July 26, 2024
For 20+ years, the Court of Common Pleas’ three-judge commerce court has served as Philadelphia’s specialized business court, publishing a consistent body of commercial law the business community can rely on. Here are four of last year’s most notable decisions.
The court frowns upon “litigation about litigation.” William Pocklington sued Christian Randazzo (principal of Ambox) for fraud over an investment. Ambox filed a retaliatory lawsuit using facts and language Pocklington had averred against Randazzo. Ambox alleged that the statements were false and tortious.
Judge Ramy I. Djerassi dismissed Ambox’s complaint on judicial privilege grounds. Judge Djerassi noted that traditionally judicial privilege applies to libel and slander. Emphasizing the broad scope of judicial privilege—and its grant of absolute immunity even to false or malicious communications made in the course of litigation—Judge Djerassi proceeded to extend judicial privilege protection to the tortious interference alleged by Pocklington in his pleading.
Robert Tambur sought a stay after learning the U.S. Attorney’s office and FBI had subpoenaed the plaintiff and interviewed the plaintiff’s CEO. Tambur was concerned about the government indicting him and about discovery provoking the government, but proffered no specific evidence about the alleged investigation, how long it might take, or whether indictments might result.
Judge Nina W. Padilla balanced the overlap between the civil and criminal cases, the status of the criminal case, and the plaintiff’s interests in expeditious proceedings versus any prejudice caused by delay as well as the burden on Tambur, interests of the court, and public interest. She concluded a stay was not warranted: There was no actual criminal case to measure any overlap; indictments might not result; discovery disputes had already prejudiced the plaintiff by delaying the case; and there was no showing Tambur could not defend himself.
While Judge Padilla was open to revisiting, the lesson is: only external circumstances directly causing tangible risk to a litigant will justify a stay.
Apex Realty v. Elverta Washington Square
This opinion addressed sheriff’s sales and the vexing situation of junior creditors post-sale, when they seem to have little recourse against the elimination of their liens by senior creditors. Apex’s predecessor obtained a judgment against Elverta. Apex obtained a writ of execution for a sheriff’s sale of Elverta’s real estate. With nothing left to distribute to Arezzo Sky Capital LTD, a junior creditor with a mortgage on the property, Arezzo petitioned to set aside the sale, arguing its mortgage had priority because of flaws in the loan documents underlying Apex’s judgment.
Judge Djerassi noted that a court can undo a sheriff’s sale even after delivery of the deed when there is fraud or no authority for the sale. Because Elverta had not questioned the judgment, however, the court presumed it was not fraudulent. Moreover, after a detailed loan document review, Judge Djerassi rejected Arezzo’s contention there was no authority for Apex’s judgment.
While junior creditors face a heavy burden, the decision suggests they have standing to challenge a senior creditor’s position.
Skw-B Acquisitions v. Stobba Residential
Here the court imposed a receiver with powers to de facto take over a property. Loan documents required commercial borrowers to deposit rent payments into a bank account for the benefit of the lender. The borrowers defaulted, and their loan matured. The borrowers instructed their tenants to direct rent payments to their operating account, and the lender filed an emergency petition to appoint a receiver, citing the loss of tenants and the property’s declining condition. The court refused, but the Superior Court vacated. On remand, the lender renewed its petition and alleged the borrowers had misappropriated rent and mismanaged the property. This time, the court granted the petition.
Judge Paula Patrick observed that in Pennsylvania, the standard for the appointment of a receiver of a solvent business is similar to that for injunctive relief. It must be necessary to protect creditors and there must be no less drastic remedy. Here the borrowers were diverting funds to themselves, in violation of the loan documents. Furthermore, commercial vacancies were increasing, and several tenants had ceased to pay. A receiver was necessary to prevent waste and stop misappropriation of funds. Judge Patrick’s order is a model for the scope of the authority and duties of a receiver for distressed property.
The original piece can be found here.
Sarah Boutros is an Associate at Eckert Seamans who focuses on complex commercial litigation, for a diverse range of clients before PA, NJ, and federal courts.
Jonathan Hugg is a Member at Eckert Seamans, concentrating on commercial and appellate litigation and counseling.