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Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 14-2049

_____________

CGL, LLC,

 Appellant

v.

WILLIAM G. SCHWAB; ANITA LAUDERMILCH; DEBRA A. FULTZ;

ELFRIEDE GARMAN; LLOYD KRUPPENBACH; LORETTA KRUPPENBACH;

WILLIAM GIERSCH; CAROL GIERSCH; MARY ANNE USNER; ARLAND L. 

LANDO; SHARON A. LANDO; JOSEPH A. KULAGA; WILLIAM O. MORRELL; 

VONITA B. MORRELL; CHARLES GOTTSCHALL; ROBERT BOYD; LAWRENCE 

T. BRAUTIGAM; MARGARET F. BRAUTIGAM; ESTER LODEK; EDWARD

REINHART; RICHARD FISTER; EARL HERTZOG; MABEL HERTZOG; GERALD 

NYE; JANET NYE; ROBERT HAINLEY; HELEN HAINLEY; KAY REDCAY; 

BARRY REDCAY; STEVEN M. ENCK; JUDY D. ENCK; BECKY BUCHANAN;

CHARLOTTE M. GENTRY; HELEN COLEMAN; ROBERT BAUDER; JOHN HIGH; 

SCOTT D. SMITH; GENE L. LYNCH; DEBORAH L. LYNCH; CLIFFORD E. 

STOLTZFUS; RAYMOND W. MILEK; PARKSIDE MANOR HOMEOWNERS’

ASSOCIATION, INC.; DONALD E. HEINTZ; WENDY SCHMUCK, Executrix of the 

Estate of Ruth Ann Schmuck, Deceased 

_______________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. No. 5-11-cv-04593)

District Judge: Hon. J. William Ditter, Jr.

_______________

Submitted Under Third Circuit L.A.R. 34.1(a)

January 21, 2015

Before: FISHER, JORDAN, and GREENAWAY, JR., Circuit Judges.

(Filed: January 22, 2015)

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OPINION

_______________

JORDAN, Circuit Judge.

CGL, LLC (“CGL”) appeals an order of the United States District Court for the 

Eastern District of Pennsylvania granting summary judgment against it and in favor of 

William G. Schwab, a bankruptcy trustee with control of certain real property in 

Lancaster County (the “Property”), and in favor of the individuals residing on the 

Property (the “Parkside Residents”). The District Court did not err in concluding that 

CGL lacked a claim because CGL is not a beneficiary of a purportedly restrictive 

covenant on the Property, and we will therefore affirm. 

I. Background

The Property is located in East Cocalico Township (the “Township”), and, prior to 

2007, was owned by Vistacare Group, LLC (“Vistacare”). Vistacare operated a 

retirement community there known as Parkside Manor Retirement Community

(“Parkside”), containing 45 lots. Lots 1-44 were zoned and subdivided by individual 

residences, and, on Lot 45, Vistacare maintained an assisted-living facility. In 1984, the 

Township approved and accepted for recording a land development plan for Parkside 

which included certain restrictions on the land. Pertinent to this litigation is Restriction 

No. 1, which provided as follows:

 

 This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,

does not constitute binding precedent.

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Fee title to the lots shown on this plan will not be transferred to the parties 

having residences constructed upon the said lots but the title will remain in 

the Developer, his heirs and assigns.

(App. at 346, 401, 402, 1469.) 

On May 7, 2007, Vistacare filed a bankruptcy petition in the United States 

Bankruptcy Court for the Middle District of Pennsylvania and Schwab was appointed as 

Chapter 7 Trustee to manage the bankruptcy estate.1In an effort to liquidate Vistacare’s 

assets, Schwab filed a motion in the Bankruptcy Court on July 24, 2008, seeking 

permission to sell Parkside either as one parcel or as two separate parcels, one containing 

Lots 1-44 and a second containing Lot 45. In the motion, Schwab stated that the sale of

Parkside as two separate parcels would “be contingent upon approval by East Cocalico 

Township of the modification of Restriction No. 1” so as to allow Lot 45 and Lots 1-44 to 

be separated. (App. at 649.) Two months later, the Bankruptcy Court approved a public 

auction of Parkside, “free and clear of all liens and encumbrances.” (App. at 652.) 

Schwab promptly arranged for the auction of Lots 1-44 and Lot 45, but, because of 

the Parkside Residents’ objections to the sale of Lots 1-44, Schwab offered only Lot 45 

for sale. Grant Wise successfully purchased Lot 45 for $177,500 at the auction and later 

assigned his interest in the agreement of sale to CGL, a Pennsylvania limited liability 

company that he formed sometime in late 2008 or early 2009. Before closing on the sale 

of Lot 45, CGL’s counsel, Mark Yoder, requested confirmation from Thomas Goodman,

 

1 Although the Property is located in Lancaster County, which is in the Eastern 

District of Pennsylvania, Vistacare chose to file for bankruptcy in the Middle District of 

Pennsylvania for reasons that are not readily apparent from the record and are not

pertinent to this appeal.

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the Township’s attorney, that Restriction No. 1 did not apply to Lot 45. Goodman 

responded that the Township would not consider the sale of Lot 45 a violation of 

Restriction No. 1 because no residence had been built on Lot 45 and Restriction No. 1 

only referred to transferring ownership to those having residences on the Property. As 

further confirmation, Schwab filed a motion with the Bankruptcy Court to approve the 

sale of Lot 45 to CGL as free from Restriction No. 1. The Bankruptcy Court granted 

Schwab’s motion, and the sale of Lot 45 to CGL closed soon after.

While the sale of Lot 45 was being finalized, Schwab, Goodman, and counsel for 

the Parkside Residents, Aaron Marines, discussed the removal of Restriction No. 1 from 

Lots 1-44 so that they could be sold to the Parkside Residents. At an August 5, 2009

meeting of the Board of Supervisors for the Township, the Board, by means of a 

“Declaration” drafted by Marines, voted to approve the removal from Lots 1-44 of all the 

restrictions, including Restriction No. 1. Two days later, Schwab sent to CGL a draft of 

the unsigned Declaration. 

To effectuate the sale of Lots 1-44, Schwab filed adversary actions against the 

Parkside Residents, seeking a determination of whether the residences located on the lots 

were mobile homes that belonged to their owners or were permanent structures that 

belonged to the bankruptcy estate. After the Township approved the Declaration 

providing for the removal of Restriction No. 1, Schwab filed Notices of Settlement 

resolving the adversary actions with the Parkside Residents by allowing them all to 

purchase their individual lots for $37,000 each, “free and clear of all liens and

encumbrances.” (App. at 752-53.) Schwab and the Township representatives signed the 

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Declaration and it was duly recorded in the Office of the Recorder of Deeds of Lancaster 

County. Schwab also sought and obtained Bankruptcy Court approval of the sale of the

common areas and remaining lots in Parkside to the newly-created Parkside 

Homeowner’s Association. 

CGL had its own request before the Bankruptcy Court. It wanted leave to file suit 

against Schwab in the Lancaster County Court of Common Pleas,2so that it could 

challenge the sale of Lots 1-44 and seek enforcement of Restriction No. 1. The 

Bankruptcy Court granted CGL’s motion. That decision was later affirmed by the United 

States District Court for the Middle District of Pennsylvania, In re Vistacare Grp, LLC,

2011 WL 2111997 (M.D. Pa. May 26, 2011), and by this Court, In re Vistacare Grp, 

LLC, 678 F.3d 218 (3d Cir. 2012).

As permitted, CGL filed suit against Schwab in Lancaster County. Schwab then 

filed a Notice of Removal, taking the case from the Court of Common Pleas to federal 

court, on the basis that he was being sued as a federal official. The case thus ended up 

before the United States District Court for the Eastern District of Pennsylvania. CGL 

later filed an amended complaint and then a second amended complaint, adding the 

Parkside Residents as additional defendants. After the close of discovery, all parties filed 

 

2 A party seeking to sue a court-appointed bankruptcy receiver must first obtain 

leave of the appointing court. Barton v. Barbour, 104 U.S. 126, 128 (1881); In re 

Vistacare Grp, LLC, 678 F.3d 218, 235 (3d Cir. 2012) (stating that a party proposing to 

sue a trustee must make out a prima facie case against the trustee, showing that its claim 

is “not without foundation,” and noting that that standard involves a greater degree of 

flexibility than the Rule 12(b)(6) motion to dismiss standard (internal citation and 

quotation marks omitted)).

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cross-motions for summary judgment. The District Court granted Schwab’s and the 

Parkside Residents’ motions and denied CGL’s. This timely appeal followed. 

II. Discussion3

CGL primarily contends that the District Court erred in holding that CGL was not 

an intended beneficiary of Restriction No. 1 and therefore could not enforce that 

restriction. Its argument is without merit.

4

Under Pennsylvania law, a restrictive covenant can be enforced by a party to the 

agreement containing the covenant or by an intended beneficiary of the covenant.

5

 

 

3 The District Court had jurisdiction under 28 U.S.C. § 1442. We have jurisdiction 

pursuant to 28 U.S.C. § 1291. We review the District Court’s grant of summary 

judgment de novo and “view inferences to be drawn from the underlying facts in the light 

most favorable to the nonmoving party.” Montanez v. Thompson, 603 F.3d 243, 248 (3d 

Cir. 2010) (internal quotation marks omitted). Summary judgment is appropriate where 

the court is satisfied that there is no genuine dispute as to any material fact and that the 

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex 

Corp. v. Catrett, 477 U.S. 317, 330 (1986).

4 CGL makes other arguments that are similarly unpersuasive. It says that the 

District Court erred in characterizing its claims as being for violations of due process 

rights. But, in fact, in its Second Amended Complaint, CGL specifically notes that “[t]he 

sales of the individual lots violate Restriction No. 1, are unlawful and have caused 

damage to CGL’s property interests in Lot 45” and that “[t]he Declaration is an attempt 

to deprive CGL of its property rights without notice and without due process of law.” 

(Second Amended Complaint, ¶¶ 24, 25.) Furthermore, while CGL contends that it never 

asserted a due process violation, it does not argue that the District Court’s ruling on the 

merits of any such due process claim was in error. CGL says that the District Court erred 

in concluding that Restriction No. 1 was properly removed from Lots 1-44 before the sale 

of those lots to the Parkside residents. As explained below, however, CGL was not an 

intended beneficiary of Restriction No. 1 and thus, even if the restriction was improperly 

removed, CGL lacks any standing to enforce the restriction. 

5 The District Court concluded that Restriction No. 1 was not a restrictive 

covenant but continued to hold that, even if it were a restrictive covenant, CGL was not 

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Mariner v. Rohanna, 92 A.2d 219, 220 (Pa. 1952) (“The persons initially entitled to 

enforce the obligation of a promise respecting the use of land are the promisee and such 

third persons as are also beneficiaries of the promise.” (internal quotation marks 

omitted)). For a person or entity who is not a party to the restriction – such as CGL in 

this case – the right to seek enforcement “depends on whether or not the restrictive 

covenant or agreement was imposed on the land owned by [the] defendant for the benefit 

of the land owned by [the] plaintiffs who are seeking to enforce the restriction.” Fey v. 

Swick, 454 A.2d 551, 554 (Pa. Super. 1982) (internal quotation marks omitted). That 

question “is determined largely by the intention of the parties.” Id. (internal quotation 

marks omitted). Thus, in order to enforce Restriction No. 1 as it pertains to Lots 1-44, 

CGL would have to establish that the restriction was intended to be a burden on Lots 1-44 

and a benefit for Lot 45. 

CGL does not point to any language in the deed to Lot 45 to show that the 

purchase of Lot 45 conferred a right to enforce restrictions pertaining to Lots 1-44, nor to 

any language within Restriction No. 1 to show that it was intended to benefit Lot 45. 

Indeed, by CGL’s own admission, “no evidence exists of the intention of either the East 

Cocalico Board of Supervisors or the Developer in plac[ing] Restriction No. 1 on the 

[Parkside land development] Plan, beyond the actual language of the restriction.” 

(Appellant’s Br. at 5-6.) That language gives a benefit only to the “developer, his heirs 

and assigns” by stating that fee title to the lots will remain with them. (App. at 346, 401, 

 

an intended beneficiary of it and thus could not seek its enforcement. Because we agree 

with the District Court that CGL was not an intended beneficiary, we do not reach the 

issue of whether Restriction No. 1 was a restrictive covenant under Pennsylvania law.

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402, 1469.) CGL provides no legal authority for its assertion – which it makes in a 

footnote in its Opening Brief – that, as the purchaser of Lot 45 in a bankruptcy auction, it 

is an assign of the developer of the lots. Furthermore, CGL and Schwab agreed at the 

time of the sale of Lot 45 that Restriction No. 1 did not apply to that lot because there 

was no residence constructed on it. After purchasing Lot 45 free from the burden of 

Restriction No. 1, CGL cannot now contend that, simply by owning a lot near Lots 1-44,

it became the beneficiary of Restriction No. 1 and acquired the right to enforce that

restriction, which pertains only to Lots 1-44.

III. Conclusion

For the foregoing reasons, we will affirm the District Court’s grant of summary 

judgment for Schwab and the Parkside Residents.

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