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HomeMy WebLinkAbout2008-3740 CivilDAVID and CAROL IVEY, Husband and Wife, Plaintiffs v CHARTER HOMES AT THE PRESERVE, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION NO. 08-3740 CIVIL TERM IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS TO PLAINTIFFS' COMPLAINT BEFORE HESS, OLER and EBERT, JJ. OPINION and ORDER OF COURT OLER, J., October 6, 2008. In this equity action, purchasers of real estate have sued a seller/builder as the result of an alleged deficit in the amount of land conveyed to them.' Included in the complaint are counts (a) seeking reformation of the deed of conveyance and (b) based upon equitable estoppel.3 Defendant has filed preliminary objections in the nature of demurrers to these counts.4 The matter was argued on September 3, 2008. For the reasons stated in this opinion, Defendant's preliminary objections will be denied. STATEMENT OF FACTS For present purposes, the facts alleged in Plaintiffs' complaint may be summarized as follows: Plaintiffs are David Ivey and Carol Ivey, husband and wife, who reside in Enola, Cumberland County, Pennsylvania.5 Defendant is ' Plaintiffs' Complaint in Equity, filed June 24, 2008. 2 Plaintiffs' Complaint in Equity, Count I (Reformation of Deed). ' Plaintiffs' Complaint in Equity, Count III (Equitable Estoppel). 4 Preliminary Objections of Charter Homes at the Preserve, Inc., filed July 30, 2008. ' Plaintiffs' Complaint in Equity, para. 1. Charter Homes at the Preserve, Inc., a corporation having an office in Lancaster, Lancaster County, Pennsylvania.6 Defendant, as the owner of subdivided land in Hampden Township, Cumberland County, Pennsylvania, known as the Preserve,' convinced Plaintiffs to purchase Lot No. 88 on the plan for purposes of building a home, to be constructed by Defendant, on it.8 Both Defendant and Plaintiffs were under the impression, and Defendant so indicated to Plaintiffs, that the right property line of the land to be acquired by Plaintiffs was about four feet to the right of the point indicated on the recorded plan at the front of the lot and about fourteen feet to the right of the point indicated on the plan at the rear of the lot.9 The agreement of sale executed by the parties for the sale of the land and construction of the home referred to the subdivision plan,10 contained an integration clause," and provided for a purchase price of about $700,000.00.12 Construction was undertaken in accordance with the parties' mutual mistake as to the right property line of the property, 13 and Plaintiffs have expended various sums in reliance upon the boundary's location as represented by Defendant. 14 About a year and a half after the conveyance of the subdivision lot and home, 15 Defendant 6 Plaintiffs' Complaint in Equity, para. 2. Plaintiffs' Complaint in Equity, Exhibit A. s Plaintiffs' Complaint in Equity, paras. 3-4, 10. 9 Plaintiffs' Complaint in Equity, paras. 6, 15-17, 21-22, 26-27, 41, 53. 10 Plaintiffs' Complaint in Equity, Exhibit A. " Plaintiffs' Complaint in Equity, Exhibit A. 12 Plaintiffs' Complaint in Equity, Exhibit A. The price was later increased to $726,900.00. Id., para. 13. 13 Plaintiffs' Complaint in Equity, paras. 14-17, 21, 27-35. 14 Plaintiffs' Complaint in Equity, paras. 31, 42. 15 Plaintiffs' Complaint in Equity, para. 42. 2 discovered its error and demanded that Plaintiffs remove various improvements from the area now in question. 16 Defendant's preliminary objections to Plaintiffs' complaint include as an attachment the deed of conveyance from Defendant to Plaintiffs. 17 With respect to the property conveyed, the deed references the lot on the aforesaid subdivision plan. 18 DISCUSSION General rule as to demurrers. In reviewing a preliminary objection in the nature of a demurrer, which challenges the legal sufficiency of a pleading, the court "must accept all material facts set forth in the [pleading,] as well as all the inferences reasonably deducible therefrom as true." Powell v. Drumheller, 539 Pa. 484, 489, 653 A.2d 619, 621 (1995) (citations omitted). A preliminary objection in the form of a demurrer should be sustained only when, "on the facts averred, the law says with certainty that" the position challenged by the demurrer can not prevail. Id. at 489, 653 A.2d at 621. If any lingering doubt remains as to whether to sustain the demurrer, "this doubt should be resolved in favor of [the nonmoving party]." Presbyterian Medical Center v. Budd, 2003 PA Super 323, ¶6, 832 A.2d 1066, 1070 (2003). Reformation of deeds. "The law is well settled that a court of equity has the right to reform a deed where a mutual mistake appears." Kutztown Fair Ass 'n v. Frey, 183 Pa. Super. 516, 520, 132 A.2d 912, 915 (1957). A mutual mistake occurs when the written instrument fails to properly set forth the "true" agreement among the parties. 19 16 Plaintiffs' Complaint in Equity, paras. 42, 49-50. 17 See Eck -ell v. Wilson, 409 Pa. Super. 132, n.1, 597 A.2d 696, 701 n.1 (1991); Preliminary Objections of Charter Homes at the Preserve, Inc., Tab 1. " Preliinary Objections of Charter Homes at the Preserve, Inc., Tab 1. 19 Daddona v. Thorpe, 2000 PA Super 75, ¶44, 749 A.2d 475, 487. 3 "The right to such reformation may be enforced even though it necessarily be an invasion or limitation of the parol evidence rule." Kutztown Fair Ass'n v. Frey, 183 Pa. Super. 516, 521, 132 A.2d 912, 915 (1957). Where a written agreement does not express the actual intention of the parties, the fact that it contains an integration clause will not prevent its reformation by a court of equity. Voracek v. Crown Castle USA, Inc., 2006 PA Super 232, 907 A.2d 1105. Although parol evidence generally cannot be introduced to change the terms of a writing which contains an integration clause because such a clause is intended to represent the complete expression of the parties' agreement, ... extrinsic evidence is admissible for the purpose of showing that by reason of mistake, fraud or accident, the written instrument does not express the actual intention of the parties .20 Thus, in Kutztown Fair Ass'n v. Frey, 183 Pa. Super. 516, 132 A.2d 912 (1957), the Pennsylvania Superior Court affirmed a decree of a lower court reforming a deed description at the request of a seller of land, based upon the following facts: ... In July of 1950, the Freys, appellants, were the owners of land on the east side of College Boulevard in the Borough of Kutztown, Pennsylvania, on which there was erected an apartment house building and a gasoline service station. The Farmers' Bank of Kutztown owned a tract of land with 4 1/2 foot frontage on College Boulevard advoining appellants' premises immediately to the north and the Kutztown Fair Association, Inc., appellee, owned a large tract of land on the east side of College Boulevard immediately adjoining the 4 1/2 foot frontage of the Farmers' Bank to the north thereof. Sometime prior to July 14, 1950, Henry W. Frey, one of the appellants, spoke to one of the officers of the bank concerning the possibility of purchasing a rectangular tract with a frontage on College Boulevard of 34 1/2 feet and a depth of 180 feet. On July 14, 1950, the appellee appointed Elmer Kline (deceased before time of trial), Howard Kutz and Claude Bordner as a committee to discuss the proposed transfer with the appellants. Three or four days after their appointment the three members of the committee met upon the ground itself and discussed the proposed transfer with one of the appellants, Henry W. Frey. The rectangular tract which appellants desired to purchase would have interfered with an existing road on the fair grounds and the committee suggested that Frey receive a total frontage of 46 1/2 feet on College Boulevard and a rear width of 10 1/2 feet. The proposed line was 20 Voracek v. Crown Castle USA, Inc., 2006 PA Super 232, ¶8, 907 A.2d 1105, 1107 (citations omitted). 11 measured with a steel tape and actually staked out upon the ground itself in the presence of Frey, who, after considerable discussion, agreed with the proposed plan. This was testified to by Bordner and Kutz, the two surviving members of the committee. On July 24, 1950, Frey gave to the Farmers' Bank of Kutztown his check to its order in the sum of $340. On the face of the check was written `Fair Ground Plot 34 1/2 X 180.' Mr. Fisher, the officer of the bank, testified as to the following conversation with Frey: `* * * The only thing I know the Committee told me that Mr. Frey would have to accept it the way the committee decided before the check would pass, and he said, `Well, then, let it go through,' and handed me the check. I had handed it back and he gave it back again.' Thereafter, before the fair, held in the third week of August, appellee erected along the diagonal boundary line, as staked out by its committee in the presence of Frey, a heavy wire fence. Frey was around when the fence was being erected and did not object. The fence remained in place until several weeks prior to the hearing on August 4, 1955, when Frey tore part of it down and erected another fence. On April 17, 1951, the committee made its report to appellee's board, stating therein that it agreed with Frey that in addition to the 34 1/2 foot frontage he would have an additional 12 feet in frong and `he would allow us 24 ft. in back thus protecting our road.' The board, upon motion made and seconded, approved the action of the committee and approved the delivery of the deed to the Freys with the provision as stated by the committee. On April 18, 1951, a deed in fee simple was executed by the president and secretary of appellee to the Freys, conveying title to a tract of land along the east side of College Boulevard with a frontage of 34 1/2 feet on College Boulevard and a depth of equal width of 180 feet. The deed was prepared by James F. Marx, Esquire, from a description left with him at his office either by Elmer Kline, deceased at the time of trial, or one of the appellants, Henry W. Frey. In March 1952 appellee caused a survey of its land to be made and on June 25, 1952, Marx had a conversation with Frey calling his attention to the mistake in the description and Frey stated it would cost about a thousand dollars to correct the situation. Marx testified that he had no knowledge of the minutes of the association when he drafted the deed in April of 1951. Id. at 518-19, 132 A.2d at 913-14. The facts in Kutztown are sufficiently analogous to those alleged in Plaintiffs' complaint to regard the decision as controlling on the issue of whether it can be said with certainty that Plaintiffs can not recover on their claim for reformation of their deed on the basis of a mutual mistake. For this reason, Defendant's preliminary objection in the nature of a demurrer to Count I of Plaintiffs' complaint will be denied .21 Z' In this regard, the court is unable to agree with Defendant's position that the case of McCoy v. Home Ins. Co., 170 Pa. Super. 38, 84 A.2d 249 (1951) compels a different result. See E Equitable estoppel. "[T]he elements of estoppel are 1) misleading words, conduct, or silence by the party against whom the estoppel is asserted; 2) unambiguous proof of reasonable reliance upon the misrepresentation by the party asserting the estoppel; and 3) the lack of a duty to inquire on the party asserting the estoppel." Chester Extended Care Center v. Commonwealth of Pennsylvania, Department ofPublic Welfare, 526 Pa. 350, 355, 586 A.2d 379, 382 (1991). In Chester, the Pennsylvania Commonwealth Court held that a nursing home's reliance on the representations of government agencies that services to Medicare patients would be reimbursed was unreasonable, where the representations were not compatible with statute, as a consequence of which an estoppel defense advanced by the nursing home to an action for recovery of such reimbursements was rejected. Chester Extended Care Center v. Commonwealth of Pennsylvania, Department of Public Welfare, 122 Pa. Commw. 207, 551 A.2d 1138 (1988). On appeal, the Pennsylvania Supreme Court, without dissent, reversed, noting as follows: These agencies by their conduct lulled appellant into the false belief that appellant's participation in the Medical Assistance programs was not in jeopardy, so long as appellant continued to comply with the terms of [a] settlement [agreement] reached between appellant and DOH in March of 1984. Appellant did comply with the terms of the settlement. Under these circumstances, it would be unconscionable to require appellant, after fully cooperating with the agencies responsible for knowing the law and seeing Defendant's Brief in Support of the Preliminary Objections of Charter Homes at the Preserve, Inc., at 9. McCoy, for present purposes, stands for the proposition that "[w]here there is an inconsistency between averments in a complaint and documents attached thereto the latter prevail." Id. at 42, 84 A.2d at 251. In the present case, the agreement of sale attached to Plaintiffs' complaint, which Defendant argues is inconsistent with a claim of mutual mistake as to the deed, is, like the deed, representative of the alleged mistake rather than inconsistent with it. Similarly, Defendant's argument that Plaintiffs' claim for reformation based upon a mutual mistake must fail because of the illegality that would result from the creation of a conveyance inconsistent with the subdivision plan is, in the court's view, premature at best. See Defendant's Brief in Support of the Preliminary Objections of Charter Homes at the Preserve, Inc., at 11. It is not, at this preliminary stage of the case, clear that Defendant should be presumed powerless to cure the alleged illegality and, to the extent that Defendant's position on this point implicates the principle that equity should not decree an illegal act, the point is in the nature of an affirmative defense, to be pled in its answer to the complaint. See Pa. R.C.P. 1030(a). 0 that the law is obeyed, to pay back the funds that were provided for the care of patients who cannot pay for appellant's services. Although it is the general rule that estoppel against the government will not lie where the acts of its agents are in violation of positive law, ... this rule cannot be slavishly applied where doing so would result in a fundamental injustice. Chester Extended Care Center v. Commonwealth of Pennsylvania, Department of Public Welfare, 526 Pa. 350, 356-57, 586 A.2d 379, 382-83 (1991). In the present case, although it can certainly be argued that Plaintiffs acted unreasonably in failing to verify Defendant's alleged representations as to the boundaries of the land which it proposed to convey to Plaintiffs by scrutinizing the recorded subdivision plan in question, it can not be said as a matter of law that such reliance was unreasonable on the basis of the present limited record. Consequently, Defendant's preliminary objection in the nature of a demurrer to Count III of Plaintiffs' complaint will also be denied. ORDER OF COURT AND NOW, this 6th day of October, 2008, upon consideration of the Preliminary Objections of Charter Homes at the Preserve, Inc., to Plaintiff's complaint, and for the reasons stated in the accompanying opinion, the preliminary objections are denied. Linus E. Fenicle, Esq. John H. Pietrzak, Esq. 2331 Market Street Camp Hill, PA 17011 Attorneys for Plaintiffs Kimberly M. Colonna, Esq. 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Attorney for Defendant 7 BY THE COURT, s/ J. Wesler Oler, Jr. J. Wesley Oler, Jr., J. DAVID and CAROL IVEY, Husband and Wife, Plaintiffs v CHARTER HOMES AT THE PRESERVE, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION NO. 08-3740 CIVIL TERM IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS TO PLAINTIFFS' COMPLAINT BEFORE HESS, OLER and EBERT, JJ. ORDER OF COURT AND NOW, this 6th day of October, 2008, upon consideration of the Preliminary Objections of Charter Homes at the Preserve, Inc., to Plaintiff's complaint, and for the reasons stated in the accompanying opinion, the preliminary objections are denied. BY THE COURT, J. Wesley Oler, Jr., J. Linus E. Fenicle, Esq. John H. Pietrzak, Esq. 2331 Market Street Camp Hill, PA 17011 Attorneys for Plaintiffs Kimberly M. Colonna, Esq. 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 Attorney for Defendant