Francisville Neighborhood Development Corporation v. Estate of M. Omether Moore ~ Appeal of: B. Ogboro, Administratrix for the Estate of M. Omether Moore and C.E. Moore ( 2017 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Francisville Neighborhood :
Development Corporation :
:
v. : No. 29 C.D. 2017
: Argued: October 19, 2017
Estate of Margaret Omether :
Moore :
:
Appeal of: Brenda Ogboro, :
Administratrix for the Estate of :
Margaret Omether Moore :
and Charles E. Moore :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION
BY JUDGE SIMPSON FILED: November 28, 2017
In this appeal involving the Abandoned and Blighted Property
Conservatorship Act (Act),1 Brenda Ogboro, Administratrix of the Estate of
Margaret Omether Moore (Estate), challenges an order of the Court of Common
Pleas of Philadelphia County2 (trial court), that directs the Estate to pay a
conservator’s fee of 20% of the price obtained for the sale of a blighted property
owned by the Estate, to the Francisville Neighborhood Development Corporation
(FNDC). The Estate contends the trial court erred in determining that FNDC is
entitled to a conservator’s fee and attorney fees and costs, where the trial court did
1
Act of November 26, 2008, P.L. 1672, as amended, 68 P.S. §§1101-1111.
2
The Honorable Idee C. Fox presided.
not appoint FNDC as conservator of the subject property prior to the property’s sale.
Upon review, we affirm.
I. Background
The trial court noted the following facts and procedural history. The
subject property is located at 1513 Cambridge Street in the City of Philadelphia
(City), and was originally owned by Charles E. Moore and his wife, Margaret
Omether Moore. Charles Moore died in 1980 and his wife became sole owner of
the subject property by operation of law. Margaret Moore died in October 1997,
leaving her daughter, Brenda Ogboro (Daughter), as her only heir. Thereafter,
Daughter was appointed Administratrix of the Estate. Daughter resided at 1515
Cambridge Street, which is next to the subject property.
In October 2015, FNDC, a neighborhood civic organization which
maintains and rehabilitates properties in the Francisville neighborhood in the City,
filed a petition for appointment of a conservator under the Act. FNDC also filed a
lis pendens against the subject property, which appeared rundown. In its petition,
FNDC claimed the statutory requirements of the Act were met, thereby warranting
the appointment of a conservator of the subject property under Section 5 of the Act,
68 P.S. §1105. To that end, FNDC alleged the subject property had not been
occupied for more than 12 months prior to the filing of the petition; the property has
not been actively marketed for 60 days prior to the filing of the petition; the property
was not subject to an existing mortgage foreclosure action; and, the property was not
acquired by the Estate within the six months preceding the filing of the petition.
2
FNDC further averred in its petition that at least three of the nine factors
in Section 5(d)(5) of the Act, 68 P.S. §1105(d)(5) (conditions of conservatorship)
were met. In particular, FNDC averred: the building on the subject property was
structurally unsound and unsanitary due to inadequate exterior maintenance so as to
pose a threat to the public health, safety or welfare; the building showed several
blighting factors including failing structural systems, boarded windows, a crumbling
front stoop, a tree or weed branch growing and extending from the building and
through the roof; the property was subject to unauthorized entry and the owners have
not secured the premises; the property has been infested with vermin; the conditions
and vacancy of the property materially increased the risk of fire because no one was
occupying the building or squatters may cause a fire; and, the dilapidated appearance
and condition of the property negatively affected the economic well-being of the
neighborhood. See Appellee’s Pet. at ¶¶19-26; Reproduced Record (R.R.) at 52-53.
In addition, FNDC attached three notices of Property Maintenance
Code violations from the City’s Department of Licenses and Inspections (L&I).
Appellee’s Pet., Ex. C; R.R. at 76-80. The violation notices stated that the vacant,
unsecured building lacked one or more windows and one or more doors. FNDC’s
petition sought to appoint Iron Stone Strategic Capital Partners, LLC (Iron Stone)
and Bastogne Venture Partners (Bastogne) as Co-Conservators. Appellee’s Pet. At
12-13; R.R. at 53-54.
Noting FNDC’s petition set forth allegations that would warrant relief
under the Act, the trial court scheduled a hearing date in December 2015. Prior to
the scheduled hearing, now continued to February 2016, the Estate filed an answer
3
and memorandum in opposition to FNDC’s petition. The Estate’s answer did admit
that the building was unoccupied for the previous 12 months and that the property
had not been listed for sale. However, the Estate claimed the property was under an
agreement of sale with a third party. The agreement of sale, executed after FNDC
filed its petition, was dated February 15, 2016. The purchase price for the subject
property was $145,000.00 with a scheduled closing date of February 18, 2016.
At a February 2016 hearing, the parties agreed to allow the sale to
proceed subject to the following conditions agreed to by the parties and entered as
an order by the trial court:
1. The Lis Pendens filed by [FNDC] shall be lifted.
2. The Property shall be allowed to be sold free and clear
from any lien under this Conservatorship Act filing by
[FNDC].
3. The title company shall hold in escrow $36,000
pending a ruling by this Court on [FNDC’s] request for
cost[s] in preparing and filing of the Petition including
a developer/conservator’s fee as defined by the Act.
4. The [Estate] has elected not to contest [FNDC’s]
assertion that the premises is blighted under the Act and
to apply to this Court for Conditional Relief pursuant
to Section [5(f)] of the Act;
5. The [Estate] has presented an agreement of sale for the
premises with Global Realty Group (hereinafter
‘buyer’) executed February 5, 2016, after the [above-
captioned] Petition was filed. The agreement is
attached hereto as Exhibit A;
6. The [Estate] and the buyer’s real estate agent have
assured the Court that it intends to rehabilitate the
property forthwith;
4
7. The [Estate] and buyer desire to close on the agreement
of sale on February 18, 2016;
8. The premises may be conveyed free and clear of the
above-captioned proceeding upon the filing of $36,000
by the buyer’s title company and the lis pendens will
be released. The title company shall not distribute the
escrow without further Order of this Court or
agreement of [FNDC] and [the Estate].
9. A hearing is scheduled … to determine [FNDC’s]
requests for fees, costs and the conservator/developer
fee. Counsel may submit discreet memorandum on the
issue ….
Tr. Ct. Order, 2/17/16 (emphasis added).
In May 2016, following the sale of the subject property, the trial court
held a hearing on the issues of fees and costs. On September 2, 2016, the trial court
filed an opinion and order granting FNDC’s requested relief in part and ordered the
Estate to pay FNDC attorney fees and costs in the amount of $1,398.23 and to pay
FNDC a conservator’s/developer’s fee in the amount of $29,000, for a total amount
of $30,398.23. Tr. Ct. Order, 9/2/16.
In its opinion, the trial court rejected the Estate’s argument that FNDC
is not entitled to the 20% conservator’s fee because FNDC was never appointed as
conservator. Contrary to the Estate’s claim, the trial court observed, nowhere does
the Act state that a conservator must be appointed before the property owner is
required to reimburse the petitioner for fees, costs and the conservator/developer fee
under Section 5(f)(4) of the Act, which provides:
(4) Upon a finding that:
5
(i) the petition states conditions for conservatorship; or
(ii) the owner elects to either:
(A) remedy all violations and nuisance or emergency
conditions; or
(B) sell the property subject to the conservatorship,
the owner shall reimburse the petitioner for all costs
incurred by the petitioner in preparing and filing the
petition in accordance with the requirements of section 4
and the conservator’s or developer’s fee.
68 P.S. §1105(f)(4) (emphasis added).
The trial court reasoned that the Estate, by not contesting the petition’s
allegations that the property was blighted as defined by the Act, and by electing to
sell the property, was required under Section 5(f)(4)(ii)(B) to reimburse FNDC for
the conservator’s fee. See Tr. Ct., Slip Op., 9/2/16, at 8; R.R. at 37. Pursuant to
Section 3 of the Act, 68 P.S. §1103, the correct amount for the conservator’s fee is
20% of the $145,000 sales price, or $29,000. Tr. Ct., Slip Op., 9/2/16, at 8-9; R.R.
at 37-38.
Further, the trial court noted it agreed with the Estate’s position that the
$29,000 fee is a windfall to FNDC. Tr. Ct., Slip Op., at 9; R.R. at 38. That being
said, the trial court recognized the Act was amended in 2014 to add the definition of
“conservator’s or developer’s fee.” Id. The trial court also reasoned that the
legislative history to the amendment further supported the conclusion that
reimbursement of the conservator’s fee was due in this case. Id. To that end, the
court cited an April 29, 2013, memorandum from Co-Sponsor Representative John
6
Taylor to the PA House of Representatives notifying them of his intention to
introduce a bill amending the Act. The memorandum stated:
One of our key findings is that the private sector
developers like the concept of the law and understand its
purpose, but they also express fear about the risks they are
taking once they petition the court and obtain
conservatorships.
For example, we have had situations where a developer
has filed a petition only to have the absentee owner decide
he wants to sell the property after years of allowing it to
sit unused and in disrepair and after causing the market
values of neighboring properties to plummet ….
By encouraging the payment of costs and developer’s fees
… my bill encourages developers, nonprofit-entities and
real estate professionals to initiate conservatorships on
properties that meet the strict requirements set forth in the
[A]ct.
Tr. Ct., Slip Op., at 9, R.R. at 38.
The trial court found the memorandum shows that the General
Assembly’s intent in amending the Act was to mitigate the risk to those filing
petitions. The court noted the fact pattern in the memorandum was almost identical
to the fact pattern here. The Estate allowed the subject property to sit unused and in
disrepair after Margaret Moore’s death, despite the fact that Daughter/Administratrix
lived next door and walked by the property every day. Only after FNDC filed the
petition, and on the eve of the conservatorship hearing, did Daughter take action by
entering into the agreement of sale for the property. Therefore, although the trial
court found the 20% conservator’s fee excessive, the court recognized it was
7
obligated to follow the Act’s clear statutory language. See Tr. Ct., Slip Op., at 10;
R.R. at 39.
The trial court also awarded FNDC $1,398.23 under Section
1105(f)(4)(ii)(B) for costs incurred in preparing and filing the petition.
Consequently, the trial court directed the Estate to pay a total of $30,398.23 to FNDC
under Section 5(f)(4)(ii)(B) of the Act. The Estate appeals.3
II. Discussion
1. Argument
The Estate contends the trial court erred in determining that FNDC is
entitled to a conservator’s fee of 20% of the sale price and, attorney fees and costs,
where the trial court did not appoint FNDC as conservator of the subject property
prior to the property’s sale. The Estate argues FNDC is not entitled to a
conservator’s fee, attorney fees and costs under Section 1105(f)(4)(ii)(B) of the Act
because it was not appointed as conservator prior to the subject property’s sale. To
that end, the Estate asserts it entered into an agreement of sale with Global Realty
Group (Buyer), and that the trial court lifted FNDC’s lis pendens prior to the closing
of the sale. Therefore, the Estate argues, FNDC takes advantage of the sale proceeds
without having been appointed conservator.
3
In matters of statutory interpretation, the appellate standard of review is de novo and the
appellate scope of review is plenary. Allstate Life Ins. Co. v. Commonwealth, 52 A.3d 1077 (Pa.
2012).
8
The Estate also maintains the plain language of the Act requires that
FNDC be appointed conservator as a condition precedent to being entitled to a
conservatorship’s fee and costs. As support, the Estate first cites Section 2 of the
Act (Legislative findings and purpose). Section 2(6) provides:
(6) If the owner of a residential, commercial or industrial
building fails to maintain the property in accordance with
applicable municipal codes or standards of public welfare
or safety, it is in the best interest of the Commonwealth,
the municipality and the community for the court, pursuant
to the provisions of this act, to appoint a conservator to
make the necessary improvements before the building
deteriorates further and necessitates demolition, resulting
in the removal of the building from the housing supply or
prohibiting future economic use.
68 P.S. §1102(6) (emphasis added).
The Estate further asserts that the entire Act springs from the condition
precedent of a court’s appointment of a conservator. Sections 4 and 5 of the Act set
forth the procedure for the appointment of a conservator. In particular, Section
5(e)(1) provides:
(1) If the court determines after hearing that the property
has met the conditions of subsection (d), the court may
appoint a conservator, certify the schedule of
encumbrances and grant such other relief as may be just
and appropriate. …
68 P.S. §1105(e)(1).
Further, and most relevant to our inquiry because it is the most specific
provision at issue, Section 5(f), entitled “Conditional relief,” provides:
9
(1) If the court finds after a hearing that the conditions
for conservatorship in subsection (d) have been
established, but the owner represents that the
condition, violations, or nuisance emergency
conditions will be abated in a reasonable period, the
court may allow the owner to proceed to remedy the
conditions.
(2) If the conditions set forth in paragraph (1) have been
satisfied, the court shall enter an order providing
that, in the event that the violations or nuisance or
emergency conditions are not abated by the owner
by a specific date or that the other specified remedial
activities have not occurred by a specific date or
dates, an order granting the relief requested in the
petition shall be entered.
(3) The court shall also require the owner to post a bond
in the amount of the repair costs estimated in the
petition as a condition to retaining possession of the
building.
(4) Upon a finding that:
(i) the petition states conditions for conservatorship; or
(ii) the owner elects to either:
(A) remedy all violations and nuisance or emergency
conditions; or
(B) sell the property subject to the conservatorship,
the owner shall reimburse the petitioner for all costs
incurred by the petitioner in preparing and filing the
petition in accordance with the requirements of section 4
and the conservator’s or developer’s fee.
68 P.S. §1105(f)(1)-(4) (emphasis added). We will address this provision below.
The Estate asserts, the subject property was not sold “subject to the
conservatorship” as required by Section 5(f)(4)(B). In short, because
10
conservatorship is a condition precedent to conservatorship fees and costs, the Estate
argues FNDC is not entitled to either a conservator’s fee or costs.
Alternatively, the Estate asserts that if FNDC is entitled to fees and
costs, they are not entitled to fees and costs defined in Section 3’s definition of
“conservator’s or developer’s fee,” which describes the fee:
A fee equal to the greatest of the following:
(1) an amount equal to $2,500, adjusted upward by 2%
each year;
(2) a 20% markup of the costs and expenses for
construction, stabilization, rehabilitation, maintenance
and operation or demolition as described in the proposed
conservator’s plan and any subsequent plan approved by
the court; or
(3) twenty percent of the sale price of the property.
68 P.S. §1103 (emphasis added). As such, the Estate requests that this Court reverse
the trial court’s award of fees and costs to FNDC.
In response, FNDC asserts the Estate did not contest that the subject
property was blighted and abandoned within the meaning of Section 5(d) of the Act.
Rather, the Estate agreed that the property met the requirements for the appointment
of a conservator. In addition, the Estate sought Conditional Relief under Section
5(f) of the Act by electing to sell the property to Buyer, who agreed to rehabilitate
it.
FNDC asserts there is no language in the Act permitting an owner to
forego payment of a conservator’s fee by electing conditional relief under Section
11
5(f) of the Act. FNDC argues that the plain language in Section 5(f)(4) indicates
that: (i) if the petition states conditions of conservatorship (the property is deemed
blighted); and (ii)(B) the owner elects to sell the property, the stated fees shall be
owed.
FNDC further asserts the trial court correctly interpreted the
Legislature’s intent to mitigate the risk to developers of filing conservatorship
actions by providing for the award of a conservator’s fee where, as here, the owner
decides to sell the property once a petition for appointment of a conservator has been
filed. Absent a conservator’s fee, there would be little incentive for parties in interest
to bring conservatorship actions.
In addition, FNDC asserts, a conservator’s fee is necessary to make the
petitioner whole for costs not covered by the limited reimbursement for preparing
and filing the petition. Consequently, every petitioner in every proceeding under the
Act must always rely on the conservator’s fee to make them whole. Such is also the
case here. FNDC did not obtain an unmerited windfall. Rather, it took the necessary
action to rehabilitate a blighted property that the Estate allowed to sit vacant and in
disrepair, lowering the value of neighborhood property. The primary objective in a
conservatorship action is the remediation of the blighted property. To that end, it
makes no difference who performs the remedial work.
2. Analysis
We recognize that “[t]he object of all interpretation and construction of
statutes is to ascertain and effectuate the intention of the General Assembly.” 1 Pa.
12C.S. §1921(a). “Every statute, shall be construed to give effect to all of its
provisions.” Id. (emphasis added). In ascertaining legislative intent, it is presumed
that the General Assembly did not intend a result that is absurd or unreasonable. 1
Pa. C.S. §1922(1). Further it is presumed that the General Assembly intends that the
entire statute be effective and certain. 1 Pa. C.S. §1922(2).
Under the clear language of Section 5(f) of the Act, quoted above and
entitled “Conditional relief,” there are two alternate findings which would require a
trial court to award fees and costs to a petitioner, like FNDC here: 1) a finding that
“the petition states conditions for conservatorship;” or 2) the owner makes certain
elections, including to “sell the property subject to the conservatorship.” 68 P.S.
§1105(f)(4).
As to the first alternate finding upon which an award of statutory fees
and costs could be predicated, the trial court stated: “Although [FNDC] filed a
detailed Petition it had not yet proven entitlement to relief under the Act nor whether
[FNDC] qualified for appointment as conservator.” Tr. Ct., Slip Op., at 9; R.R. at
38. Accordingly, the trial court did not make a finding supporting the award of
statutory fees and costs under the first alternate finding approach of the Conditional
Relief provision. Instead, the trial court focused on the second alternate finding
approach.
Here, the trial court determined that the Act does not require that a
conservator be appointed before an award of statutory fees and costs under the
second alternate finding approach. Rather, the trial court reasoned, “a plain reading
13
of the Act demands that [the Estate] reimburse [FNDC] for fees, costs and
conservator/developer fee under the circumstances.” Tr. Ct., Slip Op., at 8; R.R. at
37. We agree.
Pursuant to Paragraph 4 of the parties’ agreement, adopted by Order of
February 17, 2016: “The [Estate] has elected not to contest [FNDC’s] assertion that
the premises is blighted under the Act and to apply to this Court for Conditional
Relief pursuant to Section [5(f)] of the Act.” See Tr. Ct., Slip Op., at 4; R.R. at 33
(emphasis added). As stated above, that is the provision that authorizes awards of
statutory fees and costs to a petitioner, such as FNDC. Thus, the proceeding before
the trial court on May 12, 2016 was pursuant to the Estate’s application for
Conditional Relief under the Act.
Whether or not the conservatorship proceedings progressed to the point
of the actual appointment of a specific conservator, we discern no error of law in the
trial court’s determination that statutory fees and costs under the Act should be
awarded when the Estate elected to proceed under the Conditional Relief provision
of the Act. Stated differently, by applying for Conditional Relief under the Act, the
provision authorizing award of fees and costs, the Estate’s election to sell the
property can be viewed as satisfying the second alternate finding approach.
Under this reading of the statutory language, the phrase “sell the
property subject to the conservatorship” in Section 5(f)(4) identifies the property in
question rather than the stage of the conservatorship proceedings when the sale
occurs. As there is here no doubt that the property in question was sold during the
14
conservatorship proceedings, and that the Estate elected to do so pursuant to the
Conditional Relief provisions of the Act which authorize an award of fees and costs,
an award of statutory fees and costs is supportable.
Further, we reject the Estate’s argument that a conservatorship fee
should not be paid to FNDC because it was not appointed the conservator. Section
1105 (f) of the Act expressly requires the conservatorship fee to be paid to the
petitioner, here FNDC, if the trial court makes a finding satisfying one of the
alternate statutory bases for award of fees and costs. The trial court made such a
finding here.
For these reasons, we affirm the order of the trial court awarding a
statutory conservator’s fee and costs to FNDC under the second alternate finding
approach.
III. Conclusion
Discerning no error or abuse of discretion in the trial court’s
determination that FNDC was entitled to a conservator’s or developer’s fee of 20%
of the sale of the subject property, fees and costs, we affirm.
ROBERT SIMPSON, Judge
15
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Francisville Neighborhood :
Development Corporation :
:
v. : No. 29 C.D. 2017
:
Estate of Margaret Omether :
Moore :
:
Appeal of: Brenda Ogboro, :
Administratrix for the Estate of :
Margaret Omether Moore :
and Charles E. Moore :
ORDER
AND NOW, this 28th day of November, 2017, for the reasons stated in
the foregoing opinion, the order of the Court of Common Pleas of Philadelphia
County is AFFIRMED.
ROBERT SIMPSON, Judge