In two recent decisions, Pennsylvania courts have cautioned litigants who have failed to protect their property interests during the appeal process.
In Detusche Bank National Company v. Butler, the Superior Court of Pennsylvania dismissed an appeal of a trial court order setting aside a sheriff’s sale based upon mootness because the property was sold at a subsequently scheduled sale.
In Butler, the bank foreclosed on the property after its borrowers failed to make the monthly payments due under the promissory note. The bank then scheduled the property for sheriff’s sale. At the time of the sheriff’s sale, the bank instructed its attorney to bid up to $240,600, an amount equal to the upset price (total amount of judgment and costs), for the property.
At the sheriff’s sale, a third party bid $25,000 for the property. Since the bank’s attorney mistakenly failed to increase the bid, the property was sold to the bidder. Later that day, the bank’s attorney filed a motion to set aside the sheriff’s sale. Afterwards, the trial court entered an order granting the motion and scheduled the property for another sheriff’s sale.
After appealing the trial court’s ruling, the bidder petitioned the trial court to stay the rescheduled sheriff’s sale. In his petition, the bidder offered to post a bond in the amount of $25,000, the amount of his original bid, to operate as a supersedeas. The trial court granted the supersedeas on the condition the bidder posted a bond in the amount of $255,000. Since the bidder never posted the bond, the sheriff’s sale was not stayed. The bank purchased the property at the second sale and the sheriff delivered the deed to the bank.
The bank then filed a motion to dismiss the appeal on the ground of mootness. In granting the motion, the Superior Court found that, since the property was sold at the second sale, an order declaring the first sale valid would have no effect.
The Superior Court noted that the bidder did not exhaust his remedies to prevent the issue from becoming moot, pointing out that he never filed a motion objecting to the amount of the supersedeas bond and chose instead not to post any security, leading to the sale.
In a footnote, the Superior Court distinguished Butler from its ruling in Jefferson Bank v. Newton Associates, where it had previously denied a claim of mootness despite a sheriff’s deed being delivered after the appeal was filed.
In Jefferson Bank, a condominium association’s appeal was not dismissed as moot even though titles to the units transferred post-appeal, because the appellees themselves caused that transfer. The court held that an adverse party cannot manufacture mootness through “deliberate factual manipulation.”
By contrast, in Butler, the appellant’s own failure to secure a supersedeas bond allowed the subsequent sale to occur, and the court made clear it expects appellants to post the necessary bond to protect their rights.
In Federal Home Loan Mortgage Corporation v. Oppong, the Philadelphia County Court of Common Pleas likewise rejected a challenge to a sheriff’s sale where the former owner did not obtain a supersedeas bond after his appeal of a denial to set aside the sale.
Although the former owner appealed, FHLMC received and recorded the sheriff’s deed during the appeal and then obtained summary judgment in an ejectment action. The court held that, because no bond was filed to stay the sale or the ejectment, FHLMC’s ownership was properly enforced.
This case, like Butler, underscores that failing to post a supersedeas bond can leave an appellant without any remedy, as subsequent transfers or enforcement actions will moot the appeal.
Butler and Oppong together illustrate the critical need to secure a supersedeas bond or other appropriate security when appealing decisions affecting property rights. Without it, appellants risk losing their interest in the property and having their appeals dismissed as moot.
Reprinted with permission from the September 26, 2005 edition of The Legal Intelligencer © 2005 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.