Tuesday, June 19, 2007

real property - tax sale - notice - new sale

Willard v. Delaward Co. Tax Claim Bureau - April 276, 2007


Record owners of property listed but then removed from one judicial tax sale, then relisted for another sale, must get new , separate notice of the second sale. The second sale is not merely a continuation of the original sale. There is no provision in the Real Estate Tax Sale Law for the concept of a "continued" judicial sale.

real estate - tax assessment - appeal - base year value v. current market value

Daugherty v. County of Allegheny - Commonwealth Court - March 27, 2007


County Board of Assessment lacked the statutory authority to limit assessment appeals to challenge to base year market value, rather than challenge that assessment exceeds current market value.

mortgage foreclosure - predatory loan - arbitration - limitation of consumer judicial remedies

Salley v. Option One Mortgage Corp. - Pa. Supreme Court - May 31, 2007 majority

http://www.courts.state.pa.us/OpPosting/Supreme/out/J-34-2006mo.pdf dissent http://www.courts.state.pa.us/OpPosting/Supreme/out/J-34-2006do.pdf

In a case arising from a federal court's certification of the question to the state supreme court, the state court held that an arbitration agreement consummated in connection with a residential mortgage loan which limited a consumer's judicial remedies related to foreclosure is not presumptively unconscionable. The exceptions from arbitration involved creditor remedies exclusively, including: foreclosure; self-help remedies (such as repossession); and ancillary remedies such as sequestration, attachment, replevin, and garnishment.

The federal suit arose in the context of a consumer suit "asserting violation of various mortgage-regulation and consumer-protection laws by a sub-prime lender, i.e., a financial institution affording higher-interest loans to consumer with impaired credit histories."

The court apparently accepted the holding in Harris v. Green Tree Financial Corp., 183 F.3d 173 (3d Cir. 1999), interpreting Pa. law to be that the mere fact that the lender retains the option to litigate some issues in court, while the consumer must arbitrate all claims does not make the arbitration agreement unenforceable.

Although the court did not say that it was overruling the decision, only that it "swept too broadly," the court apparently rejected Lytle v. CitiFinancial Services, Inc. 810 A.2d 643 (Pa. Super. 2002), which had held that "under Pennsylvania law, the reservation by [a financial institution] of access to the courts for itself to the exclusion of the consumer creates a presumption of unconscionability."

The case also involved the Federal Arbitration Act, 9 USC 2, which expresses a liberal federal policy favoring arbitration agreements. The FAA was meant to "overcome state legislative and judicial efforts to undermine the enforceability of arbitration agreements, inter alia, by establishing a substantive rule of federal law placing such agreements upon the same footing as other contracts." In Prima Paint Corp v. Flood & Conklin Mfg. Co., 388 US 395, 404 (1967) and Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440 (2006), the Supreme Court "has determined that a challenge to the validity of a contract as a whole, and not specificlaly to an arbitration clause, must be presented to the arbitrator and not the courts....The courts may consider, in the first instnace, only those challenges that are directed solely to the arbitration component itself."

The court rejected the argument about the effect of a split-forum, that is, the consumer having "to litigate nearly identical statutory claims twice, one in state court against he foreclosing entity (to whom the loan has been sold/assigned in a secondary market), and a second time in an arbitral forum against....the lender."

Thus, it said that "although this Court is cognizant of the phenomenon of predatory lending and its deleterious effects, because those asserted aspects of this case go to not only the arbitration agreement but also to the underlying merits of the parties' larger dispute, we believe that any relevant contentions in this regard are for an arbitrator in the first instance, under the rationale set forth in the Prima Paint/Buckeye line of decisions."

However, the court did not entirely foreclose the consumer's arguments, noting that it had "taken care...not to exclude the possibility that the arbitration agreement might otherwise be deemed to be unconscionable under Pennsylvania law if [the plaintff's] predatory lending claims are proven, since we have little doubt concerning the unreasonableness of such an adhesion agreement when used as a tool of established predatory lending."

The court also noted "a substantial level of procedural unconscionability present in the sub-prime lending industry, as it employs adhesion contracts and, by design, targets those with few financial choices. Procedural unconscionability would be particularly high in the present case if various of the facts asserted by [the plaintiff], such as lender non-disclosure and dishonesty in the application and settlement process, are true. Furthermore, [the lender] does not deny that its agreement with [the consumer] was one of adhesion. Nevertheless, merely because a contract is one of adhesion does not render it unconscionable and unenforceable as a matter of law."

The court relied heavily on a New Jersey case, Delta Funding Corp. v. Harris, 912 A.2d 104 (NJ 2006)

The consumer-plaintiff waived several important arguments presented by his amici, including whether the costs of arbitration would be prohibitively expensive.

Justice Baldwin, dissenting, argued that a) the majority would have an arbitrator rather than the court decide the important question of unconscionability, and b) that the consumer's was attacking the arbitration clause, not the contract as a whole. She suggested that the court follow contrary decisions from Wisconsin, Tennessee, West Virginia and California in finding that "one-sided arbitration agreements are unconscionable and void."