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HomeMy WebLinkAbout02-3434 CivilROBERT H. LANDINO and FRANCES B. LANDINO, Plaintiffs VS. SON PAUCH, individually, and SOPHANY RETH, individually, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 02-3434 CIVIL CIVIL ACTION - LAW JURY TRIAL DEMANDED PRELIMINARY OBJECTIONS OF DEFENDANT, SOPHANY RETH BEFORE BAYLEY AND HESS, JJ. OPINION AND ORDER Robert H. Landino and Frances B. Landino (hereinafter "plaintiffs") contracted to sell a parcel of real estate known as 776 Glen Arden Drive, Lewisberry, Fairview Township, York County, Pennsylvania to Son Pauch and Sophany Reth (hereinafter "defendants") for $360,000.00. An Agreement of Sale was executed by the parties on or about July 29, 2001. Subsequent revisions to the Agreement were initialed by the parties on July 30, 2001. Paragraph 3(D) of the Agreement obligated the defendants to pay a deposit to the plaintiffs in the amount of $10,000.00 by August 6, 2001. The agreement also contained a liquidated damages provision 27(C) which provided that in the event of a default by the buyer the seller would be limited to retaining sums of money paid by buyer, including any deposit monies, as liquidated damages. The contract provides, specifically, that in the event of a default: Seller is limited to retaining sums paid by Buyer, including deposit moneys, as liquidated damages. If Seller elects to retain all sums paid by Buyer, including deposit moneys, as liquidated damages, Buyer and Seller will be released from further liability or obligation and this Agreement will be VOID. 02-3434 CIVIL A check in the amount of $10,000.00 was delivered on August 9, 2001 to the plaintiffs' real estate agent. The check was returned "not paid" due to insufficient funds on August 15, 2001. Thereinafter, the defendants did not perform any obligations under the contract and the plaintiffs later sold the property. Plaintiffs filed a complaint to recover damages as the result of the breach of the Agreement by the defendants. Defendant Sophany Reth has filed preliminary objections to plaintiffs' complaint in the nature of a demurrer. For the purposes of reviewing preliminary objections in the form of a demurrer, "all well-pleaded material, factual averments and all inferences fairly deducible therefrom" are presumed to be true. Tucker v. Philadelphia Daily News, 757 A.2d 938, 941-942 (Pa. Super. 2000). When presented with preliminary objections whose end result would be the dismissal of a cause of action, a court should sustain the objections only where "it is clear and free from doubt all the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish [its] right to relief." Bourke v. Kazaras, 746 A.2d 642, 643 (Pa. Super. 1999). "The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible." Bailey v. Storlazzi, 729 A.2d 1206, 1211 (Pa. Super. 1999). Liquidated damages provisions are part of the standard form agreements of sale prepared by the Pennsylvania Association of Realtors and used throughout the Commonwealth of Pennsylvania. They are permitted and enforceable "provided that at the time the parties enter into the contract, the sum agreed upon constitutes a reasonable 2 02-3434 CIVIL expectation of loss rather than an unlawful penalty." Carlos R. Leffler v. Hutter, 696 A.2d 157, 162 (Pa. Super. Ct. 1997). The defendant argues that the plaintiff is only entitled to the money retained at the time of her breach. (Defendants Brief in Support of Preliminary Objections to Plaintiffs Complaint at 3.) Because the defendant's deposit check was not honored by the drawee, she contends there is nothing for the plaintiffs to retain. (Defendants Brief in Support of Preliminary Objections to Plaintiffs Complaint at 4.) The defendant counters that the plaintiffs are attempting to circumvent the liquidated damages provision. (Defendants Brief in Support of Preliminary Objections to Plaintiffs Complaint at 4.) "Where, in an agreement of sale of real estate, there is a provision for liquidated damages and the vendee repudiates the agreement the vendor is entitled to the sum agreed upon as liquidated damages." Tudesco v. Wilson, 60 A.2d 388, 390 (Pa. Super. 1948). In Tudesco, buyers tendered deposit monies by way of two separate checks. 60 A.2d at 390. The buyers stopped payment before the sellers could cash the checks. Id. at 390. The agreement of sale contained a liquidated damages provision that provided the deposit made by the buyer may be retained by the seller. Id. at 390. The defendants argued that because they canceled the checks the plaintiffs had nothing to retain. Id. at 390. The Pennsylvania Superior Court found for the sellers, noting: There is no merit to [the] argument that the word retained as used in the agreement restricts the liquidated damages to the retention of the cash deposit... When the vendee stopped payment on the checks there was nothing for the vendors to retain. Of course, the vendors could have brought action on the checks had they chosen to do so. But they chose, as was their right...to seek recovery of the sum specified in the liquidated damage clause of the agreement. To bar this action, as the 3 02-3434 CIVIL vendee would have us do, by his narrow construction of the liquidated damage clause...would do violence to the clear intention of the parties... Id. at 390, emphasis in original. While the checks in Tudesco were canceled by the vendees, the check in the present case "bounced." There is no Pennsylvania precedent regarding bad deposit checks vis-h-vis a liquidated damage provision, however other jurisdictions have awarded sellers the full amount of the deposit when the buyer's check was not honored. Brodsky v. Linder_, 118 A.2d 803 (D.C. 1955)( allowing recovery of liquidated damages in the amount of the deposit of an unpaid check.); Mori v. Bomac Industries, 358 So.2d 47 (Fla. Dist. Ct. App. 1978)( holding liquidated damages provision was not nullified when money was not deposited because check for that amount was returned for insufficient funds). Writing a bad check and stopping payment on a check are actions which are both attributable to the check writer. "A party cannot take advantage of his own wrongful act to set up his default or to nullify his contract or work its forfeiture." Tudesco, 60 A.2d at 391. Because this case may present just such a scenario, we decline to sustain a demurrer. ~ Defendant also contends that awarding the plaintiff $10,000.00 would amount to an unlawful penalty and not a reasonable expectation of plaintiff' s expected loss. This matter is more properly left to the finder of the facts. ~ The complaint alleges that $10,000.00 was paid as a "deposit." We note that, though the agreement was signed on July 29, 2001, the deposit was not due until August 6, 2001. Whether this circumstance has any impact on the ultimate disposition of this case must await a more developed record. 4 02-3434 CIVIL ORDER AND NOW, this 18th day of June, 2003, the preliminary objections of the defendant, Sophany Reth, are DENIED. BY THE COURT, Cory J. Snook, Esquire For the Plaintiffs James M. Strong, Esquire For the Defendant Reth :rlm Kevin A. Hess, J. ROBERT H. LANDINO and FRANCES B. LANDINO, Plaimiffs VS. SON PAUCH, individually, and SOPHANY RETH, individually, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 02-3434 CIVIL CIVIL ACTION - LAW JURY TRIAL DEMANDED IN RE: PRELIMINARY OBJECTIONS OF DEFENDANT, SOPHANY RETH BEFORE BAYLEY AND HESS, JJ. ORDER AND NOW, this 18th day of June, 2003, the preliminary objections of the defendant, Sophany Reth, are DENIED. BY THE COURT, Cory J. Snook, Esquire For the Plaimiffs James M. Strong, Esquire For the Defendant Reth Kevin A. Hess, J. :rlm