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HomeMy WebLinkAbout2008-1234 Civil RAYMOND E. DIEHL : IN THE COURT OF COMMON PLEAS OF and GENEVIEVE A. : CUMBERLAND COUNTY, PENNSYLVANIA DIEHL, : Plaintiffs : : CIVIL ACTION v. : : JOHN McADOO and : CATHY McADOO, : Defendants : NO. 08-1234 CIVIL TERM ADJUDICATION BEFORE OLER, J. OPINION and DECREE OF COURT OLER, J., August 13, 2009. This equity case presents the issue of whether a landowner can be compelled to cooperate in the transfer of land subject to an option to the optionee, where the entire tract subject to the option can not be conveyed due to constraints imposed by a municipality, but the vast majority of the land can be conveyed with the municipality’s approval. For the reasons stated in this opinion, the issue will be resolved in the affirmative. PROCEDURAL HISTORY Plaintiffs Raymond E. Diehl and Genevieve A. Diehl filed the complaint sub judice on February 25, 2008, alleging, inter alia, (a) that certain land which they leased in Cumberland County, Pennsylvania, was subject to an option to purchase in their favor and (b) that the owners of the land, John McAdoo and Cathy McAdoo, had failed to cooperate in securing subdivision approval with 1 respect to conveyance of the optioned land. Relief requested by Plaintiffs 1 Plaintiffs’ Complaint, Count Two. Plaintiffs discontinued the action against the municipality in which the land was located, on February 2, 2009. 2 included a direction that Defendants cooperate in the subdivision request and pay 3 attorney’s fees to Plaintiffs for obdurate, vexatious and bad faith conduct. Defendants filed a counterclaim alleging, inter alia, that Plaintiffs had 4 breached an obligation to pay property taxes on the optioned land, that the option 5 lacked consideration, and that the entire optioned premises could not in any event 6 be legally conveyed. Defendants requested, inter alia, that the option be 78 terminated and that Plaintiffs pay attorneys’ fees to Defendants. A bench trial was conducted before the undersigned judge on July 8, 2009. FINDINGS OF FACT 1. Plaintiffs are Raymond E. Diehl and Genevieve A. Diehl, adult individuals residing in Boiling Springs, South Middleton Township, Cumberland 9 County, Pennsylvania. 2. Defendants are John McAdoo and Cathy McAdoo, adult individuals residing in Carlisle, South Middleton Township, Cumberland County, 10 Pennsylvania. 3. Defendants are the owners of a 13-acre strip of land in South Middleton 11 Township, Cumberland County, Pennsylvania, which is about 250 feet in width 12 and 2500 feet in length. 2 Plaintiffs’ Complaint, ¶39. 3 Plaintiffs’ Complaint, ¶39. 4 Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶90. 5 Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶67, 82. 6 Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶¶85-86. 7 Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶96. 8 Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶96. 9 Plaintiffs’ Complaint, ¶1; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶1. 10 Plaintiffs’ Complaint, ¶2; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶2. 11 Plaintiffs’ Complaint, ¶9, Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶9. 2 13 4. This strip of land is subject to an option in Plaintiffs’ favor. 5. The background of this option may be summarized as follows. The optioned strip was originally part of a 152-acre tract owned by Daniel W. Johnson 14 and Joyce H. Johnson. In 1995, the Johnsons sold an 85.5-acre portion of the 152-acre tract to Plaintiffs for $325,000.00 (Lot 2 on a certain subdivision plan) 15 and retained the balance of the 152-acre tract (Lot 1 on the subdivision plan). Part of the land retained by the Johnsons consisted of the strip referred to above, 16 which they subjected to a ground lease/option to purchase in favor of Plaintiffs. Plaintiffs’ rights under the ground lease/option to purchase, a memorandum of 1718 which was recorded, ran with the land. 6. The said strip subject to an option to purchase (a) ran east to west, (b) bordered the land sold outright to Plaintiffs on the south, and (c) connected the rest of the land retained by the Johnsons on the west to a public road on the east. The configuration of the land retained by the Johnsons was thus that of a dipper, with the handle being subject to an option, and with Plaintiffs’ land being situated 19 between the handle and the side of the vessel. 7. Under the April 24, 1995, ground lease/option to purchase, the term of 20 the instrument was 29 years. 12 Joint Exhibit 8, Trial, July 8, 2009. 13 Joint Exhibit 1, Trial, July 8, 2009. 14 Plaintiffs’ Complaint, ¶4; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶4. 15 Plaintiffs’ Complaint, ¶5-7; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶5-7. 16 Plaintiffs’ Complaint, ¶8; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶8. 17 Plaintiffs’ Complaint, ¶10; Answer, New Matter and Counterclaim of Defendants McAdoo to Complaint, ¶10. 18 N.T. 71-71, Trial, July 8, 2009. 19 Joint Exhibit 8, Trial, July 8, 2009. 20 Joint Exhibit 1, ¶2, Trial, July 8, 2009. 3 8. Under the ground lease/option to purchase, exclusive possession of the optioned premises was provided to the lessee/optionee during the instrument’s 21 term. 9. The ground lease/option to purchase also contained these pertinent provisions: 3. Rent: Rent for the entire term shall be $1.00 the receipt of which is hereby acknowledged. 4. Additional Rent: All charges, costs and expenses that Lessee assumes or agrees to pay hereunder, together with all interest and penalties that may accrue thereon in the event of the failure of Lessee to pay those items, and all other damages, costs, expenses, and sums that Lessor may incur or that may become due by reason of any default of Lessee or failure by Lessee to comply with the terms and conditions of this Lease shall be deemed to be additional rent, and, in the event of nonpayment when due, Lessor shall have all the rights and remedies and Lessee all the obligations as herein provided for failure to pay rent. 5. Taxes and Assessments: Lessee shall pay all taxes assessed and levied against the Premises by any taxing authority. The same shall be equitably pro-rated on the basis of acreage of the land comprising the Premises as compared with the total acreage of the tract owned by Lessor [of] which the Premises are a part. Further, Lessee shall pay all municipal assessments, if any, levied on the basis of the frontage of the Premises on Rockledge Drive. 6. Insurance: Lessee shall carry liability insurance, at their own expense, in the sum of Three Hundred Thousand ($300,000.00) Dollars in case of injury or damage to one person and Five Hundred Thousand ($500,000.00) Dollars in case of injury or damage to more than one person in the same accident or occurrence. 7. Indemnity: Lessee shall indemnify Lessor against all expenses, liabilities, and claims of every kind, including reasonable counsel fees, made by or on behalf of any person or entity arising out of any injury or damage happening on or about the Premises: except such expenses, liabilities and claims arising out of Lessors use of the Premises as set forth in Paragraph 10 hereof [relating to Lessee’s exclusive possession of the Premises]. 8. Default or Breach: Lessee’s failure to observe any condition hereunder and Lessee’s failure to cure such default within twenty (20) days of written notice given by Lessor thereof shall constitute a default hereunder. 9. Effect of Default: In the event of such default, Lessor shall have the right to cancel and terminate this Lease. In such event, the prothonotary of 21 Joint Exhibit 1, ¶10, Trial, July 8, 2009. 4 any attorney of any court of record is hereby authorized to appear for and to confess judgment in an amicable action of ejectment against Lessees, their heirs, assigns, executors, administrators for the premises herein described and to direct [t]he immediate issuing of a Writ of Possession with Writ of Execution for costs, including reasonable attorneys’ fees, 22 without asking leave of Court. 10. The option to purchase provision of the instrument provided as follows: 12. Lessee’s Option To Purchase: During the term of this Lease, provided Lessee is not in default, and provided that the Premises may legally be conveyed to Lessee, Lessee is granted an option to require conveyance of the Premises to Lessee for no consideration except that Lessee shall be exclusively liable for and shall bear the cost of any subdivision or other municipal approvals necessary to permit such conveyance to occur. Title to the Premises shall be good and marketable[,] and shall be free of all liens and encumbrances, with conveyance thereof to be by special warranty deed. All expenses incident to such conveyance except for deed preparation costs, shall be borne exclusively by Lessee, 23 including, but not limited to, transfer tax and recording costs. 24 11. The ground lease/option to purchase contained an integration clause, provided that the instrument was binding upon the heirs and assigns of the 25 parties, and directed the recording of a memorandum of lease in accordance with 26 it. 27 12. With actual knowledge of the ground lease/option to purchase, as well 28 as constructive notice of it as provided by the recorded memorandum of lease, on January 30, 2001, Defendant John McAdoo purchased the 66.5-acre tract that had been retained by the Johnsons, including the strip subject to the lease and option in favor of Plaintiffs, from the Johnsons, along with his spouse, Defendant Cathy 29 McAdoo. 22 Joint Exhibit 1, ¶¶3-9, Trial, July 8, 2009. 23 Joint Exhibit 1, ¶12, Trial, July 8, 2009. 24 Joint Exhibit 1, ¶13, Trial, July 8, 2009. 25 Joint Exhibit 1, ¶13, Trial, July 8, 2009. 26 Joint Exhibit 1, ¶14, Trial, July 8, 2009. 27 N.T. 76-82, Trial, July 8, 2009. 28 Joint Exhibit 2, Trial, July 8, 2009. 29 Joint Exhibit 5, Trial, July 8, 2009. 5 13. Defendants have frustrated Plaintiffs’ attempt to reimburse Defendants for Plaintiffs’ share of property taxes attributable to the strip, by declining to 30 advise Plaintiffs as to the amount due. In all other respects, Plaintiffs have met 31 their obligations under the ground lease/option to purchase. 14. A subdivision plan prepared on behalf of Plaintiffs with respect to the strip subject to the option contemplated a conveyance by Defendants of all of the strip to Plaintiffs, with the exception of a small area of road frontage on the eastern 32 end and a narrow band running from that area west to Defendants’ land. 15. Under a subdivision ordinance revised following the Johnsons’ initial 33 conveyance and ground lease/option in favor of Plaintiffs, this subdivision plan has been approved by the municipality in question, subject to Defendants’ joinder in the process. Specifically, the parties have stipulated as follows: The Diehls can comply with all requirements of the February 14, 2008 South Middleton Township Board of Supervisors’ approval of the Final Subdivision of Raymond E. and Genevieve Diehl, Plan No. 01-15, except for the requirement of the signature of the McAdoos and any and all other 34 documents and requirements that require the McAdoos cooperation. 35 16. Defendants have declined to provide such cooperation. DISCUSSION Statement of law. Several principles of law are particularly relevant to a disposition of the present case. First, a basic tenet of equity is that “equity regards and treats that as done which in good conscience ought to be done and equity imputes an intention to fulfill an obligation.” Sweeny v. Mechanics Trust Co., 55 Pa. D.&C. 80, 85 (Dauphin Co. 1945), citing City of Philadelphia v. Myers, 102 Pa. Super. 424, 432, 157 A. 13, 16 (1931). Thus, Pennsylvania courts have granted 30 N.T. 98-101, Trial, July 8, 2009. 31 N.T. 100-101, Trial, July 8, 2009. 32 Plaintiffs’ Exhibit 8, Trial, July 8, 2009. 33 N.T. 36, Trial, July 8, 2009. 34 Court Exhibit 1, Trial, July 8, 2009. 35 N.T. 37, Trial, July 8, 2009; Court Exhibit 1, Trial, July 8, 2009. 6 specific performance in situations where a vendee has elected to accept partial performance of a contract by a vendor, particularly where the vendee is not seeking abatement in the purchase price. See, e.g., Sidle v. Kaufman, 345 Pa. 549, 29 A.2d 77 (1942). Second, it is often said that “equity abhors a forfeiture.” Prol v. Prol, 2007 PA Super 313, ¶18, 935 A.2d 547, 554. Nor does equity favor the bestowal of a windfall. See Rusiski v. Pribonic, 511 Pa. 383, 395, 515 A.2d 507, 513 (1986). Third, under the doctrine of necessary implication, where it is clear that an obligation was within the contemplation of the parties at the time of contracting, or is necessary to carry out their intentions, the court will imply it. Gallagher v. Upper Darby Township, 114 Pa. Commw. 463, 473, 539 A. 2d 463, 467 (1988). Finally, with respect to awards of attorneys’ fees to litigants, an exception to the general rule against such awards exists where a litigant’s conduct has been “dilatory, obdurate or vexatious . . . during the pendency of [the] matter.” Act of July 9, 1976, P.L. 586, §2, 42 Pa. C.S. §2503(6). Application of law to facts. In the present case, where, inter alia, (a) a 66.5- acre tract of land was conveyed to Defendants, (b) a 13-acre strip of the tract was subject to a ground lease/option to purchase in favor of Plaintiffs as adjacent landowners, (c) the ground lease/option to purchase was supported by mutual consideration and was noticed of record, (d) the option to purchase expressly contemplated the necessity of a subdivision in the event of its exercise, (e) Defendants frustrated Plaintiffs’ efforts comply with their obligation to reimburse Defendants for property taxes attributable to the strip, and (f) Defendants have refused to cooperate in a subdivision process that would result in approval of a transfer of almost all of the optioned strip to Plaintiffs, the court is of the view, based upon the principles of law recited above, that: 1. Defendants are in material breach of an implied obligation under the ground lease/option to purchase to cooperate in the subdivision process; 7 2. Plaintiffs are not in breach of their obligations under the ground lease/option to purchase; and 3. Defendants’ legal position in this litigation, while not prevailing, has not been so lacking in merit as to warrant a finding of dilatory, obdurate or vexatious conduct. Accordingly, the following Decree will be entered: DECREE th AND NOW, this 13 day of August, 2009, upon consideration of Plaintiffs’ complaint and Defendants’ counterclaim, and following a bench trial on July 8, 2009, and the submission of briefs on behalf of the parties, and for the reasons stated in the accompanying opinion, it is ordered, adjudged and decreed as follows: 1. On Plaintiffs’ complaint, the court finds in favor of Plaintiffs Raymond E. Diehl and Genevieve A. Diehl and against Defendants John McAdoo and Cathy McAdoo, and Defendants are enjoined to: a. Execute within 20 days of service by Plaintiffs any and all documents required by any governmental authority to secure final approval and recordation of the South Middleton Township Subdivision Plan 07-5 of Raymond E. and Genieve A. Diehl; b. Prepare and execute within 20 days of the recording of the said subdivision plan a special warranty deed conveying Lot 1A on the subdivision plan to Plaintiffs, and serve the same upon Plaintiffs for recording; and c. Calculate within 15 days of the date of this order an accurate amount of taxes owed by 8 Plaintiffs pursuant to the ground lease/option to purchase sub judice, and serve the same upon Plaintiffs, who shall pay to Defendants the amount so calculated within 20 days of service. 2. On Defendants’ counterclaim, the court finds in favor of Plaintiffs Raymond E. Diehl and Genevieve A. Diehl and against Defendants John McAdoo and Cathy McAdoo, and the counterclaim is dismissed. 3. No other relief is afforded to either party. BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Robert C. Saidis, Esq. Sadis, Flower & Lindsay 26 West High Street Carlisle, PA 17013 Attorney for Plaintiffs Nathan C. Wolf, Esq. Wolf & Wolf 10 West High Street Carlisle, PA 17013 Attorney for Defendants Richard S. Mislitsky, Esq. Suite 208 1 West High Street Carlisle, PA 17013 Courtesy Copy 9 10 RAYMOND E. DIEHL : IN THE COURT OF COMMON PLEAS OF and GENEVIEVE A. : CUMBERLAND COUNTY, PENNSYLVANIA DIEHL, : Plaintiffs : : CIVIL ACTION v. : : JOHN McADOO and : CATHY McADOO, : Defendants : NO. 08-1234 CIVIL TERM ADJUDICATION BEFORE OLER, J. DECREE th AND NOW, this 13 day of August, 2009, upon consideration of Plaintiffs’ complaint and Defendants’ counterclaim, and following a bench trial on July 8, 2009, and the submission of briefs on behalf of the parties, and for the reasons stated in the accompanying opinion, it is ordered, adjudged and decreed as follows: 1. On Plaintiffs’ complaint, the court finds in favor of Plaintiffs Raymond E. Diehl and Genevieve A. Diehl and against Defendants John McAdoo and Cathy McAdoo, and Defendants are enjoined to: a. Execute within 20 days of service by Plaintiffs any and all documents required by any governmental authority to secure final approval and recordation of the South Middleton Township Subdivision Plan 07-5 of Raymond E. and Genieve A. Diehl; b. Prepare and execute within 20 days of the recording of the said subdivision plan a special warranty deed conveying Lot 1A on the subdivision plan to Plaintiffs, and serve the same upon Plaintiffs for recording; and c. Calculate within 15 days of the date of this order an accurate amount of taxes owed by Plaintiffs pursuant to the ground lease/option to purchase sub judice, and serve the same upon Plaintiffs, who shall pay to Defendants the amount so calculated within 20 days of service. 2. On Defendants’ counterclaim, the court finds in favor of Plaintiffs Raymond E. Diehl and Genevieve A. Diehl and against Defendants John McAdoo and Cathy McAdoo, and the counterclaim is dismissed. 3. No other relief is afforded to either party. BY THE COURT, _________________ J. Wesley Oler, Jr., J. Robert C. Saidis, Esq. Sadis, Flower & Lindsay 26 West High Street Carlisle, PA 17013 Attorney for Plaintiffs Nathan C. Wolf, Esq. Wolf & Wolf 10 West High Street Carlisle, PA 17013 Attorney for Defendants Richard S. Mislitsky, Esq. Suite 208 1 West High Street Carlisle, PA 17013 Courtesy Copy 13