Pottstown School District v. Petro
94 A.3d 1102
| Pa. Commw. Ct. | 2014Background
- Property at 1042 Park Drive (Pottstown) was subject to delinquent real estate taxes; School District obtained a judgment and property was exposed to upset sale and then a "free and clear" judicial sale under the MCTLA.
- Free-and-clear judicial sale on January 30, 2013 produced $40,000.00.
- Portnoff (agent for Borough and School District) claimed $52,598.04 (delinquent taxes, utilities, fees, attorney fees, interest for 2005–2013); Borough separately claimed utilities; Northeast claimed $1,763.00 for county/municipal taxes for 2011–2012.
- Sheriff’s proposed distribution allocated most proceeds to Portnoff (covering delinquencies 2005–2010) after costs and transfer taxes; Northeast objected, seeking pro rata distribution under RETSL §205(d).
- Trial court denied Northeast’s exceptions, applied MCTLA §31 distribution (oldest tax first; municipal claims next), and confirmed sheriff’s schedule; Northeast appealed and lost.
Issues
| Issue | Plaintiff's Argument (Northeast) | Defendant's Argument (Portnoff/Respondent) | Held |
|---|---|---|---|
| Proper statute for distributing proceeds of a free-and-clear judicial sale | RETSL §205(d) requires pro rata distribution to taxing districts of remaining funds | Sale was conducted under MCTLA §31; MCTLA controls and gives "oldest tax first" priority | Court held MCTLA controls; distribution pursuant to §31 (oldest-first, municipal claims next) |
| Whether RETSL §205(d) impliedly repeals or overrides MCTLA §31 | RETSL distribution scheme should apply despite MCTLA election | RETSL is optional; when a taxing authority elects MCTLA, RETSL does not override it | Court held RETSL is an optional alternative; no implied repeal of MCTLA and prior precedent supports that result |
| Interpretation of RETSL §205(d)(2) language "in proportion to the taxes due them" | Requires strict pro rata distribution among taxing districts | Language can be read consistent with prior cases: oldest liens paid first; remaining funds pro rata among same-year claims | Court agreed prior case law implies that oldest liens are paid first, then any remaining proceeds prorated among claims in the same priority cohort |
| Challenge to reasonableness/accounting of Portnoff's attorney fees and interest | Portnoff should produce itemized accounting and fees adjudicated as reasonable under MCTLA §3(a.1) | MCTLA fee-reasonableness challenge is available only to property owners; Northeast (a taxing claimant) lacks standing and waived the issue below | Court held issue waived and that statutory right to challenge reasonableness belongs to owners, not taxing claimants; no relief granted |
Key Cases Cited
- City of Allentown v. Kauth, 874 A.2d 164 (Pa. Cmwlth. 2005) (MCTLA and RETSL co-exist; RETSL is optional and does not impliedly repeal MCTLA)
- Lackawanna County Appeal, 42 A.2d 103 (Pa. Super. 1945) (oldest tax liens paid first; any remainder prorated among later claims)
- New Castle School Dist. v. Travers, 44 A.2d 665 (Pa. 1945) (approves oldest-first rule and prorating remainder among same-year claims)
- Bell v. Berks County Tax Claim Bureau, 832 A.2d 587 (Pa. Cmwlth. 2003) (scope of appellate review in tax sale cases)