City of Phila. v. Phila. Scrapyard Properties, LLC ~ Appeal of: KT Mgmt., LLC
132 A.3d 1060
| Pa. Commw. Ct. | 2016Background
- Scrapyard Properties (redeemer) filed to redeem residential property sold at sheriff’s sale to KT Management for $90,000; sheriff’s deed acknowledged April 16, 2014.
- Scrapyard alleged inadvertent missed tax payment due to employee error; tax balance was small and property continuously occupied by six student tenants during the relevant period.
- Trial court granted redemption; parties stipulated payment breakdown and procedure requiring simultaneous exchange of deed and funds; Sheriff was ordered to release $73,433.72 to KT Management.
- Sheriff delayed disbursing funds; Scrapyard did not pay the remaining balance within 7 days, explaining it intended a simultaneous exchange once Sheriff funds were released.
- KT Management refused a February 2015 tender over disputed commissions and sought to vacate the redemption for nonpayment/untimeliness; trial court held Scrapyard had the ability to pay, excluded leasing commissions from redemption costs, allowed management fees, and limited interest to run only through Feb. 4, 2015.
- Commonwealth Court affirmed the trial court, construing “basic family unit,” application of the nine‑month redemption timing, and limits on interest when the payee unreasonably refuses payment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether property was "vacant property" under §32(c) (meaning same basic family unit must occupy for 90 days before sale through acknowledgment) | KT Management: one tenant turnover broke continuous occupancy; property is vacant so no redemption after acknowledgment | Scrapyard: a change of one occupant in a six‑person household does not defeat continuous occupancy of the same "basic family unit" | Court: "basic family unit" construed by dictionary meaning; one occupant change in six‑person unit does not make property vacant; redemption permitted |
| Whether Scrapyard showed ability to pay redemption amount | KT Management: Scrapyard failed to pay within required period and thus cannot show ability to pay | Scrapyard: began redemption within statutory period and Cohen (sole member) had sufficient funds as of Nov. 3, 2014; Sheriff’s delay and stipulated simultaneous exchange excuse nonpayment within 7 days | Court: petitioner must begin redemption within nine months (not complete payment); Cohen’s testimony showed ability to pay as of Nov. 3, 2014; nonpayment explained by Sheriff’s delay and simultaneous‑exchange term, not inability to pay |
| Whether redemption price must be finally paid within nine months of acknowledgment | KT Management: statute requires payment within nine months; failure to pay bars redemption | Scrapyard: statute requires initiating redemption within the period (filing petition/readiness), not completion of payment | Court: follows precedent (Taylor/Chin) — redemption process must begin within period; final payment may occur later; affirmed |
| Whether interest accrues after Feb. 4, 2015 despite KT Management’s refusal to accept payment | KT Management: interest at 10% runs until monies paid; their refusal was reasonable so interest continued | Scrapyard: KT Management unreasonably refused tender (disputing improper commissions), so interest should stop when redeemer tendered payment | Court: interest need not run during period where intended recipient unreasonably refuses payment; trial court correctly stopped interest after Feb. 4, 2015 and disallowed improper leasing commissions |
Key Cases Cited
- City of Philadelphia v. F.A. Realty Investors Corp., 95 A.3d 377 (Pa. Cmwlth.) (construing §32 redemption timing)
- Paul J. Dooling Tire Co. v. City of Philadelphia, 789 A.2d 364 (Pa. Cmwlth.) (statutory construction support for §32 interpretation)
- Brentwood Borough Sch. Dist. v. HSBC Bank USA, N.A., 111 A.3d 807 (Pa. Cmwlth.) (factors for continuous occupancy factual inquiry)
- City of Philadelphia v. Chin, 535 A.2d 110 (Pa. Super.) (redemption process must begin within statutory period)
- City of Philadelphia v. Taylor, 465 A.2d 33 (Pa. Super.) (petition/timeliness principles for redemption)
- Pinto v. State Civil Serv. Comm’n, 912 A.2d 787 (Pa.) (statutory interpretation principles)