Taylor Borough wants the court to decide how to pay out a $60,000 escrow account from the bankrupt developer of the Taylor Commons.
Borough solicitor Bill Jones petitioned the Lackawanna County Court of Common Pleas on Thursday to determine where the borough should direct $60,310.70 in a nearly 20-year-old escrow account — minus filing and attorney’s fees — originally put up by Taylor Associates L.P. when it developed the Taylor Commons shopping plaza on South Main Avenue.
The petition names four parties:
• K and J Real Estate, 1170 Highway 315, Suite 1, Plains, which is the current owner of the shopping plaza.
• Fifth Third Bank in Cincinnati, Ohio, which sold the plaza in 2015 after taking ownership from Taylor Associates L.P. during bankruptcy.
• Taylor Associates L.P., 1219 Scalp Ave., Johnstown, the developer and former owner of the property that transferred ownership to Fifth Third Bank amid bankruptcy proceedings.
• Stacy Garrity, treasurer of the Commonwealth of Pennsylvania, and the Department of Treasury.
The petition stems from a 19-year-old development agreement from Jan. 30, 2007, between Taylor Borough and Taylor Associates for the development of Taylor Commons, according to the petition. As part of the agreement, Taylor Associates had to provide security for the completion of its land-development plan.
Taylor Associates then entered into an agreement of sale with Fifth Third Bank after receiving approval from the United States Bankruptcy Court for the Western District of Pennsylvania on Dec. 22, 2015, according to the petition.
The bank acquired Taylor Commons for $1, according to a property transaction recorded Dec. 29, 2015.
Fifth Third Bank then sold the property to K and J Real Estate, on June 18, 2018, according to the petition. The bank sold the shopping plaza for $4 million, according to a property transaction recorded June 21, 2018.
Following the sale, K and J spent money to comply with the remaining requirements in the agreement with the borough, including obtaining a survey of the completed property, Jones wrote in the petition.
On Oct. 18, 2018, Taylor notified Taylor Associates that its escrow account was in arrears. Through attorney John R. McGuire of Zamias Services Inc., Taylor Associates told the borough it was defunct and did not have interest in Taylor Commons, leaving the borough holding $60,310.70 in escrow as security that was no longer needed for improvements under the developer’s agreement, according to the petition.
Under Pennsylvania law, unclaimed funds held by a municipality are subject to be transferred — or escheat — to the state treasurer, according to the petition.
However, K and J Real Estate claims an interest in the funds, according to the petition.
“Respondent K and J Real Estate LLC has asserted a claim to the balance of the escrow funds and the borough is desirous of paying over the balance of the escrow funds without liability for doing so to K and J Real Estate LLC,” according to the petition.
The borough filed the petition “in good faith, to protect it from multiple liability” and asks the court to allow Taylor to deliver the money to the court or to whomever the court directs, Jones wrote.