Kelly L. Makowka v.
754 F.3d 143
3rd Cir.2014Background
- Makowka owned a home in a Pennsylvania planned community; she fell behind on HOA assessments and accrued late fees.
- The Association obtained default money judgments in state court (2008 and 2010) and scheduled a sheriff’s sale for Sept. 14, 2011.
- Two days before the sale Makowka filed Chapter 13 bankruptcy and sought to avoid portions of the Association’s claims under 11 U.S.C. § 522(f).
- Under the UPCA, 68 Pa. Cons. Stat. § 5315, an association has a statutory lien for unpaid assessments that "may be foreclosed in a like manner as a mortgage," and a lien is extinguished unless "proceedings to enforce the lien" are instituted within three years; subsection (f) preserves actions to recover the sums.
- Makowka argued that only foreclosure proceedings constitute "proceedings to enforce the lien," so assessments older than three years were extinguished; the Association argued that actions in debt/contract sufficed to enforce the lien and tolled the statutory period.
- Bankruptcy Court and District Court upheld the Association’s judgments (citing Hammer); the Third Circuit vacated and remanded, predicting the Pennsylvania Supreme Court would follow Karr and hold that actions in debt do not enforce the statutory lien.
Issues
| Issue | Makowka's Argument | Association's Argument | Held |
|---|---|---|---|
| Whether an action in debt or contract constitutes a "proceeding to enforce" a UPCA §5315 lien so as to avoid extinguishment after three years | Only a foreclosure action (in rem) enforces the §5315 lien; actions in debt are separate in personam remedies preserved by §5315(f) | §5315 allows multiple enforcement methods; actions in debt/contract (and judicial sale) enforce the lien and toll the 3‑year period | The Third Circuit predicted PA Supreme Court would follow Karr: actions in debt do not constitute enforcement of the UPCA lien; older assessments extinguished |
Key Cases Cited
- London Towne Homeowners Ass'n v. Karr, 866 A.2d 447 (Pa. Commw. Ct. 2004) (distinguishes enforcement by foreclosure from in personam actions; holds foreclosure is the procedure to enforce the §5315 lien)
- Forest Highlands Cmty. Ass'n v. Hammer, 903 A.2d 1236 (Pa. Super. Ct. 2006) (held actions in debt/contract could satisfy enforcement requirement, but court here discounts Hammer as inconsistent with statute and precedent)
- Phila. Constr. Servs., LLC v. Domb, 903 A.2d 1262 (Pa. Super. Ct. 2006) (explains statutory liens are extraordinary and construed strictly)