HomeMy WebLinkAbout2005-973 Civil
CHADWICK O. BOGAR,
Plaintiff
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
v.
CIVIL ACTION-LAW
MANN REALTY
ASSOCIATES, INC.,
Defendant
NO. 05-973 CIVIL TERM
IN RE: ACTION FOR DECLARATORY JUDGMENT
BEFORE OLER, J.
OPINION and ORDER OF COURT
OLER, 1., October 10,2005.
This case arises out of a real estate transaction between Chadwick O. Bogar
(Plaintiff/Buyer) and Mann Realty Associates, Inc., (Defendant/Seller) for a parcel of
land known as Lot 6 of Allen Glen, Upper Allen Township, Cumberland County,
Pennsylvania. The parcel of land is part of a planned community known as Allen Glen
and is subject to various restrictions set forth in the "Declaration of Allen Glen, a Planned
Community."
Section 8.04 of the Declaration includes a requirement that the buyer begin
construction of a single family home on the lot within twelve months of the initial
settlement; otherwise, the seller has the option to repurchase the property, at any time, for
the original consideration paid. Although the initial twelve-month period elapsed,
Plaintiff alleged that Defendant granted him an extension of two years to commence
building on the lot; Defendant, on the other hand, denies that an agreement for the
extension was reached. Plaintiff then filed a complaint, which was later amended,
requesting that the court (1) declare that Plaintiff has a two-year extension to commence
construction, (2) declare that Plaintiff may transfer the property to a third party and
assign the extension to the third party, and (3) declare that the seller's option to
repurchase the lot under Section 8.04 of the Declaration void against the Rule against
Perpetuities. After a non-jury trial was held, Defendant filed preliminary objections to
Plaintiff s amended complaint.
For the reasons stated in this opIlllOn, Defendant's preliminary objections to
Plaintiff s amended complaint will be denied, and a declaration of rights will be entered.
STATEMENT OF FACTS
Plaintiff is Chadwick O. Bogar, who currently resides at 101 Hunt Court,
Hummelstown, Dauphin County, Pennsylvania. 1 Defendant is Mann Realty Associates,
Inc., a Pennsylvania corporation with its principal offices located in Lemoyne,
Cumberland County, Pennsylvania? For the purposes of the transactions discussed
herein, Robert M. Mumma, II, was acting as Defendant's authorized agent. 3
On September 2, 2003, Plaintiff purchased from Defendant, for the price of
$200,000.00,4 a vacant parcel of land known as Lot Number 6 of Allen Glen. S Allen
Glen is a planned community of about 23 lots located in Upper Allen Township,
Cumberland County, Pennsylvania.6 Like all lots purchased in Allen Glen, Lot Number 6
is subject to a number of restrictions set forth in the "Declaration of Allen Glen, A
Planned Community," which was recorded pursuant to the Pennsylvania Uniform
Planned Community Act. 7
Of primary importance to this case is Section 8.04 of the declaration, which sets
forth time limitations for commencing construction of a home on a newly-purchased lot. 8
Section 8.04 provides, in pertinent part:
Declarant Repurchase Option. The Owner( s) of each Lot or Lots
shall, within twelve (12) months from the date of settlement, commence
construction of the single family detached dwelling to be constructed upon
the Lot or Lots. In the event that the Owner(s) shall fail to commence
1 Amended CompL, filed July 29, 2005, ~ I (hereinafter PL's Amended CompL ~; Answer, filed Mar.
21, 2005, ~ I (hereinafter Def.'s Answer ~.
2 PL's Amended CompL ~ 2; Def.'s Answer ~ 2.
3 Notes of Testimony 5, Hr'g., Aug. 10,2005 (hereinafter NT ~.
4 See NT 33.
5 NT 3-4; PL's Ex. I, Hr'g., Aug. 10,2005 (hereinafter PL's Ex.~.
6 NT 3-4; PL's Amended CompL ~~ 3-4; Def.'s Answer ~~ 3-4.
7 NT 4; PL's Ex. 2.
8 NT 4-5; PL's Ex. 2.
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construction within such twelve (12) months, then such Owner(s) shall, at
the option of Declarant, reconvey the Lot or Lots to Declarant, for the same
consideration which Owner(s) paid for the subject Lot or Lots, and the
Owner(s) shall also pay all realty transfer taxes assessed in connection with
reconveyance. Declarant, or its designees, reserve the right, at its option, to
extend, in writing, the date on which construction must commence.
Construction with respect to the single family detached dwelling, to include
the garage, must be completed within twelve (12) months after construction
has begun but not later than two (2) years following the date of settlement,
unless the date of commencement has been extended by Declarant, or its
designees, in writing.
In the event that the Owner( s) shall elect to convey the Lot or Lots
conveyed to them during the twelve (12) months following the date of the
initial settlement, then the successor Owner( s) shall be required to
commence construction within twelve (12) months from the date that the
Lot was conveyed by Declarant to the initial Owner(s). Any successor
Owner( s) must complete the single family detached dwelling, to include the
garage, within two (2) years from the initial settlement. Declarant reserves
the right, as set forth above, to extend the date on which construction must
commence or be completed, or both, for the successor Owner(s).9
In order to be in compliance with Section 8.04 of the declaration, Plaintiff would
have had to commence construction of a single family home on Lot Number 6 by
September 2, 2004.10 Plaintiff, however, did not commence construction by this date.
Instead, in June of 2004, Plaintiff began discussions with Mr. Mumma to receive an
extension for commencement of construction of a home on Lot Number 6.11 During
these discussions, Plaintiff made it known to Mr. Mumma that he intended to sell the
property.12 It appears, as evidenced by Plaintiff and Mr. Mumma's exchange of e-mails
between June 4, 2004, and June 8, 2004, that the parties agreed to a two-year extension
for commencement of construction on Lot Number 6.13 As understood by Plaintiff, and
9 PL's Ex. 2.
10 See PL's Ex. I; PL's Ex. 2.
11 NT 12,24.
12 NT 22.
13 PL's Ex. 3. The contents of the e-mails were as follows: On June 4, 2004, Plaintiff wrote, "This
constitutes written confirmation that you granted to Carter and me an indefinite extension of time to
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the court finds as a fact, this extension was to run from September 2, 2004, to September
2 200614
, .
Upon receiving an extension for commencement of construction on his property,
Plaintiff began marketing Lot Number 6 for sale. IS In December of 2004, Plaintiff
entered into an agreement to sell his property to Jeffrey and Melinda Mandak for
$212,000.00.16 However, before the sale was completed, Mr. Mumma began asserting
that no agreement for an extension for commencement of construction had been
reached. 17 If Mr. Mumma was correct in alleging that no extension had been granted,
then Mr. Mumma could, at any point in the future, exercise the option under Section 8.04
of the declarations to repurchase Lot Number 6 at the original purchase price, regardless
of whether the property had subsequently been sold to a third party.18 Because of the
uncertainty surrounding the validity of the extension, as well as the repurchase option
under Section 8.04, the Mandaks revoked their agreement to purchase Lot Number 6.19
The dispute concerning the extension for commencement of construction, coupled
with the repurchase option, has created a serious problem with the title to Lot Number 6,
leaving Plaintiff unable to sell the property?O Consequently, Plaintiff filed a complaint
on February 24, 2005, requesting that this court order the following relief:
A. Declare that Plaintiff shall have two years from the date of a final
decree in this case to commence construction of a single family
dwelling on the Real Estate.
B. Declare that Plaintiff may sell the Real Estate to a third party and may
assign Extension Agreement to build a single family dwelling to the
commencing building on my lot in Allen Glen." On June 8, 2004, Mr. Mumma responded, "It was a two
year extension. Not indefinite." On June 8, 2004, Plaintiff responded, "Okay. Thx."
14 NT 24.
15 NT 12.
16 NT 11-12,33.
17 NT 25-27.
18 NT 18.
19 NT 27.
20 NT 17,31.
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third party under such a situation as to not trigger the ability of the
Defendant to repurchase the Real Estate under Section 8.04 of the
Declarations.
C. Such other relief as the Court deems just and appropriate?l
On July 29, 2005, Plaintiff, with permission of the court, filed an amended
complaint raising the issue of the Rule against Perpetuities. 22 Plaintiff, in this regard,
requested that this court, in addition to the relief requested in the original complaint,
"[d]eclare that Section 8.04 of the Declarations is void insofar as it gives the Defendant
an option to repurchase the Real Estate.,,23
A non-jury trial was held on this matter on August 10, 2005. Both parties have
submitted post-trial briefs. Eight days after the record had been declared closed, on
August 18, 2005, Defendant filed preliminary objections to Plaintiffs amended
complaint, contending (1) that the amended complaint failed to conform to law or rule of
court, and (2) that the amended complaint was legally insufficient.24
DISCUSSION
Statement of Law
Validity of a Contract. In order for a valid contract to exist, "there must be an
offer, acceptance, and consideration or mutual meeting of the minds." Yarnall v. Almy,
703 A.2d 535, 538 (Pa. Super. 1997). "An offer is a manifestation of willingness to enter
a bargain, so made as to justify another person in understanding that his assent to that
bargain is invited and will conclude it." Perry v. Tioga County, 694 A.2d 1176, 1178
(Pa. Commw. 1997). The acceptance of an offer requires the unequivocal agreement of
the offeree to enter into a contract with the offeror. Warner Bros. Theatres v. Proffitt,
329 Pa. 316, 319, 198 A. 56, 58 (1938). Finally, a mutual meeting of the minds occurs
when "the parties mutually assent to the same thing[.]" Hahnemann Med Coll. & Hosp.
of Philadelphia v. Hubbard, 267 Pa. Super. 436, 440, 406 A.2d 1120, 1122 (1979).
21 Action for Declaratory Judgment, filed Feb. 24,2005 (hereinafter PI. CompL ~.
22 PL's Amended CompL
23 PL's Amended CompL
24 Def.'s Prelim. Objections to Amended CompL, filed August 18,2005.
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Assignment of Contract Rights. A party to a bilateral contract may assign his or
her rights to a third party so long as the contract "does not involve personal skill, trust or
confidence . . . [and] does not materially alter the other party's duties and
responsibilities." Smith v. Cumberland Group Ltd, 455 Pa. Super. 276, 285, 687 A.2d
1167, 1172 (1997). "Where an assignment is effective, the assignee stands in the shoes
of the assignor and assumes all of his rights." Id
Time for Exercise of a Contract Option. An option that does not specify a time
period in which it needs to be exercised presents a problem of construction. See Barr v.
Deiter, 190 Pa. Super. 454, 460, 154 A.2d 290, 293 (1959). When a time period for
exercising the option is not designated, "the option ... [has] to be exercised in a
reasonable time considering all the circumstances." Id
Rule against Perpetuities. An option to repurchase property, which does not
contain a time limit for exercise of the option, has in one context been described as a
"violent breach of the rule against perpetuities.... It isolates the property. It takes it out
of commerce. It remove[s] it from the market. It halts improvements." Barton v. Thaw,
246 Pa. 348, 364, 92 A. 312, 316 (1914)?5
Application of Law to Facts
With respect to Defendant's preliminary objections to Plaintiff s amended
complaint, filed after the record in the case had been closed, the court regards them as
neither meritorious nor timely. Accordingly, they will be dismissed.
With respect to the merits of the case, the evidence presented at trial established,
to the court's satisfaction in its capacity as trier-of-fact, the validity of the two-year
extension for commencement of construction on Lot Number 6, commencing on
September 2, 2004, and ending on September 2, 2006. Plaintiff wrote an e-mail to Mr.
Mumma to confirm an agreement to extend the time Plaintiff had to begin construction
on his property, thus suggesting there was an offer and acceptance for the extension. In
25 But see Cent. Delaware County Auth. v. Greyhound Corp., 527 Pa. 47, 55 n.8, 588 A.2d 485, 489 n.8
(1991) (noting that Pennsylvania uses a wait-and-see approach to determining whether the Rule against
Perpetuities voids a future property interest); Act of Dec. 19, 1996, P.L. 1336, ~ 1,68 Pa. C.S.A. ~ 5203
(suggesting that Rule against Perpetuities does not apply to certain aspects of planned communities).
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his reply to Plaintiffs confirmation e-mail.Mr. Mumma responded that the extension
was for two years, not indefinite, again suggesting that an agreement had been reached
for the extension. While Mr. Mumma's response that the extension was for only two
years may at first have caused some question about whether there was a mutual meeting
of the minds on the extension, Plaintiffs response of "Okay" to Mr. Mumma's response
strongly suggests there was a mutual meeting of the minds, and that the parties agreed to
a two-year extension.
This court also believes that the two-year extension granted to Plaintiff was
assignable to a third party. The two-year extension to commence construction did not
involve personal skill, trust, or confidence. Additionally, this court believes that
assignment of the two-year extension to a third party will not materially alter the duties of
Defendant under the Declaration or the two-year extension. Thus, the two-year extension
is assignable to a third party.
Finally, the Declarations did not designate a time period for exercising the option
to repurchase Lot Number 6; therefore, Defendant has to exercise the repurchase option
within a reasonable time of its becoming available. A repurchase option, such as the one
included in Section 8.04 of the Declarations, creates a serious problem with the title to
the property; this court believes that a reasonable period for exercising such an option is
three months. 26
ORDER
AND NOW, this 10th day of October, 2005, upon consideration of Plaintiffs
complaint and amended complaint, and Defendant's preliminary objections to the
amended complaint, following a non-jury trial, and for the reasons stated III the
accompanying opinion, it is ordered and directed as follows:
1. Defendant's preliminary objections to Plaintiff s amended complaint
are dismissed.
26 Because the court has found that Defendant has three months to act upon the repurchase option from the
date it becomes exercisable, it is unnecessary for the court to address Plaintiffs Rule against Perpetuities
position.
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2. Plaintiff has a valid two-year extension to begin construction on Lot
Number 6, commencing on September 2, 2004, and expiring on
September 2,2006.
3. Plaintiff may assign the two-year extension to a third-party grantee of
Lot Number 6.
4. In the event of a failure by Plaintiff or any assignee to commence
construction on Lot Number 6 within the time of the two-year
extension, Defendant's option to repurchase Lot Number 6 will expire
three months after the expiration of the aforementioned extension.
BY THE COURT,
s/ 1. Wesley Oler, Jr.
1. Wesley Oler, Jr. 1.
Hubert X. Gilroy, Esq.
Broujos & Gilroy, P.C.
4 North Hanover Street
Carlisle, P A 17013
Attorney for Plaintiff
Kirk Sohonage, Esq.
P.O. Box 480
Camp Hill, PA 17011
Attorney for Defendant
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