The Union Labor Life Insurance Co. v. Isle of Capri Assoc., L.P. ~ Appeal of: Isle of Capri Assoc., L.P.

IN THE COMMONWEALH COURT OF PENNSYLVANIA
The Union Labor Life Insurance :
Company, a Maryland corporation, :
on behalf of its Separate Account J. :
:
v. : No. 804 C.D. 2017
: Argued: November 13, 2018
Isle of Capri Associates, L.P., Isle of :
Capri Associates Horizon, L.P., and :
Isle of Capri Associates Tides, L.P. :
:
Appeal of: Isle of Capri Associates, :
L.P. :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION
BY PRESIDENT JUDGE LEAVITT FILED: January 14, 2019
Isle of Capri Associates, L.P. (IOC) appeals an order of the Court of
Common Pleas of Philadelphia County voiding IOC’s sale of 91 parking licenses
associated with a condominium project IOC developed.1 The court held that the
parking garage licenses were mortgaged property subject to a receivership order and
could not be sold without the approval of the court conducting the receivership
proceeding. For the following reasons, we affirm.
1
IOC appealed the Court of Common Pleas of Philadelphia County’s order to the Superior Court.
By order dated April 26, 2017, the Superior Court transferred this matter to this Court, noting this
Court has exclusive jurisdiction over proceedings related to not-for-profit corporations. 42 Pa.
C.S. §762(a)(5).
Background
The facts are undisputed. In July 2006, IOC created a condominium
complex, known as the Waterfront Square Condominium (Master Condominium),
by recording a declaration of condominium (Master Declaration) under the
Pennsylvania Uniform Condominium Act (Condominium Act).2 The Master
Declaration provided for the development of five undeveloped pad sites, i.e., Pad
Units 1 to 5. Phase I called for IOC’s construction of two condominium towers,
called the Peninsula and the Regatta, and a parking garage on Pad Units 1 and 2.
The Master Declaration provided that the parking garage was a common element of
the Master Condominium and that IOC, as declarant, may grant parking licenses to
the purchasers of the condominium units. Phase II called for the construction of a
tower, called the Reef, on Pad Unit 3 by a related entity, Isle of Capri Associates
Reef, L.P. (IOC-Reef). IOC planned to construct additional towers on Pad Units 4
and 5, to be known, respectively, as the Horizon and the Tides; these two pad sites
were never developed.
In May of 2007, IOC borrowed $39,265,840 from Union Labor
Insurance Company (Lender) to finance construction of the condominium complex.
The mortgage agreement identifies the “mortgaged property” as follows:
2.1.1 All that certain Pad Unit 3 (as defined in the [Master
Declaration]) in the Master Condominium and the undivided
twenty percent (20%) ownership interest in the Common
Elements appurtenant to Pad Unit 3 under the terms of the
[Master Declaration], all as more particularly described in
Exhibit “A” attached hereto and made a part hereof, upon which
Mortgagor intends to construct a residential condominium
project to be known as the Reef Condominium and Spa at
2
68 Pa. C.S. §§3101-3414.
2
Waterfront Square (hereinafter collectively referred to as the
“Reef Pad Unit”);
2.1.2 All that certain Pad Unit 4 (as defined in the [Master
Declaration]) in the Master Condominium and the undivided
twenty percent (20%) ownership interest in the Common
Elements appurtenant to Pad Unit 4 under the terms of the
[Master Declaration], all as more particularly described in
Exhibit “A” attached hereto and made a part hereof, upon which
Mortgagor intends to construct a residential condominium
project to be known as the Horizon Condominium and Spa at
Waterfront Square (hereinafter collectively referred to as the
“Horizon Pad Unit”);
2.1.3 All that certain Pad Unit 5 (as defined in the [Master
Declaration]) in the Master Condominium and the undivided
twenty percent (20%) ownership interest in the Common
Elements appurtenant to Pad Unit 5 under the terms of the
[Master Declaration], all as more particularly described in
Exhibit “A” attached hereto and made a part hereof, upon which
Mortgagor intends to construct a residential condominium
project to be known as the Tide Condominium and Spa at
Waterfront Square (hereinafter collectively referred to as the
“Tide Pad Unit”);
2.1.4 The Peninsula Units, together with the undivided
ownership in the Common Elements appurtenant to such
Peninsula Units, all as more particularly described in Exhibit
“A” attached hereto and made a part hereof;
2.1.5 The Regatta Units, together with the undivided ownership
in the Common Elements appurtenant to such Regatta Units, all
as more particularly described in Exhibit “A” attached hereto and
made a part hereof;
2.1.6 [A]ll structures, improvements, buildings and any additions
and alterations thereto or replacements thereof, now or hereafter
erected upon the Reef Pad Unit, the Horizon Pad Unit and the
Tide Pad Unit (hereinafter collectively referred to as the “Master
Condominium Units”), including but not limited to parking
facilities and other infrastructure, or constructed within the
3
Peninsula Units or the Regatta Units (all of the foregoing being
collectively referred to as the “Improvements”) ...
***
2.1.12 All of Mortgagor’s right, title and interest in and to all
trade leases, subleases, lettings, licenses and other occupancy
agreements, and guarantee thereof, for the Premises or any part
thereof …
***
2.1.15 All licenses, permits, and warranties attributable or
allocable to all or any portion of the Premises, both real and
personal;
***
2.1.19 All of Mortgagor’s right, title and interest in and to the
[Master Declaration], the Peninsula Condominium Declaration,
the Regatta Condominium Declaration and any Declaration of
Condominium hereafter recorded in connection with the Reef
Pad Unit, the Horizon Pad Unit and/or the Tide Pad Unit … or
any interest therein or rights thereunder, now owned or hereafter
acquired.
IOC Mortgage Agreement at 4-7; Reproduced Record at 482a-485a (R.R. __)
(emphasis added).
To finance Phase II of the construction, in November 2007, IOC-Reef
borrowed $97,300,000 from Lender, secured by IOC-Reef’s interest in the
condominium complex. This included Pad Unit 3, the Reef Condominium units, and
the associated common elements.
IOC and IOC-Reef defaulted on the loans. On September 26, 2011,
Lender commenced two foreclosure actions in the Philadelphia County Court of
Common Pleas. Against IOC, it sought $25,337,351.88, plus costs, taxes and
4
interest; against IOC-Reef it sought $79,020,015.54, plus costs, taxes and interest.3
That same day, Lender petitioned for the appointment of a receiver over the
mortgaged property, i.e., that real property and improvements “described on Exhibit
A attached to the Mortgage.” Certified Records (C.R.), Item 4, at 3. On December
19, 2011, the parties agreed to a receivership, and to have GH Property Management,
LLC (Receiver) appointed to serve as the receiver.
On December 20, 2011, the Philadelphia County Court of Common
Pleas approved the parties’ agreement, which placed “all of the Mortgaged Property
(as that term is defined in the Petition) in which [Lender] has a lien and/or security
interest” into receivership. Receivership Order, 12/20/2011, at 1, ¶2; R.R. 558a.
The receivership order appointed Receiver and stated, in pertinent part, as follows:
Receiver shall, as of the date of this Order, enter upon, receive
and take complete possession of all of the Mortgaged Property,
including all personalty located thereon … and such other
personalty as may be found thereon or off the Mortgaged
Property which relate to the operation of all portions of the
Mortgaged Property and which are subject to the security interest
of [Lender], including without limitation, all of [IOC]’s interest
in the Condominium Associations.
Receivership Order at 2, ¶3; R.R. 559a (emphasis added). The order directed
Receiver to “perform a complete inventory of the Mortgaged Property coming under
its control or possession under this appointment.” Id. at 3, ¶8; R.R. 560a. Finally,
the order enjoined IOC from “interfering in any way with the management of the
3
IOC had conveyed portions of the mortgaged property to Isle of Capri Associates Horizon, L.P.
(IOC-Horizon), and Isle of Capri Associates Tides, L.P. (IOC-Tides). At the time the foreclosure
actions commenced, IOC-Horizon owned Pad Unit 4, and IOC-Tides owned Pad Unit 5; Lender
did not release the mortgages on either pad site. Settlement Agreement at 5, ¶¶T-U; R.R. 1017a.
Therefore, these two entities were also named as defendants in the foreclosure actions.
5
Mortgaged Property (including the sale or lease of the Units) or the Condominium
Associations by Receiver until further order of this Court.” Id. at 5, ¶12; R.R. 562a.
In February 2012, Lender, IOC, and IOC-Reef entered into an
agreement (Settlement Agreement) to settle the foreclosure actions with the entry of
a consent judgment and Lender’s foreclosure on the mortgaged property. The
Settlement Agreement included a general release, which states in pertinent part:
Provided that [IOC and IOC-Reef] fully cooperate with [Lender]
in the Foreclosure Actions as provided herein, upon completion
of the Foreclosure Actions, in consideration of the promises and
covenants of [IOC and IOC-Reef] set forth herein, [Lender] on
behalf of itself, its agents, servants, officers, directors,
shareholders, employees, affiliated entities and persons,
successors and assigns, does hereby release, remise and forever
discharge [IOC and IOC-Reef] … from any and all claims,
demands, controversies, causes of action, suits, judgments, and
debts….
Settlement Agreement at 10, ¶3.2; R.R. 1022a.
On February 17, 2012, the Philadelphia County Court of Common
Pleas entered a consent judgment against IOC in the foreclosure action in the amount
of $25,337,351.88, plus costs, taxes and interest. The court also entered a consent
judgment against IOC-Reef in the amount of $79,020,015.54, plus costs, taxes and
interest. Subsequently, in March 2012, writs of execution were filed, and a sheriff’s
sale was scheduled for June 5, 2012. Specifically, the notices of the sheriff’s sale
described the following property for sale:
The Reef Condominium and Spa at Waterfront Square, 901 Penn
Street, Philadelphia, Pennsylvania 19123; Units Nos.: F 201,
202, 203, 204, 205, 206 & 207; F 301, 305, 306 & 307; F 401,
403, 404, 405, 406, 407, 408 & 409; F 501, 503, 505, 506, 507,
508, 509 & 510; F 601, 605, 606, 607, 608 & 609; F 701, 705,
6
706, 707 & 708; F 801, 805, 806, 808 & 810; F 902 & 906; F
1003 & 1004; F 1101, 1103, 1104, 1106, 1107, 1108, 1109 &
1110; F 1201, 1205, 1206, 1207, 1208, 1209 & 1210; F 1303,
1304, 1305, 1306, 1309 & 1310; F 1403, 1404, 1408, 1409 &
1410; F 1501, 1502, 1503, 1504, 1505, 1506, 1507, 1508, 1509
& 1510; F 1601, 1603, 1604, 1605, 1606, 1607, 1608 & 1610; F
1702, 1703, 1704, 1705, 1706, 1707, 1708 & 1709; F 1803, 1804,
1805, 1806, 1807, 1808 & 1809; F 1902, 1903, 1904, 1905, 1907
& 1909; F 2001, 2002, 2003, 2006 & 2007; F 2101 & 2102
***
The Regatta Condominium and Spa at Waterfront Square, Unit
R 2801, 901 Penn Street; 901 Penn Street, Pad Unit 4 (Horizon),
Waterfront Square Condominium; 901 Penn Street, Pad Unit 5
(Tides), Waterfront Square Condominium, Philadelphia,
Pennsylvania 19123.
R.R. 1068a-1069a; R.R. 1076a.
On May 15, 2012, prior to the sheriff’s sale, IOC sold 91 parking
licenses, identified as Nos. 0863 through 0953, to Gior, L.P. (Gior), an affiliate of
IOC,4 for $215,000. Gior is the owner of a commercial unit in the Reef
Condominium.
On June 5, 2012, at the sheriff’s sale, Waterfront Square Reef, LLC
(Waterfront) purchased Regatta Condominium Unit R 2801, the undeveloped Pad
Units 4 and 5, and over 100 units in the Reef Condominium. In both foreclosure
actions, Lender assigned its claims to Waterfront. After the sheriff’s sale, IOC-Reef
sold 88 parking licenses to Gior.
In October 2013, Gior and IOC-Reef initiated an action against
Waterfront, Waterfront Square Condominium Association (Association) and
4
Both Gior and IOC are controlled by Doron Gelfand and Arthur Ruppin.
7
Receiver in the Commerce Court, a division of the Philadelphia County Court of
Common Pleas,5 to validate Gior’s ownership of the parking licenses it purchased
from IOC and IOC-Reef. Waterfront, the Association and Receiver filed a motion
for summary judgment asserting that IOC and IOC-Reef lacked the power to transfer
the parking licenses and their attempt to do so violated the receivership order. In its
counterclaim, Waterfront asserted that it owned all of the parking licenses sold by
IOC and IOC-Reef to Gior.
Commerce Court Decision
On August 31, 2015, the Commerce Court granted the motion for
summary judgment with respect to the 88 parking licenses that IOC-Reef sold after
the sheriff’s sale.6 The Commerce Court reasoned that the right of IOC and IOC-
Reef to issue parking licenses was a “special declarant right” that terminated at the
foreclosure sale. Commerce Court Order, 8/31/2015, at 1 n.1; R.R. 671a-672a. The
Commerce Court denied summary judgment with regard to the 91 licenses IOC
transferred to Gior prior to the sheriff’s sale, concluding that there were unresolved
factual issues. The Commerce Court concluded that “the receivership court” was
the proper forum to address the transfer of the 91 parking licenses. Id. at 2 n.1; R.R.
672a. Lender, Waterfront and Receiver then filed a motion in the receivership
5
The Philadelphia Commerce Court Case Management Program (Commerce Court) is a
specialized civil program of the Trial Division of the Philadelphia County Court of Common Pleas.
See http://www.courts.phila.gov/common-pleas/trial/civil/units/commerce-program.asp (last
visited December 18, 2018).
6
The Commerce Court’s ruling on IOC-Reef’s sale of the 88 parking licenses to Gior is not at
issue in this appeal. Instead, Gior and IOC-Reef challenged this part of the Commerce Court’s
ruling in a different appeal. See Gior G.P., Inc. v. Waterfront Square Reef, LLC, ___A.3d ___ (Pa.
Cmwlth., No. 805 C.D. 2017, filed January 14, 2019).
8
proceeding (Receivership Court) to void the transfer of the 91 parking licenses in
the IOC foreclosure action.
Receivership Court Decision
The Receivership Court heard oral argument on December 18, 2015.
Lender, Waterfront and Receiver argued that the 91 parking licenses were part of the
mortgaged property subject to the receivership order. IOC’s transfer of the parking
licenses without permission of the Receivership Court violated the receivership
order, and, thus, the licenses held by Gior were null and void.
In response, IOC argued that the Master Declaration gave IOC, as
declarant, the power to issue parking licenses to condominium unit owners, such as
Gior. IOC simply exercised that power when it sold the 91 parking licenses. IOC
further argued that Lender, Waterfront and Receiver were barred by the doctrines of
estoppel and laches to challenge the sale of the 91 parking licenses because they
waited years to file their motion in the receivership proceeding. Further, the release
provision in the Settlement Agreement also barred their challenge.
By order of April 18, 2016, the Receivership Court granted the motion
to void the transfer of the 91 parking licenses. In support, it relied upon the mortgage
agreement, which states that the mortgaged property includes (1) the physical
structure of the parking garage; (2) the undivided interests in the parking garage as
a common element; (3) parking licenses; (4) any right, title or interest in any parking
license; and (5) the specific right to grant a parking license as permitted by the
Master Declaration. Receivership Court op. at 14; R.R. 1842a. The Receivership
Court also concluded that IOC could not sell the 91 parking licenses because its
authority to issue parking licenses was a special declarant right that terminated “not
only at the time of the Sheriff’s Sale, per [Commerce Court’s] decision, but also at
9
least prior to the date of the transfer to Gior.” Id. at 16 (citing 68 Pa. C.S.
§3304(d)(regarding rights of a declarant following foreclosure and other
proceedings)); R.R. 1844a. The Receivership Court further held that the Settlement
Agreement did not prevent Lender from seeking relief because IOC did not “fully
cooperate” in the foreclosure actions. Id. at 16-17; R.R. 1844a-1845a; Settlement
Agreement at 10, ¶3.2; R.R. 1022a. Finally, the Receivership Court rejected IOC’s
argument that the doctrines of estoppel and laches barred the application to void the
transfer of the 91 parking licenses.
IOC appealed to this Court.
Appeal
On appeal,7 IOC raises three issues for our consideration.8 It first
argues that the Receivership Court erred in holding that the 91 parking licenses were
subject to the receivership proceeding. Second, it argues that the Receivership Court
erred because the motion to void the transfer of the 91 parking licenses was barred
by the doctrines of estoppel and laches. Third, it argues that the Settlement
Agreement barred Lender from challenging the transfer. We address these issues
seriatim.
7
When reviewing the decision of a trial court in a non-jury trial, the appellate court must determine
whether the findings of facts are supported by competent evidence and whether the trial court
committed an error of law. Centennial Station Condominium Association v. Schaefer Company
Builders, Inc., 800 A.2d 379, 382 n.1 (Pa. Cmwlth. 2002).
8
We reordered IOC’s issues to facilitate our review. On appeal, IOC does not challenge the
Receivership Court’s ruling that IOC’s right to issue parking licenses was a special declarant right
under the Condominium Act, which had terminated at the time IOC transferred the 91 parking
licenses to Gior. We do not address the Receivership Court’s ruling in this regard.
10
I. Scope of Receivership Proceeding
IOC argues that the 91 parking licenses were not subject to the
receivership proceeding because the receivership ended on June 5, 2012, the date of
the sheriff’s sale. Receiver lacked any authority to hold or transfer parking licenses
after that date. The Master Declaration provides that only the owners or tenants of
condominium units can be granted parking licenses. Neither Lender, Waterfront nor
Receiver owned a unit when they filed the instant motion to void the transfer of the
91 parking licenses.
The transfer of the 91 parking licenses to Gior took place on May 15,
2012, prior to the sheriff’s sale and at a time that the receivership proceeding was
active. Accordingly, the termination of the receivership at the sheriff’s sale is
immaterial. It is likewise immaterial that none of the moving parties owned a
condominium unit in May 2012. They did not seek ownership of the 91 parking
licenses; rather, they sought to void IOC’s transfer of those licenses.
The documentary evidence supports the Receivership Court’s
conclusion that the parking licenses were mortgaged property. The mortgage
agreement encumbered pad units, condominium units, and the associated common
elements which, according to the Master Declaration, include the parking garage.
The mortgage agreement also encumbered licenses that are “attributable or allocable
to all or any portion of the Premises” as well as IOC’s “right, title and interest in and
to the [Master Declaration].” R.R. 482a, 484a. One right in the Master Declaration
so encumbered was IOC’s right, as declarant, to grant parking licenses to
condominium unit owners for consideration. In short, the relevant documents fully
support the Receivership Court’s holding that the parking garage, the licenses to the
11
parking garage, and IOC’s right to issue those licenses constituted mortgaged
property.
IOC argues, alternatively, that the 91 parking licenses were not subject
to the receivership order. Notably, the receivership order states that Receiver “shall,
as of the date of this Order, enter upon, receive and take complete possession” of all
of the mortgaged property, “including without limitation, all of [IOC’s and IOC-
Reef’s] interest in the Condominium Associations.” Receivership Order ¶3; R.R.
559a. The term “mortgaged property” was defined in Lender’s petition for
appointment of a receiver as certain real property and improvements “described on
Exhibit A attached to the Mortgage.” C.R., Item 4, at 3.
In turn, Exhibit A of the mortgage agreement described the following
real property and improvements:
Premises A
***
Pad Unit 3 (Reef) together with a proportionate undivided 20%
interest in the Common Elements (as defined in such
Declaration).
Pad Unit 4 (Horizon) together with a proportionate undivided
20% interest in the Common Elements (as defined in such
Declaration).
Pad Unit 5 (Tides) together with a proportionate undivided 20%
interest in the Common Elements (as defined in such
Declaration).
***
Premises B (UNSOLD UNITS OF The Peninsula Condominium
and Spa at Waterfront Square)
12
ALL THOSE CERTAIN units in the property known, named and
identified as The Peninsula Condominium and Spa at Waterfront
Square … Unit Numbers: 2501 and 2502, [ ] together with a
proportionate undivided interest in the Common Elements for
each unit (as defined in such Declaration)
Premises C (UNSOLD UNITS OF The Regatta Condominium
and Spa at Waterfront Square)
ALL THOSE CERTAIN units in the property known, named and
identified as The Regatta Condominium and Spa at Waterfront
Square … Unit Numbers: 301, 2702, 2801, 2901 and 2902,
together with a proportionate undivided interest in the Common
Elements for each unit (as defined in such Declaration).
R.R. 534a (emphasis added). In short, “mortgaged property” included the “Common
Elements for each unit”; the parking garage is a “common element” specified in the
Master Declaration. We conclude that the 91 parking licenses were part of the
mortgaged property subject to the receivership, as the Receivership Court correctly
held.
A receiver is an officer and agent of the court with the “usual and
ordinary duty of a receiver” to sell property on the court’s order. Lewistown Trust
Company v. Nestler, 167 A. 354, 355 (Pa. 1933) (A receiver’s “acts with regard to
the property in his custody, when authorized, are the acts of the court in whose hands,
in contemplation of law, the property actually is.”). Here, the receivership order
required IOC to “forthwith surrender possession of the Mortgaged Property” and
enjoined IOC from “interfering in any way with the management of the Mortgaged
Property.” Receivership Order ¶¶12, 13; R.R. 562a. Because IOC transferred the
91 parking licenses without seeking the Receivership Court’s permission, it violated
the receivership order.
13
II. Doctrines of Laches and Estoppel
IOC argues, next, that Lender and Receiver waived their right to
challenge the May 2012 transfer of the 91 parking licenses because they waited
almost four years before filing their motion to void that transfer in the receivership
proceeding. According to IOC, on May 17, 2012, it notified Lender and Receiver
of the pending sale of the parking licenses, but they took no action. Further, Lender
and Receiver “consistently acted in a way” that demonstrated their belief that the
parking licenses were not subject to the receivership order. IOC Brief at 31.
Particularly, the notices of the sheriff’s sale did not list the parking licenses. IOC
contends that the sheriff’s sale transferred only undeveloped pad units and unsold
condominium units, not “intangible rights” such as parking licenses. IOC Brief at
33.
Lender, Waterfront and Receiver respond that IOC’s unlawful transfer
of the 91 parking licenses cannot be ratified by inaction. Estoppel requires
detrimental reliance on another party’s “words, deeds or representation;” mere
silence or inaction is insufficient. Lender Brief at 50. In any event, IOC’s letter of
May 17, 2012, noting IOC’s intention to sell parking licenses, was sent “after the
fact.” Lender Brief at 48.
We begin with IOC’s proposition that Lender and Receiver waived
their claims to the parking licenses because they did not list them in the sheriff’s
notice for sale or the writs of execution. Section 3105(a) of the Condominium Act
states that “each unit together with its common element interest constitutes for all
purposes a separate parcel of real estate.” 68 Pa. C.S. §3105(a) (emphasis added).
Section 3204 further states:
14
After the declaration is recorded, a description of a unit which
sets forth the name of the condominium, the recording data for
the declaration, the county or counties in which the condominium
is located and the identifying number of the unit is a sufficient
legal description of that unit and its common element interest
even if the common element interest is not described or referred
to therein. Deeds, leases and mortgages of units shall be
recorded in the same records as are maintained by the recorder
for the recording of like instruments and shall be indexed by the
recorder in the same manner as like instruments are indexed.
68 Pa. C.S. §3204 (emphasis added). Stated otherwise, interests in the common
elements transfer automatically with the sale of the condominium unit. It is not
necessary to describe the common element interests in the instrument conveying title
to that unit. See 68 Pa. C.S. §3204, Uniform Law Comment 2. The sheriff’s sale
disposed of the undeveloped pad units and condominium units and the common
elements associated with them.
IOC’s argument on abandonment likewise lacks merit. Property is not
abandoned unless its owner voluntarily and intentionally relinquishes all rights to
that property. In re Funds in Possession of Conemaugh Township Supervisors, 724
A.2d 990, 993 (Pa. Cmwlth. 1999). Abandonment requires intent, “together with
external acts by which such intention is carried into effect.” Buffalo v. Jones, 813
A.2d 659, 664 (Pa. 2002). There is no evidence either Lender or Receiver intended
to abandon their property rights in the mortgaged properties, i.e., the parking garages
and parking licenses.
In support of its estoppel argument, IOC cites Erie
Telecommunications, Inc. v. City of Erie, 659 F. Supp. 580 (W.D. Pa. 1987). There,
the United States District Court stated that the “doctrine of quasi-estoppel operates
to bar a party from asserting, to another’s disadvantage, a right inconsistent with a
position previously taken by that party.” Id. at 585. The District Court explained
15
that, “[i]n common parlance, this doctrine translates into ‘one cannot blow both hot
and cold.’” Id.
Here, the record lacks any evidence that Lender or Receiver ever acted
in a way that was “inconsistent with a position previously taken by [either of them].”
Id. Although neither responded to IOC’s letter of May 17, 2012, noting IOC’s
intention to sell parking licenses, inaction does not trigger estoppel. See Farmers
Trust Company v. Bomberger, 523 A.2d 790, 794 (Pa. Super. 1987) (“As a general
rule, mere silence or inaction is not a ground for estoppel unless there is a duty to
speak or act.”). We reject IOC’s estoppel argument.
Finally, IOC asserts that the parties’ motion to enforce the injunction
provisions in the receivership order was filed four years too late and, thus, barred by
the doctrine of laches. Lender, Waterfront and Receiver respond that IOC was in no
way prejudiced by this sequence of events.
The doctrine of laches is “an equitable bar to the prosecution of stale
claims and is the practical application of the maxim that ‘those who sleep on their
rights must awaken to the consequence that they have disappeared.’” Kern v. Kern,
892 A.2d 1, 9 (Pa. Super. 2005) (quoting Jackson v. Thomson, 53 A. 506, 506 (Pa.
1902)). Our Supreme Court has explained the doctrine of laches as follows:
Laches bars relief when the complaining party is guilty of want
of due diligence in failing to promptly institute the action to the
prejudice of another. Thus, in order to prevail on an assertion of
laches, respondents must establish: a) a delay arising from
petitioner’s failure to exercise due diligence; and, b) prejudice to
the respondents resulting from the delay. Moreover, the question
of laches is factual and is determined by examining the
circumstances of each case.
Sprague v. Casey, 550 A.2d 184, 187-88 (Pa. 1988) (citations omitted). Moreover,
16
[t]he party asserting laches as a defense must present evidence
demonstrating prejudice from the lapse of time. Such evidence
may include establishing that a witness has died or become
unavailable, that substantiating records were lost or destroyed, or
that the defendant has changed his position in anticipation that
the opposing party has waived his claims.
Fulton v. Fulton, 106 A.3d 127, 131 (Pa. Super. 2014) (citations omitted) (citing
Commonwealth ex rel. Baldwin v. Richard, 751 A.2d 647, 651 (Pa. 2000)). The
question of whether laches applies is a question of law. United National Insurance
Company v. J.H. France Refractories Company, 668 A.2d 120, 124 n.4 (Pa. 1995).
Here, IOC sold the 91 parking licenses to Gior on May 15, 2012, after
the Receivership Court appointed Receiver on December 20, 2011, but before the
sheriff’s sale on June 5, 2012. In October 2013, Gior initiated an action against
Waterfront and Receiver in the Commerce Court to determine the validity of their
parking licenses. Waterfront and Receiver filed a counterclaim and a motion for
summary judgment to void the sale of the parking licenses. The parties litigated the
validity of IOC’s transfer until the Commerce Court ruled that the matter belonged
in the receivership proceeding. Thereafter, Lender, Waterfront and Receiver filed
their motion to void the transfer, and it was granted on April 18, 2016.
The motion to void IOC’s transfer of the 91 parking licenses to Gior
was filed three years after the transfer occurred. During that period of time, the
validity of the transfer of those parking licenses was vigorously litigated in the
Commerce Court. It was this litigation, instituted by Gior, that delayed the filing of
the instant motion. Given these circumstances, we agree with the Receivership
Court that the doctrine of laches did not bar the instant challenge to IOC’s sale of
the 91 parking licenses. Notably, IOC does not argue that it was prejudiced by the
alleged “lapse of time.” Rather, it argues that the transfer had “the acquiescence of
17
all other parties.” IOC Brief at 33. The ongoing litigation in the Commerce Court
belies that claim.
III. The Settlement Agreement
Finally, IOC argues that the Receivership Court erred by failing to give
effect to the Settlement Agreement that Lender, IOC, and IOC-Reef entered in
February of 2012. The Settlement Agreement includes a release, which states in
pertinent part:
Provided that [IOC and IOC-Reef] fully cooperate with
[Lender] in the Foreclosure Actions as provided herein, upon
completion of the Foreclosure Actions, in consideration of the
promises and covenants of [IOC and IOC-Reef] set forth herein,
[Lender] on behalf of itself, its agents, servants, officers,
directors, shareholders, employees, affiliated entities and
persons, successors and assigns, does hereby release, remise and
forever discharge [IOC and IOC-Reef] … from any and all
claims, demands, controversies, causes of action, suits,
judgments, and debts….
Settlement Agreement at 10, ¶3.2; R.R. 1022a (emphasis added). IOC argues that
the above-stated release barred Lender from filing its motion to void IOC’s transfer
of the 91 parking licenses. The Receivership Court held that because IOC did not
“fully cooperate” with Lender in the foreclosure actions, the release provision did
not prevent Lender and Receiver from seeking their requested relief. We agree and
so conclude.
Conclusion
IOC’s transfer of the 91 parking licenses without seeking the
Receivership Court’s approval violated the receivership order. Lender and
Receiver’s motion to void IOC’s transfer of the 91 parking licenses was not barred
18
by the doctrines of laches or estoppel, and the Settlement Agreement did not bar the
motion filed by Lender and Receiver. Accordingly, we hold that the parking garage,
the licenses to the parking garage, and IOC’s right to issue those licenses constituted
mortgaged property that was subject to the receivership order. Accordingly, we
affirm the Receivership Court’s order of April 18, 2016.
_____________________________________
MARY HANNAH LEAVITT, President Judge
19
IN THE COMMONWEALH COURT OF PENNSYLVANIA
The Union Labor Life Insurance :
Company, a Maryland corporation, :
on behalf of its Separate Account J. :
:
v. : No. 804 C.D. 2017
:
Isle of Capri Associates, L.P., Isle of :
Capri Associates Horizon, L.P., and :
Isle of Capri Associates Tides, L.P. :
:
Appeal of: Isle of Capri Associates, :
L.P. :
ORDER
AND NOW, this 14th day of January, 2019, the order of the Court of
Common Pleas of Philadelphia County dated April 18, 2016, in the above-captioned
matter is AFFIRMED.
______________________________________
MARY HANNAH LEAVITT, President Judge