            IN THE COMMONWEALTH COURT OF PENNSYLVANIA


City of Philadelphia                       :
                                           :
               v.                          : No. 128 C.D. 2016
                                           : SUBMITTED: August 26, 2016
Carmen Moore                               :
                                           :
               v.                          :
                                           :
Sahil Singhal                              :
                                           :
Appeal of: Carmen Moore                    :


BEFORE:        HONORABLE P. KEVIN BROBSON, Judge
               HONORABLE JULIA K. HEARTHWAY, Judge
               HONORABLE DAN PELLEGRINI, Senior Judge


OPINION NOT REPORTED


MEMORANDUM OPINION BY
JUDGE HEARTHWAY                               FILED: February 6, 2017

               Carmen Moore (Owner) appeals from an order of the Philadelphia
County Court of Common Pleas (trial court) denying her motion to vacate the order
granting Sahil Singhal (Purchaser) permission to intervene and an extension of time
to complete payment for a sheriff’s sale conducted under the Municipal Claims and
Tax Liens Act (“MCTLA”).1             The City of Philadelphia (City) sold Owner’s
property because of a four-year lapse in payment of real estate taxes. Owner does
not contest the initial notice of the tax sale, but rather alleges a lack of proper


      1
          Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101–7505.
notice of a subsequent intervention, and further challenges the trial court’s
authority to direct the sheriff to accept late payments. We vacate and remand.


             On August 2, 2013, the City filed a petition for a rule to show cause
why the property located at 8030 Ditman Street, Unit 4A, in Philadelphia
(Property) should not be sold for $3,622.67 in delinquent real estate taxes (Tax
Petition). Owner, who left the Property in 2005, did not pay taxes for tax years
2009 through 2012, when she was living in Maryland. Prior to filing the Tax
Petition, the City obtained a tax information certificate identifying all owners and
lienholders. The trial court issued the rule on August 6, 2013, and the City sent
notice to all interested parties by regular and certified mail, to both the Property
address and to Owner’s most recent registered mailing address at 3709 K Street,
Philadelphia. On September 24, 2013, the City filed an affidavit documenting its
service and posting on the Property. No response to the Tax Petition was filed. On
October 30, 2013, the trial court entered a decree that the Property shall be sold at
sheriff’s sale to the highest bidder. The City filed an affidavit of service of the
decree and notice of sale.


             Before the sale, on January 20, 2014, Owner made payment of $3,000
toward the outstanding taxes on the Property. Nevertheless, taxes on the Property
remained unpaid, and a sheriff’s sale was conducted on April 22, 2014. Purchaser
was the highest bidder at $18,100.00. On the date of the sale, he paid $1,850,
approximately 10% of the purchase price, with the remainder to be paid within 30
days. However, Purchaser failed to pay the balance within 30 days, and the sheriff
filed a writ of return on June 13, 2014, marking the docket “terms of sale not


                                         2
complied with.” Reproduced Record (R.R.) at 5a. Although Purchaser attempted to
tender full payment thereafter, the sheriff would not accept it, advising Purchaser
that he needed to request leave of court.


               Meanwhile, in July 2014, Owner became aware of the pending
sheriff’s sale proceedings. She claims that she paid the $1,960 in outstanding
balance of back taxes on July 30, 2014.


               Thereafter in August 2014, Purchaser filed a motion to intervene and
requested permission to complete the terms of the sale that had occurred on April 22,
2014. The trial court scheduled a hearing and directed Purchaser to serve notice on
all interested parties. Though Purchaser knew that Owner did not reside at the
Property (apparently Purchaser had by some means already leased the Property to a
third party as of July 2014),2 Purchaser sent notice to Owner only at the Property.
Purchaser did not attempt to serve Owner’s most recent registered mailing address:
3709 K Street, Philadelphia.         After the hearing, which Owner did not attend, the
trial court entered an order on September 14, 2014, granting Purchaser’s request for
intervention and allowing Purchaser 15 days to pay the balance due. The order also
states, “No objection by City.”3




       2
          See Purchaser’s Answer in Opposition to Motion to Vacate, 8/23/2015, Reproduced
Record (R.R.) at 241a, paragraph 11.
        3
          The City’s purported acquiescence is troubling in light of the claim that Owner had paid
all taxes due on the Property in advance of the hearing.


                                                3
              Thus, having failed to complete the purchase of the Property within 30
days after the sheriff’s sale, Purchaser was afforded another chance to buy the
Property, even though (1) Owner allegedly had paid to the City all the taxes due on
the Property; and (2) Purchaser did not attempt to serve Owner at her most recent
registered address, which was of record and available to Purchaser.4


              Purchaser paid the balance of the sale price. The sheriff’s deed for the
Property was acknowledged on October 29, 2014. The deed was recorded on
November 14, 2014.


              On August 3, 2015, Owner filed a motion to vacate, seeking to vacate
the Intervention Order, and to have the title to the Property quieted in her favor
(Motion).    According to the Motion, Owner, now residing in Maryland, was
unaware of the April 22, 2014 sheriff sale proceedings “prior to July of 2014.” R.R.
at 167a. When she became aware, she allegedly paid the balance due of back taxes
but received no notice of Purchaser’s motion to intervene seeking permission to
complete the terms of the sale. Without holding a hearing, the trial court denied the
Motion “as both untimely and procedurally improper.”                R.R. at 295a (Order,
8/31/15). In its Pa. R.A.P. 1925(a) opinion, the trial court described the Motion as
“completely without merit.” Tr. Ct. Slip Op., 2/17/16 at 1. It reasoned Owner may
only attack a sheriff’s sale by filing a petition to set aside, which must be filed



       4
         Owner’s registered address was evident in several documents of record pre-dating
Purchaser’s motion to intervene. See Tax Petition, 8/2/2013, R.R., page 15-17; Affidavit of
Service of Mailing Petition and Rule, 9/9/2013, R.R., page 30-31; Affidavit of Service—Decree
and Notice of Sale, 10/30/2013, R.R., pages 32-35.


                                             4
within three months of the acknowledgement of the deed pursuant to the MCTLA.
Owner missed the statutory deadline, filing her Motion almost eight months late.


               Owner filed a notice of appeal with the Superior Court, which
transferred the matter to this Court pursuant to Pa. R.A.P. 751. Our “review of a
trial court’s order in a tax sale matter is limited to determining whether the trial
court erred as a matter of law, rendered a decision that is unsupported by the
evidence, or abused its discretion.” City of Philadelphia v. Auguste, 138 A.3d 697,
700 (Pa. Cmwlth. 2016).


               The City set out to conduct this sheriff’s sale pursuant to the MCTLA.
Section 31.2 of the MCTLA5 sets forth the unique procedure for Philadelphia sales.
As to challenging a sale, section 39.3 of the MCTLA provides:

               [a]ll parties wishing to contest the validity of any sale
               conducted pursuant to section 31.2 [of the MCTLA], including
               the sufficiency of any notice, and any party claiming to have
               an interest in the premises which was not discharged by the
               sale must file a petition seeking to overturn the sale or to
               establish the interest within three months of the
               acknowledgement of the deed to the premises by the sheriff.

53 P.S. § 7193.3.6 This provision makes clear that challenges to sales conducted
pursuant to section 31.2 of the MCTLA must be filed within three months after
acknowledgment of the deed. This sale, however, included some improvisational
aspects beyond the scope of section 31.2.



      5
          Added by Act of March 15, 1956, P.L. (1955) 1274, as amended, 53 P.S. § 7283.
      6
          Added by Act of December 14, 1992, P.L. 859, as amended, 53 P.S. § 7193.3.


                                               5
              In response to Purchaser’s motion to intervene, the trial court restarted
the sale after Purchaser failed to complete the purchase within the allotted time.
Section 31.2 of the MCTLA does not expressly countenance such a restart.
However, the statute does detail the process that is required before a sale may be
authorized:
      . . . whenever a claimant has filed its tax or municipal claim in
      accordance with the requirements of this act, it may file its petition in
      the court in which the proceeding is pending, setting forth the facts
      necessary to show the right to sell, together with searches or a title
      insurance policy, showing the state of record and the ownership of the
      property, and of all tax and municipal claims, mortgages, ground rents
      or other charges on, or estates in, the land, as shown by the official
      records of the city or county, or the political subdivision in which the
      real estate is situate, and thereupon the court shall grant a rule upon all
      parties thus shown to be interested, to appear and show cause why a
      decree should not be made that the property be sold, freed and cleared
      of their respective claims, mortgages, ground rents, charges and
      estates. If upon a hearing, the court is satisfied that service had been
      made of the rule upon the parties respondent in the manner provided
      in this act for the service of writs of scire facias to obtain judgments
      upon tax and municipal claims, and that contemporaneously with the
      service of the rule on the parties respondent notice of the rule has been
      published by the claimant in at least one newspaper of general
      circulation in the county, and in a legal periodical published therein, if
      any, and that the facts stated in the petition be true, it shall order and
      decree that the property be sold at a subsequent sheriff's sale at a time
      to be fixed thereafter by the claimant, . . .

53 P.S. § 7283 (emphasis added). In this case, the trial court reauthorized the sale
of the Property with disregard for (1) whether Owner was served properly with
notice of the hearing on the motion to intervene; and (2) whether taxes remained
due to the City.




                                           6
               Consideration of the service question would have revealed that
Purchaser served Owner only by mail to the Property, which Purchaser knew or
should have known would be ineffective because the Property was occupied by
Purchaser’s own tenant. In Tracy v. Chester County, Tax Claim Bureau, 489 A.2d
1334 (Pa. 1985), our Supreme Court stated:

      Somehow, over the years, taxing authorities have lost sight of the fact
      that it is a momentous event under the United States and the
      Pennsylvania Constitutions when a government subjects a citizen's
      property to forfeiture for the non-payment of taxes. We have had
      occasion before to note that we hold no brief with willful, persistent
      and long standing tax delinquents, but at the same time, we have also
      observed that the “strict provisions of the Real Estate Tax Sale Law
      [Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101-
      5860.803] were never meant to punish taxpayers who omitted through
      oversight or error ... to pay their taxes.” Ross Appeal, 366 Pa. 100,
      107, 76 A.2d 749, 753 (1950). As this Court stated in Hess v.
      Westerwick, “the purpose of tax sales is not to strip the taxpayer of his
      property but to insure the collection of taxes.” 366 Pa. 90, 98, 76 A.2d
      745, 748 (1950). The collection of taxes, however, may not be
      implemented without due process of law that is guaranteed in the
      Commonwealth and federal constitutions; and this due process, as we
      have stated here, requires at a minimum that an owner of land be
      actually notified by government, if reasonably possible, before his
      land is forfeited by the state.

489 A.2d at 1339.

               Before a tax sale may go forward, section 39.2(a) of the MCTLA,7
requires taxing authorities to provide notice to property owners in the following
manner:



      7
          Added by the Act of December 14, 1992, P.L. 859.

                                              7
               (1) By posting a true and correct copy of the petition and rule
               on the most public part of the property;

               (2) By mailing first class mail to the address registered by any
               interested party pursuant to section 39.1 of this act a true and
               correct copy of the petition and rule; and

               (3) By reviewing a title search, title insurance policy or tax
               information certificate that identifies interested parties of
               record who have not registered their addresses pursuant to
               section 39.1 of this act, the city shall mail by first class mail
               and either by certified mail, return receipt requested, or by
               registered mail to such addresses as appear on the respective
               records relating to the premises a true and correct copy of the
               petition and rule.

53 P.S. § 7193.2(a).        A sale is valid generally when the City satisfies these
statutory notice requirements. See City of Philadelphia v. Auguste, 138 A.3d 697.
In this case, if Purchaser had completed the purchase of the Property within the
time allotted by the trial court in its initial decree authorizing the sale on October
30, 2013, the notice by the City would have been adequate to satisfy the
requirements of the MCTLA. The record reflects that the City provided notice as
required by the MCTLA. The City provided service by mail to the Property and to
the address Owner had registered with the City, and by posting the petition and
rule on the most public part of the Property. See R.R. at 26a-29a.


               The effectiveness of this system of notice is dependent on property
owners’ compliance with the address registration requirement of the statute.
Section 39.1 of the MCTLA,8 requires an owner of real property in a first class city
having a lien, claim, or interest to “register a notice of interest with the department

      8
          Added by Act of December 14, 1992, P.L. 850, 53 P.S. § 7193.1.


                                               8
of the city of the first class responsible for collection of tax and municipal claims
stating his name, residence and mailing address and a description of the real
property in which the person has an interest.” Interested parties are required to file
an amended registration as needed. Id.


             We note that Owner did not comply with the address registration
provision of section 39.1 of the MCTLA, 53 P.S. § 7193.1. If she had complied
with the address registration requirement, she presumably would have received
notice of the commencement of the sheriff’s sale proceedings in August 2013,
when the City served notice to her registered address. Moreover, although Owner
admits she was aware of the sheriff’s sale in July 2014, she took no steps to ensure
the trial court had an accurate address for her. There is no indication in the
pleadings that Owner advised the trial court of her correct address prior to the
hearing on the motion to intervene.


             However, Purchaser did not even attempt to serve Owner at her
registered address with notice of the hearing on his motion to intervene. Having
been instructed by the trial court to serve all parties, Purchaser chose to serve
Owner only by mailing notice to an address occupied by Purchaser’s own tenant.
By failing to serve Owner at her registered address, Purchaser essentially
guaranteed that Owner would not be notified that the trial court was being asked to
reauthorize the sale of the Property.


             Consideration of the outstanding tax question may be even more
critical than consideration of the service question. The trial court does not appear


                                          9
to have reconfirmed “that the facts stated in the petition be true” at the time of the
hearing prior to reauthorizing the sale of the Property. Specifically, there is no
indication in the record that the trial court inquired whether any taxes remained due
at the time of the hearing. It appears that the trial court might have reauthorized the
sale when the very basis for the sale no longer existed.


             The purpose of sheriffs’ sales under the MCTLA is to collect
municipal claims, not to strip owners of their property.         U.S. National Bank
Association v. United Hands Community Land Trust, 129 A. 3d 627, 632 (Pa.
Cmwlth. 2015) (citing City of Philadelphia v. Manu, 76 A.3d 601, 606 (Pa.
Cmwlth. 2013)). Owner’s Motion claims that she paid all outstanding taxes on the
Property before the trial court reauthorized the sale of the property on September
14, 2014.


             “By its very nature, a petition to set aside a sheriff’s sale is an
equitable proceeding, governed by equitable principles, and appellate review of
equitable matters is limited to a determination of whether the trial court committed
an error of law or abused its discretion.” Id. (citing Allegheny County v. Golf
Resort, Inc., 974 A.2d 1242, 1245 (Pa. Cmwlth. 2009)). An otherwise untimely
challenge to a sheriff’s sale may proceed if no authority existed to make the sale.
See Mortgage Electronic Registration System, Inc. v. Ralich, 982 A.2d 77, 80 (Pa.
Super. 2009). Under the circumstances of this case, where the trial court was
asked to reauthorize a sheriff’s sale because Purchaser had failed to complete the
terms of purchase within the allotted time, the trial court should have inquired into
whether the service upon Owner was adequate and whether the factual predicate


                                          10
for the legal authority for the sale (i.e., the non-payment of taxes) still existed.
Failure to do so constituted an abuse of discretion.


             Accordingly, we vacate the trial court’s order of August 31, 2015,
denying Owner’s Motion, and remand for further proceedings consistent with this
opinion.




                                       __________________________________
                                       JULIA K. HEARTHWAY, Judge




                                         11
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


City of Philadelphia                     :
                                         :
            v.                           : No. 128 C.D. 2016
                                         :
Carmen Moore                             :
                                         :
            v.                           :
                                         :
Sahil Singhal                            :
                                         :
Appeal of: Carmen Moore                  :



                                    ORDER


            AND NOW, this 6th day of February, 2017, the order of the
Philadelphia County Court of Common Pleas is vacated, and this case is remanded
for further proceedings consistent with the foregoing Opinion.


            Jurisdiction relinquished.




                                         __________________________________
                                         JULIA K. HEARTHWAY, Judge
