Elliott Greenleaf wins Superior Court’s discharge of a guarantor’s debt under the Deficiency Judgment Act

Firm News

November 6, 2014

The Pennsylvania Superior Court, affirming the President Judge of Bucks County’s lengthy opinion and Order, held that Elliott Greenleaf’s client, a guarantor of corporate debt, could not be liable on the balance of the debt obligation owing after foreclosure on the borrower’s industrial property due to the lender’s failure to timely file a petition to fix fair market value. Elliott Greenleaf won the discharge, release and satisfaction of any balance owing on the debt following foreclosure under Pennsylvania’s Deficiency Judgment Act (“DJA”). The DJA requires a creditor to file a petition to fix fair market value of the foreclosed property, and to define any deficiency allegedly owing by guarantors, within six months of the delivery of the Sheriff’s Deed from foreclosure. Here, the creditor missed the six month window by a few days, arguing that equitable tolling should apply due to a stay of in personam execution against the guarantor alone for a portion of the six month period. The trial court disagreed with the lender, finding that the lender’s defense of equitable tolling did not apply. Following briefing and oral argument in August 2014, the Superior Court held this week that the trial court properly granted Elliott Greenleaf’s petition to mark the judgment satisfied, released and discharged under the DJA. Mark A. Kearney represented the guarantor in this lender liability appeal in the Pennsylvania Superior Court.