Court Opinion

ID: 4391310
Source: CourtListenerOpinion
Date Created: 2019-04-26 17:39:29.88272+00
Date Added: 2024-06-11T14:51:53.207163
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 CHARTER HOMES AT MILL CREEK,            :   IN THE SUPERIOR COURT OF
 INC.                                    :        PENNSYLVANIA
                                         :
                                         :
              v.                         :
                                         :
                                         :
 CHARLAN GROUP, L.P.                     :
                                         :   No. 1113 MDA 2018
                   Appellant             :
                                         :
                                         :
                                         :
                                         :
              v.                         :
                                         :
                                         :
 CHARTER HOMES BUILDING                  :
 COMPANY                                 :

             Appeal from the Judgment Entered June 11, 2018
     In the Court of Common Pleas of Lancaster County Civil Division at
                           No(s): CI-15-01375

BEFORE: LAZARUS, J., DUBOW, J., and NICHOLS, J.

MEMORANDUM BY LAZARUS, J.:                           FILED APRIL 26, 2019

      Charlan Group, L.P. (“Charlan”), appeals from the judgment entered in

favor of defendant Charter Homes at Mill Creek, Inc., and additional defendant

Charter Homes Building Company (collectively, “Charter Building”), following

a bench trial, the Honorable Leonard G. Brown, III, presiding. The underlying

dispute between Charlan, a real estate developer, and Charter Building, a

residential builder, arises out of a Lot Purchase Agreement (“Agreement”) and

the parties’ subsequent oral modifications. Following trial, the court entered
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judgment in favor of Charter Building in the amount of $1,054,033.95.

Charlan filed this appeal, raising three issues:

       1.    Did the trial court commit an error of law in failing to follow
       the requirements set out in [Fine v. Checcio,] 870 A.2d 850 (Pa.
       2005),[1] when it determined an applicable statute of limitations
       was tolled?

       2.    Did the trial court abuse its discretion in inferring an
       affirmative act of misrepresentation justifying a tolling of the
       statute of limitations?

       3.    Did the trial court commit an error of law or abuse of
       discretion in not finding Charter Building was estopped from
       changing its acceptance that $8.6 million in Improvement Costs
       had been paid by Charlan?

Appellant’s Brief, at 4. After our review of the parties’ briefs, the record and

the relevant law, we affirm based on Judge Brown’s August 6, 2018 Pa.R.A.P.

1925(a) order, which incorporates his comprehensive findings of fact and

conclusions of law, filed on May 7, 2018.2

       We first note our limited scope of review following a non-jury trial:

During a non-jury trial, the trial court acts as the finder of fact and has the

authority to make credibility determinations and resolve conflicts in evidence.

Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880, 888 (Pa. Super. 2006). The

court may believe all, part or none of the evidence. Id.

____________________________________________

1In portions of its brief, Charlan refers to this case as “Checo v. Fine.” See
Appellant’s Brief, at iv, 10.

2We refer to the order and findings/conclusions as the court’s May 7, 2018
opinion.

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       Issues of credibility and conflicts in evidence are for the trial court
       to resolve; this Court is not permitted to reexamine the weight
       and credibility determinations or substitute our judgment for that
       of the factfinder. Furthermore, the findings of the judge in a non-
       jury trial are given the same weight and effect as a jury verdict
       such that the court’s findings will not be disturbed on appeal
       absent an abuse of discretion, error of law, or lack of support in
       the record. We will not disturb the court’s factual findings merely
       on the basis we would have reached a different conclusion; rather,
       our task is to determine whether there is competent evidence in
       the record that a judicial mind could reasonably have determined
       to support the finding.

Id. at 887 (citations and quotations omitted).

       The underlying facts are as follows: Charlan purchased undeveloped

property in Lampeter Township, Lancaster County for $1.3 million, intending

to develop it into a residential neighborhood. Charlan, which had a business

relationship with Charter Building, entered into the Agreement with Charter

Building pertaining to the development of the property, known as Mill Creek.

The Agreement, dated September 19, 2002, contemplated that Charlan would

complete the land improvements,3 estimated at $8.6 million, and then sell the

237 lots to Charter Building.4

____________________________________________

3  The improvements included, inter alia, installation of streets, sidewalks,
walking paths, storm water management systems, site grading and street
lighting. See infra, at n. 3.

4Mill Creek originally had five phases, but Phase 4 was eliminated because
Charlan sold the land to Charter Building for $670,000.00. Charlan, therefore,
was relieved of its obligation to complete the improvements associated with
Phase 4.

                                           -3-
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       Thereafter, disputes arose as to the duties and obligations of the parties

under the Agreement. Charlan contended it was required to complete

improvements up to $8.6 million, and that any additional required

improvements would be the responsibility of Charter Building.            Charter

Building contended that if improvements cost less than $8.6 million, Charlan

was required to remit one-half the savings to Charter Building, and if

improvements cost more than $8.6 million, Charter Building and Charlan

would evenly share the additional costs. Charter Building would pay its 50%

share of the additional costs in 237 installments, as it purchased lots from

Charlan.5

       Further, according to Charter Building, the Agreement provided that,

depending upon which pricing method was used (aggregate-sum pricing or

fixed-price method), Charter Building might be obligated to pay an additional

amount for the purchase of each lot if the improvements totaled more than

$8.6 million. In other words, Charter Building would be required to reimburse

Charlan for one-half of the “excess” improvement costs if the aggregate-sum

pricing method were used. If the fixed-price method were used, then Charter

Building would have no obligation to reimburse Charlan for any portion of the

improvement costs overruns. At trial, Charlan’s representative testified that

Charter Building was responsible for 100% of the costs in excess of $8.6

million, regardless of which method was used.
____________________________________________

5As stated above, the development was to consist of 237 lots. See supra,
at p. 2.

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       In 2006, Charlan informed Charter Building that it had spent $8.6 million

on improvement costs and thereafter claimed that it had exceed the Adjusted

Improvement Costs Budget (AICB).6 Trial Court Opinion, supra at 10, citing

N.T. Bench Trial, 1/4/18, at 90-92; N.T. Bench Trial, 1/5/18, at 183-84, 237.

At the beginning of the 2008 housing crisis, sales of lots and homes in Mill

Creek essentially ground to a halt, and Charlan, which had a mortgage on the

undeveloped property, was concerned about foreclosure.               Charlan was no

longer in a position to continue paying for improvements in accordance with

the Agreement. Thus, Charter Building agreed to pay for improvements with

the understanding that, once the economy improved and sales picked up,

Charlan would reimburse Charter Building for one-half the costs in excess of

the AICB.

       Between 2008 and 2010, the height of the housing crisis, only a few lots

sold; zero lots sold in 2009 and only two lots sold in 2010. In 2012, as the

economy began to improve, lot sales began to pick up.

       As of October 31, 2012, Charter Building provided an accounting to

Charlan, showing that Charlan’s share of the excess improvement costs

beyond the AICB was $592,122. Charter Building indicated to Charlan that it

would accept $325,000 in settlement of $592,122 amount. Charlan, in a May

15, 2013 email to Charter Building, agreed to “reimburse” Charter $325,000.

Charter     presented    Charlan     with      an   Amendment   to   the   Agreement,
____________________________________________

6The cost of Phase 4 improvements that Charlan was not required to complete
was $605,576.24; $8.6 million less that amount is the AICB - $7,994,423.76.

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memorializing this agreement, but Charlan never signed it. See Trial Court

Opinion, supra at 9, 25; N.T. Bench Trial, 1/4/18, at 72-73.

      In July 2013, Charlan instructed its Comptroller, Julie Landis, to shred

the last seven (7) years of invoices relating to Mill Creek, thus destroying

documentation of what Charlan allegedly spent on improvements in 2005 and

earlier. See Order, 6/11/18 (amending findings of fact). In a September 4,

2013 email from Charlan to Charter Building, Charlan stated that it was

obvious the parties “can’t work this out. You have our last offer so do what

you feel you need to.” Email from Doug Desmond [of Charlan] to Rob Bowman

[of Charter Building], 9/4/13, Charlan’s Exhibit 29.

      On February 13, 2015, Charter Building filed suit against Charlan,

alleging breach of contract and related claims, and seeking to recover

improvement costs pursuant to the Agreement. Charter Building filed an

amended complaint on April 10, 2017, based on post-complaint discovery,

that Charlan had not actually reached the AICB amount (of $7,994,423.76).

      In its complaint, Charter Building alleged that after the Agreement was

signed, “Charlan did not have the funds to pay for all of the Improvements

and requested that [Charter Building] pay for the Improvements.” Complaint,

2/13/15, at ¶ 20. Charter Building also alleged that Charlan assured it “that

it would reimburse [Charter Building] for the amount it had to spend to

complete the Improvements up to the $8.6 million threshold[, and o]nce the

costs exceeded $8.6 million, Charlan would reimburse [Charter Building] for

half the amount spent by [Charter Building] thereafter.” Id. at ¶ 21. See

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also id. at ¶ 33. In reliance on Charlan’s promise, Charter Building averred

that it incurred costs in the amount of $1,246,891.00. Id. at 22.

      Charter Building claimed that it had agreed to use its own funds for

improvements, “based on its expectation and the understanding between [the

parties] that Charlan would reimburse [Charter Building] for one hundred

percent of the amount it spent up to the $8.6 million specified in the

Agreement, and fifty percent of the amount spent by [Charter Building] above

and beyond the $8.6 million threshold specified in the Agreement.” Id. at ¶

29. Further, Charter Building averred that “Charlan failed to pay for the first

$8.6 million in Improvements Costs and [Charter Building] was required to

pay for some of the Improvements that were clearly Charlan’s responsibility.”

Id. at 34.

      Robert P. Bowman, President of Charter Building, testified why it was

Charter Building’s position that Charlan had not paid the threshold $8.6 million

in improvement costs:

      [W]hen we asked for information, backup, this detailed report was
      provided, say, I think a handful of invoices. There is no – primarily
      no backup to this document. All we really have are these
      headings, what we assume are costs are under those headings
      that were spent at Mill Creek. But if I were just to take out the
      ones that are not improvement costs, the number falls
      dramatically from totals that are here to an amount that we
      believe were paid for improvement costs. So those are two
      reasons I believe that they didn’t hit that. One, I don’t have any
      verification of whether there were Mill Creek invoices or not. The
      second point is that the typical improvement costs which are
      contemplated under the [A]greement, there are a lot of costs on
      this list that aren’t considered improvement costs.

                                      -7-
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N.T. Bench Trial, 1/4/18, at 91. Additionally, Bowman testified that he first

came to the conclusion that Charlan had not paid $8.6 million in improvement

costs “[a]fter we got this detailed summary,” which was in response to a

discovery request, after the original complaint had been filed in 2015. Id. at

92-93. He clarified that between 2007 and 2015, he had no reason to doubt

that Charlan had paid $8.6 million in improvement costs, because George

Desmond, general partner of Charlan, with whom he had had a business

relationship since 1999, had told him so. Id. at 92 (“George told me $8.6

million and I believed him.”). At trial, Charlan admitted that the Agreement

stated that it was required to complete all improvements shown on the

development plans.7

____________________________________________

7   The Agreement provides, as follows:

        5. RESPONSIBILITIES OF SELLER AND BUYER

        Seller [Charlan] shall be responsible for completion of all
        improvements required in connection with the Land Use Plan,
        recorded Subdivision Plan or Plans, and other plans submitted to
        and approved by all governmental entities having jurisdiction
        thereof (hereinafter collectively referred to as the “Development
        Plans”), in accordance with all requirements of all governmental
        entities having jurisdiction thereof, including all grading, streets,
        curbs, storm water system (excluding individual Lot storm water
        detention facilities, if any), common facilities including (but not
        limited to) the neighborhood center, recreational facilities, walking
        path, street lighting, common area landscaping, and public water
        and sanitary sewer lines, underground electric, telephone and
        other required utilities.

                                           -8-
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       Following trial, the court issued findings of fact and conclusions of law.

In particular, the court found as follows:

       1. Charlan spent a total of $7,052,519.88 on Improvements;

       2. Charter Building incurred costs of $1,166,164.02 for Improvements;

       3. The total Charlan and Charter Building spent on Improvement Costs
          is $8,218,683.90;

       4. Charlan was solely responsible for paying the Adjusted Improvement
          Costs Budget of $7,994,423.76;

       5. The difference between the $8,218,683.90 and the Adjusted
          Improvement Costs Budget of $7,994,423.76, is $224,260.14;

____________________________________________

Lot Purchase Agreement, 9/19/02, at § 5. The Agreement also provided that
in the event the improvements totaled less than $8.6 million, Charlan would
pay half of the difference/savings to Charter Building:

       6. COSTS OF SELLER RESPONSBILITIES                     AND BUYER
       CREDIT

       Seller’s [Charlan’s] direct costs for the responsibilities of Seller as
       forth in Section 6 of this Agreement, including the development of
       all phases of Mill Creek, are estimated to total Eight Million Six
       Hundred Thousand and no/100 Dollars ($8,600,000.00)
       (“Improvement Costs”). . . . Upon the completion of the
       responsibilities of [Charlan] as set forth in Section 5 of this
       Agreement, if the Improvement costs shall be less than Eight
       Million    Six   Hundred      Thousand      and    no/100      Dollars
       ($8,600,000.00), [Charlan] shall pay to [Charter Building] one
       half of the difference between the final Improvement Costs and
       Eight Million six Hundred Thousand and no/100 Dollars
       ($8,6000,000.00).

Id. at ¶ 6.

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        6. Under section 3(a)(ii) of the Lot Purchase Agreement, Charter
           Building had to pay 50% of the Improvement Costs in excess of the
           budget to Charlan.8 This amounted to $112,130.07; [and]

        7. Since Charter Building had paid $1,166,164.02 for Improvements in
           place of Charlan, when it was only supposed to have paid
           $112,130.07, Charlan owed Charter Building the difference, which
           amounted to $1,054,033.95.

Trial Court Opinion, 5/7/18, at 12, 22-23. As noted above, the court entered

judgment in favor of Charter Building for $1,054,033.95. Charlan filed a post-

trial motion on May 17, 2018 and this timely appeal followed.
____________________________________________

8   Section 3(a)(ii) of the Agreement provides:

        a. For all Lots, [Charter Building] shall pay to [Charlan] as the
           Purchase price for each Lot[:]

              ii.    The aggregate sum of:

                     (1)    Twenty Three percent (23%) of the Base Price
                            of each home and Lot sold by [Charter Building]
                            as Builder to a Homebuyer; and

                     (2)    Fifty percent (50%) of the Lot Premium, if any,
                            paid by the Homebuyer; and

                     (3)    Fifteen percent (15%) of the price of Options
                            incorporated into the home sold by [Charter
                            Building] as Builder to the Homebuyer, and

                     (4)    In the event that Improvement Costs (as
                            defined in Section 6 of this Agreement exceed
                            the sum of $8,600,000, one two hundred thirty
                            sevenths (1/237) of fifty percent of the
                            difference between the total Improvement costs
                            and $8,600,000.

Lot Purchase Agreement, supra at 3(a)(ii).

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       We address Charlan’s first two claims together.           Charlan argues the

court erred in finding that the statute of limitations9 was tolled and in inferring

that Charlan misrepresented that it had paid $8.6 million in improvement

costs. Charlan argues that Charter Building’s cause of action accrued in 2006,

when Charlan first told Charter Building that it had satisfied the relevant

portion of the Agreement. See Trial Court Opinion, supra at 7, 10. Charlan

claims that Charter Building’s 2015 lawsuit, amended in 2017, is time-barred

as to the contract claim, and that the trial court erred in allowing the discovery

rule to toll the statute, thereby improperly increasing Charter Building’s

damages. Charlan relies on Fine, supra, to support its argument.

       In Fine, the Court stated “the discovery rule applies to toll the statute

of limitations in any case where a party neither knows nor reasonably should

have known of his injury and its cause at the time his right to institute suit

arises.” Id. at 859. Charlan is not entitled to relief under Fine.

       The    trial   court   found    that    Charlan   told   Charter   Building   in

“approximately 2006,” and “[i]n late 2007,” that it had spent $8.6 million

improvement costs and thereafter consistently claimed it had exceeded the

AICB. See id. at 7, 10.            Charlan produced a document entitled “Job

Transaction Detail Report,” which listed costs Charlan purportedly incurred at

Mill Creek; however, Charlan produced no invoices, bills, payments requests,

checks or evidence to support its claims, contending all documentation from
____________________________________________

9 Pennsylvania’s statute of limitations requires lawsuits upon a contract to
commence within four years. See 42 Pa.C.S.A. § 5525(a).

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2005 and earlier was destroyed in 2013.         See Order, 6/11/18 (amending

findings of fact).   Since Charlan destroyed its evidence, and presented no

evidence in support of its claims, the trial court, sitting as finder of fact, found

its witnesses not credible. The court found Charter Building credibly testified

that it was never provided with detailed invoices for amounts it was charged

by Charlan for improvements prior to 2008. See N.T. Bench Trial, 1/4/18, at

91-93 (Testimony of Robert Bowman).

      Significantly, the court concluded that Charter Building’s cause of action

against Charlan arose on September 4, 2013, when Charlan indicated it would

not be paying the previously-agreed reimbursements (for improvements paid

for by Charter Building during the height of the housing crisis).          Further,

Charlan indicated that if Charter Building would not accept reimbursement in

lots, Charlan essentially invited Charter Building to file suit, “[D]o what you

feel you need to.” Charter Building then filed its suit on February 13, 2015,

within the four-year statute of limitations.

      As the court reasoned, “it is not unusual for a party to agree to pay

money on another’s behalf based on agreement that the debt will be repaid

at an unspecified later time.” Trial Court Opinion, supra at 23. Here, the

court concluded that Charlan’s “obligation to repay the debt” arose, based on

the facts and circumstance here, “when the housing market rebounded.” Id.

at 23-24. In particular, it was not until after Charter Building filed suit and it

obtained Charlan’s Job Transaction Detail Report, that Charter Building’s claim

for the excess improvement costs accrued. The court determined that Charter

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was previously unaware that Charlan “did not actually incur costs up to the

[AICB] as Charlan told Charter Building in 2006 that it had spent $8.6 million

and thereafter consistently claimed that it had exceeded the [AICB]. Id. at

24, citing N.T., 1/4/18, at 90-92, N.T. 1/5/18, 183-84, 237.       Thus, the court

concluded, Charter Buildings’ claim for Charlan’s share of the excess

improvement costs was timely. Id. at 24.

      We also find Charlan’s argument that the court erred in “inferring an

affirmative act of misrepresentation” to justify tolling the statute of limitations,

misplaced. The trial court based its conclusion on the discovery rule-- that

the statute was tolled because Charter Building did not know, or could not

reasonably have known, of its damages until (a) Charlan indicated it would

not reimburse Charter, and (b) Charter Building received Charlan’s Job

Transaction Detail Report after the original complaint was filed.        Charlan’s

attempt to cast the trial court’s tolling of the statute as based on a “finding”

of misrepresentation, is a red herring. Fraudulent concealment is a separate

ground that may toll a statute of limitations. Charlan attempts to conflate the

two, arguing that a showing of fraud is required in order for the court to apply

the discovery rule to toll the statute. Fraud need not be shown in order for a

party to invoke the discovery rule.       As we noted in Gustine Uniontown

Assocs., Ltd. v. Anthony Crane Rental, Inc., 892 A.2d 830 (Pa. Super.

2006):

      The discovery rule is distinct from the issue of whether a party is
      equitably estopped from invoking the statute of limitations. Fine
      v. Checcio, 582 Pa. 253, 870 A.2d 850 (2005). The discovery

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      rule operates to toll the statute of limitations during the period the
      plaintiff’s injury or its cause was neither known nor reasonably
      knowable to the plaintiff. Id. The separate doctrine of fraudulent
      concealment tolls the statute based on an estoppel theory and
      provides that a defendant may not invoke the statute of limitations
      if through either intentional or unintentional fraud or concealment,
      the defendant causes the plaintiff to relax his vigilance or deviate
      from his duty of inquiry into the facts. Id. Thus, the former
      doctrine involves a plaintiff’s lack of knowledge and the latter
      doctrine pertains to a defendant’s conduct after the cause of
      action arose.

Id. at 835.n.2.

      Here, the court did not make a finding of misrepresentation; it

determined that the discovery rule applied. As the record supports the trial

court’s findings, we find no error. See Gleason v. Borough of Moosic, 15
A.3d 479 (Pa. 2011) (where complaining party is reasonably unaware that his

or her injury has been caused by another party’s conduct, discovery rule

suspends, or tolls, running of statute of limitations). See also Ruthrauff,

supra at 888; John B. Conomos, Inc. v. Sun Co., Inc., 831 A.2d 696, 703

(Pa. Super. 2003) (our task is to “determine whether there is competent

evidence in the record that a judicial mind could reasonably have determined

to support the finding.”).

      Charlan’s final claim, that the court erred in not finding Charter Building

was estopped from changing its “acceptance that $8.6 million in Improvement

Costs had been paid by Charlan,” is waived. Charlan did not raise this claim

in its May 17, 2018 motion for post-trial relief. See Chalkey v. Roush, 805
A.2d 491, 496 (Pa. 2002); Pa.R.C.P. 227.1.

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     We, therefore, affirm the judgment entered in favor of Charter Building,

and we direct the parties to attach a copy of Judge Brown’s comprehensive

opinion in the event of further proceedings in this matter.   See Pa.R.A.P.

1925(a) Order, 8/6/18; Findings of Fact/Conclusions of Law, 5/7/18.

     Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/26/2019

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