CitiMortgage, Inc. v. Comini, 1284 WDA 2017
| Decision Date | 20 April 2018 |
| Docket Number | No. 1284 WDA 2017,1284 WDA 2017 |
| Citation | 184 A.3d 996 |
| Parties | CITIMORTGAGE, INC. v. Vincent A. COMINI Appeal of: Paul F. Faletto and Sharon A. Faletto |
| Court | Pennsylvania Superior Court |
Peter P. Cherellia, Greensburg, for appellant.
Jeremy J. Kobeski, Philadelphia, for appellee.
Paul F. Faletto and Sharon A. Faletto (collectively, "the Falettos") appeal from the order denying their petition to intervene following a mortgage foreclosure action filed by Citimortgage, Inc. ("Citimortgage") against Vincent A. Comini ("Comini") and granting Citimortgage's petition for a corrected deed. We reverse in part and affirm in part.
Citimortgage filed a mortgage foreclosure action against Comini on April 2, 2012, related to his residence at 135 Buffalo Hill Road, Irwin, Pennsylvania (the "Property"). A default judgment was entered on July 25, 2012, and Citimortgage filed a writ of execution on September 14, 2012. After Citimortgage complied with the notice requirements, it purchased the Property at Sheriff's Sale on March 7, 2016, and a deed was recorded on April 22, 2016.
Pursuant to Pa.R.C.P. 3135(b), Citimortgage filed a petition on January 27, 2017, seeking correction of the April 22, 2016 deed, which contained language granting a right of first refusal ("ROFR") to the Falettos. The ROFR reads as follows:
SHOULD Grantee [Comini] wish to sell the property the subject hereof or any part of it, Grantee shall first offer in writing to sell the property to Paul F. Faletto and Sharon A. Faletto, his wife, who shall have 10 days to accept said offer.
Petition for Correction of Sheriff's Deed, 1/27/17, at Exhibit A. The ROFR was in the original deed recorded on July 21, 1992, whereby the Falettos conveyed the Property to Comini and his wife, Kathleen. The ROFR also appeared in the deed recorded on February 27, 2009, whereby Kathleen Comini transferred her interest in the Property to Comini. The ROFR was not included in the legal description of Comini's mortgage with Citimortgage.
Upon receiving a copy of Citimortgage's petition for a corrected deed, the Falettos presented the trial court with a petition to intervene on April 21, 2017, seeking to preserve their ROFR. The trial court conducted a hearing on June 1, 2017. On June 9, 2017, the trial court denied the petition to intervene and granted Citimortgage's petition for a corrected deed. The Falettos sought reconsideration, which the trial court granted on July 7, 2017. Following oral argument on July 24, 2017, the trial court again denied the Falettos' petition to intervene and affirmed its grant of Citimortgage's petition. Order, 8/7/17. This appeal followed. The Falettos and the trial court complied with Pa.R.A.P. 1925.
The Falettos raise two issues for our consideration:
The Falettos' Brief at 4.
The Falettos first argue that the trial court erred in denying their petition to intervene. Relying on the bases for allowing intervention set forth in Pa.R.C.P. 2329, the Falettos assert: (1) their request to secure the ROFR does not speak to the underlying foreclosure action; (2) their interest is not adequately represented because they were not party to the foreclosure action; and (3) they acted promptly after Citimortgage served them with a copy of its petition for a corrective deed, given the fact that they did not receive notice of the Sheriff's Sale. The Falettos' Brief at 11; N.T., 6/1/17, at 25. Citimortgage responds that Citimortgage's Brief at 15 (internal citations omitted).
The trial court observed that Comini's mortgage did not include the ROFR language and Citimortgage was not required to name the Falettos in the mortgage foreclosure action because they were not real owners under Pa.R.C.P. 1144 (Parties. Release of Liability). Trial Court Opinion, 10/3/17, at 5. The trial court also found that the Falettos did not seek to intervene prior to entry of the default judgment in favor of Citimortgage on July 25, 2012, as required by Pa.R.C.P. 2327. Id.
"Whether to allow intervention is a matter vested in the discretion of the trial court and the court's decision will not be disturbed on appeal absent a manifest abuse of its discretion." U.S. Bank Nat'l Assoc. for PA Hsg. Fin. Agency v. Watters , 163 A.3d 1019, 1024 (Pa. Super. 2017). As for which rule of civil procedure applies, we agree with Citimortgage that only Pa.R.C.P. 2327 governs this matter, specifically, Pa.R.C.P. 2327(4) :
The Falettos' ROFR is an interest legally enforceable pursuant to "standard principles of contract construction." E.R. Linde Const. Corp. v. Goodwin , 68 A.3d 346, 349 (Pa. Super. 2013). Consequently, the Falettos have the right to intervene pursuant to Pa.R.C.P. 2327(4). Furthermore, the Falettos' petition was timely because they filed it while Citimortgage's case for correcting the sheriff's sale deed by removing the ROFR was ongoing. Thus, we conclude that the trial court abused its discretion in denying the Falettos' petition to intervene, and we reverse that ruling. However, we need not remand to allow the Falettos to intervene for two reasons. First, they had an opportunity to argue the merits of their position at the July 24, 2017 hearing. Second, as discussed below, their argument against Citimortgage's request for correction of the deed lacks merit.
The Falettos' second issue challenges the trial court's decision to grant Citimortgage's petition for a corrected deed. According to the Falettos, the foreclosure action did not affect their ROFR because it is not a judgment, lien, or other encumbrance on the Property, "which are not protected by statute from discharge." The Falettos' Brief at 14 (). The Falettos maintain that their ROFR is "a valid condition on the title" of which Citimortgage had notice. Id. at 15. Recognizing that they cannot forestall any sale of the Property, the Falettos "want the opportunity to repurchase" the Property when there is a voluntary sale by Citimortgage. Id. at 17.1
Citimortgage counters:
The ROFR does not affect the use of the land, it affects [Comini's] personal ability to sell the land; the covenant is simply a limited restriction on [Comini's] right of alienation. The Deeds do not contain restrictions on [Comini's] ability to mortgage the Property or restrictions on future owners of the Property. The reciprocal ROFR granted to [Comini] likewise illustrates the contractual nature of the ROFRs. The bargained-for exchange between [Comini] and the Falettos included reciprocal ROFRs, and neither Citimortgage nor its predecessor [was] a party to that agreement.
Citimortgage's Brief at 11. Additionally, Citimortgage points out that "[n]either the Mortgage nor the Complaint contain[s] the ROFRs and therefore the Sheriff's Deed contained an ‘erroneous description of the Property’ relative to this mortgage foreclosure action." Id. at 13.
Here, the trial court concluded that, because "the Falettos lacked standing, were not proper [d]efendants, and were not timely in their Petition to Intervene, [Citimortgage], as purchaser of the [Property] at Sheriff's Sale, was permitted to request the corrected deed." Trial Court Opinion, 10/3/17, at 5–6. The trial court based its grant of Citimortgage's petition on two factors: (1) the language of the ROFR limited activation of the right to a voluntary sale of the property, and a mortgage foreclosure was not a voluntary sale; and (2) the ROFR agreement was between Comini and the Falettos; Citimortgage was not party to that agreement. Id. at 4. In support of its decision, the trial court referred to Cent. Exec. Com. of ODWU, Inc. v. Carbon Co. Tax Claim Bureau , 892 A.2d 868 (Pa. Cmwlth. 2005), for guidance. Therein, our sister court held that a claimant who held a ROFR did not have standing to object to a tax sale. Id. at 872.
This Court has defined a ROFR, otherwise known as the right to preemption, as follows:
A right of first refusal constitutes a promise to offer the res of the right to the promisee for such consideration as the promisor determines to accept on the basis of an offer from a third party before accepting the offer of the third party. A right of first refusal does not require the promisor to offer the res at all. The right of first refusal merely requires that before the promisor accepts an offer of a third party, the promisor must offer the res to the promisee of the right for the consideration the promisor is willing to accept from the third party.
Power Gas Mktg. & Transmission, Inc. v. Cabot Oil & Gas Corp. , 948 A.2d 807, 810 (Pa. Super. 2008) (citations and internal brackets omitted). The Power Gas Court explained the history of rights of first refusal:
Over 150 years ago, our Supreme Court reached the following conclusion with respect to what have subsequently come to be defined as rights of first refusal: "Where a lessor has stipulated with his lessee, in the lease, that when the land was offered for sale, the first offer shall be made to...
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