Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Mortgage Electronic Registration Systems (MERS) is a national electronic loan registry system that permits its members to transfer, among themselves, promissory notes associated with mortgages, while MERS remains the mortgagee of record in public records as “nominee” for the note holder and its successors and assigns. MERS facilitates the secondary market for mortgages by permitting members to transfer the right to repayment pursuant to the terms of the promissory note, recording such transfers in the MERS database to notify one another and establish priority, instead of recording such transfers as mortgage assignments in local land recording offices. It permits note holders to avoid recording fees. Recorders of deeds in Pennsylvania counties sued, seeking an injunction, and to recover millions of dollars in unpaid recording fees, contending that the MERS entities violated 21 Pa. Cons. Stat. 351. The Third Circuit rejected the claims, holding that section 351 does not create a duty to record all land conveyances and is so clear that certification to the Supreme Court of Pennsylvania was unnecessary. The transfers of promissory notes among MERS members do not constitute assignments of the mortgage itself. View "Cnty. of Montgomery Recorder v. MERSCorp Inc" on Justia Law

Realtor Willis planned Southgate, involving the purchase of 68 acres on St. Croix, re-zoning, subdivision, building infrastructure, and selling individual lots. Willis worked with defendants Cheng and Dubois and their entities (OMEI, Ocean View) for financing, but the defendants did not actually intend to develop the property. Pollara, a 47-year veteran of the construction industry, was hired to create the subdivision’s entrance. Ultimately Cheng and Dubois stopped paying Pollara and locked him out of his site office. Pollara was never paid for repair work to the roadway after flooding. Defendants, standing on both sides of the financing, refused any extension of the financing terms; they withheld their consent to selling the land at a profit to a buyer whom Willis had found. They caused Ocean View to foreclose, acquiring the property free of Willis’s and Pollara’s interests. The jury found that Ocean View and Cheng had made intentional misrepresentations and that OMEI had made negligent misrepresentations and that Dubois had made negligent misrepresentations with respect to the building permit and proposals for the development plan, and intentional misrepresentations as to the other three subjects. The jury awarded Pollara compensatory damages of $391,626 from all of the defendants and punitive damages of $90,000 against Cheng. The Third Circuit affirmed. View "Frank C Pollara Grp. LLC v. Ocean View Inv. Holding, LLC" on Justia Law

Makowka owns a home in a Pike County, Pennsylvania, planned community and, in 2005, fell behind on her homeowners’ association dues. In 2008, the Association obtained a default judgment of $2,436. As additional dues went unpaid, the Association sued again in 2010 and obtained another default judgment, worth $3,599.08. A writ of execution and attachment issued. A sheriff’s sale of Makowka’s property was scheduled for September 2011. Days before the sale, Makowka filed a Chapter 13 petition. In her proposed bankruptcy plan, Makowka moved to avoid the Association’s claims under 11 U.S.C. 522(f), which releases a debtor from obligations imposed by judicial liens and non-possessory, non-purchase money security interests. Although Makowka acknowledged that the Uniform Planned Community Act granted the Association a self-executing statutory lien on her residence for unpaid dues, she claimed that part of that lien had been extinguished because the Association failed to foreclose within the statutory period of three years. To the extent the claims represented fees due before September 2008, Makowka contended, it had obtained dischargeable money judgments. The Bankruptcy Court denied Makowka’s motion. The district court affirmed. The Third Circuit vacated, concluding that the district court relied on the wrong state precedent and that the Association did not enforce its statutory lien on Makowka’s residence when it pursued actions in debt.View "In re: Makowka" on Justia Law

Columbia, an interstate natural gas company subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC), seeks to replace a portion of a natural gas pipeline that runs in and around York County, Pennsylvania. Because the original location of the pipeline has become heavily populated, the replacement will not track the original line but will be outside the existing right of way. To obtain easements necessary to complete construction of the replacement, in 2013, Columbia filed Complaints in Condemnation against four Landowners in federal court. The district court held that Columbia did not have the right of eminent domain required to condemn the easements, reasoning that 18 C.F.R. 157.202(b)(2)(i), was ambiguous. The Third Circuit reversed, finding that the regulation clearly anticipates replacement outside the existing right of way and contains no adjacency requirement. The district court erroneously adopted its own definition of “replace” and concluded that a “notice” of “proposed rulemaking” for “Emergency Reconstruction of Interstate Natural Gas Facilities” promulgated by FERC after 9/11 was relevant.View "Columbia Gas Transmission, LLC v. 1.01 Acres in Penn Twp" on Justia Law

New Jersey and Pennsylvania municipalities sued the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Housing Finance Agency (FHFA) (collectively, the Enterprises). Fannie Mae and Freddie Mac are federally-chartered but privately owned corporations that issue publicly traded securities, created by Congress to establish and stabilize secondary markets for residential mortgages, 12 U.S.C. 1716; 12 U.S.C. 1451. Fannie and Freddie purchase mortgages from third-party lenders, pooling them together and selling securities backed by those mortgages. In the wake of the housing market collapse of 2008, Fannie and Freddie owned many defaulted and overvalued subprime mortgages. They went bankrupt, and Congress created the FHFA to act as conservator for Fannie and Freddie. Congress exempted the Enterprises from all state and local taxation, with an exception for taxes on real property. The plaintiffs sought declaratory judgments that the Enterprises were not exempt from paying state and local real estate transfer taxes. The district courts dismissed. In a consolidated appeal, the Third Circuit affirmed. View "Delaware Cnty. v. Fed. Hous. Fin. Agency" on Justia Law

The sellers own an island off St. Thomas, Virgin Islands, and a launch providing access to the island from St. Thomas. In 2004, the buyers signed land contracts and an escrow agreement to purchase the properties for $21 million and $2.5 million, respectively. Premier Title served as the escrow agent and was party to the escrow agreement. Unbeknownst to the buyers, D’Amour, the sellers’ attorney-in-fact, owned Premier. The contract required an initial deposit of $1 million. The buyers paid an additional $500,000 nonrefundable deposit to extend the closing date. The sellers were to deliver “Clear and Marketable” title and assignments of all permits, submerged land leases and other licenses necessary for occupancy of the dock and other improvements. At the scheduled closing, it was determined that dock permits had expired and that there were several exceptions to title. The sellers refused to refund the deposits. The buyers appealed district court orders, rejecting certain claims; the sellers cross-appealed other orders. D’Amour appealed some holdings. The Third Circuit affirmed in part and reversed in part, concluding that conclude that the buyers are entitled to recover the $1.5 million deposit in restitution, and that the tort claims are barred by the gist of the action doctrine. View "Addie v. Kjaer" on Justia Law

Mortgage-backed securities, known as the MASTR Pass-Through Certificates, Series 2007-3, were offered to the public in 2007. UBS, the sponsor of the Certificates, purchased the underlying loans from originators, including Countrywide Home Loans and IndyMac Bank, then sold the loans to MASTR, which placed the loans into the MASTR Adjustable Rate Mortgages Trust, the issuer of the Certificates. UBS Securities, the underwriter, sold the Certificates to investors. The Certificates were issued pursuant to a Securities and Exchange Commission (SEC) Form S-3 Registration Statement filed in 2005 and an SEC Form 424B5 Prospectus Supplement filed in 2007. Those documents assured investors that the underlying loans were originated pursuant to particular underwriting policies and in compliance with federal and state laws and regulations. The district court dismissed a purported class action by investors, alleging violations of the Securities Act of 1933, 15 U.S.C. 77, for failure to plead compliance with the one-year statute of limitations and dismissed an amended complaint as untimely under an inquiry notice standard. The Third Circuit affirmed, holding that a Securities Act plaintiff need not plead compliance with Section 13 and that Section 13 establishes a discovery standard for evaluating the timeliness of Securities Act claims, but the claims were, nonetheless, untimely. View "Pension Trust Fund for Operating Eng'rs v. Mortg. Asset Securitization Transactions, Inc." on Justia Law

In 1999, Klein and Weidner divorced in California. Weidner was ordered to pay spousal and child support. He made some child support payments but had paid no spousal support, when Klein filed suit, resulting in a 2008, judgment that he owed $548,797.07 in unpaid spousal and child support. Klein later challenged, under the Pennsylvania Uniform Fraudulent Transfer Act, Weidner’s 2006 transfer of Pennsylvania real estate to himself and his new wife as tenants by the entirety. The district court granted Klein summary judgment and awarded $548,797.07 in punitive damages; the Weidners were ordered to execute a deed transferring the property back to Weidner in fee simple by January 15, 2010. Klein also successfully attacked Weidner’s transfer of an ownership interest in a company, DMW, and attempted to pierce DMW’s corporate veil. The Third Circuit affirmed, holding that the new wife was not a good faith transferee and that the Pennsylvania statute does authorize an award of punitive damages. View "Klein v. Weidner" on Justia Law

A 2010 fire at an apartment in Erie, Pennsylvania took the lives of a tenant and her guest. The third-floor bedroom purportedly lacked a smoke detector and an alternate means of egress, both of which are required under the Section 8 housing choice voucher program (42 U.S.C. 1437f) in which Richardson participated. The district court rejected a defense of qualified immunity in a suit under 42 U.S.C. 1983 by the estates of the deceased. The Third Circuit reversed. State officials’ approval and subsidization of the apartment for the Section 8 program, even though the apartment allegedly failed to comply with Section 8’s standards, did not constitute a state-created danger toward the apartment’s tenant and her guest in violation of their constitutional substantive due process rights. View "Henry v. City of Erie" on Justia Law

In 1988 Trinity acquired South Plant, 53 acres in Greenville, and manufactured railcars there until 2000. Some buildings are now vacant and some are used for storage. Pennsylvania initiated enforcement proceedings concerning release of hazardous substances in 2006, which resulted in Trinity pleading no contest to misdemeanor counts of unlawful conduct. Trinity and the Pennsylvania Department of Environmental Protection entered into a consent order; pursuant to Pennsylvania’s Hazardous Sites Cleanup Act and Land Recycling and Environmental Remediation Standards Act, Trinity agreed to fund and conduct Response Actions under a schedule approved by DEP. Trinity claims to have undertaken preliminary investigation but has yet to perform remediation. Trinity sought contribution from CB&I, the prior owner, which had constructed a facility for manufacturing steel products on the site in 1910 and had operated for 75 years. Trinity alleges that CB&I contaminated sections of South Plant through abrasive blasting, submerging steel plates in acid, and painting. The district court granted CB&I summary judgment on claims under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601-9675, and the Resource Conservation and Recovery Act, 42 U.S.C. 6901. The Third Circuit affirmed with respect to the RCRA claim, but agreed with Trinity and the government that CERCLA does not require that a party have settled its liability under CERCLA in particular to be eligible for contribution. View "Trinity Indus., Inc. v. Chicago Bridge & Iron Co." on Justia Law