text:
    Holiday Supermarkets, Inc. v. Sackett Development Co.

      Kelly Scheese, Jay D. Branderbit, Justin E. Proper, Samuel S. Dalke and Shane R. Heskin, for plaintiff.

      Jay D. Marinstein, Melissa McCoy Gormley, Lisa M. Rutenberg, Peter A. Lesser, Patrick J. Troy, Sabrina L. Reliford, Carolyn M. Hazard and Robert C. Heim, for defendants.
    Feb. 11, 2014—
   McInerney,J.,

Plaintiff Holiday Supermarket, LLP (“Holiday”) operates a retail supermarket in the Mayfair Shopping Center in Philadelphia, Pennsylvania (the “Shopping Center”). Defendant Dollar Tree Stores, Inc., (“Dollar Tree”) also operates a retail store in the Shopping Center. Defendant USRP I, LLC (“USRP”) owned the Shopping Center and leased the retail space to Holiday and Dollar Tree (the lease between USRP and Holiday being referred to as the “Holiday Lease”), defendant Regency Realty Corp., Inc. (“Regency”) was the property manager of the Shopping Center for USRP.

Holiday and USRP are not the original parties to the Holiday Lease. Rather, in March 1992, Sackett Development Company (“Sackett”), as the “LESSOR,” entered into a lease agreement with Fleming Foods East, Inc. (“Fleming”), as the “LESSEE,” for space as the anchor tenant in the Shopping Center. (Holiday Lease p.l.) Originally, Holiday entered into a sublease with Fleming whereby Holiday leased Fleming’s space at the Shopping Center to operate a Shop ‘N Bag Supermarket. Following Fleming’s bankruptcy, however, the United State Bankruptcy Court for the District of Delaware issued an order on December 8, 2003 that authorized Holiday’s assumption of the lease. USRP, on the other hand, was a successor-in-interest to Sackett, having assumed the Holiday Lease from Sackett’s successor-in-interest, First Washington Realty Limited Partnership, when it purchased the Shopping Center.

On July 7,2009, Holiday filed suit against Dollar Tree, USRP, and Regency for, among other things, breach of contract. In the complaint, Holiday alleged Dollar Tree operated as a “retail supermarket of any nature” in the Shopping Center in violation of a restriction contained in the Holiday Lease, which provided in part that “LESSOR covenants that it will not permit any person other than the LESSEE to operate a retail supermarket of any nature in the Shopping Center....” (Compl. ¶¶ 7, 18; Holiday Lease § 17.1 (the “Holiday Restriction”).) Holiday alleged this breach caused it “damages including, but without limitation, serious financial and pecuniary harm which includes, but is not limited to, loss of income, loss of funds, loss of opportunity income, out of pocket expenses, finance charges, and other related costs.” (Compl. ¶24.) Holiday did not seek any equitable or injunctive relief against USRP or Regency and, on September 28, 2009, Holiday filed an amended complaint that omitted Dollar Tree as a defendant.

On October 9, 2009, Dollar Tree filed a petition to intervene as a party defendant in Holiday’s action against Landlord because “the allegations in the Amended Complaint are based on the contention that Dollar Tree continues to sell items and goods in alleged violation” of the Holiday Restriction. (Emergency Petition to Intervene ¶36.) Holiday did not oppose the petition, and by order dated October 14, 2009, the late Honorable Albert Sheppard, Jr. allowed Dollar Tree to intervene. The trial of this case was later bifurcated into liability and damages phases upon stipulation of the parties.

After completing liability discovery, the parties filed cross-motions for summary judgment on or about September 20, 2010 on the issue of whether the subject Dollar Tree store had acted as a supermarket of any nature in violation of the Holiday Restriction. On November 10, 2010, Judge Sheppard entered orders denying Holiday’s motion, granting USRP and Dollar’s motions, and declaring that Dollar Tree had not been operating as a supermarket and had not violated Holiday Restriction. On December 9, 2010, Holiday appealed. And on December 13, 2010, USRP executed a special warranty deed in which it transferred all of its rights, title, and interest in the Shopping Center to WP Mayfair Associates, L.P. (“WP Associates”) for the sum of $18,500,000.

On December 9, 2011, the Superior Court of Pennsylvania reversed the granting of summary judgment in favor of USRP and Dollar Tree and remanded the action back for proceedings consistent with its opinion. Dollar Tree Stores, Inc. v. Holiday Supermarkets, Inc., 2 EDA 2011 (Pa. Super. Ct. Dec. 9, 201 l)(unpublished memorandum). In its opinion, the Superior Court noted that by filing cross motions for summary judgment, the parties “maintained to the trial court that the [Holiday Restriction was] clear in [its] reflection of the parties’ intent relative to the scope of the activity reserved/restricted thereby.” Id. at 10-11. The court, however, held “the term supermarket of any nature is reasonably susceptible of different constructions and consequently is ambiguous” and concluded “resolution of the ambiguity require[d] the finder of fact to determine the parties’ actual intent after considering the surrounding circumstances, the situation of the parties, the objects they apparently have in view, ...the nature of the subject-matter of the agreement, and other relevant extrinsic evidence [.]” Id. at 16-17 (quotations omitted).

With this direction, the instant matter proceeded to a jury trial on January 23, 2013 on the issue of whether USRP and/or Regency were liable to Holiday for breach of contract for allowing Dollar Tree to operate a supermarket of some nature in the Shopping Center. Following the trial, the jury returned a liability verdict in favor of Holiday and against USRP and Regency. With the damages discovery having now been completed, Dollar Tree, USRP, and Regency have now filed for summary judgment on the issue of whether the limitation of liability provision in the Holiday Lease precludes Holiday from obtaining an enforceable damages award against USRP or Regency. According to the defendants, they are entitled to summary judgment because the clause only permits enforcement of any judgment against USRP’s interest in the Shopping Center and USRP no longer has any interest in the Shopping Center as it long ago sold it to the current owner and lessor, WP Mayfair.

The limitation of liability clause at issue, which was entered into in 1992 by Sackett as “LESSOR” and Fleming as “LESSEE,” states in its entirety that:

Anything contained in this Lease to the contrary notwithstanding, LESSEE agrees that subsequent to: (a) the completion of all construction and/or punch list items, (b) the issuance of a permanent certificate of occupancy (or its equivalent) and (c) the LEASE COMMENCEMENT DATE, LESSEE shall look solely to the estate and property of the LESSOR in the land and buildings Comprising the Shopping Center of which the premises forms a part, together with any insurance or condemnation proceeds to which LESSOR may be entitled, but only as and when such proceeds are received by LESSOR, for the collection of any judgment (or other judicial process) requiring the payment of money by LESSOR for any default or breach by LESSOR of any of its obligations under this Lease subject, however, to the prior rights of any ground or underlying landlord or the holder of any mortgage covering the Shopping Center or of LESSOR’S interest therein. It is agreed that LESSOR (and its shareholders, venturers, and partners, and their shareholders, venturers and partners and all of their officers, directors and employees) will never be personally liable for any such judgment. No other assets of the LESSOR shall be subject to levy, execution or other judicial process for the satisfaction of LESSEE’S claim. The provisions contained in this paragraph are not intended to, and will not, limit any right that LESSEE might otherwise have to obtain legal (but not including personal collection or enforcement of any judgment against LESSOR, its shareholders, venturers, partners, and their shareholders, venturers, and partners and all of their officers, directors and their employees or their assets beyond their respective or collective interests in the land and buildings comprising the buildings comprising the Shopping Center) equitable or injunctive relief against LESSOR, or to offset or deduct from rent.

(Holiday Lease § 19.24.)

Based on this limitation of liability clause, Dollar Tree argues in its motion that summary judgment is appropriate because there is no dispute that USRP no longer holds any interest in the Shopping Center. Citing cases such as Fork Union Medical Investors Ltd. Partnership v. HR Acquisition of Virginia Ltd. Partnership, 2012 WL 5951602 (Tenn. Ct. App. Nov. 28, 2012), Dollar Tree argues that “[wjhile there are no Pennsylvania cases directly on point, this result has widespread support from cases decided in other jurisdictions in which the court has enforced nearly identical lease provisions limiting a landlord’s liability for a default after it sold its interest in the subject property.” (Dollar Tree’s Mot. for Summ. J. (Mem.) pp. 7-8.)

USRP and Regency essentially made the same arguments as Dollar Tree in their motion for summary judgment. These defendants, however, also more explicitly argue this clause “bars any continued claim against Regency.” (USRP’s Mot. for Summ. J. (Mem.) p. 7.) These defendants note Holiday argued at trial that Regency was liable to it for breach of contract because “Regency is an affiliated company of USRP” and then proceed to argue that “[wjhile [they] disagree that Regency is liable to Holiday at all because it is not-and never has been-a party to the [Holiday] Lease, Section 19.24 nonetheless precludes assessing any damages against Regency or the collection of any liability judgment against Regency... because Holiday is limited to seeking damages [against] the landlord’s interest in the property.” (USRP’s Mot. for Summ. J. (Mem.) pp.7-8.)

In response to the defendants’ motions, Holiday made a number of arguments as to why summary judgment is inappropriate. First, Holiday argues “there are material issues of fact concerning the limitation of liability provision.” (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) p.6.) Specifically, Holiday argues Pennsylvania law holds “that limitation of damages provisions are not enforceable to limit damages for breaches of contract that are intentional, willful, wanton, reckless or otherwise in bad-faith” and “there is substantial evidence in the record that [USRP] knowingly and intentionally allowed” Dollar Tree to operate a supermarket of some nature in the Shopping Center. (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) pp. 6-7 (quotations and emphasis omitted).)

Second, Holiday argues:

Section 19.24 expressly allows...Holiday to collect a judgment against [USRP’s] interest in the [S]hopping [C]enter. Dollar Tree admits that the [Sjhopping [C] enter was sold to WP Realty for $ 18.5 million dollars while this litigation was ongoing. These proceeds of sale clearly are part of the estate and property of [USRP] for purposes of Section 19.24. Indeed, Section 19.24 is intended to limit liability personally and to protect other properties owned by [USRP]. It is not designed to protect the sales proceeds for the subject property in the event of a sale.

(Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) pp. 7-8.)

Third and forth, Holiday argues “Holiday can enforce the judgment against WP Realty” and USRP has “never divested its interest in the Shopping Center as it relates to this lawsuit.” (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) pp. 8-10.) Regarding its third argument, Holiday cites to cases such as Resolution Trust Corp. Warwick Nurseries, Ltd., 675 A.2d 730 (Pa. Super. Ct. 1996) and states “[t]he concept that purchasers of property take subject to the results of pending litigation of which they are aware is well-recognized under Pennsylvania law.” (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.), p. 8.) Holiday then states, “the evidence is undisputed that WP Realty had actual knowledge of this lawsuit prior to purchasing the [S]hopping [C]enter....” (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) p. 8.) Holiday further states it “did not need to file a lis pendens because WP Realty had actual knowledge of the lawsuit....” (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.) p. 10.)

Regarding its fourth argument, Holiday asserts that because USRP “agreed to indemnify WP Realty for damages arising out of this lawsuitf,]” USRP has not completely divested itself of an interest in the Shopping Center as it relates to this litigation and/or it can recover against USRP as an intended third party beneficiary of the indemnification agreement. (Holiday’s Resp. to Dollar Tree’s Mot. (Mem.), p. 10.)

In reply, the defendants primarily refute there are issues of material fact that preclude summary judgment by arguing that “limitation of liability clauses are enforceable under Pennsylvania law unless the plaintiff can establish fraudulent or tortious conduct, unconscionability, or an overriding public interest” and that “[njone of these exceptions apply here.” (See, e.g., Dollar Tree’s Reply p. 6.) The defendants, however, also make a number of other arguments, including that the language of the lease precludes Holiday from collecting any money judgment from the proceeds of USRP’s sale of the Shopping Center to WP Realty as the clause limits recover to the actual estate and property in the land and buildings comprising the Shopping Center and does not include proceeds from sale.

On January 15, 2014, this court held oral argument on the defendants’ motions for summary judgment. During the argument, counsel for Dollar Tree invited the court to look at the cases it cited on page eight of its brief such as Fork Union Medical Investors; the cases which it asserts supports summary judgment because there is no dispute that USRP no longer holds any interest in the Shopping Center. The court accepted counsel’s invitation and issues this opinion in support of its denial of summary judgment as to. Dollar Tree and USRP.

“The entry of summary judgment is only proper where the uncontroverted allegations in the pleadings, depositions, answers to interrogatories, admissions of record, and submitted affidavits demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.” Rush v. Philadelphia Newspapers, Inc., 732 A.2d 648, 650-51 (Pa. Super. Ct. 1999). “[I]n determining whether summary judgment should enter, the record is...viewed in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.” Manzetti v. Mercy Hosp. of Pittsburgh, 776 A.2d 938, 945 (Pa. 2001). Additionally, summary judgment should only be granted “in those cases which are free and clear from doubt.” Washington v. Baxter, 719 A.2d 733, 737 (Pa. 1998).

This court agrees with the defendants that the issue of whether the breach of contract in this case was intentional or knowing did not preclude summary judgment as limitation of liability clauses may be enforceable in Pennsylvania even where the breach of contract was intentional. See generally Standard Pipeline Coating Co. v. Solomon & Teslovich, Inc., 496 A.2d 840 (Pa. Super. Ct. 1985) (agreeing that “the motive for breaching [a] contract is not important” and that “punitive damages will not be assessed for a mere breach of contractual duties, where no recognized trespass cause of action, pleaded by the plaintiff, arose out of the same transaction.”) Rather, it is when a plaintiff can also establish some sort of fraudulent or tortious conduct, unconscionability, or an overriding public interest that a limitation of liability clause may not be enforced in whole or in part. See, e.g., John B. Conomos, Inc. v. Sun Co., Inc., 831 A.2d 696, 708 (Pa. Super. Ct. 2003) (among other things, noting that “ [n] otwithstanding the characterization of a breach as a bad faith breach or otherwise, the contract may prescribe for the remedies available for such breach” and that “[t]o the extent that the cause of action and remedies remain within the province of contract law, the contract may be binding in the determination of the consequence of a breach.”)(citations omitted).

This court, however, disagrees with the defendants that they are all entitled to summary judgment as the cases they cited that addressed provisions that limited liabilities following a default by a landlord, in addition to not being binding, are distinguishable. With Fork Union Medical Investors Ltd. Partnership v. HR Acquisition of Virginia Ltd. Partnership being the most on fours with the instant case, we will address that case in detail.

In that case, a landlord, Quality Links L.P., leased two nursing home properties in Virginia to a tenant, Care More, Inc, in 1989. 2012 WL 5951602 at *1. Paragraph 22 of the leases contained the following provision, which was called “Status of Landlord.” Id. The provision provided:

A. Anything in this Lease to the contrary notwithstanding. Tenant agrees that Tenant shall look solely to the estate and interest of Landlord in the Demised Premises for the collection of any judgment (or other judicial process) requiring the payment of money by Landlord in the event of a default or breach by Landlord with respect to any of the terms, conditions and covenants of this Lease to be performed by Landlord, subject, however, to the prior rights of any mortgagee to all or any part of the Demised Premises. Tenant acknowledges and agrees that no other assets of Landlord, its agents and designees, its partners or its affiliates shall be subject to levy, execution or other judicial process for the satisfaction of Tenant’s claim.
B. Landlord shall have the absolute and unfettered right to sell or transfer all or part of its interest in the Demised Premises and Tenant acknowledges and agrees that upon such sale or transfer the term “Landlord” shall mean only the new owner or transferee and the transferor shall be automatically relieved of and discharged of all further liability with respect to the performance of any of the terms, conditions and covenants of this Lease, and Tenant agrees to thereafter look only to such purchaser or transferee of Landlord’s interest in the Demised Premises for the performance of Landlord’s obligations hereunder.

Id.

In 1991, Care More, Inc. assigned its leasehold interests for both properties, which ended up in the hands of the plaintiffs. Id. In 1998, HR Acquisitions of Virginia Limited Partnership, an affiliate of Healthcare Realty Trust, assumed ownership of both properties, thus becoming the “landlord” under the lease agreements. Id. at *2. Thereafter, a rent dispute arose involving the two Virginia properties and a claim of overpayment of rent, and in 2006, the plaintiffs filed suit in state court in Tennessee against HR Acquisitions; Healthcare Realty Trust; and HRT Holdings, Inc. Id. In 2007, HR Acquisitions sold all of its interests in the two properties to Ruxton Village Holdings Company, LLC. In 2011, the defendants filed a motion for summary judgment arguing Paragraph 22 of the original leases barred the plaintiffs’ claims, which was granted by the trial court. Id.

On appeal, a Tennessee appellate court affirmed. First, the court noted that because the parties treated the clause as an exculpatory clause, so would it. Id. at *3. Having stated that exculpatory clauses are enforceable when they (1) do not violate public policy, (2) are plain and easily understood, and (3) clearly and unequivocally release the party from precisely the type of liability alleged by the plaintiff, the Tennessee court held: “It [was] hard to imagine how the parties could have made the limitations on recovery any plainer. Paragraph 22 ‘clearly and unequivocally’ relieves the defendants] from any liability if they are no longer the landlord of the properties covered by the leases.” Id.

The Tennessee court also addressed the plaintiffs’ argument that if the court held as such, the plaintiffs would have no remedy since HR Acquisitions had sold its interest in the nursing homes without notifying the new owner that the properties were subject to the plaintiff’s claims. Id. at *4. In response, the court stated that it was “not entirely sure that the record showfed] that the new owners are bona fide purchasers without notice of the [plaintiffs’] rights to subject the properties to their claims.” Id. The court, however, also stated in granting summary judgment, assuming that was true: “the [plaintiffs] had from November of 2003 to March of 2007-while [HR Acquisitions] still owned both properties-to assert a lien lis pendens on the nursing home properties. That action would have put any purchasers on notice that the properties were subject to a claim for the overpaid rent.” Id.

In this case, the similarities to Fork Union end with Subparagraph A of Paragraph 22. While the court in Fork Union held that “[i]t [was] hard to imagine how the parties could have made the limitations on recovery any plainer” and that “Paragraph 22 ‘clearly and unequivocally’ relieve[d] [HR Acquisitions] from any liability if [it was] no longer the landlordf,]” everything that made that clear was contained in Subparagraph B, to which Section 19.24 has no equivalent.

First, Fork Union’s Subparagraph B specifically addresses the issue of sale and states the landlord “shall have the absolute and unfettered right to sell or transfer all or part of its interest in the [property].” Subparagraph B also specifically states the tenant “acknowledges and agrees that upon such sale or transfer the term “Landlord” shall mean only the new owner or transferee and the [old landlord] shall be automatically relieved of and discharged of all further liability with respect to the performance of any of the terms, conditions and covenants of [the] [l]ease, and [the tenant] agrees to thereafter look only to such purchaser or transferee of [the old landlord’s] interest in the [property] for the performance of [the old landlord’s] obligations hereunder.”

Section 19.24 does none of these things. Rather, Section 19.24: is written from the perspective of the parties’ having a present relationship; the landlord having a present interest in the land and buildings comprising the Shopping Center; and makes no mention of what happens in the event of a sale. Moreover, if Subparagraph A so clearly relieved the landlord from any liability if they sold the property covered by the lease, why add Subparagraph B? A subparagraph b would not be necessary. As such, this court will not grant USRP and Dollar Tree summary judgment because unlike Section 22 in Fork Union, Section 19.24 in this case does not unambiguously provide for such a result. 5 6

The court, however, will grant summary judgment as to Regency. Regency was found liable for allowing Dollar Tree to operate as a supermarket of any nature in violation of Section 17.1 of the Holiday Lease. Section 19.24, however, limits the collectability of breach of lease claims to the then landlord/”LESSOR.” Regency was not the landlord/”LESSOR” under the Holiday Lease at the time in question, USRP was. Summary judgment is, therefore, properly granted as to Regency. Cf. R.R.S. II Enterprises, Inc. v. Regency Assocs., 646 N.E.2d 56, 60-61 (Ind. Ct. App. 1995) (under a limitation of liability provision that is similar in this respect, limiting a tenant’s breach of lease claims to the landlord, Regency Village Common, Ltd., and affirming the trial court’s dismissal of individual employees and a related entity).

ORDER

And now, this 11th day of February, 2014, upon consideration of defendant Dollar Tree Stores, Inc.’s motion for summary judgment filed under control number 13103567 and defendants Regency Realty Corp., Inc. and USRP I, LLC’s motion for summary judgment filed under control number 13110024, plaintiff Holiday Supermarkets, Inc.’s responses in opposition, any replies thereto, and oral argument, and in accord with the opinion issued simultaneously hereto, it is ordered and decreed that the motions are denied as to defendants Dollar Tree Stores, Inc. and USRP I, LLC and granted as to defendant Regency Realty Corp., Inc.

      . Holiday also sued the original developer and lessor of the Shopping Center, Sackett.

      . A leading treatise, Corbin on Contracts, has similarly, though more fully but relatedly, stated:
      One,
      [W]ith certain exceptions, the courts see no harm in express agreements limiting the damages to be recovered for breach of contract. Public policy may forbid the enforcement of penalties against a defendant, but it does not forbid the enforcement of a limitation in the defendant’s favor. ***[The other party] may later regret their assumption of the risk of non-performance in this manner, but the courts generally let them lie on the bed they made. While exceptions are carved out for certain public service or other essential services, the enforcement of such limitation is particularly appropriate where contracts are negotiated rather than adhesive.
      Two,
      If the breach of contract is also a tort or involves the commission of a tort, a provision limiting the liability in damages for the breach may not be operative as a limitation of the liability in tort. This involves not only a problem of interpretation of the provision but also a problem of public policy. Under some circumstances a bargained for exemption from liability for tortious conduct is held to be against the public interest and illegal.
      And three,
      The general rule of exculpatory agreements is that a party may agree to exempt another party from tort liability if that tort liability results from ordinary negligence. Courts [, however,] do not enforce agreements to exempt parties from tort liability if the liability results from that party’s own...recklessness[] or intentional conduct.
      Corbin on Contracts §§58.16,85-18 (revised edition)(footnotes omitted).

      . It would also make sense to treat Section 19.24 in this case as an exculpatory clause because the defendants reading of the section would not limit the landlord’s liability in the event of sale, but rather extinguish it.

      . For example, ‘[n]o other assets of the LESSOR shall be subject to levy, execution or other judicial process for the satisfaction of LESSEE’S claim[,]” presupposes USRP” LESSOR” has assets to satisfy Holiday’s/ LESSEE’S claim in the absence of language later specifically stating what happens in the event of a sale.

      . The court, however, would be willing to say USRP’s liability is capped at $18.5M less any prior mortgages it had to pay as such a reading of Section 19.24 would appear to effectuate the intent of the parties’ to limit the landlord’s liability to its investment in the Shopping Center and protect its other assets.

      . These defendants were also not entitled to summary judgment because it was not conclusively established that Holiday cannot enforce the judgment against WP Realty as a purchaser with notice.


source: Caselaw Access Project

author: SNITE, J.,

license: Public Domain

text:
    First Surety Financial LLC v. Taylor Associates LP

      Jonathan A. Cass and Daniel E. Fierstein, for plaintiff.

      Stephen T. Carpenito and Walter T. Grabewski, for defendants.
    July 18, 2014-
   SNITE, J.,

FINDINGS OF FACT

I. The Parties.

1. Plaintiff, First Surety Financial, LLC (“First Surety”) is a private specialty lender that provides construction industry financing to contractors and subcontractors. Trial tr. vol. 1, p. 54:11-13 (Ronald Gregory LeFevre (“LeFevre”)).

2. Defendant Taylor Associates, LP (“Taylor Associates”) is a limited partnership formed for the purpose of building a shopping center which would come to be known as Taylor Commons. Trial tr. vol. 5, p.t6:1014 (Samuel Zamias (“S. Zamias”).

3. Defendant Taylor Gen/Par, LLC is a limited liability company and the general partner of Taylor Associates. Trial tr. vol 5., p.7 16-18 (S. Zamias).

4. Defendant Zamias Services, Inc. (“Zamias”) is an agent of Taylor Associates, and acted as the construction manager for Taylor Associates. As construction manager, Zamias was responsible for overall management, development, and leasing on behalf of Taylor Associates. Trial tr. vol. 2, pp. 34:23-35:1 (John Spory (“Spory”)).

5. Zamias was also responsible for handling contractor payment requisitions (which included the provision of payment advice to Taylor Associates), payments to contractors, Project funding, and recommending the approval of change orders. Trial tr. vol. 5 at p. 26:7-25, 27:1-2, 28:6 -15, 30:10-23, 137:2-8, 192:1-7) (S. Zamias and Joseph Anthony (“Anthony”).

6. Additional defendant A.R. Popple, Inc. (“Popple”) is the contractor hired by Taylor Associates to perform the site work on the Project. Trial tr. vol. 5, p. 10:16-19 (Zamias); Trial tr. vol. 6 p.77:6-10 (Anthony).

7. Samuel Zamias, Stephen Zamias, George Zamias, and Damian Zamias are managing members of Taylor Gen/Par, LLC. (Trial tr. vol. 6 p. 60:4-61:3, 62:1-65:11 (Anthony). Managing Members have the ability to make decisions and bind the limited liability company. Defendants ex. 142; Id. 66:9-14 (Anthony).

II. Background.

8. Between 2007 and June 5,2009, First Surety provided construction financing to Popple for a project known as Taylor Commons. Trial tr. vol. 1, p. 57 3-9, 58:2-25, vol.2. pp.191:l-7, 229:17-23 (LeFevre), plaintiff’s ex. 4.

9. Taylor Commons was to be a shopping center anchored by a Wal-Mart. Taylor Associates sold approximately half of the property to Wal-Mart, then entered into a development agreement with Wal-Mart to develop the Taylor Commons site, as well as an adjacent site on which Wal-Mart would construct its store (collectively, the two parcels shall be referred to as the “Site”). Specifically, the development agreement provided that Taylor Associates would contract for and oversee the preliminary site work for the entire Site, including the pad where the Wal-Mart would be built, and Taylor Associates and Wal-Mart would split the costs. Trial tr. vol. 5 p.8:3-10:25 (S. Zamias), plaintiff’s ex. 2 at ex. C.

10. In October 2007, Popple entered into a construction contract (the “Construction Contract”) with Taylor Associates. Popple agreed to perform site improvement work for the project that included excavation, grading, and the installation of sanitary sewer systems and other piping and utility work in exchange for a lump sum price of $6,388,721. Trial tr. vol.1, pp.59:8-25, 60:1-14 (LeFevre); see also trial tr. vol.5, pp. 37:24-25; 38:1-25 (S.Zamias); see also plaintiff’s ex. 2.

11. In order to begin work on the project, Popple entered into an agreement with First Surety, under which First Surety provided short-term financing to Popple for the project. Trial tr. vol. 3, p 148: 5-12 (A.R. Popple).

12. In October 2007, First Surety and Popple entered into a loan agreement, under which First Surety initially authorized Popple to borrow up to $750,000. Plaintiff’s ex. 4.

13. Popple also executed a note and a security agreement to secure its obligations under the loan agreement. Plaintiff’s ex. 5 and 6. Under the note, First Surety could increase the amount and term of the loan to protect the security set forth in the security agreement. Trial tr. vol. 1. p.64:7-20, p.72:l-4 (LeFevre); plaintiff’s ex. 6.

14. The loan functioned as a line of credit. Trial tr. vol. 1 pp. 64:23-25, 65:1-2, vol.2. pp. 252:21-25, 253:1-8 (LeFevre); plaintiff’s ex. 6.

15. The original $750,000 loan threshold was increased to $1.1 million in April 2008, to $1.85 million in August 2008, and to $2.1 million in September, 2008. Trial Tr. Vol 1. pp. 73:21-25, 74:1-10, 75:18-25, 76:1-2, trial tr. vol 2. p. 157 (LeFevre); plaintiff’s ex. 12.

16. To obtain funding from First Surety, Popple would make written requests for funds as needed, accompanied by backup information to support each request. Trial tr. vol. 1, p. 87:2-10 (LeFevre).

17. The note required that all payments due under the Construction Contract from Taylor Associates to Popple be made directly to First Surety. Plaintiff’s ex. 6.

18. Accordingly, on or about October 12, 2007, First Surety, Popple, and Taylor Associates executed an assignment agreement (the “assignment agreement”). Trial tr. vol. 5 pp. 41:8-25, 42:1-6, 43: 4-9 (S. Zamias); plaintiff’s ex. 10-11.

19. The assignment agreement provides that, subject to certain conditions, payments under the construction contract were to be made to First Surety:

(1) Assignment— [Popple] assigns, transfers, sells and conveys to [First Surety] all of its entire right, title and interest in and to payments due under the construction contract including, the right to receive payment directly from [Taylor Associates], provided [Popple] is not then in default under said contract or has otherwise committed acts or omitted obligations that give rise to suspension or termination of payments from [Taylor Associates]. In such event, this assignment shall no longer be binding on [Taylor Associates].
(2) Payment — Until and unless the Loan is paid in full, [Taylor Associates] shall deliver to [First Surety] any and all monies due to or to become due to [Popple] under the construction contract. All such, payments shall be sent by [Taylor Associates] to [First Surety] at its offices located at the address stated above and shall be addressed to the attention of R. Gregory LeFevre. Under no circumstances is said payments to be deposited/negotiated by [Popple] without written authorization from [First Surety]. Trial tr. vol. 5 p. 43:4-9 (S. Zamias); plaintiff’s ex. 10-11.

20. The manner in which this three-party relationship operated was that First Surety would, at the written request of Popple and after review, disburse cash advances to Popple to be used to pay costs associated with the project under the construction contract, and as Popple performed the work, Popple would submit applications for payment to Taylor Associates. Trial tr. vol. 1, pp. 87:2-10, 88:22-25, 89:1-25, 95:4-14 (LeFevre).

21. The proceeds generated from Popple’s applications for payment, which Taylor Associates funded, were to be paid to First Surety. Trial tr. vol. 1 at p. 95:4-14 (LeFevre); trial tr. vol. 5, p. 43:4-9 (S. Zamias).

22. Sometime in the Spring of 2008, it was discovered that there existed a huge “mine void” which existed underground where the parking lot was to be located. This caused a dangerously unstable area of land that could collapse. This became the subject matter of change order 2, referred to as “mine void remediation.” Trial tr. vol. 2, p. 159 (LeFevre).

23. On or about November 5,2008, a meeting was held at Zamias’ office in Johnston Pa., at which Zamias, under the authority and direction of Taylor Associates, issued a $175,000 check payable to Popple. Trial tr. vol 5, pp.133: 12-137:8 (Anthony). This check was to reimburse Popple and Popple’s subcontractor(s) for work that had been completed as part of the significant change order for mine remediation. Trial tr. vol. 2, pp. 48:8-13, 49:24-25, 50:1-2 (Spory); trial tr. vol. 5, p. 139:14-18 (Anthony); trial tr. vol. 4, p. 69: 1-24 (Popple). Two more checks, each for $12,500, dated December 12, 2008, brought the total to $200,000.

24. Between August 19,2009 and April 2,2010, Taylor Associates issued ten more payments directly to Popple in the total amount of $490,385.54, and fifteen more payments to either Popple and a subcontractor jointly, or directly to a Popple subcontractor, in the total amount of $682, 394.33. pi. ex. 36 at tabs 2-28.

25. In total, Taylor Associates issued twenty-eight payments totaling $ 1,372,779.87 to parties other than First Surety (the “Misdirected Payments”). Id. at tabs 1-28; trial tr. vol. 1, p. 156:9-23 (LeFevre); trial tr. vol. 2, p. 81: 5-23 (Spory).

26. First Surety did not have specific knowledge of these Misdirected Payments. Trial tr. vol. 1., pp. 140:20-25, 141:1-5, 155:3-25, 156: 1-25, 157:1-5 (LeFevre).

27. First Surety did not necessarily suspect that Taylor Associates was issuing payments under the construction contract to other parties because, during the same time frame, First Surety continued to receive sporadic payments under the assignment agreement from Taylor Associates. Trial tr. vol.2,p.55:14-20 (Spory); trial tr. vol. 1 pp. 155:3-25, 156:1-25, 157:1-5 (LeFevre). The last payment was dated October 13, 2009. Vol. 2 19-23 (LeFevre).

28. Despite frequent communications between representatives of Zamias and First Surety, the only time whenZamias and/or Taylor Associates advisedFirst Surety that Taylor Associates intended to make a direct payment to one of Popple’s subcontractors took place during January 2009. Trial tr. vol. 1, pp. 124-133 (LeFevre), trial tr. vol 2, p. 68:8-15 (Spory); plaintiff’s ex. 34.

29. At that time, a representative of Zamias, John Spory, advised First Surety that the subcontractor, Newport Aggregate, had threatened to file a mechanic’s lien claim for the value of its unpaid work on the project. Id.

30. In that instance, First Surety was aware of and granted permission to Zamias, on behalf of Taylor Associates, to make the $35,380.01 payment to Newport Aggregate, and Taylor Associates issued the balance of the payment to First Surety. Trial tr. vol. 1, pp. 132:12-25, 133:1-20 (LeFevre), plaintiff’s ex. 34.

31. Other than that payment, neither Zamias nor Taylor Associates ever notified First Surety that Taylor Associates was making payments to parties other than First Surety. Trial tr. vol.2, p. 68: 8-15 (Spory).

32. First Surety’s loan to Popple was never paid in full; the principal owed at the end of 2009 was $788,548.79, plus interest and fees, to total $2,328,335.34. The parties stipulated to the accuracy of these numbers. Trial tr. vol. 2, pp. 9-16; plaintiff’s ex. 47.

CONCLUSIONS OF LAW

I. Taylor Associates breached the Assignment Agreement by sending payments to Popple and/or its subcontractors rather than to First Surety.

33. To prevail on a claim for breach of contract, a plaintiff must prove “(1) the existence of a contract, (2) a breach of a duty imposed by that contract, and (3) damages.” Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710, 716 (Pa. Super. 2005) (internal citations omitted).

34. Taylor Associates was a signatory to a contract — the assignment agreement — between it, First Surety and Popple. This agreement, executed on October 12, 2007, was made for valuable consideration and with the intent to be legally binding. Plaintiff’s ex. 10-11. The language of the assignment agreement obligates Taylor, as owner, to pay any monies that it owed to Popple under the construction contract, to First Surety.

35. The interest rate for the Loan First Surety made to Popple did not render it an illegal contract.

36. Although the rate of 6 percent per month was above the maximum rate of interest under the Usury Statute (41 P.S. §201), the statute provides an exception to this rule for business loans. Id. at (b)(3). It is undisputed that the loan in dispute was a business loan.

37. Accordingly, the loan is permitted by law and does not violate the Usury Statute or the RICO Statute (18 Pa. C.S. §911(h)(1)).

38. During the time in which the misdirected payments were made to Popple and subcontractors, Taylor Associates was also making payments to First Surety.

39. Taylor Associates’ actions indicate that Taylor did not believe its obligations to First Surety were fulfilled.

40. This court ruled prior to trial that under the assignment agreement, any payments to be made by defendants for work under the Construction Contract were required to be made to First Surety, not to Popple. (Court’s order of October 4, 2012).

41. Taylor would be excused from its obligations under the assignment only if Popple defaulted, and consequently Taylor was no longer obligated to make payments to Popple; or if Popple committed acts or failed to perform obligations such that payments to Popple could be suspended or terminated.

42. First Surety provided at trial a list of 28 payments that Taylor made under the project that were misdirected payments; i.e., paid to entities other than First Surety. Without directly showing the amount of money Taylor might actually owe under the Construction Contract, First Surety simply claimed this amount of money as the amount due it under the theory of the breached assignment.

43. These 28 payments were identified by First Surety from the discovery it obtained from Taylor.

44. Taylor presented testimony at trial, both from Zamias’ John Anthony, and from Anthony Popple, that payments #23. through #28., although payable for the Taylor Commons construction project, were not actually due to be paid to Popple.

45. Payments #25., #26., and #27. were to a subcontractor of Popple whom Popple should have already paid and who was threatening a mechanic’s lien. Vol. 2 pp. 132-136 Spony, vol.4 pp. 158-159 (Popple), vol. 4 pp. 161 (Popple).

46. Payment #28. was to a subcontractor who was being paid “outside of’ Popple’s contract. Vol. 3 pp. 210-214 (Popple).

47. Payments #23. and #24. were to a subcontractor (Susquehanna) of a subcontractor (Sheller); where it was shown that Sheller had been paid but had not paid Susquehanna. Vol. 4 pp. 160.

48. Payment #22. was paid by Taylor to Popple and a subcontractor who did not have a contract with Popple. Vol. 4, p. 161 (Popple). See, also, vol. 5, pp. 87-94 (Zamias), Vol. 6 pp. 154, 160-164 (Anthony).

49. The court holds that such payments did not have to be forwarded to First Surety. These payments were either outside of the Construction Contract, or represented what would be the equivalent of double payments for some costs.

50. Taylor likewise claimed similar circumstances with respect to other payments, but not to such a situation where it is excused from its assignment obligations.

51. Although Taylor took the position that payments #1., #2., and #3., totaling $200,000, were paid by Taylor through its own lender (Fifth Third Bank) to pay Popple sub-contractors who had not been paid for a period of months due to the extensive problems caused by the “mine void”, Taylor did so at its own peril.

52. The financing agreement in place had high interest rates, including a significant transaction fee for each advance. When the mine void was discovered, the impracticality and the ultimate outcome was nearly certain. Taylor’s direct payment of $200,000 to Popple in December 2008 was a significant step in the divergence from the protocol set forth in the assignment agreement.

53. First Surety made its last advance in June, 2009. Trial tr. vol. 3, p. 83 (LeFevre). By early fall First Surety and Popple were negotiating terms of default. Id. at 94. By April, 2010, Popple was gone from the project. Trial tr. vol. 5, p. 73 (Zamias).

54. Taylor Associates is liable to First Surety for breach of the assignment agreement.

II. Zamias did not tortiously interfere with the Assignment Agreement.

55. The elements of a cause of action for intentional interference with a contractual relation, whether existing or prospective, are as follows: (1) the existence of a contractual, or prospective contractual relation between the complainant and a third party; (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of the defendant; and (4) the occasioning of actual legal damage as a result of the defendant’s conduct. Ira G. Steffy & Son, Inc. v. Citizens Bank of Pennsylvania, 2010 PA Super 175, 7 A.3d 278, 288-89 (Pa. Super. Ct. 2010).

56. As discussed supra, a valid contract existed between First Surety, Popple, and Taylor.

57. No evidence that Zamias acted with the specific intention of harming the relationship between First Surety and Taylor was presented.

58. The only testimony offered by Joseph Anthony, of Zamias, corroborated by Gregory LeFevre, of First Surety, was that the purpose of these payments made outside of the assignment agreement was to keep the Project moving forward. Trial tr. vol. 5 pp.l94:25-195:6 (Anthony). This purpose does not encompass any malice or intent to harm First Surety.

59. Moreover, Zamias’ conduct was privileged, due to Zamias’ role as Taylor Associates’ agent. “An agent cannot tortiously interfere with its principal’s contract when acting within the scope of his agency.” Werther v. Rosen, 1078 May Term 2002, 2003 WL 1861579 (Pa. Com. Pl. Apr. 2, 2003); See also Rutherfoord v. Presbyterian-Univ. Hosp., 417 Pa. Super. 316, 332, 612 A.2d 500, 508 (1992) (“Where employees or agents for the corporation act within the scope of their employment or agency, the employees, the agents and the corporation are one and the same; there is no third party.”)

60. As the construction manager for Taylor Associates, Zamias’ duty was to advise Taylor Associates regarding all issues surrounding the Project’s construction activities, and how to respond to them. Any advice Zamias gave Taylor Associates regarding payment of contractors and subcontractors is well within the scope of its agency, and is therefore privileged.

61. Finally, it is clear from the evidence at trial that the decisions regarding payment were made by Taylor Associates, and that payments made by Zamias were made at Taylor Associates’ direction. Trial tr. vol.5:50:14-51:14 (S. Zamias).

III. First Surety is owed damages for Taylor Associate’s Breach of Contract.

62. First Surety argues that the measure of its damages is the total of the misdirected payments.

63. First Surety has demonstrated that the misdirected payments totaled $1,372,779.87; the burden therefore shifted to Taylor Associates to rebut the adequacy of the damages evidence. Penn Elec. Supply Co., Inc. v. Billows Elec. Supply Co., Inc., 364 Pa. Super. 544, 547, 528 A.2d 643, 644 (1987) (“once plaintiff establishes the measure of his damages, the burden of proof to rebut plaintiff’s claim is on the defendant”). Defendant adequately demonstrated justification for payments #22. - #28., in the amount of $195,461.61, but did not otherwise rebut the remaining claims.

64. Under this analysis, First Surety would be awarded $ 1,177,318.28 in damages.

65. However, as previously noted, although this last figure analyzes what the damages would be by examining the propriety of the “misdirected payments,” this does not finally settle the issue of actual damages.

66. There is absolutely no evidence in the record that Taylor would ever be liable for Popple’s interest or transaction fees.

67. Consequently, actual damages suffered cannot rise above the actual and final principal owing.

68. First Surety stipulated that this amount was $788,548.79.

69. Plaintiff First Surety is therefore awarded damages of $788,548.79, together with pre and post-judgment interest.

      . Citations are to seven days of testimony: October 22, 23, 25, 26, November 6,7, and 27,2012. The November 27,2012 transcript actually is misidentified as “January 27, 2012”.

      . The agreement actually states that delivery be to “Assignor” who is Popple. This is a typographical error, as the agreement would be meaningless if the “Assignor” was going to get the money it was assigning.

      . The actual funding was coming from Wal-Mart and Taylor Associates’ lender, Third Fifth Bank.

      . The work had been ongoing for a number of months before the applicable change order was actually executed.

      . There also was testimony from Anthony Popple that first surety contracted with and paid Krasavage for the “sanitary” drains, and Taylor paid Krasavage for the “storm” drains. Vol. 4 pp. 156-157.

      . Although Taylor Associates argued that it was paying Popple money so that Popple’s demand on First Surety would be less, the argument misses the point that, as long as Popple was still on the construction site, and still periodically had a balance due to First Surety, it was Taylor Associates’ obligation under the assignment agreement to pay the money to First Surety.

      . Defendants’ argument that some of the misdirected payments do not count as actual losses to First Surety, because First Surety would have been obliged to pay them out to Popple or to its subcontractors, is illogical. The payments were assigned to First Surety as consideration for the loans it made to Popple; the payments are to pay First Surety back for loans it already extended. Trial tr. vol. 2 p.227:7-15 (LeFevre). While First Surety may have made the decision to put the money back into the project, that was for First Surety to determine, not another party.

      . Stated differently, assume that Taylor had, in fact, remitted the entire $1,372,779.87 to First Surety. First Surety would then have to remit all the fluids in excess of $788,548.79, back to Taylor.
      The court has undertaken this dual analysis in the event that its final award is disturbed either on post-trial motions or appeal.

      . The decision in this case is in no way meant to limit any damages Taylor Associates may seek from Popple in the bifurcated portion of this lawsuit.
      Two more things should be noted. Taylor Associates is mistaken when it seems to argue that in a number of instances the provisions of the construction contract between Taylor and Popple trumps the assignment agreement. It is only logical that the reverse is true. Taylor is also without logical support to take the position that it can unilaterally decide that Popple has defaulted in the Construction Contract and then unilaterally decide that the assignment agreement is null and void, especially without informing First Surety of these decisions.


author: ANDERSON, J.,

text:
    Cornwall Mountain Investments L.P. v. Thomas E. Proctor Heirs Trust

      C.P. of Lycoming County,
    No. 11-00,718
    Aug. 4, 2014
   ANDERSON, J.,

— Before the court is the motion for partial judgment on the pleadings filed by plaintiff Cornwall Mountain Investments, L.P. on January 14, 2014, joined in by plaintiff Range Resources — Appalachia, LLC on March 14, 2014. Argument was heard March 28, 2014. As responses to the motion raised the possibility that indispensable parties had not been joined, further pleading was directed on April 3,2014, and a further argument held May 5,2014. Thereafter, by order of that date, plaintiffs were directed to join the Margaret O.F. Proctor Trust as a defendant and that defendant was then given an opportunity to respond to the motion. That response was filed July 1,2014, and the matter is now ripe for decision.

In its second amended complaint, plaintiffs seek to quiet title to the oil, gas and mineral estate (hereinafter “mineral estate”) in certain land in Lewis and Cogan House Townships. Plaintiffs contend the mineral estate was severed from the surface by a reservation of the rights by Thomas E. Proctor in a conveyance to the Elk Tanning Company in 1894. Plaintiffs further contend that the mineral estate was separately assessed for taxes in 1930 and 1931 and that those taxes were not paid and thus the estate was sold at a tax sale in 1932. In count I, plaintiffs claim title to the property by way of treasurer’s deeds issued following that tax sale. In count II, plaintiffs claim title through adverse possession.

In the instant motion, plaintiffs seek judgment on count I, based on the pleadings which set forth the facts of the tax sale in 1932 and the issuance of the deeds into Cornwall Mountain Club, its predecessor in interest, the fact that the estate was never redeemed and the fact that no action for its recovery was brought within the five-year period after the sale. Those in opposition to the motion have raised various objections, all of which the court considers legal arguments, none of which raises issues of fact. After careful consideration of all arguments, the court finds that none of the objections has merit and plaintiffs are entitled to judgment as a matter of law.

First, an objection is raised by the Thomas E. Proctor Heirs Trust that the Lycoming County taxing authorities lacked the authority to assess and tax the mineral estate, citing Independent Oil and Gas Association of Pennsylvania v. Board of Assessment Appeal of Fayette County, 814 A.2d 840 (Pa. 2002), which held that there is no statutory authority in Pennsylvania authorizing the imposition of a real estate tax on oil or gas interests. The lack of such authority, argues the Trust, rendered the assessment invalid and the tax sale void. Further, in response to plaintiffs’ reliance on Oz Gas Limited v. Warren Area School District, 938 A.2d 274 (Pa. 2007), which held that IOGA was not to be applied retroactively, the Trust contends that Oz’s limitation on retroactivity should be applied to requests for refunds of taxes only (the factual scenario in IOGA), and that IOGA should be applied retroactively to invalidate assessments and render tax sales void. The court does not read Oz so narrowly, however. The Supreme Court acknowledged that retroactive application of IOGA would have “potentially devastating consequences” to taxing entities. The consequences to parties who purchased property at tax sales would be no less devastating, as those interests would be lost, oftentimes after much has been invested. Between the party who purchased a property under what was believed to be a valid process, and the party who lost the property due to his failure to pay what was believed to be a valid tax, the court believes the equities weigh in favor of the purchaser. Therefore, IOGA will not be applied retroactively to invalidate the sale and the Trust’s objection on this basis has no merit.

The Trust next objects to the sale on the grounds that lack of production resulted in no basis on which to value the mineral estate and thus no basis on which to assess the tax, rendering the sale void, citing F.H. Rockwell & Company v. Warren County, 77 A. 665 (Pa. 1910), and Herder Spring Hunting Club v. Keller, No. 2008-334 (Centre County, September 29, 2010). In reversing the trial court in Herder Spring Hunting Club, however, the Superior Court noted such a challenge as a “collateral attack” on “overvaluation” and stated that such an attack was not allowed fifty years later, citing Bannard v. New York State Natural Gas Corporation, 293 A.2d 41 (Pa. 1972). Herder Spring Hunting Club v. Keller, 2014 Pa. Super. LEXIS 699 (2014). Here, the attack comes eighty years later. This objection is thus also without merit.

Objection is also based on the fact that the assessments at issue referred only to “mineral rights” and it is argued that under the Dunham Rule, oil and gas were thus not included in the assessment and the subsequent treasurer’s deeds. In Bannard v. New York State Natural Gas Corporation, supra, however, the court specifically held that the rule does not obtain in a tax sale as “the deed is based on the assessment and conveys the interests in land which are properly included within the assessment”, and also that an assessment of “minerals only” includes the entire estate owned by the party assessed. While the Trust argues that Bannard has been called into question by the subsequent holding in Butler v. Charles Powers Estate, 65 A.3d 896 (Pa. 2013), which upheld the Dunham rule in a direct attack, the court in Butler was careful to refer only to “private deed” transactions. Where the underlying estate is adequately described in the owner’s chain of title, it makes no sense to require a showing of the parties’ intent in a tax sale of that estate. Therefore, this objection is also without merit.

The Trust finally objects by asserting that there were two separate reservations at the time of the tax sale, one made in 1867 by Clement Biddle of “all of the premises’ ores of iron, lead, and copper and % of all minerals, coal and oils”, and one made in 1894 by Thomas E. Proctor of “all of the premises’ gas rights and Vk of the premises coal, oil and mineral rights.” Since the tax sale purported to sell “mineral rights”, the Trust argues that the rights actually sold were those reserved by Biddle and not those reserved by proctor. This argument is faulty for several reasons. First, it is based on the incorrect assumption that the Biddle reservation remained viable in 1932. The record shows, however, that the Biddle reservation was wiped out by a tax sale of the surface estate in 1890. Second, the proctor reservation is actually of “all of the natural gas, coal, coal-oil, petroleum, marble, and all minerals of every kind and character.” See The Thomas E. Proctor Heirs Trust’s answer to plaintiff’s second amended complaint, paragraphs 73.10-12, and deed between Thomas E. Proctor and Emma H. Proctor and the Elk Tanning Company dated October 2, 1894, attached as exhibit 5 to the answer (emphasis added). Third, the assessor’s records show the estate being taxed and sold as owned by “Thomas E. Proctor & Heirs”, not Biddle. This final objection is therefore meritless as well.

Objections are raised by Pennlyco, Ltd. that (1) no assessment was made on the mineral rights in Warrant 5753 in 1930 and thus the sale was for 1931 taxes only, (2) the tax sale of 1932 was held less than one year after the 1931 tax became due and payable, and (3) this defect in procedure rendered the sale void and thus subject to attack even after the redemption periods. The court finds no merit in either of the first two contentions and therefore need not reach the third.

Pennlyco’s assertion that no assessment was ever made on the mineral estate in 1930 is based on the fact that in the 1931 assessment record, the relevant entries (of lands owned by “Proctor/Thomas E. & Heirs”) are located under the words “Mineral Rights Only” but in the 1930 record, those words are missing. As Pennlyco itself points out, however, the “assessment records show a consistent pattern of assessment of unseated land for both the surface and the mineral ownership. Each township is listed alphabetically, and under each township is a listing: first of each warrant, with the name of the purported owner, then, at the end of each township, for those warrants where the mineral rights had been separated from the surface estate, under the heading “Mineral Rights”, each warrant is listed with the name of each purported owner of the warrant’s mineral estate.” See Pennlyco’s brief in opposition to the motion, page 7-8. This pattern was followed in 1930 and the four lands of Thomas E. Proctor & Heirs are listed at the end, following the previous listing of those same four lands showing ownership by Cornwall Mountain Club. It is obvious, in spite of the lack of the heading “Mineral Rights Only”, that mineral rights are being assessed, based not only on the duplicate listing but also on the difference in the rate assessed: Cornwall Mountain Club is assessed at $1.00 per acre, and Proctor is assessed at $.50 per acre. Further, the Assessor’s Return for 1930 does list the estate at issue under the heading “Mineral Rights”. See Cornwall Mountain’s brief in reply to Pennlyco’s brief in opposition, at exhibit “L”. Thus, the 1930 assessment was actually made and the sale for non- payment of 1930 taxes, was proper.

In any event, even if the sale was for non-payment of 1931 taxes only, that sale was held more than one year after the tax became due and payable. Pennlyco contends that the tax did not become due and payable until August 31, 1931, when the Commissioners certified the 1931 assessment to the Treasurer. This contention is without merit. As the court made clear in Ellis v. Houseknecht, 57 Pa. Super. 55 (1914), taxes are due and payable when levied and assessed; certification is not the relevant date. In the instant case, the tax was levied on January 5, 1931, as noted in the Commissioners’ Minute Book, see Cornwall mountain’s brief in reply to Pennlyco’s brief in opposition, at exhibit “J”, and was assessed on May 4, 1931, when the Tax Assessor returned the Assessment Book to the Commissioners. See Id., at exhibit “N”. The sale was held on June 13, 1932, more than one year after the levy and assessment. The sale was thus valid, and Pennlyco’s objection on this basis has no merit.

Finally, objections are raised by the Margaret O.F. Proctor Trust, but most of those objections are identical to objections raised by others and previously discussed and/ or are based on the assumption that the Biddle reservation, referred to above, continued to exist at the time of the 1932 tax sale. As noted above, that interest was lost by way of a tax sale in 1890. The records show that following Biddle’s 1867 reservation of “all ores of iron, lead, copper and other minerals ... and also the three-fourths part of all mineral coals and all oils”, and after various conveyances of the surface, the surface estate came into the hands of one Flarriet Land, who allowed the premises to be sold for unpaid taxes on June 9, 1890. The property was not redeemed. The mineral estate reserved by Mr. Biddle had never been reported or separately assessed and thus was lost in this sale. See Powell v. Lantzy, 34 A. 450 (Pa. 1986); Hutchinson v. Kline, 49 A. 312 (Pa. 1901); Herder Spring Hunting Club v. Keller, 2014 Pa. Super. LEXIS 699 (2014). Thus, any objection which relies on the continued existence of the Biddle reservation is without merit.

The Trust also claims boldly that “the heirs of Thomas E. Proctor did not receive notice and the opportunity to be heard before they could be deprived of their property interests, pursuant to the U.S. and Pennsylvania constitutions” and that “the Treasurer of Lycoming County who appeared before the Court of Common Pleas and acknowledged the Tax Sale Deeds ... was convicted of embezzlement and forgery and falsification of tax documents” and that “[t]he Treasurer’s wrongful acts in the course of his official duties shed further doubt on the validity of the tax sale.” See Margaret O.F. Proctor Trust’s response in opposition at p. 7. The law requires, however, that the court “presume that all actions ... that were required to be taken were taken”, “failing any affirmative proof to the contrary”. Herder Spring Hunting Club, supra. The Trust has offered no proof whatsoever that the sale was not held in accordance with the requirements of the act under which the property was sold and therefore the court will assume that it was. These claims, therefore, also have no merit.

Finally, the Trust argues that the only appropriate remedy for failure to pay taxes on unseated lands was four-fold taxation and not title divestiture. As noted by the Trust, the Herder Springs court rejected this argument. This court will therefore not address the argument further.

Since none of the objections raised by any party has convinced this court that plaintiffs are not entitled to judgment as a matter of law, the court enters the following:

ORDER

And now, this day of August 2014, for the foregoing reasons, plaintiffs’ motion for partial summary judgment is hereby granted.

      . It is undisputed that plaintiff Cornwall Mountain Investments, LP, owns the surface estate.

      . There were five separate deeds issued, respecting Warrants 5753, 5666, 5751 and 5668 in Lewis Township, and Warrant 5666 in Cogan House Township.

      . Dunham & Shortt v. Kirkpatrick, 101 Pa. 36 (1882). “The rule may be briefly stated: if, in connection with a conveyance of land, there is a reservation or an exception of ‘minerals’ without any pecific mention of natural gas or oil, a presumption, rebuttable in nature, arises that the word ‘minerals’ was not intended by the parties to include natural gas or oil.” Bannard v. New York State Natural Gas Corporation, 293 A.2d 41, 48 (Pa. 1972).

      . These descriptions are quoted from the trust’s brief in opposition to the motion, page 45, not from any deed.

      . This conclusion will be discussed infra, in response to the objections raised by the Margaret O.F. Proctor Trust.

      . Pennlyco asserts a claim to Warrant 5753 in Lewis Township.

      . This is a separate document from the assessor’s record, and the court assumes the Record is compiled from all the various returns made from each township.

      . As noted previously, since the court did not find the sale to be void, it need not address the argument that the redemption periods do not apply.

      . See plaintiff Cornwall Mountain’s Response to defendant Thomas E. Proctor Heirs Trust’s Factual Pleading, filed May 2, 2014, at exhibit “M”.

      . See plaintiff Cornwall Mountain’s Response to defendant Thomas E. Proctor Heirs Trust’s Factual Pleading, filed May 2, 2014, at exhibit “N”.

      . Id.

      . The Trust notes that the argument is being raised only to preserve the matter for further appellate scrutiny”.


author: DOZOR, J.,

text:
    Schader v. Schader

      C.P. of Delaware County,
    No. 2011-01137; 1645 EDA 2014

      Robert A. DeLuca, for appellant.

      Kristen Rushing Daniels, for appellee.
    Aug. 6, 2014-
   DOZOR, J.,

NATURE AND HISTORY OF THE CASE:

This appeal is a direct appeal from this court’s final order of support entered on April 30, 2014.

This court notes that on April 10, 2014, this court held a de novo hearing and considered during that hearing the following filings: a petition for contempt for failure to pay spousal support (filed by DRO), appellee’s support appeal of master’s September 4, 2013 order, appellee’s answer filed on January 14, 2014, appellant’s self represented petition for emergency relief requesting a support contempt hearing filed on March 18, 2014, appellee’s answer to appellant’s petition for emergency relief filed on March 19, 2014.

After considering all of the evidence presented on April 10,2014 and a review of all the documents filed and received by the court, this court recalculated the support guidelines and issued a final support order on April 30, 2014.

Appellant filed a motion for reconsideration of the final support order on May 14, 2014; this motion for reconsideration raises the same issues raised in this appeal. On May 16, 2014, appellant filed an amended petition for reconsideration of this court’s final support order dated April 30, 2014. This amended petition for reconsideration was filed simply because the initial motion for reconsideration was filed under the divorce/ equitable distribution docket number and not the support docket number, which is the only change between the motions for reconsideration. Thereafter, on May 22, 2014 this court issued an order denying appellant’s motion for reconsideration.

On May 30, 2014, appellant/wife filed the appeal in this matter. On June 9, 2014, this court issued a 1925(b) request for a concise statement of matters complained of on appeal. On June 19,2014, appellant filed her statement of matters complained of on appeal. After reviewing the filed “Plaintiff’s Statement of Errors Complained of,” this court discovered that the nineteen paragraph, three page document truly only raises three issues of error regarding this court’s support order. Appellant’s allegations of error are as follows:

1. This court incorrectly relied on husband’s evidence related to his income, including husband’s employment, as there was no 2013/2014 tax returns provided to the court.
2. This court failed to consider that husband improperly paid his support obligation to wife utilizing the income he received from his rental property.
3. This court failed to consider that husband has a significant inheritance that he is able to utilize ánd as such should have been considered income for support purposes.

FACTS:

The parties were married on October 12, 1985 and have four (4) emancipated children. Appellant/wife filed a complaint in divorce and a complaint in custody on June 24, 1994; thereafter, the parties reconciled. On August 17, 2007, the parties formally separated. Appellant completed the ninth grade (9th) and thereafter received her General Educational Development (GED) High School Equivalency Degree and during the marriage, appellant was the primary caregiver to the parties’ four children.

Appellee is a high school graduate, who completed college at St. Louis Washington University before going to Dental School at Temple University. Appellee was licensed as a dentist during the marriage. During the marriage, appellee bought property located at 248 South 21st Street, Rittenhouse Square, Philadelphia in 1993, with a loan from his father and as such the property was originally titled solely in appellee’s name and the parties renovated the building to accommodate appellee’s dentistry practice. Appellee sold his general dentistry practice located at 248 South 21st Street, Rittenhouse Square, Philadelphia in 2005 and retained the building, which he continues to rent out. Appellee receives rent from the dental office in the amount of $3,700 a month, the second floor apartment in the amount of $2,090 a month and the third floor apartment in the amount of $1,600 a month.

After the separation of the parties, appellant was in a severe auto accident on May 9, 2008, wherein she sustained numerous serious and disabling injuries which resulted in her having several operations. Appellant requires significant medical care to this day. There was a stipulation between the parties that appellant has no earning capacity.

It is important for the calculations of support in this matter to note that this court’s final order of equitable distribution was entered on May 30, 2013 and thereafter this court issued an order granting in part and denying In part plaintiff and defendant’s motions for reconsideration entered June 19, 2013. This court also notes that divorce decree was issued on August 26, 2013 by The Honorable Nathaniel C. Nichols and as such the parties were formally divorced on that date.

Appellee filed a petition to Modify APL/spousal support on July 13, 2013. Thereafter, a master issued an order on September 4, 2013, effective July 22, 2013, for APL/spousal support in the amount of $3,759.60 plus 35% of the mortgage, for an additional $1017.45, with a total APL/spousal support obligation of $4,777.05 per month plus $477.57 toward arrears, thus a total monthly obligation of $5,254.75. This court noted that as of April 7,2014, the support arrears are $21,068.62. See plaintiff’s Exhibit, P-2. Appellee thereafter filed a timely appeal from the master’s order.

This court also notes that appellee, as required by the court’s final equitable distribution order of May 30, 2013, is to pay appellant’s existing medical, dental and prescription insurance coverage and/or make full payments of the COBRA for appellant’s medical insurance for the full term of the COBRA that is available to appellant.

During the April 10,2014 hearing, both parties testified, as well as Lisandra Miasonet, the Office Manager of Newtown Dentistry for Kids and Newtown Orthodontics (hereinafter “Newtown”), appellee’s current employer located in Newtown, Bucks County, PA. Appellee characterizes his employment as “paid per diem.” appellee testified that in addition to his new position with Newtown he continued to work for and still remains employed with Liberty Dental.

This court heard testimony from appellee that after June 21, 2013, he attempted to pursue part-time employment in Reading, Pennsylvania. Appellee candidly testified that he intentionally postponed the decision to begin a part time job in Reading because of the anticipation that he would be working in August or September at Newtown.

Appellee further testified that from July 13, 2013 to September 30, 2013 he had received unemployment compensation in the amount of $573 per month and an additional $2,600 from Liberty Dental thus providing him with a total gross monthly income in the months of July, August and September of 2013 of $3,173.

Husband began his new full time position with Newtown on October 1, 2013. See defendant’s Exhibit, D-5. Since October 1, 2013, appellee has been employed at Newtown while still employed with Liberty Dental. Appellee entered into a written contract with Newtown on November 1, 2013. Per the employment contract with Newtown, appellee would receive 38% of his production, less any lab fees collected by Newtown. Appellee credibly testified that he was to receive this 38% because that was what the prior orthodontist had been receiving from Newtown and because appellee anticipated buying into the Newtown practice. Appellee’s contract with Newtown was to expire on December 31, 2014. This court notes that because of the structure of appellant’s payment from Newtown, based on a percentage of his production less the lab fees, appellant is paid in the following month that he provides the services.

Appellee received his first check in November of 2013 for $18,000, for approximately 10 days of employment that occurred in October of 2013. On December 5, 2013, appellee received a second check from his employer in the amount of $33,244.50, for work he provided Newtown in November of 2013.

Appellee provided appellant with his 1099 form for 2013 and this was entered into the record during the Support Hearing. See ExhibitP-3. Appellee’s 1099 form for the calendar year 2013 demonstrated that appellee’s total compensation received from Newtown was $51,244.50.

Appellee credibly testified that in January of 2014 his production was $89,463.88. As a result of his employment contract he received 38% of the $89,463.88 less the lab fees; therefore, appellee received a paycheck from Newtown in the amount of $33,509.10 in income.

On or about February 6, 2014, appellee received a check from Newtown in the amount of $11,753.95. This check was significantly lower than the prior month’s salaries because this check had been adjusted downward since Newtown had discovered that they had overpaid appellee for the work he had completed in November 2013. See plaintiff’s Exhibit, P-3 (Newtown a record of which includes his 1099). This court heard credible evidence from appellee that in December 2013 his true earnings after making the appropriate corrections for the overpayment was $30,931.46, which was paid to appellee on February 6, 2014.

Appellee credibly testified that in February of 2014 his production was $65,516.79 and as a result of his employment contract he received 38% of the $65,516.79 less the lab fees and therefore appellee received a paycheck from Newtown in the amount of $21,297.78 in income.

Husband candidly testified that when he entered into employment in October of 2013 with Newtown and when he signed the contract in November of 2013 he intended to buy into the Newtown practice; however, this “buy in” did not occur. Appellee credibly testified that when he realized he was not going to buy into the practice he wanted a more stable position at Newtown. Appellee also credibly testified that one reason he was able to take the position at Newtown was because the practice did not want to pay his predecessor the 38% because they were losing money that way. Therefore, appellee’s employment contract was renegotiated in April of 2014. After the renegotiation, appellee’s formula for compensation was modified slightly, appellee is still paid per diem; however, appellee is now paid 33% of his net collections/production, after lab fees and appellee’s contract was stable as he is now contractually employed with Newtown until December 31, 2017. See defendant’s Exhibits, D-5 and D-6.

Appellee candidly testified that in the last two months he now averages a gross monthly salary of approximately $21,000 withNewtown. In addition to appellee’s continued “full time” employment with Newtown he has continued with his part time employment at Liberty Dental providing him with an additional $2,600 per month.

Therefore, husband’s average gross monthly salary since the renegotiated contract with Newtown is approximately $23,600 a month.

A copy of husband’s 2012 1040 US Federal Tax Return was admitted into evidence, as well as a copy of husband’s 2013 1099 “Miscellaneous Income” Form. See plaintiff’s Exhibits, P-3 and 6.

Appellee testified that following the death of his mother and father, appellee has two separate inheritances. Appellee has an established trust from his father, this trust generates income which is retained in the trust; however, appellee does receive distributions from that trust yearly. Appellee also testified that he received an inheritance from his mother that is not retained in a trust. Appellee further testified that in December of 2013 he received a lump sum distribution from an inheritance in the amount of $57,500; prior to the payment of that inheritance distribution, appellee had access and received $15,000 of trust income to pay his attorney’s fees. Appellee testified that as a result of an inheritance he had received he has the availability and control of obtaining up to approximately $57,500 per year in trust income, as well as the opportunity, at his liberty to invade, the principle of the trust.

In issuing the April 30, 2014 final support order, this court determined that appellee had failed to comply with his support obligations especially in light of the opportunity he can receive trust income, as well as using any portion of the inheritance that he received in December of 2013 in the amount of $57,500 and his failure to invade the principle of his trust, all confirm that appellee willfully failed to comply with his support order. This court notes that while the inheritance and trust were not calculated in terms of income for appellee, appellee always had the financial resources to keep his support obligations current. This court further determined that prior to appellee beginning employment (October 1, 2013) with Newtown Orthodontics, he intentionally failed to obtain or maintain appropriate employment; intentionally delayed and postponed available employment in Reading, PA, and intentionally chose not to utilize his other sources (i.e.: trust income and inheritance proceeds) of income to keep his support obligations current.

This court had previously, in the final equitable distribution order, determined that appellee’s two employment positions in 2012 provided him with a gross income of approximately $194,200; in paragraph 16 on page 25 said order found appellee had a minimum earning capacity of $160,000. Therefore, in the final support order of April 30, 2014, this court determined that from July 13, 2013 to September 30, 2013, when appellee was “unemployed” that based upon his employment history, opportunity for employment, education, experience, training and earning history the court was required to impute an income equal to appellee’s earning capacity, of $160,000 per year.

On May 13, 2009 Montgomery County Judge Daniele had ordered that the rental income be escrowed and subject to equitable distribution appellee’s rental income generated from a property at 248 S. 21st Street, Rittenhouse Square, Philadelphia.

Thereafter on May 30, 2013 this court’s final equitable distribution order found and ordered, see paragraph 10b, page 16, that all rental income shall be escrowed with appellant receiving a bi-monthly accounting and thereafter equitably divided 60% to appellant and 40% to appellee. Therefore, this court determined that the Rental income shall not be included in appellee’s monthly income calculations.

This court’s determination of appellee’s support as set forth in the final support order of April 30, 2014 states as follows:

B. Calculations
1. Due to the fluctuations in husband’s income during the calendar year 2013, there are three (3) different periods of time which this court must address.
2. This court further determines that there is no mortgage deviation applicable. This court notes that in the May 30, 2013 final equitable distribution order, wife was awarded the martial residence.
3. The first time period for calculations is from July 13, 2013 (the date husband filed his petition to modify his APL/Support) until September 30, 2013 (the last date before husband’s new employment with Newtown Orthodontics began). During this time period, husband was receiving monthly unemployment compensation of $573 plus an additional $2,600 from Liberty Dental.
4. This court determines that although husband was no longer working for Einstein, he had the opportunity to begin another job wherein he would have been earning substantially more than his unemployment compensation and as a result this court determines that husband had a minimum earning capacity of $160,000 per year thus a gross monthly income of $13,333 and net monthly income of $9,130 dollars.
5. Wife has a zero net monthly income.
6. The support calculations retroactive from the date that husband filed his petition to modify support, July 13, 2013 until September 30, 2013 are as follows,
CHART (1) ONE
HUSBAND’S 2013 INCOME WIFE’S 2013 INCOME
$160,000 (Imputed) $0
-$50,430.36 (tax)
$ 109,569.64 Net yearly Income $0 Net Income
$ 109,569.64 /12=$ 9,130.80 $0
$ 9,130.80 Net Monthly $0 Net Monthly
Joint Monthly Net ($ 9,130.80 + $0) = $ 9,130.80
July 13,2013 until September 30, 2013 SPOUSAL SUPPORT
Husband’s net Monthly: $ 9,130.80
Wife’s Income Deduction: -$0
$9,130 x .40 = $ 3,652
July 13, 2013 until September 30,2013 SUPPORT ORDER = $ 3,652 MONTHLY
7. This court notes that for the next two charts, this court is using the gross monthly income as provided by husband during the hearing held on April 10, 2014.
8. The next calculation period is from the date husband began his employment with Newtown Orthodontics (October 1, 2013) and the date of husband’s new, renegotiated contract with Newtown Orthodontics began (March 31, 2014).
9. The court finds that from Newtown Orthodontics husband has a gross monthly income of $22,500 plus an additional $2,600 from Liberty Dental that is a total gross monthly of $25,100 and a net monthly income of $ 16, 648.
10. Wife has a zero net monthly income.
11. The support calculations retroactive from the date husband began his employment with Newtown Orthodontics, October 1, 2013 until March 31, 2014 are as follows, CHART (2) TWO:
CHART (2) TWO
HUSBAND’S 2013-2014 INCOME
WIFE’S 2013-2014 INCOME
$25,100 Gross Monthly Income $0
-$ 8,451.37 (tax)
$ 16,648 Net Monthly Income $0 Net Income
Joint Monthly Net ($16,648.00 + $0) = $16,648.00
October 1, 2013 until March 31, 2014 SPOUSAL SUPPORT
Husband’s net Monthly: $16,648.00
Wife’s Income Deduction: -$0
$16, 648.00 x .4 = $ 6,659
October 1,2013 until March 31,2014 SUPPORT ORDER = $ 6,659 MONTHLY
12. The final calculation is the period from the date husband when husband renegotiated contract with Newtown Orthodontics on April 1, 2014 and into the future.
13. husband’s renegotiated contract provided husband with a monthly gross income of $21,375 plus $2,600 a month from Liberty Dental that is a total gross monthly income of $23,975 and a net monthly income of $ 15,987.62
14. wife has a zero net monthly income.
15. The Support Calculations retroactive from the date husband’s renegotiated contract with Newtown Orthodontics began on April 1,2014 and into the future, until further modified by the court are as follows,
CHART (3) THREE
HUSBAND’S 2014 INCOME
WIFE’S 2014 INCOME
$23,975 Gross Monthly Income $0
-$ 7,987.38 (tax)
$15,987.62 Net Monthly $0 Net Income
Joint Monthly Net ($ 15,987.62+ $0) = $ 15,987.62
April 1,2014 and until further Court Order SPOUSAL SUPPORT
Husband’s net Monthly: $ 15,987.62
Wife’s Income Deduction: -$0
$ 15,987.62 x .4 = $ 6,395
April 1,2014 until further Court Order SUPPORT ORDER = $ 6,395 MONTHLY

C. Conclusions

1. Husband’s arrears should be recalculated based upon this order and recalculated based upon the Support amounts determined below.

2. In accordance with the above calculations, the TOTAL SUPPORT AMOUNTS for the three (3) different periods of time which this court must address are as follows:

a. $3,652/month + 10% Arrears ($ 365.20), if arrears exist, for the period of July 13, 2013 - September 30,2013. See CHART (1) ONE above.
b. $ 6,659/month + 10% Arrears ($665.90), if arrears exist, for the period of October 1, 2013 - March 31, 2014. See CHART (2) TWO above.
c. $ 6,395/month + 10% Arrears ($639.50), if arrears exist, for the period of April 1, 2014 and until further court order. See CHART (3) THREE above.

3. Husband is to pay wife’s existing medical, dental and prescription insurance coverage and/or make full payments of the COBRA for wife’s medical insurance for the full term of the COBRA that is available to wife, uninterrupted, until further order of the court, as required by the equitable distribution order of May 30, 2013.

4. In the event that husband remains in contempt and fails to timely pay his APL/Supposal Support until further order of the court, this court will entertain a petition for contempt, sanctions, attorney fees as well as the imposition of a sentence, if necessary.

5. Within 60 days of the finality of the equitable distribution order, husband shall pay the arrears in full.

See “Final Support Order” datedApril 30,2014, pgs. 7-11.

DISCUSSION:

As of the date of this opinion there is an appeal pending with the Superior Court regarding this court’s final equitable distribution order (Schader v. Schader, 2492 EDA 2013 (No. 94-7374)). This court notes that many of the issues raised in that pending appeal are consistent with the issues in this appeal. As previously stated this court has consolidated the nineteen issues raised in the concise statement of matters complained on appeal to three issues.

A. The court did not incorrectly rely on appellee’s evidence and testimony related to his income, including appellee’s employment and inheritance, as there were no 2013 tax returns provided to the court.

This court did not incorrectly rely on the evidence and testimony presented by the parties during the hearing held on April 10, 2014. This court notes that the hearing on this support matter was first scheduled in January of 2014 and then in March of 2014 and those hearings were continued at the request of appellant’s counsel. This court notes that the hearings were not continued due to a request for continued discovery or failure to comply with discovery requests. This court notes that at no time prior to or during the hearing did appellant argue that appellee’s 2013 tax returns were necessary such that a continuance of the hearing should be granted. This court notes that appellant never requested a continuance of the April 10, 2014 hearing nor asserted during the hearing that the 2013 tax returns of appellee were vital to the case during the hearing. Even if appellant had requested a continuance for appellee’s 2013 tax returns, this court would not have granted such a request, as this court was able to determine appellee’s current income (or income at the time of the April 10, 2014 hearing) based upon the credible testimony and overwhelming and extensive evidence presented during the April 10, 2014 hearing.

This court had previously, in the final equitable distribution order, determined that appellee’s two employment positions in 2012 provided him with a gross income of approximately $194,200; in paragraph 16 on page 25 said order found appellee had a minimum earning capacity of $160,000. At that time, the court had been provided with appellee’s 2012 tax return, as this court was provided with the tax return for 2012 at the April 10,2014 hearing.

This court notes that at the time of the April 10, 2014 support hearing, appellee provided credible testimony that he did not have a 2013 tax return prepared to submit to appellant as the tax deadline of April 15, 2014 had not passed. Appellee provided credible testimony of his employment status and his earnings from October of 2013 until the date of the support hearing. Appellee also presented as evidence his 1099 form. Additionally the office manager for Newtown, Lisandra Miasonet, presented credible evidence of appellee’s employment history with Newtown as well as his earnings with Newtown.

This court notes that based upon the credible testimony and evidence of appellee, which was accepted by this court, appellee currently earns approximately $23, 600 a month in gross earnings. This gross monthly figure is based upon his 33% percent of his production (less lab fee) which appellee is paid by Newtown in addition to the $2,600 a month appellee is paid by Liberty Dental. Therefore, this court was able to determine that from April of 2014 until at least December 31,2014, appellee’s gross income has increased to an average of $283,000 yearly, which is almost double the earning capacity this court set in the final equitable distribution order and almost $89,000 over what appellee’s 2012 tax return showed he earned.

B. The court did not fail to consider that appellee improperly paid his support obligation to appellant utilizing the income he received from his rental property.

Appellant argues that this court erred, and therefore the support order should be vacated and the case remanded for a new hearing, because this court did not consider how appellee was paying his support obligation. The record clearly and unambiguously contradicts appellant’s argument. There was testimony by appellee that he had in fact paid his support obligation from his rental property account.

This court determined, as it continues to determine that where or how appellant paid his support obligation, i.e. from then rental account, was not an issue to be properly raised in support court during the de novo hearing or on the petition for contempt. During this proceeding, it was the court’s obligation to determine the proper amount of support owed to wife/appellant and if appellee/husband had failed to meet his obligation at during the time of the alleged contempt. This court unambiguously determined that appellee had failed to meet his support obligations and this fact was not denied by appellee.

Therefore, this court did not err in failing to find appellee in contempt for paying his support obligation from the escrowed rental account. This court notes that appellee was strongly cautioned, in open court by this court, to stop providing appellant with her support payments from the rental income and to reconcile that account.

C. This court did not fail to consider that appellee has a significant inheritance that he is able to utilize and as such should have been considered income for Support purposes.

Appellant argues, as she did during her equitable distribution trial, that appellee has a significant inheritance which should be considered a factor in determining her apportionment of the marital estate as well as in determining appellee’s income for the support calculations.

Initially this court notes that there was insufficient evidence presented at the trial regarding appellee’s distributions from the trust and inheritance he received from his father and his mother’s estates. Appellee candidly testified that he was able to take yearly distributions, which is only distributions of the interest generated, which would generally be received on December 31, 2013. Appellee credibly testified that he has not invaded the principle of the trust account and has only received distributions from the interest generated.

This court notes that a trial court’s determination regarding a support award will not be disturbed absent an abuse of discretion. Mooney v. Doutt, 766 A.2d 1271, 1273 (Pa. Super. 2001). Further, this court notes that “[a]n abuse of discretion occurs if insufficient evidence exists to sustain a support award, if the trial court overrides or misapplies existing law, or if the judgment exercised by the trial court is manifestly unreasonable.” Colonna v. Colonna, 788 A.2d 430, 437-38 (Pa.Super.2001).

The Supreme Court of Pennsylvania has consistently held that “the corpus of an inheritance may not be considered income for purposes of calculating child support.” Maher v. Maher, 575 Pa. 181, 189-90, 835 A.2d 1281, 1286 (2003) citing Humphreys v. DeRoss, 567 Pa. 614, 790 A.2d 281 (2002). This court has found no case law which expressly determines that inheritance may or may not be considered income for the purposes of calculating spousal support. This court determines that consistent with the Humphrey and Maher decisions, the court’s determination that appellee’s inheritance from either his mother or father should not be considered for purposes of calculating spousal support as well.

In Humphreys this Pennsylvania Supreme Court noted that:

In light of the fact that we can find no principled way of fitting the corpus of an inheritance into the statutory definition of income, we hold that it may not be so included. However, this does not mean that an inheritance will not affect the amount of support to which a child may be entitled. The Support Guidelines provide that in deciding whether to deviate from the presumptive amount of support determined by the Guidelines, the trier of fact shall consider, inter alia, the assets of the parties and other relevant and appropriate factors, including the best interests of the children. Pa.R.C.P.1910.16-5(b)(5),(9)(emphasis added). Rule 1910.16-5 (a) requires the trier of fact to provide written reasons for, and findings of fact justifying the amount of the deviation.

Humphreys, 790 A.2d at 287-88 (footnote omitted) (italics in original).

This court notes that the Humphreys court did reiterate that while inheritance is not statutorily “income” and as such it cannot be included in the guidelines for child support, a court is permitted deviate from the guidelines such that the support would be affected. This court did consider appellee’s distribution from his inheritance and trust when calculating appellee’s earning capacity, for the time period when appellee was solely employed with Liberty Dental and was receiving unemployment as his position with Einstein had been terminated, from July 13, 3012 until September 30, 2013.

When issuing the final support order, this court did consider the inheritance received by appellee in calculating appellant’s spousal support; however, this court determined that the inheritance should not be calculated a part of appellee’s monthly income. This court notes that appellee’s credible testimony was that he was able to receive a distribution from his inheritance and trust; however, there was no testimony that this is appellee’s consistent practice or that he receives a consistent amount. This court notes that appellee’s testimony was that he received a distribution in a lump sum on or about December 31, 2013, there is no guarantee of the amount of distribution or the date of distribution.

Additionally, this court determined that even with appellant at a zero earning capacity and with appellee now making almost double what the court had previously ascribed as his earning capacity, there was no reason to depart from the guidelines and include the one time distribution of interest as a part of appellee’s income. This court notes that the parties children are emancipated, appellee continues to pay the mortgage on the marital residence, over and above the spousal support award, for the residence in which appellant currently resides, appellee continues to pay the COBRA payments for appellant’s medical benefits and appellant receives alimony from appellant. Based upon the spousal support award of nearly $6,400 a month, plus all the other “benefits” as listed above, this court determined that there was no reason to deviate from the guidelines and to consider appellee’s inheritance as a part of his income in determining the spousal support award.

CONCLUSION:

For the foregoing reasons, this appeal should be quashed and this courts order of equitable distribution should be affirmed.

      . In the June 19, 2013 order this court granted reconsideration for the limited purpose of reconsidering the alimony awarded to wife and the life insurance policy required to be provided to wife and this court ordered that husband shall pay to wife fifteen hundred dollars ($1,500) a month in alimony for fifteen (15) years, which shall be paid to wife within the first ten (10) days of each month. Further, this court ordered that husband shall procure a life insurance policy, insuring his life, naming wife the irrevocable beneficiary, for the value of the alimony referred to above. The sole purpose of the life insurance policy is to guarantee wife’s alimony for fifteen (15) years, presently valued at two hundred seventy thousand dollars ($270,000). Husband is to provide wife annual proof of current life insurance policy. The value of the life insurance policy may be reduced annually in relation to the corresponding alimony paid to wife. All other issues raised in the cross petitions for reconsideration of the final order of equitable distribution was denied and all other findings of facts and conclusions of law and the terms and conditions of this court’s final equitable distribution order of May 30, 2013 shall remain effective and a final order.

      . This court notes that the master’s order should have been effective July 13, 2013 and there was no explanation by the parties or their counsel as to why the master’s order shows the effective date of July 22, 2013.

      . This court notes that from July of 2006 until June 21, 2013, appellee worked at Einstein Philadelphia (formerly known as Albert Einstein Medical Center) and at Liberty Dental as a dentist and orthodontist.

      . This court realizes that there could be four calculations since the Statutory Guidelines changed on August 9,2013 and therefore there should be one calculation from July 13, 2013 to August 8, 2013 and another from August 9,2013 to September 30,2013; however, the change in these two calculations was so de minumus as to be unnecessary for time period set forth in this order.

      . This court heard some testimony that as a result of an order from the support master, husband paid some mortgage payments directly to the mortgage company for mortgage payments for the marital home which was awarded to wife in this court’s May 31, 2013 final equitable distribution order. These mortgage payments were over and above the ordered support obligation (which included 1/3 of the mortgage payment). The record does not reflect what months or the amount of money husband paid the mortgage directly to the mortgage company. Thus, husband can receive no credit within this order for these payments. Upon a petition filed by either party and following a limited hearing on the matter, the court may consider a credit towards husband’s arrears.

      . This court notes that appellee was found in contempt by this court for failing to comply with his support obligations. This court determined that appellee was in contempt of the support order as appellee receives money from his inheritance and trust income. This court noted that appellee credibly testified that he received in December of 2013 $57,500, which he could have utilized to pay his Support in full or pay clear his arrears. Additionally, this court determined that appellee could have invaded the principal of the trust to not have his support obligation in arrears and his failure to invade the principle of his trust. Therefore, this court determined that appellee willfully failed to comply with his support order.