J. S69021/15


NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

PARKE BANK                       :      IN THE SUPERIOR COURT OF
                                 :            PENNSYLVANIA
                v.               :
                                 :
NORTH CHARLOTTE ROAD, LP AND     :
GEORGE J. SPAEDER, BRUCE P.      :
EARLE, RHOADS AVENUE NEWTOWN     :
SQUARE, LP, ROSENDON HOLDING     :
COMPANY LIMITED PARTNERSHIP,     :
NORTH CHARLOTTE ROAD             :
POTTSTOWN, GP, LLC,              :
DOWNINGTOWN PIKE WEST CHESTER, :
LP, DOWNINGTOWN PIKE WEST        :
CHESTER GP, LLC, EAST LINCOLN    :
HIGHWAY, THORNDALE, LP, AND EAST :
LINCOLN HIGHWAY THORNDALE GP,    :
LLC,                             :           No. 1363 EDA 2015
                                 :
                    Appellants   :


              Appeal from the Order Entered March 9, 2015,
          in the Court of Common Pleas of Montgomery County
                     Civil Division at No. 2013-02279



PARKE BANK                         :    IN THE SUPERIOR COURT OF
                                   :          PENNSYLVANIA
                v.                 :
                                   :
NORTH CHARLOTTE ROAD               :
POTTSTOWN, LP AND GEORGE J.        :
SPAEDER, BRUCE P. EARLE, RHOADS    :
AVENUE NEWTOWN SQUARE, LP,         :
ROSENDON HOLDING COMPANY           :
LIMITED PARTNERSHIP, NORTH         :
CHARLOTTE ROAD POTTSTOWN, GP,      :
LLC, DOWNINGTOWN PIKE WEST         :
CHESTER, LP, DOWNINGTOWN PIKE      :
WEST CHESTER GP, LLC, EAST         :
LINCOLN HIGHWAY, THORNDALE, LP,    :
J. S69021/15


AND EAST LINCOLN HIGHWAY                 :
THORNDALE GP, LLC,                       :
                                         :
APPEAL OF: NORTH CHARLOTTE               :
ROAD POTTSTOWN, LP AND GEORGE            :
J. SPAEDER, RHOADS AVENUE                :
NEWTOWN SQUARE, LP, NORTH                :
CHARLOTTE ROAD POTTSTOWN, GP,            :
LLC, DOWNINGTOWN PIKE WEST               :
CHESTER, LP, DOWNINGTOWN PIKE            :
WEST CHESTER GP, LLC, EAST               :
LINCOLN HIGHWAY, THORNDALE, LP,          :         No. 1666 EDA 2015
AND EAST LINCOLN HIGHWAY                 :
THORNDALE GP, LLC,                       :
                                         :
                       Appellants        :


                Appeal from the Order Entered March 9, 2015,
            in the Court of Common Pleas of Montgomery County
                       Civil Division at No. 2013-02279


BEFORE: GANTMAN, P.J., FORD ELLIOTT, P.J.E., AND OLSON, J.


MEMORANDUM BY FORD ELLIOTT, P.J.E.:                  FILED APRIL 15, 2016

      This is an appeal from the orders entered March 9, 2015, granting

Parke Bank’s petition to fix fair market value and denying appellants’ petition

to mark the judgment satisfied. We affirm.

      The trial court has aptly summarized the history of this case as

follows:

                  The instant appeal arises from a Petition to Fix
            Fair Market Value of Real Property Sold and for
            Deficiency Judgment (the “Bank’s Petition”) filed by
            Parke Bank (the “Bank”). On February 1, 2013, the
            Bank filed a Praecipe to Transfer Judgment to this
            Court.    The judgment was in the amount of


                                     -2-
J. S69021/15


          $9,762,357.86, and was originally entered by the
          Court of Common Pleas of Delaware County,
          Pennsylvania.     A judgment in that amount was
          thereafter entered against North Charlotte Road
          Pottstown, LP (the “Debtor”) in this Court. The
          judgment against North Charlotte Road Pottstown,
          LP, arises from a loan taken out by North Charlotte
          in the amount of $8,000,000.00 which North
          Charlotte failed to repay as agreed. (N.T. 8/19/14,
          p. 27). The Bank held a mortgage on the property
          located at 1400 North Charlotte Street, Pottstown,
          Pennsylvania (the “Property”)[Footnote 1] and thus
          secured the $8,000,000.00 loan.

               [Footnote 1] Situated on the Property is
               a shopping center constructed in 1971.
               (See N.T. 12/2/14, p. 32).          This
               shopping center has its own parking lot
               in addition to a single building with
               approximately 85,000 square feet of
               space. The building has a long frontage
               and is very deep as well. (N.T. 8/19/14,
               p. 30).

                 On May 2, 2013, the Bank filed a Praecipe for
          Writ of Execution Upon a Confessed Judgment. On
          September 12, 2013, the Property was sold to the
          Bank at a Sheriff’s Sale. On October 1, 2013, Parke
          Bank filed its petition to fix fair market value. On
          April 9, 2014, George J. Spaeder (“Spaeder”), a
          respondent named in the Petition, filed a Verified
          Petition to Mark Judgment Satisfied, to Strike the
          Petition of Parke Bank to Fix Fair Market Value and
          for Deficiency Judgment, and for Other Relief
          (“Spaeder’s Petition”).

                This Court held a hearing on the Petition and
          Spaeder’s Petition on August 19, 2014. This Court
          also heard testimony in the matter on December 2,
          2014. On March 4, 2015, this Court entered two
          Orders. The first Order denied Spaeder’s Petition.
          The second Order Fixing Fair Market Value --
          Deficiency Judgment granted the Bank’s Petition,
          fixing the fair market value of the Property at


                                 -3-
J. S69021/15


            $4,500,000.00. The Order further established that
            the amount of the judgment owed to the plaintiff
            that was not discharged by the sale of the property
            was $5,369,725.37, plus continuing interest,
            attorney’s fees and costs.

            Subsequently, on March 18, 2015, Spaeder filed a
            Motion for Post-Trial [relief] seeking relief from this
            Court’s Orders entered March 4, 2015. On May 5,
            2015, this Court held a hearing on the motion for
            post-trial relief and entered an Order denying the
            motion.

            On April 8, 2015, Defendant North Charlotte Road
            Pottstown, LP and Respondents George J. Spaeder,
            Rhoads Avenue Newtown Square, LP, North
            Charlotte Road Pottstown, GP, LLC, Downingtown
            Pike West Chester, LP, Downingtown Pike West
            Chester GP, LLC, East Lincoln Highway Thorndale,
            LP, and East Lincoln Highway Thorndale GP, LLC
            (“Appellants”) filed two Notices of Appeal indicating
            that Appellants were challenging this Court’s two
            Orders dated March 4, 2015. Appellants’ appeals of
            those Orders are currently pending resolution under
            Superior Court Docket Number 1363 EDA 2015. In
            addition, on May 12, 2015, Appellants appealed this
            Court’s Order dated May 5, 2015 denying Spaeder’s
            motion for post-trial relief. This Opinion addresses
            the appeal from this Court’s May 5, 2015 Order.

Trial court opinion, 6/22/15 at 1-3.1


1
   On July 21, 2015, this court issued a rule to show cause why the appeal
should not be quashed as untimely, where the appeal was taken from the
May 5, 2015 order denying appellants’ motion for post-trial relief. See
Parke Bank v. North Charlotte Road Pottstown, LP et al., No. 1666
EDA 2015, per curiam order (Pa.Super. filed 7/21/15) (“A motion for
post-trial relief may not be filed to matters governed exclusively by the rules
of petition practice. Furthermore, a motion for post-trial relief may not be
filed to orders disposing of proceedings that do not constitute a trial.”)
(citations omitted). Because a deficiency judgment on the Bank’s petition to
fix fair market value was entered on the docket on March 9, 2015, it
appeared that appellants’ notice of appeal filed May 12, 2015 was untimely.


                                        -4-
J. S69021/15


     Appellants have raised the following issues for this court’s review:

           1.    Did the trial court err in fixing fair market
                 value of the property in the amount of the
                 Appellee bank’s private sale of the property to
                 its customer with bank financing, without
                 exposing the property to the market, without
                 any appraisal or other evidence to support its
                 valuation, in an amount that was $1,300,000
                 less than the fair market value judicially
                 admitted in the bank’s Deficiency Judgment
                 Petition?

           2.    Did the lower court err in denying the
                 Appellants’ petition to mark the judgment
                 satisfied when the Appellee bank collected
                 $800,000 of an alleged deficiency on its
                 judgment before getting a determination that
                 there was any remaining deficiency?

           3.    Did the lower court err in permitting the bank
                 to apply that prematurely collected $800,000
                 to    unrelated      debt   that    was    not
                 cross-collateralized with the North Charlotte
                 loan in order to collect the same $800,000 a
                 second time from the Appellee North Charlotte
                 Loan guarantors who did not guaranty
                 cross-collateralized debt?



Id. In their response, appellants averred that they filed two notices of
appeal on April 8, 2015, from the trial court’s orders entered on March 4,
2015, granting the Bank’s petition for a deficiency judgment and fixing fair
market value, and denying appellants’ petition to mark judgment satisfied.
Appellants noted that the trial court had not ruled on their post-trial motion
by the 30-day appeal deadline so they filed the April 8, 2015 appeals as a
precaution against waiver. (Appellants’ response to July 21, 2015 show
cause order, 7/28/15 at 2.) The trial court ordered argument on the
post-trial motion on May 5, 2015, and denied it that day. (Id.) Appellants
then filed an appeal on May 12, 2015, from the trial court’s May 5, 2015
order denying their post-trial motion. (Id.) As appellants’ April 8, 2015
notices of appeal were timely filed within 30 days after the trial court’s
orders docketed March 9, 2015, we will consider the instant appeal to be
timely.


                                    -5-
J. S69021/15



Appellants’ brief at 2-3.

      The Deficiency Judgment Act (“DJA”) provides, in relevant part, as

follows:

            (a)   General rule.--Whenever any real property is
                  sold, directly or indirectly, to the judgment
                  creditor in execution proceedings and the price
                  for which such property has been sold is not
                  sufficient to satisfy the amount of the
                  judgment, interest and costs and the judgment
                  creditor seeks to collect the balance due on
                  said judgment, interest and costs, the
                  judgment creditor shall petition the court to fix
                  the fair market value of the real property sold.

42 Pa.C.S.A. § 8103(a).

      “The initial duty and authority to determine fair market value under

the petition of the kind present here lies with the fact-finder, the trial court.

Our review is limited to deciding whether there is sufficient evidence to

sustain the holding of the trial court, or whether there is a reversible error of

law.” Loukas v. Mathias, 931 A.2d 661, 662 (Pa.Super. 2007), citing First

Pennsylvania Bank, N.A. v. Peace Valley Lakeside Community and

Agricultural Trust, Inc., 478 A.2d 42 (Pa.Super. 1984); Cheltenham

Federal Savings and Loan Association v. Pocono Sky Enterprises,

Inc., 451 A.2d 744 (Pa.Super. 1982); Shrawder v. Quiggle, 389 A.2d

1135 (Pa.Super. 1978).

            The Deficiency Judgment Act applies when real
            property is sold to the judgment creditor at a
            sheriff’s sale. First National Consumer Discount
            Company v. Fetherman, 515 Pa. 85, 527 A.2d 100


                                      -6-
J. S69021/15


           (1987).    If the sale proceeds are insufficient to
           satisfy the amount of the judgment debt, the Act
           requires the judgment-creditor to file a petition to fix
           the fair market value within six months after the
           deed is delivered in order to proceed against the
           debtor for the remainder of the debt. Id. at 91-93,
           527 A.2d at 103.

Fidelity Federal Sav. and Loan Ass’n v. Capponi, 684 A.2d 580, 585

(Pa.Super. 1996), appeal denied, 698 A.2d 67 (Pa. 1997).

                 The Deficiency Judgment Act was enacted in
           the 1940s in order to protect debtors after their
           property was foreclosed. The act was aimed at
           shielding the mortgagor-debtor from the mortgagee
           who would purchase the mortgaged property for less
           than fair market value, usually for cost, and then
           reduce the debt only by the purchase price. [PNC
           Bank, National Association v. Balsamo, 634 A.2d
           645 (Pa.Super. 1993), appeal denied, 648 A.2d
           790 (Pa. 1994)].

                Prior to the Deficiency Judgment Act, the
           judgment creditor often recovered the property and
           the full amount of the debt.        The Deficiency
           Judgment Act prevented this by requiring the
           judgment creditor to reduce the debt by the fair
           market value of the property.        This court in
           [Commonwealth Bank & Trust Co., N.A. v.
           Hemsley, 577 A.2d 627 (Pa.Super. 1990), appeal
           denied, 583 A.2d 793 (Pa. 1990)] noted that the
           purpose of the Deficiency Judgment Act was

                 to relieve a debtor of further personal
                 liability to the creditor, if the real
                 property taken by the creditor on an
                 execution has a “fair market value”, as of
                 the date of the execution sale, sufficient
                 so that the creditor may dispose of the
                 property to others (or even, sometimes,
                 use it himself) without a net loss to the
                 creditor.



                                    -7-
J. S69021/15


            Hemsley, supra[], 577 A.2d at 629 (quoting
            Cheltenham     Federal     Savings    and    Loan
            Associations v. Pocono Sky Enterprises, Inc.,
            305 Pa.Super. 471, 479, 451 A.2d 744, 748 (1982)).

Id. at 586 (emphasis in original).

            The fair market value of land refers to the price a
            purchaser, who is willing but not obligated to buy,
            would pay an owner, who is willing but not obligated
            to sell. First Pa. Bank, N.A. v. Peace Valley
            Lakeside, 329 Pa.Super. 218, 478 A.2d 42 (1984).
            A professional appraisal is not required in order to
            determine fair market value, and although evidence
            of fair market value may be obtained through expert
            testimony, such testimony is not the exclusive
            method of establishing value. National Council of
            Junior Order of United American Mechanics v.
            Zytnick, 221 Pa.Super. 391, 293 A.2d 112 (1972).
            The trier of fact weighs the credibility of an expert
            witness’ testimony regarding valuation.         Mellon
            Bank v. Restaurant of A.B.E., 364 Pa.Super. 567,
            528 A.2d 654 (1987).         An appellate court must
            accept the credibility determinations of the trial court
            with respect to the credibility of witnesses. Id.

Bryn Mawr Trust Co. v. Healy, 667 A.2d 719, 723 (Pa.Super. 1995),

appeal denied, 681 A.2d 1340 (Pa. 1996).

            The [DJA] requires the court to determine the ‘fair
            market value’ of the premises, without defining such
            value. This phrase has, however, been interpreted
            by this Court to mean the price which the property
            would bring at a fair sale between parties dealing on
            equal terms.

Union Nat. Bank of Pittsburgh v. Crump, 37 A.2d 733, 735 (Pa. 1944)

(citation omitted).

            Many elements properly enter into the determination
            of ‘fair market value’. Among these are recent sales
            of real estate of comparable location and


                                     -8-
J. S69021/15


            description[]. No evidence of such sales was offered
            in this case. Other factors of value include (1) the
            uses to which the property is adapted and might
            reasonably be applied[]; (2) the demand for the
            property and similar properties, taking into
            consideration economic conditions which depress
            market value in its true sense and detrimentally
            influence such demand[]; (3) the income produced
            by the property, including rents, and (4) generally,
            all elements which affect the actual value of property
            and therefore influence its fair market value[].

Id. (citations omitted).

      Appellants complain that the trial court should have used the

“as-stabilized”   value    of   $13,500,000     provided    by    its   expert,

John Paul Williams (“Williams”). An as-stabilized valuation assumes that the

property is 95% occupied with the tenants paying rent at a market rate.

(Appellants’ brief at 40.) According to Williams, the fair market value of the

property was $10,800,000 as of the date of the 2013 sheriff’s sale

($13,500,000 minus stabilization construction costs).      Appellants complain

that the trial court used an “as is” valuation that failed to account for the

presently-unoccupied portion of the property.

      The trial court, sitting as finder-of-fact, specifically found Williams’

testimony to be not credible and based on hypothetical assumptions. (Trial

court opinion, 6/22/15 at 6.)    “These assumptions included a ninety-five

percent tenant occupancy rate, income from the lease of a pad site on the

Property, and the completion of numerous renovations.” (Id. (citations to

the transcript omitted).) Instead, the trial court accepted the testimony of



                                    -9-
J. S69021/15


the Bank’s experts, Anthony Salvitti (“Salvitti”) and Ralph Gallo (“Gallo”), in

determining that the fair market value of the property was equal to the sales

price, i.e., $4,500,000. (Id. at 5 n.3.) We find no abuse of discretion in

this regard. See Crump, 37 A.2d at 735 (trial court is not bound to adopt

the opinion of any one expert, or group of experts, but may determine the

fair market value on the whole record).

      The trial court noted that the property is occupied by a single tenant,

Planet Fitness, and is 81% vacant.        (Trial court opinion, 6/22/15 at 4.)

Appellants argue that the Bank did not expose the property to the market.

This argument is refuted by the testimony of Gallo, which was credited by

the trial court, that the Bank posted a sign advertising the sale of the

property and received several inquiries as a result. (Id. at 5.) The Bank

contacted its customers that it knew were engaged in the commercial real

estate business, eventually discussing the sale of the property with

approximately fifty individuals, including real estate developers and brokers.

(Id.) The Bank attempted to lease additional portions of the property but

was unable to do so. (Id.)

      Appellants make much of the fact that the Bank eventually sold the

property to one of its own customers, Lenard Thylan (“Thylan”). Appellants

imply that the Bank sold the property for less than it was worth because

Thylan was an important long-term customer. Again, the record belies this

argument. Gallo testified that this was an arms-length transaction and the



                                    - 10 -
J. S69021/15


Bank and Thylan engaged in extensive negotiations. (Id.) This was not a

distressed sale, and each party had the opportunity to walk away.                 (Id.)

The   Bank   initially   proposed   a   sale     price   of   $5,000,000,   but   after

negotiations, agreed to sell the property to Thylan for $4,500,000.               (Id.)

There is no indication that the Bank sold the property at a below-market

price to Thylan. To the contrary, the record reflects that the property is in

poor condition, requires hundreds of thousands of dollars in deferred

maintenance, and has only one tenant. The record fully supports the trial

court’s determination that the purchase price received by the Bank

represents the fair market value of the property.2

      Finally, in their last two issues on appeal, appellants contend that the

Bank violated the DJA when it failed to apply $800,000 in proceeds from the

sale of property located at 3607 West Chester Pike, Newtown, Pennsylvania,

against the North Charlotte deficiency judgment. However, as explained by



2
  Appellants argue that the Bank was bound by the contention in its petition
that the fair market value of the property was $5,800,000. (Appellants’ brief
at 43.) Appellants characterize this as a judicial admission. (Id. at 43-44.)
However, the $5,800,000 valuation was based on a 2011 appraisal when the
property had three tenants. As the trial court states, the DJA requires the
court to hear evidence regarding the fair market value of a property prior to
fixing that value if the value proffered by a petitioner is challenged by a
respondent. (Trial court opinion, 6/22/15 at 4 n.2.) See 42 Pa.C.S.A.
§ 8103(c)(4) (“If an answer is filed and testimony produced setting forth
that the fair market value of the property is more than the value stated in
the petition, the court shall hear evidence of and determine and fix the fair
market value of the property sold.”). Appellants have cited no authority for
the proposition that the trial court was bound by the value proposed in the
Bank’s petition.


                                        - 11 -
J. S69021/15


the trial court, this property was not sold to the Bank and the sale did not

occur in the context of an execution proceeding.       (Trial court opinion,

6/22/15 at 7.) It was sold to a third party, and the proceeds were applied to

an entirely separate debt. (Id. at 7-8.) Therefore, the Bank did not violate

the DJA. See 42 Pa.C.S.A. § 8103(a) (“Whenever any real property is sold,

directly or indirectly, to the judgment creditor in execution proceedings

. . . .”).

       Orders affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/15/2016




                                   - 12 -
