301.4. Designation; review of proposed capital expenditures.
301.6. Procedures for agency review.
301.8. Criteria for agency review.
301.9. Determination by the Secretary of HHS.
301.10. Continuing effect of determinations.
301.11. Phase-out of health facilities review program.
The provisions of this Chapter 301 adopted October 26, 1979, effective October 27, 1979, 9 Pa.B. 3563; amended through April 25, 1980, effective April 26, 1980, 10 Pa.B. 1664, unless otherwise noted.
This chapter cited in 55 Pa. Code § 1151.52 (relating to payment for capital costs not included in the base year); 55 Pa. Code § 1163.452 (relating to payment methods and rates); 55 Pa. Code § 1163.453 (relating to allowable and nonallowable costs); 55 Pa. Code § 1181.65 (relating to cost-finding); 55 Pa. Code § 1181.259 (relating to depreciation allowance); 55 Pa. Code § 1181.260 (relating to interest allowance); 55 Pa. Code § 1181.412 (relating to depreciation allowance); and 55 Pa. Code § 1187.113 (relating to capital component payment limitation).
This chapter is applicable to reviews of proposed capital expenditures by covered health care facilities conducted by the Department of Health under an agreement with the United States Department of Health and Human Services and implementing Federal regulations, 42 CFR 100.101100.109 (relating to cost containment and quality control). The agreement is authorized by section 1122 of the Social Security Act (42 U.S.C.A. § 1320a-1); section 2102(a) and (g) of The Administrative Code of 1929 (71 P. S. § 532(a) and (g)) and Act 56-A of 1978 as it relates to the Health Department. The purpose of the program is to assure that Federal and State funds appropriated under Titles V, XVIII and XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff) and sections 441.1472 of the Public Welfare Code (62 P. S. § § 441.1472) are not used to support unnecessary capital expenditures made by or on behalf of health care facilities or health maintenance organizations which are reimbursed under any of those provisions.
ActThe Social Security Act, 42 U.S.C.A. § § 2017706.
ApplicantA person proposing a capital expenditure.
Designated planning agency or DPA or DepartmentThe Department of Health.
HHSThe United States Department of Health and Human Services.
(i) Hospital. An institution which is primarily engaged in providing to inpatients, by or under supervision of physicians, diagnostic services and therapeutic services for medical diagnosis, treatment and care of injured, disabled or sick persons, or rehabilitation services for the rehabilitation of injured, disabled or sick persons. The term does not include psychiatric and tuberculosis hospitals.
(ii) Psychiatric hospital. An institution which is primarily engaged in providing to inpatients, by or under the supervision of a physician psychiatric services for the diagnosis and treatment of mentally ill persons.
(iii) Tuberculosis hospital. An institution which is primarily engaged in providing to inpatients, by or under the supervision of a physician, medical services for the diagnosis and treatment of tuberculosis.
(iv) Skilled nursing facility. An institution or a distinct part of an institution which is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled or sick persons.
(v) Intermediate care facility. An institution which provides, on a regular basis, health-related care and services to individuals who do not require the degree of care and treatment which a hospital or skilled nursing facility is designed to provide, but who because of their mental or physical condition require health-related care and services (above the level of room and board).
(vi) Ambulatory surgical facility. A facility, not a part of a hospital, which provides surgical treatment to patients not requiring hospitalization. The term does not include the offices of private physicians or dentists, whether for individual or group practice.
(i) Provides or otherwise makes available to enrolled participants health care services, including at least the following basic health care services: Usual physician services, hospitalization, laboratory, X-ray, emergency and preventive services and out-of-area coverage.
(ii) Is compensated, except for co-payments, for the provision of the basic health care services listed in subparagraph (i) of this definition to enrolled participants on a predetermined periodic rate basis.
(iii) Provides physicians services primarily directly through physicians who are either employes or partners of the organization or through contracts or other arrangements with individual physicians or one or more groups of physicians organized on a group practice or individual practice basis.
Health systems agency or HSAAn entity performing regional health planning and regulatory functions and duly designated by the Secretary of HHS under provisions of the Public Health Service Act (42 U.S.C.A. § § 201300cc-15).
PersonAn individual, a trust or estate, partnership, a corporation, including associations, joint-stock companies and insurance companies, the Commonwealth, or a political subdivision or instrumentality, including a municipal corporation, of the Commonwealth.
The provisions of this § 301.2 amended through October 26, 1979, effective October 27, 1979, 9 Pa.B. 4164.
(a) A capital expenditure proposed by or on behalf of a health care facility or health maintenance organization, the obligation for which is incurred by or on behalf of a health care facility or health maintenance organization after March 31, 1973, shall be subject to this chapter; provided, that in the case of a health care facility providing health care services as of December 18, 1970, which on such date was committed to a formal plan of expansion or replacement, this chapter does not apply with respect to such expenditures as may be made or such obligations as may be incurred for capital items included in such plan where preliminary expenditures toward the plan of expansion or replacement including payments for studies, surveys, designs, plans, working drawings, specifications, and site acquisition essential to the acquisition, improvement, expansion or replacement of the health care facility or equipment concerned, of $100,000 or more, had been made during the 3-year period ended December 17, 1970.
(b) For purposes of this chapter, a capital expenditure is an expenditure, including a force account expenditure, that is, an expenditure for a construction project undertaken by the facility as its own contractor which under generally accepted accounting principles is not properly chargeable as an expense of operation and maintenance and which exceeds $100,000, changes the bed capacity of the facility with respect to which such expenditure is made, or substantially changes the services of the facility with respect to which such expenditure is made.
(c) For purposes of subsection (b), the cost of studies, surveys, designs, plans, working drawings, specifications and other activities essential to the acquisition, improvement, expansion or replacement of the plant and equipment with respect to which the expenditure is made shall be included in determining whether such expenditure exceeds $100,000.
(d) For purposes of subsection (b), where the estimated cost of a proposed project, including cost escalation factors appropriate to the area in which the project is located, is, within 60 days of the date on which the obligation for the expenditure is incurred, certified by a licensed architect or engineer to be $100,000 or less, the expenditure may be deemed not to exceed $100,000 regardless of the actual cost of such project; provided, that in a case where the actual cost of the project exceeds $100,000, the health care facility or health maintenance organization on whose behalf the expenditure is made shall provide written notification of the cost to the designated planning agency not more than 30 days after the date on which the expenditure is incurred. The notification shall include a copy of the certified estimate.
(e) For purposes of subsection (b), a capital expenditure which changes the bed capacity of a facility means a capital expenditure which results in any increase or decrease in licensed capacity.
(f) For purposes of subsection (b), a capital expenditure which substantially changes the services of a facility means a capital expenditure which results in the addition of a clinically related, that is, diagnostic, curative, or rehabilitative service not previously provided in the facility or in the termination of such a service which had previously been provided in the facility.
(g) A change in a proposed capital expenditure which itself meets the criteria set forth in subsection (b) shall, for purposes of this chapter, be deemed a capital expenditure; provided, that an increase or decrease in the cost of a proposed capital expenditure which increase or decrease is not related to a change in bed capacity or a substantial change in services and does not increase the cost of the project more than 20%, may, at the option of the designated planning agency, be exempt from review under this chapter.
(1) In the case of a lease or comparable arrangement, in computing the persons rental expense, in determining the Federal payments to be made under Titles V, XVIII and XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff) with respect to services furnished in the facility, deduct the amount which in his judgment is a reasonable equivalent of the amount that would have been excluded if the person had acquired the facility or equipment by purchase.
(2) In the case of a lease or comparable arrangement, in computing the persons return on equity capital, deduct an amount deposited under the terms of the lease or comparable arrangement.
(3) In the case of a donation which is carried by the person as a capital asset, exclude from reimbursement for services provided under Titles V, XVIII and XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff) an amount claimed for depreciation on the facility or equipment, and other costs related to its acquisition.
(1) When an enforceable contract is entered into by the facility or organization or by a person proposing the capital expenditure on behalf of the facility or organization for the construction, acquisition, lease or financing, of a capital asset; to be enforceable a construction contract shall obligate a party to cause the capital asset to be constructed, require the commencement of construction by a date specified in the contract but no later than 6 months after the close of the period for incurring an obligation, and provide for appropriate liquidated damages in the event of default by the facility or organization.
(2) Upon the formal internal commitment of funds by a facility or organization for a force account expenditure which constitutes a capital expenditure.
(3) In the case of donated property, as described in subsection (h) of this section the date on which the gift is completed in accordance with Commonwealth law.
(4) In any event, if construction when applicable has not commenced within 2 years from the date on which the applicant received a recommended approval from the Department, an obligation incurred under this subsection shall expire and shall result in a termination of the obligation and of the recommended Commonwealth approval.
(j) A determination by the designated planning agency that a proposed expenditure is not a capital expenditure within the meaning of section 1122 of the act (42 U.S.C.A. § 1320a-1) and this chapter or that it falls within the exemption described in this section or that it is otherwise not subject to review under section 1122 of the act (42 U.S.C.A. § 1320a-1) shall be binding upon the Secretary of HHS. A determination by the designated planning agency that a proposed expenditure is a capital expenditure subject to review under section 1122 of the act and this chapter may be appealed, by the applicant, to the Secretary of HHS. The appeal may be made at any time, in such form and manner as the Secretary of HHS may prescribe.
(k) During the pendency of the appeal, the running of all time periods specified in § 301.6 (relating to procedures for agency review) shall be suspended, except that nothing in this subsection shall affect the requirement that written notice of the intention to make a capital expenditure subject to this chapter shall be received by the designated planning agency not less than 60 days prior to the date on which the expenditure is incurred.
§ 301.4. Designation; review of proposed capital expenditures.
(i) The designated planning agency had been given notice of the proposed capital expenditure at least 60 days prior to obligation for the expenditure.
(ii) The expenditure is or is not consistent with the standards, criteria or plans developed under the Public Health Service Act (42 U.C.S.A. § § 201300cc-15) or the Mental Retardation Facilities and Community Mental Health Centers Construction Act of 1963, Pub. L. No. 88-64, 77 Stat. 282, to meet the need for adequate health care facilities in the area covered by the plans so developed.
(iii) In reaching the findings, the designated planning agency shall consult with and take into consideration the findings and recommendations of the appropriate health systems agency.
(iv) When the designated planning agency finds that the expenditure is not consistent with the standards, criteria or plans, it shall submit to the Secretary of HHS the findings and recommendations of all other agencies with which it has consulted.
(i) Exclude, in determining the Federal payments to be made under Titles V, XVIII and XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff) with respect to services furnished in the health care facility or health maintenance organization for which the capital expenditure is made, expenses related to the capital expenditure, in accordance with section 1122(d)(1) of the act (42 U.S.C.A. § 1320a-1).
(ii) Not exclude expenses, on the ground that the facility or organization has demonstrated proof of capability to provide comprehensive health care services efficiently, effectively and economically, and that an exclusion would discourage the operation or expansion of the facility or organization, or of any facility of the organization.
(3) With respect to each proposed capital expenditure which is found by an agency described in paragraph (1)(ii) to be not consistent with the standards, criteria or plans described in paragraph (1) within the field of responsibilities of the other agency, the findings and recommendations of the other agency.
(4) With respect to each proposed capital expenditure as to which the designated planning agency reaches a finding contrary to that reached by the health systems agency a statement of the reasons for a contrary finding.
This section cited in 28 Pa. Code § 301.7 (relating to fair hearing); 28 Pa. Code § 301.8 (relating to criteria for agency review); 28 Pa. Code § 301.9 (relating to determination by the Secretary of HHS); and 28 Pa. Code § 301.10 (relating to continuing effect of determinations).
The Statewide Health Coordinating Council, constituted under section 1524 the act (42 U.S.C.A. § 300m-3), shall serve as the advisory body to the designated planning agency.
§ 301.6. Procedures for agency review.
(1) A health care facility or health maintenance organization proposing to make a capital expenditure subject to this chapter shall provide written notice of its intent to make such capital expenditure to the designated planning agency not less than 60 days prior to the date on which the obligation is expected to be incurred. The designated planning agency shall forward the letter of intent to the appropriate health systems agency.
(2) The notice shall be submitted on an application form provided by the designated planning agency and shall contain the information as may be required by the application and the health systems agency to meet the needs of all the agencies whose respective fields of responsibility cover the proposed expenditure. The designated planning agency shall promptly publicize its receipt of the notice through local newspapers and public information channels.
(3) If the application under this subsection is found by the health systems agency to be incomplete, the agency shall notify the person proposing the capital expenditure within 15 days of its receipt of the incomplete application, advising the person of the additional information required. Where the timely notification of incompleteness is provided, the period within which the designated planning agency is required to notify the person proposing the expenditure that the expenditure is not approved, shall run from the date of receipt by the health systems agency of an application containing the additional information.
(4) The health systems agency shall complete its review of an application for a capital expenditure and send its findings and recommendation to the designated planning agency no later than 70 days after receipt of a complete application.
(5) When an applicant makes a substantial change in its project during review by the designated planning agency, the applicant shall withdraw the application and resubmit it for a full review under paragraph (1). When a substantial change is made by the applicant during review by the health systems agency, the same procedure shall apply unless waived by the health systems agency. A substantial change, for purposes of this paragraph, shall mean any alteration to a project which changes the site; changes the project cost in excess of 20% or a limit established by the health systems agency, whichever is smaller; changes the number of beds by 5% or five beds, whichever is smaller; or substantially changes the services provided by the health care facility.
(6) The designated planning agency shall within 90 days after the receipt of a complete application unless the applicant agrees to a longer period, provide written notification to the applicant of its decision to recommend approval or disapproval of a project to the Secretary of HHS or of its decision not to review a project.
(7) A health systems agency may, with the approval of the designated planning agency, give a nonsubstantive review, that is, less than a full review, to a proposed capital expenditure. Factors which will be considered in determining when to permit a nonsubstantive review include a project cost of less than $100,000; replacement of plant or equipment as a result of a natural disaster, fire, equipment failure or similar occurrence requiring immediate replacement in order to maintain continuity of operation; or alteration strictly for remedying Life Safety Code deficiencies, supported by an inspection report from the appropriate agency, when the need is apparent.
(8) The failure of the designated planning agency to provide notification within the time limitations set forth in this section shall have the effect of a recommendation of approval to the Secretary of HHS.
(9) When the designated planning agency notifies an applicant of its intention to recommend disapproval of the proposed expenditure to the Secretary of HHS, it shall include the reasons therefor and a summary of the findings and recommendations of the other agencies with which such agency has consulted and shall provide an opportunity for a fair hearing with respect to the findings and recommendations of the designated planning agency at the request of the applicant.
(10) Copies of the findings and recommendations of the designated planning agency shall also be sent to the other agencies consulted, and shall be publicized through local newspapers and public information channels.
(b) A person proposing a capital expenditure may withdraw his previously filed application without prejudice by filing simultaneous written notification of the withdrawal with the health systems agency and the designated planning agency at any time prior to his receipt of notice from the designated planning agency of its intention to make a recommendation to the Secretary of HHS.
This section cited in 28 Pa. Code § 301.3 (relating to expenditures covered); 28 Pa. Code § 301.9 (relating to determination by the Secretary of HHS); 28 Pa. Code § 301.10 (relating to continuing effect of determinations); and 28 Pa. Code § 301.11 (relating to phase-out of health facilities review program).
(i) Requests for hearing shall be made in writing to the designated planning agency within 30 days after the applicant receives notice of the designated planning agencys findings and recommendations. The request for hearing shall be in the form of a pleading. It shall indicate which of the issues specified in this subsection the applicant wishes to raise and shall set forth the facts and the law upon which the applicant relies. A mere general assertion that the capital expenditure is consistent with standards, criteria or plans or that the designated planning agency committed prejudicial error, or the like, will not be considered as complying with this subsection. The Hearing Officer may strike a portion of a request for hearing which does not comply with this subsection, or, in the alternative, may permit the applicant to make its request more specific. In the latter event, the hearing shall be commenced within 30 days of the filing of the amended request for hearing.
(ii) Subparagraph (i) supplements 1 Pa. Code § 35.17 (relating to petitions generally).
(i) The hearing shall be commenced within 30 days after receipt of the request described in subsection (c)(1) (or later, at the option of the person requesting the hearing), and shall be conducted in accordance with the regulations contained in this subsection and 1 Pa. Code Part II (relating to general rules of administrative practice and procedure); provided that, whenever the general rules of administrative practice and procedure are inconsistent with this subsection, the latter shall control.
(ii) The following provisions of the general rules of administrative practice and procedure are inapplicable to hearings held under this subsection: 1 Pa. Code § § 35.190, 35.20135.203, 35.21135.214, 35.221, 35.225, 35.226, 35.23135.233, 35.241 and 35.251 (relating to appeals to agency head from rulings of presiding officers; certification of record without proposed report; proceedings in which proposed reports are prepared; unavailability of presiding officer; exception to proposed reports; briefs and argument in absence of proposed report; decisions; reopening of record; application for rehearing or reconsideration; and reports of compliance).
(i) Hearings shall be conducted by an agency or person, other than the designated planning agency, as the Governor designates for that purpose; provided, that no agency which or person who has taken part in a prior consideration of or action upon the proposed capital expenditure may conduct the hearing.
(ii) Subparagraph (i) supersedes 1 Pa. Code § 35.123 (relating to conduct of hearings).
(4) Open to the public. The hearing shall be open to the public and shall be publicized through local newspapers and public information channels.
(i) The person proposing the capital expenditure, the other agency described § 301.4(i)(iii) (relating to designation; review of proposed capital expenditures) and other interested parties, including members of the public and representatives of consumers of health services, shall be permitted to give testimony and present arguments at the hearing without formally intervening. Reference should be made to 1 Pa. Code § § 35.2735.32 (relating to intervention). The testimony and arguments shall be presented after the testimony of the designated planning agency, the applicant, and any intervening parties has been heard but may be presented, at the discretion of the Hearing Officer, at any other convenient time. When the testimony is presented, parties may cross-examine the witness.
(ii) Subparagraph (i) supplements 1 Pa. Code § § 35.2735.32 and 35.125(b) (relating to order of procedure).
(A) Whether the findings and recommendations of the designated planning agency are supported by substantial evidence.
(B) Whether there was a violation of the constitutional or statutory rights of the applicant or a prejudicial procedural error in the review of the proposed capital expenditure.
(A) The correctness, adequacy or appropriateness of the standards, criteria or plans against which the proposed expenditure was measured.
(B) Whether the proposed expenditure is subject to review by the designated planning agency.
(ii) Subparagraphs (i) and (ii) supplements 1 Pa. Code § 35.162 (relating to reception and ruling on evidence).
(i) Unless the Hearing Officer, for good cause, orders otherwise, the designated planning agency will proceed first with its case, followed by the applicants case; nevertheless, the burden of proof shall be on the applicant, and the findings and recommendations of the designated planning agency shall be sustained unless unsupported by substantial evidence or unless the applicant establishes that it was the victim of a violation of law or a prejudicial procedural error.
(ii) Subparagraph (i) supersedes 1 Pa. Code § 35.125(a) (relating to order of procedure).
(A) The complete application for the proposed capital expenditure.
(B) The standards, criteria or plans against which the proposed expenditure was measured by the designated planning agency and by any agency consulted by the designated planning agency.
(C) The findings and recommendations of the designated planning agency and of any agency consulted by the designated planning agency.
(D) Minutes, transcripts or other records of a public hearing or public meeting held by the designated planning agency or an agency consulted by the designated planning agency at which hearing or meeting the proposed expenditure was considered.
(E) Other documentary evidence considered by the designated planning agency, or an agency consulted by the designated planning agency, in making its findings and recommendations.
(ii) Paragraph (8) shall not be construed so as to deprive a party of the opportunity to offer additional documentary or oral evidence relevant to an issue raised in the hearing.
(iii) Subparagraph (ii) supplements 1 Pa. Code § § 35.125(d) and 35.162.
(9) Record of the fair hearing. A record of the proceedings shall be kept in accordance with the requirements of applicable State law and copies of the record together with copies of documents received in evidence, shall be available to the public for inspection and copying: provided, that a person who requests copies of the material may be required to bear the costs thereof.
(i) Hearings shall conclude on the last day fixed by the Hearing Officer for the submission of a brief. The Hearing Officer shall notify all parties, in writing or on the record, of the day on which the hearing will conclude and of any changes thereto.
(ii) Subparagraph (i) supplements 1 Pa. Code § 35.191 (relating to proceedings in which briefs are to be filed).
(11) Notification of decision. As soon as practicable, but not more than 45 days after the conclusion of a hearing, the Hearing Officer shall notify the person who requested the hearing, the designated planning agency, the other agencies described in § 301.4(1)(iii) who participated in the hearing, and other interested parties at the discretion of the Hearing Officer of his decision and the reasons therefor. The decision shall be publicized through local newspapers and public information channels. In the event that the Hearing Officer fails to provide notice as required in this section within 45 days after the conclusion of a hearing, the failure to provide notice shall have the effect of a recommendation of approval to the Secretary of HHS.
(i) After rendering his decision, the Hearing Officer shall transmit the record of the hearing to the designated planning agency.
(ii) The provisions of subparagraph (i) supplement the provisions of 1 Pa. Code § 35.133 (relating to copies of transcripts).
(13) Role of the fair hearing decision. A decision of a Hearing Officer arrived at in accordance with this subsection shall, to the extent that it reverses or revises the findings or recommendations of the designated planning agency, supersede the findings and recommendations of the designated planning agency; provided, that where judicial review of the decision is obtained, the final decision of the reviewing court to the extent that it modifies the findings and recommendation of the designated planning agency, shall to such extent supersede the findings and recommendation of the designated planning agency.
(14) Further action. To the extent that any decision of a Hearing Officer under this subsection requires that the designated planning agency take further action, the action shall be completed by the date the Hearing Officer specifies. Failure by the designated planning agency to complete the action by the date shall have the effect of a recommendation of approval of the proposed capital expenditure.
§ 301.8. Criteria for agency review.
(1) Whether the proposed project is needed or projected as necessary to meet the needs in the community in terms of health services required; provided, that projects for highly specialized services, such as open-heart surgery, renal transplantation or radiation therapy, which will draw from patient population outside the community in which the project is situated will receive appropriate consideration.
(2) Whether the proposed project can be adequately staffed and operated when completed.
(3) Whether the proposed capital expenditure is economically feasible and can be accommodated in the patient charge structure of the health care facility or health maintenance organization without unreasonable increases.
(4) Whether the project will foster cost containment or improved quality of care through improved efficiency and productivity, including promotion of cost-effective factors such as ambulatory care, preventive health care services, home health care and design and construction economies, or through increased competition between different health services delivery systems.
§ 301.9. Determination by the Secretary of HHS.
(a) This section issued by the Department of Health imposes no legal obligation on the Secretary of HHS. It restates the Federal regulation found at 42 CFR 100.108 (relating to determination by the Secretary). Reference should be made to the Federal regulation.
(b) Except as provided in subsection (c), if the Secretary of HHS determines that the designated planning agency has not been given timely notice of intention to make a capital expenditure in accordance with § 301.6 (relating to procedures for agency review) or that the designated planning agency has, in accordance with the requirements of section 1122 of the act (42 U.S.C.A. § 1320a-1) and this chapter, submitted to the Secretary of HHS its findings that the expenditure is not consistent with the standards, criteria or plans described in § 301.4(2) (relating to designation; review of proposed capital expenditures) then for a period the Secretary of HHS deems necessary to effectuate the purpose of section 1122 of the act, the Secretary of HHS will, in determining the Federal payments to be made under Titles V, XVIII and XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff) to the health care facility or health maintenance organization, exclude expenses related to the capital expenditure.
(c) Notwithstanding the provisions of subsection (b), if the Secretary of HHS, after submitting the matters involved to the National Advisory Health Council on Comprehensive Health Planning Programs and after taking into consideration the recommendations of the designated planning agency and the other agency described in § 301.4 (2)(i) with respect to the expenditure, determines that an exclusion of expenses related to a capital expenditure of a health care facility or health maintenance organization would discourage the operation or expansion of the facility or organization or of any facility of the organization which has demonstrated to his satisfaction proof of capability to provide comprehensive health care services efficiently, effectively and economically or would otherwise be inconsistent with the effective organization and delivery of health services or the effective administration of Titles V, XVIII or XIX of the act (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff), the Secretary of HHS will include the expenses in Federal payments under such titles.
(d) Upon making a determination under this section, the Secretary of HHS will promptly notify the person proposing a capital expenditure, the designated planning agency and the other agency described in § 301.4 (2)(i) with which the designated planning agency has consulted of the determination and the basis for the determination.
(e) A person dissatisfied with a determination by the Secretary of HHS under section 1122 of the act or this chapter with respect to a particular capital expenditure may, within 6 months following the date of the determination, request the Secretary of HHS to reconsider the determination.
(1) The request for reconsideration shall be in writing, shall be addressed to the Secretary of HHS or to an officer or employe of HHS to whom the Secretary of HHS has delegated responsibility to receive requests, and shall set forth the grounds based upon the record of the proceedings and issues of law upon which reconsideration is requested.
(2) Reconsideration will be based upon the record of the proceedings, which shall consist of the findings; the recommendation and supporting materials submitted to the Secretary of HHS by the designated planning agency, including the findings and recommendations of other agencies, which relate to the findings and recommendations involved; the record of the hearing provided by the designated planning agency, if any, and of judicial proceedings; the materials submitted in connection with the request; and the comments as the Secretary of HHS may request from the designated planning agency.
(3) Notice of a reconsidered determination under this subsection shall be sent to the designated planning agency and the person requesting such reconsideration.
(f) A determination by the Secretary of HHS is, under section 1122 of the act (42 U.S.C.A. § 1320a-1), not subject to administrative or judicial review.
The provisions of this § 301.9 amended through October 26, 1979, effective October 27, 1979, 9 Pa.B. 4164.
§ 301.10. Continuing effect of determinations.
(a) Except in the case of a long-term construction plan of the type described in subsection (b), where the designated planning agency has found that a proposed capital expenditure is in conformity with the standards, criteria and plans described in § 301.4(a)(2) (relating to designation; review of proposed capital expenditures), the obligation for capital expenditure shall be incurred not more than 1 year following the date of the finding; provided, that the designated planning agency may, under a showing of good cause by the person proposing the expenditure, extend the period during which the obligation shall be incurred for up to an additional 6 months from the expiration date of the original approval. The health systems agency shall contact the applicant no later than 10 months after the designated planning agency approval to notify the person of the expiration date and of the procedure for requesting a 6-month extension for good cause. If no obligation is incurred within the period or, if incurred, the facility or organization has not started construction or purchased the equipment for which the approval was granted, within 6 months following the expiration date for incurring an obligation, the approval of the designated planning agency shall, for purposes of this chapter, be deemed to be terminated upon the expiration of the applicable period. When a project approval is terminated for failure to incur an obligation or to start construction or purchase equipment in a timely manner, the designated planning agency will notify the applicant in writing of the termination.
(b) In the case of a plan for capital expenditures proposed by or on behalf of a health care facility or health maintenance organization under which a series of obligations for capital expenditures for discrete components of the plan is to be incurred over a period longer than 1 year, the designated planning agency may review and approve or disapprove, for purposes of this chapter, those of capital expenditures which it estimates will be incurred within 3 years following the date of approval or disapproval.
(i) Whenever there is a substantial change in existing or proposed health facilities or services of the type proposed in the area served by the facility or organization.
(ii) Upon a substantial change in the need for facilities or services of the type proposed in the area served by the facility or organization as reflected in the standards, criteria or plans referred to in § 301.4(a)(2).
(iii) At any time following the expiration of 3 years from the date of the finding of the designated planning agency or of its last reconsideration of a finding under this subsection, whichever is later.
(i) If, upon reconsideration of its finding under this subsection and after consulting with and taking into consideration the findings and recommendations of the other agency described in § 301.4(a)(2)(i) the designated planning agency finds that the facilities or services provided by the capital expenditure are in conformity with the standards, criteria and plans described in § 301.4(a)(2) it shall promptly so notify the Secretary of HHS and the person submitting the request.
(ii) If the designated planning agency, upon reconsideration, reaffirms its previous finding, the procedure set forth in § 301.6 (relating to procedures for agency review) and fair hearings following an initial determination shall be followed.
(3) Upon notification by a designated planning agency of a revised finding in accordance with paragraph (2), the Secretary of HHS will include (42 U.S.C.A. § § 701709, 13951395zz and 13961396ff), in determining future payments under Titles V, XVIII and XIX of the act, expenses related to the capital expenditure. The expenses will be included for periods following the date of notification only and amounts previously excluded may not be taken into account in determining Federal payments under Titles V, XVIII and XIX of the act.
§ 301.11. Phase-out of health facilities review program.
(a) No letter of intent required by § 301.6(a)(1) (relating to procedures for agency review) will be accepted after July 31, 1980.
(b) No Health Facilities Section 1122 Project Form required by § 301.6(a)(2) will be accepted after September 30, 1980. No Health Facilities Section 1122 Project Form will be accepted unless a letter of intent related to that project has been submitted prior to July 31, 1980.
(c) Forms required to be filed under § 301.6 will be reviewed for completeness in accordance with the procedures established in that section by December 1, 1980. In the event an application is found to be incomplete; required information shall be submitted by December 1, 1980, or the applications will be deemed to be abandoned and no further review will occur. The Department may grant an appropriate extension if unique circumstances require it, but in no event will the extension exceed 3 months.
The provisions of this § 301.11 issued under section 2102(a) and (g) of The Administrative Code of 1929 (71 P. S. § 532(a) and (g)); and section 904 of the Health Care Facilities Act (35 P. S. § 448.904).
The provisions of this § 301.11 adopted October 24, 1980, effective October 25, 1980, 10 Pa.B. 4213.


Petitioner is a state prisoner without counsel seeking a writ of habeas corpus. See 28 U.S.C. § 2254. On March 26, 2013, respondent filed a motion to dismiss on the grounds that the petition is untimely. ECF No. 11. For the reasons that follow, the undersigned recommends that the motion be granted in part and denied in part.
On January 28, 1983, petitioner pleaded guilty to various charges, including attempted robbery and kidnapping with the intent to commit robbery. ECF No. 1 at 1. He received a sentence of seven years to life in prison. Id. The judgment was affirmed on direct appeal, and petitioner did not seek review by the California Supreme Court. Id. at 2. Petitioner avers that he was not mentally stable prior to 1995, but that, since then, he has "been doing everything possible to present the fact and circumstances of this case" to a court. Id. at 72. According to respondent, petitioner has filed a number of state habeas petitions, beginning in December 1999. ECF No. 11 at 3.
Under the Anti-terrorism and Effective Death Penalty Act ("AEDPA"), a one-year limitations period for seeking federal habeas relief begins to run from the latest of: (1) the date the judgment became final on direct review (or April 25, 1996, if the judgment became final prior to AEDPA's enactment), (2) the date on which a state-created impediment to filing is removed, (3) the date the United States Supreme Court makes a new rule retroactively applicable to cases on collateral review, or (4) the date on which the factual predicate of a claim could have been discovered through the exercise of due diligence. 28 U.S.C. § 2244(d)(1)(A)-(D); Malcom v. Payne, 281 F.3d 951, 955 (9th Cir. 2002).
No statute tolls the limitations period "from the time a final decision is issued on direct state appeal [to] the time the first state collateral challenge is filed...." Nino v. Galaza, 183 F.3d 1003, 1006 (9th Cir. 1999). However, if a petitioner properly files a state post-conviction application prior to the expiration of the limitations period, the period is tolled, and remains tolled for the entire time that application is "pending." 28 U.S.C. § 2244(d)(2). "[A]n application is properly filed' when its delivery and acceptance are in compliance with the applicable laws and rules governing filings." Artuz v. Bennett, 531 U.S. 4, 8 (2000). In California, a properly filed post-conviction application is "pending" during the intervals between a lower court decision and the filing of a new petition in a higher court that elaborates on the claims raised in the lower-court petition (rather than raises different claims). Stancle v. Clay, 692 F.3d 948, 953 (9th Cir. 2012); Carey v. Saffold, 536 U.S. 214, 223 (2002). A federal habeas application does not provide a basis for statutory tolling. Duncan v. Walker, 533 U.S. 167, 181-82 (2001). Nor does a state petition filed after the federal limitations period has expired. Ferguson v. Palmateer, 321 F.3d 820, 823 (9th Cir. 2003).
The limitations period may also be equitably tolled where a habeas petitioner establishes two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented timely filing. Holland v. Florida, 560 U.S. 631, 130 S.Ct. 2549, 2554, 2562 (2010). Petitioner has the burden of showing facts entitling him to equitable tolling. Smith v. Duncan, 297 F.3d 809, 814 (9th Cir. 2002); Miranda v. Castro, 292 F.3d 1063, 1065 (9th Cir. 2002). The threshold necessary to trigger equitable tolling is very high, "lest the exceptions swallow the rule." Waldron-Ramsey v. Pacholke, 556 F.3d 1008, 1011 (9th Cir. 2009). Equitable tolling may be applied only where a petitioner shows that some external force caused the untimeliness. Id.
In addition, the statute of limitations is subject to an actual innocence exception. A petitioner may have his untimely case heard on the merits if he can persuade the district court that it is more likely than not that no reasonable juror would have convicted him. McQuiggin v. Perkins, __ U.S. __, 133 S.Ct. 1924, 1928, 1933 (2013); Lee v. Lampert, 653 F.3d 929, 937 (9th Cir. 2011) (en banc). "Unexplained delay in presenting new evidence bears on the determination whether the petitioner has made the requisite showing." McQuiggin, 133 S.Ct. at 1935. For example, the "court may consider how the timing of the submission and the likely credibility of a petitioner's affiants bear on the probable reliability" of his evidence of innocence. Id.


text:
FIG. 18 is a bottom view thereof.
The broken line portions in the drawings are shown to illustrate environment only and form no part of the claimed design.
The ornamental design for a case for a mobile electronic device, as shown and described.
"Power Slider," Web Archive Date Dec. 4, 2008, https://web.archive.org/web/20081204105303/http://goincase.com/products/detail/power-slider-ec20003/?
"PowerSkin Samsung Galaxy S3 Case with Backup Battery," dated Aug. 19, 2012 , http://gadgetsin.com/powerskin-samsung-galaxy-s3-case-with-backup-battery.htm.
"Sandberg BatteryCase for iPhone 4/4S delivers more band for your buck," dated Mar. 15, 2012, http://www.gizmag.com/sanberg-batterycase-iphone/21839.
"USB battery charger detector intelligently powers mobiles," Dec. 17, 2007, http://www.eetasia.com/ART-8800493819-765245-NP-10b171b6.HTMce#.
Amazon.com, "Galaxy S6 Battery Case, i-Blason External Protective Battery Case/Cover for Samsung Galaxy S6 2015 Release." Customer Review published Mar. 29, 2015. Retrieved from internet at <http://www.amazon.com/Case-i-Blason-External-Protective-Versions/dp/B00SNS4LME>, Apr. 28, 2016. 7 pages.
Amended Final Judgment and Permanent Injunction, dated Dec. 11, 2015, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
AVR458: Charging Lithium-Ion Batteries with ATAVRBC100, which appear to include a date of Aug. 2008.
Battery Charging Specification, dated Apr. 15, 2009.
BCM2033 Product Brief, 2 pages, dated Nov. 1, 2002.
Ben Kaufman, "Behind the Invention: The mophie Juice Pack," dated Dec. 31, 2013, https://medium.com/@benkaufman/behind-the-invention-the-mophie-juice-pack-a0620f74efcf.
Brian Nyhuis, "Mophie Juice Pack Battery Case for Samsung Galaxy S III Review," dated Nov. 28, 2012, http://www.legitreviews.com/mophie-juice-pack-battery-case-for-samsung-galaxy-s-iii-review-2084.
Corrected Request for Ex Parte Reexamination of U.S. Pat. No. 8,367,235, filed Sep. 18, 2014.
Daniel Huang Deposition Transcript (Redacted) with Exhibit 121, dated Aug. 21, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Dave Rees, "Richard Solo Backup Battery for iPhone / iPod Review," dated Jun. 16, 2008, http://the-gadgeteer.com/2008/06/16/richard-solo-backup-battery-for-iphone-ipod/.
David Munson Deposition Transcript, dated Sep. 29, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Declaration of David Munson in Support of Defendant's Motion for Partial Summary Judgment, dated Sep. 22, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Declaration of John Feland, Ph.D. In Support of Mophie's Opposition to Defendents Motion for Partial Summary Judgment, filed Oct. 3, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Declaration of John Feland, Ph.D. In Support of Plaintiff's Preliminary Claim Constructions, filed Oct. 29, 2014, in Mophie, Inc. v. UNU Electronics Inc., Case No. 8:13-CV-01705 in the United States District Court for the Central District of California.
Declaration of Sheila N. Swaroop in Support of Mophie's Motion for Reconsideration, filed Nov. 19, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Declaration of Sheila N. Swaroop in Support of Mophie's Opening Claim Construction Brief, filed Oct. 29, 2014, in Mophie, Inc. v. UNU Electronics Inc., Case No. 8:13-CV-01705 in the United States District Court for the Central District of California.
Defendants Dharmesh Shah and Serve Global, LLC's Memorandum of Points and Authorities in Support of Defendants's Motion for Attorney's Fees, filed Mar. 21, 2015, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Defendant's Memorandum in Support of Motion for Partial Summary Judgement, dated Sep. 23, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Defendant's Opening Claim Construction Brief, dated Oct. 29, 2014, in Mophie, Inc. v. UNU Electronics Inc., Case No. 8:13-CV-01705 in the United States District Court for the Central District of California.
Defendants' Opposition to Plaintiff's Motion for Summary Judgement, filed Oct. 3, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Defendant's Preliminary Claim Constructions and Extrinsic Evicence, dated Oct. 14, 2014, in Mophie, Inc. v. UNU Electronics Inc., Case No. 8:13-CV-01705 in the United States District Court for the Central District of California.
Defendants' Reply in Support of Motion for Partial Summary Judgment, Filed Oct. 10, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Defendant's Response to Mophie's Fourth Set of Interrogatories, dated Sep. 23, 2014, in Mophie, Inc. v. UNU Electronics Inc., Case No. 8:13-CV-01705 in the United States District Court for the Central District of California.
Defendants' Response to Plaintiffs Statement of Uncontroverted Material Fact and Contentions of Law, filed Oct. 3, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Defendants' Statement of Uncontroverted Material Fact and Contentions of Law, filed Sep. 22, 2014 in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Dharmesh Shah Deposition Transcript, dated Jul. 11, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Expert Report of Dr. David Munson, dated Aug. 28, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Expert Report of John Feland, Ph.D, dated Aug. 28, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
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Incase Motion 2-Motion to Undesignate Claims, filed Nov. 20, 2013 in Patent Interference No. 105,946(RES).
Incase Motion 3-Motion for Judgment Based on Lack of Written Description, filed Nov. 20, 2013 in Patent Interference No. 105,946(RES).
Incase Motion 4-Motion for Unpatentability of Mophie Claims, filed Nov. 20, 2013 in Patent Interference No. 105,946(RES).
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International Preliminary Report on Patentability for PCT/US2013/057276, dated Mar. 3, 2015.
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International Search Report and Written Opinion for PCT/US2014/067470, dated Mar. 31, 2015.
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John Feland, Ph.D. Deposition Transcript, dated Sep. 30, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
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LivingSocial's Reply in Support of Motion for Summary Judgment, Filed Oct. 10, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Matthew Brand Deposition Transcript, dated Jul. 23, 2014, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
Memorandum of Points and Authorities in Support of Livingsocial, Inc.'s Motion for Legal Fees and Costs, filed Mar. 20, 2015, in Mophie, Inc. v. Source Vista, Case No. 8:13-CV-01321 in the United States District Court for the Central District of California.
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Mophie Juice Pack iPhone 1G Product-Figure 8-Retrieved from http://www.mophie.com/pages/information/ on Apr. 10, 2009.
Mophie Juice Pack iPhone 1G Product-Figures 15-16-Retrieved from http://mophie.com/blogs/Juice-Pack-FAQ on Apr. 20, 2009. Figure 16 is dated May 1, 2008.
Mophie Juice Pack iPhone 1G Product-Figures 1-7-Retrieved from http://www.mophie.com/products/juice-pack on Apr. 10, 2009.
Mophie Juice Pack iPhone 1G Product-Figures 9-14-Retrieved from http://www.mophie.com/blogs/Juice-Pack-FAQ on Apr. 10, 2009.
Mophie Juice Pack iPhone 3G Product-Figures 11-14-Retrieved from http://mophie.com/blogs/Juice-Pack-3G-FAQ on Apr. 10, 2009.
Mophie Juice Pack iPhone 3G Product-Figures 15-16-Retrieved from http://mophie.com/blogs/press on Apr. 20, 2009. Figure 15 is dated Aug. 4, 2008, and Figure 16 is dated Nov. 10, 2008.
Mophie Juice Pack iPhone 3G Product-Figures 1-8-Retrieved from http://www.mophie.com/products/juice-pack-iphone-3g on Apr. 10, 2009.
Mophie Juice Pack iPhone 3G Product-Figures 9-10-Retrieved from http://www.mophie.com/pages/iphone-3g-details on Apr. 10, 2009.
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Tag Archive | "carrington mortgage"
In re: DAVID CLEARY JR., Chapter 7, Debtor.
DAVID CLEARY JR., et al., Defendants.
Case No. 09-14900, Adversary Proceeding No. 09-1285.
ARTHUR I. HARRIS, Bankruptcy Judge.
This matter is currently before the Court on the motion for partial summary judgment filed by the plaintiff-trustee, Lauren Helbling, and the joint brief in opposition of Carrington Mortgage and Deutsche Bank National Trust Company (“Deutsche Bank”). The main issue is whether the trustee is entitled to avoid a mortgage because the notary’s certificate of acknowledgment failed to recite the names of the parties whose signatures were acknowledged. The Court must also decide whether the filing of one or both foreclosure actions imparted the trustee with constructive notice resulting in inability to act as a bona fide purchaser for value. If the trustee is charged with constructive notice, then the Court must consider whether the second foreclosure action was an avoidable preference. For the reasons that follow, the Court holds that the Mortgage was not executed in accordance with Ohio’s statutory requirements but that the trustee is charged with constructive notice of the interest of Deutsche Bank as a result of the filing of the second foreclosure action. However, the filing of the second foreclosure acted to perfect the defective mortgage as against third persons, and it is a preferential transfer. As such, the Mortgage can be avoided by the trustee as a preference. Accordingly, the trustee’s motion for partial summary judgment is granted.
1. Jurisdiction of this Court is proper and as set forth in Paragraph 1 of the complaint.
2. This is a core proceeding as set forth in Paragraph 2 of the Complaint.
3. Plaintiff is the duly appointed, qualified and acting Trustee of the estate of the debtor.
4. A legal description for property known as 4155 West 114th Street, Cleveland, OH is shown as Exhibit A to the Complaint (“Property”).
5. The petition in this case was filed on May 31, 2009.
6. The Debtor’s interest in the Property is property of the bankruptcy estate pursuant to 11 U.S.C. § 541.
7. The Debtor is the owner, in fee simple of the Property, by virtue of a General Warranty Deed filed in Instrument No. 200302030753 of the records of Cuyahoga County, Ohio on February 3, 2003.
8. Deutsche Bank National Trust Company (“Deutsche”) is the holder of a mortgage on the Property (the “Mortgage”), which Mortgage is at issue in this proceeding.
9. The Mortgage was filed on May 5, 2004, as Instrument No. 200405050625 in the records of Cuyahoga County, Ohio.
10. A true and exact copy of the Mortgage is attached to the Complaint as Exhibit B.
11. The original mortgagee under the Mortgage is New Century Mortgage Corporation. The Mortgage was assigned to Deutsche of record by assignment filed December 16, 2008 as Instrument No. 200812160236, Cuyahoga County Records.
13. Debtor’s initials appear at the bottom of Mortgage pages 1 through 13, and page 15 and page 17.
14. A foreclosure action was filed as to thea subject property in Case No. 663230 of the Cuyahoga County, Ohio Common Pleas Court on June 25, 2008 by Deutsche. The property was described in the foreclosure Complaint. The debtor answered in that case on September 25, 2008. The case was dismissed without prejudice on October 30, 2008.
15. A foreclosure action was filed as to the subject property in Case No. 694194 of the Cuyahoga County, Ohio Common Pleas Court on May 28, 2009 by Aeon Financial. The property was described in the foreclosure Complaint. The debtor filed a Notice of Suggestion of Stay on June 15, 2009. The Court entered an Order staying the case on June 19, 2009. The case was dismissed without prejudice on August 5, 2009.
On August 28, 2009, the trustee of the Chapter 7 estate initiated this adversary proceeding seeking to avoid the Mortgage and to determine the respective interests of various parties in the real property. The complaint named as defendants the debtor; Carrington Mortgage; CitiFinancial Inc.; Aeon Financial, LLC; Beneficial Ohio, Inc.; TFC National Bank; Deutsche Bank National Trust Company; and the Cuyahoga County Treasurer. The treasurer, Citifinancial, David Cleary, Aeon Financial, TFC National Bank, and Carrington/Deutsche Bank filed answers to the complaint. Aeon Financial and TFC National Bank disclaimed any interest, and all parties stipulated that the Cuyahoga County Treasurer has a first lien for taxes and assessments. Default was entered against Beneficial Ohio on March 24, 2010. On January 13, 2010, the trustee filed a motion for partial summary judgment seeking to avoid the Mortgage held by Deutsche Bank. On February 3, 2010, Deutsche Bank filed a brief in response. Briefing on the trustee’s partial motion for summary judgment is complete, and the Court is ready to rule.
11 U.S.C. § 544. Any transfer under section 544 is preserved for the benefit of the estate. See 11 U.S.C. § 551.
Page 10 of the Mortgage provides that “[t]his Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located.” Accordingly, because the real property in question is located in Ohio, the Court will apply Ohio law to determine whether the trustee may avoid the Mortgage using the “strong arm” clause. See Simon v. Chase Manhattan Bank (In re Zaptocky), 250 F.3d 1020, 1024 (6th Cir. 2001) (applicable state law governs determination whether hypothetical bona fide purchaser can avoid mortgage).
Under Ohio law, a bona fide purchaser is a purchaser who ” `takes in good faith, for value, and without actual or constructive knowledge of any defect.’ ” Stubbins v. Am. Gen. Fin. Servs. (In re Easter), 367 B.R. 608, 612 (Bankr. S.D. Ohio 2007) (quoting Terlecky v. Beneficial Ohio, Inc. (In re Key), 292 B.R. 879, 883 (Bankr. S.D. Ohio 2003)); see also Shaker Corlett Land Co. v. Cleveland, 139 Ohio St. 536 (1942). The Bankruptcy Code expressly provides that a bankruptcy trustee is a bona fide purchaser regardless of actual knowledge. See In re Zaptocky, 250 F.3d at 1027 (“actual knowledge does not undermine [trustee’s] right to avoid a prior defectively executed mortgage”). Because actual knowledge does not affect the trustee’s strong-arm power, contrary to the assertions made by the defendants, the Court need only determine whether the trustee had constructive knowledge of the prior interest held by Deutsche Bank.
Ohio law provides that “an improperly executed mortgage does not put a subsequent bona fide purchaser on constructive notice.” In re Zaptocky, 250 F.3d at 1028. Ohio courts have refused to allow a recorded mortgage to give constructive notice when the mortgage has been executed in violation of a statute. See In re Nowak, 104 Ohio St. 3d 466, 469 (2004) (listing cases). The first question, then, is whether the Mortgage was executed in compliance with, or substantially conforms to applicable statutory law.
Ohio Revised Code § 5301.01, requires four separate acts to properly execute a mortgage: (1) the mortgage shall be signed by the mortgagor; (2) the mortgagor shall acknowledge his signing in front of a notary public, or other qualified official; (3) the official shall certify the acknowledgment; and (4) the official shall subscribe his name to the certificate of acknowledgment. Ohio Rev. Code § 5301.01(A) (2004); see Drown v. GreenPoint Mortgage Funding, Inc. (In re Leahy), 376 B.R. 826, 832 (Bankr. S.D. Ohio 2007) (listing four requirements provided by Ohio Rev. Code. § 5301.01).[ 2 ] The first issue in this case is whether the certificate of acknowledgment, which omitted the name of the borrower, satisfies the third requirement to proper execution of a mortgage.
The trustee argues that the Mortgage is invalid because the certification of acknowledgment fails to indicate or recite who appeared before the notary public as required by Ohio law. The Court agrees. Recent case law, including a 2008 decision from the Sixth Circuit BAP, supports the trustee’s position that an acknowledgment is defective if it fails to identify the person whose signature is being acknowledged. See In re Nolan, 383 B.R. 391, 396 (6th Cir. B.A.P. 2008); In re Sauer, 417 B.R. 523, (Bankr. S.D. Ohio 2009); Daneman v. Nat’l City Mortg. Co. (In re Cornelius), 408 B.R. 704, 708 (Bankr. S.D. Ohio 2009) (“The absence of the name of the mortgagee acknowledging election is the functional equivalent of no certificate of acknowledgment and renders an acknowledgment insufficient.”); Drown v. Countrywide Home Loans, Inc. (In re Peed), 403 B.R. 525, 531 (Bankr. S.D. Ohio 2009) affirmed at No. 2:09cv347 (S.D. Ohio May 1, 2009); Terlecky v. Countrywide Home Loans, Inc. (In re Baruch), No. 07-57212, Adv. No. 08-2069, 2009 Bankr. Lexis 608 at *22 (Bankr. S.D. Ohio Feb. 23, 2009) (“An acknowledgment clause containing nothing relative to the mortgagor’s identity is insufficient; rather, an acknowledgment clause must either identify the mortgagor by name or contain information that permits the mortgagor to be identified by reference to the mortgage.”); In re Leahy, 376 B.R. at 832. See also Smith’s Lessee v. Hunt, 13 Ohio 260, 269 (1844) (holding that court was unable to infer name of grantor when acknowledgment was blank as to the grantor and, thus, the mortgage was defective and did not convey title).
Although no argument was made, the execution of the Mortgage does not “substantially comply” with the statutory requirements. When the validity of a mortgage is challenged for failure to comply with the statutory mandates of Ohio Revised Code section 5301.01, a court can “review the nature of the error and the balance of the document to determine whether or not the `instrument supplies within itself the means of making the correction.’ ” Menninger v. First Franklin Fin. Corp. (In re Fryman), 314 B.R. 137, 138 (Bankr. S.D. Ohio 2004) (quoting Dodd v. Bartholomew, 44 Ohio St. 171, 176 (1886)). This principle enunciated by the Dodd court essentially allows a court to determine whether the execution of a mortgage is in “substantial compliance” with section 5301.01. See In re Fryman, 314 B.R. at 138. Under Ohio law, a mortgage that substantially complies with section 5301.01 will be considered valid. See Drown v. EverHome Mortg. Co. (In re Andrews), 404 B.R. 275, 279 (Bankr. S.D. Ohio 2008) (citing Mid-American Nat’l Bank & Trust, 451 N.E.2d 1243, 1245-46) (Ohio Ct. App. 1982)).
Nothing in the present case provides evidence of substantial compliance with section 5301.01. See In re Peed, 403 B.R. at 536 (presence of initials on each page of mortgage, including acknowledgment clause page, did not substantially comply with requirement that acknowledgment clause identify person whose signature is being acknowledged); accord Bank of America N.A. v. Corzin, (In re Bergman), 2010 U.S. Dist. LEXIS 8755 Case No. 5:09cv2520 (N.D. Ohio Feb. 2, 2010) (same), In re Cornelius, 408 B.R. at 708 (same); In re Andrews, 404 B.R. at 279 (same). Therefore, the Mortgage was improperly executed because the certification of acknowledgment fails to indicate or recite who appeared before the notary public as required under Ohio Revised Code section 5301.01.
Having found that the Mortgage is defective, the Court must determine whether the trustee is charged with constructive notice of Deutsche Bank’s interest as a result of either of the foreclosure actions. This Court finds that the second foreclosure action imparted constructive notice to the trustee, under the rule of lis pendens.
The most recent version of Ohio’s lis pendens statute provides that “[w]hen a complaint is filed, the action is pending so as to charge a third person with notice of its pendency. While pending, no interest can be acquired by third persons in the subject of the action, as against the plaintiff’s title.” Ohio Rev. Code Ann. § 2703.28. Thus, the filing of a foreclosure complaint prior to the date of filing of the bankruptcy petition imparts constructive notice to a bankruptcy trustee of the plaintiff’s interest, whatever that might be, in the property. See Treinish v. Norwest Bank Minn. (In re Periandri), 266 B.R. 651, 659 (6th Cir. BAP 2001).
As to the June 25, 2008, foreclosure, filed by Deutsche Bank, the trustee cannot be charged with constructive notice because the case was not pending at the commencement of the bankruptcy petition on May 31, 2009. The section requires that the case be “pending” in order to charge third parties with notice. Ohio Rev. Code Ann. § 2703.28.
Exhibit C to the Complaint lists Deutsche Bank as an interest holder by way of a second mortgage, in the amount of $104,500. As a result of lis pendens, third parties had constructive notice of the interest of Deutsche Bank at the commencement of the bankruptcy case, and therefore the trustee cannot avoid the mortgage pursuant to her strong arm powers. “When any purchaser would have constructive knowledge of the mortgage, the trustee, cannot assume the position of a hypothetical BFP because no such good-faith purchaser can exist.” Argent Mortgage Company, LLC v. Drown (In re Bunn), 578 F.3d 487, 489 (6th Cir. 2009).
A trustee may avoid as a preference any transfer of an interest of the debtor’s property that is for the benefit of a creditor, on account of an antecedent debt, made while the debtor was insolvent within 90 days before the filing of a bankruptcy case that allows the creditor to receive more than what it would have received in a typical liquidation. 11 U.S.C. § 547(b). Additionally, “a transfer of real property other than fixtures, but including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona fide purchaser of such property from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of the transferee.” 11 U.S.C. § 547(e)(1). Thus, this Court must determine whether a “transfer” occurred. The Sixth Circuit BAP has held that lis pendens provides constructive notice of a defectively acknowledged mortgage but that because the filing of a notice of lis pendens “took place within the preference period, it is considered a transfer, subject to avoidance as a preference, assuming the other required elements of a preference exist.” Kendrick v. CIT Small Business Lending Corp. (In re Gruseck), No. 06-8091, 2008 WL 1756243 at *8 (6th Cir. BAP 2008). See also Hurst Concrete Products Inc. v. Lane (In re Lane), 980 F.2d 601, 604 (9th Cir 1992) (because the recording of the lis pendens operated to perfect the filer’s interest against bona fide purchasers, the recording was a transfer under § 547(e)(1)(A)). Here, a transfer occurred because the trustee could no longer acquire an interest superior to the interest of Deutsche Bank upon the filing of the foreclosure complaint. The filing of the complaint acted to perfect Deutsche Bank’s interest as against third parties (while the suit was pending) such that no bona fide purchaser could exist.
It is undisputed that the bankruptcy was filed on May 31, 2009, and the foreclosure was filed only three days prior on May 28, 2009. Because a transfer of property of the debtor on account of a debt incurred in 2008, took place within the 90 day preference window that allowed Deutsche Bank to receive more than it would have as an unsecured creditor, the transfer is avoidable under 11 U.S.C. § 547.
For the reasons stated above, the Court holds that the certificate of acknowledgment in the Mortgage at issue is defective, that the filing of the second foreclosure complaint provided the trustee with constructive notice, and the that trustee may avoid the Mortgage as a preferential transfer. Accordingly, the trustee’s motion for partial summary judgment is granted. While it appears that this decision is largely dispositive, the precise interests and relative priorities of all parties have yet to be determined. Therefore, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed R. Civ. P. 54(b). The Court will conduct a status conference at 1:30 p.m. on July 20, 2010. Counsel shall be prepared to advise the Court as to what additional steps are needed to resolve all remaining claims in this adversary proceeding.