J.F. Zola v. Scotch Valley Estates

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
John F. Zola and Jill M. Zola, :
his wife, and Vincent J. Zola :
and Jayme A. Zola, his wife, :
Appellants :
: No. 155 C.D. 2019
v. :
: Submitted: May 10, 2019
Scotch Valley Estates and Daniel W. :
Derr, II and Shirley R. Derr, his wife :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McCULLOUGH FILED: November 18, 2019
John F. Zola and Jill M. Zola, his wife, and Vincent J. Zola and Jayme A.
Zola, his wife (collectively, Plaintiffs) appeal from the May 30, 2018 order of the Court
of Common Pleas of the Twenty-Sixth Judicial District, Columbia County Branch (trial
court), which sustained the preliminary objections of Scotch Valley Estates to
Plaintiffs’ second amended complaint and dismissed the complaint with prejudice.
Facts and Procedural History
The underlying facts of this case are garnered from the original record
before the trial court, as well as a 1991 opinion from our Superior Court in the matter
of Scotch Valley Homeowners Association v. Long (Pa. Super., No. 691 Philadelphia
1990, filed January 14, 1991).1 Scotch Valley Estates is a development comprised of
residential lots located in Beaver Township, Columbia County, Pennsylvania. Scotch
Valley Estates was originally owned by Evergreen Lake, Inc., which sought in 1970 to
establish a planned residential community consisting of 880 individual lots, improved
roads, a central water and sewer system, a lake, and numerous outdoor recreational
facilities. As part of this development, Evergreen Lake, Inc., issued a Declaration of
Restrictions (Declaration) that was properly recorded on September 1, 1970. This
Declaration addressed the exclusive residential use of each lot and the limitations on
improvements thereto, which required the approval of Evergreen Lake, Inc., including
the prohibition of any outbuildings. Although it sold 408 lots, Evergreen Lake, Inc.,
eventually failed and the property was placed in foreclosure.2 On February 1, 1977,
the property was sold to Scotch Valley Estates, Inc. The Board of Scotch Valley
Estates (SVE Board) later issued variance guidelines for storage sheds, thereby
permitting sheds on unimproved lots as a principal use and primary structure. 3
1
In that case, Donald and Mary Long had purchased 10 lots from Evergreen Lake, Inc., in
December 1971, with the latter promising not to impose maintenance fees until the lots were sold.
However, after Scotch Valley Estates, Inc., purchased the property in 1977, it began assessing each
lot owner an annual maintenance fee of $225.00. The Longs sought to enforce their original
agreement deferring imposition of said fees and were successful before the trial court and Superior
Court. In fact, because only the lake existed at the time of trial, the trial court concluded, and the
Superior Court agreed, that the intended purpose of the development never came to fruition and the
deed restriction relating to payment of maintenance fees for recreational facilities that were
nonexistent was invalid due to changed conditions.
2
It appears that sewage issues prevented most lot owners from building residences on their
lots.
3
These variance guidelines included numerous criteria that must be met before a variance
would be granted, including a signed letter from all adjoining property owners giving their
permission; compliance with all local government permitting requirements; compliance with all set-
back guidelines in current deed restrictions; construction using rustic or earth tone colors; maximum
2
Plaintiffs John and Jill Zola and Vincent and Jayme Zola each own two
lots within Scotch Valley Estates. Daniel and Shirley Derr (the Derrs) also own a lot
within Scotch Valley Estates. The Derrs sought and obtained a variance from the SVE
Board to erect a 12- by 20-foot shed,4 with electricity but no sewer or water, on their
unimproved lot. As required by the shed guidelines, the Derrs obtained the written
approval of the adjacent lot owners for construction of the shed. The Derrs intended
to use the shed to store fishing equipment and other personal property near the lake that
was part of Scotch Valley Estates. After receiving the variance, the Derrs constructed
the shed on their lot.
Shortly thereafter, on October 13, 2017, Plaintiffs filed their original
complaint against Scotch Valley Estates and the Derrs seeking a declaratory judgment,
specific performance, and injunctive relief. More specifically, Plaintiffs sought an
order stating that the Declaration prohibits the SVE Board from granting a variance to
allow the construction of a shed as a principal use and primary structure on an
unimproved lot. Plaintiffs also sought an order enjoining the SVE Board from
administering the variance guidelines for sheds and granting variances.
Plaintiffs noted in their complaint that section 4(A) of the Declaration
states that:
No lot shall be used except for single family residential
purposes. No structure shall be erected, placed or permitted
to remain on any lot other than one (1) detached single family
residence dwelling and such outbuildings as are usually
height of 15 feet; maximum interior dimension of 250 square feet; limit of one shed per lot;
prohibition of use of a shed as a residence; permitting electrical service only to the shed; and the SVE
Board retaining the right to revoke shed privileges at any time if evidence of property abuse exists.
4
The Derrs also sought and obtained a variance from the Zoning Hearing Board of Beaver
Township relating to front and rear yard setbacks.
3
accessory to a single family residence dwelling including a
private garage.
(Reproduced Record (R.R.) at 55a.) Plaintiffs also noted that section 7(A) of the
Declaration prohibited outbuildings and that while section 8(A) permitted reasonable
variances and adjustments, no such variance may be materially detrimental or injurious
to any other property or improvements and must be done within the intent and purpose
of the general development scheme.5 Scotch Valley Estates filed preliminary
objections alleging that Plaintiffs’ requests for relief would affect all property owners
within Scotch Valley Estates and the complaint failed to join these indispensable
parties. Scotch Valley Estates also alleged that Plaintiffs improperly requested an
award of attorney fees.
Plaintiffs did not respond to these preliminary objections, but instead filed
an amended complaint on November 21, 2017, again naming only Scotch Valley
Estates and the Derrs as defendants. The amended complaint contained three counts,
the first challenging a contested corporate action, the second requesting specific
5
Section 8(A) of the Declaration provides, in full, as follows:
The Declarant or Committee [such as the SVE Board] may allow
reasonable variances and adjustments of these Restrictions in order to
overcome practical difficulties and prevent unnecessary hardships in
the application of the provisions contained herein; provided, however,
that such is done in conformity with the intent and purpose of the
general development scheme and provided also that in every instance
such variance or adjustment will [not] be materially detrimental or
injurious to other property or improvements in the neighborhood or the
Subdivisions.
(Supplemental Reproduced Record at 8A.) Contrary to Pa.R.A.P. 2173, the supplemental reproduced
record submitted by Scotch Valley Estates used the capital “A” in its page numbering instead of the
lower case “b.”
4
performance, and the third requesting injunctive relief. However, the amended
complaint essentially sought the same relief as the original complaint. Scotch Valley
Estates again filed preliminary objections alleging that Plaintiffs’ amended complaint
failed to join indispensable parties and improperly requested an award of attorney fees.
After briefing and argument, the trial court ultimately agreed with Scotch Valley
Estates, specifically noting that the requested relief would affect the rights of all
members of Scotch Valley Estates, such that they were indispensable parties to this
matter. By order dated March 2, 2018, the trial court granted the preliminary
objections, dismissed Plaintiffs’ complaint and request for attorney fees,6 and allowed
Plaintiffs 20 days to file another amended complaint.
Plaintiffs filed a second amended complaint on March 21, 2018, which
included the same three counts of the amended complaint. Plaintiffs reiterated that the
Declaration prohibits the construction of a shed as a principal use and primary structure
on an unimproved lot and that the permitting of sheds in such manner would require
an amendment to the Declaration by at least a 67% vote of all lot owners. Plaintiffs
sought an order stating that the Derrs were prohibited from constructing a shed without
the aforementioned amendment to the Declaration and that the SVE Board was
prohibited from granting the Derrs a variance, as well as directing the SVE Board to
rescind the variance granted to the Derrs.
With regard to the second count requesting specific performance, namely
compliance with the specific terms of the Declaration, Plaintiffs alleged that the shed
on the Derrs’ lot devalues, diminishes, and impairs the property values of lawfully
improved lots; negatively impacts the use and quiet enjoyment of such lots; adversely
affects the health, safety, and welfare of the community; intrudes upon the aesthetic
6
The trial court held that there was no legal or factual basis stated in the complaint to sustain
a claim for attorney fees.
5
beauty of the development; and attracts undesirables. Plaintiffs sought an order
directing the SVE Board to refrain from administering the shed variance as to the Derrs,
directing the SVE Board to administer and enforce the Declaration as to the Derrs, and
directing the Derrs to remove the shed on their lot.
With respect to the third count seeking injunctive relief, Plaintiffs alleged
immediate and irreparable harm for the reasons stated above in the second count, that
the continued action of the SVE Board in granting variances for sheds will result in
greater injury if the injunction is not granted, and that ordering the removal of the
Derrs’ shed was necessary to return the parties to the status quo. Plaintiffs sought an
order enjoining the SVE Board from granting a variance to the Derrs, directing the
Derrs to remove the shed, and awarding Plaintiffs costs.
Scotch Valley Estates once again filed preliminary objections alleging
that Plaintiffs’ second amended complaint failed to join indispensable parties and that
there was no legal or factual basis to award costs to Plaintiffs. Following briefing and
oral argument, by order dated May 30, 2018, the trial court sustained the preliminary
objections and dismissed the claim against Scotch Valley Estates and the Derrs with
prejudice. The trial court reiterated that the relief sought by Plaintiffs requires the
joinder of all members of Scotch Valley Estates as indispensable parties. The trial
court noted that the rights of all members of Scotch Valley Estates would be affected
by the requested relief. Plaintiffs thereafter filed a notice of appeal.7 After Plaintiffs
filed a concise statement of errors complained of on appeal, the trial court issued an
opinion in accordance with Pa.R.A.P. 1925(a) explaining that Plaintiffs are essentially
attacking the variance procedure of the SVE Board, which applies to all lot owners in
Scotch Valley Estates. In other words, because the relief sought by Plaintiffs, i.e.,
7
This appeal was originally filed with our Superior Court. However, by order filed January
2, 2019, the Superior Court transferred the matter to this Court.
6
voiding the variance guidelines for storage sheds, would affect the property rights of
all lot owners, the trial court concluded that all members of Scotch Valley Estates are
indispensable parties to Plaintiffs’ lawsuit.
Discussion
On appeal,8 Plaintiffs argue that the trial court erred as a matter of law
and/or abused its discretion in sustaining the preliminary objections filed by Scotch
Valley Estates. More specifically, Plaintiffs allege that their second amended
complaint specifically limited any claims against the SVE Board to its granting of a
variance to the Derrs and the relief sought would not affect any other property owner
in Scotch Valley Estates. We agree.
Our Supreme Court addressed the issue of indispensable parties in City of
Philadelphia v. Commonwealth, 838 A.2d 566 (Pa. 2003), stating as follows:
[A] party is [an] indispensable [party plaintiff] when his or
her rights are so connected with the claims of the litigants
that no decree can be made without impairing those rights.
[T]he basic inquiry in determining whether a party is
indispensable concerns whether justice can be done in the
absence of him or her. In undertaking this inquiry, the nature
of the claim and the relief sought must be considered.
Furthermore, we note the general principle that, in an action
for declaratory judgment, all persons having an interest that
would be affected by the declaratory relief sought ordinarily
must be made parties to the action. Indeed, Section 7540(a)
8
Our scope of review of a trial court’s order sustaining preliminary objections and dismissing
a complaint is limited to determining whether the trial court abused its discretion or committed an
error of law. Petty v. Hospital Service Association of Northeastern Pennsylvania, 967 A.2d 439, 443
n.7 (Pa. Cmwlth. 2009), aff’d, 23 A.3d 1004 (Pa. 2011). “In reviewing preliminary objections, all
well pleaded relevant and material facts are to be considered as true, and preliminary objections shall
only be sustained when they are free and clear from doubt.” Id. (citation omitted). “Such review
raises a question of law as to which our standard of review is de novo and our scope of review is
plenary.” Id. (citation omitted).
7
of the Judicial Code, 42 Pa.C.S. §7540(a), which is part of
Pennsylvania’s Declaratory Judgments Act, states that,
[w]hen declaratory relief is sought, all persons shall be made
parties who have or claim any interest which would be
affected by the declaration, and no declaration shall
prejudice the rights of persons not parties to the proceeding.
While this joinder provision is mandatory, it is subject to
limiting principles. For example, where the interest involved
is indirect or incidental, joinder may not be required.
Additionally, where a person’s official designee is already a
party, the participation of such designee may alone be
sufficient, as the interests of the two are identical, and thus,
the participation of both would result in duplicative filings.
Id. at 567-68 (citations and footnotes omitted).
Further, in Mechanicsburg Area School District v. Kline, 431 A.2d 953
(Pa. 1981), our Supreme Court identified the following questions to be considered in
determining whether a party is indispensable:
1. Do absent parties have a right or interest related to the
claim?
2. If so, what is the nature of that right or interest?
3. Is that right or interest essential to the merits of the issue?
4. Can justice be afforded without violating the due process
rights of absent parties?
Id. at 956.
In the present case, Plaintiff’s second amended complaint is premised on
the SVE Board’s enactment of variance guidelines for storage sheds, upon which the
SVE Board relied in granting the variance to the Derrs, and whether such enactment
runs afoul of the Declaration that governs the Scotch Valley Estates development.
More specifically, Plaintiffs contend that the Declaration restricts the use of any lot in
Scotch Valley Estates for single-family residential purposes only and that the variance
8
guidelines equated to an amendment of the Declaration which would require a vote of
two-thirds of the residential lot owners in accordance with section 2(A) of the
Declaration.9 To that end, Plaintiffs appropriately named as defendants the only entity,
the SVE Board, and individuals, the Derrs, directly impacted by the alleged invalid
action.
Contrary to the trial court’s reasoning, we do not believe that all other
property owners within Scotch Valley Estates were indispensable to Plaintiffs’ suit.
While these lot owners may have an interest in the suit, in the sense that the variance
guidelines enacted by the SVE Board apply equally to all lot owners, such interest is at
best indirect and cannot be said to surpass the general interest of all lot owners within
the development in ensuring that the SVE Board acts lawfully and consistent with the
Declaration. The SVE Board will represent the interest of these lot owners and the
matter can be adequately resolved without offending the due process rights of said lot
owners.
We reached a similar conclusion in Belleville v. David Cutler Group, Inc.
(Pa. Cmwlth., No. 284 C.D. 2013, filed January 3, 2014).10 In that case, William and
Bette Ann Belleville (the Bellevilles) appealed from a common pleas court order that
dismissed their amended complaint against David Cutler Group, Inc. (Developer) and
the Malvern Hunt Homeowner’s Association (Association) for failure to join all 278
property owners in a planned community known as Malvern Hunt as necessary and
indispensable parties. The development was subdivided into three communities, “The
9
Section 2(A) provides, in pertinent part, “that at any time after January 1, 1980, these
Restrictions may be amended by the vote of the then record owners of two-thirds (2/3) of such
residential lots. . . .” (R.R. at 14a.)
10
Pursuant to section 414(a) of this Court’s Internal Operating Procedures, an unreported
decision of this Court may be cited “for its persuasive value.”
9
Reserve,” “The Chase,” and “The Ridings.” The Bellevilles resided in “The Ridings,”
whose members, according to a recorded declaration dated March 20, 2001, were
excluded from enrollment in the Association, not subject to maintenance fees, and
responsible for all aspects of their own property maintenance. However, when the
Bellevilles purchased their home in August 2001, Developer provided them with an
unrecorded declaration that required owners in “The Ridings” to pay an annual
maintenance assessment and, like the recorded declaration, prohibited any amendments
that would impose additional financial obligations upon these specific owners.
Developer later filed and recorded an amendment to the original recorded declaration
attempting to “clarify” that property owners within “The Ridings” were subject to the
annual maintenance assessment.
The Association later took control of the development from Developer in
accordance with the provisions of the recorded declaration. In January 2008, the
Association sent the Bellevilles an assessment notice that was calculated differently
from the previous invoices they had received. The Bellevilles first learned of the
exemption from the annual maintenance assessment around this time and a dispute
arose with the Association. The Bellevilles subsequently commenced a declaratory
judgment action against Developer and the Association, seeking a declaration that
certain amendments to the original recorded declaration were null and void, a refund
of all improperly paid assessments, and punitive damages from Developer for its
deceitful conduct. Developer filed a motion to dismiss the action due to lack of
jurisdiction for failure to join indispensable parties, namely all other property owners
in the development. The common pleas court granted the motion and dismissed the
declaratory judgment action.
10
On appeal, this Court vacated the common pleas court’s decision and
remanded for further proceedings. We concluded that the pecuniary interest of the
individual owners in “The Chase” and “The Reserve” in not having to pay increased
assessments to make up for any budget shortfall relating to the annual maintenance
assessments was not directly related to the precedent to be set as a result of the
Bellevilles’ declaratory judgment action. Instead, we noted that an order declaring that
the owners in “The Ridings” were illegally assessed would only indirectly affect the
owners in “The Chase” and “The Reserve.” Additionally, regardless of whether the
other owners in “The Ridings” were made parties, we noted that Developer and the
Association would be bound by the common pleas court’s decision and that each of
these owners would not be barred from asserting their individual rights against the
same. In other words, we stated that any declaration from the common pleas court
would not operate as res judicata or collateral estoppel to preclude or deprive these
other owners of their right to seek monetary relief.
Similarly, in this case, even if the trial court ruled in favor of Plaintiffs
and struck the variance guidelines enacted by the SVE Board, the residential lot owners
of Scotch Valley Estates would not be precluded or estopped from asserting their rights
under the Declaration. As this Court has previously stated, requiring the joinder of
hundreds of parties “would undermine the litigation process” and “render the litigation
unmanageable.” City of Philadelphia v. Commonwealth, 838 A.2d 566, 582-83 (Pa.
2011). In sum, the remaining residential lot owners in Scotch Valley Estates are simply
not indispensable parties to the present litigation.
11
Accordingly, the order of the trial court is reversed.
________________________________
PATRICIA A. McCULLOUGH, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
John F. Zola and Jill M. Zola, :
his wife, and Vincent J. Zola :
and Jayme A. Zola, his wife, :
Appellants :
: No. 155 C.D. 2019
v. :
:
Scotch Valley Estates and Daniel W. :
Derr, II and Shirley R. Derr, his wife :
ORDER
AND NOW, this 18th day of November, 2019, the order of the Court of
Common Pleas of the Twenty-Sixth Judicial District, Columbia County Branch ,
dated May 30, 2018, is hereby reversed.
________________________________
PATRICIA A. McCULLOUGH, Judge