author: SMYTH, J.,

text:
    William Penn Bank v. East Investments, LLC

      C.P. of Montgomery County,
    No. 14-02856
    June 19, 2015
   SMYTH, J.,

This is an action to quiet title and for declaratory judgment and other relief arising out of the sale of a certain piece of real property closing “[o]n or around August 31, 2011.” (Compl. Quiet Title para. 101.) Plaintiff William Penn Bank is mortgagee, and Plaintiff Muntasir Khandkar is mortgagor/buyer of the property. Defendants East Investments LLC and its principal, Bryan Benford, are involved with a lien held on the property, a confessed judgment, East Invs., LLC v. F&V Real Estate Mgmt., Inc., No. 11-25002 (Pa. C.P. Montg. County filed Aug. 29, 2011), entered several days prior to the land sale and the recording of the deed and mortgage on the property, but which Plaintiffs seek to have stricken in subordination to the mortgage, with title cleared. East Investments and Benford have preliminarily objected under the Pennsylvania Rules of Civil Procedure, Pa.R.C.P. 1028, to Plaintiff’s complaint. Three other Defendants, a corporate entity and its principals, are the parties against whom the confessed judgment was taken and were associated with the sale of the property to Khandkar. They have answered the complaint, and are not directly concerned in the matters now at issue.

The preliminary objections of East Investments and Benford raise three arguments: (1) Under Pa.R.C.P. 1028(a)(3), the complaint does not specifically enough plead facts to demonstrate that East Investments is the alter ego of Benford or sufficient to pierce the corporate veil to allow Benford to be sued in his individual capacity, so that he should be dismissed as a party to the action.

(2) Under Pa.R.C.P. 1028(a)(2), the complaint fails to conform to law or rule of court by not pleading fraud with particularity as required by Pa.R.C.P. 1019(b), so that three identified paragraphs of the complaint should be stricken.

(3) Under Pa.R.C.P. 1028(a)(4), the complaint is legally insufficient to state a claim against East Investments and Benford, so that the complaint against them should be stricken entirely, with leave to amend.

Plaintiffs have preliminarily objected under Pa.R.C.P. 1028(a)(2) to Defendants’ preliminary objections, arguing that they should be dismissed as filed untimely under Pa.R.C.P. 1026(a) because they were interposed more than twenty days after the complaint was served. See Pa.R.C.P. 1026(a) (“[Ejvery pleading subsequent to the complaint shallbefiledwithin twenty daysafterserviceofthepreceding pleading ....”); see also Pa.R.C.P. 1017(a)(4) (pleadings include preliminary objections); cf. Commonwealth v. Morcoal Co., 54 Pa.Commw. 87, 419 A.2d 821 (1980) (per curiam) (order disposing of preliminary objections) (sustaining preliminary objection in nature of motion to strike as untimely preliminary objection/demurrer filed twenty-five days after service of complaint). See generally Chester Upland Sch. Dist. v. Yesavage, 653 A.2d 1319, 1324 n.8 (Pa. Commw. Ct. 1994) (“[A] party has the right to file preliminary objections raising any appropriate defenses or objections which that party might have to an adverse party’s preliminary objection. The proper method for challenging the propriety of a preliminary objection is by a preliminary objection to a preliminary objection.” (citation omitted)). East Investments and Benford have filed a response to Plaintiffs’ preliminary objections to preliminary objections, disputing Plaintiffs’ rendition of the procedural history of the case, particularly concerning service of the complaint, detailing communications off the record between Plaintiffs’ and Defendants’ counsel, and attaching to the pleading printouts of various of counsels’ emails back and forth to advocate for an alternate version of that history.

Neither side, in the preliminary objections or response, took advantage of the opportunity to engage in discovery on factual issues provided for by our local rules, Montg. Co. R.C.P. 1028(c)(3) and Montg. Co. R.C.P. *205.2(b), or in any event no party has presented the Court with additional evidence to resolve the dispute about when the complaint was served on moving Defendants to start the clock running under Pa.R.C.P. 1026(a) on their time to file preliminary objections. See also Pa.R.C.P. 1028(c)(2) (“If an issue of fact is raised, the court shall consider evidence by depositions or otherwise”). See generally John M. Stevens, Procedural Considerations Regarding Preliminary Objections Raising Issues of Fact, 18 Widener L.J. 149 (2008). Neither side requested oral argument before the Court of their preliminary objections, as they could have done under the same local rules, and so the Court Administrator sent the two sets of preliminary objections to us, albeit at different times and under separate covers, for review on the papers. On this state of the pleadings, counsel clamor for a decision.

Although the Court Administrator sent Defendants’ preliminary objections to us first, orderly procedure would dictate that we first take up Plaintiffs ’ preliminary obj ections to Defendants’ preliminary objections. Cf. Jacobs v. Merrymead Farm, Inc., 799 A.2d 980, 983 (Pa. Commw Ct. 2002) (holding party who preliminarily objects to a preliminary objection does not waive procedural defect in the objection under Pa. R.C.P. 1032(a) and reversing this Court’s sustaining defective preliminary objections to which opposing parties had preliminarily objected). Reviewing the procedural facts of record available to us, we find that Plaintiffs’ preliminary objections should be sustained, and Defendants’ preliminary objections dismissed as untimely filed.

Plaintiffs filed their complaint on February 5, 2014, but failed to achieve service upon East Investments and Benford within the 30 days allowed by Pa.R.C.P. 401(a). After reinstating the complaint under Pa.R.C.P. 401(b), Plaintiffs moved the Court pursuant to Pa.R.C.P. 430 (relating to service pursuant to special order of court) for a special order allowing Benford to be served by alternative means. The motion described Benford as East Investments’ “sole owner.” (Pis.’ Mot. Alternate Service para. 2.) Judge Moore granted Plaintiffs’ motion and authorized them to serve the complaint upon Benford by posting it at a certain address in Chester County and sending a copy to that address by regular and certified mail. (Order Alternative Service, June 20, 2014.)

Plaintiffs reinstated the complaint several more times, the final time being on July 22,2014. On July 29,2014, the Sheriff of Chester County, as deputized by the Sheriff of Montgomery County, served the complaint by posting it at the designated premises in accordance with Judge Moore’s order for special service; the Sheriff of Montgomery County filed proof of such service on August 13, 2014. On August 15,2014, Plaintiffs filed an affidavit of service of the complaint and the order for alternative service by certified mail to Bryan Benford at the same address, attaching a returned receipt for the mail dated July 28, 2014, although the signature on the receipt is illegible.

On August 5, 2014, counsel entered appearances in this Court on behalf of East Investments and Benford. However, he did not file their preliminary objections to the complaint until September 12, 2014.

In his response to Plaintiffs’ preliminary obj ections to his preliminary objections, counsel maintains that the address where Plaintiffs attempted to serve East Investments and Benford pursuant to the Court’s special order was not a valid address (Defs. Reply Pis.’ Prelim. Objections Defs.’ Prelim. Objections para. 2 (sic), 4) and offers a series of emails and off-the-record communications between himself and Plaintiffs’ counsel as proof of the date he actually received the complaint (Defs. Reply Pis.’ Prelim. Objections Defs.’ Prelim. Objections para. 2 (sic), 5-8 & Exs. A-B, D). He refers obliquely to having previously received only “an unfiled draft copy of a [cjomplaint via regular mail” (Defs. Reply Pis.’ Prelim. Objections Defs.’ Prelim. Objections para. 7) and in a supporting brief (which cites no specific legal authority whatsoever) collaterally attacks this Court’s order authorizing alternative service by asserting Plaintiff’s motion therefore “contains misstatements which would or could have mislead [sic] this Court to grant [the motion]” (Defs. Br. Opp’n Pis.’ Prelim. Objections Defs.’ Prelim. Objections pt. II). The brief also contends Plaintiffs made no attempt to serve East Investments and that service was not perfected until counsel filed an acceptance of service (Defs. Br. Qpp’n Pis.’ Prelim. Objections Defs.’ Prelim. Objections pt. II) (which he did contemporaneously with filing Defendants’ preliminary objections to the complaint on September 12, 2014). We will not wade into this morass of conflicting off-the-record “facts” and contentions.

In asking us to find their preliminary objections timely filed, moving Defendants seek to challenge the official record of proceedings reflected on the docket of this Court. Had they sought to establish that service of the complaint happened otherwise than the record reflects, Defendants had the chance to do so by requesting discovery on the cover sheets to their preliminary objections and response to Plaintiff’s preliminary objections required by our local rules, Montg. Co. R.C.P. *205.2(b) and Montg. Co. R.C.P. 1028(c)(1)(b)(1), (2)(c)(1), and by obtaining or producing such discovery within 60 days ofthe preliminary obj ections, Montg. Co. R.C.P. 1028(c)(3). See also Pa.R.C.P. 1028(c) (2) (“If an issue of fact is raised, the court shall consider evidence by depositions or otherwise”); John M. Stevens, Procedural Considerations Regarding Preliminary Objections Raising Issues of Fact, 18 Widener L.J. 149 (2008). On the cover sheet to their preliminary objections, however, Defendants indicated no discovery was needed; their response to Plaintiffs’ preliminary objections was filed without a cover sheet. Defendants have properly placed no facts before this Court that would allow us to go behind the facts as shown on the dockets and records of the Court, or to reexamine decisions made earlier on in the litigation that now stand as the “law of the case,” see Morgan v. Petroleum Prods. Equip. Co., 92 A.3d 823, 827 (Pa. Super. Ct. 2014) (“The law of the case doctrine [sets forth various rules that] embody the concept that a court involved in the later phases of a litigated matter should not reopen questions decided by another judge of that same court or by a higher court in the earlier phases of the matter”); Mountain View Condo. Ass ’n v. Bomersbach, 734 A.2d 468, 471 (Pa. Commw. Ct. 1999) (holding “law of the case” cannot be disturbed absent compelling circumstances), appeal dismissed per curiam as improvidently granted, 564 Pa. 433, 768 A.2d 1104 (2001).

The allegation Plaintiffs never attempted to serve East Investments strikes this Court as a red herring. Plaintiffs’ motion before Judge Moore portrays Benford as East Investments’ “sole owner.” (Pis.’ Mot. Alternate Service para. 2.) Plaintiffs’ complaint pleads a case for finding East Investments to be nothing more than Benford’s “alter ego,” a corporation in name only, and a presently defunct one at that. (Compl. Quiet Title paras. 11-24.) And the docket reflects that our Prothonotary’s mailed attempt to serve Judge Moore’s order for alternative service upon East Investments at its Nevada address of registration — the same address that East Investments had used in confessing judgment in the related case, East Investments, LLC v. F&V Real Estate Management, Inc., No. 11 -25002 (Pa. C.P. Montg. County filed Aug. 29, 2011), and that still appears as East Investments’ address on this Court’s official dockets in both that case and this one — came back marked “Return to Sender,” “No Longer at This Address,” “Attempted —■ Not Known,” and “Unable to Forward.” If indeed East Investments is an ongoing concern with corporate existence independent of Bryan Benford, it appears to be a tenuous one at best.

Moreover, moving Defendants’ counsel entered separate appearances on the docket of this case for both East Investments and Bryan Benford on August 5, 2014. He was, no later than then, on at least constructive notice that a complaint had been filed, and could easily have converted the constructive notice into actual notice by obtaining a copy of the filed complaint from the docket, regardless of whether Plaintiffs’ counsel’s attempts to send him or the parties a copy of the complaint by email or postal mail were efficacious.

We compare this case with Romeo v. Looks, 369 Pa. Super. 608, 535 A.2d 1101 (1987) (en banc). There, the Superior Court of Pennsylvania affirmed the trial court’s denial of a petition to open judgment by default entered against a party who failed to answer substituted service of process that the court had authorized upon her mother and her insurance carrier, among others, although the party failed to receive actual notice of the action in time to prevent the default. The reviewing court found that the substituted service properly established the lower court’s personal jurisdiction over the party because the means of service selected were reasonably calculated to provide the party with notice of the suit. See also Noetzel v. Glasgow, Inc., 338 Pa. Super. 458, 469-71, 487 A.2d 1372, 1377-78 (1985) (“As long as a method of service is reasonably certain to give notice to a defendant that an action is pending against him, the fact that such defendant fails to receive actual notice does not invalidate service on due process grounds. The substituted service on the West Virginia Secretary of State in this case and his subsequent notification of Glasgow’s West Virginia agent was in fact reasonably calculated to inform Glasgow of the action and was adequate to satisfy due process requirements. Moreover, the notice in this case was received in fact by Glasgow’s representatives. The failure to act in pursuance thereof was attributable either to inadvertence or carelessness. Due process did not require that Glasgow receive repeated notices thereafter. When Glasgow failed to appear in response to initial service, due process did not require that it again be invited to participate in the proceedings. Appellees were not required to obtain Glasgow’s permission to proceed further” (citation omitted)).

In the absence of competent proof to the contrary, or an appropriately raised collateral attack on Judge Moore’s order approving special service, the Sheriff’s return of service reflecting posting of the complaint at the designated premises on July 29, 2014, in accordance with Judge Moore’s order, established that as the date the complaint was served. Counsel’s entry of appearances for both East Investments and Benford on August 5, 2014, merely confirmed that those parties or their representatives had received actual notice of the lawsuit, and they were then under obligation to ascertain the stage of the litigation and proceed accordingly. Since under Pa.R.C.P. 1026(a) “every pleading subsequent to the complaint shall be filed within twenty days after service of the preceding pleading” moving Defendants’ preliminary objections to the complaint were due August 18, 2014. If necessary, Defendants could have sought more time to respond, by motion to the Court or by agreement of Plaintiffs’ counsel, see Pa.R.C.P. 1003 (“Rules relating to the manner of commencing an action or the time for serving process or for filing or serving pleadings may be waived by agreement of the parties. The court on cause shown may extend or shorten the time within which pleadings shall be filed or process served”), but subject to the proviso, “Agreements of attorneys relating to the business of the court shall be in writing . . . Pa.R.C.P. 201, not through an amorphous chain of off-the-record emails and phone calls between counsel that Defendants ask us to sift through to ascertain an agreed due date for Defendants’ pleadings (which Plaintiffs vociferously contest in any event).

Under our calculation, Defendants’ preliminary objections filed September 12, 2014, were 25 days late under Pa.R.C.P. 1026(a). We have discretion to refuse to strike preliminary objections based on a brief delay in their filing. See Ambrose v. Cross Creek Condos, 412 Pa. Super. 1, 11, 602 A.2d 864, 868 (1992). On the other hand, Plaintiffs have properly preserved their challenge to the late filing of Defendants’ preliminary objections by preliminarily objecting to them, see Jacobs, 799 A.2d at 983; see also Yesavage, 653 A.2d at 1324 n.8 (“[A] party has the right to file preliminary objections raising any appropriate defenses or objections which that party might have to an adverse party’s preliminary objection. The proper method for challenging the propriety of a preliminary objection is by a preliminary objection to a preliminary objection” (citation omitted)), and have not answered or briefed them on the merits. We exercise our discretion to sustain Plaintiffs’ preliminary objections to Defendants’ preliminary objections and dismiss them as untimely filed. See also, e.g., Vision Serv. Plan v. Pa. AFSCME, 326 Pa. Super. 474, 474 A.2d 339, appeal after remand, 331 Pa. Super. 217, 480 A.2d 322 (1984) (affirming refusal to open default judgment entered against defendant who tried to file preliminary objections without a supporting brief one day beyond extension granted by plaintiff’s counsel); Morcoal Co., 54 Pa.Commw. 87, 419 A.2d 821 (order disposing of preliminary objections) (sustaining preliminary objection in nature of motion to strike as untimely preliminary objection/demurrer filed twenty-five days after service of complaint); Delgrosso v. Gruerio, 255 Pa. Super. 560, 389 A.2d 119 (1978) (upholding order reinstating default judgment and dismissing preliminary objections filed one day beyond period trial court had allowed under Pa.R.C.P. 1003 in prior order opening judgment); cf. Peters Creek Sanitary Auth. v. Welch, 545 Pa. 309, 681 A.2d 167 (1996) (finding no abuse of discretion in trial court’s grant of plaintiff’s oral motion to strike answer to complaint as late under Pa.R.C.P. 1026(a) despite plaintiff’s failure to move for judgment by default and establishing that party filing late pleading must show just cause for delay before opponent must show prejudice from lateness); McCullough v. Clark, 784 A.2d 156, 158 (Pa. Super. Ct. 2001) (Eakin, J.) (“Where the untimely filing of preliminary objections is not excused and would prejudice the opponent, those objections must be dismissed as waived. . . . The [opponent] need not establish prejudice in order to prevail; the burden is on the defendant to provide a basis for the untimely motion.” (citation omitted)); Montg. Co. R.C.P. 1028(c)(l)(b)(2), (4)(a) (“All preliminary objections shall be filed . . . along with ... a brief or memorandum of law .... If the brief... is not timely filed ... the assigned Judge may: (a) Dismiss the preliminary objections where the moving party has failed to comply ....” (emphasis added)).

Alternatively, we have reviewed the substance of Defendant’s preliminary objections. Were their merits properly presented to us, we would overrule them.

A tenet of advocacy we are fond of advises, “Give the best argument first.” Lynn Bahrych, Legal Writing in a Nutshell 20, 224 (4th ed. 2009). If Defendants in their preliminary objections have followed this wise dictum, we question at the outset whether any of them can have merit, because the first argument raised lacks all validity.

That argument is that Bryan Benford should be dismissed as a party to the action basically because,

10. Plaintiffs have merely alleged that East Investments, LLC[,] is the alter ego of Defendant Bryan Benford. No facts have been plead [sic] to allow Defendants to respond to these baseless allegations.
11. It is premature to permit the filing of an action against an individual without the corporate veil having been pierced or, at the very least, without the allegations of specific facts that would support such a claim could succeed.

(Defs. Prelim. Objections Pis.’ Compl. paras. 10-11.)

On this issue, the complaint pleads, in part, as follows:

11. Upon information and belief, East Investments, LLC[,] is a defunct Nevada corporation, formed on May 20, 2004, with a former address of 2232 South Nellis Blvd [sic], Las Vegas, NV 89104.
12. At all times material hereto, East Investments transacted business in the Commonwealth of Pennsylvania as an unregistered, foreign corporation without authorization from the Commonwealth of Pennsylvania.
13. Upon information and belief, East Investments was not adequately capitalized.
14. Upon information and belief, East Investments did not follow corporate formalities such as the appointment of directors, issuance of stock, the holding of annual meetings of board members and shareholders, updating minutes and bylaws, [or] filing annual reports with the State of Nevada, or in the maintenance of its books and records.
15. Upon information and belief, East Investments did not, at any time material hereto, own any property or have any assets.
16. Upon information and belief, East Investments did not, at any time material hereto, have an office in Pennsylvania, have any employees, or engage in any business transactions aside from the loan transactions described in greater detail below.
17. It is believed and therefore averred that East Investments was organized and established for the sole purpose of participating in a 2004 real estate transaction described in greater detail below[, presumably the sale to other Defendants of the property at issue later sold to Plaintiffs].
19. Upon information and belief, [Defendant Bryan Benford] was never registered with the Nevada Division of Corporations as an officer, director, or agent of East Investments.
20. At all times material hereto, Benford transacted business in the name of East Investments in Pennsylvania, as set forth in more detail below, but was not authorized to do so.
21. Upon information and belief, at all times material hereto Benford exerted sole financial interest in and control over East Investments as set forth in more detail below.
22. Upon information and belief, Benford and East Investments commingled their respective personal and corporate assets as set forth in more detail below.
23. Upon information and belief, Benford transacted his own personal business in the name of East Investments in order to shield himself from certain tax and other liabilities.
24. Thus, it is believed and therefore averred that, at all times relevant hereto, East Investments was the alter ego of Benford.

(Compl. Quiet Title paras. 11-24.)

The standards guiding a court’s review of preliminary objections in Pennsylvania have long been in effect:

Preliminary objections, the end result of which would be dismissal of a cause of action, should be sustained only in cases that are clear and free from doubt. The test on preliminary objections is whether it is clear and free from doubt from all of the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish his right to relief. To determine whether preliminary objections have been properly sustained, this Court must consider as true all of the well-pleaded material facts set forth in [the] complaint and all reasonable inferences that may be drawn from those facts.

Bower v. Bower, 531 Pa. 54, 57, 611 A.2d 181, 182 (1992) (citations omitted), quoted in In re Raymond G. Perelman Charitable Remainder Unitrust, 113 A.3d 296, 303 (Pa. Super. Ct. 2015); Commonwealth ex rel. Nicholas v. Pa. Labor Relations Bd., 545 Pa. 288, 292, 681 A.2d 157, 159 (1996); Discover Bank v. Stucka, 33 A.3d 82, 86 (Pa. Super. Ct. 2011).

Under these standards, we have no difficulty finding Plaintiffs’ complaint satisfies, at the pleading stage, the requirements in Pennsylvania for showing a corporation is the alter ego of an individual and for piercing the corporate veil on that basis, as set forth in, e.g., Allegheny Energy Supply Co. v. Wolf Run Mining Co., 53 A. 3d 53, 58 n.7 (Pa. Super. Ct. 2012) (quoting Ashley v. Ashley, 482 Pa. 228, 237, 393 A.2d 637, 641 (1978)):

The party seeking to establish personal liability through piercing the corporate veil must show the person “in control of a corporation [used] that control, or [used] the corporate assets, to further his . . . own personal interests[.]” . . . [T]he alter ego theory [for piercing the corporate veil] requires proof (1) that the party exercised domination and control over [the] corporation; and (2) that injustice will result if corporate fiction is maintained despite unity of interests between corporation and its principal.

In fact, Plaintiffs’ complaint appears to us to be a textbook pleading for piercing the corporate veil on the theory that East Investments was the alter ego of Benford. Of course, past the stage of preliminary objections, Plaintiffs will have to prove their allegations to satisfy the standard for “piercing the corporate veil” and to hold Benford to account for East Investments’ actions.

Defendants’ preliminary objections next argue all allegations of fraud and misrepresentation against moving Defendants and three identified paragraphs of the complaint making those allegations should be stricken from the complaint under Pa.R.C.P. 1028(a)(2) for failure to conform to law or rule of court, specifically Pa.R.C.P. 1019(b) (“Averments of fraud...shall be averred with particularity”).

The Rule that “[ajverments of fraud . . . shall be averred with particularity,” Pa.R.C.P. 1019(b), is one of the express bases for the motion for specificity, its object being to dispel “the alluring generality of the term ‘fraud,’” when it appears without basic factual allegations. However, the motion for specificity cannot be used to make a party plead purely evidentiary matters; and the requirements of precision and detail are more easily met where the matters involved are equally or more in the knowledge of the objecting party.

Local No. 163, Int’l Union of United Brewery, Flour, Cereal, Soft Drink & Distillery Workers v. Watkins, 417 Pa. 120, 122-23, 207 A.2d 776, 778 (1965) (footnote omitted) (quoting Hornsby v. Lohmeyer, 364 Pa. 271, 276, 72 A.2d 294, 298 (1950)). Moreover, in this, as in other determinations as to whether a complaint’s allegations are sufficiently specific,

[I]t is not enough to focus upon one portion of the complaint. Rather, in determining whether a particular paragraph in a complaint has been stated with the necessary specificity, such paragraph must be read in context with all other allegations in that complaint. Only then can the court determine whether the defendant has been put upon adequate notice of the claim against which he must defend.

Yacoub v. Lehigh Valley Med. Assocs., 805 A.2d 579, 589 (Pa. Super. Ct. 2002) (en banc), quoted in Rachlin v. Edmison, 813 A.2d 862, 870 (Pa. Super. Ct. 2002) (enbanc).

In drawing our attention to three isolated paragraphs of the complaint as insufficiently pleading fraud (Defs. Prelim. Objections Pis.’ Compl. paras. 17-19 (citing Compl. Quiet Title paras. 124, 130, 132)) the preliminary objections ignore the remainder of the complaint, including a lengthy and detailed recitation of the factual history of the case (Compl. Quiet Title paras. 11-123) that provides grounds for at least an inference that moving Defendants knowingly and intentionally waited till the eleventh hour before the closing on the sale to Plaintiffs of the land in question before perfecting the confessed judgment against the other Defendants (essentially, the seller(s) of the property) despite their long prior history of default and nonpayment on the obligations the judgment sought to secure, or re-secure, as the case may be.

We find the allegations and inferences of fraud or misrepresentation made out by the complaint sufficient to survive a preliminary objection charging lack of particularity. Of course, to prove fraud ultimately, Plaintiffs, after appropriate opportunity for post-pleading discovery, would have to meet the standards laid down by case law, e.g., Blumenstock v. Gibson, 811 A.2d 1029, 1034 (Pa. Super. Ct. 2002) (setting forth elements of fraud in a real-estate transaction), quoted in Youndt v. First Nat’l Bank, 868 A.2d 539, 545 (Pa. Super. Ct. 2005), if indeed “fraud” in the classic sense is even essential to Plaintiffs’ claims against moving Defendants: The only counts the complaint pleads against East Investments and Benford are to quiet title and for a declaratory judgment to have their lien on the property nullified. There is no count against them labelled “fraud” (though there is against the other three Defendants). “Unclean hands” might be a more apt description of what the complaint is alleging with respect to moving Defendants’ acquiring their judgment lien {see Pis.’ Prelim. Objections Prelim. Objections Defs. para. 2). See, e.g., Equibank v. Adle, Inc., 407 Pa. Super. 553, 595 A.2d 1284 (1991) (discussing equitable doctrine of “unclean hands” in dispute over priority between mortgage and mechanics’ lien).

The third and final argument of Defendants’ preliminary objections, presumably the one they are least confident in since they have saved it for last, cf. Bahrych, supra (“Give the best argument first”), demurs generally under Pa.R.C.P. 1028(a)(4) that the complaint’s claims against East Investments and Benford to quiet title and for declaratory judgment are insufficient to pass legal muster. “A demurrer is a preliminary objection that the pleadings fail to set forth a cause of action upon which relief can be granted under any theory of law.” Regal Indus. v. Crum and Forster, Inc., 890 A.2d 395, 398 (Pa. Super. Ct. 2005); cf. Pa.R.C.P. 1020(c) (“Causes of action... may be pleaded in the alternative”).

The standard for reviewing preliminary objections in the nature of a demurrer is limited. All material facts set forth in the complaint as well as all inferences reasonably deducible therefrom are admitted as true. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it. Mahoney v. Furches, 503 Pa. 60, 66, 468 A.2d 458, 461-62 (1983).

McMahon v. Shea, 547 Pa. 124, 129, 688 A.2d 1179, 1181 (1997) (plurality opinion) (affirming reversal of order sustaining demurrer).

Defendants’ third argument is not what we would call a traditional demurrer under these standards. Essentially, it consists of a list of other remedies aside from attacking moving Defendants’ judgment that Plaintiffs might avail themselves of, and casts blame back on Plaintiffs and the other Defendants for not discovering/disclosing Defendants’judgment lien on the property prior to closing on the sale. (Defs. Prelim. Objections Pis.’ Compl. paras. 31-37.) While these theories may be proper to raise in an answer to the complaint or as affirmative defenses in new matter in a responsive pleading, see Pa.R.C.P. 1030(a), or in a cross-claim against the other Defendants, we find no relevance to a preliminary objection demurring to the complaint for legal insufficiency. Cf. Jacobs, 799 A.2d at 984 (“[The] preliminaiy objection in the nature of a demurrer rises to the level of an improper speaking demurrer which must be rejected. The objection assumes facts not appearing in the pleading to which it responds. The trial court erred in considering and ruling upon the merits of [the] preliminary objections” (citation omitted)); Cardenas v. Schober, 783 A.2d 317, 321-22 (Pa. Super. Ct. 2001) (“Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the pleadings; no testimony or other evidence outside of the complaint may be considered to dispose of the legal issues presented by the demurrer”), appeal granted in part, 568 Pa. 713, 797 A.2d 909 (2002); Elling v. Callas, 334 Pa. Super. 32, 34, 482 A.2d 1065, 1066 (1984) (holding trial court erred in sustaining improper speaking demurrer that raised facts not pled in complaint).

Having reviewed each of Defendants’ preliminary objections, we find them lacking in merit. They are overruled.

The Court hereby orders as follows: Plaintiffs’ preliminary objections to Defendants’ preliminary objections are sustained, and Defendants’ preliminary objections are dismissed. Defendants’ preliminary objections are also overruled on the merits. Under Pa.R.C.P. 1028(d), moving Defendants shall have the right to plead over to Plaintiffs’ complaint within 20 days after notice of this order.


source: Caselaw Access Project

author: MCCOY, J.,

license: Public Domain

text:
    T.E.B. v. S.L.B.

      C.P. of Lycoming County,
    No. 12-21531

      Rachael Wiest Benner, for husband.

      Christina Dinges, for wife.
    June 23, 2015
   MCCOY, J.,

ORDER

AND NOW, this 23rd day of June, 2015, after a hearing held on June 11, 2015, in regard to the Petition for Contempt/Petition for Enforcement of Property Settlement Agreement filed by Wife on April 17, 2015, and the Response to Petition for Contempt/Petition for Enforcement of Property Settlement Agreement with Counterclaim for Enforcement of Property Settlement Agreement filed by Husband on May 29, 2015, at which time Husband was present with his counsel, Rachael Wiest Benner, Esquire, and Wife was present with her counsel, Christina Dinges, Esquire. The issue before the Court concerns the language in the Qualified Domestic Relations Orders prepared by Conrad Siegel Actuary, in regard to Husband’s City of Williamsport, PA Deferred Compensation Plan, Husband’s City of Williamsport Police Pension Plan, and Wife’s Lycoming County Employees’ Retirement System Plan. Both parties stipulated to the following facts:

1. The parties entered into a Marriage Settlement Agreement dated December 5, 2013.

2. Jonathan Cramer of Conrad Siegel Actuary was hired to prepare qualified domestic relations orders pursuant to paragraph 16 A. through D. of the parties’ Marriage Settlement Agreement.

3. The parties obtained drafts of the Qualified Domestic Relations Orders from Conrad Siegel.

4. The Plan Administrators for each of the retirement accounts approved the Qualified Domestic Relations Orders as drafted.

5. On January 19, 2015, Wife’s counsel forwarded correspondence to Husband’s counsel which included the Qualified Domestic Relations Orders which had been signed by Wife.

6. Husband has failed to sign the Qualified Domestic Relations Orders.

7. Both parties agreed to pay the remaining balance owed to Mr. Cramer for preparation of the QDROs on or before June 30, 2015.

8. The Marriage Settlement Agreement was drafted by Husband’s counsel, Rachael Wiest Benner.

9. Wife’s counsel, Attorney Dinges, made changes and additions to the Marriage Settlement Agreement before it was finalized. Specifically, Attorney Dinges requested that the language “pursuant to current law” was placed in each of the paragraphs concerning Wife’s retirement, Husband’s retirement, and Husband’s Deferred Compensation account.

In dispute between the parties is paragraph 7 of the Domestic Relations Order for Husband’s City of Williamsport, PA Pension Plan. Paragraph 7 states as follows:

“This DRO assigns to Alternate Payee, an amount equal to 55.0% of the marital portion of the Participant’s accrued retirement benefit under the Plan as of the Participant’s date of retirement. The marital portion of the Participant’s accrued retirement benefit equals the monthly retirement benefit, payable in the normal form of payment for the Participant’s lifetime, multiplied by a fraction equal to 7.85 years (the period from December 18,2004, date of marriage, until October 24,2012, date of separation) divided by the years of credited benefit service (including any partial year credited) earned by the Participant as of the date his benefit accruals cease. If any cost-of-living increase or other increase is applied to the pension payable to the Participant, the same increase shall apply to the Alternate Payee’s share, but only to the extent permitted by the Plan and state law.”

Counsel for Wife argues that this paragraph is consistent with Paragraph 16 C. of the Marriage Separation Agreement which indicates that “Wife shall receive 55% of the marital portion and Husband will receive 45% of the marital portion pursuant to current law. For purposes of determining the marital portion, the parties agree they were married on December 18, 2004, and that they separated on October 24, 2012.” Counsel for Wife further argues that the Domestic Relations Order as drafted at Paragraph 7 is consistent with current law. Wife argues that 23 Pa.C.S.A. §3501(c)(l) provides that when a defined benefit retirement plan is to be distributed between the parties, the marital portion is to be defined by a coverture fraction and shall include all post-separation enhancements, except for enhancements arising from post-separation monetary contributions by the employee spouse.

Husband argues that the language in the parties’ Marriage Settlement Agreement which states “for purposes of determining the marital portion, the parties agree that they were married on December 18, 2004, and separated on October 24, 2012” means that it was the intent of the parties that only that portion of Husband’s Deferred Compensation Plan would be utilized for distribution and that anything that occurred after these dates would be considered Husband’s post-separation monetary contributions made by the efforts and/or contributions of Husband. Additionally, Husband argues that the language in the Agreement which states “pursuant to current law” means pursuant to current contract law which allows parties to agree to whatever they wish to agree to despite what the law states. Husband further argues that because his Defined Benefit Retirement Plan utilized the average of the three highest years of his pay to determine his pension payment at retirement, that Wife’s portion should be determined utilizing his highest three years of pay between the date of marriage and date of separation to determine Wife’s 55% of the total marital portion.

The Court finds that the language of Paragraph 16 B. through D. in the parties’ Marriage Settlement Agreement is clear and unambiguous. The parties agree that Wife would receive 55% of the marital portion and Husband would receive 45% pursuant to current law. At the time the parties executed the Marriage Settlement Agreement, the current law regarding the division of defined benefit retirement plans was outlined at 23 Pa.C.S.A. §3501(c)(l) which states as follows:

“In the case of the marital portion of a defined benefit retirement plan being distributed by means of a deferred distribution, the defined benefit plan shall be allocated between its marital and nonmarital portions solely by use of a coverture fraction. The denominator of the coverture fraction shall be the number of months the employee spouse worked to earn the total benefits and the numerator shall be the number of such months during which the parties were married and not finally separated. The benefit to which the coverture fraction is applied shall include all post-separation enhancements except for enhancements arising from post-separation monetary contributions made by the employee spouse, including the gain or loss on such contributions.”

The next sentence in the parties’ agreement, “for purposes of determining the marital portion, the parties agree that they were married on December 18, 2004, and they separated on October 24, 2012” clearly applies to 23 Pa.C.S.A. §3501(c) which states that “the denominator of the coverture fraction shall be the number of months the employee spouse worked to earn the total benefits and the denominator shall be the number of such months during which the parties are married and not finally separated.”

The Court dismisses Husband’s argument that the language in the Marriage Settlement Agreement indicates that the parties’ intent was to not agree to the current statutory law regarding the division of the Defined Benefit Plan, but rather apply contract principles which allow the parties to agree to a distribution other than the current statute. Husband’s argument is without merit. The parties clearly agreed to divide the Defined Benefit Plan pursuant to 23 Pa.C.S.A. §3501(c). The dates in the Agreement clearly show the parties’ intent in regard to the determination of the denominator for the coverture fraction.

Husband next argues that because his Defined Benefit Plan utilizes the average of the three highest years of his pay to determine his pension payment at retirement, that Wife’s portion should be determined utilizing his highest three years of pay between the date of marriage and the date of separation. The Court finds that this argument also fails. Pursuant to 23 Pa.C.S.A. §3501(c)(l), the benefit to which the coverture fraction is applied shall include all post-separation enhancements except for enhancements arising from post-separation monetary contributions made by the employee spouse. In the case of MacDougall v. MacDougall, 202 Pa. Super. 83, 49 A.2d 890 (212), the Court found that post-separation COLAs are marital property. InMeyer v. Meyer, 561 Pa. 225, 749 A.2d 917 (Pa. 2000), the Court held that husband’s action in purchasing two years of additional service to obtain a special retirement option was marital property. The Court noted that what was required by husband to receive the benefits in this case was that he accumulated enough years of service and that without the marital years of service, he could not have done so. In the case of Gordon v. Gordon, 545 Pa. 391, 681 A.2d 732 (Pa. 1996), husband was offered retirement incentives in the form of supplemental retirement income and a bonus, which was calculated based on the total years of service and accumulation of past bonuses. The Court concluded that these increases in Husband’s retirement benefit were marital property because “for the most part, the increased benefits were not attributable to the efforts or contributions of husband.” Rather, the Court concluded that the supplemental retirement income and the bonuses were simply benefits based upon years of service, and so required no effort or contribution from the husband.

As the above cases hold, the Court finds that utilization of Husband’s pay years post-separation to determine his highest three years of pay for purposes of determining his pension payment at retirement is marital property. The years of service that Husband acquired during the marriage were a necessary component towards his overall employment. But for the years of service Husband had during the parties’ marriage, he would not have had the total years of service upon which his retirement is based.

The Petition for Contempt/Petition for Enforcement of Property Settlement Agreement filed by Wife requests Husband to sign not only the Qualified Domestic Relations Order for Husband’s City of Williamsport Police Pension Plan (Defined Benefit Retirement Plan), but also requests Husband to sign the Domestic Relations Order for Husband’s City of Williamsport, PA Deferred Compensation Plan, as well as signing the Domestic Relations Order for Wife’s Lycoming County Employees’ Retirement System. Husband presented no argument to the Court, either orally or in the Memorandum of Law submitted, as to why the Stipulation for Division of Benefits and Domestic Relations Order drafted in regard to the division of Husband’s City of Williamsport, PA Deferred Compensation Plan was not consistent with the terms of the parties’ Marriage Settlement Agreement, or that the Domestic Relations Order regarding Wife’s Lycoming County Employees’ Retirement System Plan was not consistent with the terms of the parties’ Marriage Settlement Agreement. Husband does, in his Counterclaim for Enforcement of Marriage Settlement Agreement, make a blanket allegation that “the QDROs prepared by Conrad Siegel are legally incorrect as they include as a benefit to Petitioner post-separation monetary contributions made by Respondent” and that “the QDROs prepared by Conrad Siegel are not consistent with the terms of the parties’ Marriage Settlement Agreement as they include as a benefit to Petitioner monies earned by the Respondent after the date of October 24, 2012.”

The Stipulation for Division of Benefits and Domestic Relations Order drafted by Conrad Siegel in regard to Husband’s City of Williamsport, PA Deferred Compensation Plan indicates that Wife is to receive 55% of the balance in Husband’s account under the Plan as of October 24, 2012, adjusted to reflect the investment earnings or losses on such share from October 24,2012 through the date of transfer to Wife’s separate account. The Court finds that this language does not give Wife entitlement to any of Husband’s post-separation monetaiy contributions, nor does it provide Wife with monies earned by Husband after the date of separation on October 24, 2012. The Court further finds that the language in the Stipulation for Division of Benefits and Domestic Relations Order in regard to Husband’s City of Williamsport, PA Deferred Compensation Plan are consistent with the parties’ Marriage Settlement Agreement and the current law in regard to the division of marital assets pursuant to 23 Pa.C.S.A. §3501(c)(l).

The Court also finds that the Domestic Relations Order drafted by Conrad Siegel in regard to Wife’s Lycoming County Employees’ Retirement System Plan is consistent with the parties’ Marriage Settlement Agreement and the current law pursuant to 23 Pa.C.S.A. §3501(c)(l).

Wife requests the Court to find Husband in contempt for his failure to comply with the terms of the Marriage Settlement Agreement dated December 5,2013, as aresult of his failure to sign the Qualified Domestic Relations Orders as drafted by Conrad Siegel. A Court’s contempt powers are available when a party disobeys a Court order. 42 Pa.C.S.A. §4132. The power to punish for contempt is a right inherent in the Court. Siniako v. Siniako, 664 A.2d 1005, 1009 (Pa. Super. 1995). In this particular case, because the act of contempt complained of is the refusal to do an act that was ordered by the Court pursuant to the parties’ agreement for the benefit of a private party, proceedings to enforce compliance with said order are civil mna.tu.re. Lachat v. Hinchliffe, 769 A.2d 481, 488 (Pa. Super. 2001). In civil contempt proceedings, the complaining party has the burden of proving by a preponderance of evidence the following: (1) that the contemptor had notice of the specific order or decree which he is alleged to have disobeyed; (2) that the acts constituting the contemptive violation were volitional; and (3) the contemptor acted with wrongful intent. Lachat, supra. At 489. Based upon what has occurred in this case, the Court does not find that Husband acted with wrongful intent. It is clear that both parties proceeded pursuant to their agreement to have Conrad Siegel prepare qualified domestic relations orders in regard to the various retirement plans. Since that date, there has been on-going communication between counsel in regard to the signing of the Qualified Domestic Relations Orders. There was no evidence presented that Husband simply refused to sign the Qualified Domestic Relations Order as a result of his intent to prohibit Wife from receiving a portion of his retirement plan.

Based upon the foregoing, the Court hereby finds that the Domestic Relations Order drafted in regard to Husband’s City of Williamsport Police Pension Plan, the Stipulation for Division of Benefits and Domestic Relations Order drafted in regard to Husband’s City of Williamsport, PA Deferred Compensation Plan, and the Domestic Relations Order prepared in regard to Wife’s Lycoming County Employees’ Retirement System Plan, as drafted by Conrad Siegel are consistent with the terms of the parties’ Marriage Settlement Agreement dated December 4, 2013. Husband is hereby ORDERED and DIRECTED to sign the Domestic Relations Order in regard to his City of Williamsport Police Pension Plan as drafted by Conrad Siegel, the Stipulation for Division of Benefits and Domestic Relations Order regarding Husband’s City of Williamsport, PA Deferred Compensation Plan as drafted by Conrad Siegel, and the Domestic Relations Order regarding Wife’s Lycoming County Employees’ Retirement System Plan, as drafted by Conrad Siegel within ten (10) days of the date of this Order. Counsel for Husband shall thereafter immediately provide the executed documents to Wife’s counsel for submission to the appropriate Plan Administrators. Further, pursuant to the stipulation of the parties, the balance owed to Mr. Cramer shall be paid in full on or before June 30, 2015.


author: BELTRAMI, J.,

text:
    Maula v. Northampton County Division of Assessment

      C.P. of Northampton County,
    No. C-48-CV-2014-11108

      Robert J. Kidwell, for appellant.

      David M. Backenstoe, for respondent.
    July 2, 2015
   BELTRAMI, J.,

This matter is before the Court on the appeal of Anthony Maula (“Appellant”) from the October 22, 2014, Decision of the Northampton County Revenue Appeals Board denying his appeal from Respondent’s termination of the preferential tax assessment for Appellant’s property and the imposition of roll-back taxes. Appellant commenced this appeal by filing a Petition for Appeal on November 21, 2014. The County of Northampton (“Intervenor”) filed a Notice of Intervention and an Answer to the Petition on March 4, 2015. On March 20, 2015, the parties filed a Joint Stipulation of Facts. On April 28, 2015, the case was assigned to the undersigned, on briefs, at Argument Court. The matter is ready for disposition.

As the factual basis of this appeal, the Court will reproduce herein the Joint Stipulation of Facts filed by the parties:

1. Appellant is the former owner of a “contiguous tract” of land, as that term is defined by Section 5490.2 of the Pennsylvania Farmland and Forest Land Assessment Act of December 19, 1074, P.L. 973, No. 319, 72 P.S. § 5490.1, et seq., (“Act 319”), located on Jacoby Run Road in Upper Mt. Bethel Township.
2. The parcels of the contiguous tract have separate ID numbers as follows:
(a) Parcel ID # Cll 9 11A 0131 (26.7 acres) (“Parcel A”);
(b) Parcel ID # Cll 9 11B 0131 (55.2 acres) (“Parcel B”); and
(c) Parcel ID#C11911C0131 (2.88 acres) (“Parcel C”)....
3. On April 22, 2009, Appellant enrolled the entire contiguous tract (Parcels A, B[,] and C) for preferential assessment under Act 319....
4. Parcel C consists of 2.88 acres and is used as a detention basin.
5. Appellant failed to pay real estate taxes on Parcel C for the years 2011, 2012[,] and 2013.
6. On or about July 22, 2013[,] and multiple times thereafter, Appellant was notified by the Tax Claim Bureau that if he failed to pay taxes due and owing on Parcel C in the total amount of $266.12, Parcel C would be sold at the September 24, 2013[,] tax-upset sale....
7. Appellant failed to pay back taxes in the amount of $266.12[,] and[,] therefore[,] Parcel C was sold at the subsequent tax sale.
8. On March 21, 2014, pursuant to the tax sale, [Intervenor] conveyed title to Parcel C to Romany Investments, LLC....
9. On June 13,2014, Appellant sold Parcel A to Patricia Setar....
10. Appellant retained title to Parcel B only. Parcel B is a 55.2 acre parcel classified by [Intervenor] as agricultural, rural land, vacant over 10 acres.
11. On or about July 11,2014, [Respondent] learned that Parcel C had been conveyed to a third party; pursuant thereto [Respondent] provided Appellant notice of [rollback] taxes due and owing for Parcels A, B[,] and C....
12. OnAugust5,2014, [Respondent] notified Appellant of a change of assessment for Parcels A, B[,] and C. The prior assessment for Parcel B was $3,200.00[,] and the new assessment was $111,100.00....
13. The basis for the change in assessment on the August 5, 2014[,] notification was the statement “Take Out of Act [319].” [Respondent] provided no additional explanation for the termination of the preferential assessment for Parcel B.
14. Appellant filed a timely appeal of the change of assessment to the Northampton County Revenue Board of Appeals (the “Board”).
15. The Board convened a hearing on the appeal on October 21, 2014.
16. The Board determined by way of a written decision dated October 22, 2014[,] that it would not change the assessment....
17. On November 21, 2014, Appellant filed a timely appeal to this Court from the determination of the [Board].

(Joint Stip. of Facts ¶¶ 1-17, Exs. A-H.) In addition to the termination of the preferential tax assessment, Intervenor seeks roll-back taxes and interest from Appellant in the amount of $56,353.54 for the tax years 2010 through 2014. (Id. Ex. F.)

Typically,

[i]n a de novo proceeding in a tax assessment case, the taxing authority bears the initial burden of establishing its prima facie case for the validity of the assessment. This is typically done by presenting the official assessment records and the testimony of an assessment officer. The burden then shifts to the taxpayer to respond with credible, relevant evidence to persuade the court of the merits of his position. If the taxpayer fails to do so, the taxing authority prevails. However, if the taxpayer meets its burden, then the court may no longer presume the taxing authority’s assessments are correct.

BET Lehigh Real Estate, LLC v. Schuylkill Cnty. Bd. of Assessment Appeals, 67 A.3d 845, 852 (Pa. Cmwlth. 2013). In this appeal, however, the parties have chosen to submit the above-reproduced Joint Stipulation of Facts “in lieu of a non-jury trial” and to rest on their briefs for purposes of argument. (Order of Court, Mar. 25, 2015.) Therefore, it is apparent that the nature of this challenge is limited solely to Respondent’s decision to remove Appellant’s parcel from Act 319’s preferential treatment and to impose roll-back taxes, rather than the methodology or calculation process it used in imposing an assessment. For these reasons, the Court does not believe this matter is an “appeal of an assessment,” such that it is required to determine “the market value” of the subject property or “the common level ratio” applicable thereto. 72 P.S. § 5020-518.2(a)(l)-(2).

Intervenor’s primary argument in favor of affirming the Board’s Decision is that the tax-upset sale of Parcel C on September 24, 2013, constituted an impermissible “split-off,” as defined in Act 319, authorizing Respondent to impose roll-back taxes and to remove the preferential tax assessment. Appellant argues that he did not conduct a split-off by a conveyance or any other action and that he is, therefore, not subject to roll-back taxes or a change in assessment.

The split-off of a part of land which is subject to preferential assessment under [Act 319] shall subject the land so split off and the entire tract from which the land was split off to roll-back taxes_The landowner who conducts the split-off shall be liable for payment of roll-back taxes.

72 P.S. § 5490.6(a.l)(l). Pursuant to Act 319, a “split-off’ is defined as

[a] division, by conveyance or other action of the owner, of lands devoted to agricultural use, agricultural reserve or forest reserve and preferentially assessed under the provisions of this act into two or more tracts of land, the use of which on one or more of such tracts does not meet the requirements of section 3 [(concerning land devoted to agricultural use, agricultural reserve, and/or forest reserve)].

Id. § 5490.2. This appeal hinges on the phrase “conveyance or other action of the owner.” If the tax sale of Parcel C, which occurred due to Appellant’s non-payment of real estate taxes, was a “conveyance or other action of the owner,” a split-off occurred, and the imposition of rollback taxes and the change in assessment are justified. The Court notes that “[a] statute creating a preferential tax treatment must be strictly construed against the taxpayer.” Sher v. Berks Cnty. Bd. of Assessment Appeals, 940 A.2d 629, 632 n.4 (Pa. Cmwlth. 2008); see also 1 Pa.C.S.A. § 1928(b)(3), (5) (providing provisions of statutes imposing taxes and providing exemption from taxation shall be strictly construed).

Preliminarily, the Court agrees with Appellant that Intervenor can only maintain that there was a split-off by “other action of the owner,” since Intervenor cannot plausibly argue that there was a split-off of Parcel C by a “conveyance” of Appellant. Hence, the dispositive question in this appeal is whether Appellant’s failure to pay real estate taxes on Parcel C, which led to the resulting tax-upset sale of that parcel, constituted “action of the owner.” Based on the record in this case, the Court can only conclude that, pursuant to the plain and unambiguous language of Section 5490.2 of Act 319, Appellant did not take any “action” constituting a split-off.

The facts on which Intervenor bases its argument that a split-off occurred include that “Appellant failed to pay real estate taxes,” that “Appellant failed to pay back taxes,” and that “[Intervenor] conveyed title to Parcel C” following the tax sale. (Joint Stip. of Facts ¶¶ 5, 7-8.) None of these examples involve Appellant taking any “action” whatsoever. Further, Intervenor’s argument that Appellant’s failure to pay real estate taxes constituted “action” is contradicted by the following language in Section 5490.6: “The landowner who conducts the split-off shall be liable for payment of roll-back taxes.” 72 P.S. § 5490.6(a.l)(l) (emphasis added). The verb “conduct” is defined as “to plan and do (something, such as an activity).” MERRIAM-WEBSTER DICTIONARY (2015). Thus, the statute’s use of the term “conducts” implies that a split-off can only occur if a landowner contemplatively takes some affirmative step to see that a division of property occurs. In other words, the statute plainly implies active involvement by the landowner in the decision to voluntarily conduct a split-off. To the contrary, a landowner who passively allows a parcel subject to Act 319 to be divided from a contiguous tract, or who knowingly or unknowingly allows it to be sold at a judicial sale, cannot be said to have “conducted” or taken “action” consistent with a split-off. Because the tax-upset sale and subsequent conveyance of Parcel C upon which Respondent rested its decision to terminate the contiguous tract’s preferential assessment and to impose roll-back taxes does not meet the definition of a “split-off’ as contained in Act 319, Appellant is not liable for roll-back taxes, and the Board erred in failing to reverse Respondent’s decision to remove Appellant’s parcel from Act 319’s preferential treatment and to impose roll-back taxes.

WHEREFORE, the Court enters the following:

ORDER OF COURT

AND NOW, this 2nd day of July, 2015, the Decision of the Northampton County Revenue Appeals Board, entered on October 22, 2014, is hereby REVERSED. Respondent shall correct its assessment records in accordance with the Court’s opinion.

      . Intervenor argues that Respondent was authorized to change the preferential assessment for Parcels A, B, and C as the result of the tax sale of Parcel C because Parcel C is less than ten acres. See 72 P.S. § 5490.3(a)(1).

      . A “conveyance” is “[t]he voluntary transfer of a right or of property.” BLACK’S LAW DICTIONARY (10th ed. 2014) (emphasis added).

      . Where the legislature does not define a term, “its common and approved usage may be ascertained by examining its dictionary definition.” Commonwealth v. Hart, 28 A.3d 898, 909 (Pa. 2011).


author: LOVECCHIO, J.,

text:
    In re Estate of Kuntz

      C.P. of Lycoming County,
    No. 41-14-0322
    July 16, 2015
   LOVECCHIO, J.,

Kay Kuntz died on May 25, 2014 leaving a Last Will & Testament. Said Will leaves a specific bequest of $1,000.00 to each of her four grandchildren, a specific bequest of $1,000.00 to her church and the remainder of her estate to her daughter Lori Kuntz.

Appointed as Co-Executors of her Will pursuant to the terms of the Will were Patricia and Richard Hull. According to the Will, the Co-Executors have the power and authority to sell, among other things, any estate real or personal property.

According to an inventory filed by the estate on August 19, 2014, the decedent’s real property located at 65 Hocker Lane in Jersey Mills, PA was listed as having a value of $28,600.00. On or about July 30, 2014, however, an appraisal on the property indicated that it was valued at $273,000.00.

A dispute subsequently arose between the Co-Executors and the sole remainder beneficiary, Lori Kuntz. The dispute centered on the estate debt, what information was being provided by the estate to the remainder beneficiary, the value of the real estate and whether the remainder beneficiary could purchase the real estate.

On June 16,2015, Lori Kuntz, the remainder beneficiary filed a Motion for Protective Order seeking an Order directing that the estate not be permitted to enter into an Agreement of Sale for the aforesaid real estate, requiring the estate to provide a specific letter of assurance, an informal accounting and any other information necessary to obtain a mortgage.

The Co-Executors filed Preliminary Objections in the nature of a demurrer. The Preliminary Objections were filed on July 2, 2015.

An argument on the Motion for Protective Order and Preliminary Objections was held before the Court on July 8, 2015. While the estate was willing to enter into a temporary agreement, it insisted that the Court decide the Preliminary Objections and the Motion.

The position of the estate is clear. The estate asserts that according to the Will it has the power to sell the real property and that pursuant to 20 Pa. C.S.A §§ 3351 and 3355, because the Will gives the Co-Executors said power, they may not be restrained from doing so by Order of Court.

While the Will certainly gives the Co-Executors the power to sell the real estate and while the statutory provisions relied on by them validate said authority, said statutes and Will are not determinative in connection with the issue at hand. Interestingly, counsel for the estate specifically noted during the argument in this matter that the estate’s position was so strong that his client was willing to risk a personal surcharge against the Co-Executors. Risking a surcharge may be much more of a risk than the Co-Executors realize.

Indeed, the case law that addresses this issue would support a surcharge against the Co-Executors personally if they choose to sell the real estate over the objection of the residual beneficiary and in light of the offer of the residual beneficiary to purchase the property in kind and to pay the estate debt.

In Halfpenny Estate, 2 Pa. D. & C. 3d 783 (1976), the Court upheld a surcharge against the Executor for entering into an agreement of sale without consent of the residua] beneficiaries. The sale was vacated via a prior injunction but the surcharge involved realtor fees.

As in this case, the Will did not specifically devise the real estate and the Co-Executors were empowered to sell the real estate.

However, the Court imposed a surcharge against the Executor because the Executor had a fiduciary obligation to deal with the heirs “with utmost fairness” and “those interested in an estate, have ordinarily a right to furnish necessary monies for the purpose of payment of a decedent’s debts and thus remove the cloud on their title to the land arising out of its liability to be sold for debt.” Id. at 786 — 787.

Further, statutory law, Pennsylvania Supreme Court precedent and other case law support a similar conclusion. 20 Pa. C.S.A. § 301 (b) notes that all legal title to all real estate of a decedent shall pass at his death to his heirs subject to the powers granted to the personal representative by the Code. In Minichello Estate, 84 A.2d 511 (Pa. 1951), the Pennsylvania Supreme Court held, in partial reliance on this statute, that the request of a beneficiary to take property in kind must be honored if the sale of said property is not reasonably necessary to pay debts or to make distribution. The Court further noted that this was the law regardless of a provision in the Will granting the Executor the discretionary power to sell. Id. at 513; see also, Polanco Estate, 80 D & C 436 (1952); In Re: Friedman Estate, 23 Beaver 217, 221 (1961).

The Preliminary Objections in the nature of a demurrer are accordingly denied. Given the uncontested averments of the Motion for Protective Order, said Motion shall be granted.

ORDER

AND NOW, this 16th day of July. 2015, it is hereby Ordered and Directed as follows:

(1) The Preliminary Objections by way of a demurrer filed by the estate of Kay Kuntz are DENIED.
(2) The Motion for Protective Order filed by Petitioner Lori Kuntz is GRANTED.
(3) The estate shall not be permitted to enter into an Agreement of Sale for the purchase of 65 Hocker Lane, Jersey Mills, PA without Petitioner having at least sixty (60) days from the date of this Order to obtain a mortgage and provide a commitment letter to the Estate evidencing the same.
(4) Within ten (10) days of the date of this Order, if it has not already done so, the estate must provide to Petitioner the following:
(a) A letter of assurance and/or an appropriate agreement as required by a banking institution to permit Petitioner to obtain a mortgage; and
(b) A formal accounting, which includes a final amount to satisfy the debts and liabilities of the Estate of Kay Kuntz.

      . The Court has concerns about the accuracy of the information that the Co-Executors and/or counsel for the estate were providing to the residuary beneficiary. Both the value of the real estate and the outstanding Estate debts seemed to constantly change from one letter or document to another. The disparity in the amount listed on the inventory and the appraised value is the most egregious example. Absent a catastrophic event such as a fire or a flood, the value of the real estate would not decrease over $200,000 in the span of 19 days. While the court suspects that the inventory figure might be based on the assessed value of $92,930 minus the outstanding mortgage and the appraisal did not include any deduction for the mortgage, even the valuations purportedly based solely on the assessed value and common level ratio changed from $123,596.90 in a letter to Mr. Campana dated April 14, 2015 to $118,000 in a letter dated May 19, 2015.


author: FARINA, P.J.,

text:
    Herr v. Smith

      David E. Greer, for plaintiff.

      Daniel Cam, for defendant.
    August 11, 2008
   FARINA, P.J.,

The matter presently before this court is defendant Robin L. Smith, t/a Traditional Country Crafts’ petition to open confessed judgment. On September 29, 2006, defendant Robin L. Smith executed a commercial lease for Suites A, B and F on W. Main St., Lancaster. Plaintiff Dennis D. Herr, landlord, approved and signed the lease on October 2, 2006. Within the lease an integration clause states:

“(16) Entire agreement. This lease sets forth all of the promises, agreements, conditions and understandings between the parties relative to the premises and supersedes any prior agreement between the parties. No subsequent alteration, amendment, change or addition shall be binding unless reduced to writing and signed by the parties.”

Defendant testified that she took possession of the premises and remained there until the end of February 2007. Defendant admits to only checking the lease for the borough approval contingency, but did not read the lease in its entirety before execution. (Smith dep. at 8.)

Defendant contends that the second time she visited the premises, prior to signing the lease, the leasing agent, Richard A. Heslin, showed defendant the rental spaces surrounded by 20 marked off-street parking spaces. Defendant alleges that when she expressed her concerns about parking, Mr. Heslin walked her to a parking lot behind the property, which contained another 112 spaces. Defendant believed that she would have use of the 112 spaces and that this would be included in the lease. Defendant proceeded to sign the commercial lease before confirming that the 112-space parking lot was available and/or included within the lease terms. Id.

Although six more spaces were added to the previous 20, defendant contends that this was insufficient for her to obtain proper zoning permits. Defendant claims to have been misled and that plaintiff was acting fraudulently. On July 31, 2007, defendant filed a petition to open confessed judgment and filed her brief in support on March 24, 2008. Oral arguments were heard by the court on July 23, 2008.

The main issues defendant raises is whether there was fraud in the execution, therefore allowing the admission of evidence of previous alleged negotiations by the parties regarding additional parking, and whether the lease was void due to illegality. Additionally defendant notes that there is a discrepancy in the amount of the judgment.

Defendant alleges that Mr. Heslin and plaintiff represented to her that the 112-space parking lot would be available for defendant’s use and would be included within the lease agreement. However, upon execution, no such parking arrangements were within the lease. Defendant contends that this alleged deliberate omission of the additional parking spaces, within the commercial lease, is considered fraud in the execution, in which defendant’s reliance is based upon plaintiff’s previous representations and is an exception to the parol evidence rule.

Defendant provides Toy v. Metropolitan Life Insurance Co. 593 Pa. 20, 928 A.2d 186 (2007) as support. In Toy, the plaintiff’s fraud claim alleged that the defendant represented that a savings plan feature would be included in the plaintiff’s insurance policy, which later was not present. Id. The court held in Toy that fraud in the execution, where a party alleges that he was mistaken as to the terms and the actual contents of the agreement he executed due to the others’ fraud, is excepted from the parol evidence rule’s operation. Id. at 40, 928 A.2d at 205-206. Additionally, the court held that when dealing with fraud in the execution claims, a party can have justifiably relied upon proper representations regardless of a subsequent fully integrated written contract that the plaintiff did not read. Id.

However, the instant case is analogous to Yocca v. Pittsburgh Steelers Sports Inc., 578 Pa. 479, 854 A.2d 425 (2004). In Yocca, concerned claims were brought by purchasers of stadium builder licenses which granted them the right to buy annual season tickets to Steeler football games. Id. at 489, 854 A.2d at 431. The purchasers received a brochure which included a diagram of the general location of seats. Id. The purchasers then entered into a fully integrated written agreement, but were later disappointed to learn that the seats they were assigned were not located where they expected them to be according to the brochure. Id. at 494-95, 854 A.2d at 434-35. The court held that the agreement was the parties’ entire contract and was unambiguous concerning the sale and that the claim of fraud in the inducement leads to application of the parol evidence rule. Id. at 500, 854 A.2d at 438. In applying the rule, any evidence of previous negotiations or agreements between the parties to vary or explain those terms as expressed in the agreement was barred from admission and the plaintiffs’ allegations of justifiable reliance failed as a matter of law due to being based upon the brochure’s representations prior to the agreement. Id. at 501-502, 854 A.2d at 438-39.

Similarly to Yocca, defendant’s claim in the instant case, at most, would be considered fraud in the inducement despite her erroneous attempt to allege fraud in the execution and avoid the parol evidence rule’s operation. Fraud in the inducement occurs when an opposing party allegedly made false representations that induced the complaining party to agree to the contract. Id. at 498, 854 A.2d at 437. Here, defendant alleges that discussions and representations were made to her by plaintiff and Mr. Heslin regarding additional parking, which then induced her into executing the lease. However, the lease agreement was a fully integrated contract without ambiguity and therefore the parol evidence rule applies. Accordingly, defendant’s attempt to demonstrate that she justifiably relied upon previous discussions with plaintiff and/or Mr. Heslin are precluded and fails as a matter of law. Unlike insurance policies, as in Toy, the lease agreement in the instant case was a commercial transaction, handled at arms-length negotiations, and defendant’s failure to read the lease does not protect her from the parol evidence rule. Furthermore, the parol evidence rule precludes defendant’s arguments regarding breach of contract and voiding the lease based on indefiniteness or lack of mutual assent since these arguments are based upon the prior alleged parking space discussions between the parties.

Defendant contends that the lease is void due to illegality. This is based on the Borough of Mount Joy’s Zoning Ordinance which states that “it shall be unlawful to use and/or occupy any structure, sign, land area or portion thereof for which a zoning permit is required until a certificate of use and occupancy for such activity has been issued by the borough staff.” See Borough of Mount Joy, Zoning Ordinance §103A2a (1999). Under the ordinance an increase in the number of establishments requires off-street parking spaces and where there are multiple uses “where a proposed lot contains or includes more than one type of use, the number of parking spaces required shall be the sum of the parking requirements for each separate use.” Id. at section 601A1, 3. According to this language, defendant contends that there was not enough parking spaces allotted to her suites to obtain a permit, therefore the lease is illegal and against public policy. However, according to the testimony of Terry Kauffman, Mount Joy borough manager, there were sufficient spaces, with additional line paintings, to meet the parking requirements of the borough. (Kauffman dep. at 23.) Although the alleged parking issues may have taken time to resolve and therefore difficult to use and/or occupy the leased suites, it does not make it illegal for defendant to possess the vacant suites in the interim. Accordingly, this does not make the commercial lease illegal.

A petition to open a confessed judgment is the proper procedural tool for a debtor to utilize to contest the amount of the judgment. Leasing Service Corporation v. Benson, 317 Pa. Super. 439, 464 A.2d 402 (1983). In the instant case defendant alleges that she paid $1,341.13 for the months of October 2006 to and including February 2007 together with a security deposit in the amount of $ 1,341.13 for a total of $8,046.78. This is contested by plaintiff who states that only $6,705.65 has been paid.

Accordingly, I enter the following:

ORDER

And now August 11, 2008 upon consideration of defendant Robin L. Smith, t/a Traditional Country Crafts’ petition to open confessed judgment, briefs of the parties and oral arguments, it is hereby ordered and decreed that defendant’s petition to open confessed judgment as to liability is denied; and as to the amount of damages is granted for the limited purpose of determining the amount of damages to which plaintiff is entitled due to defendant’s breach of the lease.

      . “Once a writing is determined to be the parties’ entire contract, the parol evidence rule applies and evidence of any previous oral or written negotiations or agreements involving the same subject matter as the contract is almost always inadmissible to explain or vary the terms ofthe contract.” Youndt v. First National Bank of Port Allegany, 868 A.2d 539, 546 (Pa. Super. 2005).


author: RUEST, J.,

text:
    U.S. Bank National Association v. Cable

      JillM. Wineka, for plaintiff.

      Kathleen V. Yurchak, for defendants.
    August 18, 2008
   RUEST, J.,

Presently before the court is plaintiff’s motion for summary judgment. Oral argument was held on June 20, 2008. Both parties submitted briefs. Upon consideration of the briefs, arguments, and the relevant case law, the court determines plaintiff’s motion is denied.

FACTUAL BACKGROUND

On May 5, 2006, defendant Ronald W. Cable Jr. executed a mortgage in favor of Jersey Shore State Bank for $93,700. The mortgage was recorded on May 9,2006 in the office of the Recorder of Deeds of Centre County in mortgage book 1952, page 834. The mortgage was assigned to the Pennsylvania Housing Finance Agency and the assignment was recorded in book 1952, page 852 on May 9, 2006. The mortgage was further assigned to plaintiff and the assignment was recorded in book 2005, page 324, on February 22, 2008.

The real property subject to the mortgage is 112 Upper Coleville Road, Bellefonte, Centre County, Pennsylvania, 16823.

On the same date the mortgage was executed, May 5, 2006, defendants purchased a homeowners’ insurance policy through Centre County Mutual Fire Insurance Company, P. of H. On November 29,2006, the property was severely damaged by a fire caused by an undetermined source. Following an investigation of the fire, by letter dated January 16, 2007, defendants’ insurance company denied their claim. On November 19, 2007, defendants filed a complaint against the insurance company, alleging breach of contract and bad faith. This litigation is still pending.

PROCEDURAL HISTORY

Plaintiff initiated this cause of action by filing a complaint on February 22,2008. Defendants filed an answer to the complaint on March 24, 2008. Plaintiff filed a motion for summary judgment on May 27, 2008.

DISCUSSION

Defendants do not deny that, following the fire that destroyed their home, they have not made all payments to plaintiff for their mortgage on the subject property. Defendants argue, however, that the facts of this case warrant a stay of the mortgage foreclosure. “Under some circumstances, a stay or injunction against a mortgage foreclosure proceeding might be appropriate.” Signal Consumer Discount Company v. Babuscio, 257 Pa. Super. 101, 109 n. 10, 390 A.2d 266, 270 n.10 (1978). The Sig nal court cited an instance in which such a stay would be appropriate:

“[I]f a mortgagee and insurance company knew that a mortgagor was totally disabled, yet collusively agreed that the mortgagee would institute a mortgage foreclosure action instead of seeking payment from the insurance company, as it assured the mortgagor it would do, then a stay or injunction against the mortgage foreclosure action might be appropriate until a court could determine the validity of the mortgagor’s assumpsit claim against the insurance company.” Id.

Defendants argue this example parallels the case at bar. The court concurs. Plaintiff, the mortgagee, is aware of the fact that defendants lost their home in a fire. Plaintiff is also aware that defendants are in the midst of litigation with their homeowners’ insurance company. Instead of joining their lawsuit, or seeking payment directly from the insurance company, plaintiff has instead filed a foreclosure action against defendants.

In determining whether to grant a stay the court will consider the following:

“(1) the petitioner makes a strong showing that he is likely to prevail on the merits; (2) the petitioner has shown that he will suffer irreparable injury without the requested relief; (3) the issuance of a stay will not substantially harm other parties; and (4) the issuance of a stay will not adversely affect the public interest.”

The court determines defendants are likely to prevail on the merits of the present matter, once their litigation with their insurance company is resolved and they are indemnified under the terms of their homeowners’ policy. The court also determines irreparable injury would result if defendants lose their property to foreclosure due to their insurance company’s actions. Although there is no longer a livable home on the property, the location and possibility of rebuilding remain, which are cognizable benefits that would be lost without the requested relief. The court further determines issuing the stay will not substantially harm plaintiff; they will merely be delayed. If defendants do not prevail against their insurance company, plaintiff can then proceed with their foreclosure action. In fact, plaintiff may be in a better position after a stay because of the drastically reduced value of the mortgaged property in its present state. If defendants do prevail against their insurance company, they will either be able to cure their default and resume making payments to plaintiff or plaintiff will be able to seek other remedies from defendants. Finally, the court determines a stay will not harm the public interest. This matter is personal to defendants and plaintiff and does not involve any significant public interests.

Based upon the foregoing discussion, the court does not reach the merits of plaintiff’s motion for summary judgment.

Accordingly the following is entered:

ORDER

And now, August 18,2008, plaintiff’s motion for summary judgment is denied. This matter is stayed pending the resolution of defendants’ litigation against their insurance company.