J-A19028-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LIBERTY PHILADELPHIA REO, LP IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
EFL PARTNERS, V, L.P., EFL PARTNERS
X, L.P. AND
EFL PARTNERS IX, L.P., EFL PARTNERS I,
L.P.,
LISE A. MILLER AND JOHN J. KONTRA
No. 3396 EDA 2015
Appeal from the Order Entered October 8, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 100100314
BEFORE: FORD ELLIOTT, P.J.E., OTT, J., and FITZGERALD, J.*
MEMORANDUM BY OTT, J.: FILED SEPTEMBER 08, 2016
Liberty Philadelphia REO, LP (Liberty) appeals from the order entered
in the Court of Common Pleas of Philadelphia County on October 8, 2015,
denying its petition to fix fair market value of the Spruce Street Properties,
owned by debtors EFL Partners V, LP, and EFL Partners X, LP (collectively
EFL).1 In this timely appeal, Liberty argues the trial court erred in denying
the petition: (1) based upon a purported lack of jurisdiction due to the
matter being on appeal; (2) when EFL failed to take the necessary steps to
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*
Former Justice specially assigned to the Superior Court.
1
We will explain the identities of all the defendant/appellees infra.
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stay execution on a money judgment during the pendency of the appeal;
and (3) without tolling the statutory six-month period for the filing of such
petition. After a thorough review of the submissions by the parties, relevant
law, and the certified record, we agree with Liberty that the trial court erred
in determining it lacked the jurisdiction to entertain the petition due to the
pendency of an appeal of other aspects of the matter. Accordingly, we
reverse and remand for action consistent with this decision.
EFL has filed their own appeal, consolidated with this appeal by order
of our Court dated December 10, 2015. That appeal is predicated on the
assumption that the trial court correctly dismissed Liberty’s petition to fix
fair market value and claims the statutory six-month period for filing a
petition to fix fair market value has expired, thereby preventing Liberty from
refiling the petition. As will be discussed below, that argument is unavailing.
This matter arises from a confessed judgment taken against EFL on
January 5, 2010, in the amount of $11,214,861.05, plus per diem interest
and attorneys’ fees and costs. Liberty is the successor in interest to
Republic First Bank (Republic) which had loaned money to EFL for the
development of the Waterbridge Properties.2 The procedural history of this
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2
EFL Partners V and EFL Partners X (EFL) borrowed approximately $7.5
million from Republic. This amount was later increased to approximately
$7.8 million and then to approximately $9.5 million. EFL were the named
parties on the promissory note, which was subject to a suretyship and
guarantee agreement from EFL Partners IX, LP; EFL Partners I, LP; John J.
(Footnote Continued Next Page)
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matter defines tortured,3 and includes multiple and overlapping appeals of a
variety of issues.
As best as we can discern, on February 26, 2010, EFL filed a petition
to open/strike the confessed judgment. The petition was denied and EFL
appealed (the first appeal), claiming the trial court had failed to, sua sponte,
examine the reasonableness of the award of attorneys’ fees.4 While this
appeal was pending, Republic executed on the judgment and caused the sale
of the Waterbridge Properties. While the appeal was still pending, on April
4, 2011, Republic filed a motion to fix fair market value, a hearing for which
was scheduled on May 12, 2011. That hearing was later rescheduled to June
23, 2011. However, on June 8, 2011, a panel of this Court issued its
decision in the first appeal, vacating the judgment and remanding for a
hearing on the reasonableness of the attorneys’ fees. See Republic v. EFL
Partners, 31 A.3d 738 (Pa. Super. 2011) (unpublished memorandum).
On June 24, 2011, in response to the Superior Court decision, but
before the certified record had been returned to the trial court, 5 Republic
_______________________
(Footnote Continued)
Kontra, Jr.; and Lise A. Miller. We believe this explains the identities of the
defendant/appellees.
3
In this, we agree with the trial court’s assessment of the history of this
matter. See Trial Court Opinion, 12/10/2015 at 1.
4
The attorneys’ fees were approximately $1.5 million.
5
The order vacating judgment pursuant to the Superior Court’s decision was
not docketed until July 27, 2011.
(Footnote Continued Next Page)
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filed a motion to modify the confessed judgment by eliminating the award of
attorneys’ fees. On June 23, 2011, the hearing on the motion to fix fair
market value was continued to September 13, 2011. In the interim, despite
Republic having filed a motion seeking to forego attorneys’ fees, pursuant to
the Superior Court order, the trial court scheduled a hearing for August 2,
2011 to consider the reasonableness of the attorneys’ fees. Nevertheless,
on July 12, 2011, the trial court entered an order amending the confessed
judgment by eliminating the award of attorneys’ fees. However, the order
left the per diem interest rate as stated in the original judgment. On July
27, 2011, as previously noted, the Superior Court’s order vacating judgment
and remanding for a hearing was docketed. On August 9, 2011, EFL filed its
second appeal, this time claiming the trial court did not have the authority to
act upon Republic’s motion to modify in light of the Superior Court’s order
vacating judgment. A panel of this Court found EFL’s claim waived on
appeal.6
In February, 2013, a hearing was held to fix fair market value, after
which the trial court determined the fair market value of the Waterbridge
Properties be $8.4 million, leaving a deficiency judgment of approximately
_______________________
(Footnote Continued)
6
Essentially, EFL argued the entire judgment was stricken, thereby
returning the matter to the procedural standing prior to the entry of the
confessed judgment. The Superior Court found this argument to have been
waived. See Liberty v. EFL Partners V, LP and EFL Partners X, LP., 55
A.3d 141 (Pa. Super. 2012) (unpublished memorandum).
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$4 million. EFL appealed (the third appeal) challenging the fair market value
determination and the per diem rate. The Superior Court upheld the
determination of fair market value but reversed the per diem determination.
See Liberty v. EFL, 100 A.3d 292 (Pa. Super. 2014) (unpublished
memorandum). EFL then appealed that part of the order upholding the fair
market value to the Pennsylvania Supreme Court. While that appeal was
pending, the trial court, pursuant to the Superior Court order, recalculated
the per diem interest from $2,444.31 to $498.69, and reduced the deficiency
judgment to approximately $2.6 million. See Order, 6/18/2014. EFL
subsequently appealed (the fourth appeal) that recalculation, arguing the
trial court had no jurisdiction to act while the Supreme Court appeal was
pending. In June, 2015, the Supreme Court denied allowance of appeal
regarding the third appeal, thereby allowing the previously determined fair
market value of the Waterbridge Properties to stand. See Liberty v. EFL,
117 A.3d 298 (Pa. 2015) (table).
Because a deficiency judgment remained, and EFL had not posted a
supersedeas bond, Liberty sought execution against the Spruce Street
Properties, the property that is the subject of the instant appeal. The
property was sold at sheriff’s sale while the fourth appeal7 was pending.
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7
The appeal to the Superior Court challenging the jurisdiction of the trial
court to recalculate the per diem and deficiency judgment while the
Supreme Court appeal was pending.
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Thereafter, on October 6, 2015, Liberty filed its petition to fix fair market
value. This petition was denied by the trial court on the grounds the fourth
appeal was still pending. See Order, 10/8/2015. Although reconsideration
was denied, the trial court amended its original order specifically allowing
Liberty to refile its petition to fix fair market value “when the appellate court
returns/relinquishes jurisdiction back to the trial court.” See Order
10/27/2015. Our review of the certified record and of appellate records
leads us to believe the fourth appeal was resolved by our Court on
September 15, 2015. See Liberty Philadelphia REA [sic], LP v. EFL
partners V, LP & EFL Partners X, LP, 2015 WL 6550771 (Pa. Super.
2015) (unpublished memorandum). EFL sought reargument, which was
denied in November, 2015. The certified record appears to have been
returned to the trial court by mid-April, 2016.8
The central question before us is whether the trial court retained
subject matter jurisdiction over the matter while it was still pending on
appeal. “Because the question of subject matter jurisdiction is purely one of
law, our standard of review is de novo, and our scope of review is plenary.”
In re B.T., 82 A.3d 431, 434 (Pa. Super. 2013) (citation omitted).
Here, when Liberty sought to fix the fair market value of the Spruce
Street Properties, the trial court denied the motion pursuant to Pa.R.A.P.
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8
The Superior Court docket shows the acknowledgement of record remittal
to the court of common pleas on April 13, 2016.
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1701(a) that, generally, divests the trial court of jurisdiction over a matter
once an appeal has been taken. Specifically, the rule states:
(a) General rule. Except as otherwise prescribed by these
rules, after an appeal is taken or review of a quasijudicial order
is sought, the trial court or other government unit may no longer
proceed further in the matter.
Pa.R.A.P. 1701(a).
Relevant to this matter, are the exceptions provided at Pa.R.A.P.
1701(b)(1) and (c), which state:
(b) Authority of a trial court or agency after appeal. After
an appeal is taken or review of a quasijudicial order is sought,
the trial court or other government unit may:
(1) Take such action as may be necessary to preserve the
status quo, correct formal errors in papers relating to the
matter, cause the record to be transcribed, approved, filed
and transmitted, grant leave to appeal in forma pauperis,
grant supersedeas, and take other action permitted or
required by these rules or otherwise ancillary to the
appeal or petition for review proceeding.
***
(c) Limited to matters in dispute. Where only a particular
item, claim or assessment adjudged in the matter is involved in
an appeal, or in a petition for review proceeding relating to a
quasijudicial order, the appeal or petition for review proceeding
shall operate to prevent the trial court or other government unit
from proceeding further with only such item, claim or
assessment, unless otherwise ordered by the trial court or other
government unit or by the appellate court or a judge thereof as
necessary to preserve the rights of the appellant.
Pa.R.A.P. 1701(b)(1), (c) (emphasis added).
After a thorough review of this matter, we are convinced Liberty’s
petition to fix fair market value of the Spruce Street Properties was ancillary
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to the then pending fourth appeal. Additionally, we believe the limited issue
involved in the fourth appeal did not operate to divest jurisdiction from the
trial court regarding the wholly separate issue involved in Liberty’s petition.
Accordingly, we hold that 1701(b)(1) and (c) applies.
The Rules of Appellate Procedure do not define what constitutes an
ancillary proceeding. However, “ancillary” is generally defined as:
Subordinate; aiding. A legal proceeding that is not the primary
dispute but which aids the judgment rendered in or the outcome
of the main action. A descriptive term that denotes a legal claim,
the existence of which is dependent upon or reasonably linked to
a main claim.
West’s Encyclopedia of American Law, ed. 2, 2008, The Gale Group, Inc.
Here, Liberty sought to fix the fair market value of the Spruce Street
Properties while the issues on appeal addressed questions directly related to
the valuation the Waterbridge Properties; the issue before the Superior
Court was whether the trial court could amend the amount of the deficiency
judgment and per diem rate while the Supreme Court appeal was pending.9
The valuation of the Spruce Street Properties was not the primary dispute
that was on appeal, although it was reasonably linked to the main issue, the
satisfaction of the confessed judgment. Accordingly, we believe the trial
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9
We reiterate that the Supreme Court declined to accept EFL’s appeal
regarding the fair market value of the Waterbridge properties in June of
2015. Accordingly, only EFL’s appeal regarding the trial court’s jurisdiction
to determine per diem interest was pending at the time Liberty filed the
petition to fix fair market value of the Spruce Street Properties was filed.
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court erred when it determined it had no jurisdiction to decide the petition to
fix the fair market value.
Nonetheless, even if we are incorrect regarding the ancillary nature of
Liberty’s petition to fix fair market value, the subject matters of the pending
appeal and the petition were sufficiently distinct to allow for the application
of 1701(c).
EFL had challenged the determination of fair market value of the
Waterbridge Properties and the trial court’s subsequent recalculation of the
per diem interest rate. Both of these issue arose from the Superior Court’s
resolution of ESL’s third appeal. Rule 1701(c) allows a trial court to retain
jurisdiction and proceed on matters when only a “particular item, claim or
assessment” is at issue in the pending appeal. The underlying subject
matter of EFL’s then pending fourth appeal was the amount of the deficiency
judgment and the per diem interest rate calculation performed by the trial
court. The limited nature of that appeal operated to give effect to Rule
1701(c), allowing the trial court to proceed on matters not involved in the
appeal.
We believe our resolution of this matter is supported by our Court’s
prior determination of EFL’s fourth appeal, wherein EFL argued the trial court
did not have jurisdiction to recalculate the deficiency judgment and per diem
rate while the prior appeal was pending before the Supreme Court.
However, a panel of our Court held, based on Pa.R.A.P. 1701(b)(1) and (c),
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that the trial court did have said jurisdiction. In relevant part, our Court
stated:
Liberty argues that the interest calculation was not at issue in
the petition for allowance of appeal; therefore, the calculation
falls under the exception set forth in Rule 1701(b)(1) and (c).
Liberty's Brief at 16. We agree.
In its last appeal to this Court, EFL set forth two issues. First, it
challenged the fair market value calculation. Second, it
challenged the trial court's calculation of interest. This Court held
that the fair market value calculation was correct, but the
interest calculation was incorrect. In other words, EFL won on
the issue of the interest calculation; therefore, its petition for
allowance of appeal to our Supreme Court concerned only the
fair market value issue. Accordingly, the issue as to interest was
no longer in dispute, and the trial court properly acted in
recalculating the judgment.
Liberty v. EFL, 2015 WL 6550771, at *3.
In light of the above, we find the trial court erred in not applying Rule
1701(c), which would have allowed the trial court to act upon Liberty’s
petition to fix fair market value.
Because of our resolution of this matter based upon Liberty’s first
issue, we need not address Liberty’s second and third issues.10
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10
We also note that EFL has not challenged the propriety of the Sheriff’s sale
at which the Spruce Street Properties were sold. That sale took place in
April 2015, during the pendency of the Supreme Court appeal. Indeed,
there is no question that the sale of the Spruce Street Properties was proper
despite the pending appeal. It is logical that the trial court would retain the
jurisdiction to undertake any subsequent action directly related to Sheriff’s
sale.
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In the consolidated appeal, EFL argues “Liberty’s right to re-file a
petition to fix fair market value of the Spruce Street Properties is time
barred.” See EFL Brief at 6. This argument is based on the presumption
that the trial court properly denied Liberty’s petition in the first instance. In
its argument, EFL admits that Liberty’s petition instantly at issue was timely.
Id. at 7. Because we have determined the trial court erred in denying that
petition, and we are remanding for further proceedings pursuant to that
petition, it is clear that EFL’s argument is without merit. Additionally, we
believe the trial court’s order of October 27, 2015, that granted Liberty
permission to refile the petition after this appeal was resolved, would have
acted to toll to the six month time limit. Accordingly, EFL is not entitled to
relief on its claim.
Therefore, we reverse the Order of October 8, 2015, denying Liberty’s
petition to fix fair market value based upon a lack of jurisdiction. The trial
court is directed to hold a hearing on the merits of that petition as soon as
practical upon the remand of the certified record.
Order reversed. This matter is remanded for action consistent with
this decision. Jurisdiction relinquished.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/8/2016
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