certified Record (C.R.) Item 56, Motion for Class Certification ¶ 10. A class certification hearing was held on February 13, 2013. By March 12, 2013 order, the trial court denied the motion because Plaintiffs failed to satisfy the numerosity, typicality, representation adequacy, and fair and efficient methodology requirements for class certification. The trial court also held that the trial court was not the proper forum since each party could seek funds from the Sheriff's Office in accordance with the Pennsylvania Rules of Civil Procedure or from the State Treasurer under DAUPA. Plaintiffs appealed to this Court.[11]

I. APPEALABILITY

This Court's order directing the parties to address whether the trial court's order is appealable implicates this Court's jurisdiction.

Ordinarily, a final order is any order that disposes of all claims and of all parties or is expressly defined as a final order by statute. Pa.R.A.P. 341(b)(1), (2). Appeals are permitted only from final orders so as to prevent piecemeal determinations and the consequent protraction of litigation. The general rule that a final order is required before an appeal may be taken ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.