RESIDENTIAL AND COMMERCIAL REAL ESTATE
Confession of Judgment • Fair Market Value • Deficiency Judgment • Interest
Liberty Philadelphia REO, L.P. v. EFL Partners V, L.P., PICS Case No.14-0336 (Pa.Super. March 3, 2104) Strassburger, J. (11 pages).
In a case arising out of a confession of judgment and sale of real property, EFL appealed from the order which granted Liberty’s petition to fix the fair market value of the real properties and entered a deficiency judgment against EFL. Affirmed in part, vacated in part and remanded.
EFL presented two issues for review: did the trial court err or abuse its discretion in relying on the bulk wholesale method to determine the fair market value of the condominiums and did the court err or abuse its discretion in awarding a deficiency judgment that contained an excessive interest component.
EFL argued that Liberty’s expert testimony for the fair market value of the condominiums was entitled to no credence because it used a valuation methodology that was specifically rejected in Cheltenham. EFL also argued that by not accepting the complete report of either appraiser and setting a value somewhere between the two reports, the court’s value was not “grounded in the actual evidence of record.” Liberty’s expert used “developmental analysis” to value the properties and concluded that the fair market value was $6,000,000. ELF’s expert used a “sales comparison approach” and concluded that the fair market value was $12,750,000. The trial court found a fair market value of $8,400,000. There was no question that the approaches of both appraisers were acceptable forms of valuing property under these circumstances. Where these experts differed, it was appropriate for the court to resolve the conflict. Thus, there was sufficient evidence of record for the trial court’s determination of fair market value.
Liberty’s argument that EFL had waived the issue of the interest on the deficiency judgment on appeal was without merit. Despite Liberty’s contention that EFL should have raised the issue in its appeal from the July 12, 2011 order, the issue was not ripe for appeal until the trial court calculated the deficiency judgment in a Feb. 19, 2013 order, at which time EFL appealed the order.
EFL argued that the trial court erred in continuing to apply the $2,444.31 per diem interest amount for the time following the sheriff’s sale even though the amount of the unpaid judgment significantly decreased as of the sheriff’s sale and the property Liberty obtained at the sale. The court agreed that the $2,444.31 per diem interest rate was only effective from the date of the confessed judgment, Jan. 5, 2010, to the date of the sheriff’s sale, Oct. 5, 2010.
The fair market value determination was affirmed, the interest judgment was vacated and the matter was remanded for further proceedings.