Keller v. Bank of N.Y. Mellon

212 A.3d 52

David KELLER, Appellant

v.The BANK OF NEW YORK MELLON, Trustee Cert Holder CWALT, Inc., A1 Trust 2004-27CB

PA Property Portfolio, Inc., and David Keller, Appellant

v.Bank of America, N.A., Successor to BAC Home Loan Servicing, L.P.

PA Property Portfolio, Inc. - David Keller, Appellant

v.Wells Fargo Bank, N.A., a/k/a Wells Fargo

Northeast Investors Group, Inc., - David Keller

v.Wells Fargo Bank, N.A., a/k/a/ Wells Fargo

Appeal of: Northeast Investors Group, Inc.

No. 2628 EDA 2018

No. 2895 EDA 2018

No. 2902 EDA 2018

No. 2926 EDA 2018

Superior Court of Pennsylvania.

Argued April 30, 2019

Filed May 24, 2019

David Keller, appellant, pro se.

Lauren R. Tabas, Philadelphia, for Bank of New York Mellon, appellee.

Anthony Roberti, Jim Thorpe, for PA Property Portfolio and Northeast Investors Group, appellants. (submitted)

Michael J. Clark, Philadelphia, for Bank of America, appellee.

Henry F. Reichner, Philadelphia, for Wells Fargo Bank, appellee.

BEFORE: LAZARUS, J., OTT, J., and DUBOW, J.

OPINION BY LAZARUS, J.:

Appellants, David Keller, PA Property Portfolio, Inc.,¹ and Northeast Investors Group, Inc.² (collectively "Plaintiffs"), appeal from four related orders,³ entered in the Court of Common Pleas of Monroe County, granting opposing parties' preliminary objections with prejudice and dismissing Plaintiffs' complaints. After careful review, we affirm.

The facts underpinning all four actions are substantially similar and the questions of law are identical. Brief of Appellant,⁴ at 3 ("this appeal is one of four appeals involving the exact same questions of law[ ] and general background history[.] The four ... appeals in question are 2902 EDA 2018, 2895 EDA 2018, 2926 EDA 2018, [and] 2628 EDA 2018."). Plaintiffs brought the instant suits to recover state and local transfer taxes⁵ levied by the Monroe County Sheriff ("Sheriff") after successfully bidding on foreclosed properties at Sheriff's sales.⁶ Plaintiffs, however, sought to recover these sums not from the Sheriff, but from the respective mortgage holders in each sale—namely, the instant Appellees—Bank of New York Mellon, Bank of America, and Wells Fargo Bank (collectively "the Banks").

In their pleadings, Plaintiffs argued that by being erroneously instructed by the Sheriff to pay the transfer tax, Plaintiffs overpaid for each property, creating a resultant windfall for the Banks⁷ in violation of Northwest Savings Bank v. Knapp , 149 A.3d 95 (Pa. Super. 2016). In each amended complaint, Plaintiffs asserted claims for declaratory judgment, unjust enrichment,⁸ equitable restitution, conversion, and special relief to pursue a class action claim. Amended Complaint, 2628 EDA 2018, 5/9/18, at 5–6; Amended Complaint, 2895 EDA 2018, 5/9/18, at 4–5; Amended Complaint, 2902 EDA 2018, 6/1/18, at 8–9; Amended Complaint, 2926 EDA 2018, 6/1/18, at 6–7. However, Plaintiffs never claimed to have filed exceptions to the Sheriff's proposed schedule of distributions under Pa.R.C.P. 3136, instead arguing they had no legal duty to comply with Rule 3136 under, inter alia ,⁹ Community Federal Savings & Loan Assn. v. Luckenbach , 436 Pa. 472, 261 A.2d 327 (1970). See Amended Complaint, 2628 EDA 2018, 5/9/18, at 7–9; Amended Complaint, 2895 EDA 2018, 5/9/18, at 9–10; Amended Complaint, 2902 EDA 2018, 6/1/18, at 16–17; Amended Complaint, 2926 EDA 2018, 6/1/18, at 12–14.

The Banks filed preliminary objections under Pa.R.C.P. 1028, each asserting the pleadings failed to state a valid cause of action as Plaintiffs failed to follow the statutory remedy under Rule 3136 for filing exceptions to a proposed schedule of distribution from the Sherrif's sale. The Honorable Arthur L. Zulick and the Honorable David J. Williamson sustained the Banks' preliminary objections in each case, finding Plaintiffs' failure to allege filing timely exceptions to the Sherrif's sales' distribution schedules pursuant to Rule 3136 resulted in waiver. Moreover, the courts found themselves unable to grant equitable relief, as Plaintiffs failed to avail themselves of an adequate remedy at law.¹⁰ Plaintiffs filed notices of appeal and subsequently complied with Pa.R.A.P. 1925(b).

Across all four briefs, Plaintiffs present the following identical issues, reproduced verbatim as follows:

1) Under Community Federal Savings v. Luckenback [Luckenbach] , 261 A.2d 327 (Pa. 1970), [do Plaintiffs] have legal standing to file exceptions under Pa.R.C.P. 3136 ?

2) Under Pa.R.C.P. 3136(c), does only a party holding a ‘recorded’ judgment/lien/mortgage under the lien priority statutes ( 42 Pa.C.S. Sections 8141 – 8142 ) have standing to file exceptions?

3) Even if Pa.R.C.P. 3136 applied under P[ennsylvania] "common law" and Shafer Electric v. Mantie [Mantia], 96 A.3d 989 (Pa. 2014) does the failure to exercise a remedy at law[ ] preclude or bar a later civil action for "unjust enrichment?"

4) In view of the recent 3^rd Edition (2011) of [the] reinstatement [sic] of law on unjust enrichment and restitution, and section 4(2) in particular of 3^rd Edition (2011) of Restatement of Law on "Unjust Enrichment and Restitution" render "moot" the defense of failure to exercise available "remedy at law?"

5) [Plaintiff] was not a named party in the mortgage foreclosure case, and [was] not served with court process, therefore, under Martin v[.] Wilkes, 490 U.S. 755 [109 S.Ct. 2180, 104 L.Ed.2d 835] [1989] is the appellant subject to Pa.R.C.P. 3136 ?

Brief of Appellant, at 1–3 (punctuation and capitalization adjusted) (emphasis and use of quotation marks in original).

Plaintiffs' appeals are from orders sustaining preliminary objections in the nature of a demurrer.¹¹ We, therefore, review Plaintiffs' claims as follows:

Preliminary objections in the nature of [a] demurrer test the legal sufficiency of the plaintiff's complaint. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Thus, our scope of review is plenary and our standard of review mirrors that of the trial court. Accepting all material averments as true, we must determine "whether the complaint adequately states a claim for relief under any theory of law."

Schwarzwaelder v. Fox , 895 A.2d 614, 618 (Pa. Super. 2006) (citations omitted).

Plaintiffs assert a variety of theories in support of the proposition that the courts below erred in ruling that failure to follow Rule 3136 precluded the return of taxes improperly levied by the Sheriff.¹² We, however, must first explore the rules governing proceedings related to sheriff's sales provided by the Pennsylvania Rules of Civil Procedure before addressing plaintiffs' argument.

The Rules allow "any party in interest" to petition the court overseeing a sheriff's sale to enter "any ... order which may be just and proper under the circumstances." Pa.R.C.P. 3132. "The [R]ules also state that the time for petitioning the court should occur within a reasonable time proximity to the date of the sale and the filing of the schedule of distribution." Federal Nat. Mort. Ass'n v. Citiano , 834 A.2d 645, 648 (Pa. Super. 2003). Rule 3136 lays out the time period for contesting amounts owed at a sheriff's sale, stating in relevant part:

The sheriff shall distribute the proceeds of sale in accordance with the proposed schedule of distribution, unless written exceptions are filed with the sheriff not later than ten (10) days after the filing of the proposed schedule.

Pa.R.C.P. 3136(d) (emphasis added).¹³ If no party files exceptions or a petition to set aside the sale, the sheriff is obligated to execute a deed to the property. See Pa.R.C.P. 3135(a) ("[T]he sheriff, at the expiration of twenty days but no later than 40 days after either the filing of the schedule of distribution or the execution sale if no schedule of distribution need be filed, shall execute and acknowledge before the prothonotary a deed to the property sold.") (emphasis added).

The rules make clear that a party dissatisfied with the schedule of distribution has ten days to file exceptions. Concord-Liberty Sav. And Loan Ass'n v. NTC Properties, Inc. , 454 Pa. 472, 312 A.2d 4, 5 (1973). After the delivery of the sheriff's deed to the purchaser, the only possible attacks are those based on fraud or lack of authority to make the sale. Id. at 6 ("[A]fter the delivery of a sheriff's deed to a purchaser[,] the only attacks possible on the sheriff's sale are those based on fraud which vitiates the transaction, or a lack of authority to make the sale.") (citation omitted); see also Sklaroff v. Weiner , 204 Pa.Super. 273, 203 A.2d 366, 368 (1964) ("Where, as here, no fraud is alleged or shown but the only issue is the amount to which the holder of a valid lien is entitled out of the proceeds, the remedy under Pa.R.C.P. 3136 is adequate[.]"). If, after a sheriff's sale, an appellant "neglect[s] to pursue the procedural remedies available to him, appellant has waived such challenges." Citiano , supra at 648.

Knapp , supra , offers a case-in-point example of how, under the Rules, purchasers of property at a sheriff's sale are obligated to seek redress for the improper assessment of transfer taxes. In Knapp , just as in the instant case, county sheriffs sold real property to a third-party purchaser. Knapp , supra at 96. Following the sale, the sheriff added state and local transfer taxes to the winning bid, increasing the amount owed by the purchaser. Id. at 96–97. The purchaser in Knapp , however, properly filed timely exceptions to the sheriff's proposed schedule of distributions. Id. at 97. Consequently, this Court was obligated to reverse the lower court's order dismissing the third-party purchaser's exceptions to the sheriff's schedule of proposed distributions where the sheriff required the purchaser to pay transfer taxes associated with the sale. Id.

The instant facts differ in one critical respect—Plaintiffs failed to file timely exceptions (or any exceptions whatsoever) to the Sheriff's proposed distributions as required by Rule 3136....