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HomeMy WebLinkAbout2008-1980 Civil RALPH L. FOSTER, JR., : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, : PENNSYLVANIA : V. : : NO. 08-1980 : KEITH A. BLESSING, : Defendant : CIVIL ACTION – LAW AND EQUITY IN RE: PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS BEFORE BAYLEY, J. AND EBERT, J. OPINION AND ORDER OF COURT Ebert, Jr., J., October 26, 2009 - Plaintiff requests that this Court grant his Motion for Judgment on the Pleadings. After considering the pleadings, this Court grants the Motion. Accordingly, Plaintiff is permitted to prepay and settle all debts with Defendant and receive free and clear title to the property at 180 Ponderosa Road, Lower Frankford Township, Cumberland County upon full payment. I. STATEMENT OF FACTS Ralph Foster, Jr. (“Plaintiff”) was owner of the Ponderosa Farm which consisted of over 116 acres of land. In 2004, Plaintiff was having difficulty paying the mortgage on the farm and facing possible foreclosure. Plaintiff’s uncle, George Blessing, suggested that his nephew, Keith Blessing (“Defendant”) could be of assistance. Defendant purchased the farm, tax assessed at $378,240, from Plaintiff for $200,000. Plaintiff and Defendant then entered into an Installment Sales Agreement for Plaintiff to purchase the property back from Defendant by making monthly payments. The interest was set at six percent with a term of 30 years and Defendant’s attorney drafted the Installment Sales Agreement for Real Estate used by the Parties. This agreement was silent as to the availability of prepayment. Several events occurred between the date of the Sales Agreement and this case, the most notable of which was an Ejectment Proceeding filed by Blessing (current Defendant) against Foster (current Plaintiff) at Blessing v. Foster docketed to 06-4135 Civil Term. Blessing’s Complaint in that proceeding was dismissed by President Judge Bayley after a two day bench trial by his Opinion and Order dated November 26, 2007. II. PROCEDURAL HISTORY Plaintiff filed this Complaint to Compel Specific Performance on March 29, 2008. This complaint requested a settlement date, Plaintiff’s attorney’s fees, and other relief as appropriate. On May 19, 2008, Defendant filed a single Preliminary Objection to the Complaint, disputing the provision for attorney’s fees as requested in the complaint. Plaintiff filed an amended Complaint eleven days later, removing the request for attorney’s fees and mirroring the rest of the prior Complaint. On June 26, 2008, Defendant filed Preliminary Objections in the Nature of a Demurrer to the Amended Complaint. Plaintiff filed a written response on July 21, 2008, which included an Exhibit A consisting of two pages of the sworn testimony of Defendant taken before Judge Bayley at the November 12, 2003, bench trial in Blessing v. Foster. Defendant requested that the Court sustain his Preliminary Objection to the Plaintiff’s Amended Complaint and dismiss. On January 6, 2009, the Court overruled this demurrer and gave Defendant 20 days to file an Answer to the Amended Complaint. Defendant answered the amended Complaint on January 26, 2009, and added New Matter and CounterClaims of Breach of Contract, Abuse of Process, and Malicious Prosecution. A Reply to New Matter, Answer to Counterclaim and New Matter to Defendant’s Counterclaim was filed by Plaintiff on February 12, 2009. Defendant followed with an Answer to New Matter to Defendant’s Counterclaim on March 2, 2009. On July 21, 2009, Plaintiff filed a motion for 2 Judgment on the Pleadings to which were attached Exhibits A through I. Defendant filed an Answer thereto on July 27, 2009. The parties filed briefs on the matter and argument was held before the Court on September 9, 2009. III. DISCUSSION The Plaintiff has filed a Motion for Judgment on the Pleadings requesting that the Defendant tender the deed to the property in question and accept prepayment of the Installment Sales Contract. While the Defendant has filed counterclaims, the Court notes that these have been litigated or are totally unrelated to the Plaintiff’s Motion and Request for Relief. At issue then is whether “prepayment” is permitted when the term is specifically not mentioned in the Installment Sales Agreement For Real Estate (“Sales Agreement”). A. Judgment on the Pleadings – Legal Principles A Motion for Judgment on the Pleadings should be granted only where the pleadings demonstrate that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. In re Weidner, 895 A.2d 11 (Pa. Super. 2006). The Court must accept as true all well pleaded statements of facts, admissions, and any documents properly attached to the pleadings presented by the party against whom the motion is filed. Id at 14. Facts specifically admitted by the party opposed to the motion for judgment on the pleadings may be considered against him. The Court may consider the pleadings themselves and any documents properly attached thereto. Pennsylvania Prison Soc. v. Com. 727 A.2d 632 (Pa. Cmwlth. 1998). B. Prepayment - Application of Law to Facts The plain language of the Sales Agreement makes prepayment a possibility. By signing the Sales Agreement, Plaintiff agreed to pay the full amount ($200,000) together with any 3 1 interest accrued “on or before April 15, 2034.” Additionally, nowhere in the Sales Agreement is it stipulated that prepayment would not be accepted or that there would be any type of prepayment penalties. The Pennsylvania Supreme Court, in opposing restraints on alienation, held that “where a mortgage note is silent as to the right of prepayment, there arises a presumption that the debt may be prepaid.” Mahoney v. Furches, 503 Pa. 60, 468 A.2d 458 Previously, President Judge Bayley in the ejectment action related to this case (Pa. 1983). docketed to 06-4135 Civil Term citing Stillwater Lakes Civic Association, Inc. v. Krawitz, 772 A.2d 118 (Pa. Cmwlth. 2001) noted that “indeed, Pennsylvania has adopted a view stating that the relationship between a seller and buyer who are parties to an Installment Sales Agreement is that of mortgagee and mortgagor” Id. at 121. The existence of the Amortization Schedule is not evidence that prepayment is not allowed. Such a document, which is included with most loans, is merely a graphical view of the principal that remains to be paid and the interest owed if the debtor pays only the minimum payment each month. The Defendant may invalidate the assumption of prepayment by demonstrating “a contrary intent mutually manifested by the parties,” Citicorp Mortgage, Inc. v. Morrisville Hampton Here, the Defendant has Village Realty Limited Partnership, 662 A.2d 1120, 1122 (Pa.Super 1995). admitted to just the opposite. In a previously related civil ejectment case, Defendant, in an attempt to bolster his eviction argument, stated under oath that Plaintiff “could have paid it off early” and that his attorney, who drafted the Sales Agreement, did not place any exclusion on prepayment. While these admissions were not made in the present case, they are part of the records of this Court and were included as exhibits to Plaintiff’s response to Preliminary Objections to Amended Complaint and Plaintiff’s Motion for Judgment on the Pleadings. 1 Installment Sales Agreement For Real Estate, Amended Complaint, Exhibit B, Mar. 31, 2004 (emphasis added). 4 Obviously this sworn testimony is very compelling and reveals great insight into the intention of the parties. Defendant asserts that the Motion for Judgment on the Pleadings cannot be granted because his requests for the Court to sustain his Preliminary Objections to Plaintiff’s Amended Complaint and dismiss the complaint were denied. However, two other factors played a key role in that opinion. First, was Defendant’s lack of timeliness in filing preliminary objections and briefs. While the Court used its discretion to “permit late filing”, it did so noting that it would be justified in dismissing the Preliminary Objections altogether based on timeliness. Second, Pennsylvania Rule of Civil Procedure 1028(b) required that all preliminary objections be raised at one time. The Defendant failed to adhere to this rule. The Court denied the demurer partially on the grounds that Defendant was precluded from raising the additional preliminary objection in the nature of a demurrer when initially he only objected to attorney’s fees. However, timeliness and preclusion issues aside, there is a difference between the previous demurrer and the current Motion for Judgment on the Pleadings in this case. As stated in our opinion of January 6, 2009, in a demurrer, “no testimony or other evidence outside of the complaint may be considered to dispose of the legal issues presented by the demurrer.” A Motion for Judgment on the Pleadings, while excluding outside materials, allows for the use of all of the pleadings. Considering that since the Defendant’s request for demurrer there have been numerous supplemental documents filed, it is flawed to assume that none of those documents can merit a change in this Court’s opinion. Defendant states in his brief that “this Court cannot in this instance exercise intellectual honesty by denying a demurrer but then sustaining judgment on the same pleading…” (Defendant’s brief at page 2). Unfortunately for the Defendant, the law in Pennsylvania 5 recognizes that “it is proper to consider a motion for judgment even though a prior demurrer was dismissed.” Berlin v. Drexel University, 10 Pa. D. & C.3d 319, at 321, (Pa.Com.Pl. 1979). In assessing “intellectual honesty” the Defendant would be well served by examining his own statements made under oath: TESTIMONY AT NON JURY TRIAL Attorney Diveglia: Did he say anything to you about that he was going to refinance or do anything with that? Keith Blessing: He never said nothing about refinancing. Attorney Diveglia: And by the way, was that an option that he had under that agreement? Keith Blessing: He could have paid it off early, sure, if he got a better interest rate. I gave him six percent, the same interest rate that I received. Attorney Diveglia: So you didn’t have attorney – direct Attorney Hanft to put a prohibition against early payoff? 2 A: Absolutely not. (Emphasis added) * * * * * * * TESTIMONY AT DEPOSITION Attorney Hribal: There are not buyer’s remedies, though, correct? There are not remedies for Mr. Foster? Keith Blessing: I think there are in there. I don’t know what you mean by remedies. He has all kind of options. He could pay me off early. He fills out – He follows the agreement, 3 he gets the deed back. There’s huge benefits for the buyer. (Emphasis added) 2 Notes of Non-Jury Trial, 11/13-14/07, page 29-30, Exhibit A, Plaintiff’s Motion for Judgment on the Pleadings. 3 Notes of Defendant’s Deposition, 7/10/07, page 58, Exhibit B, Plaintiff’s Motion for Judgment on the Pleadings. 6 This dispute began with Defendant Blessing’s complaint in ejectment filed on July 21, 2006. Based on the extensive record before this Court and the equities owed to each party, this Motion for Judgment on the Pleadings must be granted. While it is certainly not necessary to decide this issue, anyone applying an “intellectual honesty” standard to this case recognizes that Plaintiff was 76 years old at the time he entered this sales agreement. He got $200,000 to save a 116 acre farm which had a tax assessment of $378,240. If Plaintiff is required to make only the minimum payment each month for 30 years, he will be 106 years old before he is entitled to have the title to his farm back. This is not the law, and the time has come for this sales agreement and transfer of the title to this farm to be concluded. C. Effect of Defendant’s Counterclaims The Defendant in his Answer to the Plaintiff’s Motion for Judgment on the Pleadings maintains that the Motion cannot be granted because the Defendant has filed three counterclaims in his Answer to the Plaintiff’s Amended Complaint. These consist of a Breach of Contract, Abuse of Process and Malicious Prosecution. With regard to the latter two claims, the Defendant requests “compensatory and punitive damages”. These claims are based on an allegation that counsel for the Plaintiff attempted to “effectuate a settlement” by threatening “criminal prosecution”. While this Court will render no opinion in regard to the merit of these claims, it is clear that they can be litigated separately from Plaintiff’s current request for equitable relief in the form of compelling specific performance. With regard to Defendant’s counterclaim regarding Breach of Contract, the doctrine of collateral estoppel applies in this case. In Erie Insurance Exchange v. Muff, 851 A.2d 919, 931 (Pa. Super. 2004) the Superior Court of Pennsylvania stated: The doctrine of collateral estoppel, which is sometimes referred to as issue preclusion, operates to prevent questions 7 of law or issues of fact which have once been litigated and adjudicated finally in a court of competent jurisdiction from being re-litigated in a subsequent suit. Collateral estoppel is applicable when: (1) the issue in the prior adjudication was identical to the one presented in the later action; (2) there was a final judgment on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication; (4) the party against whom it is asserted had a full and fair opportunity to litigate the issue in a prior action; and (5) the determination in the prior proceeding was essential to the judgment. Defendant maintains that in his action for ejectment brought against the Plaintiff at 06-4135 Civil term, the Court did find a “breach of contract.” As such, Defendant maintains that this breach is a violation of the Installment Sales Agreement contract, and therefore, Defendant is allowed to void the contract and keep the land. The ejectment case docketed at 06-4135 Civil term was tried Non-Jury before President Judge Edgar B. Bayley on November 12-13, 2003. A plain reading of Judge Bayley’s opinion in the case dated November 26, 2007, clearly establishes that Judge Bayley found in favor of Ralph Foster and against Keith Blessing. The result was that Defendant’s complaint for ejectment was dismissed. The sole issue in that case was whether or not Ralph Foster had breached the installment sales agreement contract. Judge Bayley wrote: Furthermore, on the unique facts of this case, assuming that Foster breached the installment sales agreement by not purchasing the $200,000.00 insurance coverage at some point, and did not cure the default by purchasing it within 15 days of the notice of default, we find that the breach is not material… under these circumstances we find that any breach of the agreement by Foster regarding insurance is not material, that the minor financial loss caused by Blessing can possibly be recovered as damages, and that the non material breach does not warrant a forfeiture under paragraph 11 of 8 the installment sales agreement. The agreement is not null and void and Blessing is not entitled to 4 a judgment of ejectment. Defendant’s current breach of contract counter-claim specifically states: 35. Nonetheless, the Court there did find a breach of contract and as such Plaintiff is collaterally estopped from saying otherwise. 36. This breach is a violation of the contract, and even if now cured, Blessing is allowed to void the contract and keep the land. The doctrine of collateral estoppel does indeed apply to this case but not in favor of Defendant Blessing. (1) The single issue in the prior adjudication (complaint for ejectment) was whether or not the installment sales agreement was breached. Judge Bayley ruled that it was not breached because even assuming a breach it was not a material breach. (2) This was a final judgment on the merits of breaching the installment sales agreement. (3) The parties in the prior adjudication were Keith A. Blessing and Ralph L. Foster, the same identical parties as in this case. (4) Keith Blessing, the party against whom collateral estoppel is asserted, had a full and fair opportunity to litigate the issue in the prior case. The matter went to trial, Blessing filed a motion for reconsideration which was denied, and the case was appealed to the Superior Court docketed to Blessing, K. v. Foster Jr., R., No. 2043 MDA 2007. This appeal was eventually withdrawn and discontinued by Keith Blessing and the case was marked discontinued by the Superior Court on January 28, 2008. Clearly, Blessing had and did fully litigate the issue of breach of the installment sales agreement. (5) The ruling that there was no material breach of the installment sales agreement was the essential issue decided at the non-jury trial before Judge Bayley. 4 Judge Bayley’s Opinion of November 26, 2007, page 7 - 8 9 Given this analysis, the Defendant is now precluded from re-litigating the issue of breach of contract raised in his current counterclaim. Thus, this claim does not present a bar to the Plaintiff’s current action to compel specific performance. CONCLUSION This Court is of the opinion that pursuant to Pa.R.C.P. No. 1034 there is no genuine issue of fact and Plaintiff is entitled to judgment as a matter of law. Accordingly, the following Order of Court is entered: ORDER OF COURT th AND NOW , this 26 day of October, 2009, the Plaintiff’s Motion for Judgment on the GRANTED Pleadings is . IT IS FURTHER ORDERED AND DIRECTED that the Parties shall schedule a settlement date within 30 days of the date of this order at which time the Defendant shall accept pre-payment of the installment sales contract and tender the deed to the property in question to the Plaintiff. By the Court, M. L. Ebert, Jr., J. Margaret M. Stuski, Esquire Attorney for Plaintiff Karl E. Rominger, Esquire Attorney for Defendant 10