HARRISBURG – The Superior Court of Pennsylvania has stayed an ejectment action brought by First Cornerstone Bank and the Federal Deposit Insurance Corporation (FDIC), citing final disposition in, or remand from, federal court.

Judge H. Geoffrey Moulton Jr. said on Oct. 13 that Edward Filby’s appeal was stayed due to a “notice of removal during the pendency of the appeal by FDIC”, the substitute appealing party in this case.

“On Feb. 10, 2016, the trial court (Chester County Court of Common Pleas) entered two orders – one granted summary judgment in favor of First Cornerstone Bank and the other struck Filby’s counterclaims. Filby filed a notice of appeal on March 9, 2016, claiming that the trial court erred as a matter of law by concluding that Filby’s counterclaims constituted an improper collateral attack on the earlier sheriff’s sale of the property in question,” Moulton said.

During the appeal process, First Cornerstone Bank became insolvent. The Secretary of the Pennsylvania Department of Banking and Securities and the FDIC agreed FDIC would act as a receiver for First Cornerstone Bank.

“On June 13, 2016, First Cornerstone Bank petitioned this Court to substitute the FDIC, in its capacity as Receiver for First Cornerstone Bank. On Aug. 12, 2016, this Court granted the substitution in a per curiam order,” Moulton said.

“On August 16, 2016, the FDIC filed a notice of removal with the United States District Court for the Eastern District of Pennsylvania. On Sept. 6, 2016, the FDIC filed a copy of the notice with this Court and served the notice on Filby. The FDIC asserts that pursuant to 12 U.S.C. Section 1819(b)(2)(B) it has a statutory right to remove the pending appeal to federal court,” Moulton added.

Moulton explained typically, removal occurs while the case is pending in the trial court, and the Superior Court had found “no Pennsylvania authority addressing removal by the FDIC of a case on appeal.”

“At least two United States Courts of Appeal, however, have allowed the FDIC, acting as a receiver, to remove state appellate actions to federal court. And the U.S. Court of Appeals for the Third Circuit permitted the Resolution Trust Corporation, with statutory removal authority similar to that of the FDIC, to remove to federal court a case then pending in this Court,” Moulton said.

Moulton said in order to comply with the federal removal statute, a party seeking removal must: “(1) File a notice of removal with the United States district court; (2) File a copy of the notice of removal with the clerk of the State court; and (3) Give written notice to all adverse parties.”

“When the moving party meets these requirements, removal to the federal court is complete and ‘the State Court shall proceed no further unless and until the case is remanded,” Moulton said, according to Section 1446(d).

“The FDIC complied with the statute by filing its notice of removal with the district court, filing a copy with the Prothonotary of the Superior Court, and serving a copy upon Filby. This Court is therefore without jurisdiction to proceed with the appeal.”

Moulton said per the stipulation Section 1446(d), that left the Superior Court no choice but to stay the instant appeal.

“In light of the command contained in Section 1446(d), we are compelled to stay the appeal pending final disposition in federal court,” Moulton said.

Moulton added the Superior Court has found that the filing of a petition for removal “has the effect of statutory stay of further state proceedings”, but after removal, if a federal court finds said removal was improper, “federal law provides that it shall remand the matter to the state court.”

“If the District Court or the United States Court of Appeals for the Third Circuit were to make such a ruling, then this Court would regain jurisdiction over the appeal. We therefore stay the appeal pending final disposition in, or, remand from, federal court and direct the FDIC to notify the Prothonotary of the Superior Court as to any such disposition,” Moulton said.

Superior Court of Pennsylvania case 700 EDA 2016

Chester County Court of Common Pleas 2014-10792

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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