Eagleview Corporate Center Ass'n v. Citadel Federal Credit Union ( 2016 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Eagleview Corporate Center :
Association :
:
v. : No. 547 C.D. 2016
: Argued: October 20, 2016
Citadel Federal Credit Union, :
Appellant :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION
BY PRESIDENT JUDGE LEAVITT FILED: December 2, 2016
Citadel Federal Credit Union (Citadel) appeals an order of the Court
of Common Pleas of Chester County (trial court) directing it to screen its roof-
mounted air-conditioning equipment. The trial court also ordered Citadel to
reimburse Eagleview Corporate Center Association (Association) for the attorneys’
fees and costs that it incurred to enforce a prior order of the trial court. Citadel
contends that the trial court erred. It notes, first, that the prior order, which granted
Citadel’s request for a declaration that its air-conditioning equipment could be
placed on the roof, did not order Citadel to do anything. Citadel further notes that
the trial court specifically found in the prior proceeding that the visual intrusion of
Citadel’s equipment was de minimis, suggesting that separate screening was
neither required nor necessary. We reverse and remand.
Background
In April 2010, Citadel purchased an office building located in the
Eagleview Corporate Center, which center was developed pursuant to the Uniform
Planned Community Act, 68 Pa. C.S. §§5101-5414. An “Amended and Restated
Declaration of Easements and Protective Covenants and Restrictions for the
Center” (Declaration) imposes duties upon, and creates rights in, property owners
in the Center. The Association is charged with the management of the Eagleview
Corporate Center and enforcement of the covenants in the Declaration.
In September of 2010, Citadel installed air-conditioning condensing
units that were necessary to cool its data processing equipment located inside the
building. The Association claimed that the equipment violated Article VIII,
Section 8.3(c) of the Declaration, which states as follows:
(c) Exterior Equipment. Exterior mechanical and electrical
equipment, including, without limitation, air conditioning
equipment, air handling equipment, transformers, transclosures,
pump houses, communication towers, vents and fans, whether
mounted on the roof or walls of any building or on the ground,
shall be placed or screened so that the predominant design
lines of the building or structure continue without visual
distraction or interruption. If any such equipment is not
screened from the view of any interior roadway, such
equipment shall be separately screened as approved by the
Committee. The height of any such screening shall be at least
equal to the height of the equipment to be screened.
Declaration, Art. VIII, §8.3(c) (emphasis added); Reproduced Record at 63a-64a
(R.R. ___). The Association contended that Citadel’s equipment presented a
“visual distraction” and demanded that Citadel remove the equipment and place it
on the ground. Citadel refused.
In February of 2011, the Association initiated a suit in equity against
Citadel seeking to have Citadel remove the equipment and to be enjoined from
making any future alteration to its building without Association approval. Citadel
counterclaimed, seeking a declaratory judgment that the Association had no
2
authority under the Declaration to require the placement of air conditioning
equipment on the ground.
On January 23, 2014, after a bench trial, the trial court denied the
Association’s request for an injunction because it did not establish the requisite
elements for an injunction. The Association did not establish a clear right to an
injunction because the Declaration authorized the installation of equipment on the
roof. Because the visual impact of the equipment was de minimis, the Association
did not establish harm, let alone that greater harm would result from the denial of
an injunction than from its grant.
On these factual findings and legal conclusions, the trial court entered
an order that stated as follows:
1. Plaintiff’s Petition for Permanent Injunction is DENIED;
2. Defendant’s request for Declaratory Judgment is
GRANTED;
3. Declaratory Judgment is entered in favor of Defendant and
against Plaintiff, and consistent therewith, Defendant’s
existing roof-mounted mechanical equipment is hereby
authorized and approved and is subject to the screening
requirement found in the Declaration at Article VIII,
§8.3(c);
4. Defendant’s request for counsel fees is DENIED.
Trial Court op., 1/23/2014, at 10.
In May 2014, the Association asked Citadel about its plans for
screening the rooftop equipment. When Citadel declined to discuss the matter, the
Association filed a “petition to compel” Citadel’s compliance with the trial court’s
January 23, 2014, order. In connection therewith, the Association requested
3
attorney fees and costs. The trial court conducted a hearing on January 7, 2016, at
which both parties presented evidence.
The Association presented the testimony of Lance Hillegas, the vice-
president of design at the Hankin Group, who provides consulting services to the
Association’s Architectural Control Committee (Committee). Hillegas testified
that after the entry of the January 23, 2014, order, Citadel did not send him
proposed plans for screening its rooftop equipment. Carl Holden, an architect
engaged by the Association to consider screening options for Citadel’s rooftop
equipment, also testified. Working with a structural engineer and a general
contractor, Holden came up with several options with varying costs depending on
whether the rooftop equipment remained in its current location or would be
relocated. Were the rooftop equipment to be relocated, the cost would range
between $169,081 and $176,021, depending on the type of screen. Were the
rooftop equipment to remain in its current location, the cost would range between
$196,000 and $204,000.
Citadel presented the testimony of its architect, Lee Casaccio, who
generally agreed with Holden’s cost estimates. However, he was uncertain about
the cost to relocate the equipment, noting that it could be significant because of the
need to re-route electrical and other utility services inside the building. He
doubted that “investing $200,000 would be a prudent decision” because the visual
impact of the screening “could be greater than the de minimis impact of the
individual units that are there now.” Notes of Testimony, 1/7/2016, at 83-85 (N.T.
___); R.R. 1265a-67a.
On March 8, 2016, the trial court granted the Association’s petition to
compel. The trial court was troubled that Citadel had adopted a “reversal of its
4
trial position” by asserting that the equipment should not be screened. Trial Court
op., 3/8/2016, at 5. Accordingly, the trial court entered the following order:
1. Defendant is directed to comply with the January 14, 2014
Order in that the Equipment is subject to the screening
requirements of §8.3(c) of the Declaration and must be
separately screened as approved by the Architectural Control
Committee consistent with Exhibits P-11, P-12 and D-1, and
2. Defendant shall pay Plaintiff’s attorneys’ fees and costs
incurred in enforcing the screening requirement set out in
§8.3(c) of the Declaration and as determined to be
applicable to the Equipment in the January 24, 2014[,]
Order, with a hearing to assess fees and costs to be
scheduled.
It is further ORDERED that Defendant’s cross-petition to
strike Plaintiff’s petition and for counsel fees is DENIED.
Trial Court op., 3/8/2016, at 6. Citadel appealed to this Court.1
On appeal,2 Citadel raises four issues. First, it contends that the trial
court erred because the trial court’s declaratory judgment in favor of Citadel did
not order it to take any action. Second, it contends that the trial court erred and
abused its discretion because in the initial proceeding neither party sought an order
to require screening. Third, the trial court erred in concluding that Citadel’s pre-
1
Generally, this Court does not hear appeals in civil matters involving two private parties.
Because the Association has not objected to our jurisdiction, it is perfected. 42 Pa. C.S. §704(a);
Pa. R.A.P. 741(a) (“The failure of an appellee to file an objection to the jurisdiction of an
appellate court on or prior to the last day under these rules for the filing of the record shall,
unless the appellate court shall otherwise order, operate to perfect the appellate jurisdiction of
such appellate court.”).
2
“The scope of review by [this Court] of a court of common pleas sitting in equity is severely
restricted.... We will not reverse if apparently reasonable grounds exist for the relief ordered and
no erroneous or inapplicable rules of law were relied on.” Jackson v. Hendrick, 456 A.2d 229,
233 (Pa. Cmwlth. 1983) (citations omitted).
5
trial settlement offer for separate screening of equipment was part of the
Association’s request for relief in the initial proceeding. Fourth, the trial court
erred in denying Citadel’s request for attorney fees and awarding them to the
Association. The trial court lacked authorization in statute, in contract or in the
Declaration that set up the planned development.
I. Petition to Compel
In its first issue, Citadel contends that the trial court lacked
jurisdiction over the Association’s petition to compel Citadel to comply with the
order of January 23, 2014, because that order did not require any action by Citadel.
In support, Citadel offers several arguments.
Citadel first contends that the Association’s petition to compel was
actually a petition to modify the trial court’s order of January 23, 2014. As such,
the Association’s petition was untimely. The Association responds, however, that
it did not seek to modify the order of January 23, 2014, but only to enforce it.
Section 5505 of the Judicial Code authorizes a trial court to modify or
rescind an order, so long as it does so within 30 days of the order’s issuance. 42
Pa. C.S. §5505.3 The trial court’s order of March 8, 2016, was far too late to
modify its order of January 23, 2014. However, the trial court did not amend its
order of January 23, 2014; rather, it issued a new order. The question, then, is
3
Section 5505 states as follows:
Except as otherwise provided or prescribed by law, a court upon notice to the
parties may modify or rescind any order within 30 days after its entry,
notwithstanding the prior termination of any term of court, if no appeal from such
order has been taken or allowed.
42 Pa. C.S. §5505.
6
whether the trial court’s order of January 23, 2014, ordered Citadel to install
screening, as asserted by the Association and denied by Citadel.
In its injunction action, the Association requested an order:
a. [E]njoining Defendant from all further construction,
alteration or improvements of any nature at the Property
until Defendant has obtained approval for same from
Plaintiff consistent with the requirements set out in the
Declaration; and
b. [D]irecting Defendant to remove all exterior equipment
placed or installed on the rooftop at the Property within 5
days.
Association Petition for Injunction at 2; R.R. 219a. The Association requested
removal of the equipment, not its screening. The trial court “DENIED” the
Association’s “Petition for Permanent Injunction.”4 Trial Court op., 1/23/2014, at
10. On the other hand, it “GRANTED” Citadel’s “request for Declaratory
Judgment.” Id. The order then stated:
3. Declaratory Judgment is entered in favor of Defendant
and against Plaintiff, and consistent therewith,
Defendant’s existing roof-mounted mechanical
equipment is hereby authorized and approved and is
subject to the screening requirement found in the
Declaration at Article VIII, §8.3(c)[.]
Id. (emphasis added). In short, the trial court “approved” Citadel’s equipment
because it was “authorized” in Section 8.3(c) of the Declaration and, as such, must
be screened or placed so as not to be visually distracting under Article VIII, §8.3(c)
of the Declaration. Id.
4
An injunction is a “court order that can prohibit or command virtually any type of action.” Big
Bass Lake Community Association v. Warren, 950 A.2d 1137, 1144 (Pa. Cmwlth. 2008).
7
A declaratory judgment declares the rights, status, and other legal
relations “whether or not further relief is or could be claimed.” 42 Pa. C.S. §7532.5
It has been observed that “[d]eclaratory judgments are nothing more than judicial
searchlights, switched on at the behest of a litigant to illuminate an existing legal
right, status or other relation.” Doe v. Johns-Manville Corporation, 471 A.2d
1252, 1254 (Pa. Super. 1984). Stated otherwise, “[t]he purpose of awarding
declaratory relief is to finally settle and make certain the rights or legal status of
parties.” Geisinger Clinic v. Di Cuccio, 606 A.2d 509, 519 (Pa. Super. 1992),
appeal denied, 637 A.2d 285 (Pa. 1993), cert. denied, 513 U.S. 1112 (1995). A
declaratory judgment, unlike an injunction, does not order a party to act. This is so
because “the distinctive characteristic of the declaratory judgment is that the
declaration stands by itself; that is to say, no executory process follows as of
course.” Petition of Kariher, 131 A. 265, 268 (Pa. 1925).
The trial court’s order of January 23, 2014, settled the legal status of
the air conditioning equipment Citadel installed on its roof. Consistent with the
contours of a declaratory judgment, the trial court did not order action by Citadel
or by the Association.6
5
The Declaratory Judgments Act states, in relevant part, as follows:
Courts of record, within their respective jurisdictions, shall have power to declare
rights, status, and other legal relations whether or not further relief is or could be
claimed. No action or proceeding shall be open to objection on the ground that a
declaratory judgment or decree is prayed for. The declaration may be either
affirmative or negative in form and effect, and such declarations shall have the
force and effect of a final judgment or decree.
42 Pa. C.S. §7532.
6
The trial court could have issued an injunction narrower than the one requested by the
Association; indeed, injunctions should be drawn narrowly. Big Bass Lake Community
Association v. Warren, 23 A.3d 619, 626 (Pa. Cmwlth. 2011) (holding that where the essential
prerequisites of a permanent injunction are satisfied, the court must narrowly tailor its remedy to
(Footnote continued on the next page . . . )
8
It is beyond cavil that a court of law may enforce its orders. Our
Supreme Court has explained that “[w]here there is an unimpeachable final decree,
contemplating the performance of a series of acts, the proceedings to enforce
compliance with that decree must be through that proceeding.” Advanced
Management Research, Inc. v. Emanuel, 266 A.2d 673, 676 (Pa. 1970) (quotation
omitted). The order of January 23, 2014, was not such a decree. It did not order
Citadel to perform a series of acts. It did not order the Association’s Architectural
Review Committee to approve Citadel’s screening proposal. Nor did it establish a
timetable for the implementation of such directives.
Section 8.3(c) of the Declaration requires property owners to place or
screen equipment so that it does not distract from the building’s appearance.
Further, equipment must be placed in a way that it is “screened from the view from
any interior roadway.” R.R. 64a. If placement does not meet this test, then the
equipment must be “separately screened as approved by the Committee.” Id. The
trial court’s order did not use the term “separately screened as approved by the
[Architectural Control] Committee,” as it is characterized by the Association.7
Regardless, the trial court did not order action either by Citadel or by the
Association.
(continued . . . )
abate the harm). Here, the trial court held that the Association did not meet the prerequisites for
an injunction.
7
In its petition to compel, the Association requested the trial court to enter an order:
(1) Compelling Defendant to comply with [the] January 23, 2014 Order in that
the Equipment is subject to the screen requirement of Section 8.3(c) of the
Declaration and must be separately screened as approved by the Architectural
Control Committee[.]
Petition to Compel, at 5; R.R. 1107a (emphasis added).
9
Because the trial court’s order of January 23, 2014, did not direct
Citadel to install screening, there was no directive for the Association to “compel.”
However, the Association was not left without a remedy. The Association could
have initiated an injunction action against Citadel to enforce the covenants in the
Declaration and used the trial court’s declaratory judgment to its advantage.
However, because the January 23, 2014, order did not order action, the
Association’s petition to compel lacked a foundation. Simply, it was premature.
II. Screening Order
Citadel also contends that the trial court lacked authority to order
Citadel to screen its equipment. Neither the Association nor Citadel ever requested
this relief in the initial proceeding, and pre-trial settlement proposals are irrelevant.
The Association responds that Citadel’s counterclaim made screening an issue in
the proceeding, and every witness at the trial in the prior proceeding testified that
the equipment could be seen from at least one interior roadway.
The Association requested a permanent injunction to order Citadel to
remove the equipment from its roof. In its counterclaim, Citadel requested
approval “to install screening of the Exterior Equipment consistent with the
predominant design lines of the building in accordance with Section 8.3(c) of the
Declaration.” Citadel Counterclaim, ¶53; R.R. 234a. Citadel sought declaratory
judgment because
[a]n actual dispute and controversy exists between Citadel and
the Association with respect to: (1) whether the Association
abused and exceeded its authority by denying Citadel’s request
for approval of the Exterior Equipment; and (2) whether
Citadel’s request for approval of the Exterior Equipment should
be approved based upon the plans and specifications from
Casaccio Architects and drawings SD-43, SD57 and SD58
which accompanied counsel’s letter of January 31, 2011
10
attached to Plaintiff’s Complaint as Exhibit “I” and in
accordance with the relevant provisions of the Declaration and
the Act.
Citadel Counterclaim, ¶75; R.R. 237a. The plans referenced by Citadel were
schematics showing screening of the rooftop equipment. Exhibits SD-43, SD-57
and SD-58; R.R. 195a-99a, 237a-38a.
As noted, Section 8.3(c) of the Declaration provides that exterior
equipment “shall be placed or screened so that the predominant design lines of the
building or structure continue without visual distraction or interruption.”
Declaration, Art. VIII, §8.3(c); R.R. 63a-64a (emphasis added). The goal is that
exterior equipment should not distract from the design of the building. If
equipment “is not screened from the view from any interior roadway” by reason of
its placement, then it must be separately screened. Id.
Citadel contends that the screening ordered by the trial court distracts
from the building design and, thus, does not meet the standard in Article VIII,
Section 8.3(c) of the Declaration. Although the equipment can be seen, with
difficulty, from one interior roadway, it is, as the trial court found, “de minimis.”
In other words, Citadel argues that the screening will create a visual distraction
while the equipment itself is barely noticeable. Citadel also contends that
screening is simply inappropriate because the record shows that numerous
buildings in the Eagleview Corporate Center have equipment on their roofs that
can be seen from multiple points of view. By contrast, Citadel’s equipment cannot
be seen, except with determination.
In light of our holding that the Association’s petition to compel was
improvidently filed, it is not necessary to rule on the merits of the trial court’s
order of March 8, 2016. We decline to do so.
11
III. Equitable Estoppel
Citadel argues that the Association is forever estopped from pursuing
separate screening because it had informed Citadel that screening the rooftop
equipment was unacceptable and then filed a lawsuit to compel Citadel to remove
the equipment on its rooftop. Citadel relied on the Association’s statements that
separate screening of the rooftop equipment was unacceptable. Indeed, Citadel
incurred substantial costs and legal fees associated with the Association’s
litigation. Citadel argues that, under the doctrine of equitable estoppel, the
Association’s reversal of its position, to Citadel’s detriment, bars the Association
from now seeking separate screening. The Association responds that the doctrine
of equitable estoppel has no application here because it did not make a promise on
which Citadel relied.
“[E]quitable estoppel recognizes that an informal promise implied by
one’s words, deeds or representations which lead another to rely justifiably thereon
to his own injury or detriment, may be enforced in equity.” Novelty Knitting Mills,
Inc. v. Siskind, 457 A.2d 502, 503 (Pa. 1983). The two essential elements of
equitable estoppel are inducement and justifiable reliance on that inducement. Our
Supreme Court has explained:
The inducement may be words or conduct and the acts that are
induced may be by commission or forbearance provided that a
change in condition results causing disadvantage to the one
induced.
Id. at 503-04 (emphasis added). “[T]he burden rests on the party asserting the
estoppel to establish such estoppel by clear, precise and unequivocal evidence.”
Blofsen v. Cutaiar, 333 A.2d 841, 844 (Pa. 1975).
12
The trial court did not find that Citadel was induced to abstain from
screening its equipment based upon a promise, formal or informal, from the
Association. Citadel characterizes the Association’s rejection of its proposal as a
“promise” that Citadel would not be required to screen the equipment. Again, to
the extent Citadel is setting up a future defense, its equitable estoppel claim is
premature.
IV. Attorney Fees and Costs
In its final issue, Citadel argues that although the Association sought
attorney fees and costs in its petition, it did not request them at the time of the
hearing on January 7, 2016, or in its hearing memorandum. Thus, it waived its
right to fees and costs. Citadel further argues that neither statute nor the
Declaration authorizes attorney fees. The Association responds that it could not
request attorney fees until it prevailed and, further, these fees are authorized by the
Declaration.
Section 12.3 of the Declaration provides:
ENFORCEMENT. The Association and/or Declarant shall
have the right to enforce the covenants, restrictions and
development standards set out in this Declaration and any
subsequent amendment to this Declaration by an appropriate
action at law or equity. In any such action, the Association
and/or Declarant, as the case may be, may seek to either
restrain a violation and/or to recover damages. If the
Association’s enforcement action is successful, the Association
shall be entitled to recover from the losing party all costs
incurred by the Association’s prosecuting the violation,
including, without limitation, all attorney’s fees and costs. The
Association and/or Declarant shall have the right to levy any
amount that becomes due under this Section as an Assessment
against the violating party. The failure of the Association
and/or Declarant to enforce any covenant, restrictions or
development standard shall in no event be deemed a waiver of
the right to do so thereafter.
13
R.R. 1415a (emphasis added).8 In short, Section 12.3 of the Declaration allows the
Association to restrain a violation of the Declaration. Where the Association takes
legal action to restrain a violation and is successful, it may recover costs and
attorney fees.
Citadel argues that Section 12.3 authorizes the recovery of attorney
fees to enforce the Association’s Declaration but not to enforce a court order. We
disagree with Citadel’s narrow construction of Section 12.3 of the Declaration.
Any action instituted to correct a violation of the covenants in the Declaration
triggers Section 12.3. However, because we reverse the trial court’s order, its
award of attorney fees to the Association must be set aside.
Lastly, Citadel argues that the trial court erred in not granting its
request for attorney fees. Section 2503(9) of the Judicial Code authorizes the
imposition of attorney fees where “the conduct of another party in commencing the
matter or otherwise was arbitrary, vexatious or in bad faith.” 42 Pa. C.S. §2503(9).
Our Supreme Court has set forth the factors to be considered in considering
whether litigation was commenced arbitrarily, vexatiously or in bad faith:
The statutory provision at 42 Pa. C.S. §2503(9) expressly
permits a trial court to award reasonable counsel fees to a
litigant when, inter alia, that litigant’s opponent initiated the
action arbitrarily, vexatiously or in bad faith. [citation
omitted]. An opponent’s conduct has been deemed to be
“arbitrary” within the meaning of the statute if such conduct is
based on random or convenient selection or choice rather than
on reason or nature. Bucks County Board of Supervisors v.
Gonzales, 158 Pa. Cmwlth. 664, 670–71, 632 A.2d 1353, 1356
(1993), appeal denied, 538 Pa. 618, 645 A.2d 1321 (1994).
Accord Black’s Law Dictionary 104 (6th ed., reprinted 1993).
8
This section was added to the Declaration in June 2011, prior to the filing of the Association’s
petition in June 2014.
14
An opponent also can be deemed to have brought suit
“vexatiously” if he filed the suit without sufficient grounds in
either law or in fact and if the suit served the sole purpose of
causing annoyance. Id.; Black’s Law Dictionary, supra, at
1565. Finally, an opponent can be charged with filing a lawsuit
in “bad faith” if he filed the suit for purposes of fraud,
dishonesty or corruption. Frick v. McClelland, 384 Pa. 597,
600, 122 A.2d 43, 45 (1956) (quoting McNair’s Petition, 324
Pa. 48, 187 A. 498 (1936)); Bucks County Board of
Supervisors, supra, 158 Pa. Cmwlth. at 670–71, 632 A.2d at
1356; Black’s Law Dictionary, supra, at 139.
Berg v. Georgetown Builders, Inc., 822 A.2d 810, 816 (Pa. Super. 2003) (citing
Thunberg v. Strause, 682 A.2d 295, 299–300 (Pa. 1996)). In short, a high burden
falls upon the party seeking to show that litigation was instituted in bad faith,
arbitrarily and for vexatious purposes.
The trial court denied Citadel’s request for attorney fees without
addressing any of Citadel’s contentions in support thereof. Given our reversal, we
are constrained to remand the matter of Citadel’s request for attorney fees in
defending against the Association’s “petition to compel” to the trial court to
decide.
Conclusion
For all of the above-stated reasons, we reverse the trial court’s order
of March 8, 2016, and remand the matter of Citadel’s claim for attorney fees.
______________________________________
MARY HANNAH LEAVITT, President Judge
Judge Hearthway did not participate in the decision in this case.
15
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Eagleview Corporate Center :
Association :
:
v. : No. 547 C.D. 2016
:
Citadel Federal Credit Union, :
Appellant :
ORDER
AND NOW, this 2nd day of December, 2016, the order of the Court of
Common Pleas of Chester County, dated March 8, 2016, in the above-captioned
matter is REVERSED and this matter is REMANDED for further proceedings in
accordance with the attached opinion.
Jurisdiction relinquished.
______________________________________
MARY HANNAH LEAVITT, President Judge