Twp. of Bristol v. 1 Enterprises, LLC

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Township of Bristol :
:
v. : No. 658 C.D. 2017
: Argued: December 4, 2017
1 Enterprises, LLC, :
Appellant :
Township of Bristol, :
Appellant :
: No. 727 C.D. 2017
v. : Argued: December 4, 2017
:
1 Enterprises, LLC :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION BY
SENIOR JUDGE COLINS FILED: January 5, 2018
These are consolidated cross-appeals from a judgment entered by the
Bucks County Court of Common Pleas (trial court) in an eminent domain case in
the amount of $61,500 in favor of African Century Industries, LLC (Condemnee)
and against the Township of Bristol (Township), following a nonjury trial. For
the reasons set forth below, we affirm.
On October 27, 2006, the Township filed a Declaration of Taking
condemning a property situated at 1248/1250 Murphy Drive (also known Marie
Lowe Drive), Bristol Township and identified on the Bucks County Tax Map as
Tax Map Parcel 5-61-499 (the Property) for the purpose of constructing a
recreation and community center. (Declaration of Taking, Reproduced Record
(R.R.) at 17a-33a.) Condemnee, a Delaware limited liability company, had
purchased the Property on January 10, 2006 for $40,000 and was the owner of the
Property at the time of the taking. (Declaration of Taking ¶2, R.R. at 17a; Deed,
R.R. at 25a-26a.) At the time that Condemnee purchased the Property, there were
recorded Internal Revenue Service (IRS), Pennsylvania Department of Labor &
Industry (Department of Labor & Industry), and Bristol Borough Water & Sewer
Authority (Water & Sewer Authority) liens against the Property. (Petition to
Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-44a; Memorandum
of Law in Opposition to Petition to Distribute Just Compensation, R.R. at 67a-
68a.) These liens were filed against the Property between 1997 and 2003 and the
amount of those liens, as of the dates that they were filed, totaled $94,700.60.
(Petition to Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-44a;
Memorandum of Law in Opposition to Petition to Distribute Just Compensation,
R.R. at 67a-68a.) Condemnee did not pay down any of these liens during its
ownership of the Property. (Trial Transcript at 86-87.)
In the Declaration of Taking, the Township estimated the just
compensation for the Property at $115,000. (Declaration of Taking ¶10, R.R. at
18a.) Condemnee filed a petition for appointment of a board of viewers on March
9, 2007, and the trial court appointed a board of viewers to determine just
compensation. On April 2, 2007, the Township filed a petition to distribute just
compensation seeking to pay the estimated $115,000 just compensation into court
because Condemnee would not consent to payment of the liens on the Property. In
response, Condemnee admitted that the $94,700.60 in IRS, Department of Labor &
Industry, and Water & Sewer Authority liens shown on the Township’s title report
for the Property were valid liens on the Property when the Declaration of Taking
2
was filed. (Answer to Petition to Distribute Just Compensation ¶¶6, 10-11, R.R. at
54a-55a; Memorandum of Law in Opposition to Petition to Distribute Just
Compensation, R.R. at 67a-68a.) Condemnee also admitted that the Township
could pay the $94,700.60 face amount of these liens to those three lienholders from
the just compensation, but contended that the Township could not pay any interest
or penalties on those liens. (Answer to Petition to Distribute Just Compensation
¶¶6, 10-11, R.R. at 54a-55a; Memorandum of Law in Opposition to Petition to
Distribute Just Compensation, R.R. at 67a-68a.) On October 26, 2007, the trial
court issued an order denying the Township’s request to pay the estimated just
compensation into court and ruling that the Township “shall distribute damages to
the Condemnee directly in the sum of $115,000 less any liens (with any interest,
penalties and fees allowable by law) existing as of the date of the Declaration of
Taking, October 27, 2006.” (R.R. at 77a.)
On September 27, 2007, while the Township’s petition was pending,
the board of viewers filed its report awarding $140,000 in just compensation and
$2,500 for Condemnee’s appraiser’s fees. (Report of the Board of View, R.R. at
182a-185a.) Condemnee appealed the board of viewers’ decision to the trial court
the same day and demanded a jury trial. On November 10, 2008, the Township
paid the $140,000 awarded by the board of viewers to the three holders of liens and
municipal claims on the Property, paying $116,474.15 to the IRS, $7,082.47 to the
Department of Labor & Industry, and $16,443.38 to the Water & Sewer Authority.
(Certified Record Item 37, Condemnee’s Petition for Declaratory Relief ¶¶11-13 &
Exs. 7-9; Certified Record Item 40, Township Petition to Strike Petition for
Declaratory Relief ¶¶3-4 & Ex. B.)
3
Between April 2009 and October 2014, Condemnee filed several
unsuccessful motions in the trial court, variously titled as motions for declaratory
judgment and for contempt, challenging the Township’s payment of the $140,000
to the lienholders, and filed three appeals from denial of those motions, which this
Court quashed as interlocutory. (Docket Entries, R.R. at 6a-12a.) On September
9, 2012, the trial court ordered that discovery and expert reports be completed by
December 1, 2012. (Id., R.R. at 8a.) Between October 2012 and the end of 2015,
the case was placed on the trial list multiple times, but no trial was held. (Id., R.R.
at 8a-12a.) Following a May 2014 trial court order placing the case on the trial list
and a contempt motion filed by Condemnee that was scheduled for a hearing on
August 8, 2014, the Township, on August 1, 2014, served a notice to attend and
produce documents on Condemnee. (Notice to Attend and Produce, R.R. at 129a-
130a.) Condemnee filed a motion to quash the notice; the trial court did not rule
on the motion to quash and denied the contempt motion. (Docket Entries, R.R. at
10a.)
On February 4, 2015, Condemnee executed a document assigning all
of its rights to the Property and all of its rights in the condemnation proceeding to 1
Enterprises, LLC (Assignee), a Delaware limited liability company formed on
January 22, 2015. (Assignment of Property Rights, R.R. at 262a-264a; Township
Motion to Dismiss Ex. B, R.R. at 250a.) On March 9, 2015, counsel for
Condemnee filed a praecipe to substitute Assignee as a party in the condemnation
as the successor in interest to Condemnee and entered his appearance as counsel
for Assignee. (Praecipe to Substitute, R.R. at 260a-261a; Docket Entries, R.R. at
12a.) The Township did not file any motion to strike this substitution or challenge
4
the validity of the assignment in response to this praecipe. (Docket Entries, R.R. at
12a.)
On March 4, 2016, the trial court ordered the case placed on the April
4 to April 15, 2016 trial list. (Docket Entries, R.R. at 13a.) On April 1, 2016, the
Township filed a motion to dismiss the appeal from the board of viewers for lack
of standing on the ground that Condemnee’s certificate of formation had been
canceled by the state of Delaware. (Township Motion to Dismiss, R.R. at 239a-
254a.) The Township based its motion to dismiss on a September 17, 2014
printout from the Delaware Department of State, Division of Corporation website
showing that Condemnee’s certificate had been canceled on June 1, 2009 for
nonpayment of taxes. (Id. Ex. A, R.R. at 248a.) The Township also filed a pretrial
motion in limine on March 29, 2016 to exclude the testimony of Condemnee’s
appraiser. (Township Motion in Limine, R.R. at 211a-238a.)
On April 4, 2016, the case came to trial. The trial court denied the
Township’s motion in limine to exclude Condemnee’s appraiser on the grounds
that the Township’s arguments were issues of credibility. (Trial Transcript at 77.)
On the Township’s motion to dismiss, the trial court held that Condemnee was the
real party in interest, rather than Assignee, because the cancelation of
Condemnee’s certificate invalidated its 2015 assignment, and ruled that the trial
would proceed with Condemnee, and not Assignee, as a party. (Id. at 50-74, 100-
05, Supplemental Reproduced Record (Supp. R.R.) 3b.) Following these rulings
and rulings on motions and arguments made by Condemnee, the parties waived
jury trial. (Id. at 136, Supp. R.R. at 27b.) The trial court then held a one-day
nonjury trial and viewed the Property the next day, April 5, 2016. (Id. at 136-211;
Trial Court Findings and Verdict at 1.) At the trial, Condemnee put in evidence its
5
appraiser’s testimony before the board of viewers opining that the fair market
value of the Property at the date of the October 27, 2006 taking was $455,000 and
its appraiser’s report. The Township called as an expert witness an appraiser who
inspected the Property in 2008 and opined that the fair market value of the
Property at the date of the taking was $150,000, and introduced in evidence its
appraiser’s report and supporting documents.1
On April 6, 2016, the trial court entered a verdict awarding
Condemnee $200,000 for the value of the Property on the date of the taking,
finding that the Township was entitled to a credit of $140,000 against this amount
for its lien payments, and awarding Condemnee appraisal and attorney fees of
$4,000, as to which the Township was entitled to a credit of $2,500 for appraisal
fees already paid. (Trial Court Findings and Verdict at 4.) Both parties filed
motions for post-trial relief. The trial court denied the post-trial motions on May
12, 2016, but did not enter judgment. On June 7, 2016, before judgment was
entered by the trial court, counsel for Condemnee and Assignee filed a praecipe to
substitute Assignee as a party, attaching a May 25, 2016 Certificate of Good
Standing from the State of Delaware showing that Condemnee had been restored to
good standing. (Praecipe to Resubstitute Party, R.R. at 255a-258a.) The Township
did not file any motion to strike or challenge this substitution. (Docket Entries,
R.R. at 15a.) On April 25, 2017, on the praecipe of counsel for Condemnee and
Assignee, the trial court entered judgment in favor of Condemnee in the amount of
$61,500 in accordance with its April 6, 2016 verdict. (Id.; Certified Record Item
1
The Township also called as a witness its former Director of Building, Planning &
Development, who testified concerning the zoning status of the Property and the denial of a use
and occupancy permit for the Property in 2005, but did not opine on the value of the Property.
6
153.) Both Assignee and the Township appealed from the judgment and the
appeals were consolidated by this Court.2
The Township’s Appeal
The Township argues as the primary ground of its appeal that the trial
court’s judgment must be reversed because Condemnee did not have standing to
pursue its claim for just compensation.3
Delaware’s Limited Liability Company Act, under which Condemnee
was formed, provides that a limited liability company’s certificate of formation
may be canceled for nonpayment of taxes and that a limited liability company
“may not maintain any action, suit or proceeding” while it is not in good standing
due to nonpayment of taxes. 6 Del. Code § 18-1107(h), (l); 6 Del. Code § 18-
1108. The Delaware Limited Liability Company Act also prohibits maintenance of
any action or proceeding by an assignee of a limited liability company that is not in
good standing where the assignment was made while the limited liability company
was not in good standing. 6 Del. Code § 18-1107(l). Condemnee’s certificate had
been canceled for nonpayment of taxes in 2009 and Condemnee’s and Assignee’s
counsel admitted that Condemnee had not yet paid the outstanding tax liabilities to
2
Our review of a judgment following a nonjury trial is limited to examining whether the trial
court’s factual determinations are supported by competent evidence and whether the trial court
committed an error of law. Southwest Regional Tax Bureau v. Kania, 49 A.3d 529, 532 n.5 (Pa.
Cmwlth. 2012); Commonwealth v. Hoffman, 938 A.2d 1157, 1160 n.10 (Pa. Cmwlth. 2007).
3
Assignee has filed applications to strike numerous statements in the Township’s brief and reply
on the ground that they allegedly are not supported by the trial court record. Both applications to
strike are denied. The vast majority of the items that Assignee seeks to strike are either fully
supported by the record or are argument from the facts in the record. While a small number of
statements in the Township’s principal brief, concerning appearances before the board of viewers
and alleged notices to appear and produce other than the August 2014 notice, are not supported
by the record, this Court has disregarded those assertions and considered only documents in the
trial court record.
7
be restored to good standing at the time the case came to trial. (Township Motion
to Dismiss Ex. A, R.R. at 248a; Trial Transcript at 100-01.)
The cancelation of Condemnee’s certificate was a curable defect,
however, not a permanent bar to Condemnee’s and Assignee’s rights in this
eminent domain case. Under the Delaware Limited Liability Company Act,
cancelations and loss of good standing for nonpayment of taxes do not dissolve the
limited liability company or permanently divest it or its assignees of rights. 6 Del.
Code § 18-1107(i), (k), (l), (m); Chantz Enterprises, LLC v. JHL Brighton
Design/Decor Center, LLC, (Del. Super. No. 09C-06-072 MJB, filed June 30,
2010), 2010 WL 2642885 at *3; Western States Federal Contracting, LLC v.
Department of Veterans Affairs, 667 Fed. Appx. 775, 777 (Fed. Cir. 2016). The
statute expressly provides for restoration of the company to good standing upon
payment of all taxes, interest and penalties and limits its prohibitions to the period
before the company has been restored to good standing. 6 Del. Code § 18-1107(i),
(l).4 A limited liability company’s cause of action therefore may not be dismissed
4
Title 6, Section 18-1107(l) of the Delaware Code provides:
A domestic limited liability company that has ceased to be in good standing or a
foreign limited liability company that has ceased to be registered in the State of
Delaware by reason of its neglect, refusal or failure to pay an annual tax may
not maintain any action, suit or proceeding in any court of the State of Delaware
until such domestic limited liability company or foreign limited liability
company has been restored to and has the status of a domestic limited liability
company or foreign limited liability company in good standing or duly
registered in the State of Delaware. An action, suit or proceeding may not be
maintained in any court of the State of Delaware by any successor or assignee
of such domestic limited liability company or foreign limited liability company
on any right, claim or demand arising out the transaction of business by such
domestic limited liability company after it has ceased to be in good standing or
a foreign limited liability company that has ceased to be registered in the State
of Delaware until such domestic limited liability company or foreign limited
liability company, or any person that has acquired all or substantially all of its
(Footnote continued on next page…)
8
on the ground that its certificate was canceled or it was otherwise not in good
standing earlier in the litigation, if it later pays the taxes, interest and penalties and
is restored to good standing while the litigation is pending. Chantz Enterprises,
LLC, 2010 WL 2642885 at *3; Western States Federal Contracting, LLC, 667 Fed.
Appx. at 777. In addition, the Delaware Limited Liability Company Act provides
that loss of good standing for failure to pay taxes does not invalidate the
company’s contracts or bar the company from defending proceedings against it. 6
Del. Code § 18-1107(m). In May 2016, after the trial and verdict but before
judgment was entered, Condemnee was restored to good standing. (Certificate of
Good Standing, R.R. at 258a.)
The Township contends that the trial court was required to grant its
motion to dismiss Condemnee’s appeal from the board of viewers for lack of
standing because it was statutorily barred from litigating at the time of trial and
because Condemnee had no interest in the litigation as a result of its assignment of
its rights to Assignee.5 We conclude that this claim of error is barred by waiver
because the Township failed to timely challenge Condemnee’s standing and agreed
at trial that the proceeding could be adjudicated with Condemnee as a party.
(continued…)
assets, has paid any annual tax then due and payable, together with penalties and
interest thereon.
6 Del. Code § 18-1107(l) (emphasis added).
5
The Township does not dispute that Assignee has standing to litigate this appeal. Assignee
lacked standing at trial because Assignee’s rights were based on the 2015 assignment while
Condemnee was not in good standing and Assignee therefore could not assert claims based on
the assignment until Condemnee was restored to good standing by payment of its tax liabilities.
That defect, however, was cured prior to this appeal when Condemnee was restored to good
standing in May 2016. Because the cancelation of a certificate does not invalidate the limited
liability company’s acts during the period of cancelation and the inability to assert claims based
on the assignment ceases when is restored to good standing, 6 Del. Code § 18-1107(l), (m),
Assignee is entitled to assert its rights under the assignment.
9
Lack of standing is not a jurisdictional defect. Commonwealth v.
Allen, 107 A.3d 709, 711 n.1 (Pa. 2014); City of Philadelphia v. Rivera, 171 A.3d
1, 6 (Pa. Cmwlth. 2017). Objections to lack of standing, including claims of lack
of capacity to sue, must be raised at the earliest opportunity and are waived if not
promptly raised. Erie Indemnity Co. v. Coal Operators Casualty Co., 272 A.2d
465, 467 (Pa. 1971); Hall v. Episcopal Long Term Care, 54 A.3d 381, 399 (Pa.
Super. 2012); Carroll v. Exeter Township, (Pa. Cmwlth., No. 1580 C.D. 2013,
Aug. 4, 2014), slip op. at 16-17 n.18, 2014 WL 3812323 at *6 n.18.6
The Township did not raise its objections to Condemnee’s standing at
the earliest opportunity. It was aware of the cancelation of Condemnee’s
certificate in 2014, as it attached a September 2014 printout of Condemnee’s status
as the basis for its motion to dismiss. (Township Motion to Dismiss Ex. A, R.R.
at 248a.) The Township also received notice in March 2015 that Condemnee
asserted that it had assigned all of its rights in the case to Assignee. (Praecipe to
Substitute, R.R. at 260a.) Notwithstanding this knowledge, the Township did not
raise its claim that Condemnee lacked standing until April 1, 2016, three days
before trial, over a year after it knew of the bases on which it challenged
Condemnee’s standing. Because the Township did not timely raise the issue, its
challenge to Condemnee’s standing as a party at trial was waived and cannot
constitute a ground for reversal of the trial court’s judgment. Hall, 54 A.3d at 399
(challenge to plaintiff’s standing was barred by waiver where it was first raised at
trial in a directed verdict motion); Carroll, slip op. at 16-17 n.18, 2014 WL
3812323 at *6 n.18 (challenge to party’s right to litigate eminent domain case
6
While Carroll is an unreported decision and therefore not binding precedent, the Court finds it
to be persuasive authority. See 210 Pa. Code § 69.414(a).
10
under assignment of rights was barred by waiver where it was first raised by
motion in limine).7
In addition, the Township’s counsel waived his objection to
Condemnee’s standing in his statements to the court at trial. Although the
Township sought dismissal of Condemnee’s claims in its motion, after the trial
court indicated reluctance to dismiss the case in its entirety since Condemnee still
had rights that it could enforce if restored to good standing, counsel for the
Township agreed that the case could proceed with Condemnee as a party and
expressed only concern with evidence rather than capacity to sue or standing:
THE COURT: Well, are you saying that they have to
somehow resurrect ACI [Condemnee] with the Delaware
Corporation Bureau before it can do anything?
MR. SACCO [Township Counsel]: Yes.
THE COURT: Okay. And that if they don’t do that the rights
vanish or the rights still remain with ACI?
MR. SACCO: The rights would still remain with ACI.
THE COURT: Okay.
MR. SACCO: I mean, how does ACI transfer an interest that -
- when they’re, in fact, not a legal entity?
THE COURT: All right. So let’s assume that I rule that the
rights to pursue this action have not properly passed from ACI
to 1 Enterprises, LLC, do we not just proceed with the trial on
the basis that ACI is still the plaintiff or the condemnee?
MR. SACCO: Sure. And they would have to appear.
Apparently the member’s still here. She signed something in
2015.
7
Although counsel for Condemnee raised the fact that the Township had known of the
cancelation of Condemnee’s certificate since 2014 (Trial Transcript at 107-08), the trial court did
not rule that the Township’s motion was barred as untimely. This Court, however, may affirm a
trial court’s order on grounds other than those on which the trial court based its decision.
Orange Stones Co. v. City of Reading, 87 A.3d 1014, 1023 (Pa. Cmwlth. 2014); Guy M. Cooper,
Inc. v. East Penn School District, 903 A.2d 608, 618 & n.9 (Pa. Cmwlth. 2006).
11
THE COURT: Okay.
MR. SACCO: And produced documents that we’ve asked for.
(Trial Transcript at 72-73) (emphasis added). Following this colloquy, the
Township’s counsel did not express any clear objections to proceeding with trial
with Condemnee as the party seeking just compensation. Indeed, the Township
asserted that “African Century Industries [Condemnee] is still a party in interest.”
(Id. at 105, Supp. R.R. at 3b.)
As a result of the Township’s counsel’s statements at trial, the trial
court concluded that the standing issue was a question of which entity, Condemnee
or Assignee, had the right to pursue the claim for just compensation, not a claim
that dismissal or postponement of the trial was necessary. (Trial Court Findings
and Verdict at 3; Trial Transcript at 95, 105, Supp. R.R. at 3b.) In its findings and
verdict, the trial court described the issue raised by the Township’s motion as “the
issue of which entity had the right to pursue the claims against the Township in this
case.” (Trial Court Findings and Verdict at 3.) Having led the trial court to
understand that it did not object to the trial proceeding with Condemnee as a party,
the Township cannot now invoke the contention that dismissal was required to
obtain reversal of a verdict that is not to its liking. Estate of Hannis v. Ashland
State General Hospital, 554 A.2d 574, 576-77 (Pa. Cmwlth. 1989) (objection to
substitution of new expert was waived where counsel agreed at trial that new
expert could testify on subjects and opinions within scope of prior expert’s report).
The Township also contends that reversal is required because the trial
court failed to impose sanctions on Condemnee for failure to comply with a notice
to attend and produce and that the trial court erred in admitting Condemnee’s
appraiser’s testimony and report.
12
Rule 234.3 of the Pennsylvania Rules of Civil Procedure provides that
a party may compel the attendance of another party’s representative and production
of documents at a trial or hearing “by serving upon that party a notice to attend
substantially in the form prescribed by Rule 234.7 … reasonably in advance of the
date upon which attendance is required.” Pa. R.C.P. No. 234.3(a). Rule 234.7
prescribes a form of notice that states the date, time and location that the witness is
directed to appear and produce documents. Pa. R.C.P. No. 234.7. If a party fails
to comply with a valid notice to attend or notice to produce, the court may impose
sanctions. Pa. R.C.P. No. 234.5(b).
Here, the Township’s only notice to attend and produce documents is
a notice that it served on Condemnee on August 1, 2014, over a year before the
April 2016 trial at which Township claims that the notice should have been
enforced. (Notice to Attend and Produce, R.R. at 129a-130a.) That notice did not
set forth a specific date, time and location at which Condemnee’s representative
was required to appear and produce documents. Instead, it stated:
You are directed to come to appear by and through your
designated agents and records custodians at the hearing on
your contempt motion at the time and place scheduled by the
Court, and at the trial of this matter when scheduled by the
Court, and at the time and place scheduled by the Court for
trial, to testify on behalf of Bristol Township, in the above
case, and to remain until excused.
(Id., R.R. at 129a.)
Moreover, the Township did not request that the trial court impose
particular sanctions on Condemnee after Condemnee failed to comply with the
notice. Although the Township argued at trial that Condemnee must comply with
its notice to attend and produce, the transcript does not show a request that the trial
13
court impose a specific sanction for the failure to comply or any request to enforce
after trial began and no witness for Condemnee appeared. Notably, the Township
does not cite in its brief to any place in the trial transcript that it requested
imposition of a sanction for the failure to comply with its notice to attend and
produce.
The decision whether to sanction a party for failure to produce a
witness or documents is a matter committed to the sound discretion of the trial
court. Commonwealth Financial Systems, Inc. v. Smith, 15 A.3d 492, 501 (Pa.
Super. 2011). Given the vagueness of the notice, its lack of any temporal
connection to the April 2016 trial and the Township’s failure to make a clear
request for specific sanctions, we cannot say the trial court’s failure to impose a
sanction on Condemnee rises to the level of abuse of discretion or reversible error.
The Township’s arguments concerning the damages evidence at trial
likewise fail. The Township argues that the trial court erred in admitting
Condemnee’s appraiser’s valuation in evidence because it was based on uses of the
Property that were not permitted under the applicable zoning ordinance and on
sales that the Township contended were not comparable sales.8 The trial court,
however, did not accept Condemnee’s appraiser’s valuation as accurate or rely on
it, concluding that the appraiser overvalued the Property “because he used an
outdated Zoning Ordinance and failed to adequately consider the impact of the
8
The Township is correct that Condemnee’s appraiser based his appraisal on a zoning ordinance
provision that was no longer in effect at the time of the taking and on uses that were not
permitted as of right. (Hoez Testimony at 54, 61-62, 72-74, R.R. at 320a, 327a-328a, 338a-
340a.) The Township’s attack on Condemnee’s appraiser’s comparable sales is more
questionable. Three of the four sales that Condemnee’s appraiser used in his valuation were
considered as comparable sales by the Township’s own appraiser. (Compare Condemnee Ex. 6
at 25-26, R.R. at 299a-300a with Township Ex. 3 at 21-22, R.R. at 396a-397a; Trial Transcript at
189.)
14
location of the property.” (Trial Court Findings and Verdict at 2-3; Trial Court Pa.
R.A.P. 1925 Opinion at 12-13.) Any error in admitting this evidence was therefore
harmless. McEwing v. Lititz Mutual Insurance Co., 77 A.3d 639, 651 (Pa. Super.
2013).
The Township asserts that absent Condemnee’s appraiser’s valuation,
the trial court’s award of $200,000 is not supported by substantial evidence. We
do not agree. The Township’s appraiser testified that, in his opinion, the fair
market value of the Property was $150,000. (Trial Transcript at 180-82.) The trial
court found that this opinion significantly undervalued the Property because the
Township’s appraiser reduced the value due to conditions, the absence of water
and sewer service and missing piping, that were not present at the date of the
taking. (Trial Court Findings and Verdict at 2-3; Trial Court Pa. R.A.P. 1925
Opinion at 12-13.) We conclude that the trial court acted well within its authority
as fact-finder and that there is no basis to disturb its determination of the
Property’s fair market value.
Assignee’s Appeal
Assignee, in its appeal, seeks reversal of the trial court’s finding that
the Township was entitled to a credit of $140,000 against the $200,000 just
compensation award.
Section 521(a) of the Eminent Domain Code provides in relevant part:
(a) Liens.--
(1) Damages payable to a condemnee under sections 701
(relating to just compensation; other damages) through 707
(relating to removal of machinery, equipment or fixtures), 713
(relating to delay compensation), 714 (relating to
consequential damages), 715 (relating to damages for vacation
of roads) and 902(b)(1) and (2) (relating to moving and
related expenses of displaced persons) shall be subject to a
15
lien for all taxes and municipal claims assessed against the
property and to all mortgages, judgments and other liens of
record against the property for which the particular damages
are payable, existing at the date of the filing of the declaration
of taking.
(2) The liens shall be paid out of the damages in order of
priority before any payment to the condemnee, unless
released.
26 Pa. C.S. §521(a)(1)-(2). Assignee attacks the $140,000 credit for lien payments
on three grounds: 1) that the Township is not entitled to any credit for payment of
liens because the validity of the liens was allegedly not established; 2) that the
Township allegedly did not show that it paid $140,000 to the lienholders; and 3)
that the evidence does not support the trial court’s finding that the value of the
liens on the Property on the date of taking was $140,000.
The first two of Assignee’s arguments are barred by the admissions of
Condemnee in the trial court. Condemnee admitted that the recorded IRS,
Department of Labor & Industry, and Water & Sewer Authority liens on the
Property were valid. (Answer to Petition to Distribute Just Compensation ¶¶6, 11,
R.R. at 54a-55a; Memorandum of Law in Opposition to Petition to Distribute Just
Compensation, R.R. at 67a-68a.) Moreover, Condemnee expressly agreed in 2007,
before the Township made the lien payments, that the Township could pay the face
amount of those liens to those lienholders out of the just compensation, stating that
the liens against the condemned property totaling $94,700.60
must be deducted from Condemnor's $115,000 in estimated
just compensation as mandated by § 521 (a)(1) of the Eminent
Domain Code.
(Memorandum of Law in Opposition to Petition to Distribute Just Compensation,
R.R. at 68a) (footnote omitted). Condemnee did not advise the Township at any
time before the liens were paid that it had changed its position concerning any of
16
the IRS and Department of Labor & Industry liens or that it challenged the validity
of any of those liens. (See Certified Record Item 37, Condemnee’s Petition for
Declaratory Relief ¶¶3-4.) Condemnee did notify the Township in November 2007
that it challenged the validity of one recorded Water & Sewer Authority lien in the
amount of $1,251.73, but continued to admit that the other recorded Water &
Sewer Authority lien was valid and could properly be paid. (Id. ¶¶3, 8 & Ex. 4.)
Having agreed that the IRS and Department of Labor & Industry liens and one of
the two recorded Water & Sewer Authority liens were valid and that the Township
could and should pay those liens out of Condemnee’s just compensation,
Condemnee was estopped from changing its position after the Township
reasonably relied on the absence of a dispute as to the validity of the liens and paid
the holders of those liens. Tryson v. Pennsylvania Insurance Department, 784
A.2d 857, 859-60 (Pa. Cmwlth. 2001); Fessenden Hall of Pa., Inc. v.
Mountainview Specialties, Inc., 863 A.2d 578, 579 (Pa. Super. 2004).
Condemnee also admitted in the trial court that the Township paid
$140,000 to the lienholders. Condemnee affirmatively asserted to the trial court
that the Township in November 2008 paid $116,474.15 to the IRS, $7,082.47 to
the Department of Labor & Industry, and $16,443.38 to the Water & Sewer
Authority. (Certified Record Item 37, Condemnee’s Petition for Declaratory
Relief ¶¶11-13.) The contention that the Township did not pay $140,000 to the
holders of liens on the Property is therefore waived. In re Estate of Talerico, 137
A.3d 577, 582 n.1 (Pa. Super. 2016) (on appeal, “[a] party cannot be permitted to
question facts expressly admitted or deliberately waived at trial”) (quoting
Education Resources Institute, Inc. v. Cole, 827 A.2d 493 (Pa. Super. 2003)).
17
Assignee’s third argument, challenging the value of the liens on the
date of taking, is not waived or otherwise barred. This argument, however, fails on
the merits. At trial, the parties introduced four documents from the lienholders to
show the amounts of their claims: an April 13, 2007 Department of Labor &
Industry letter stating that amount owed as of May 31, 2007 was $9,800.39, an
April 3, 2007 IRS letter stating the amount of the liens as of April 30, 2007 was
$123,636.65, an October 14, 2008 IRS Notice of Levy stating that the amount
owed was $135,804.11 as of November 13, 2008, and statements from the Water &
Sewer Authority showing that a total of $16,765.60 was owed as of the October 27,
2006 taking, consisting of $9,995.14 and $6,770.46 for the two addresses
comprising the Property. (Condemnee Exs. 2, 3, 4, & 5, R.R. at 265a-270a.)
These amounts exceed both the amounts paid to each of the lienholders and the
$140,000 credit to which the trial court found that the Township was entitled.
Assignee argues that the evidence is insufficient to show that the
Department of Labor & Industry and IRS payments were for principal and interest
and penalties owed as of the date of taking because the letters from these
lienholders state amounts owed six months or more after October 27, 2006. This
contention is inaccurate. With respect to the Department of Labor & Industry, the
fact that its April 2007 letter does not state the amount owed at the date of taking is
immaterial because the amount of its liens in the Township’s title report, which
Condemnee admitted were owed at the time of the taking, was $9,451.46. (Petition
to Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-43a;
Memorandum of Law in Opposition to Petition to Distribute Just Compensation,
R.R. at 67a-68a.) Since the Township’s payment of $7,082.47 to the Department
of Labor & Industry was less than the $9,451.46 that Condemnee admitted was
18
owed on the date of taking, the conclusion that the Township was entitled to credit
for this payment is supported by the record.
The trial court’s conclusion that the Township’s $116,474.15 payment
to the IRS included only principal and interest and penalties owed as of the date of
taking is also supported by the record. Condemnee admitted that the amount of the
IRS liens totaled $82,910.67 as of the dates that they were filed in 1998, 2001, and
2002. (Petition to Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-
43a; Memorandum of Law in Opposition to Petition to Distribute Just
Compensation, R.R. at 67a-68a; Certified Record Item 37, Condemnee’s Petition
for Declaratory Relief ¶19.) The Township’s payment exceeded this face amount
of the liens by $33,563.48. The evidence showed that post-filing interest and
penalties of $40,725.98 had accrued on the IRS liens as of April 30, 2007.
(Condemnee Ex. 2, R.R. at 265a.) While this date was six months after the taking,
the period of time between the lien filings and the date of the taking ranged from
approximately four years to eight years. (Petition to Distribute Just Compensation
Ex. A, Title Report, R.R. at 42a-43a; Memorandum of Law in Opposition to
Petition to Distribute Just Compensation, R.R. at 67a-68a.) Because 88% or more
of the period of time between the lien filings and the April 30, 2007 date of the
calculation of interest and penalties was before the date of the taking, the trial court
could reasonably infer that at least $33,563.48 of the $40,725.98 in interest and
penalties had accrued as of the October 27, 2006 date of taking.
The documentation concerning the Water & Sewer Authority showed
the amount of its claim on the date of the taking and that amount, $16,765.60, was
greater than the $16,443.38 that the Township paid to the Water & Sewer
Authority. Assignee, however, argues that Section 521 of the Eminent Domain
19
Code provides for payment of only recorded claims against a condemned property
and that the Water & Sewer Authority was therefore not entitled to payment of its
full claim. We do not agree.
Section 521(a) of the Eminent Domain Code does not limit payment
of municipal claims to recorded liens. Rather, it provides that just compensation
awards “shall be subject to a lien for all taxes and municipal claims assessed
against the property …, existing at the date of the filing of the declaration of
taking.” 26 Pa. C.S. §521(a)(1) (emphasis added). The Eminent Domain Code
limits the requirement that the creditor’s claim be “of record” to “mortgages,
judgments and other liens.” Id. Under Sections 1, 3, and 4 of the statute
commonly known as the Municipal Claims Act of 1923 (Municipal Claims Act),9
amounts billed for water and sewer service by the Water & Sewer Authority are
municipal claims and recording is not a prerequisite to their validity or status as
liens against the Property. 53 P.S. §§ 7101, 7106(a)(1), 7107; In re Berwick
Associates, Ltd., 178 B.R. 65, 66-67 (Bkcy Ct. M.D. Pa. 1994). Section 1 of the
Municipal Claims Act provides:
The words “municipal claim,” as used in this act, unless
specifically indicated otherwise, mean and include (1) the
claim arising out of, or resulting from, a tax assessed, service
supplied, work done, or improvement authorized and
undertaken, by a municipality, although the amount thereof be
not at the time definitely ascertained by the authority
authorized to determine the same, and a lien therefor be not
filed, but becomes filable within the period and in the manner
herein provided …. A municipal claim shall be together with
and shall include all penalties, interest, costs, fines, charges,
9
Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101, 7106, 7107.
20
expenses and fees, including reasonable attorney fees, as
allowed by this act and all other applicable laws.
53 P.S. § 7101 (emphasis added). Section 3 of the Municipal Claims Act provides
that “[a]ll municipal claims … which may hereafter be lawfully imposed or
assessed on any property in this Commonwealth … shall be and they are hereby
declared to be a lien on said property, together with all charges, expenses, and fees
incurred in the collection of any delinquent account, including reasonable attorney
fees under subsection (a.1), added thereto for failure to pay promptly; and
municipal claims and municipal liens shall arise when lawfully imposed and
assessed.” 53 P.S. § 7106(a)(1).
Assignee contends that absent recording, such liens could not be valid
against Condemnee as a subsequent purchaser. Contrary to Assignee’s assertions,
the case law and statute on which it relies do not hold or provide a subsequent
purchaser’s rights in a property are exempt from all unrecorded municipal claims.
Rather, they apply only where the lien has expired for failure to file within three
years and the municipality seeks to later revive the lien. Section 1 of the Act of
September 23, 1959, P.L. 955, as amended, 53 P.S. § 7432; Sanft v. Borough of
West Grove, 437 A.2d 1332, 1333-34 (Pa. Cmwlth. 1981); Sewer Authority of City
of Scranton v. Arnold, 385 A.2d 1034, 1035 (Pa. Cmwlth. 1978); see generally In
re Berwick Associates, Ltd., 178 B.R. at 67. In any event, the record here shows
that Condemnee had notice of the unfiled municipal water and sewer claims when
it purchased the Property. Condemnee took the position, in its valuation evidence,
that the purchase price when it bought the Property in January 2006 included
$113,772.68 liens and unpaid water and sewer bills and that this figure included
unrecorded water and sewer charges. (Condemnee Ex. 6 at 12, R.R. at 285a; Hoez
21
Testimony at 57, 62-63, 65, 81-82, 96; R.R. at 323a, 328a-329a, 331a, 347a-348a,
362a.)
For the above reasons, we affirm the trial court’s judgment.
____________________________________
JAMES GARDNER COLINS, Senior Judge
22
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Township of Bristol :
:
v. : No. 658 C.D. 2017
:
1 Enterprises, LLC, :
Appellant :
Township of Bristol, :
Appellant :
: No. 727 C.D. 2017
v. :
:
1 Enterprises, LLC :
ORDER
AND NOW, this 5th day of January, 2018, the judgment of the Court
of Common Pleas of Bucks County in the above-captioned case is AFFIRMED.
The applications filed by 1 Enterprises, LLC to strike parts of the brief and reply
brief of Township of Bristol are DENIED.
____________________________________
JAMES GARDNER COLINS, Senior Judge