Court Opinion

ID: 9366384
Source: CourtListenerOpinion
Date Created: 2023-01-26 17:08:23.669343+00
Date Added: 2024-06-11T17:15:52.124292
License: Public Domain

J-A16036-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    MATTHEW 2535 PROPERTIES, LLC               :    IN THE SUPERIOR COURT OF
                                               :         PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    RICHARD E. DENITHORNE AND                  :
    PRISCILLA F. DENITHORNE                    :
                                               :    No. 285 EDA 2022
                       Appellants              :

               Appeal from the Judgment Entered March 4, 2022
     In the Court of Common Pleas of Carbon County Civil Division at No(s):
                                   18-1411

BEFORE:      McLAUGHLIN, J., McCAFFERY, J., and PELLEGRINI, J.*

DISSENTING MEMORANDUM BY PELLEGRINI, J.: FILED JANUARY 26, 2023

        Because the majority, in reversing the trial court, has engaged in

impermissible fact finding, and that fact finding is not supported by competent

evidence and is at variance with the words of the provision at issue and has

reversed the trial court’s remedy based on a misapprehension of law and facts,

I respectfully dissent.

        On January 13, 2018, Richard E. Denithorne and Priscilla F. Denithorne

(Sellers) and Matthew 2535 Properties, LLC (Buyer) entered into an

agreement of sale for the Property on which there was a bar-restaurant with

an agreed-upon sale price of $400,000.             The Sellers’ three sons, through

Denithorne Brothers, Inc., operated the bar-restaurant and it insured the

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
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Property, even though it did not own the Property. Sellers did not have their

own insurance on the Property. Prior to closing, on March 17, 2018, a large

fire engulfed the Property and destroyed the bar-restaurant.

     After Sellers refused to remediate the damages to and close on the sale

of the Property, Buyer brought an action for specific performance seeking to

enforce the agreement of sale (Agreement).        The key provision in that

Agreement at issue is Paragraph 16 that provides, in pertinent part:

     Risk of Loss/Condemnation. Seller shall bear all risk of loss
     until Closing, and shall deliver the Property in its current
     condition as of this date. Seller shall coordinate any remediation
     of casualty with Buyer or arrange for the provision of the funds
     for remediation at Closing and may leave the Property in its
     damaged condition if the proposed insurance settlement is
     acceptable to Buyer. The parties shall cooperate and coordinate
     any remediation or assignment of proceeds to achieve the desired
     result of the Buyer without added cost to Seller. . . .

     In granting specific performance, the trial court found this paragraph to

be ambiguous because of the different understandings of what “without

additional cost to the Seller” meant. The Sellers contended that that clause

protected them from any loss other than the amount of the insurance

proceeds, if they existed, while the Buyer stated that that provision meant

that the Buyer was required to assume all risks of cost until closing.     In

resolving the ambiguity, the trial court found that because the Sellers were

obligated to close on the Property and deliver the Property in its current

condition but was also obligated to compensate the Buyer the value of the

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bar-restaurant as measured by insurance proceeds received by Denithorne

Brothers, Inc. rather than remediate the Property.

      In reversing the trial court, the majority states that the trial court did

not give proper effect to the phrase “without added cost to Seller” in holding

that the Sellers were bound by the Agreement to either remediate the

property to its prior condition or “provide[ ] the funds necessary to remediate

the Property.”   As a result of that lack of emphasis, the majority rewrites

Paragraph 16 which states the Sellers are responsible for “all risk of loss until

Closing” to the Seller is “not” responsible for risk of loss unless they have

insurance. Because the majority ignores a whole lot of words in arriving at

this conclusion and substitutes factual interpretation for that of the trial court,

I respectfully dissent for several reasons.

                                        I.

      As the majority points out, on appeal, Sellers do not challenge the trial

court’s finding that Paragraph 16 is ambiguous. What the majority does not

squarely address, though, is our narrow scope of review when reviewing a

trial court’s findings regarding an ambiguous contract. Unlike unambiguous

provisions which are interpreted as a matter of law, ambiguous provisions are

interpreted by the finder of fact.    See Ins. Adjustment Bureau, Inc. v.

Allstate Ins. Co., 905 A.2d 462, 469 (Pa. 2006). Because the trial court is

the finder of fact, we must begive those findings the same weight and effect

on appeal as the verdict of a jury and interpret those provisions most favorable

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to the verdict winner, and we can only reverse the trial court’s interpretation

of an ambiguous contract that is not supported by competent evidence in the

record or if its findings are premised on an error of law. Jones v. McGreevy,

270 A.3d 1, 12 (Pa. Super. 2022).

      The majority does not discuss why the trial court’s interpretation is

unreasonable or wrong by emphasizing the topic sentence of Paragraph 16

that “Seller shall bear all risk of loss until Closing, and shall deliver the

Property in its current condition . . .” Presumably, it believes its interpretation

is “better,” a conclusion that is not ours to make under our scope of review.

      Moreover, not only does it usurp the trial court’s fact finding function,

the majority’s interpretation is not better because it does not take into

consideration all the language of Paragraph 16 in that:

      •      It reads out the first sentence which provides that “Seller
      shall bear all risk of loss until Closing and shall deliver the Property
      in its current condition as of this date.” All risk of loss is just that
      – all risk of loss.

      •     It also ignores the next sentence which states that “Seller
      shall coordinate any remediation of casualty with Buyer or
      arrange for the provision of the funds for remediation at Closing
      and may leave the Property in its damaged condition if the
      proposed insurance settlement is acceptable to Buyer.” Under
      this sentence, it is clear that Sellers can cure any loss by
      remediation, funds for remediation or any insurance settlement,
      if acceptable to Buyer. By denominating those options, this
      provision clearly does not provide that only if Sellers have
      insurance are they obligated for loss; only if they do have
      insurance, Buyer, at its discretion, can accept that amount.

      •     The best reading of the phrase in the last sentence -
      “without added cost to the Seller,” upon which the majority relies,
      modifies “the assignment of [insurance] proceeds” mentioned in

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      previous sentences. In other words, it means that if the Buyer
      accepts the insurance proceeds, that was all that it was to receive.

      Because the trial court’s interpretation is not unreasonable and is

consistent with all words of the Agreement, I disagree with the majority

essentially making its own findings and arriving at its interpretation of the

contract, something that is not permissible under our narrow scope of review.

                                      II.

      Even if Sellers were entitled to specific performance, the majority then

goes on to say that the trial court erred in directing the purchase price to be

$400,000 less the amount of insurance proceeds paid to Denithorne Brothers,

Inc. because Buyer did not present evidence of the fair market value of the

Property, and the only evidence submitted was the $375,000 post-fire offer

they had received from a third party.       I respectfully disagree because the

majority relies on a mistaken view of the law and a misimpression of what the

trial court ordered.

      Specific performance of an agreement for the sale of real estate is not

an action for damages but to have the effect of the

             From the moment an agreement of sale of real estate
      is executed and delivered it vests in the grantee
      [(purchaser)] what is known as an equitable title to the
      real estate. Thereupon the vendor [(seller)] is considered
      as a trustee of the real estate for the purchaser and the latter
      becomes a trustee of the balance of the purchase money for the
      seller. Hence, if the terms of the agreement are violated by the
      [seller], [the purchaser] may go into a court of equity seeking to
      enforce the contract and to compel specific performance.

                                     ***

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                Courts in this Commonwealth consistently have determined
         that specific performance is an appropriate remedy to compel the
         conveyance of real estate where a seller violates a realty contract
         and specific enforcement of the contract would not be contrary to
         justice.

Oliver v. Ball, 136 A.3d 162, 167 (Pa. Super. 2016), appeal denied, 145 A.3d

167 (Pa. 2016) (citations and quotation marks omitted; emphases added).

         In this case, the terms of the Agreement provided Sellers with the right

to seek specific performance in the event of a breach, given the necessarily

unique nature of the sale of real property. In addition, Paragraph 16 provided

how any damages involving the structure incurred before closing would be

compensated or remediated for which the Sellers were to bear the risk of “all

loss.”

         In crafting its order for specific performance of the Agreement, the trial

court recognized that remediation had to take the form of money damages

representing the value of the Property that were paid due to the destruction

of the Property. It reasoned that:

                [We] are mindful that the subject property no longer
         contains the restaurant structure as a result of the fire. The
         plaintiff has sought other possible forms of relief, but they are not
         feasible.     We cannot order the parties to coordinate the
         remediation of the property because remediation in this case
         would require the Defendants to construct an entirely new
         restaurant on the property. There has been no testimony or
         evidence presented to this Court concerning the value of the
         restaurant structure prior to the fire. There has been no testimony
         or evidence presented to this Court as to the timeframe or cost of
         constructing a new restaurant on the property. . . . We also
         cannot order the Defendants to provide the insurance proceeds to

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      the Plaintiff because the insurance proceeds were not paid to the
      Defendants, but to Denithorne Brothers, Inc.

             Based on the foregoing, we find the most equitable remedy
      to be one where the Plaintiff may purchase the subject property
      for the sum of four hundred thousand dollars ($400,000), as set
      forth in the Agreement, minus the amount of the insurance
      proceeds paid to Denithorne Brothers, Inc. for the total loss of the
      restaurant structure, excluding therefrom any sum paid by the
      insurance company for the loss of personal property contained
      within the restaurant. We find that because there was no
      testimony or evidence presented as to the value of the damaged
      and destroyed restaurant, the insurance proceeds provide the
      best estimate as to the true value of that structure. . . . The
      Plaintiff is, in effect receiving the value of the insurance settlement
      as negotiated by the parties in the event of a loss and a failure to
      remediate on the part of the Defendants.

(Trial Ct. Op., at 13-15).

      As can be seen, the trial court did not order the amount of insurance

proceeds paid to Denithorne Brothers, Inc. to be paid to the Sellers. What

this order did was use that amount as a measure of damages for remediation

that Sellers were required to pay.      It was also an amount envisioned by

Paragraph 16 as an alternative measure of damages rather than remediation,

i.e., that Sellers rebuild the bar-restaurant, something that the trial court

could have ordered.

      As to the Sellers’ claim that the trial court should have accepted their

evidence of a market value of $375,000 in the form of the third-party offer for

the Property after the fire, presumably, the Sellers would contend that if

accepted, they would argue that the Buyer only suffered a $25,000 loss. What

that ignores is that this is an action for specific performance seeking to have

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the Agreement enforced, not an action for money damages. Even if there was

a bona fide offer of one million dollars for the Property after the fire, that

would not have defeated the request for specific performance to close on the

Property with the Property in the same condition as it was when the

Agreement was entered.

      Moreover, the trial court properly rejected that evidence because the

party who purportedly made the offer was not called as a witness to verify the

contents of the offer or its authenticity and the trial court refused to accept it.

Viewing the evidence in the light most favorable to the Buyer as the verdict

winner and giving appropriate weight to the findings and credibility

determinations of the trial court as factfinder, we decline to disturb the trial

court’s assessment in this regard. See Jones, supra at 12.

      Accordingly, because I agree with the trial court that equity required

specific performance of the sale of the Property at the contract price, adjusted

downward measured by the amount of the insurance proceeds paid as a proxy

for the amount needed to cover the loss, I respectfully dissent.

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