Matlow, R. v. Marsh, B. v. Gateway Towers ( 2019 )

J-A26008-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RICHARD MATLOW, JAMES J. BYRNE, : IN THE SUPERIOR COURT OF
THOMAS GLASGOW, MARY ELLEN : PENNSYLVANIA
GLASGOW, ROSEMARIE RIZZO :
PARSE, ANNA CUNNINGHAM, JAMES :
H. LOGAN, AND KATHLEEN M. LOGAN :
:
:
v. :
:
:
BRIEN MARSH, MOUNIR :
KASHKOUSH, JOHN L. HORNER, :
ROBERT C. JAZWINSKI, SCOTT F. :
SNEDDON, TODD R. CARLSON, AND :
STEVEN B. SCHWARZWAELDER, IN :
THEIR CAPACITY AS DIRECTORS OR :
MEMBERS OF THE ASSOCIATION :
COUNCIL OF GATEWAY TOWERS :
CONDOMINIUM ASSOCIATION, INC. :
:
:
v. :
:
:
GATEWAY TOWERS CONDOMINIUM :
ASSOCIATION, INC. :
:
Appellant :
:
:
v. :
:
:
:
:
GATEWAY TOWERS EXECUTIVE :
OFFICE CONDOMINIUM OWNERS :
ASSOCIATION : NO. 722 WDA 2017
J-A26008-18
Appeal from the Order Entered May 11, 2017
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): No. GD-17-003480
BEFORE: BENDER, P.J.E., SHOGAN, J., and MURRAY, J.
MEMORANDUM BY BENDER, P.J.E.: FILED JANUARY 07, 2019
Appellant, Gateway Towers Condominium Association, Inc. (“GTCA”),
appeals from the trial court’s order granting Appellees’, Richard Matlow, James
J. Byrne, Thomas Glasgow, Mary Ellen Glasgow, Rosemarie Rizzo Parse, Anna
Cunningham, James H. Logan, and Kathleen M. Logan (collectively referred to
herein as “Appellees”), motion for preliminary injunction. We affirm.
Appellees are residential unit owners within the Gateway Towers
Condominium and members of GTCA, a residential condominium association.
See Trial Court Opinion (“TCO”), 8/16/2017, at 2; GTCA’s Brief at 10. 1 GTCA
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1 We briefly identify the other parties listed in the caption. We note that
Intervenor, Gateway Towers Executive Office Condominium Owners
Association (referred to herein as the “Commercial Association”), filed a
petition to intervene on March 14, 2017, which the trial court subsequently
granted. The Commercial Association has filed a brief with this Court. As for
the Commercial Association’s connection to this litigation, it explains that
“[a]lso located within the same Gateway Towers building is a separate
condominium of units on Floors 1, 2, 3 and 27, known as the Gateway Towers
Executive Office Condominium and for which [the Commercial Association] is
the governing owners’ association.” Commercial Association’s Brief at 4.
Brien Marsh, Mounir Kashkoush, John L. Horner, Robert C. Jazwinski, Scott F.
Sneddon, Todd R. Carlson, and Steven B. Schwarzwaelder are (or possibly
were) involved in this case in their capacity as directors or members of the
association council of GTCA. GTCA’s counsel represents that they have been
dismissed from this case since GTCA filed its appeal. See Response to Rule
to Show Cause, 6/13/2018, at 1 (unnumbered pages). GTCA’s counsel has
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is governed by Articles of Incorporation, a Declaration of Condominium, and
a Code of Regulations (collectively referred to herein as the “Condominium
Documents”). See TCO at 5. The Code of Regulations sets forth, in pertinent
part, the following:
By the Association – Common Elements. Except as provided in
Subsection 5.8 of the Declaration [relating to the amendment of
plans by the Sponsor, Gateway Capital, Inc., 2] and except for
repairs and maintenance of the existing improvements, after the
completion of the improvements, including the Common
Elements, contemplated by the Sponsor, there shall be no
alteration or further improvement of the Common Elements
without the prior approval in writing of the Owners of not less than
75% of the Condominium Parcels and by Institutional Mortgagees
holding Institutional Mortgages encumbering not less than 75% of
the Condominium Parcels. Any such alteration or improvement
shall not interfere with the rights of any Unit Owners without their
consent.
GTCA’s Exhibit F (Code of Regulations § 15.2(a)).
Further, the Articles of Incorporation provide, inter alia, that GTCA has
the power:
To maintain, repair, replace and operate the Condominium
Property, which shall include the irrevocable right to access each
Unit from time to time during reasonable hours as may be
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asked us to amend the caption and docket to reflect their dismissal; however,
it appears counsel has not filed a new application to amend, including a copy
of the trial court’s order amending the case caption, as directed in our June
18, 2018 order. See Motion to Correct Docket, 5/25/2018, at 3 (unnumbered
pages) (requesting that we “correct the docket identifying [GTCA] as the only
Appellant in this action, and modify[] the caption” to exclude the directors or
members of GTCA’s council); Order, 6/18/2018, at 1 (single page) (“If the
trial court permits amendment of the caption, counsel may file a new
application in this Court and shall include a copy of the trial court’s order
amending the case caption.”). Thus, we decline to do so.
2 The parties do not argue that this Subsection 5.8 exception applies.
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necessary for such maintenance, repair, or replacement of any
Common Elements therein or accessible therefrom, or for the
making of emergency repairs therein to prevent damage to the
Common Elements or to another Unit or Units.
GTCA’s Exhibit A (Articles III(C)(3)).
In early 2017, the board of GTCA proposed pursuing four construction
projects, which the trial court identified as follows: “(1) replacement of the
existing HVAC system[] at a cost of more than $14 million; (2) replacement
of all of approximately 1[,]500 windows at a cost of about $5.3 million; (3)
installation of metal panels at a cost of $1.6 million; and (4) installation of
new waste stack equipment at a cost of several hundred thousand dollars.”
TCO at 5 (citation omitted). We refer to these proposals collectively as the
“Infrastructure Plan.” On January 24, 2017, the GTCA board presented the
Infrastructure Plan to the unit owners. See GTCA’s Brief at 16; Appellees’
Brief at 5-6; Commercial Association’ Brief at 7. On February 21, 2017, the
GTCA board adopted the Infrastructure Plan and passed corresponding
resolutions but, before doing so, did not attempt to obtain the approval of the
unit owners or the institutional mortgagees. See GTCA’s Brief at 16-17;
Appellees’ Brief at 5-6; Commercial Association’s Brief at 7.
Appellees subsequently filed a complaint against GTCA and its seven
board members for declaratory judgment, breach of fiduciary duty,
negligence, accounting, and preliminary and permanent injunctive relief. In
short, Appellees sought “to stop the unauthorized expenditure by [GTCA] of
$21.1 million in owner funds to make unauthorized alterations and
improvements to the Condominium Common Elements without required
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owner consent.” See Amended Complaint, 4/10/2017, at ¶ 1. On the same
day Appellees filed their amended complaint, they also filed an amended
motion for a special injunction (in the nature of a temporary restraining order)
and a preliminary injunction seeking, among other things, that GTCA be
“enjoin[ed] from taking any steps to plan, design, effectuate, commence,
construct or install any alterations or improvements to the Condominium
Common Elements without first obtaining the required approval and consent
of Unit Owners and Institutional Mortgagees….” See Amended Motion for
Special/Preliminary Injunction, 4/10/2017, at ¶ 26.
In April of 2017, the trial court held a three-day hearing on Appellees’
motion for preliminary injunction. On May 11, 2017, the trial court entered
an order granting Appellees’ motion as follows:
[GTCA is] enjoined from taking any steps to effectuate,
commence, construct, or install any alterations or improvements
pursuant to the GTCA Infrastructure Plan, or any other
rehabilitation to any systems covered by the GTCA Infrastructure
Plan, without first obtaining the approval and consent of Unit
Owners and Institutional Mortgagees pursuant to § 15.2 of the
Code of Regulations.
[GTCA is] authorized to enter into contracts to explore alternatives
to the GTCA Infrastructure Plan. [GTCA] will not, however, begin
any construction or installation of any such alternative, or enter
into any agreement to do so, without first obtaining the approval
and consent of Unit Owners and Institutional Mortgagees pursuant
to § 15.2 of the Code of Regulations.
This Preliminary Injunction shall be effective upon [Appellees’]
filing with the Department of Court Records cash, bond, or other
appropriate security in the sum of ten thousand dollars ($10,000).
Trial Court Order, 5/11/2017, at 1-2 (unnumbered pages).
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On May 16, 2017, GTCA filed a timely notice of appeal pursuant to
Pa.R.A.P. 311(a)(4), which states that an appeal may be taken as of right
from an order granting an injunction. The trial court subsequently directed
GTCA to file a concise statement of errors complained of on appeal pursuant
to Pa.R.A.P. 1925(b), and GTCA timely complied.3
GTCA sets forth the following issues in its statement of questions
involved:
Whether the [t]rial [c]ourt erred in granting Appellees’ Amended
Motion for Special Injunction (in the Nature of a Temporary
Restraining Order) and Preliminary Injunction, generally, and in
the following particulars:
1. Finding, without reasonable grounds, that Appellees satisfied
all of the prerequisites for an award of a special and/or preliminary
injunction, namely as follows:
a. That Appellees are likely to succeed on the merits of their
claim (i.e.[,] that Section 15.2 of the Code of Regulations
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3 GTCA and the Commercial Association acknowledge that GTCA is organized
as a non-profit corporation. See GTCA’s Brief at 26; Commercial Association’s
Brief at 43. Under 42 Pa.C.S. § 762(a)(5), the Commonwealth Court has
exclusive jurisdiction of appeals from final orders of the courts of common
pleas in cases involving all actions or proceedings relating to not-for-profit
corporations. Nevertheless, as no party has objected to our jurisdiction and
in the interests of judicial economy, we exercise our discretion to accept
jurisdiction of this appeal. See 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, notwithstanding any provision of law vesting jurisdiction
of such appeal in another appellate court.”); Gordon v. Philadelphia County
Democratic Executive Committee, 80 A.3d 464, 474-75 (Pa. Super. 2013)
(accepting jurisdiction pursuant to Rule 741(a) where the appellees did not
object and judicial economy was served).
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applies to the activities outlined in the GTCA Infrastructure
Plan and in levying assessments for the same);
b. That Appellees will be irreparably harmed and cannot be
compensated by adequate monetary damages should the
preliminary injunction not be granted;
c. That greater injury will result to Appellees from not
granting the preliminary injunction and that [GTCA] will not
be substantially harmed;
d. That the granting of the preliminary injunction will restore
the parties to the status quo;
e. That the preliminary injunction is properly suited to abate
the offending conduct; and,
f. That the granting of the preliminary injunction will not
adversely affect the public interest.
2. By finding that the implementation of the GTCA Infrastructure
Plan requires a vote by the unit owners and institutional
mortgagees pursuant to Section 15.2 of the Code of Regulations;
3. By finding that the implementation of the GTCA Infrastructure
Plan amounts to an alteration of or further improvement of the
common elements of the Condominium Building rather than
replacement and/or repair of common elements;
4. By finding or ruling that [GTCA] cannot issue or levy
assessments without first taking a vote pursuant to Section 15.2
of the Code of Regulations;
5. By failing to acknowledge and follow prior precedent of [GTCA]
related to the making of repairs and replacements to common
elements[,] which included the replacement of elevator cables,
the renovation of the lobby area, the renovation of hallways, the
installation of a new security systems [sic] (that arguably was a
further improvement), the installation of a new roof, as well as
other repairs and replacements identified to the [c]ourt, without
taking a vote pursuant to [S]ection 15.2 of the Code of
Regulations, which prior precedent acknowledged the intent of the
real and perceived limitations of Section 15.2 and precludes
Appellees from arguing that Section 15.2 of the Code of
Regulations applies to the implementation of the GTCA
Infrastructure Plan;
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6. By failing to acknowledge and follow prior precedent of [GTCA]
related to the making of repairs and replacements to common
elements[,] which included the replacement of elevator cables,
the renovation of the lobby area, the renovation of hallways, the
installation of a new security systems [sic] (that arguably was a
further improvement), the installation of a new roof, as well as
other repairs and replacements identified to the [c]ourt, without
taking a vote pursuant to [S]ection 15.2 of the Code of
Regulations[,] which defines the intent of Section 15.2 as not
requiring a vote to repair or replace common elements that have
exceeded their useful life.
7. By granting injunctive relief against the individual
[d]irectors/[b]oard [m]embers.
8. By issuing an [o]rder that establishes that the replacement of
windows that have exceeded their useful life is an alteration or
further improvement.
9. By issuing an [o]rder that establishes that the repair and/or
replacement of the HVAC system and waste stacks that have
exceeded their useful life at [Gateway Towers Condominium] are
alterations or further improvements.
10. By issuing an [o]rder that establishes that the [b]oard may
not make assessments to create a reserve to pay for the repair
and replacement of Common Elements.
11. By issuing an [o]rder that prevents the [b]oard from repairing,
replacing and maintaining any systems identified in the
Infrastructure Plan, which systems are critical components of
Common Elements in contravention of the clear language in
Section 15 and Section 15.1 of the Code of Regulations and other
Condominium Documents.
GTCA’s Brief at 5-9.
At the outset, we point out that GTCA raises eleven issues, including
one with six subparts, in its statement of questions involved. However, GTCA
does not divide the argument section of its brief into eleven corresponding
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parts; instead, it divides it into three, incongruous sections.4 We admonish
GTCA for its lack of compliance with Rule 2119(a). See Pa.R.A.P. 2119(a)
(“The argument shall be divided into as many parts as there are questions to
be argued; and shall have at the head of each part—in distinctive type or in
type distinctively displayed—the particular point treated therein, followed by
such discussion and citation of authorities as are deemed pertinent.”);
Donaldson v. Davidson Bros., Inc., 144 A.3d 93, 99 n.9 (Pa. Super. 2016)
(determining that the appellant failed to comply with Rule 2119(a) where the
appellant’s brief did not “present and develop eight arguments in support of
the eight questions raised”).
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4 GTCA’s statement of questions involved concerns us in other ways as well.
Initially, we remind GTCA’s counsel that “[t]he effectiveness of appellate
advocacy may suffer when counsel raises numerous issues, to the point where
a presumption arises that there is no merit to any of them.” See
Commonwealth v. Snyder, 870 A.2d 336, 340 (Pa. Super. 2005) (citations
omitted). More troubling than GTCA’s verboseness, however, is its failure to
address the bulk of these issues in the argument section of its brief. Further,
GTCA dedicates two entire sections of its three-part argument to issues that
it does not clearly identify in its statement of questions involved, namely
standing and the unclean hands doctrine. Finally, we note our confusion as
to why issue number 7 — pertaining to the trial court’s granting injunctive
relief against GTCA’s individual directors/board members — is included when
GTCA’s counsel insists that such individuals did not file the appeal, she no
longer represents them, she contends that they have been dismissed from
this action, and the trial court conceded that it erred in granting injunctive
relief against individual directors/board members in its Rule 1925(a) opinion.
See Response to Rule to Show Cause, 6/13/2018, at 1-2; TCO at 7.
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Because GTCA advances three discernible issues with accompanying
analysis in its argument section, we limit our review to those claims.5 In its
first issue, GTCA argues that “Appellees lack standing to maintain this action
in their individual capacities.” GTCA’s Brief at 24 (unnecessary capitalization
and emphasis omitted). GTCA states that “Appellees’ contention that the
[GTCA b]oard, in passing the Infrastructure Plan, exceeded its authority under
the Condominium Documents, could only have been maintained as a
derivative action.” Id. at 21. Citing 15 Pa.C.S. § 1712(a) and arguing that
corporate principles apply to a non-profit entity like GTCA, GTCA states that
“[i]t is a general rule that an action at law to recover damages for an injury
to a corporation can be brought only in the name of the corporation itself
acting through its directors, and not by an individual stockholder, though the
injury may result in diminishing or destroying the value of the stock.” Id. at
25; see also id. at 26.6 GTCA concludes that Appellees’ claims “belong to
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5 We deem all other issues raised in GTCA’s statement of questions involved
waived to the extent they do not overlap with the three main arguments
presented and developed by GTCA in its argument section. See PHH Mortg.
Corp v. Powell, 100 A.3d 611, 615 (Pa. Super. 2014) (“Because the
‘Argument’ section of the Powells’ appellate brief sufficiently identifies two
issues and provides legal argument in support of them, however, we will
address these two issues herein. The other nine issues set forth in the
‘Statement of Questions Involved’ are waived, as the above-referenced
failures to comply with our appellate rules preclude our ability to conduct
meaningful appellate review of these issues.”).
6 GTCA’s citation to 15 Pa.C.S. § 1712(a) to support this proposition befuddles
us, as that statutory section appears to pertain to the standard of care and
justifiable reliance of directors, and not to who can bring an action at law to
recover damages for an injury to a corporation.
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[GTCA] and not the individual Appellees[,]” and therefore Appellees “have no
standing to commence and maintain this action in their individual capacities.”
Id. at 27.
GTCA has waived this claim. This Court has explained that “[i]n
Pennsylvania, whether a party has standing to maintain an action is not a
jurisdictional question. Thus, an issue relating to standing is waivable.”
Grimm v. Grimm, 149 A.3d 77, 83 (Pa. Super. 2016) (internal quotation
marks, brackets, footnote, and citations omitted); see also In re Adoption
of Z.S.H.G., 34 A.3d 1283, 1289 (Pa. Super. 2011) (per curiam) (clarifying
that “standing is not intertwined with subject matter jurisdiction when a
statute designates who may sue” and is therefore subject to waiver)
(emphasis in original). Appellees and the Commercial Association both assert
that GTCA did not raise this claim below, and GTCA does not point us to where
it did so. See Appellees’ Brief at 12; Commercial Association’s Brief at 39.7
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7 Although GTCA includes a statement of place of raising or preservation of
issues in its brief, it provides little guidance to us. Therein, GTCA vaguely
asserts that it “preserved the issues that form the basis of this appeal, and
which arise out of the May 1[1] [o]rder, by raising the same in the various
pleadings filed in this case, during the three-day hearing held before the [trial
court,] as well as in [GTCA’s] [p]ost-[h]earing [b]rief.” GTCA’s Brief at 20.
Problematically though, it includes no specific citations to where in the record
these issues were raised. See Pa.R.A.P. 2117(c)(4) (“Where under the
applicable law an issue is not reviewable on appeal unless raised or preserved
below, the statement of the case shall also specify … (4) Such pertinent
quotations of specific portions of the record, or summary thereof, with
specific reference to the places in the record where the matter
appears (e.g. ruling or exception thereto, etc.) as will show that the question
was timely and properly raised below so as to preserve the question on
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Further, at a minimum, GTCA has not raised this issue in its Rule 1925(b)
statement, nor in its statement of questions involved. Accordingly, we deem
it waived. See Pa.R.A.P. 2116(a) (“No question will be considered unless it is
stated in the statement of questions involved or is fairly suggested thereby.”);
Pa.R.A.P. 1925(b)(4)(vii) (“Issues not included in the [s]tatement … are
waived.”); Greater Erie Indus. Development Corp. v. Presque Isle
Downs, Inc., 88 A.3d 222, 225 (Pa. Super. 2014) (“[I]n determining whether
an appellant has waived his issues on appeal based on non-compliance with
Pa.R.A.P. 1925, it is the trial court’s order that triggers an appellant’s
obligation … therefore, we look first to the language of that order.”) (internal
quotation marks and citations omitted); Trial Court Order, 5/23/2017, at 1
(unnumbered page) (warning GTCA that “[a]ny issue not stated in the
[c]oncise [s]tatement shall be deemed waived”). Accordingly, no relief is due
on this basis.
In its second issue, GTCA maintains that “Appellees are barred from
seeking equitable belief [sic] because they come with unclean hands.” GTCA’s
Brief at 27 (unnecessary emphasis and capitalization omitted). It argues that
“Appellees are seeking to prohibit certain conduct and actions in which they
themselves had previously engaged.” Id. at 28 (citations omitted). GTCA
explains that “[d]uring the hearing, … Appellee[s] admitted that, during the
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appeal.”) (emphasis added). We advise GTCA that “it is not the responsibility
of this Court to scour the record to prove that an appellant has raised an issue
before the trial court, thereby preserving it for appellate review.” Phillips V.
Lock, 86 A.3d 906, 920 (Pa. Super. 2014) (citation omitted).
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course of Gateway Towers’ existence, no vote of the [u]nit [o]wners had ever
been held for any replacement projects, regardless of cost or scope.” Id.(citation omitted; emphasis in original). It contends that “[d]uring each of
these projects, at least one of the Appellee[s] was on [GTCA’s b]oard.” Id.Consequently, it requests that we vacate the preliminary injunction because
Appellees “came into equity with unclean hands.” Id. at 30.
Once again, we deem this claim waived. Both Appellees and the
Commercial Association assert that GTCA did not make this argument below,
and GTCA does not identify where it raised this unclean hands argument
before the trial court. See Appellees’ Brief at 12-13; Commercial Association’s
Brief at 39. We also observe that GTCA has not raised this issue clearly in its
Rule 1925(b) statement, nor in its statement of the questions involved. See
Pa.R.A.P. 2116(a), supra; Pa.R.A.P. 1925(b)(4)(vii), supra;
Commonwealth v. Coward, 414 A.2d 91, 99 (Pa. 1980) (determining that
party waived unclean hands claim).8, 9 Thus, no relief is due.
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8 To the extent GTCA contends that the issues in its Rule 1925(b) statement
or statement of questions involved encompass this claim, we remind GTCA
that “[w]hen a court has to guess what issues an appellant is appealing, that
is not enough for meaningful review.” Commonwealth v. Dowling, 778
A.2d 683, 686 (Pa. Super. 2001) (citations omitted).
9 We recognize that “[t]he court may raise the doctrine of unclean hands sua
sponte.” In re Bosley, 26 A.3d 1104, 1114 (Pa. Super. 2011) (citation
omitted). We decline to do so based on the arguments and record before us,
as we consider persuasive the Commercial Association’s argument that not all
of the Appellees have previously served on GTCA’s board and that the past
projects undertaken by some of the Appellees are distinguishable from the
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Finally, in its third issue, GTCA claims that “Appellees failed to satisfy at
least one of the ‘six essential prerequisites’ necessary for the issuance of the
preliminary injunction.” GTCA’s Brief at 30 (unnecessary emphasis and
capitalization omitted). As a result, GTCA urges us to vacate the preliminary
injunction. Id.Our Supreme Court has discerned:
[O]ur review of a trial court’s order granting or denying
preliminary injunctive relief is highly deferential. This highly
deferential standard of review states that in reviewing the grant
or denial of a preliminary injunction, an appellate court is directed
to examine the record to determine if there were any apparently
reasonable grounds for the action of the court below. We will find
that a trial court had apparently reasonable grounds for its denial
of injunctive relief where the trial court has properly found that
any one of the following essential prerequisites for a preliminary
injunction is not satisfied.
There are six essential prerequisites that a party must establish
prior to obtaining preliminary injunctive relief. The party must
show: 1) that the injunction is necessary to prevent immediate
and irreparable harm that cannot be adequately compensated by
damages; 2) that greater injury would result from refusing an
injunction than from granting it, and, concomitantly, that issuance
of an injunction will not substantially harm other interested parties
in the proceedings; 3) that a preliminary injunction will properly
restore the parties to their status as it existed immediately prior
to the alleged wrongful conduct; 4) that the activity it seeks to
restrain is actionable, that its right to relief is clear, and that the
wrong is manifest, or, in other words, must show that it is likely
to prevail on the merits; 5) that the injunction it seeks is
reasonably suited to abate the offending activity; and, 6) that a
preliminary injunction will not adversely affect the public interest.
The burden is on the party who requested preliminary injunctive
relief….
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nearly $21 million Infrastructure Plan at issue here. See Commercial
Association’s Brief at 47-49.
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Warehime v. Warehime, 860 A.2d 41, 46-47 (Pa. 2004) (internal citations,
quotation marks, and footnotes omitted).
GTCA advances that “there were numerous deficiencies with respect to
each of the six required elements.” GTCA’s Brief at 32 (emphasis in original).
With respect to the first Warehime prerequisite — that the injunction is
necessary to prevent immediate and irreparable harm that cannot be
adequately compensated by damages — GTCA states that “[a]ny alleged harm
was speculative at best (as no assessment had yet been issued, and was at
least five months away), and any alleged harm would constitute a purely
financial injury….” Id. at 33 (internal quotation marks omitted). Further,
GTCA claims that, “[i]n any event, even if any alleged harm existed, …
Appellees would have had an adequate remedy at law, thus barring …
Appellees from seeking equitable relief.” Id.
In determining that Appellees satisfied this first prerequisite, the trial
court explained that it “granted the injunction to prevent the immediate and
irreparable harm that would come to [Appellees], fulfilling the first of the
Warehime factors. The harm is not purely economic damage, it is people
potentially losing their homes.” TCO at 3. We agree.
To help establish this first factor, both Appellees and the Commercial
Association compare the residential unit owners in the case sub judice to the
policyholders in Safeguard Mut. Ins. Co. v. Williams, 345 A.2d 664 (Pa.
1975). In Safeguard, the policyholders “filed a complaint in equity and a
petition for a preliminary injunction seeking to enjoin [their insurance
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company] from the cancellation or the threatened cancellation of its current
policyholders for non-payment of an assessment premium, until the equity
action contesting the legality of the assessment could be brought to a final
disposition.” Id. at 666. In determining that the chancellor properly granted
the policyholders a preliminary injunction, our Supreme Court reasoned that,
many of the policyholders are people of meager means. Many
found it necessary to finance the agreed-upon premiums and
would have significant difficulty in attempting to meet the
additional financial burden that would be occasioned by the
assessment. It is equally clear that cancellation of their policies
during the pendency of this lawsuit would result in irreparable
harm to them. As noted by the learned court below, the 12,000
policyholders whose policies would be terminated in the event
they could not meet the additional assessments would find
themselves without insurance coverage. During that period of
time they might lose lawsuits because of their inability to pay for
the services of counsel or find themselves losing operating
privileges under the Vehicle Code…. Many of the possible
consequences are of such a nature that monetary damages would
be inadequate.
Id. at 670.
Here, at the preliminary injunction hearing in April of 2017, the
president of GTCA’s board testified that he advised unit owners that “[t]he
assessments require payments with the first payment due on August 1,
2017[,]” and corroborated that GTCA informed unit owners that it “will take
every means at its disposal to collect monies owed….” See N.T. Hearing,
4/10/2017-4/13/2017, at 32-34, 94; see also Commercial Association’s Brief
at 29-30, 32-33. Further, Appellees proffered evidence that many of the unit
owners are elderly and on a fixed income, and one particular Appellee testified
that she is in her seventies and retired, has lived in the building for almost 35
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years, has no mortgage, and would not be able to afford the approximately
$70,000 assessment imposed on her by way of the Infrastructure Plan, of
which she owed over $16,000 on August 1, 2017. See N.T. at 286-89;
Commercial Association’s Brief at 30. The Commercial Association points out
that “each [u]nit [o]wner, not only … Appellees, would have had to
immediately pursue financing in order to have it in place by the August 1st due
date — if it was possible for [them] to obtain financing at all.” Commercial
Association’s Brief at 30. At the hearing, Appellees additionally expressed
their concerns about losing and/or endangering their homes in a process in
which they have no voice. See N.T. at 245-46, 287; Commercial Association’s
Brief at 32-33; Appellees’ Brief at 19-20.
Thus, as in Safeguard, Appellees demonstrated that they “would have
significant difficulty in attempting to meet the additional financial burden that
would be occasioned by the assessment.” Safeguard, 345 A.2d at 670. Unit
owners have to pay the contested assessment or risk losing their homes,
whether by foreclosure or proactively moving because they know they cannot
make ends meet in light of the assessment. We find persuasive Appellees’
observation that “[e]ven if owners displaced by the burden of the assessments
could manage to obtain new housing, the loss of their current home would
remain irreparable harm because each parcel of real estate is unique.”
Appellees’ Brief at 20 (citation omitted). Therefore, similar to the
policyholders in Safeguard, monetary damages would be inadequate to
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compensate Appellees for their harm. Accordingly, we discern that Appellees
satisfied this first prerequisite. See Warehime, supra.
GTCA next contests the second Warehime prerequisite — that issuance
of the injunction will not substantially harm other interested parties in the
proceedings. See id. GTCA argues that it “proffered unnerving testimony
during the hearing that, if the [p]reliminary [i]njunction were granted, other
interested parties, including the general public, would be subjected to
potential physical harm….” GTCA’s Brief at 43-44. Specifically, GTCA states
that “the lower court heard testimony that not one, but four, industrial-grade
windows had malfunctioned and plunged to the ground.” Id. at 44.
Additionally, GTCA advances that it also suffered injury “via interference over
its right and duties to effectuate the maintenance, repair, and replacement of
the Common Elements….” Id. at 43-44. It asserts that, before the
preliminary injunction hearing, “no unit owner votes had ever been held
regarding any maintenance, repairs, or replacements to the Common
Elements.” Id. at 45 (emphasis omitted).
Nevertheless, the trial court found that Appellees satisfied the second
Warehime prerequisite. It explained:
Greater injury would result from refusing the injunction, as
required by the second prong of Warehime. The injunction was
crafted to prevent the imposition upon [Appellees] of
unmanageable debt without the opportunity to exercise their
contractual right of collective refusal. Any potential harm to
[GTCA] is just that the work outlined in the GTCA Infrastructure
Plan cannot proceed without a vote of unitholders and institutional
mortgagees. [GTCA] ha[s] a route to implementation of the GTCA
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Infrastructure Plan. They simply must garner sufficient approval
from the unitholders and institutional mortgagees.
TCO at 3-4.
We agree with the trial court that Appellees have satisfied this
prerequisite, as the issuance of an injunction will not substantially harm GTCA.
Although the trial court did not address GTCA’s argument regarding the
potential for physical harm to interested parties and the general public, the
Commercial Association sets forth a thorough recitation of the evidence
presented demonstrating that “there is no immediate or imminent threat with
regard to the health, safety or welfare of the [u]nit [o]wners or the public
regarding any of [the] work related to the Infrastructure Plan.” Commercial
Association’s Brief at 25 (emphasis omitted); see generally id. at 25-29.10
Moreover, we do not view any interference with GTCA’s rights and duties
as a greater injury than imposing unmanageable debt on the unit owners at
____________________________________________
10For instance, with respect to the purportedly malfunctioning windows, the
Commercial Association asserts:
[T]he record in fact shows that in 2015, GTCA had hired AE
Dynamics to mechanically fasten and secure all of the windows on
the residential floors closed in late 2015 and early 2016.
According to AE Dynamics’ correspondence…, the fasteners used
“are generally intended to be used in a permanent manner” and
asserted further “that the fasteners will continue to perform as
intended for a period of 5 years or longer, provided they are
installed in a proper manner….”
Commercial Association’s Brief at 26 (internal citations and emphasis
omitted). In addition, the Commercial Association observes that Appellees’
expert testified that “[t]here is no life/safety issues related to the windows as
they are on the building[,]” id. at 27 (citations omitted), and a board member
admitted that this fix has been successful with respect to life/safety issues.
Id. at 27-28 (citation omitted).
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the cost of their homes. We observe that, although a vote may have never
occurred in the past, it does not mean that the Condominium Documents do
not require GTCA to obtain such approval. It simply could be that no one has
demanded compliance with the Condominium Documents before and, in that
case, there could be no interference with GTCA’s rights and duties as it never
had the authority to proceed without a vote in the first place. Thus, we
determine that Appellees fulfilled this second prerequisite. See Warehime,
supra.
We now turn to the third Warehime prerequisite — that the preliminary
injunction will properly restore the parties to their status as it existed
immediately prior to the alleged wrongful conduct. See id. GTCA argues that
“the [p]reliminary [i]njunction doesn’t maintain the status quo, it creates an
entirely new one out of whole cloth — one that never existed during any period
of Gateway Towers’ existence.” GTCA’s Brief at 46 (emphasis omitted). It
states that “no vote had ever been taken or required for any repairs,
maintenance, or replacements[,]” and “[GTCA’s b]oard never put[s] projects
like the Infrastructure Plan up for a vote of the [u]nit [o]wners.” Id. at 47,
48.
The trial court, however, found that Appellees met the third Warehime
prerequisite, explaining:
By granting the injunction, the parties were properly restored to
the status quo, fulfilling the third Warehime factor. [Appellees]
maintain their homes and [GTCA is] required to, if [it] wish[es] to
proceed before a trial can be held, act in accordance with the
Articles of Incorporation, the Declaration of Conodminium…, and
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the Code of Regulations … that control Gateway Towers
Condominium.
[GTCA], somewhat absurdly, maintain[s] that compliance is an
unreasonable burden. One board member even threatened in our
hearing to resign his seat if forced to consult with unitholders and
mortgagees on this issue. Perhaps unintentionally, he identified
his relief: if he does not wish to fulfill his duties as a board
member, he may quit. And so may any board member. As long
as they serve on the GTCA [b]oard, however, members must fulfill
the duties of that board.
TCO at 4.
We agree with the trial court that Appellees satisfy this prerequisite,
though our reasoning is slightly different. Our Supreme Court has explained
that “a preliminary injunction will properly restore the parties to their status
as it existed immediately prior to the alleged wrongful conduct.” SEIU
Healthcare Pennsylvania v. Com., 104 A.3d 495, 509 (Pa. 2014) (citation
and internal quotation marks omitted). Before the complained of conduct —
i.e., GTCA’s board’s passing the Infrastructure Plan without the approval of
the unit owners and mortgagees — it was unclear whether the Condominium
Documents required a vote. Although no vote had occurred in the past,
Appellees contended at the time that the Condominium Documents mandate
a vote while GTCA disputed that requirement. Further, before the complained-
of conduct, Appellees maintained their homes and did not have to pay the at-
issue assessments, and GTCA had not yet implemented the Infrastructure
Plan. We determine that the trial court’s order preserves these circumstances
until the question of the vote requirement can play out through the litigation
process.
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Nonetheless, though, we feel we must construe the trial court’s order
further. The trial court is not requiring that a vote take place on the
Infrastructure Plan. Instead, the trial court advised GTCA that if it wants to
proceed with the Infrastructure Plan before the conclusion of the underlying
litigation on the merits, it could do so by obtaining the approval that Appellees
say the Condominium Documents compel. In other words, GTCA may proceed
before the court decides the question of whether a vote is required if it garners
the approval that Appellees argue is necessary. With that clarified, we
ascertain that Appellees fulfilled this third prerequisite. See Warehime,
supra.
We next consider the fourth prerequisite — that the activity Appellees
seek to restrain is actionable, that their right to relief is clear, and that they
are likely to prevail on the merits. See id. At the outset, we observe that our
Supreme Court has said, “[t]o establish a clear right to relief, the party
seeking an injunction need not prove the merits of the underlying claim, but
need only demonstrate that substantial legal questions must be resolved to
determine the rights of the parties.” SEIU, 104 A.3d at 506 (citation omitted).
Here, the trial court found that Appellees had a clear right to relief, explaining:
The crux of the matter is whether the work in the GTCA plan is
considered an alteration or a repair. We determined, as a factual
matter, that the proposed work is an alteration and therefore
requires a vote.
The Board of the GTCA proposed four construction projects: (1)
replacement of the existing HVAC system[] at a cost of more than
$14 million; (2) replacement of all of approximately 1[,]500
windows at a cost of about $5.3 million; (3) installation of metal
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panels at a cost of $1.6 million; and (4) installation of new waste
stack equipment at a cost of several hundred thousand dollars.
TCO at 4-5 (internal citation omitted). Upon examining § 15.2 of the Code
and the Article III(C)(2), produced supra, the trial court reasoned:
[W]e see that “repairs” may be made by … GTCA without direct
authorization by unitholders (apart, of course, from the regular
election of directors), but “alterations” require a supermajority
vote of not only unitholders, but their mortgagees.
The governing documents do not define what constitutes an
“alteration” versus a “repair,” so we are required to look to
common usage of those terms. We heard testimony in which the
terms were defined using the International Existing Building Code
(“IEBC”). The IEBC defines repairs as “patching or restoration or
replacement of damaged materials, elements, equipment or
fixtures for the purpose of maintaining such components in good
or sound condition with respect to existing loads or performance
requirements.” In Section 403.1 of the [IEBC], alteration is
defined as “the removal and replacement or the covering of
existing materials, elements, equipment, or fixtures using new
materials, elements, equipment or fixtures that serve the same
purpose.”
We heard testimony from Mark Baker, a consulting engineer, who
testified that removal of all of the windows followed by
installations of new windows “would be an alteration Level I
without a doubt.” [GTCA] complain[s] on [a]ppeal that our
reading of the documents is incorrect. However, we found, based
on the evidence and testimony presented before us[,] that the
work proposed falls under the category of alterations and
therefore, under the Code of Regulations, [GTCA] must obtain the
consent of [unitholders] through a vote.
TCO at 5-6 (internal citations omitted).
In response, GTCA makes a three-fold argument as to why Appellees’
right to relief is not clear. First, GTCA contends that Appellees “did not have
a clear right to relief, as the Uniform Condominium Act[, 68 Pa.C.S. §§ 3101-
3414 (referred to herein as “UCA”),] unambiguously authorizes [GTCA] to
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implement the Infrastructure Plan without a vote of the [u]nit [o]wners.”
GTCA’s Brief at 50-51 (unnecessary emphasis omitted). Second, GTCA says
Appellees “did not have a clear right to relief because, under the Condominium
Documents, replacements are distinct from alterations.” Id. at 56
(unnecessary emphasis omitted). Finally, GTCA claims that “[t]here was no
clear right to relief because this was an issue of first impression where other
jurisdictions that had considered the same issue reached the opposite
conclusion.” Id. at 60 (unnecessary emphasis omitted). We address each
argument in turn.
First, GTCA states that Appellees “could not, and cannot, prove that they
had a clear right to relief, as the [UCA] … expressly provides otherwise. The
lower court, therefore, erred and abused its discretion by ignoring the clear
statutory authority (and obligation) conferred upon [GTCA] to maintain,
repair, and replace the Common Elements.” Id. at 51. It argues that,
pursuant to the UCA, GTCA has “unbridled authority to implement the
Infrastructure Plan” and that “under the UCA, alteration is a wholly-distinct
concept from replacement.” Id. at 52, 54 (emphasis and footnote omitted).
However, it also recognizes that the rights conferred on a unit owners’
association by the UCA is limited by that association’s declaration. See id. at
52 (observing that certain rights under the UCA “may only be limited to the
extent expressly provided in the declaration”); see also Commercial
Association’s Brief at 18 (“The powers conferred upon a ‘[u]nit [o]wners’
[a]ssociation’ by the retroactive provisions of the [UCA] are explicitly limited
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‘[e]xcept to the extent provided by the declaration.’ 68 Pa.C.S. § 3307. See
also 68 Pa.C.S. § 3302(a).”). Accordingly, we fail to see the import of the
UCA if GTCA’s Condominium Documents amend or limit those rights.11 As the
trial court determined that the Condominium Documents prescribed specific
rights, it did not err by disregarding the statutory provisions of the UCA.
Turning to GTCA’s second argument, it states that, “[s]hould this Court
disagree with [GTCA’s] position regarding the UCA, the lower court still erred
in concluding that … Appellees have a clear right to relief, as the Condominium
Documents say otherwise.” GTCA’s Brief at 56. GTCA asserts that “[u]nder
the Condominium Documents, there is no ambiguity that replacement is
different from alterations or further improvements.” Id. at 58 (emphasis in
original). It argues that “Section 15.2 of [the] Code refers to ‘alteration or
further improvement’ but makes no mention of the word ‘replacement,’
despite the fact that the word ‘replacement’ is clearly contemplated elsewhere
by the Condominium Documents.” Id. at 58-59. GTCA states that the trial
court “improperly equated replacement with alteration, despite a mountain of
evidence being presented indicating that the two terms were clearly district
concepts under the Condominium Documents.” Id. at 59 (emphasis in
original). We disagree.
Pursuant to Section 15.2(a), GTCA need not obtain prior approval for
“repairs and maintenance of the existing improvements” but must garner
____________________________________________
11 Oddly, GTCA does not argue that the rights provided by the UCA are not
limited by GTCA’s Condominium Documents.
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approval for “alteration or further improvement of the Common Elements….”
GTCA’s Exhibit F (Code of Regulations § 15.2(a)). The trial court consequently
had to determine if the Infrastructure Plan constituted ‘repairs and
maintenance’ or ‘alteration or further improvement.’12 There was evidence in
the record supporting that the Infrastructure Plan constituted an alteration.
See TCO at 6 (citing Mark Baker’s testimony that the removal of all windows
and installation of new windows constituted an alteration); see also
Warhime, supra (“[A]n appellate court is directed to examine the record to
determine if there were any apparently reasonable grounds for the action of
the court below.”). Thus, based on the arguments before us, we conclude
that Appellees have sufficiently “demonstrate[d] that substantial legal
questions must be resolved to determine the rights of the parties.” See SEIU,
supra.
Finally, GTCA argues that — to the extent we disagree that the UCA or
Condominium Documents expressly authorized the Infrastructure Plan — the
trial court nevertheless “erred in determining, as an issue of first impression,
____________________________________________
12 We reiterate that Section 15.2(a) does not use the word ‘replacement.’ The
Commercial Association, however, observes that “GTCA itself has
characterized the Infrastructure Plan’s work as a ‘replacement’ (in an attempt
to distinguish it from ‘alteration’ or ‘improvement’ which would require a [u]nit
[o]wner vote under Section 15.2).” Commercial Association’s Brief at 17-18;
see also id. at 11 (“[U]nder Pennsylvania law and pursuant to the testimony
heard during the injunction hearing, including that of GTCA [b]oard
[m]embers, the scope of work under the Infrastructure Plan constitutes an
‘alteration’ or ‘improvement,’ rather than a ‘replacement[.’]”). Ultimately, as
set forth supra, the trial court classified the Infrastructure Plan as an
alteration. See TCO at 4.
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that … Appellees had a clear right to relief, as this result was contrary to the
conclusion that numerous jurisdictions had reached when addressing the same
issue.” GTCA’s Brief at 60. Put differently, GTCA says that “there was no
reasonable basis to conclude that there was a clear right to relief because the
issue had never been addressed, and because the jurisdictions that had
addressed it had aligned with [GTCA’s] position.” Id. at 61. GTCA avers that
“[c]onstruing similar voting requirement provisions, other courts have
routinely found that a condominium association can authorize replacements
to common elements without a vote because replacements to common
elements fall exclusively within the association’s independent duty to
maintain, repair, and replace … common elements….” Id.
We reject this argument. We repeat that our Supreme Court
pronounced that “[t]o establish a clear right to relief, the party seeking an
injunction need not prove the merits of the underlying claim, but need only
demonstrate substantial legal questions must be resolved to
determine the rights of the parties.” SEIU, supra (emphasis added).
Thus, even if this matter were an issue of first impression in our
Commonwealth as GTCA contends, it would not preclude Appellees from
establishing a clear right to relief. Accordingly, we determine that Appellees
satisfied this fourth prerequisite. See Warehime, supra.
We next consider the fifth Warehime prerequisite — that the injunction
Appellees seek is reasonably suited to abate the offending activity. See id.
The trial court reasoned that the injunction “is reasonably suited to abate the
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offending activity because, by compelling [GTCA] to follow the terms of the
Declaration and the Code, it protects [Appellees] from the imposition of
obligations without the process promised to them in those documents, and
upon which they reasonably relied.” TCO at 6.
GTCA, however, claims that the trial court “had no basis, reasonable or
otherwise, to conclude that the [p]reliminary [i]njunction was suited to abate
the offending activity for one straightforward reason: there was no offending
activity.” GTCA’s Brief at 67. GTCA repeats its arguments that it had not
imposed an assessment yet, it possessed the authority to implement the
Infrastructure Plan without a vote, and it had never taken a vote of the unit
owners in the past. See id. at 67-69. For the reasons already discussed at
length above, we are unpersuaded by these assertions and agree with the trial
court that GTCA engaged in offending conduct. Consequently, we deem this
fifth Warehime prerequisite met. See Warehime, supra.
The last Warehime prerequisite examines if a preliminary injunction
will adversely affect the public interest. See id. The trial court noted that it
is “not aware of any way in which this injunction could affect the public
interest, adversely or otherwise.” TCO at 6. GTCA contests this conclusion,
asserting that it “provided alarming evidence that delaying the Infrastructure
Plan could result in physical harm to [GTCA’s] residents, invitees, licenses
[sic], as well as the public at large.” GTCA’s Brief at 69-70. It also claims
that “the [p]reliminary [i]njunction adversely affects the public’s interest as it
relates to injunctive jurisprudence itself. In other words, the public is
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damaged where a preliminary injunction is issued in derogation of the
stringent precepts on which equitable relief relies.” Id. at 70.
We disagree. Initially, as described supra, the evidence establishes that
delaying the Infrastructure Plan would pose no immediate threat to the safety
of GTCA’s unit owners or the public. See footnote 10, supra, and
accompanying text. Moreover, issuance of this preliminary injunction does
not diminish ‘injunctive jurisprudence’ as we determine that Appellees have
established all six essential Warehime prerequisites. Accordingly, based on
the foregoing, we affirm the trial court’s order granting Appellees’ motion for
preliminary injunction.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/7/2019
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