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Home My WebLink About04-3798 , THE MCNAUGHTON COMPANY, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v, CIVIL ACTION Oil -379g e,l!; L TeRrY) ESTATE OF DALE B. FAILOR, Deceased Late of Upper Allen Township Cumberland County, Pa., Defendant. Q,'1f"'1IAN'S 00;';1"..'f DIVISION NO. 2105lO 11'3 NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 717-249-3166 800-990-9108 NOTICIA Le han demandado a usted en la corte. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) dias de plazo al partir de la fecha de la demanda y la notificacion. Usted de be presentar una apariencia escrita 0 en persona 0 por abogado y archivar en la corte en forma escrita sus defensas 0 sus objeciones alas demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara medidas y puede entrar una orden contra usted sin previo aviso notificacion y por cualquier queja 0 alivio que es pedido en la peticion de demanda. Usted puede perder dinero 0 sus propiedades 0 otros derechos importantes para usted. LLEVE ESTA DEMANDA A UN ABOGAGO INMMEDIATAMENTE. SI NO TIENE ABOGADO 0 SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA 0 LLAME POR TELEFONO A LA OFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 717-249-3166 800-990-9108 McNEES WALLACE & NURICK LLC By/()(Mn! h David E. Lehman (10 No. 15243 Helen L. Gemmill (10 No. 60661) 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Tel: (717) 232-8000 Fax: (717) 237-5300 Dated: August 3, 2004 Attorneys for Plaintiff The McNaughton Company . . . THE MCNAUGHTON COMPANY, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v. CIVIL ACTION ESTATE OF DALE B. FAILOR, Deceased Late of Upper Allen Township Cumberland County, Pa" Defendant. ORPHAN'S COURT DIVISION NO. 21-96-413 COMPLAINT The McNaughton Company, by and through its counsel McNees Wallace & Nurick LLC, for its Complaint against the Estate of Dale B. Failor, Deceased, avers as follows: The Parties 1. Plaintiff The McNaughton Company is a Pennsylvania business corporation with its principal place of business at 4400 Deer Path Road, Harrisburg, Dauphin County, Pennsylvania. 2. Defendant The Estate of Dale B. Failor, Deceased ("The Estate") is an estate administered through the Orphan's Court Division, Court of Common Pleas of Cumberland County, with an address of East Winding Hill Road, Mechanicsburg, Cumberland County, Pennsylvania. 3. The Executrix of the Estate is Patsy A. Hertzler, an adult individual residing at 409 West Maplewood Avenue, Mechanicsburg, Pennsylvania. . . Factual Averments 4. On March 26, 2004, The McNaughton Company and the Estate of Dale B. Failor entered into a Purchase and Sale Agreement (the "Agreement") for the purchase of certain real property generally known as the Failor Farm. A true and correct copy of the Agreement is attached hereto as Exhibit "A" 5. A full description of the premises known as the Failor Farm is attached to the Agreement. 6. Under the Will of Dale B. Failor and under Pennsylvania law, the Executrix of the Estate of Dale B. Failor, Patsy A Hertzler, was authorized to sell the Failor Farm without Court approval. 7. The Agreement was a final, unconditional, binding and enforceable contract. 8. Under paragraph 6.4 of the Agreement, the Executrix was authorized to petition the Court "for approval of the terms of the Agreement." 9. The purpose of paragraph 6.4 of the Agreement was to confirm that the Executrix had not abused her lawful authority nor abused any fiduciary discretion in entering into the McNaughton contract, thereby protecting the Executrix from surcharge actions against her by beneficiaries of the Estate. 1 O. The Agreement was not subject to a condition precedent, however, that the Estate receive Court approval of the sale of the Failor Farm. Accordingly, the Agreement was binding upon the Estate without Court approval first obtained. 11, After execution of the Agreement, the Executrix of the Estate of Dale B. Failor, Patsy A Hertzler, filed a "Petition For Hearing Re: Sale Of Real Estate In The Estate Of Dale B. Failor" ("the Petition For Hearing"). 2 . . 12. In the prayer for relief contained in her Petition for Hearing, the Executrix requested an order from the Orphan's Court that: (a) states that the Executrix has not abused her lawful authority nor abused any fiduciary discretion by entering into the McNaughton contract subject to the terms, conditions and contingencies therein contained; (b) sets a day, time, and place for a hearing to determine whether court approval of a contract with the McNaughton Company, or a denial of such approval and the approval of another competing offer is in the best interests of the Estate of Dale B. Failor and its beneficiaries; (c) authorizes the full confirmation of the McNaughton contract or the execution of a separate and different contract for the sale of the real estate of the Dale B. Failor Estate; (d) makes such other findings and/or approvals and/or sets such other terms and conditions as the Court deems appropriate in the circumstances for the sale of said real estate. 13. On June 11, 2004, the Court issued an Order in response to the Petition for Hearing, which paralleled the relief requested by the Estate. 14. Specifically, in paragraph (a) of the June 11,2004 Order, the Court decreed that the Executrix had not abused her lawful authority nor abused any fiduciary discretion by entering into the Agreement. 15. In paragraphs (b), (c) and (d), the June 11,2004 Order set forth the procedures to be employed by the Court in determining "whether court approval of a contract with the McNaughton Company, or a denial of such approval and the approval 3 . . of another competing offer, is in the best interests of the Estate of Dale B. Failor and its beneficiaries. " 16, The Court's Order solicited proposed offers from other interested bidders for the purchase of the Failor Farm. 17. Other interested bidders have responded and submitted proposed offers. 18. As a result, it is possible that the Court will decree that the Failor Farm be sold to another bidder, or that the Court will decree that the Failor Farm be sold to The McNaughton Company only if The McNaughton Company agrees to pay a higher purchase price than the agreed price under the Agreement. 19. By letter transmitted to the Estate on July 28, 2004, The McNaughton Company advised the Estate that "The covenant of the Estate under Section 6.4 of the Agreement has been satisfied by the filing of the Petition for Hearing and no further action is required." A copy of the said letter is appended hereto and marked as Exhibit "B." 20. On July 27, 2004, The McNaughton Company requested that the Court vacate those portions of its prior Order of June 11,2004 (paragraphs (b), (c) and (d)), which are inconsistent with the Estate's unconditional obligation under the Agreement. 21. The "feasibility study period and contingency period" described in Section 5 of the Agreement has expired by its terms, and The McNaughton Company, as purchaser, is prepared to proceed to settlement. 22. The Estate has obligated. itself under Section 6.1 of the Agreement not to enter into any other agreement "affecting any part of the Property," without the prior written approval from The McNaughton Company, as purchaser. 4 . . 23. The filing by the Estate of a Petition, which now contemplates and seeks a Court-approved process for soliciting other bid proposals, followed thereafter by approval of some other terms than those of the Agreement with McNaughton, is in violation of the Estate's obligations under the Agreement. Count I . Specific Performance 24. The averments of paragraphs 1 -23 of the Complaint are incorporated by reference as though set forth in full herein. 25. The McNaughton Company has fully and faithfully performed all obligations required to date under the Agreement. 26. The McNaughton Company stands ready and willing to perform all remaining obligations required under the Agreement to effect the transfer of the real estate to The McNaughton Company. 27. By petitioning the Court for the solicitation and possible approval of another offer for the purchase of the Failor Farm, the Estate has indicated that it does not intend to perform its obligations under the Agreement. 28, The Failor Farm is a unique parcel of real estate. 29, The McNaughton Company is entitled to specific performance of the Agreement as no damages at law can adequately compensate the McNaughton Company. 30. Paragraph 13.1 of the Agreement entitles The McNaughton Company to specific performance as a remedy for the Estate's breach of the Agreement. WHEREFORE, The McNaughton Company requests that the Court order that (1) The Estate specifically perform the Agreement and by good and sufficient fiduciary 5 . . deed convey and assure the premises and every part thereof with marketable title (per the Agreement), in fee simple, and (2) The Executrix of the Estate legally sign, seal, acknowledge, and deliver the deed to The McNaughton Company in proper form and (3) The McNaughton Company is awarded its reasonable attorneys' fees pursuant to paragraph 13.1 of the Agreement. Count II . Breach of Contract (Plead in the alternative) 31. The averments of paragraphs 1-30 of the Complaint are incorporated by reference as though set forth in full herein. 32. The McNaughton Company has fully and faithfully performed all obligations required to date under the Agreement. 33. The McNaughton Company stands ready and willing to perform all remaining obligations required under the Agreement to effect the transfer of the real estate to The McNaughton Company. 34. The Estate has breached the Agreement by petitioning the Court for approval of a competing offer of purchase. 35. The McNaughton Company has been damaged by the Estate's breach of the Agreement, including damages for lost profits, lost costs and expenses and attorneys' fees as authorized under paragraph 13.1 of the Agreement. WHEREFORE, The McNaughton Company demands that judgment be entered in favor of The McNaughton Company and against The Estate, that the Court award 6 . . damages to The McNaughton Company in amounts to be determined under the evidence submitted at trial, along with costs and reasonable attorneys' fees. Respectfully submitted, McNEES WALLACE & NURICK LLC By~j~ David E. Lehman (10 No. 15243) Helen L. Gemmill (10 No. 60661) 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Tel: (717) 232-8000 Fax: (717) 237-5300 Attorneys for Plaintiff The McNaughton Company Dated: August 3, 2004 7 .' /. ,i PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into this .;(~Ii day of ~ ,2004, by and between The Estate of Dale B. Failor, East Winding Hill Road, Mechanicsburg, Cumberland County, Pennsylvania 17055, ("Seller") and The McNaughton Company, a Pennsylvania Corporation, having its principal place of business at 4400 Deer Path Road, Harrisburg, Dauphin County, Pennsylvania ("Purchaser") WHEREAS, Seller is the owner of a certain property generally known as the Failor Farm and consisting of approximately One Hundred Fifty (150) acres of land in Upper Allen Township, together with improvements thereon contained, as further identified on Exhibit A (site plan) and Exhibit B (property legal description) attached hereto (the "Real Property"); and WHEREAS, Seller desires to sell and Purchaser desires to purchase the Property, pursuant to the terms, provisions and conditions herein; and WHEREAS, Seller is willing to grant a Feasibility Study Period, as defined in Paragmph 5, herein, to allow the Purchaser to complete preliminary studies essential for the project. NOW, THEREFORE, in consideration ofa nonrefundable One Thousand Dollars ($1,000.00), cash in hand paid, the receipt and sufficiency of which lite hereby acknowledged, the premises, the mutual covenants and conditions set forth herein and other good and valuable considemtion, and intending to be legally bound hereby, the parties hereby agree as follows: 1. PURCHASE AND SALE OF PROPERTY. 1.1 Seller agrees to sell and Purchaser agrees to purchase the Real Property and all rights appurtenant thereto; all improvements on and to the Real Property; all mineml, oil, and gas rights and profits, water rights and sub terrain; all sewer and utility rights allocated to the Real Property and the improvements; all right, title, and interest of Seller in and to any roads, streets and ways, public or private, serving the Real Property; and appurtenances to the Real Property; all right, title and interest of Seller in and to any land lying in the bed of any street, road, avenue, land or right-of-way in front of, adjoining or adjacent to the Real Property; and all rights and entitlements to development of the Real Property granted by governmental or quasi-governmental bodies or entities having jurisdiction or authority over the Real Property (all of the foregoing, together with the Real Property, being referred to herein as the "Property"). Purchaser, in selling any marketable salvage as a result of the demolition of any improvements on the purchased Property, shall give Seller the first right of refusal to purchase the same, otherwise Purchaser may sell to any potential third party purchaser. The sales proceeds of any sale of salvage shall be split 50/50 between Seller and Purchaser. 1.2 Seller and Purchaser agree that Purchaser is purchasing the Property for the purpose of utilizing the Property as a residential housing community. 389841v> Page I ., . .' 2. PURCHASE PRICE. DEPOSIT AND SECURITY. 2.1 The purchase price for the Property shall be Three Million Dollars and Zero Cents ($3,000,000.00), computed on the basis of a charge per usable acre and based on a per acre value of Twenty Thousand Dollars and Zero Cents ($20,000.00) per usable acre, subject to adjustments as hereinafter provided. 2.1(a) Usable acre is dermed to include any and all land used in any way in the development of the property, including use for storm water management. Lands set aside or restricted in use, such as utility easements or wetlands, and not used for rear yards shall be considered as non-usable. 2.2 Purchaser shall deposit with the SeHer's attorney, as Escrow Agent, a total deposit in the amount of Fifty Thousand and no/I 00 Dollars ($50,000.00) within thirty (30) days of execution of this Agreement. Purchaser and Seller shaH execute the Escrow Agreement attached hereto as Exhibit C. Upon receipt of a fully signed Escrow Agreement, Escrow Agent will deposit said funds in an interest-bearing account at a federally-insured commercial bank, with interest to accrue to Purchaser. The $50,000.00 deposit and any additional deposits may be referred to herein as the "Deposit". 2.3 At Closing, the Deposit shall be applied to the Purchase Price and the balance of the Purchase Price payable as follows: (a) Two Million Nine Hundred Fifty Thousand and no/IOO Dollars ($2,950,000.00), or the amount due as adjusted, within thirty (30) days following notice to settle from Seller; 3. TITLE. 3.1 Title shall be conveyed to Purchaser at Closing in fee simple by Special Warranty Deed, free and clear of any and all liens, claims, encumbrances, mortgages, deeds of trust, and security interests (except for the lien of real estate taxes not yet due and payable) but subject to all Permitted Exceptions. 3.2 Purchaser shaH obtain a Commitment for Title Insurance (the "Title Commitment"), committing to insure upon the payment of a requisite premium at standard rates that Purchaser shall own good and indefeasible fee simple title to the Property, subject only to the Pennitted Exceptions, as defined herein. Purchaser shall promptly forward a complete copy of the Title Commitment to Seller. Purchaser shaH have until the expiration of the Feasibility Study Period, as defined hereinbelow, within which to object, by written notice to Seller, to any exceptions to title set forth in the Title Commitment. Such objections shall be within Purchaser's sole discretion. If Purchaser fails to object to any such item by written notice to SeHer prior to the expiration of the Feasibility Study Period, Purchaser shaH be deemed to have approved such item. If Purchaser objects to any such item by timely written notice to Seller, Seller shall have the right 389847v2 Page 2 . (without any obligation to do so) to cure or attempt to cure Purchaser's objections to such item within ten (10) days after receiving such notice. In the event Seller is unable to or elects not to cure anyone or more of Purchaser's objections, Seller may notify Purchaser in writing of such election and request that Purchaser waive Purchaser's right to terminate this Agreement due to such objection(s). If Purchaser does not terminate this Agreement within ten (10) days of receiving such notice from Seller, Purchaser shall be deemed to have waived its right to terminate this Agreement due to such objections. If Seller fails to respond to Purchaser's objections within ten (IO) days after receiving notice of such objections from Purchaser, Seller shall be deemed to elect to cure such objections and this Agreement shall continue in full force and effect. 3.3 The term "Permitted Exceptions", as used herein, shall mean (i) the lien of real estate taxes not yet due and payable, (ii) all matters revealed in the Title Commitment obtained by Purchaser and approved or deemed approved by Purchaser as provided hereinabove, (Hi) all existing building, zoning and other city, state, county or federal laws, codes and regulations affecting the Property, provided such would not materially interfere with Purchaser's Intended Use (iv) any existing general utility easements serving the Property, provided such existing utility easements would not materially interfere with Purchaser's Intended Use, (v) any title exceptions created directly by any act or omission of Purchaser or its representatives, agents, employees or invitees, (vi) a private right-of-way to the 1.83 acre parcel occupied by a Derr family, which right- of-way must be maintained by Seller and their successors in title, and (vii) three leases for the radio tower, Stamy lease for farming, and Rachel Ely, a copy of said leases being attached hereto. 3.4 If, at or before Closing, it appears that the Property may be or is subject to mechanics' or materialmen's liens or the lien of decedent's debts, Seller shall, at Seller's cost and expense, provide special insurance against such lien and upon so doing the same shall be considered good deliver of title with respect thereto under this Agreement. Seller shall discharge all monetary liens at Closing. 3.5 If, at or before Closing, it appears that the Property is subject to the possible lien of unsettled claims or other taxes, Seller will enter into an agreement satisfactory to the Title Company or deposit funds or security with the title insurer as required to induce the Title Company to insure title to the Property free and clear ofloss or damage by reason of the nonpayment of such unsettled claims and the same shall be considered good delivery of title with respect thereto under this Agreement. 4. DOCUMENTS. Within ten (10) days after execution of this Agreement, and thereafter until Closing, Seller shall deliver to Purchaser or otherwise provide, as appropriate, a completely legible copy of the following documents and information relating to the Property, if such documents and information are in the possession of Seller; Any and all engineering studies, soil boring test results, title insurance policies, boundary or topographic surveys; any and all existing, proposed or proffered conditions and agreement accepted and agreed to by Seller (or any predecessor in title to Seller if such documents are in the possession of Seller) as a condition to development of the Property; any and all correspondence with County in which the Property is located or the Pennsylvania Department of Transportation with regard to the Property; any and all development 389847v2 Page 3 , . plans, bills or correspondence relating to taxes or assessments; and all other material information pertaining to the Property in Seller's possession. Until Closing, all materials delivered to Purchaser shall remain the property of Seller, and if Closing does not take place for any reason other than the breach of this Agreement by Seller, Purchaser shall promptly return all such materials to Seller, along with copies of any other documents or information pertaining to the Property which may be obtained by Purchaser from a third party. 5. FEASIBILITY STUDY PERIOD AND CONTINGENCY PERIOD. S.I Purchaser, its agents, contractors, engineers, surveyors, attorneys, employees and invitees shall have the right for a period of ninety (90) days from the execution of this Agreement (the "Feasibility Study Period"), at any time, to enter the Property to make studies, tests, analyses, or other determinations desired by Purchaser, including soil borings, drainage studies, surveying, soil testing and the like. Purchaser agrees to indemnitY and hold Seller hannless for any direct damage to personal or real property resulting from the exercise of those rights granted by this Paragraph to Purchaser. Purchaser shall reasonably restore the Property if it is changed as a result of the exercise of any of the rights granted herein. 5.2 Purchaser shall have the right throughout the Feasibility Study Period and the Contingency Period, as defined below, to investigate and confirm that zoning, including any current special exception, land use, and other applicable ordinances, regulations, proffers and other official actions, site conditions, water, sewer, gas and other utility availability and capacity shall, in Purchaser's opinion, permit the construction of sufficient improvements for Purchaser's Intended Use. 5.3 Purchaser, at its sole cost and expense, may submit and diligently prosecute an application or applications to the appropriate authorities and to obtain all necessary subdivision or other approvals, zoning, relief, licenses, registrations, permits, or authorizations required by any municipal, county, or state authorities, bureaus or agencies having jurisdiction relating to Purchaser's Intended Use of the Property. Purchaser shall further have the option to explore and submit alternate use consistent with the existing underlying zoning simultaneously. 5.4 Seller agrees to cooperate with Purchaser and use Seller's reasonable efforts in furtherance of and in connection with any and all applications of Purchaser relating in any manner whatsoever to the development of the Property. Seller agrees to sign, execute and deliver to Purchaser upon request of Purchaser any and all documents that may be reasonably necessary or appropriate in Purchaser's judgment to gain any Approvals desired or required by Purchaser. Seller shall attend public hearings as necessary to assist Purchaser. 5.5 Purchaser may elect, at its sole discretion, during the Feasibility Study Period, to terminate this Agreement for any reason (or for no reason whatsoever) and receive prompt refund of the Deposit, together with any and all accrued interest; provided, however, that before the Deposit plus interest is returned, Purchaser will restore and repair said Property to the nearly as original condition as is feasible. Purchaser shall be deemed to have elected to terminate this Agreement by providing written notice delivered to seller prior to the expiration of the 389847.2 Page 4 ", '. . '. Feasibility Study Period notifying Seller that Purchaser is terminating this Agreement. In the absence of such notice, this Agreement shall remain in full force and effect. 6. ADDITIONAL COVENANTS OF SELLER. In addition to all other covenants of the Seller, Seller hereby covenants and agrees with Purchaser as follows: 6.1 Seller shall not, without the prior written approval of Purchaser (a) make or permit to be made any material changes or alterations to any part of the Property; (b) enter into any agreement affecting any part of the Property; (c) permit any liens, mortgages, deeds of trust, or other encumbrances not currently of record to be placed against, or to affect any part of the Property or title to the Property which are unable to be satisfied at Settlement. 6.2 Purchaser, with the cooperation of the Seller, if required, shall be responsible for obtaining subdivision approval based on surveyed drawings and plans provided by purchaser, at its cost, which designates approximate size of each subdivided lot. 6.3 Seller shall promptly notify Purchaser of any material changes that occur with respect to any of the matters set forth in Seller's representations and warranties contained in Paragraph 7 below. 6.4 Seller, in addition to attempting to obtain the consent of all beneficiaries of Seller to this Agreement, shall, within thirty (30) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphans' Court Division) for approval of the terms of this Agreement. 7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and warrants as of the date of execution of this Agreement the following to Purchaser: 7.1 Seller possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein. 7.2 No suit, action, arbitration, or legal administrative, or other proceedings is pending or has been threatened against the Property or against the Seller with respect to the Property. 7.3 No bankruptcy, insolvency, rearrangement, or similar action or proceeding, whether voluntary or involuntary, is pending or threatened against Seller, or any partner of Seller, and Seller has no intention of filing or commencing any such action or proceeding. 7.4 To the best of Seller's knowledge, there currently exist no adverse subsurface conditions affecting the Property such as underground mines, caves, or unusual rock 389847v2 Page 5 . . formations and there are not underground storage tanks on the Property, except for a gas tank near the fann, diesel tank for fueling equipment near the bam, fuel oil tank near access road, septic tank and cesspool. 7.5 There are no outstanding violations with respect to the Property, nor have any notices of any uncorrected violations of any laws, statutes, ordinances, rules or regulations been received, and any such notices hereafter issued prior to Closing shall be satisfied prior to Closing by Seller at Seller's sole cost and expense. 7.6 Seller is the owner of the Property. 7.7 There are no existing or pending contracts of sale, leases, options to purchase or rights of first refusal (or the like) with respect to the Property. 7.8 The Property shall be free and clear of all tenancies or rights of possession on or before Closing. 7.9 Seller is not a foreign person (as the term is defined in Section 1445 of the Interal Revenue Code as amended by the Foreign Investment in Real Property Tax Act of 1980 (nFIRPT A") and Seller shall provide Purchaser with an affidavit to that effect in compliance with FIRPTA at Closing. 7.10 There are no pending or, to the best of Seller' knowledge, contemplated eminent domain or condemnation proceedings affecting or which may affect any portion of the Property. 7.11 The execution and delivery of this Agreement and the consummation of the transactions will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any agreement, indenture, or other instrument to which seller is a party or by which it or the Property is bound, any judgment, decree, order, or award of any court, governmental body or arbiter, or any law, rule or regulation applicable to Seller. 7.12 Seller represents and warrants to Purchaser that as of the date of this Agreement and as of the Closing Date, Seller has no knowledge or notice of any work being done or about to be done, or of any assessment, violation or other notice issued or about to be issued by any federal, state, municipal or public body or authority, relating to, or with respect to or otherwise affecting the Property or abutting streets. Seller agrees to pay for all work done or ordered to be done by or required in order to comply with the requirements of any federal, state, municipal or public body or authority prior to the Closing Date, of which Seller then has notice, whether or not presently assessed or ordered to be done, on or with respect to or otherwise affecting with any existing assessment, violation or similar notice. Seller represents and warrants to Purchaser that as of the date of this Agreement, and as of the Closing Date, all installed public improvements, ifany, (including, but not limited to, cartways, curbs, sidewalks, water, storm and sanitary sewer, gas and electric lines and pipes) abutting, serving or affecting the Property from previously approved final plans have been paid for. In consideration of such representations, warranties and agreements of Seller, Purchaser agrees to comply at Purchaser's expense with all assessments, violation and other 389847v2 Page 6 notice requiring work on or with respect to or otherwise affecting the Property or abutting streets issued on or after the Closing Date, in the event Closing is made or required in accordance with this Agreement. 7.13 Seller has not been notified by any source that it is or may be a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986,42 U.S.C. Subsection 9601 ~ seq. 7.14 Seller represents and warrants (i) that the existing use of the Property is vacant farm land and (ii) that the zoning classification of the Property under the applicable zoning ordinances is Suburban Residential (SR). In the event the zoning classification of the Property is changed prior to Closing without Purchaser's written approval, Purchaser shall have the right to cancel this Agreement and receive the Deposit, whereupon neither party shall have any further rights, duties or obligations under this Agreement. 8. ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY. 8.1 Seller also hereby represents and warrants the following to Purchaser as of the date of execution of this Agreement: (a) During Seller's ownership of the Property, and to the best of their knowledge regarding any previous ownership of the Property, there has been no discharge, spillage, controlled loss, seepage or filtration (a "Spill") of oil, petroleum or chemical liquids or solids, liquid or gaseous products or any hazardous waste or hazardous substance, as those terms are used in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, ("CERCLA") or in any other federal, state or local law governing hazardous substances, as such laws may be amended from time to time (collectively, the "Hazardous Waste Laws") at, upon, under or within the Property or, to the best of SeHer's knowledge, any contiguous or adjacent real estate. (b) Seller has not caused or to its knowledge pennitted to occur, and shall not permit to exist, any conditions on the Property which may cause a Spill of any contaminants or pollutants as described above at, upon, under or within the Property or on any contiguous real estate. (c) Seller nor, to the best of their knowledge, any other party has been, is or wiIl be involved in operations at or adjacent to the Property, which operations could lead to (i) the imposition of liability on Seller, Purchaser or any other subsequent or fonner owner of the Property under the Environmental Statutes or any other similar laws or regulations, or (ii) the creation of a lien or restriction on the Property under the Environmental Statutes or under any other laws or regulations. 8.2 Seller hereby indemnifies and holds Purchaser, its officers, directors, employees and agents, and their successors and assigns harmless, from and against any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses of every kind 389847v2 Page 7 and nature whatsoever, including, without limitation, reasonable attorneys' fees, which arise as a result ofa breach of any of the representations and warranties set forth in this Section 8. This indemnity shall survive Closing. 9. CONDITIONS PRECEDENT TO SELLER'S AND PURCHASER'S OBLIGATIONS. 9.1 In addition to all other conditions contained elsewhere herein, the obligations of Seller to sell and Purchaser to purchase the Property are subject to the following subparagraphs: (a) A Final examination of title to the Property at Closing shall evidence no title exceptions other than Permitted Exceptions and those approved or deemed approved by Purchaser pursuant to Paragraph 3.2 hereinabove; (b) From the date of this Agreement until the Closing, there shall have not occurred any material change in the physical condition of the Property to which Purchaser has not consented; (c) Seller and Purchaser shall have performed and observed all covenants required under this Agreement; (d) Seller shall not have misrepresented any fact or circumstance or be aware of any facts or circumstances inconsistent with any representations and warranties; (e) No governmental agency shall have initiated or have threatened to initiate any action against any part of the Property, except as the Seller shall have disclosed; (f) The Property shall be properly zoned and engineered and all permits shall have been obtained by Purchaser to allow construction of residential housing consistent with the underlying zoning; and (g) Any moratorium or other action by an appropriate governmental entity preventing applications for or issuance of approvals, building permits, utility hookups or the like, shall have expired or otherwise been lifted, repealed or terminated. 9.2 If, between the expiration of the Feasibility Study Period and the date of Closing, there is evidence of the existence of a Hazardous Waste or Hazardous Substance on or affecting the Property or its value, Purchaser may terminate this Agreement and receive back the Deposit, together with any and all accrued interest, without any further liability to Seller, with the sole exception of the indemnification and restoration requirements under Paragraph 5.1, which shall survive termination of this Agreement as set forth therein. 389847v2 Page 8 . . 9.3 Any of the conditions to the obligations of Seller and Purchaser set forth herein may be waived; provided that the waiver of any conditions shall be in writing and agreed to by Seller and Purchaser, as applicable. 9.4 In the event that any of the conditions precedent to Purchaser's obligations set forth in this Agreement are not satisfied, Purchaser shall have the right, in its sole discretion, (i) to extend the Closing for such time as is necessary to satisfy the conditions, or (ii) to terminate this Agreement by written notice to Seller and receive a return of the Deposit, together with all accrued interest thereon. 10. CONFIDENTIAL AGREEMENT. 10.1 Both Seller and Purchaser agree that the terms of this Agreement, or any information obtained by Purchaser during its investigation and due diligence period, shall remain confidential and shall not be disclosed to the public except on an as needed basis to complete Purchaser's due diligence. I J. CLOSING. 11.1 The consummation of the contemplated transactions (the "Closing") shall be held at the offices of the title company selected by Purchaser or at any other mutually acceptable location, not later than thirty (30) days after notice, including any extensions, time being of the essence. The exact date and time of the Closing shall be designated by Purchaser upon notice to Seller of not less than thirty (30) days. The title company selected by Purchaser shall be responsible at the Closing for preparing the settlement statement, causing all documents to be recorded, disbursing all closing proceeds, and otherwise conducting settlement. 11.2 At the Closing, Seller shall deliver to Purchaser, in a form and substance satisfactory to Purchaser's counsel, the following: (a) (b) (c) (d) 389847v2 A recordable Special Warranty Deed, conveying the Property in fee simple to Purchaser, or its assigns as provided in Paragraph; If Seller is other than a natural person(s), a certificate as to resolutions of the Seller authorizing the sale of the Property to Purchaser, executed by all partners of the Seller, or certified by Seller's secretary if Seller is a corporation; All required real estate transfer declarations; Any and all other documents, instruments, and agreements necessary or appropriate in the reasonable opinion of Purchaser's attorney to transfer and convey the Property and all interest therein to Purchaser in accordance with this Agreement and as may be required by the title insurer. Such other documents, instruments and agreements shall be furnished to Seller's attorney ten (10) days prior to Closing. Page 9 ',. ' . . 11.3 At the Closing, Purchaser shall deliver to seller the balance of the Purchase Price in readily available funds after application of the Deposit previously tendered. Any check tendered shall be a certified check, cashier or attorney check. 11.4 Seller shall pay the cost of preparing the Deed and Seller's attorneys' fees. Purchaser shall pay the cost of recording the Deed, all costs of the title company, selected by the Purchaser set forth herein to insure title, and the cost of owner's title insurance policy. Real estate taxes, utilities and rent shaH be prorated between the parties as of the Closing on the basis of the fiscal year for which they are assessed. SeHer and Purchaser shaH each pay one-half of all state, local and county realty transfer taxes due in connection with the transfer of the Property. Seller shall be responsible for all rollback taxes or agricultural transfer taxes and any other form of taxes or county assessments which become due as a result of the transfer of title to Purchaser. 11.5 The delivery of the documents and the payment of the sums to be delivered and paid at the Closing shaH be accomplished through an escrow with the title company to be established by Purchaser. The costs of such escrow if any shall be borne by Purchaser. I I .6 Possession of the Property shaH be delivered to Purchaser immediately upon completion o{the Closing. 12. RISKS OF LOSS. Risk of loss to the Property shaH be borne by Seller until Settlement. If the Property is damaged by fire or other cause prior to Settlement, Purchaser may elect to proceed to Settlement without reduction in the purchase price and SeHer shall assign any insurance proceeds payable in connection with the damages to Purchaser, or Purchaser may terminate this Agreement, whereupon Purchaser's Eamest Money Deposit and any interest eamed thereon shaH be returned forthwith, and neither party shall have any further liability or obligation hereunder. During the term of this Agreement, SeHer shall maintain casualty and liability insurance coverage for all improvements located on the Property in amounts reasonably satisfactory to Purchaser. In the event of a condemnation, Purchaser shaH have the option to terminate this Agreement and receive a return of the Deposit, including accrued interest thereon, or to proceed to Closing with any condemnation award paid or credited to Purchaser at Closing. 13. REMEDIES. 13.1 In the event Seller fails to perform or breaches any of their representations, warranties or covenants to be performed by SeHer under this Agreement, or SeHer misrepresents any fact or circumstance, Purchaser shaH be entitled (a) to enforce specific performance of this Agreement; (b) to bring suit for all damages suffered by reason of such failure and all of Purchaser's costs and expenses, including reasonable attorneys' fees; and (c) to have the Deposit together with any and aH accrued interest returned to Purchaser. Each remedy under this Paragraph 13.1 may be cumulative and not exclusive. 389847v2 Page 10 .\ ' . . 13.2 If Purchaser defaults in its performance of any term, covenant, condition, or obligation under this Agreement, including the obligation of Purchaser to purchase the Property if all conditions precedent to such obligations have been satisfied, Seller shall be entitled to receive as complete liquidated damages (a) the Deposit, as liquidated damages, and (b) copies of any and all engineering studies, site plans, and similar material owned by Purchaser and prepared by Purchaser or its agents or employees in connection with the contemplated development of the Property. The parties acknowledge that the Deposit represents a reasonable effort to ascertain the damages to Seller in the event of a Purchaser default, which damages are difficult or impossible to quantify. Seller waives all other remedies. 13.3 A failure by either party to perform any act required by it under this Agreement, other than the requirement to close if all conditions have been met, shall not be deemed a default under this Agreement until such party has received written notice from the other party setting forth the alleged failure, and such failure has not been cured within five (5) days of receipt of such notice. 14. BROKERAGE COMMISSION. The parties represents and warrant to each other that to the extent either has dealt with or engaged any broker, finder or other person in connection with the transaction contemplated herein, that such party solely is obligated for any and all commissions claimed by such person, and that such party agrees to indemnifY and hold the other harmless and defend on account of any loss, damage, liability or expense, including reasonable attorneys' fees, incurred by reason of a demand for payment by such broker, finder or other person. Both parties warrant to the other that they have not dealt to negotiate this transaction through a real estate broker. 15. GENERAL PROVISIONS. 15.1 The terms and conditions of this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective heirs, successors, assigns, and legal representatives. 15.2 Any notice required or permitted hereunder shall be deemed to have been received either (a) when delivered by hand and the party giving such notice has received a signed receipt thereof, or (b) one (I) day following the date deposited with Federal Express or other recognized overnight courier, or (c) when sent by telecopy machine or (d) on the day following the date deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed as follows (or addressed in such other manner as the party being notified shall have requested by written notice to the other party) for: 389847.2 Page II '.- If to the Seller: Estate of Dale B. Failor C/O Charles E. Shields, ill, Esquire 6 Clouser Road Mechanicsburg, Pennsylvania 17055 Telephone: (717) 766-0209 Telecopier: (717) 795-7473 If to the Buyer: Francis C. McNaughton The McNaughton Company 4400 Deer Path Road Suite 201 Harrisburg, Pennsylvania 17110 Telephone: (717) 234-4000 Telecopier: (717) 234-2000 With a copy to: Peter J. Ressler, Esquire Mette, Evans & Woodside 3401 North Front Street Harrisburg, Pennsylvania 17110 Telephone: (717) 232-5000 Telecopier: (717) 236-1816 15.3 Whenever used herein, unless expressly provided otherwise, the term "days" shall mean consecutive calendar days, except that if the expiration of any time period measured in days occurs on Saturday, Sunday, legal holidays or other days when federal offices are closed in Washington, D.C., such expiration shall automatically be extended to the next business day. 15.4 This Agreement constitutes the entire agreement between the parties concerning the Property and supersedes all prior agreements or undertakings. 15.5 This Agreement may not be modified except by the written agreement of the parties. 15.6 In the event anyone or more of the provisions contained in this Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or 389847v2 Page 12 " ' "...' unenforceability will not affect any other provisions hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had not been contained herein. 15.7 This Agreement may be assigned by Purchaser in its sole discretion to any other entity which controls, is controlled by, or which is under common control with the Purchaser. Any assignment by Purchaser will not relieve it of its obligations hereunder. 15.8 Any paragraph headings or captions contained in this Agreement shall be for convenience or reference only and shall not affect the construction or interpretation of any provisions of this Agreement. 15.9 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 15.10 The parties hereby agree to indemnify and defend the Escrow Agent from any and all suits, actions or claims if the Escrow Agent acts in good faith on the written notice and direction of the parties delivered in accordance with the terms hereof. 15.1 I The Feasibility Study Period shall commence upon the execution of this Agreement by both Seller and Purchaser. 15.12 The date of this Agreement shall be the date on which it is executed by Seller and Purchaser, or, if not executed simultaneously, the date on which it is executed by the last of Seller or Purchaser, which date will be inserted at the top of the first page hereof. 15.13 The individuals executing this Agreement represent and warrant that they have full authority and/or have been duly authorized by their respective parties to do so on behalf of such parties. 15.14 The parties waive the formal requirements for tender of payment and deed. The parties agree that all time is of the essence. 15.15 Multiple Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one and the same agreement. 15.16 Recordation. The parties agree that this Agreement may be recorded at the option of Purchaser, for the purpose of establishing equitable title in Purchaser. If Purchaser fails to settle on this Agreement, it will join in any filing necessary to remove or nullify this Agreement as recorded. 16. LIKE KIND EXCHANGE. 16.1 The Parties agree that either Party may wish to treat the conveyance as a tax- free exchange of like kind properties, as may be permitted under Section 1031, or other applicable sections of the United States Internal Revenue Code. In the event that either party is able to 389847v2 Page 13 ".~ \ " : arrange for the acquisition of other property that can be exchanged for the Property in such a tax. free transaction, the Parties agree that each of them will cooperate to conclude such a transaction, if possible. In consideration of the cooperation of either Party, the other Party agrees to bear and pay in fulJ all of the cooperating parties' reasonable costs and expenses, not to exceed $1,000 in the aggregate, associated with the tax-free exchange and further agrees to indemnify and save harmless the cooperating Party from any loss, cost or claim, including reasonable attorney's fees and accountant fees caused to the cooperating Party as a result of any review, audit or dispute of the tax-free exchange by the Internal Revenue Service. IN WITNESS WHEREOF, The parties hereto have executed this Agreement on the dates written below. Date: 3/21> /P'I SELLER: ESTATE OF DALE B. FAILOR -Pd4j ~ ~4f,c By: Name: Title: Date: ;<~ PURCHASER: THE McNAUGHTON COMPANY ~-d"<) 4t/~ By: Name: ,cf'(A..,,~;J e. -f'.-M<a-~ n.,) Title: ~tp 389847v2 Page 14 A~tV McN,ees Wallace & Nurick LLC attorneys at law DAVID E. leHMAN DIRECT DIAL: (717) 237-5285 E-MAIL ADDRESS:DI.EHMAN@MWN.COM July 28, 2004 BY TELECOPY TO 717.795-7473 Estate of Dale B. Failor clo Charles E. Shields, III, Esquire 6 Clouser Road Mechanicsburg, PA 17055 RE: Purchase and Sale Agreement dated March 26, 2004 by and between The Estate of Dale B. Failor and The McNaughton Company (the "Agreement) Dear Mr. Shields: On behalf of The McNaughton Company, please be advised that the covenant of the Seller under Section 6.4 of the Agreement has been satisfied by the Seller's attempts to obtain the consent of all beneficiaries and the Seller's filing of the Petition For Hearing. Therefore, no further action is required under Section 6.4. Sincerely, MCN~/ (IRICK LLC By ~ David E. Lehman c: Francis C. McNaughton Peter J. Ressler, Esq. Steven J. Weingarten, Esq. Helen L. Gemmill, Esq. PO, Box 1166 . 100 PINE STREET. HARRISBURG. PA 17108-1166. TEL: 717,232.8000. FNC 717.237.5300. WWW,MWN,COM HAlLETON, PA. STATE COLLEGE, PA . COWMBUS, OH . WASHINGTON, DC AUG-2-2004 12:15 FROM:MWN 717-237-5471 TO: 92342000 P.9/10 VERIFICA TION Subject to the penalties of 18 Pa. C.S.A. g 4904 relating to unsworn falsification to authorities, I hereby certify that I am the Chief Executive Officer of The McNaughton Company. In that capacity, I am authorized to make this Verification on its behalf. I further certify that the facts set forth in the foregoing document are true and correct to the best of my information and belief. THE MCNAUGHTON COMPANY Dated: f7/y BY~~~~ Francis C. . ghton ~ '8--~ 9- ", ~(;1 ;\t ~o~. G ~ ~;" ,) ~ '+~-' ~ 6~ 3 c. ::J ~,'-='~ C;'l ....,.., +.-, .~ ,j ~ LAW OFFICES 5NELBAKER. BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYL VANIA v. CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant PRAECIPE FOR ENTRY OF APPEARANCE TO THE PROTHONOTARY: Please enter the appearance of Keith O. Brenneman, Esquire and the law firm of Snelbaker, Brenneman & Spare, P. C. as attorneys for Defendant Estate of Dale B. Failor in the above-captioned action. Papers may be served at the address set forth below. SNELBAKER, BRENNEMAN & SPARE, P. C. 0IJJt fAYV1M--- BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, P A 17055 (717) 697-8528 Date: August 11, 2004 LAW OFFICES SNELBAKER, BRENNEMAN & SPARE CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date, caused a true and correct copy of the foregoing Praecipe For Entry of Appearance to be served upon the person and in the manner indicated below: FIRST CLASS MAIL. POSTAGE PREPAID. ADDRESSED AS FOLLOWS: David E. Lehman, Esquire: McNees, Wallace & Nuric:k, LLC 100 Pine Street P. O. Box 1166 Harrisburg, P A 17108-1166 Attorneys for Plaintiff Thc: McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P.C. /I'ly} ~7/h By: Keith O. Brennemcm, Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, P A 17055 (717) 697-8528 Date: August 11,2004 ..>; ~' r, '" (".:::;:1 '''~';;J L- o "1"1 .-1 ~T' rii:D i-~- -orTi "l~_~ CT) . '! ~~:? ,:'~.~ i.r~ jrrl ;-++1 f~ rf\ ~::J .< LAW OFFICES SNELBAKER BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant ACCEPTANCE OF SERVICE I hereby accept service of the Complaint in the above-captioned action on behalf of Defendant Estate of Dale B. Failor and certify that I am authorized to do so. SNELBAKER, BRENNEMAN & SPARE, P. C. r141 J1/l/l . Date: August II, 2004 BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date, caused a true and correct copy of the foregoing Acceptance of Service to be served upon the person and in the manner indicated below: FIRST CLASS MAIL. POSTAGE PREPAID. ADDRESSED AS FOLLOWS: David E. Lehman, Esquirt~ McNees, Wallace & Nuri<:k, LLC 100 Pine Street P. O. Box 1166 Harrisburg,PA 17108-1166 Attorneys for Plaintiff The McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P,C. 11/~~ Date: August 1 I, 2004 By: Keith O. Brenneman., Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor LAW OFFICES SNEL8AKER. BRENNEMAN & SPARE - ". ~ C) C~J -}'I ""- :r::'~ c, (J'.) -n :::1: N ,z.- --, LAW OFFICES SNELBAKER, BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant PRAECIPE FOR ENTRY OF APPEARANCE TO THE PROTHONOTARY: Please enter the appearance of Keith O. Brenneman, Esquire and the law firm of Snelbaker, Brenneman & Spare, P. C. as attorneys for Defendant Estate of Dale B. Failor in the above-captioned action. Papers may be served at the address set forth below. SNELBAKER, BRENNEMAN & SPARE, P. C. 0IJJt f;,f///l/1/I---- BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, PAl 7055 (717) 697-8528 Date: August 11,2004 . , cr :0'1 ,.':v !.I S,W liUOZ .:./J CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date, caused a true and correct copy of the foregoing Praecipe For Entry of Appearance to be served upon the person and in the manner indicated below: FIRST CLASS MAIL. POSTAGE PREP AID.. ADDRESSED AS FOLLOWS: David E. Lehman, Esquire McNees, Wallace & Nurick, LLC 100 Pine Street P. O. Box 1166 Harrisburg, P A 17108-1166 Attorneys for Plaintiff The McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P.C. /I'ly} tt-r'h By: Keith O. Brennem[ill, Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, P A 17055 (717) 697-8528 Date: August II, 2004 LAW OFFICES SNEL8AKER. BRENNEMAN 8: SPARE ~ ..... ~ ~~, C:;;J C;;:J J:' o '''n .-1 ::r.;-r; n!=. ..,.,h. l.lCi ~:~,l ~,:..' ":1::: -;i . ~; ('.0;1 -<-.~ fl."l ,~:"l ;S: r~ .1::-- cr\ LAW OFFICES SNELBAKER BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff : IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYL VANIA v. CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant ACCEPTANCE OF SERVICE I hereby accept service of the Complaint in the above-captioned action on behalf of Defendant Estate of Dale B. Failor and certify that I ani authorized to do so. SNELBAKER, BRENNEMAN & SPARE, P. C. r141 ~Vl Date: August 11, 2004 BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date, caused a true and Correct copy of the foregoing Accept,mce of Service to be served upon the person and in the manner indicated below: FIRST CLASS MAIL. POSTAGE PREPAID. ADDRESSED AS FOLLOWS: David E. Lehman, Esquin~ McNees, Wallace & Nurick, LLC 100 Pine Street P. O. Box 1166 Harrisburg,PA 17108-1166 Attorneys for Plaintiff The McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P.C. 11/~L Date: August I I, 2004 By: Keith O. Brenneman, Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, PA ] 7055 (7 17) 697-8528 Attorneys for Defendant Estate of Dale B. Failor LAW OFFICES SNELBAKER. BRENNEMAN 8: SPARE -5 ~v C) C' - " , '" ~ (:~~~ ~- o ""1'1 ceil -",,;.0'1- l ) 1 f;~ ,: rTl CJ ~S :.n ,,'J C} ,'-j', -n ::1': i5:S .r.- --I LAW OFFICES SNELBAKER BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : CIVIL ACTION 2004-3798 ESTATE OF DALE B. FAILOR, eceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant NOTICE TO PLEAD 0: The McNaughton Company, Plaintiff and David E. Lehman, Esquire McNees, Wallace & Nurick, LLC P. O. Box 1166 Harrisburg, PA 17108-1166 You are hereby notified that you have twenty (20) days in which to plead to the enclosed reliminary Objections or a Default Judgment may be entered against you. SNELBAKER, BRENNEMAN & SPARE, P. C. I/t~ ate: By: Keith O. Brenneman, Esquire 44 West Main Street Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor September 3, 2004 LAW OFFICES SNELBAKER BRENNEMAN & SPARE THE MCNAUGHTON COMPANY, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION 2004-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant DEFENDANT'S PRELIMD-.rARY OBJECTIONS TO PLAINTIFF'S COMPLAINT Defendant Estate of Dale B. Failor, through Executrix Patsy A. Hertzler and by her attorneys, Snelbaker, Brenneman & Spare, P. C., submits the following Preliminary Objections to Plaintiffs Complaint. BACKGROUND I. Plaintiff The McNaughton Company ("McNaughton") initiated this action against the Estate of Dale B. Failor by Complaint filed August 3, 2004. 2. Plaintiff in this action seeks, inter alia, specific performance of a Purchase and Sale Agreement (the "Agreement") dated March 26, 2004 which Agreement concerns the sale by Defendant and purchase by Plaintiff of real estate consisting of approximately 150 acres located in Upper Allen Township, Cumberland County, commonly known as the Failor Farm. (See Agreement, Complaint "Exhibit A") 3. After the parties' execution of the Agreement, the Executrix of the Estate of Dale B. Failor filed a Petition with the Orphans' Court for a hearing on the sale of the Failor Farm (the "Petition"). (Complaint, Paragraphs 11 and 12) 4. By Order dated June I I, 2004, the Court set forth a procedure to be employed for purposes of determining whether Court approval ofthe Agreement with McNaughton or a denial LAW OFFICES SNELBAKER BRENNEMAN & SPARE of such approval and the approval of another competing offer is in the best interest of the Estate of Dale B. Failor and the Estate's beneficiaries. (Complaint, Paragraph 15) PRELIMINARY OBJECTIONS I. Lack of Subject Matter Jurisdiction IPursuant to Pa.R.C.P. l028(a)(1) 5. Plaintiffs Complaint concerns matters involving the administration ofreal property in a decedent's estate. 6. The sale of property from a decedent's estate concerns the administrative power over real estate exercisable by a fiduciary. 7. As a matter of law, the Orphans' Court has exclusive jurisdiction over matters raised by McNaughton in its Complaint. WHEREFORE, Defendant requests this Court to dismiss this action due to lack of subject matter jurisdiction pursuant to Pa.R.C.P. 1028(a)(l). II. Pendency of a Prior Action PUrlluant to Pa.R.c.P. l028(a)(6) 8. As alleged in Plaintiffs Complaint, the Orphans' Court has before it a Petition filed by the Executrix of the Estate of Dale B. Failor to determine, inter alia, whether the Agreement should be approved or denied and whether another Gompeting offer is in the best interest of the Estate. 9. The aforementioned Petition was filed in the Orphans' Court approximately two (2) months prior to Plaintiffs initiation of the action su12 judice. 10. Plaintiff and Defendant are parties to the Orphans' Court proceeding in which the Petition is being considered. -2- LAW OFFICES SNELBAKER BRENNEMAN & SPARE 11. Any relief granted by the Court in the Orphans' Court proceeding will resolve all claims that have been subsequently raised by Plaintiff in this action. 12. By Order dated August 6, 2004 in the Orphans' Court proceeding docketed to No. 21-96-413, the Court ordered and Plaintiff through its counsel agreed: a. That the Orphans' Court can decide the meaning of clause or section 6.4 ofthe parties' Agreement, which decision would control the result in this civil case initiated by Plaintiff; b. That this civil action raised a centralllegal question of the effect of section 6.4 of the parties' Agreement which is before the Orphans' Court; and c. That the litigation matter is properly before the Orphans' Court and within the Orphans' Court jurisdiction. A true and correct copy ofthe Court's Order of August 6, 2004 docketed in the Orphans' Court Division to No. 21-96-413 is attached hereto .md incorporated by reference herein as "Exhibit 1". 13. For the reasons set forth above, the matter pending in the Orphans' Court constitutes a lis pendens to this civil action subsequently initiat,ed by Plaintiff. WHEREFORE, Defendant requests this Court to dismiss this action due to the pendency of the prior action in the Orphans' Court pursuant to Pa.R.C.P. 1028(a)(6). III. Demurrer Pursuant to Pa.R.C.P. 1029(a)(4). 14. Paragraph 6.4 of the parties' Agreement provides: 6.4 Seller, in addition to attempting to obtain the consent of all beneficiaries of Seller to this Agreement, shall, within thirty (30) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphans' Court Division) for approval of the terms of this Agreement. (Complaint, "Exhibit A") -3- LAW OFFICES SNELBAKER BRENNEMAN & SPARE 15. Pursuant to Paragraph 6.4 ofthe parties' Agreement, Court approval of the terms of the Agreement is a condition precedent to Defendant being able to sell the Failor Farm to McNaughton. 16. The Agreement between Defendant and Plaintiff is not a valid contract binding on the Defendant until such time as there has been Court approval of the terms of the Agreement. 17. As a matter oflaw, Plaintiff cannot obtain specific performance of the Agreement since all conditions ofthe Defendant's obligation to sell the Failor Farm have not been performed or have not occurred. 18. There has been no Court approval of the Agreement as required pursuant to Paragraph 6.4. WHEREFORE, Defendant requests this Court to dismiss this action due to the legal insufficiency of the McNaughton Complaint pursuant to Pa.R.C.P. 1029(a)4. SNELBAKER, BRENNEMAN & SPARE, P. C. Ilwl/I/l.-- BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, P A 17055 (717) 697--8528 Attorneys for Defendant Estate of Dale B. Failor Date: September 3, 2004 -4- IN RE IN THE COURT OF COMMON PLEAS. OF CUMBERLAND COUNTY, PENNSYLVANIA ESTATE OF DALE B. FAILOR DECEASED, LATE OF UPPER. ALLEN TOWNSHIP, CUMBERLAND COUNTY / PENNSYLVANIA ORPHANS' COURT DIVISION 21-96-413 ORDER OF COURT AND NOW, August 6, 2004, th,,, record should reflect that the Court held a continuation of 1~he hearing started last Thursday, July 29, 2004. At today's p:roceeding no testimony was entertained by the Court, although the Court did hear considerable argument off the record regarding legal questions. Charles E. Shields, III, Esquire, is here together with various co-counsel representing the Executrix; David E. Lehman, Esquire, together with co-counsel, appears representing the McNaughton Company; and Mark D. Br,adshaw, Esquire, with various counsel, appears representing the Charlan Group. All attorneys agree that the issue in the case is the interpretation of paragraph 6 point 4 in the sales agreement between the estate and the McNaughton Company dated March 26, 2004. The position of the McNaughi::on group is that the sales agreement is a binding document with the Executor, despite the language contained in 6 point 4. WhilE, the McNaughton Company has filed a concurrent action in civil court at 04-3798, requesting specific performance, there is a second count for money damages, including a claim for damages. Mr. Lehman does agree that the Orphans' Court can decide the meaning of the contract clause of 6 point 4 (which would control the result in his civil case, notwithstanding); the McNaughton Company's civil EXHIBIT 1 In Re; Estate of Dale B. Failor 21-96-413 Page 2 action raises as a central legal question the effect of section 6 point 4, which is before this court, and that litigation matter is properly before the Orphans' Court in the Orphans' Court jurisdiction. The Court has.received various submissions of law from counsel on the interpretation of paragraph 6 point 4. McNaughton Company wishes to add a further brief and will be given until the close of business on Thursday, August 12, 2004, for the final brief. Mr. Shields and Mr. Bradshaw will be given to the close of business on Thursday, August 19, 200'4, to respond. Unless otherwise ordered by the Court, the case will be decided by the Court on the basis of the briefs presented. By the Court, Charles E. Shields, III Esquire ~ For the Executrix David E. Lehman, Esquire For McNaughton Company -Mark D. Eradshaw, Esquire For Charlan Group :mtf LAW OFFICES SNELBAKER BRENNEMAN & SPARE CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hen:by certify that I have, on the below date, caused a true and correct copy ofthe foregoing Preliminary Objections to be served upon the person and in the manner indicated below: FIRST CLASS MAIL. POSTAGE PREPAID. ADDRESSED AS FOLLOWS: David E. Lehman, Esquire McNees, Wallace & Nurick, LLC P. O. Box 1166 Harrisburg, P A 17108-1166 Attorneys for Plaintiff The McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P.C. )1;m1/f/'- By: Keith O. Brenneman, Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor Date: September 3, 2004 (') c u~ r" \ Il .!)! " -~,>. .- ~~; (/)')-, ~-;::: t:~ {~j ~c ~..F ~ -"' , '!? (..,.:. \,0 "-> = C;:J .z;- <>, 1"'1 -., o -., '-1 :L:." nl-. r"- -om t~? --jV ~,- l'i (-5 :!J -;.-tJ (~rl'l .-/ :I; .< I (..) ;:::a :;c THE MCNAUGHTON COMPANY, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v. CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased Late of Upper Allen Township Cumberland County, Pa., Defendant. PLAINTIFF'S ANSWER TO DEFENDANT'S PRELIMINARY OBJECTIONS Plaintiff The McNaughton Company, for its response to Defendant's Preliminary Objections To Plaintiffs Complaint, states as follows: Response To Backaround Averments 1. Admitted. 2. Admitted with qualification. The Complaint, being a writing, speaks for itself and must be read in its entirety. 3. Admitted. 4. Admitted. Response To Preliminary Obiection For Lack Of Subiect Matter Jurisdiction 5. Admitted. 6. Admitted, 7. Admitted. Further answering, The McNau~Jhton Company states that it presented the Complaint to the Orphans' Court, but the Clerk of the Orphan's Court refused to accept the filing. The Clerk of the Orphan's Court directed that the complaint be filed with the Prothonotary of the Court of Common Pleas of Cumberland County. The McNaughton Company does not object to the transfer of this action to the Orphan's Court to be considered under the Orphan's Court docket number 21-96413. WHEREFORE, Defendant's preliminary objection for lack of subject matter should be overruled. Alternatively, The McNaughton Company requests that this matter be transferred to the Orphan's Court under docket number 21-96413. Response To Preliminary Obiection Based On Pendency Of A Prior Action 8. Admitted. 9. Admitted. 10. Denied as stated. The McNaughton Company is not a party to the Orphan's Court proceeding. The McNaughton Company had filed a petition to intervene in that proceeding, but the petition has not yet been formally granted. The McNaughton Company has been participating in the Orphan's Court proceeding to the extent allowed by the Court. 11. Denied. While the Orphan's Court has issued a decision on the meaning of certain provisions of the contract between the Estate and The McNaughton Company, The McNaughton Company's Complaint in this action seeks further relief, including damages for lost profits, lost costs and expenses and attorneys' fees, which may not be resolved in the Orphan's Court proceeding. 12. Admitted with qualification. The Complaint, being a writing, speaks for itself and must be read in its entirety. 13. Denied. The McNaughton Company denies this paragraph to the extent that it suggests that The McNaughton Company's Complaint is barred by the existence of the Orphan's Court proceeding. 2 WHEREFORE, Defendant's preliminary objection based on pendency of a prior action should be overruled. Alternatively, this civil action should only be stayed, not dismissed, pending the resolution of the current proceedings before the Orphan's Court. Response To Preliminary Obiection Based 011 Leaallnsufficiencv 14. Admitted with qualification. The Purchase and Sale Agreement, being a writing, speaks for itself and must be read in its entirety. 15. Denied. Further answering, while the Orphlm's Court has issued a decision on the meaning of Paragraph 6.4, the Orphan's Court decision is subject to appeal and possible reversal for legal error. The McNaughton Company incorporates by reference its brief filed August 12, 2004 in the Orphan's Court proceeding. 16. Denied. Further answering, while the Orphsln's Court has issued a decision on the meaning of Paragraph 6.4, the Orphan's Court decision is subject to appeal and possible reversal for legal error. The McNaughton Company incorporates by reference its brief filed August 12, 2004 in the Orphan's Court proceeding. 17. Denied. Further answering, while the Orphan's Court has issued a decision on the meaning of Paragraph 6.4, the Orphan's Court decision is subject to appeal and possible reversal for legal error. The McNaughton Company incorporates by reference its brief filed August 12, 2004 in the Orphan's Court proceeding. 18. The McNaughton Company admits that the Court has not approved the Agreement. The McNaughton Company denies that Court approval is required. 3 WHEREFORE, the Estate's preliminary objection based on legal insufficiency should be overruled. Respectfully submitted, MCNE7~-tALLACE & NURICK LLC BY! (j()AA,i!eL- David E. Lehman (ID No. 15243) Helen L. Gemmill (ID No. 60661) 100 Pine Stnaet P.O. Box 1 H56 Harrisburg, PA 17108-1166 Tel: (717) 232-8000 Fax: (717) 2:~7-5300 Attorneys for Plaintiff The McNaughton Company Dated: September 23, 2004 4 CERTIFICATE OF SERVICI;, The undersigned certifies that a true and correct copy of the foregoing was served by first class mail, postage prepaid, upon this date, upon the following: Keith O. Brenneman, Esquire Snelbaker, Brenneman & Spare, P.C.. 44 West Main Street P.O. Box 318 Mechanicsburg. PA 17055 a,c1W--- David E, L.ehman Dated: September 23, 2004 THE MCNAUGHTON COMPANY, Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : CIVIL ACTION 2004-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant ORDER rft\ AND NOW, this V) day of October, 2004 it is hereby ORDERED that argument on Defendant's Preliminary Objection to Plaintiff's Complaint is hereby scheduled to take place in Courtroom No.3 in the Cumberland County Courthouse on Tuesday, November 16,2004 at 3:00 o'clock p.m. Defendant as moving party is directed to file a Brief in support of its Preliminary Objections on or before November 5, 2004 with any response Brief to be filed and served by Plaintiff on or before November 12,2004. Counsel for the parties is directed to deliver a copy of their respective Briefs to the chambers of the undersigned upon filing the Brief with the Prothonotary . BY THE COURT: ! Z :ii "~"f Cz ['"'lilULZ LAW OFFICES SNElBAKER. BRENNEMAN 8: SPARE THE MCNAUGHTON COMPANY, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION 2004-3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant DEFENDANT'S BRIEF IN SUPPORT OF PRELIMINARY OBJECTIONS TO PLAINTIFF'S COMPLAINT Defendant Estate of Dale B. Failor, Deceased, by Executrix Patsy A. Hertzler and her attorneys, Snelbaker, Brenneman & Spare, P. C., submits this Brief in Support of Defendant's Preliminary Objections to Plaintiffs Complaint as follows: 1. PROCEDURAL AND FACTUAL BACKGROUND. This action represents an effort by Plaintiff The McNaughton Company ("McNaughton") to interfere with Defendant Estate of Dale B. Failor (the "Estate") in obtaining Court approval of the sale of farm land in order to conclude the administration of the Estate. On March 26,2004 McNaughton and the Estate entered into a Purchase and Sale Agreement (the "Agreement") for purchase and sale of 150 acres of real estate located in Upper Allen Township commonly known as the "Failor Farm". (See Agreement, Exhibit A, Page 1 to Plaintiffs Complaint) The parties agreed pursuant to Paragraph 6.4 of the Agreement as follows: 6.4 Seller, in addition to attempting to obtain the consent of all beneficiaries of Seller to this Agreement, shall, within thirty (30) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphans' Court Division) for approval of the terms of this Agreement. (Agreement, p. 5) Consistent with Paragraph 6.4 of the Agreement, the Estate through its attorney, Charles E. Shields, III, Esquire, on June 11, 2004 filed with the Orphans' Court a Petition For Hearing LAW OFFICES SNELBAKER. BRENNEMAN 8: SPARE Re: Sale of Real Estate of Dale B. Failor (the "Petition"). (Complaint, Paragraph 11) In response to the Petition, this Court issued an order dated June 11, 2004 directing, inter alia, that a hearing be scheduled to "determine whether court approval of a contract with the McNaughton Company, or a denial of such approval and the approval of another competing offer, is in the best interest of the Estate of Dale B. Failor and its beneficiaries. . .". (Complaint, Paragraphs 13, 15) On July 27,2004, more than 45 days after the filing ofthe Petition and the Court's June 11, Order, McNaughton requested the Court to vacate portions ofthe June 11,2004 Order (Complaint Paragraph 20) by filing a Motion For Reconsideration. On August 3, 2004, McNaughton initiated this action in the civil side of the Court seeking specific performance of the parties' Agreement and in the alternative, claiming breach of contract on the basis that the Estate breached the Agreement by petitioning the Court for approval of a competing offer of purchase. On September 3,2004 Defendant filed preliminary objections to McNaughton's Complaint in the nature of a demurrer, lack of subject matter jurisdiction and pendency of a prior action. On September 23,2004, McNaughton filed an Answer to Defendant's Preliminary Objections. This Brief is submitted by the Estate in support of its preliminary objections. 2 LAW OFFICES SNELBAKER. BRENNEMAN Be SPARE II. ISSUES PRESENTED. A. Whether based upon the allegations of record the law does not permit the recovery sought by McNaughton. (Proposed Answer: Yes) B. Whether the proceedings initiated in the Orphans' Court constitute a lis pendens to the civil action subsequently initiated by McNaughton. (Proposed Answer: Yes) C. Whether the Orphans' Court has exclusive jurisdiction over the matters raised by McNaughton in its Complaint. (Proposed Answer: Yes) 3 LAW OFFICES SNELBAKER. BRENNEMAN Be SPARE III. ARGUMENT. A. BASED UPON THE FACTS ALLEGED AND MATTERS OF RECORD, THE LAW DOES NOT PERMIT THE RECOVERY SOUGHT BY PLAINTIFF. The standards for this Court's consideration of preliminary objections in the nature of a demurer are well known and established. The question presented by a demurrer is whether on the facts averred, the law says with certainty that no recovery is possible. Santiago v. Pennsylvania Nation Mutual Casualty Insurance Company, 418 Pa. Super. 178,613 A.2d 1235 (1992). Any doubts about sustaining preliminary objections in the nature of a demurrer should be resolved in favor of overruling the demurer. Hill v. Thome, 430 Pa. Super. 551,635 A.2d 186 (1993). However, although a demurrer may admit all well-pleaded facts, it does not admit conclusions of law, unwarranted inferences from facts, argumentative allegations or expressions of opinion. Commonwealth, Department of General Services v. Celli-Flynn, 115 Pa. Commw. 494,540 A.2d 1365 (1988). Defendant, being not unmindful of the relatively stringent standards for the grant of a demurrer, asserts that as a matter of law McNaughton is precluded from maintaining this action. 1. The parties' Agreement is contingent upon approval of the Orphans' Court. As noted above, Paragraph 6.4 of the parties' Agreement expressly states that the Estate "shall, within sixty (60) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphans' Court Division) for approval of the terms of this Agreement." (emphasis added) As this Court has observed, while an executor may have the express power to sell a decedent's property without obtaining court approval, the executor may nonetheless include in a sales agreement a provision making the sale conditional upon the approval of the Orphans' 4 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE Court. I In this case not only did the Executrix of the Estate obligate herself to petition the court (she "shall" petition) but made clear that the purpose in doing so was "for approval of the terms" of the Agreement. McNaughton's contentions that Paragraph 6.4 of the Agreement simply "authorized" the Executrix to petition the Court for approval and that the Agreement was not subject to the condition precedent of court approval (Complaint, Paragraphs 8, 10) not only are patently baseless but ignore the plain language of the Agreement it negotiated and signed. In the case ofIn Re Estate of Lazarus, 420 Pa. Supra. 379,616 A.2d 1023 (1992) the Pennsylvania Superior Court considered the effect of contract language similar to that relevant to the instant case. In Lazarus, the Superior Court affirmed a lower court's disapproval of an agreement of sale and approval of a different agreement for the sale of real estate. The agreement of sale at issue contained a provision providing that "this Agreement is specifically conditioned upon Seller obtaining court approval of this sale and the above-mentioned Purchase Money Mortgage." Lazarus, 616 A.2d at 1024. The Superior Court noted that under established principles of contract law, the "court approval" clause in the sales agreement operates as a condition precedent. Accordingly, an event must occur; namely, that the Orphans' Court approve the agreement, before any contractual duties arise. Lazarus, at 1026. See also In re Matter of I See Order of Court dated September 1,2004, entered to No. 21-96-413, Orphans' Court Division (citing Pennsylvania Std. Practice 2d ~ 152:126) attached hereto as "Exhibit A". It should be noted that the general rule against taking judicial notice when a court considers preliminary objections in the nature of a demurrer is subject to limited exceptions. It is appropriate for a court to take notice of fact which a party admits or which is incorporated into a complaint by reference to a prior action. The 220 Partnership v. Philadelphia Electric Company, 437 Pa. Super. 650, 650 A.2d 1094 (1994). McNaughton makes numerous references in its Complaint to pleadings, facts and matters in the Orphans' Court proceeding. It also acknowledges this Court's September I, 2004 decision on the meaning of Paragraph 6.4. See Plaintiffs Answer to Defendant's Preliminary Objections, Paragraphs 15-17, This Court can take judicial notice of the official records of the Orphans' Court since they are a matter of public record. See Reese v. Moshannon Coal Company, 8 D. & C. 3d 743 (1977) (Trial court took judicial notice of the existence and contents of tax sale records for purposes of ruling on preliminary objection in nature of a demurrer); See also Lampenfeld v. Seitz, 450 Pa. Super. 527,676 A.2d 684 (1996) (Noting that an order of the bankruptcy court is part of the public record of the bankruptcy court.) 5 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE Samson, 442 Pa. Super. 545, 660 A.2d 592 (1995) (sales agreement providing that Seller will seek court approval for leave to consummate sale of assets made the agreement contingent on court approval.) In the case at hand, petitioning the Orphans' Court "for approval ofthe terms" of the Agreement makes approval of the Agreement a condition precedent to the Estate's contractual duties. For McNaughton to claim otherwise would render the obligation of the Estate to petition the court for such approval meaningless if approval were not necessary. Such a construction by McNaughton is absurd, contravenes the plain language of the parties' Agreement and represents an ex post facto attempt to contort the contract language it had earlier agreed with and understood. Such machinations should be not countenanced by this Court. 2. There has been no breach by the Estate of the Agreement giving rise to any claim of damages for McNaughton. McNaughton concedes in its Answer to Defendant's Preliminary Objections that the Court has not approved the Agreement. (Answer, Paragraph 18) Although it continues to assert that Court approval of the Agreement is not required, for the reasons set forth above and as noted by this Court in its September 1, 2004 Order and decision in the Orphans' Court, court approval is indeed required.2 Since court approval of the Agreement is required and has not been obtained, the Estate cannot be considered in breach of any obligation under the Agreement. Any argument that McNaughton may raise that the Estate breached the Agreement by allowing solicitations of other bids is unavailing. In Lazarus, supra., another offer had been 2 This Court's order of September 1,2004 and decision docketed in the Orphans' Court to No. 21-96-413 is incorporated by reference herein. 6 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE presented to the executor prior to court approval of the agreement of sale. The Superior Court expressly held that the trial court did not err in evaluating the offers in light of the best interests of the beneficiaries. Lazarus, at 1026. It is obvious that a court has the authority to consider other bids for the benefit ofthe beneficiaries and the personal representative. For McNaughton to suggest the Estate should not advise the Court of other offers would be deceptive if not fraudulent to the Court and suggests the lengths to which Plaintiff will go for financial gain contrary to the interests of the Estate's beneficiaries. Regardless of whether other bids were received by the Estate, the Agreement with McNaughton by its terms still needs to be approved by the Court and there is no guarantee that the Agreement would be approved even in the absence of competing bids. See Lazarus, supra. at 1026. (A key characteristic of a conditional contract is that the condition is not certain to occur.) In sum, there can be no breach of the Agreement by the Estate because the Agreement must first be approved by the Court. The parties have agreed to a condition that has not yet been performed; accordingly, McNaughton cannot as a matter oflaw maintain an action for specific performance of the Agreement or a claim in the alternative for damages associated with an unripe claim for breach of contract. For these reasons, Defendant's preliminary objection in the nature of a demurrer should be granted and McNaughton's Complaint dismissed. 7 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE B. THIS ACTION SHOULD BE DISMISSED DUE TO THE PRIOR PROCEEDING IN THE ORPHANS' COURT. The purpose of a preliminary objection on the basis of the pendency of a prior action is to assert that the controversy should not be determined in the particular action. Pa.R.c.P. 1028(a)(6), Civil Procedural Rules Committee Explanatory Comment (1991). To successfully plead a preliminary objection on the grounds ofthe pendency of a prior action, the objector must show that the prior case is the same, the parties are the same and the relief requested are the same. Penox Technologies, Inc. v. Foster Medical Corp., 376 Pa. Super. 450, 546 A.2d 114 (1988). The matter initiated in the Orphans' Court by the Estate's Petition (the "Orphans' Court action") resulted in a Motion For Reconsideration being filed by McNaughton as a result ofthe Court's June 11,2004 Order. In the Motion for Reconsideration, McNaughton claimed that the Agreement with the Estate was not conditioned upon obtaining court approval. McNaughton therefore requested the Court to approve the Agreement or the Agreement containing McNaughton's subsequent proposed amendment. (Motion For Reconsideration, Paragraphs 3, 12) By Order dated August 6, 2004, the Court in the Orphans' Court action ordered and McNaughton through its counsel agreed: a. That the Orphans' Court can decide the meaning of clause or section 6.4 of the parties' Agreement, which decision would control the result in this civil case initiated by Plaintiff; b. That this civil action raised a central legal question of the effect of section 6.4 of the parties' Agreement which is before the Orphans' Court; and c. That the litigation matter is properly before the Orphans' Court and within the Orphans' Court jurisdiction. 8 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE See August 6, 2004 Order, attached to Defendant's Preliminary Objections as "Exhibit 1".3 The action sub judice, which was initiated by McNaughton after filing its Motion For Reconsideration, in substance seeks confirmation of the parties' Agreement by the Court, which would place McNaughton in the same position it would be in if the Court would ultimately approve the Agreement. McNaughton conceded as much by its counsel agreeing on August 6, 2004 that the Orphans' Court can decide the meaning of Paragraph 6.4 of the Agreement, which would control the result in this case. McNaughton's claim that it is also asking for monetary relief in the civil action is unavailing. This Court may grant to McNaughton in the Orphans' Court action costs and expenses in the event the Agreement is not ultimately approved. See ~ Kargiatly v. Provident Trust Company, 338 Pa. 358, 13 A.2d 11 (1940) (where a vendor accepts a better offer after entering into a written agreement of sale, the vendee's recovery is limited to the down payment and its necessary expenses incurred in the transaction); Yost's Estate, 40 D. & C. 208 (194) (the down-money should be returned and expenses reimbursed to successful auction bidder when property is later resold at higher price by the executor). In sum, the integrated hearing process available in the Orphans' Court (see exhibit to Response To McNaughton Company's Memorandum filed in the Orphans' Court) advances judicial economy and efficiency and provides sufficient protection and potential relief to McNaughton. It is apparent that in consideration of the relief available to McNaughton in the Orphans' Court action, McNaughton initiated this civil action solely to place a cloud on the title of the 3 McNaughton in its Answer to Defendant's Preliminary Objections, Paragraph 12, admitted the above description of the content of this Court's August 4,2004 Order. 9 LAW OFFICES SNELBAKER. BRENNEMAN Be SPARE Failor Farm so as to thwart any adjudication of the Orphans' Court that would be in the best interests of the beneficiaries of the Estate. Such a use of civil proceedings should not be condoned by this Court. For the above reasons, this action should be dismissed on the basis that the Orphans' Court action constitutes a lis pendens to the civil action subsequently initiated by McNaughton. C. THE CIVIL COURT LACKS SUBJECT MATTER JURISDICTION OVER THIS ACTION. McNaughton admits that its Complaint concerns matters involving the administration of real property in the Estate of Dale B. Failor and administrative powers over real estate exercisable by a fiduciary. Accordingly, Plaintiff concedes that as a matter of law, the Orphans' Court has exclusive jurisdiction over the matters raised by McNaughton in its Complaint. (See Plaintiffs Answer to Defendant's Preliminary Objections, Paragraphs 5-7.) In the alternative to dismissal of this action based upon the preliminary objections of demurrer and lis pendens, Defendant requests this matter be dismissed due to lack of subject matter jurisdiction in the civil side of the court. 10 LAW OFFICES SNELBAKER. BRENNEMAN & SPARE IV. CONCLUSION. F or all of the reasons set forth hereinabove, Defendant requests this Court to dismiss Plaintiffs Complaint. Date: SNELBAKER, BRENNEMAN & SPARE, P. C. ~ November 5, 2004 BY: Keith O. Brenneman, Esquire 44 W. Main Street Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Estate of Dale B. Failor 11 In re: ESTATE OF DALE B. FAILOR Late of Upper Allen Township, Cumberland County, Pennsylvania IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHAN'S COURT DIVISION NO. 21-96-413 rnER OF COURT AND NOW, this ~ day of September, 2004, upon consideration of The McNaughton Company's Motion for Reconsideration and the briefs submitted by The McNaughton Company, the_ Estate of Dale B. Failor and Charlan Group, L.P., and after hearing oral arguments, it is hereby ORDERED that The McNaughton Company's Motion for Reconsideration is DENIED and the Court's Order of June 11,2004 is REAFFIRMED in its entirety. \ The Court hereby directs an office conference with the attorneys for The McNaughton Company, the Estate of Dale B. Failor and the Charlan Group, L.P. to decide the next practical step in dealing with interested bidders of the Failor Farm. The attorneys are requested to contact the Court, in a coordinated effort, with available dates. By the Court, A TRUE Copy FROM RECORD In Testimony wherof, I hereunto set my hand and the seal of said Court i';e. PAN/ This ~~ of. :Ylbtr. 20~ h1~(A ~ . . Clerk of the Orphans Court r- c pt:h{3;~ t:~~L(;~' .,J J EXHIBIT A David E. Lehman, Esquire McNees, Wallace & Nurick, LLC 100 Pine Street Harrisburg, PA 17055 Counsel for The McNaughton Company Charles E. Shields, III, Esquire 6 Clouser Road Mechanicsburg, PA 17055 Counsel for the Estate of Dale B. Failor Mark D. Bradshaw Stevens & Lee P.O. Box 11670 Harrisburg, PA 17108 Counsel for Charlan Group, L.P. 2 In re: ESTATE OF DALE B. FAILOR Late of Upper Allen Township, Cumberland County, Pennsylvania IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHAN'S COURT DIVISION NO. 21-96-413 RE: MOTION FOR RECONSIDERATION HOFFER, P.J. Factual BackQround and Procedural Historv On March 26, 2004, Patsy A. Hertzler ("Hertzler"), Executrix of the Estate of Dale B. Failor, entered into a Purch9se and Sale Agreement ("the Agreement") with The McNaughton Company ("McNaughton"). The Agreement contained terms and conditions for the sale of property in the estate known as the "Failor Farm." The present dispute arises from Paragraph 6.4 of the Agreement. This provision states: Seller [Hertzler], in addition to attempting to obtain the consent of all beneficiaries of Seller to this Agreement, shall, within sixty (60) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphan's Court Division) for approval of the terms of this Agreement. In light of this provision, Hertzler filed a "Petition for Hearing Re: Sale of Real Estate in Estate of Dale B. Failor" with the Court. Upon consideration of the Petition, the Court entered an Order on June 11, 2004. That order decreed that Hertzler had properly entered into a sales agreement with McNaughton. The Order further set forth the process for obtaining court approval of the sale of the Failor Farm.1 Subsequent to the Order of June 11, 2004, additional buyers, including Traditions of America, LLC and Charlan Group, L.P., submitted proposals for the purchase of the Failor Farm. Additionally, McNaughton submitted an amendment to its original sales Agreement. On July 27, 2004, The McNaughton Company ("McNaughton") filed a Motion for Reconsideration of subparagraphs (b), (c) and (d) of the Court's Order of June 11, 2004. McNaughton contends that the Agreement of March 26, 2004 was a final and binding contract not conditioned upon Court approval. The Court heard oral argument on the Motion for Reconsideration on July 29, 2004 and August 6, 2004. Discussion I. The Purchase and Sale Agreement of March 26, 2004 requires court approval. It is settled law in Pennsylvania that while an executor may have the express power to sell a decedent's property without obtaining court approval, the executor may nonetheless include in a sales agreement a The pertinent paragraphs of the Order of June 11, 2004 provide as follows: "(b) The Court hereby sets a hearing to determine whether court approval of a contract with the McNaughton Company, or a denial of such approval and the approval of another competing offer, is in the best interests of the Estate of Dale B. Failor and its beneficiaries.. .(c) Any offerors, in addition to the McNaughton Company, shall make themselves known to Peter Ressler, Esquire, counsel for the McNaughton Company and to this Court in a timely fashion and shall file their proposed offers with the Clerk 'of the Orphans' Court... (d) After said hearing the Court shall fashion its own final Order as it deems best, including further findings, terms and conditions as it deems most appropriate in the circumstances to be issued at a time deemed appropriate by the Court." 2 provision making the sale conditional upon the approval of the Orphan's Court. See Pennsvlvania Std. Practice 2d S 152:126. Furthermore, court approval of an agreement is not "pro forma" and is contingent upon the court's determination that the sale is in the best interests of the estate. ll1. See also In the Matter of Est. of Penrose, 486 Pa. 9, 12 (1979) (stating that although the testamentary grant to the executors of the estate relieved them of a requirement to seek court approval of a sale of estate property, the executors were permitted to include in the agreement a provision making the sale subject to approval of the Orphans' Court). These principles are illustrated in cases similar to the instant action. In In re Est. of Lazarus, 420 Pa. Super. 379 (1992), the Superior Court affirmed the lower court's disapproval of a sales agreement for land in an estate and its subsequent approval of a different agreement. The sales agreement provided that "this Agreement is specifically conditioned upon Seller obtaining Court approval of this sale and the above-mentioned Purchase Money Mortgage." J& at 381-82. Reasoning that the provision operated as a "condition precedent," the court concluded that the lower court did not err in evaluating all the offers and granting approval of a specific offer "in light of the best interests of the beneficiaries." 19.:. at 386. See also In re Matter of Samson, 442 Pa. Super. 545 (1995) (concluding that a section of the sales agreement stating "in order to satisfy conditions and restrictions of the Trust Agreement, Sellers will seek court approval for 3 leave to consummate the sale of the assets.." made the agreement contingent on court approval). Similar to the agreements in Lazarus and Samson, the Purchase and Sale Agreement of March 26, 2004 is conditioned on approval of the Court. Paragraph 6.4 of the Agreement expressly states that the Seller "shall, within sixty (60) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphan's Court Division) for approval of the terms of this Agreement." The difference in this language from the language of the court approval provisions in Lazarus and Samson does not yield a different result. Despite any variation in language, the meaning and underlying purpose are the same. Thus, while the court approval provision in Lazarus uses the language "specifically conditioned," the language in the McNaughton Agreement similarly conditions execution of the Agreement by requiring the Seller to petition the Court for approval. It would be illogical and superfluous for the Executor to Petition the Orphan's Court for approval pursuant to Paragraph 6.4, but not actually need court approval to fully execute the agreement. To hold otherwise would contravene the plain language of the Agreement and the intent of the parties.2 2 In putting together the bargaining of this contract, McNaughton merely could have refused to sign the final agreement if this paragraph was unacceptable. 4 II. 20 Pa.C.S.A. 9 3360 is inapplicable to the Purchase and Sale Agreement of March 26, 2004 because the agreement requires court approval. In support of its Motion, McNaughton asserts that 20 Pa.C.S.A. S 3360 binds Hertzler to the Purchase and Sale Agreement of March 26, 2004. McNaughton contends that this section of the PEF code precludes the Court from setting the Purchase and Sale Agreement of March 26, 2004 aside, even if the consideration for the Agreement is inadequate or the estate receives a better offer. , Subsection (a) of this statute, entitled "Inadequacy of consideration or better offer," states: When a personal representative shall make a contract not requiring approval of court or when the court shall approve a contract of a personal representative requiring approval of the court, neither inadequacy of consideration, nor the receipt of an offer to deal on other terms shall, except as otherwise agreed by the parties, relieve the personal representative of the obligation to perform his contract or shall constitute ground for any court to set aside the contract... 20 Pa.C.S.A. S 3360(a) (emphasis added). Section 3360 is triggered only in two situations: (1) when a personal representative makes a contract not requiring court approval; or (2) when a court has already approved the contract of a personal representative requiring court approval. Lazarus, 420 Pa.Super. at 384. Accordingly, if an agreement does require court approval, Section 3360 does not prohibit a personal representative from entertaining subsequent offers or the court from disapproving the agreement. See Lazarus, 420 Pa. Super. at 384 5 (holding an agreement fell into neither category of Section 3360 because the agreement required court approval and affirming the Orphan's Court disapproval of an agreement); Samson, 442 Pa. Super. at 549 (finding the agreement did not fall under Section 3360 because it required court approval). As discussed in the preceding section, the Purchase and Sale Agreement of March 26, 2004 is contingent upon approval of the Orphan's Court. By its Order of June 11, 2004, this Court commenced the process of determining what agreement, if any, to approve for the sale of the Failor Farm. To date, the Court has not approved the Agreement. Accordingly, Section 3360 has not yet been triggered and the Court may disapprove or set aside the Agreement if it determines that it is not in the best interests of the estate. 6 LAW OFFICES SNELBAKER. BRENNEMAN 8: SPARE CERTIFICATE OF SERVICE I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date, caused a true and correct copy of the foregoing Brief to be served upon the person and in the manner indicated below: FIRST CLASS MAIL, POSTAGE PREPAID, ADDRESSED AS FOLLOWS: Date: November 5, 2004 David E. Lehman, Esquire McNees, Wallace & Nurick, LLC P. O. Box 1166 Harrisburg, PA 17108-1166 Attorneys for Plaintiff The McNaughton Company SNELBAKER, BRENNEMAN & SPARE, P.C. t~ By: Keith O. Brenneman, Esquire 44 W. Main Street P. O. Box 318 Mechanicsburg, P A 17055 (717) 697-8528 Attorneys for Defendant Estate of Dale B. Failor t._~, r--..;> c r'C ("""':;) j ..;:"' Tl "'-1 ( :~,I ~r rI] rrl ........... ". -'rr ;'1 I -r ; t~} C ~ :.) C> -. ~ - I II -., ;..) ~D I '.-) <: 11 (' r..) . ::J c:) -"'-..oo! -'.... 4- . -.... THE MCNAUGHTON COMPANY, Plaintiff, : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION 2004 - 3798 ESTATE OF DALE B. FAILOR, Deceased, Late of Upper Allen Township, Cumberland County, Pennsylvania Defendant ORDER OF COURT AND NOW, this 5"'" day of ~ ~'7 ' 20Cupon consideration of the Preliminary Objections of the Estate of Dale B. Failor, the brief submitted by the Estate of Dale B. Failor in support of the Preliminary Objections and the brief of The McNaughton Company in opposition to the Preliminary Objections, and after having oral argument, it is hereby ORDERED that the preliminary objection in the nature of a demurrer raised by Defendant Estate of Dale B. Failor is GRANTED and Plaintiffs Complaint is DISMISSED. By thL~~: -' )~ '~--- ---=4 / George E. Hoffer, P.l. \ .' Vlf,!V!\lASNN:::Jd )J.Nn:l') .:.'~:i7;jV~nJ IS: II ~!V S - NVr SOOl AtNlOt';ClliDcd 3Hl :10 :r)I~:10'-0::nlJ '. Charles E. Shields "', Esquire 6 Clouser Road Mechanicsburg, PA 17055 Peter J. Ressler, Esquire 3401 North Front Street PO Box 5950 HarriSburg, PA 17110-0950 Mark D. Bradshaw, Esquire 4750 Lindle Road HarriSburg, PA 17108 David E. Lehman, Esquire Steven J. Weingarten, Esquire 100 Pine Street, P.O. Box 1166 HarriSburg, PA 17108 Ivo V. Otto III, Esquire 10 East High Street Carlisle, PA 17013 THE MCNAUGHTON COMPANY, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. 04-3798 CIVil TE RM ESTATE OF DALE B. FAilOR, Deceased, late of Upper Allen Township, Cumberland County, PA. Defendant IN RE: STATEMENT OF REASONS ORDER OF COURT AND NOW, February 3, 2005, notice having been received that an appeal has been taken in the above-captioned matte.r, it is ordered and directed that the appellant forthwith file with this court a concise statement of the matters complained of on the appeal, together with reference to any statutory authority or any rule of court. Upon the failure of the appellant to file such reasons within ten days, the court will presume that the appeal has been abandoned. {v ..-6avid E. Lehman, Esquire Helen L. Gemmill, Esquire 100 Pine Street, P.O. Box 1166 Harrisburg, PA 17108 For the Plaintiff --Keith O. Brenneman, Esquire Snelbaker and Brenneman 44 West Malin Street P.O. Box 318 Mechanicsburg, PA 170ff For the Defendant \, ~('. ", .'? .',_!. ."1 ,.. (, J' - JL u ~ ' .~ - c:L SE . .:(1 _.'." THE MCNAUGHTON COMPANY, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v. CIVIL ACTION 04-3798 ESTATE OF DALE B. FAILOR, Deceased Late of Upper Allen Township Cumberland County, Pa., Defendant. NOTICE OF APPEAL Notice is hereby given that The McNaughton Company, the above-named Plaintiff, hereby appeals to the Superior Court of Pennsylvania from the Order entered in this matter on January 5, 2005. This Order has been entered in the docket, as evidenced by the attached copy of the docket entry. There is no verbatim record of the proceedings in the trial court. Respectfully submitted, ::N~/CLC David E. Lehman (10 No. 15243) Helen L. Gemmill (10 No. 60661) 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Tel: (717) 232-8000 Fax: (717) 237-5300 Attorneys for Plaintiff The McNaughton Company Dated: February 1, 2005 02/01/2005 12:37 L2114302012005 ?YS510 2004-03798 7172405573 PROTHONOTARV Cumberlan4 Cpunty Prothonotary's c~vil Case Prlnt . THE MCNAUGHTON COMPJllr:{ (vs) GAILOR DALE C LONG Of! ice PAGE 02/03 Page J. Reference No. . : Case Type. . . . . : Judgment...., . Judge Assigned: Disposed Dese. : ------------ Case Comments ------------- COMPLAINT .00 HOFFER GEORGE B ESTATE OF Filed. . . .. . . . : Time......... : Execution Date .Jury Trial.... Disposed Date. Higner Crt 1.: Higber Crt 2.: 8/03/2004 2:23 0/00/0000 0/00/0000 E PJ **************k*********.******.******************~'*************************;*** General Index Attorney Info MCNAUGHTON COMPANY THE PLAINTIFF 1,EHMAN DAVID E 4400 DEER PATH ROAD HARRISBURG PA 17111 FAILOR DALE B DEFENDANT BRENNEMAN KEITH 0 ESTATE OF EAST WINIDING HILL ROAD MECBANICSBURG PA 17055 ~**********************************************.***.********~******************* * Date Entries * ***************.********~******.****.***~*.****..*************************.***** 8/03/2004 8/11/2004 8/11/2004 8/11/2004 8/11/2004 9/03/2004 9/23/2004 10/25/2004 11/05/2004 ~/05/2005 - . - - - - - - - - - - - FIRST ENTRY - - - - - - - - - - - - - - COMPLAINT ---------------------------------------,-------------------------~-- PRAECIPE FOR ENTRY OF APPEARANCE l"OR DEFENDANT BY KEITH 0 BRENNEMAN ESQ -----~----------------~--~------------_.._------~-------~----------- ACCEPTANCE OF SERVICE OF THE COMPLAINT BY KEITH 0 BRENNEMAN ESQ ~----------------------------~-----~--_.._-----~---------------.---- PRAECIPE FOR ENTRY OF APPEARANCE FOR DEFT - BY KEITH 0 BRENNEMAN ESQ ---.---~-------------------------------.,-------------------------.- ACCEPTANCE OF SERVICE FOR COMPLAINT - BY KEITH 0 BRENNEMAN ESQ FOR DEFT --------~---~--------------------------~,--~------------------------ DEFENDANT'S PRELIMINARY OBJECT!ONS TO Pl,FF' S COMPLAINT - BY KEITIi o BRENNEMAN ESQ FOR DEFT _________________w___________~________________________------------- PLAINT!FF'S ANSWER TO DEFT'S PRELIMINARY OBJECTIONS - BY DAVID E LEHMAN ESQ FOR PLFF ________________________~__________4_~_____~___________~___________ ORDER DATED 10/25/04 - IT IS ORDEERD THAT ARGUMftT ON DEFT'S P 0 TO PLFF'S COMPLAINT IS SCHEDULED FOR TUESDAY 11 16/04 AT 3:00 PM - COUNSEL TO DEELlVER A COpy OF BRIEFS TO CHAMBER AFTER FILING WITH THE PROTHOHOTARY - BY THE COURT - GEORGE E HOFFER PJ COPIES MAILED __________________w________________________~_______________________ DEFENDANT'S BRIEF IN SUPPORT OF PREL!MIN~Y OBJECTIONS TO PLFF'S COMPLAINT - BY KEITH 0 BRENNEMAN ESQ _____~___________w_________~______w________________________________ ORDER OF COURT - DATED 1/5/05 - UPON CONSIDERATION OF THE PREL!MINARY OBJECTIONS OF THE ESTATE OF DALE B FAILOR THE BRIEF SUBMITTED BY THE ESTATE OF DALE B FAILOR IN SUPPORT OF THE PRELIMINARY OBJECTIONS AND THE BRIEF OF 'rHE MCNAUGHTON COMPANY IN OPPOSITION TO THE PRELIMINARY OBJECT INS 1~ AFTER HAVING ORAL ARGUMENT IT IS HEREBY ORDERED THAT THE PRELIMINARY OBJECTION IN THE NATURE OF A DEMURRER RAISED BY DEFENIlANT ESTATE OF DALE B FAILOR IS GRANTED AND PLAINTIFF'S COMPLAJ:NT IS DISMISSED - BY EDWARD E GUIDO J FOR GEORGE E HOFFER p.J -. COPIES MAILED 1/6/05 - - - - - - - - - - - - - - LAST ENTRY.. - - - - - - - - - - - ********.*****************~~*************~**********~************.*****.**~***** * Escrow Intorzation * * Fees & Debi ts Be Sal P ts Ad' End Ba,l * ********~**.****w******~******w*j.*******~** **~******.****~***.****.*******.** COMPLAIN!' TAX ON CMPLT SETTLEMENT AUTOMATION JCP FEE 35.00 .50 5.00 5.00 10.00 35.00 .50 5.00 5.00 10.00 .00 .00 .00 .00 .00 02/01/2005 12:37 71 72405573 PROTHONOTARV C LONG Cumberland County Prothonotary's Office Civil Case Print 2114302012005 YS510 004-03798 J3 ESTAtE OF Filed.. . . . . . . : Time......... : Execution Date J1,lry Tr:i,al. . . . DJ.sposed. Date. Higher Crt :L.: Higher Crt 2.: -------..---- .00 THE MCNAUGHTON COMPAN'I (va) GAILOR DALE Reference No..: Case Type.....: COMPLAINT Judgment.,.... .00 JVdge A~BJ.gned: HOFFER GEORGE E PJ JJJ.spOBed. DeBC.: ------------ Case Comments ------------- --------_.----~--------- 55.50 55.50 PAGE 03/03 l'age '" 8/03/2004 2:23 0/00/0000 0/00/0000 r********************.***********~*****************.t**************************** . End of Case Information * ~*****************.**w*******.*********************.t***************~************ CERTIFICATE OF SERVICE The undersigned certifies that a true and correct copy of the foregoing was served by first class mail, postage prepaid, upon this date, upon the following: Keith O. Brenneman, Esquire Snelbaker, Brenneman & Spare, P.C. 44 West Main Street P.O. Box 318 Mechanicsburg, PA 17055 Counsel for Defendant The Honorable George E. Hoffer Cumberland County Courthouse 1 Courthouse Square Carlisle, PA 17103 Official Court Reporter for the Honorable George E. Hoffer Cumberland County Courthouse 1 Courthouse Square Carlisle, PA 17103 Court Administrator Cumberland County Courthouse 1 Courthouse Square Carlisle, PA 17103 tU L. r;J1 Helen L. Gemmill Dated: February 1, 2005 r-~,::> ~ C' ,'..:..:' ~ .;:." 0 U' (d W ~, 'i 0 rT', ~ CO \ () 0-' - ~ ~ , I;- 0- ..c:. c) - r ~ -a \"<'l 1- - ,~ r"',) --..{) - v. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION 04-3798 THE MCNAUGHTON COMPANY, Plaintiff ESTATE OF DALE B. FAILOR, Deceased Late of Upper Allen Township Cumberland County, Pa., Defendant. APPELLANT'S STATEMENT OF MATTERS COMPLAINED OF ON APPEAL Pursuant to the direction of the Court's Order of February 3, 2005, entered pursuant to Rule 1925(b) of the Rules of Appellate Procedure, Appellant herewith submits its concise Statement of Matters Complained of on Appeal. Appellanl intends to raise the following matters, which Appellant submits will be subject to plenary review on appeal. The Court's Order, entered January 5, 2005, dismissed Plaintiff's Complaint. The Court's Order did not state the basis for dismissal. Noneth(~less, the following matters were argued by Plaintiff/Appellant, and are therefore raised in support of the appeal. 1. The Court did not apply the proper standard of review in ruling on preliminary objections. The Court failed to accept as true the well-pleaded facts and all inferences reasonably deducible therefrom. 2. If the dismissal was based upon an assertion that the Court, on its law side, lacked jurisdiction, the Court erred in granting dismissal. As recited in the response to preliminary objections, the Complaint was tendered to the Clerk of the Orphan's Court, who refused to docket the matter, but directed Plaintiff to present it to the Prothonotary. If the Court viewed the matter as necessarily and properly only before the Orphan's Court side, the appropriate remedy would have been to transfer the matter into the "jurisdiction" of the Orphan's Court. Plaintiff invited the Court to transfer the matter, in the interests of its further appropriate handling. 3. If the Court's dismissal Is based on its September 1, 2004 decision, entered in the Orphan's Court action relating to the Estate of Failor, docketed to Orphan's Court Division No. 21-96-413, the Court's ruling is in error. Whether evidenced in that earlier ruling or in a comparable ruling under this caption, the Court's decision regarding the nature of the Failor Estate Agreement with The McNaughton Company erred in that it rejected the fact averments of the Complaint, concerning the parties' negotiations and intentions regarding paragraph 6.4 of their Agreement. Accepting the averments of the Complaint as well-pleaded, Plaintiffs Complaint set forth a valid and sustainable cause of action for enforcement of contractual rights. The Court erred in rejecting that claim on preliminary objections and without hearing evidence. Similarly, no evidence was taken in the Orphan's Court proceeding, and could not form the basis of a decision upon which to dismiss this Complaint. 4. The Court erred in holding that the Agreement between The McNaughton Company and the Failor Estate was presently subject to a condition precedent not yet performed. The Court erred in refusing to recognize that the condition precedent had been satisfied by its earlier Order, entered June 11, 2004, decreeing that the "Executrix had not abused her lawful authority, nor abused any fiduciary discretion by entering into the Agreement." Thereafter, any condition precedent to the obligation of performance under the Agreement was satisfied by The McNaughton Company's express waiver, communicated in its July 28, 2004 correspondence, attached as Exhibit "8" to the Complaint. 5. The Court erred in dismissing the Complaint, notwithstanding that it plead a valid claim that the Estate breached its contract with The McNaughton Company. As plead 2 in the Complaint, the Estate breached the contract by petitioning for approval of the Agreement and further requesting the Court to establish a process by which additional, competing offers would be solicited in order to displace The McNaughton Company's signed Agreement. The Court's dismissal of the breach of contract claim on preliminary objections was an error as a matter of law. 6. The Court erred as a matter of law, or alternatively abused its discretion, in dismissing Plaintiff's claim for a remedy of specific performance, notwithstanding the pleading of facts and circumstances which, if proven, would entitle Plaintiff to relief. 7. To the extent that the Court's dismissal is premised on the finding that the Orphan's Court proceeding is the same as the matters raised in Plaintiffs Complaint, the Court has erred. The parties are not the same; the relief sought in the current proceeding is not the same. Respectfully submitted, McNEES WALLACE & NURICK LLC 0cw<ikL-. By David E. Lehman (10 No. 15243) Helen L. Gemmill (10 No. 60661) 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Tel: (717) 232.8000 Fax: (717) 237-5300 Attorneys for Plaintiff The McNaughton Company Dated: February 11, 2005 3 CERTIFICATE OF SERVICE The undersigned certifies that a true and correet copy of the foregoing was served by first class mail, postage prepaid, upon this date, upon the following: Keith O. Brenneman, Esquire Snelbaker, Brenneman & Spare, P.C. 44 West Main Street P.O. Box 318 Mechanicsburg, PA 17055 Counsel for Defendant ~Jlur/tk. - David E. Lehman Dated: February 11, 2005 -'" .~-'\. --- -- ~ --- THE MCNAUGHTON COMPANY, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. ESTATE OF DALE B. FAILOR, : NO. 2004-3798 CIVIL TERM Deceased, Late of Upper Allen Township, Cumberland County, Pa., Defendant CIVIL ACTION - LAW IN RE: OPINION PURSUANT TO Pa. R.A.P. 1925 Hoffer, P.J., April ii ' 2005 Plaintiff has filed this appeal from our Order dated January 5, 2005 granting the defendant's preliminary objections in the nature of a demurrer. Plaintiffs action was for breach of contract. The demurrer was based upon plaintiffs failure to plead the occurrence of a condition precedent to the performance ofthe contract, i.e. court approval of its terms. On June 11,2004 we entered an order declaring that the contract at issue was in fact conditioned upon the executor obtaining court approval. 1 On September I, 2004 we entered an order denying defendant's Motion for Reconsideration of our June 11, 2004 order. The latter order was accompanied by an opi reas;)4i: ~sion? DATE . t Goo"" E. Hoff~, P,J. vl"avid E. Lehman, Esquire ~ [}-.UJ?6...M viGith O. Brenneman, Esquire 1-"\ \~ n I?-::J OLI-/3-0-5 1 See a copy ofIn reo Estate of Donald B. Failor, No. CP-21-413 -1996 ORPHANS' COURT DIVISION 2 The June 11,2004 order and opinion are attached hereto. SS :8 il"'J 8 I HdlJ 5002 h:1V1Ci:\F){~Ocld 3Hl :JO :J.JU:{O-(I]lH , f .. Irene M. Bizzoso Deputy Prothonotary Norina K. Blynn Quef <Jerk Supreme Court of Pennsylvania Middle District April 25, 2006 P.o. Box 624 HanisbUl"2. PA 17108 717.787.6181 www.aopc.org Mr. Curtis R. Long Prothonotary Cumberland County Courthouse 1 Courthouse Square Carlisle, PA 17013 RE: The McNaughton Company, Petitioner v. Estate of: Dale B. Failor, Deceased Late of Upper Allen Township, Respondent Superior Docket Number - 233 MDA 2005 Trial Court/Agency Dkt. Number: 04-3798 No. 1117 MAL 2005 Appeal Docket No.: Date Petition for Allowance of Appeal Filed: December 29,2005 Disposition: Order Denying Petition for Allowance of Appeal Date: April 25, 2006 Reargument/Reconsideration Disposition: Reargument/Reconsideration Disposition Date: lesh J J. . . -- OY-3?98 IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT THE MCNAUGHTON COMPANY, No. 1117 MAL 2005 Petitioner Petition for Allowance of Appeal from the Order of the Superior Court v. ESTATE OF: DALE B. FAILOR, DECEASED LATE OF UPPER ALLEN TOWNSHIP, Respondent ORDER PER CURIAM AND NOW, this 25th day of April 2006, we hereby DENY the Petition for Allowance of Appeal. TRUE & CORRECT r.crv ~- \-::- u..IQ 03 tc-~c k~_ ;.-;.:_ "C) '0 )",,{.C ~o- D.-\ :;;! \J.! u-:r- r- \ol- D if' - c;., ~c. 0- . ... c-..J C'..l ~ ~ ,J:1 '8 C:-.l J .~. h ., ,') ''': ((1\ A " t:l'f{ d '1 /' ,.u I' C",,~ IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT THE MCNAUGHTON COMPANY, No. 1117 MAL 2005 Petitioner Petition for Allowance of Appeal from the Order of the Superior Court v. J ()4--1Iqf ~ ESTATE OF: DALE B. FAILOR, DECEASED LATE OF UPPER ALLEN TOWNSHIP, ), Respondent ORDER PER CURIAM AND NOW, this 25th day of April 2006, we hereby DENY the Petition for Allowance of Appeal. TRUE & CORRECT r.c~y AJJEsr~p~. 0 /.A/\..-.--- RINA it B 'CHIEF CLERK ....- ... J. A33036/05 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P.65.37 THE McNAUGHTON COMPANY, Appellant IN THE SUPERIOR COURT OF PENNSYLVANIA v. ESTATE OF DALE B. FAILOR, DECEASED, LATE OF UPPER ALLEN TOWNSHIP No. 233 MDA 2005 Appeal from the Order entered January 5, 2005 In the Court of Common Pleas of Cumberland County, Civil No. 04-3798 BEFORE: KLEIN, BENDER and BOWES, JJ. MEMORANDUM: ALED: November 29, 2005 On March 26, 2004, Patsy A. Hertzler, Executrix of the Estate of Dale B. Failor (Executrix), entered into an agreement with The McNaughton Company (McNaughton) to sell a 150-acre property known as the Failor Farm. The agreement contained the following provision: Seller, in addition to attempting to obtain the consent of all beneficiaries of Seller to this Agreement, shall, within thirty (30) days of this Agreement, petition the Cumberland County Court of Common Pleas (Orphans' Court Division) for approval of the terms of this agreement. (Purchase & Sale Agmt., 3/26/04, ~ 6.4.) On June 11, 2004, the trial court issued an order scheduling a hearing on the estate's petition for approval of sale. In that order, the court also declared that the contract was, in fact, conditioned upon court approval of the sale. There were other bidders, and the trial court never approved the sale. McNaughton moved for reconsideration of the June 11, 2004 order, asking the ~ ,. J. A33036/0S trial court to keep only the provision giving the Executrix general authority to enter into a contract to sell the farm, and to strike the provisions allowing other bidders, scheduling a hearing, and providing that a final order would issue. McNaughton's motion was denied. Thereafter, McNaughton filed a complaint in civil court, seeking specific performance of the contract. The estate filed preliminary objections in the nature of a demurrer, which were ultimately granted. This appeal followed. Apparently McNaughton is arguing that once the Executrix filed a petition for approval under the contract, that was all that was required and the contract became final, and it did not matter whether the court approved or disapproved of the sale. This makes no sense. While the Executrix had the power to sell the farm without court approval, that is not what she chose to do. Instead, the contract was specifically conditioned upon court approval. Without such approval, there is no contract. Therefore, we must affirm the order granting the preliminary objections and dismissing McNaughton's civil complaint. We affirm on the basis of the trial court's Pa.R.A.P. 1925(a) statement, which incorporates the opinion in the underlying orphans' court action. We incorporate both opinions herein and attach them in the event of further proceedings. Order affirmed. - 2 - #-./ . ~ J. A33036/0S Date:-.-N OV2~9,~005 - 3 - 0 ,....., 0 = ~ c..~ lJ 0-.. --:roo :r --:,-:... );;>0> rn .,., -< F -0 J1.~ N :'0 CJ 0'\ C) ~: ~T~ :t:'" .) -'f ~ :J: .':;.;.00 0 ~ IT' -=:;- C} L___ ::E'" ~~_.t (..0 .n "-( 0'\ .<