Opinion
412 EDA 2021
04-05-2022
THE BANK OF NEW YORK MELLON, F/K/A THE BANK OF NEW YORK, AS TRUSTEE FOR CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2005-3 Appellants v. MAURICE R. CABRERA, ALITHEA CABRERA, AND THE UNITED STATES OF AMERICA
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered December 17, 2020 In the Court of Common Pleas of Monroe County Civil Division at No(s): No. 2018-08466
BEFORE: BOWES, J., NICHOLS, J., and McLAUGHLIN, J.
MEMORANDUM
NICHOLS, J.
Appellant, the Bank of New York Mellon, f/k/a the Bank of New York, as Trustee for CWABS, Inc., Asset-Backed Certificates, Series 2005-3 (the Bank), appeals from the trial court's order denying the Bank's petition for supplemental relief in aid of execution filed pursuant to Pa.R.C.P. 3118(a)(6). The Bank claims that the trial court erred in concluding that it lacked subject matter jurisdiction over the Bank's attempt to recoup funds paid to the Pennsylvania Department of Revenue (the Department) following foreclosure and sheriff's sale on a residential property in the above-captioned matter. We affirm.
Although the Department is not a named party in the underlying mortgage foreclosure action, it became involved in the above-captioned action as a lienholder on the subject property due to unpaid state income tax. See the Bank's Affidavit Pursuant to Pa.R.C.P. 3129.1 (Sale of Real Property. Notice. Affidavit), 2/15/19; see also the Bank's Petition for Supplementary Relief in Aid of Execution, 5/26/20. We note that while all persons or entities that must be served with the complaint in a mortgage foreclosure action must also be served with notice of the sheriff's sale, the converse is not always true:
The Pennsylvania rules of procedure require that notice of an impending foreclosure sale be served upon all lienholders so that they may protect their interests at the foreclosure sale (by bidding, for example). Pa.R.Civ.P. 3129.1. Conversely, though, such lienholders need not, under state law, be served with the foreclosure complaint, or be made a party to the complaint. Pa.R.Civ.P. 1144.U.S. Bank National Association for Pennsylvania Housing Finance Agency v. Watters, 163 A.3d 1019, 1026 (Pa. Super. 2017) (some citations omitted).
As discussed below, although we affirm the trial court's order denying the Banks's petition, we do so on a different basis. See Rambo v. Greene, 906 A.2d 1232, 1235 n.4 (Pa. Super. 2006) (providing that this Court may affirm the trial court by reasoning other than that employed by trial court).
The trial court summarized the relevant facts and procedural history of this matter as follows:
This matter is before the [c]ourt following a Motion for Reconsideration filed by the [Department]. The underlying issue involved [the Bank] seeking to recover costs it paid to the Monroe County Sheriff's office on the sale of real property in execution of a judgment held by the [Bank] in a mortgage foreclosure.
Those disputed costs were ultimately sent to the Department by the Sheriff's office. In the instant case, [the Bank] foreclosed on real property that was owned by . . . Maurice R. Cabrera and
Alithea Cabrera [(the Cabreras)]. The [Cabreras] defaulted on a Mortgage and Note on April 1, 2017, and had not made any payments since that time. The Mortgage was recorded on or about March 4, 2005, in favor of Countrywide Home Loans, Inc. The mortgage was later assigned to [the Bank] by Assignment of Mortgage dated June 1, 2018.
The Department became involved in this case because the Cabreras failed to pay state income taxes. As such, the Department issued three personal tax liens (hereinafter "PIT liens") against the real property subject to [the Bank's] mortgage interest. These liens were recorded on April 7, 2017, September 22, 2017, and on July 23, 2019. Since the mortgage was recorded on March 4, 2005, many years before the three PIT liens were recorded, the mortgage held priority over these PIT liens.
An in rem judgment was entered against the [Cabreras] and in favor of the [Bank] on February 15, 2019, due to non-payment under the terms of the Mortgage and Note. The [Bank] also filed a Praecipe for Writ of Execution on February 15, 2019, in order to enforce the judgment. The property was then set for sale by the Monroe County Sheriff's office on September 26, 2019.
At the sale held September 26, 2019, [the Bank] was the only bidder for "costs" of sale. The Sheriff's office advised [the Bank's] counsel that the amount that would need to be paid for the property to be sold to [the Bank] at that time was $41, 309.30, which represented the balance of the sale costs due. [Pursuant to Pa.R.C.P. 3136, t]here was no proposed schedule of distribution issued by the Sheriff's office due to the fact that [the Bank], as mortgage holder, was the only bidder. The Sheriff's deed from the sale was then recorded on October 25, 2019. Unbeknownst to [the Bank], an amount of $22, 723.55 was included in the $41, 309.30 costs of the sale and was sent by the Sheriff's office to the Department on October 24, 2019, for the PIT liens it had filed. Upon receipt of the check, the Department immediately deposited the money into the Commonwealth of Pennsylvania's General Fund and applied the money to pay the [Cabreras'] PIT liens. The Sheriff's office later filed a Sheriff's return on November 13, 2019, which included the amount paid to the Department. [The Bank] avers it was unaware that the sale costs included payment to the Department. The Monroe County Sheriff's office acknowledged at time of argument that it had made a mistake in collecting funds and sending them to the Department. All parties agreed that the Department's lien was second in priority to [the
Bank's] mortgage and that funds should not have been collected from the sale and sent to the Department out of the costs paid by [the Bank].
On May 26, 2020, [the Bank] filed a Petition for Supplementary Relief in Aid of Execution [pursuant to Pa.R.C.P. 3118(a)(6), requesting that the trial court order the Department to refund $22, 723.55 directly to the Bank's counsel, ] and [the Bank] also filed a brief in support of [its] petition. [The trial court] issued a Rule Returnable on May 28, 2020. The Department then filed an Answer [with New Matter] to [the Bank's] Petition for Supplemental Relief in Aid of Execution, a brief in support of [its] answer, and a Motion for Hearing or Argument. This [c]ourt issued a Scheduling Order on July 9, 2020. On August 5, 2020, the Department filed a Supplemental Brief supporting their answer. [The Bank] filed [its] reply to the Department's New Matter and [its] Supplemental Brief on August 13, 2020. A hearing was held on August 18, 2020.
On September 18, 2020, this [c]ourt issued an Order and Opinion granting [the Bank's] Petition for Supplementary Relief in Aid of Execution. On October 5, 2020, the Department filed a Motion for Reconsideration. This [c]ourt then issued an order on October 6, 2020, which granted the Department's Motion for Reconsideration of the September 18, 2020 order and vacated that Order. On November 5, 2020, [the Bank] filed a response to the Department's Motion for Reconsideration. [The Bank] also filed a brief in support of [its] position.Trial Ct. Op., 12/17/20, at 1-3 (some formatting altered).
After reconsideration, the trial court agreed with the Department's argument that, under the facts and circumstances of this case, the trial court did not have subject matter jurisdiction to grant the Bank's petition for supplemental relief in aid of execution. Order, 12/17/20. The Bank filed a timely appeal, and both the trial court and the Bank complied with Pa.R.A.P. 1925.
The Bank raises the following issues:
1. Did the [t]rial [c]ourt err as a matter of law in determining it did not have subject matter jurisdiction?
2. Did the [t]rial [c]ourt err as a matter of law in determining it did not have equity jurisdiction?
3. Did the [t]rial [c]ourt err as a matter of law in find[ing] the [Department] was not unjustly enriched by [the Bank]?The Bank's Brief at 3.
In its first issue, the Bank claims that the trial court had subject matter jurisdiction to grant the petition for supplementary relief in aid of execution pursuant to Pa.R.C.P. 3118(a)(6). The Bank's Brief at 7-8. In support, the Bank asserts that the payment made to the Department, which was allocated to the PIT liens, was necessary to complete the sale and execution on the subject property. Id. at 9. Therefore, the Bank argues that there was no obstacle to the trial court's subject matter jurisdiction. Id.
The Department contends that the application of Rule 3118 (a)(6) is limited to "execution on a debtor's property." The Department's Brief at 9 (citation omitted). The Department states that although the rule "authorizes summary proceedings in aid of execution for the purpose of maintaining the status quo of the judgment debtor's property[, ] . . . [it] may be used only for that purpose." Id. (quoting Greater Valley Terminal Corp. v. Goodman, 202 A.2d 89, 94 (Pa. 1964)). The Department asserts that Rule 3118(a)(6) does not apply in this matter because the Bank's petition for supplemental relief in aid of execution did not involve property belonging to the judgment debtors (the Cabreras), and there was no property subject to execution. Indeed, the Bank had already foreclosed on the Cabreras' property and purchased it at sheriff's sale. The Department emphasizes that the Bank was not seeking to maintain the status quo of the judgment debtors' property as required by Rule 3118(a)(6), and the subject real property is not at issue. Rather, the Bank is solely seeking a refund of its own money that it paid voluntarily. The Department's Brief at 9-10. Therefore, because Rule 3118(a)(6) does not apply, the Department claims that the trial court is without subject matter jurisdiction.
"Subject matter jurisdiction is defined as the power of the court to hear cases of the class to which the case before the court belongs, that is, to enter into inquiry, whether or not the court may ultimately grant the relief requested." Harley v. HealthSpark Foundation, 265 A.3d 674, 687 (Pa. Super. 2021) (citation and internal quotation marks omitted). Questions "involving the subject matter jurisdiction of the courts of common pleas are questions of law, and, as such, our standard of review is de novo and our scope of review is plenary." Id. (citation omitted).
Pennsylvania "Courts of Common Pleas have unlimited original jurisdiction over all proceedings in this Commonwealth, unless otherwise provided by law." Beneficial Consumer Discount Co. v. Vukman, 77 A.3d 547, 552 (Pa. 2013) (citing Pa. Const. Art. 5, § 5; 42 Pa.C.S. § 931(a)). However, our Supreme Court has explained:
The right to sue the Commonwealth for the recovery of money or taxes alleged to have been erroneously paid to it exists only by the grace of the Legislature. Article I, Section 11 of the
Constitution of Pennsylvania, P.S., provides: . . . Suits may be brought against the Commonwealth in such manner, in such courts and in such cases as the Legislature may by law direct.Land Holding Corp. v. Board of Finance and Revenue, 130 A.2d 700, 703 (Pa. 1957). It is undisputed that the Department is a Commonwealth agency. Pursuant to the doctrine of sovereign immunity, the Commonwealth and its agencies are "immune from suit except as the General Assembly shall specifically waive the immunity." U.S. Venture, Inc. v. Commonwealth, 255 A.3d 321, 329 (Pa. 2021) (citing 1 Pa.C.S. § 2310)).
Generally, actions against the Commonwealth and its agencies must be brought pursuant to the original jurisdiction of the Commonwealth Court, and in some instances, as specified by statute, before the Board of Claims. See 42 Pa.C.S. § 761; 62 Pa.C.S. §§ 1702(b), 1721-26.
On appeal, the focus of the parties' arguments and the trial court's ruling on this issue centers on Pa.R.C.P. 3118. Rule 3118 provides, in relevant part, as follows:
Supplementary Relief in Aid of Execution
(a) On petition of the plaintiff, after notice and hearing, the court in which a judgment has been entered may, before or after the issuance of a writ of execution, enter an order against any party or person
(1) enjoining the negotiation, transfer, assignment or other disposition of any security, document of title, pawn ticket, instrument, mortgage, or document representing any property interest of the defendant subject to execution;
(2) enjoining the transfer, removal, conveyance, assignment or other disposition of property of the defendant subject to execution;
(3) directing the defendant or any other party or person to take such action as the court may direct to preserve collateral security for property of the defendant levied upon or attached, or any security interest levied upon or attached;
(4) directing the disclosure to the sheriff of the whereabouts of property of the defendant;
(5) directing that property of the defendant which has been removed from the county or concealed for the purpose of avoiding execution shall be delivered to the sheriff or made available for execution; and
(6) granting such other relief as may be deemed necessary and appropriate.Pa.R.C.P. 3118(a)(1)-(6).
In its opinion, the trial court addressed the application of Rule 3118 and the trial court's subject matter jurisdiction as follows:
Pennsylvania Rule of Civil Procedure 3118 authorizes summary proceedings in aid of execution for the purpose of maintaining the status quo as to the judgment debtor's property. Pa.R.C.P. 3118. The rule contains six ways that a Petition for Supplementary Relief in Aid of Execution may be used. Pa.R.C.P. 3118. The last section, Rule 3118(a)(6), is a "catch all" provision that entitles the court to grant "such other relief as may be deemed necessary and appropriate." Pa.R.C.P. 3118(a)(6); Chadwin v. Krouse, 386 A.2d 33, 36 (Pa. Super. 1978). [The Bank] seeks relief under Pa.R.C.P. 3118(a)(6), requesting an order of court directing the Department to return the monies paid to it in this matter.
In this [c]ourt's opinion and order dated September 18, 2020, we found that we had subject matter jurisdiction to hear this matter under Rule 3118(a)(6). We reasoned that [the Bank] had been harmed while attempting to execute on a judgment debtor's property and that the matter required "such other relief' as would be necessary and appropriate. It seemed unfair for the Department to benefit from a mistake of others. The Department argued in their Motion for Reconsideration that [it] believe[d] this [c]ourt lacks jurisdiction, as the judgment debtor's property, being the mortgaged premises, was not at risk; rather after a sale,
a distribution was incorrectly made. Pennsylvania Rule of Civil Procedure 3118(a)(6) allows a judgment holder, upon petition, to request a court to enter an order granting "relief as may be deemed necessary and appropriate" in aid of execution. Pa.R.C.P. 3118(a)(6). Rule 3118 authorizes summary proceedings in aid of execution for the purpose of maintaining the status quo. Pa.R.C.P. 3118. Rule 3118 may only be used to uphold the status quo of the judgment debtor's property and not for any other purpose. Kaplan v. Kaplan. Inc., 619 A.2d 322, 325 (Pa. Super. 1993). To establish entitlement [to] relief under Pa.R.C.P. 3118, a movant must establish (1) the existence of an underlying judgment; and, (2) that property of the debtor was subject to execution. Id. at 326.
In reconsidering [Rule 3118] and the Kaplan case, supra, while looking to the pleadings of the [Bank], it does not appear that the [Bank] has established that [it is] entitled to the relief requested. The money mistakenly sent to the Department was not property of the debtor (the [Cabreras] in this case) subject to execution. Instead, it consisted of [the Bank's] own money, used to pay the costs of sale of the debtor's property as the successful bidder. The mortgaged real property was the property of the debtor, not the proceeds payable by [the Bank] to the Sheriff's office. Furthermore, when taking a second look at the case law in this matter provided by the Department, we find that Rule 3118 only allows a [c]ourt to uphold the status quo. As pointed out by the Department, once [the Department] has received money from a sheriff's sale, that money goes into the General Fund and is not able to be reimbursed. The Department argues that the relief requested by [the Bank], essentially on order requiring the Department reimburse [the Bank] for proceeds of sale it received, is not contemplated by the Rule or case law. The Department believes the relief sought does not concern a need to preserve a judgment debtor's assets for execution because the asset, being the real property, was sold and conveyed to the [Bank]. Instead, the relief [the Bank seeks] concerns money [the Bank] itself paid at time of sale, to purchase the real property subject to a mortgage foreclosure. Upon further review and reflection, we are constrained to agree with the Department.
[The Bank] argues that this [c]ourt has jurisdiction because [the Bank] has utilized Rule 3118 in context of a mortgage foreclosure and execution on real property. As discussed above, the facts and law regarding subject matter jurisdiction in this matter cuts against that argument. The nature of a Rule 3118 proceeding is
strictly limited. Kaplan, at 326. It is too much for the trial court to be required to delve into the validity of a judgment. Id. This applies even where the debtor alleges factual errors. Id. Here, we find that [the Bank's] argument does not fall within the purview of Rule 3118(a)(1)-(a)(5). Therefore, to succeed, as [the Bank] notes, this action must be cognizable under Rule 3118(a)(6). [The Bank] argues [it was] executing on [the] judgment at the time of the Sheriff's sale, and that as a result, the proceeds paid to the Department fall under Rule 3118(a)(6). [The Bank] argues that the relief sought, which is the return of "costs" paid at time of sheriff's sale, [were] incurred as a result of the execution on [the Bank's] judgment. [The Bank] notes that [its] judgment was secured by the mortgage on the debtor's real property. [The Bank] argues that this distinction allows them to pursue a return of the monies paid to the Department under Rule 3118(a)(6) as supplementary relief in aid of execution. [The Bank] also states such relief will return the status quo [from] before the sale.
We are persuaded by the Department's arguments made in the request for reconsideration. There was no ongoing discovery and no grounds to involve supplemental relief as to execution. There was no judgment debtor's property to preserve. The property in question was the [Cabreras'] real property. It was sold at sheriff's sale for "costs" to [the Bank]. The money paid to the Department was not the debtor's property in need of preservation for execution. The debtor's property had been sold at the sheriff's sale to [the Bank] for costs. We originally had found Rule 3118 (a)(6) applied as a "catch all." However, upon review, we believe that even Rule 3118(a)(6) has limits and must relate to actual execution on a debtor's property. Here, as the [Bank] had successfully obtained a judgment in rem, and execution on the real property, and had actually completed execution by sheriff's sale, the relief requested does not fall within the purview of Rule 3118(a)(6). The relief requested simply does not involve the need to maintain the debtor's property, being the real property, for execution. Thus, we find that this [c]ourt does not have subject matter jurisdiction under Rule 3118 to rule on this matter and [the Bank's] Petition must be dismissed.Trial Ct. Op., at 4-7 (some formatting altered).
After review, we are constrained to disagree with the trial court's conclusion that it lacked subject matter jurisdiction pursuant to Rule 3118. The Courts of Common Pleas have unlimited original jurisdiction except where a statute or rule has vested exclusive original jurisdiction in another Pennsylvania court. Commonwealth v. Danysh, 833 A.2d 151, 152 (Pa. Super. 2003) (citing 42 Pa.C.S. §§ 761, and 931). However, a limitation on the original jurisdiction vested in the Courts of Common Pleas are actions against Commonwealth agencies. 42 Pa.C.S. § 761(a). Actions taken against Commonwealth agencies, such as the Department, fall within Commonwealth Court's original jurisdiction. Danysh, 833 A.2d at 152; 42 Pa.C.S. § 761(a).
As noted, it is undisputed that the Department of Revenue is a Commonwealth agency. In Danysh, we concluded that the Court of Common Pleas lacked jurisdiction over a petition seeking relief against the Department of Corrections, a Commonwealth agency. See Danysh, 833 A.2d at 153-54. As the Danysh Court explained, original jurisdiction against state agencies is exclusively in Commonwealth Court. Id.
Accordingly, Rule 3118 did not deprive the trial court of jurisdiction over the Bank's petition, and the trial court could "enter into inquiry" whether the Bank could pursue supplementary relief in aid of execution. See Harley, 265 A.3d at 687. However, the trial court lacked jurisdiction to afford the Bank the remedy it sought because jurisdiction to do so against a state agency, such as the Department, lies in Commonwealth Court., Danysh, 833 A.2d at 153. Therefore, as the trial court did not have jurisdiction to grant the Bank's petition, we affirm.,
To the extent there is any question about whether this appeal belongs in Commonwealth Court as opposed to this Court, see Appellee's Brief at 1-4, our jurisdiction is perfected because no party lodged a timely objection. See Pa.R.A.P. 741(a).
We note that in some instances, a party must begin with an administrative proceeding that is subject to review in Commonwealth Court. See, e.g., Quality Driven Copack, Inc. v. Commonwealth, 2021 WL 6130136, at *1 n.1 (Pa. Cmwlth. filed Dec. 29, 2021) (unpublished mem.); see also 62 Pa.C.S. § 1724 (providing that in certain contractual matters, jurisdiction in vested in the Board of Claims).
Moreover, we note that Rule 3118 may not be used for any purpose other than to uphold the status quo of the judgment debtor's property. See Kaplan, 619 A.2d at 325. In the instant case, the judgment debtors were the Cabreras, not the Bank, and the funds at issue were not subject to execution. Therefore, even if the trial court had jurisdiction to order relief against the Department of Revenue, Rule 3118 would not be applicable.
In light of conclusion regarding the trial court's lack of jurisdiction in this matter, we do not reach the Bank's remaining claims of error.
Order affirmed.
Judgment Entered.