Sheriff’s Sale • Interpleader • Absence of Third Party Bidder

Sysco Corporation v. FW Chocolatier, PICS Case No. 14-0077 (Pa. Super. Jan. 17, 2014) Mundy, J. (12 pages).

The court determined that an interpleader action may commence if there is no “third party bidder” at a sheriff’s sale.

In 2009, Citizens Bank of Pennsylvania extended a line of credit to FW Chocolatier, LLC, doing business as Fudgie Wudgie, L.P. These loans were secured by collateral in the form of all personal property assets owned by Fudgie Wudgie. Financing statements were filed. In 2011, Citizens Bank obtained a judgment against Fudgie Wudgie. The judgment lien for $560,619 was later assigned to Three Rivers Confections, LLC. In May, 2012, pursuant to an agreement for acceptance of collateral in partial satisfaction of debt, Three Rivers accepted all of the personal property of Fudgie Wudgie in full satisfaction of the debt that had been assigned to it by Citizens Bank.

Sysco Corporation obtained a default judgment in the amount of $274,138 against FW Chocolatier and Fudgie Wudgie in November, 2011. Sysco sought to execute on this judgment by means of a sheriff’s sale. That sale was scheduled for August 29, 2012. Three Rivers received notice of the sale and on July 26, 2012, it filed a goods claim, asserting that the property sought to be sold belonged to Three Rivers and not to Fudgie Wudgie. The sheriff immediately denied the goods claim filed by Three Rivers. On August 6, 2012, Three Rivers filed an objection to the sheriff’s determination of the goods claim. However, Three Rivers did not post a bond. The sheriff’s sale took place on August 29, 2012. The only bidders at the sale were Three Rivers and Sysco. Three Rivers outbid Sysco, purchasing all of the property for $276,000.

Sysco filed a motion for release of funds from the sheriff’s sale and Three Rivers moved for judgment on the pleadings, as well as for fees and costs. The trial court heard these matters together. The court decided in favor of Sysco and denied Three Rivers’ motions. Three Rivers filed an emergency motion to stay the distribution, which was granted. Three Rivers then filed this appeal.

Three Rivers argued it was not required by the sheriff’s interpleader procedure to file a bond to maintain a claim for the proceeds where the claimant repurchases its own property. The court agreed that filing an objection after the sheriff’s denial was sufficient.

The statute provides that the interpleader action is between the claimant and all other “interested parties,” not simply the claimant and the purchaser at the sale.

The next issue was whether an interpleader action can commence if there is no third party bidder. The court concluded that it could. The trial court erred in precluding Three Rivers from pursuing a claim of ownership in the interpleader action. The court reversed and remanded for proper distribution of the proceeds from the sheriff’s sale.