Lakhmna, C. v. Lakhmna, G.

J-A27025-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CRISTY CAUCHON LAKHMNA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
GAGANDEEP S. LAKHMNA :
:
Appellant : No. 984 EDA 2018
Appeal from the Order Entered March 19, 2018
In the Court of Common Pleas of Philadelphia County Family Court at
No(s): 8517 September Term, 2012
BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.
DISSENTING MEMORANDUM BY BOWES, J.: FILED APRIL 24, 2019
I believe the parties’ postnuptial agreement unambiguously
contemplates that Wife will sell her unit in Husband’s building as soon as
reasonably possible to effectuate the division of the parties’ assets. Further,
I view Wife’s chosen course of action as contrary to her duty of good faith and
fair dealing in the performance of her contractual duties. Therefore, I
respectfully dissent.
The Majority correctly states that our standard of review is de novo on
issues of contract interpretation, and that our goal is to effectuate the intent
of the parties. Majority Memorandum at 5. The Majority properly reiterates
that, when the writing is unambiguous, we must ascertain the parties’ intent
from the language of the contract alone, viewing the contract as a whole to
give effect to all of its provisions. Id. at 5-6. However, in my view, the
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Majority’s interpretation of the contract at issue is not consistent with the
intent of the parties as evidenced from the contract as a whole.
As our Supreme Court has stated, “in determining intent, we are mindful
to examine the entire contract, taking into consideration the surrounding
circumstances, the situation of the parties when the contract was made and
the objects they apparently had in view and the nature of the subject matter.”
Commonwealth by Shapiro v. UPMC, 188 A.3d 1122, 1131 (Pa. 2018)
(cleaned up). Additionally, “every contract imposes upon each party a duty
of good faith and fair dealing in its performance and its enforcement.”
Stamerro v. Stamerro, 889 A.2d 1251, 1259 (Pa.Super. 2005) (cleaned up).
A lack of requisite good faith is demonstrated by, inter alia, “evasion of the
spirit of the bargain, lack of diligence and slacking off, willful rendering of
imperfect performance, abuse of a power to specify terms, and interference
with or failure to cooperate in the other party’s performance.” Id. (citation
and internal quotation marks omitted).
Moreover, “[i]n the absence of an express term, the doctrine of
necessary implication may act to imply a requirement necessitated by reason
and justice without which the intent of the parties is frustrated.” Id. (citation
and internal quotation marks omitted). Pursuant to this doctrine,
the law will imply an agreement by the parties to a contract to do
and perform those things that according to reason and justice they
should do in order to carry out the purpose for which the contract
was made and to refrain from doing anything that would destroy
or injure the other party’s right to receive the fruits of the
contract.
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Id. (citation and internal quotation marks omitted). Although implied duties
cannot defeat the express language of a contract, “[b]oth the implied
covenant of good faith and the doctrine of necessary implication are principles
for courts to harmonize the reasonable expectations of the parties with the
intent of the contractors and the terms in their contract.” Id. (citation and
internal quotation marks omitted).
For example, in Stamerro, supra, the parties’ comprehensive marital
settlement agreement provided, inter alia, that the husband would pay the
wife $1,200 per week for ten years, and that the amount was nonmodifiable
so long as his annual income was between $200,000 and $600,000. In the
five years prior to execution of the agreement, husband had been earning
between $350,000 and $400,000 per year. The next year, husband
voluntarily left his employment and took a job with a company owned by his
new wife and began earning $83,000 per year. Husband moved for reduction
in the alimony payments, the trial court denied the request, husband
appealed, and this Court affirmed. This Court applied the above principles to
the facts of that case as follows.
the parties’ contract imposed a duty of good faith to perform
contractual obligations diligently and honestly. Husband
consented to pay [w]ife $1200.00 per week in alimony as long as
his gross income did not go below $200,000.00. Husband
conceded he was not fired from his lucrative employment . . . .
Moreover, [h]usband presented no evidence of a company-
imposed salary reduction to support his claim that his job was in
jeopardy, due to lower sales volume and changes in the business
environment. Husband should not be allowed to evade the spirit
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or abuse the terms of the agreement by unilaterally and
voluntarily reducing his income. To do so would destroy [w]ife’s
right to receive the fruits of her bargained-for agreement.
Similarly, the doctrine of necessary implication serves to
prohibit [h]usband from voluntarily reducing his income.
Although the agreement did not expressly state that [h]usband
could seek a reduced alimony payment only upon an involuntary
salary reduction, to infer otherwise would give [h]usband the
power to unilaterally defeat the purpose for which the alimony
agreement was made, and to destroy [w]ife’s right to receive the
benefit of the support for which she bargained. To prevent this
injustice, the trial court properly imputed this requirement into the
contract.
Stamerro, supra at 1261-62 (citations omitted).
I find this analysis highly instructive in interpreting the postnuptial
agreement at issue in the case sub judice. The express purpose of the
agreement was to divide the parties’ assets and debts, rather than have a
court do so, to effectuate their “wish to live separately and apart from each
other.” Postnuptial Agreement, 10/13/15, at 1, 3. The terms of the
agreement evidence this desire to completely separate the parties’ debts and
interests in various pieces of property.
Under the agreement, Husband agreed to assume the only joint debt of
the parties—$76,682.47 owed to American Express. Id. at 5. The three main
joint assets addressed were the company 1808 Spruce Street, LLC, the real
estate located at 1808 Spruce Street, and real estate located at 1216 S. 12th
Street. The 1216 S. 12th Street property, valued at $126,000, was to be
transferred to Wife following Husband’s satisfaction of an outstanding
mortgage, after which Wife would forever hold Husband harmless for any
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expense connected with the property. Id. at 8. Regarding the LLC, a
company jointly owned by the parties with no designated value, Wife was to
be removed as a member of the company and as a debtor on the mortgage
incurred by it, after which Husband would forever hold Wife harmless for any
expenses connected with the business. Id. at 6.
The remaining joint asset—the three units located at 1808 Spruce
Street—was to be divided as follows.
7.3.1 1808 Spruce Street, Unit 3, Philadelphia, PA (appraised
value of $1.3 million) shall be transferred to [Wife] in a
fashion that minimizes the cost of the transfer. This
property shall be transferred to [Wife] free and clear of any
liens, mortgages, or encumbrances, with clear title and with
a valid Certificate of Occupancy. [Husband] shall be
responsible to arrange the transfer of title to [Wife] by
October 26, 2015. Upon signing of this agreement, even
prior to the transfer, [Wife] shall have exclusive decision
making authority with regard to the current sale listing of
this unit.
7.3.2 Upon[ ]a bona fide sale of 1808 Spruce Street, Unit 3, to a
third party, the parties shall divide the net proceeds 70% to
[Wife] and 30% to [Husband]. Net proceeds shall be
defined as customary costs of sale including, but not limited
to, Realtor fees and transfer taxes. No other expenses or
mortgages or expenses shall be allowable as deduction to
the sales price. [Wife] shall have sole discretion regarding
the sale of the property including, but not limited to, choice
of Realtor and listing or sale price. Should the property not
be sold until after [Husband]’s death, [Husband]’s share of
the proceeds shall be placed in a trust for [the parties’ child].
This property shall not be sold for less than the [higher] of
the fair market value at the time of sale or $1,450,000.00.
7.3.3 [Husband] shall retain 1808 Spruce Street, Unit 1
(appraised value [$]2.1 million) and Unit 2 (appraised value
[$]1.2 million).
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Id. at 7 (emphasis added).
The Majority concludes that this agreement does not require Wife to
ever sell Unit 3 of the property. It opines that interpreting the contract to
impose a duty upon Wife to follow through with the then-existing listing of
Unit 3 for sale would be inconsistent with, and render null, the provisions
indicating that Wife held a fee simple absolute in the property. Majority
Memorandum at 6-7. The Majority cites Wife’s sole discretion in the listing of
Unit 3, the lack of any provision prohibiting Wife from taking the property off
the market, and the requirement that the property be sold at no less than
$150,000 above the indicated appraised value, as indicative of the parties’
contemplation of “a possible indefinite delay in the sale[.]” Id. at 7. The
Majority further finds support for its holding that “the agreement left open the
possibility that a sale of the property, if it occurred at all, would take place at
an indefinite time well into the future” in the fact that the contract addresses
the possibility that the sale might not occur until after Husband’s death. My
colleagues point to the lack of any indication “that Husband is of advanced
age or terminally ill, and § 7.3.2 does not purport to apply in the event of
Husband’s accidental or tragic death before the completion of a sale.” Id. at
6.
While there is no doubt that the postnuptial agreement contemplates
that it may take some time for Wife to sell Unit 3 based upon the minimum-
sale-price requirement, I cannot agree with the Majority’s interpretation of the
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contract to impose no duty upon Wife to make reasonable, sustained efforts
to sell Unit 3, and rather to allow Wife to take the property off the market,
potentially for the remainder of her life, and instead rent it to a third party.
First, § 7.3.1 provides that Wife shall have exclusive decision making
authority regarding the current listing of Unit 3. While “current” is not
included in § 7.3.2 when Wife’s “sole discretion regarding the sale of the
property” is again referenced, I do not view this as an indication that the sale
need not move forward. Rather, because that reiteration is stated in
connection with provisions excluding realtor fees from the calculation of net
proceeds, the provision indicates that Wife’s decision to go with a realtor that
may charge higher fees will not be counted against her in dividing the
proceeds. The contract nonetheless expressly provides that efforts to sell Unit
3 take place “current” with its execution.
Second, the fact that the agreement provides for the contingency that
Husband is no longer living when the sale occurs, without acknowledging a
reason for Husband to expect his life to end in the near future, does not
suggest that the parties intended for Wife to completely forgo a sale of Unit
3. It is a sad fact of life that people die unexpectedly without warning.
Knowing that this loose end of the sale of Unit 3 for at least $1.45 million is
outside of his control, Husband’s desire to direct that his share be placed in
trust for his child rather than pass through his estate, in the event that he
suffered an untimely demise, is a reasonable precaution. It does not express
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a willingness to allow Wife to willfully deprive Husband of his 30% share of
$435,000 or more for the remainder of his life through her intentional act of
making no effort at all to exercise her discretion in choosing a realtor to
effectuate the sale.
Third, I fail to read an acquiescence to indefinite delay in the fact that
the minimum sale price of Unit 3 must be 10% above the appraised value
stated in the contract. The Majority cites nothing in the record to indicate
when the appraisal was done. Hence, we do not know if that value was
indicative of the market value at the time of the agreement as opposed to the
value as of the date of separation for purposes of equitably distributing the
parties’ property. In any event, I cannot conclude as the Majority does that
this difference in values absolves Wife of any obligation to make reasonable
efforts to complete the expressly-contemplated current sale of Unit 3.
Finally, granting Wife a fee simple absolute in Unit 3, and allowing her
to take a mortgage on the property pending its sale, is not inconsistent with
Wife’s agreement to follow through with the sale of her property. The parties
could not sell Unit 3 without the type of continued interactions that they
expressly sought to minimize unless the property was placed in one party’s
name or the other. As the sale of Unit 3 was designed to provide Wife with
the majority of her share of the distribution of marital assets, it is logical that
the property was placed in her name to give her control over obtaining and
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maximizing her 70% share of the net proceeds. What does not logically follow
is that Wife use her control to deprive Husband of his 30% of Unit 3’s value.
The parties expressed their desire to separate their lives and divide their
property. They reached an agreement as to the division of marital property
and debts, with Husband assuming the only enumerated joint debt, and the
assets divided between them. Husband’s 30% share of Unit 3’s value is a
significant portion of the assets that Wife agreed would belong to him.
Therefore, while the agreement does not state a date by which Wife must sell
Unit 3, nor provide that Wife may not keep it rather than sell it, I would hold
that §§ 7.3.1 and 7.3.2 unambiguously intend that Wife maintain the then-
current efforts to sell Unit 3, albeit with any realtor and listing specifics of her
choosing.
Further, I would apply the reasoning of Stamerro, supra to interpret
the contract to require Wife to make good faith efforts to sell Unit 3 within a
reasonable time.1 Just as the husband in Stamerro could not take advantage
of the absence of express language forbidding his voluntary reduction in
income to avoid his agreement to pay alimony, Wife cannot realize her share
of the value of Unit 3 through a mortgage and rental while unilaterally and
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1 See, e.g., Francis Gerard Janson, P.C. v. Frost, 618 A.2d 1003, 1006
(Pa.Super. 1993) (“[I]t is the general rule that where no time is agreed upon
for the completion of a contract, it must be completed within a reasonable
time under all the circumstances[.]”).
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purposefully depriving Husband of the benefit of his bargain. As the Majority’s
interpretation allows Wife to do so,2 I must respectfully dissent.
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2 To be clear, I would hold Wife is required to keep the Unit 3 on the market
for sale. Lease of the property is contrary to her contractual obligations only
to the extent that a lease would interfere with her ability to complete a sale;
short-term rental, with the lessee’s understanding that the property could be
shown or sold at any time, would not be impermissible. Likewise, obtaining a
mortgage on the property that would be satisfied upon the sale of Unit 3 would
not be in conflict with Wife’s duty to make good-faith efforts to secure a buyer
and complete the sale.
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