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Thornton v. City of Philadelphia

United States District Court, E.D. Pennsylvania

August 23, 2017

JOANNE THORNTON
v.
CITY OF PHILADELPHIA, et al.

          MEMORANDUM

          Juan R. Sánchez, J.

         Plaintiff Joanne Thornton brings this putative class action against the City of Philadelphia, the Philadelphia Sheriff's Office, and Philadelphia Sheriff Jewell Williams alleging she and other class members were denied procedural due process in connection with the distribution of unused proceeds from sheriff's sales of the class members' real property.

         After being unable to pay her mortgage, Thornton's home was foreclosed upon and sold at a sheriff's sale to a third-party purchaser for $305, 000. The Sheriff's Office collected the proceeds and thereafter proposed a Schedule of Distribution, indicating that, after paying liens and costs associated with the property and sheriff's sale, the unused proceeds due to Thornton amounted to $193, 795.18. Included in the costs associated with the sheriff's sale, and thus deducted from the proceeds, was a title insurance policy in the amount of $1, 317.50. The Sheriff's Office later amended the Schedule of Distribution to include, among other things, a $179, 454 lien on the property, thus reducing the unused proceeds to $11, 968.17. Thornton filed a claim for the unused proceeds, which have been distributed to her. In her Amended Complaint, Thornton asserts she was deprived procedural due process in the distribution of the unused proceeds, and that the Schedule of Distribution should not have been amended and should not have accounted for the title insurance policy.

         Defendants move to dismiss Thornton's Amended Complaint for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), alleging Thornton was afforded sufficient process in connection with the distribution of the sheriff's sale proceeds and has available to her further process, under Pennsylvania law, to challenge the calculation and distribution of unused proceeds. Because the Court agrees, Defendants' motion will be granted, and Thornton's Amended Complaint will be dismissed without prejudice.

         FACTS[1]

         Thornton previously owned real property located at 1609 Christian Street in Philadelphia. Thornton was unable to make her mortgage payments. In May 2011, her mortgagee, EverBank, filed a complaint for mortgage foreclosure in the Court of Common Pleas of Philadelphia County. In September 2014, Thornton's property sold at a sheriff's sale for $305, 000 to a third party purchaser.

         The Philadelphia Sheriff's Office collected the proceeds from the sale and thereafter issued a Proposed Schedule of Distribution of the proceeds listing taxes, fees, costs, liens, and mortgages associated with the property, as well as “unused proceeds” from the sale to be distributed to Thornton. One such deduction includes the cost of a title insurance policy in the amount of $1, 317.50. After accounting for all costs and liabilities from the sale proceeds, the Proposed Schedule of Distribution listed the unused proceeds as $193, 795.18. Sometime thereafter, the Proposed Schedule of Distribution was amended to include, among other things, a Redevelopment Authority of the City of Philadelphia (RDA) mortgage in the amount of $179, 454.

         After the amendment, the unused proceeds amounted to $11, 968.17. Pursuant to Pennsylvania law, Thornton filed a Defendant Asset Recovery Team claim for the unused proceeds in August 2016, about two years after the sheriff's sale. The Sheriff's Office disbursed a check to Thornton for the unused funds.

         Thornton brings this putative class action lawsuit against the City, the Sheriff's Office, and the Sheriff, asserting she was deprived of procedural due process because she did not receive the amount of unused proceeds calculated in the original Schedule of Distribution, that the Sheriff's Office improperly amended the Schedule of Distribution, and that the sale proceeds should not have been used to pay for the title insurance policy. In bringing this class action, she seeks to represent two classes of individuals. As to the first class, Thornton seeks to represent those individuals “whose real property was foreclosed and sold at sheriff sale for an amount in excess of the legal credit price plus costs and who did not recover the excess funds remaining from the proceeds of such sheriff's sale after all proper liability had been satisfied.” Am. Compl. ¶ 40. As to the second class, Thornton seeks to represent those individuals “who were charged a premium by Defendants for a title insurance policy insuring Defendants for their actions related to a sheriff's sale.” Id.

         Thornton also brings claims under Pennsylvania law for breach of contract, negligent mishandling of funds, unjust enrichment, and conversion. Thornton seeks compensatory and punitive damages and a declaratory judgment that Defendants' policies are unconstitutional. Defendants move to dismiss the Amended Complaint for failure to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6).

         DISCUSSION

         To withstand a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the facts pleaded “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. In evaluating a Rule 12(b)(6) motion, a district court first must separate the legal and factual elements of the plaintiff's claims. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The court “must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions.” Id. at 210-11. The court must then “determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.'” Id. at 211 (quoting Iqbal, 556 U.S. at 679).

         “To state a claim under § 1983 for deprivation of procedural due process rights, a plaintiff must allege that (1) he was deprived of an individual interest that is encompassed within the Fourteenth Amendment's protection of ‘life, liberty, or property, ' and (2) the procedures available to him did not provide ‘due process of law.'” Hill v. Borough of Kutztown, 455 F.3d 225, 233-34 (3d Cir. 2006) (quoting Alvin v. Suzuki, 227 F.3d 107, 116 (3d Cir. 2000)).

         In evaluating Thornton's procedural due process claims, the Court must first determine whether her asserted individual interest is constitutionally protected. See Baraka v. McGreevey, 481 F.3d 187, 205 (3d Cir. 2007). Property interests protected by the Due Process Clause of the Fourteenth Amendment “are not created by the Constitution.” Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538 (1985). Rather, “they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.” Id. (quoting Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972)). To have a protected property interest in a benefit, a person must have “more than an abstract need ...


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