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HomeMy WebLinkAbout00-8830 CIVILNICOLE D. HUTZELL BARNETT,: IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW NO. 00-8830 CIVIL BRADLEY HUTZELL, Defendant IN RE: OPINION PURSUANT TO RULE 1925 The parties to this action have filed cross petitions for relief. In his petition for enforcement, the defendant, Bradley Hutzell, sought to implement a property and separation agreement of the parties dated December 21, 2000. In her action for declaratory judgment, the plaintiff sought enforcement of the same agreement but asked the court to construe its provisions differently than the defendant had suggested. The agreement provided, inter alia, for the transfer of the defendant's interest in a certain tract of land in Fulton County to the plaintiff and her parents (Mr. and Mrs. Sites). The specific provision of the property and separation agreement at issue in this case reads as follows: Husband and Wife agree that Wife and her parents will buy out Husband's interest in certain mountain property which the four of them purchased in February, 1998. Husband agrees to assume responsibility for having the property appraised. The parties agree that Wife reserves the right to obtain a second appraisal at her expense. Husband has one-quarter interest in said property and the parties will purchase his one-quarter interest based on said appraisal(s). A lien on said property in the amount of over $50,000.00 is still due and owing to Wayne or Clyde Fogelsanger. At the time of the parties' buy out of Husband's interest in the property Wife and her parents will assume responsibility for the remaining debt on said property, indemnify and hold Husband harmless from same. Notwithstanding the aforesaid, Husband and Wife also owe $15,000.00 in addition to same on said property. $7500.00 of the 00-8830 CIVIL $15,000.00 still due and owing on this separate debt will be deducted from Husband's share when Wife and her parents buy out his interest in the property. Pursuant to this provision of the separation agreement, the parties caused the Fulton County tract to be appraised. Unfortunately, there was a considerable disparity between the appraisals obtained by the parties and they could not agree on a value. In addition, the parties disagreed with respect to the meaning of that part of the paragraph providing for the assumption of the mortgage due and owing to the Fogelsangers. On August 21, 2002, we entered an order valuing the mountain tract at $160,000 and declaring that the interest of the defendant in the real estate was its value less the existing mortgage balance. The defendant has appealed from both findings. The testimony in the case indicated that the parties, along with Ms. Barnett's parents, purchased the Hutzell-Sites mountain tract in Harrisonville, Fulton County, Pennsylvania, in 1998. The property had been listed at more than $192,000. It was ultimately sold to the parties, however, for $133,000 with the sellers holding a mortgage in the amount of $58,000. Ms. Barnett's parents and the parties each paid fifty percent of the amount necessary to purchase the property. The plaintiff and the defendant, however, borrowed $15,000 from Mr. and Mrs. Sites to assist with their portion of the settlement funds. It is not surprising that the separation agreement in this case reflects that the husband has a "one-quarter interest" in the property as there were four purchasers. He, however, seeks to construe the agreement so as to compute his one-quarter interest as not including any portion of the mortgage debt. This simply defies logic. The only "interest" which any person can have in real estate is in its equity. In other words, real estate has no value except to the extent that its worth exceeds any encumbrance. Were the 2 00-8830 CIVIL mortgage not to be taken into account in computing Mr. Hutzell's interest, then he would receive a windfall of more than $12,000 (twenty-five percent of the mortgage balance). Mr. Hutzell finds support in his position from the provision of the paragraph which specifically divides the debt which husband and wife owe to her parents. The money owed by the plaintiff and defendant to the plaintiff' s parents is a separate debt and does not reduce the share of the four of them in the value of the real estate. It is for this reason that the separation agreement required a separate discussion of the way in which the loan would be repaid to the plaintiff' s parents. With regard to the other issue in the case, we reiterate that the parties procured appraisals of the real estate which are disparate, to say the least. The plaintiff's appraiser, Tim Ausherman, valued the real estate at a $140,000. This appraisal allows for very little increase in value from the time of its purchase and struck us as too conservative. An analysis of at least one of the comparables used by Mr. Ausherman would place the value of this tract closer to $150,000. The appraiser for Mr. Hutzell, Barbara Boock, valued the subject real estate at $190,000. Her analysis was, however, severely flawed in at least one area. Specifically, there was an error of $30,000 in the average value of the comparables used by her. In addition, we believe that she has underestimated the negative impact of the lack of a legal right-of-way to this real estate. We have valued at $160,000 a tract of real estate which the parties purchased three years before for $133,000. We are more than comfortable with this valuation. In fact, upon reflection, we believe that we have been, if anything, generous to Mr. Hutzell. November ,2002 Kevin A. Hess, J. 00-8830 CIVIL Bradley Griffie, Esquire For the Plaintiff Andrew Brown, Esquire For the Defendant :rlm 4