2002 ruling may help housing authority
SHAMOKIN - The Shamokin Housing Authority has found an ally in its dispute with Red Gold Enterprises over its Center City Apartments.
It's a 2002 Commonwealth Court ruling.
In "Commonwealth of Pennsylvania v. Rosalie and Carl Sprock," the Sprocks were cited in Somerset County for violating a city's safe property maintenance ordinance. But the couple claimed that since the property was offered at a tax sale and there were no bidders, the property was no longer their responsibility. The couple claimed the county tax bureau was responsible as a trustee.
The court affirmed the law, and cited examples such as Section 601, which states: "A property owner may satisfy the lien against his property by paying the amount of the lien to be tax claim bureau prior to the upset sale or bid on the property at the upset sale."
The court also ruled: "At the time in which the citations in the matter was issued, the Sprocks may have been the owners of record, but the subject property has been previously offered at an upset tax sale and title to the property had, therefore, passed to the Bureau as trustee."
Shamokin Housing Authority Board Chairman Jerry Splane claims that, based on that ruling, Red Gold faces the same situation.
"They have an obligation to pay the taxes, which they did, but they are not the owners of Center City Apartments," he said. "The county should still be the trustee of that building."
Red Gold's payment came just a few days before Center City Apartments was scheduled to be on the auction block as part of Northumberland County's first judicial sale in eight years. The authority was primed to bid on the property, but then couldn't because the taxes had been paid.
Housing authority director Ronald Miller was upset with what took place, considering the authority had acquired the two mortgages for Center City - which Red Gold hadn't made a payment on in 11 years.
"It's not that the payment was taken (by the county); I'm sure the city, county and school district are happy to get their money, finally," Miller said. "What I didn't like is that he (Red Gold President Eugene Picarella) is collecting money on a building that he doesn't own. We are entitled to the rents because he is in default of his mortgages."
Northumberland County Solicitor Vincent Rovito said ownership of the building wasn't the issue for the county.
"The tax claim bureau's responsibility is merely to have the tax lien paid, which we did when we took the payment," Rovito said. "As far as the ownership goes, that's for the Housing Authority and Red Gold to decide and litigate if necessary. It's not our fight; we did our job."
Also at issue is a million-dollar mortgage note that Red Gold took out with the Pennsylvania Housing Finance Agency (PHFA) in December 1988. On Sept, 22, 2000, PHFA filed a foreclosure action against Red Gold in the County Court of Common Pleas.
In its lawsuit against the housing authority, Picarella said that on July 6, 2004, the court dismissed the action with prejudice due to PHFA failing to pursue its claim against the plaintiff. With that, Red Gold argues, the mortgages are invalid.
In its point-by-point answer to the suit, the housing authority disputes the result.
"The plaintiff's averment and enforcement of an alleged 'oral understanding' with PHFA that the support mortgage would be forgiven five years after execution, is barred by the Statute of Frauds, Parol Evidence Rule and the applicable statute of limitations," the response reads.
Currently, tenants are either paying Red Gold or the authority while the case is under litigation, and no court date has been set to decide the case.
While the mortgage issue remains up in the air, the authority filed a confession of judgement on Oct. 14 on the primary note.
Clayton Davidson, the attorney hired by the authority to handle this case, said this filing enables them to skip the trial function and receive the judgement.
"Because of the statements that were made in the previous affidavit, it enables us to receive a judgement without going to court," Davidson said. "The defendants do have 30 days to contest the ruling."
The judgment asks for the principal amount, $532,905.42, and interest accrued, totalling $462,159.96, for a total of $995,065.38, plus interest from and following Sept. 16 at a rate of 6 percent per year, or $87.60, court costs and reasonable attorney's fees until paid in full.
Calls to Robert Cravitz, attorney and spokesman for Red Gold Enterprises, were not returned.
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