In Re: Estate of Frano, M. Appeal of: Gaczkowski ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF MARY D. FRANO, IN THE SUPERIOR COURT OF
NOREEN M. SWANSON, ELAINE B. PENNSYLVANIA
WEHNER GACZKOWSKI, BEVERLEY J.
FRANO BURKETT AND GORDON F.
FRANO, CO-EXECUTORS
APPEAL OF: ELAINE B. WEHNER
GACZKOWSKI, BEVERLEY J. FRANO
BURKETT AND GORDON F. FRANO,
REMAINING LIVING CO-EXECUTORS OF
THE ESTATE OF MARY D. FRANO
No. 555 WDA 2015
Appeal from the Order March 4, 2015
In the Court of Common Pleas of Clearfield County
Orphans' Court at No(s): No, 95-284 O.C.
BEFORE: GANTMAN, P.J., BENDER, P.J.E., and PANELLA, J.
MEMORANDUM BY PANELLA, J. FILED AUGUST 22, 2016
Appellants, the remaining co-executors of the estate of Mary D. Frano
(“the Estate”), appeal from the order directing them to transfer ownership of
real estate located in Clearfield County to Appellee, Eagle Environmental,
L.P. (“Eagle”). Eagle petitioned the orphans’ court to enforce a judgment
from 1999 compelling specific performance of an option to purchase real
estate that it had purchased from Mary D. Frano before she passed away.
The orphans’ court engaged in a detailed, well-reasoned analysis of the
circumstances and extensive legal history of this case and concluded that
the doctrine of laches was not available as an equitable defense to Eagle’s
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petition to enforce a judgment entered in 2001. Among several other
arguments, Appellants contend that the orphans’ court erred in concluding
that the doctrine of laches did not apply. While the orphans’ court’s 1999
order and this Court’s 2000 affirming memorandum speak of judgment in
favor of Eagle, the true effect of the 1999 order, as revealed by the 2000
memorandum and the subsequent actions taken by Eagle, was in the nature
of a declaratory judgment providing the legal rights and responsibilities of
the parties under the controlling option agreement. We therefore vacate the
orphans’ court’s order in part and remand for the orphans’ court to consider
whether equity favors the application of laches to Eagle’s claim.
In 1993,1 Mary D. Frano granted Eagle an option to purchase
approximately 150 acres of real estate in Washington Township. Among
other purposes, Eagle intended to build and operate a solid waste disposal
facility on the property. To that end, the agreement provided that if Eagle
exercised the option, the total purchase price would be $270,000 and that
Mary Frano was obligated to provide “good and marketable title” to the
property.
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1
There are references in prior court orders in this case to option agreements
dating back to 1990. However, all parties agree that it is the 1993
agreement and its subsequent addendum that governed the rights of the
parties at the time that Eagle sought to exercise the option to purchase the
property.
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On January 13, 1995, Mary D. Frano executed an addendum to the
option agreement, extending the option period for an additional twelve
months. Shortly thereafter, she passed away. On January 8, 1996, Eagle
gave notice of its intent to exercise the option to purchase the property.
After Mary D. Frano’s death, the original co-executors, her four
children, discovered that some of the property subject to the option was
actually located in Sandy Township. This created an issue, as the portion in
Sandy Township was smaller than the minimum lot size permitted in the
Sandy Township land use ordinances. Furthermore, the co-executors claimed
that in 1991, Mary Frano had deeded another portion of the property subject
to the option to her daughter, and now co-executor, Beverley J. Frano
Burkett, and her husband. The co-executors asserted that after Mary Frano
had discovered this mistake, she and Eagle had orally modified the option
agreement.
The Estate therefore filed a complaint for declaratory judgment in
Jefferson County to determine their rights. Eagle filed a demurrer to this
complaint, asserting that the Estate had failed to state a valid cause of
action. The Jefferson County Court of Common Pleas agreed with Eagle, and
entered an order dismissing the Estate’s complaint. The Estate did not
appeal from the Jefferson County order.
In the meantime, Eagle had filed a petition seeking specific
performance of the option contract in the Court of Common Pleas of
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Clearfield County. The Clearfield County action was stayed until the
resolution of the Jefferson County proceedings. After the Jefferson County
court dismissed the Estate’s complaint, Eagle filed a motion for judgment on
the pleadings in its Clearfield County action. The Clearfield County court
found that the Jefferson County decision was res judicata on the issues
involved, and granted judgment on the pleadings to Eagle and granted
Eagle’s request for specific performance.
The co-executors appealed the Clearfield County decisions. On March
6, 2000, this Court affirmed the Clearfield County decisions. Importantly, the
panel provided the following analysis relevant to the current appeal:
Approximately one acre of the nearly 150 acres of the option
property is located in Sandy Township. Appellants [co-executors]
contend that subdivision of the Sandy Township property is
illegal because it does not comply with the minimum lot size
requirements under the Sandy Township Subdivision Ordinance.
Appellants admit that they do not know whether Sandy Township
will grant subdivision of the property. In addition, there is
nothing in the record indicating that the co-executors have
applied for subdivision approval. To comply with the trial court’s
order and judgment in favor of Eagle, and to perform the option
agreement, the co-executors must first seek subdivision
approval. Sandy Township may or may not approve the
subdivision, and it may or may not grant a modification or
variance. Nonetheless, we find that the co-executors here can
lawfully comply with the provisions of the option agreement
regardless of Sandy Township’s eventual determination. … Thus,
the co-executors here must seek subdivision approval, apply for
a modification or variance if necessary, and otherwise comply
with the provisions of the option agreement and the order of the
trial court. If subdivision approval, or a modification or
variance, is not granted, and the co-executors cannot
convey good title to that portion of the property located in
Clearfield County, then Eagle must decide whether to take
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title to property the co-executors are able to convey, or
rescind the agreement.
In re: Estate of Mary D. Frano, No. 682 WDA 1999, at 10-11 (Pa. Super.,
filed 3/6/00) (unpublished memorandum) (emphasis supplied). The
Supreme Court of Pennsylvania denied review.
The case returned to the orphans’ court. Eagle continued to pursue its
remedies under the option agreement, without any apparent cooperation
from the Estate. On March 21, 2001, the orphans’ court entered the
following order:
[F]ollowing status conference into the above captioned matter,
and upon agreement of the parties, it is the ORDER of this
Court that Eagle Environmental, L.P., shall post with the Clerk of
the Orphans’ Court of Clearfield County the sum of $110,000
representing 50% of the purchase price of the subject premises
to be placed by said Clerk in an interest bearing account until
further Order of Court. It is the further ORDER of this Court that
the Mary Frano Estate shall submit, within 30 days from the date
hereof, to the Planning Commission of Sandy Township,
Clearfield County, and Washington Township, Jefferson County,
sub-division applications for the subject premises. Finally, Eagle
Environmental, L.P. shall submit to the Mary Frano Estate an
engineering survey of the rock storage area and of the proposed
ingress and egress road to and from the same within five days
from date hereof.
(emphasis supplied).
Eagle deposited the sum of $110,000 into an interest bearing account
held by the clerk of the orphans’ court of Clearfield County. The Estate
eventually submitted the required documents, but Eagle objected to the
documents submitted. Eagle was subsequently granted the right to pursue
the subdivision application and zoning variance on behalf of the Estate in
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Washington Township, with the Estate directed to comply with all requests
made by Eagle.
Eagle was similarly nonplussed with the documents the Estate
submitted to Sandy Township. The orphans’ court subsequently ordered the
Estate to submit a revised zoning variance application that met Eagle’s
requirements.
Washington Township denied Eagle’s request for subdivision of the
property on October 9, 2001. Sandy Township denied Eagle’s request for a
zoning variance on January 28, 2002. While Eagle appealed the Washington
Township decisions to the Jefferson County Court of Common Pleas, it did
not pursue any appeal of the Sandy Township decision.
In the following years, Eagle determined that its plan to build a solid
waste disposal facility on the optioned property was no longer feasible and
abandoned this intent. On June 6, 2005, the Jefferson County Court of
Common Pleas dismissed Eagle’s appeal from the Washington Township
decisions for lack of activity. Eagle did not appeal from this order. Nor did
Eagle take any steps to consummate its purchase of the optioned property.
In 2013, the Clearfield County Court of Common Pleas notified Eagle
that the $110,000 that Eagle had deposited with the Orphans’ Court would
be forfeited to the state treasury if no activity occurred within 60 days. Eagle
responded on October 21, 2013, with a petition seeking to compel the Estate
to convey the portion of the optioned property located in Washington
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Township. The Estate responded, raising a litany of defenses. Of factual
significance is the intervening discovery of Marcellus Shale underneath the
optioned property, and the Estate’s recorded entry of leases to develop this
resource.
After holding a hearing, the orphans’ court entered an order directing
the Estate to cooperate with Eagle in filing a subdivision application in
Washington Township. Furthermore, the Estate was ordered to convey the
subdivided property to Eagle in return for the purchase price pursuant to the
option contract. The Estate filed post-trial motions, which the orphans’ court
denied, and this timely appeal followed.
Our standard in reviewing decisions of the orphans’ court is as follows:
The findings of a judge of the orphans’ court division, sitting
without a jury, must be accorded the same weight and effect as
the verdict of a jury, and will not be reversed by an appellate
court in the absence of an abuse of discretion or a lack of
evidentiary support. This rule is particularly applicable to findings
of fact which are predicated upon the credibility of the witnesses,
whom the judge has had the opportunity to hear and observe,
and upon the weight given to their testimony. In reviewing the
orphans’ court’s findings, our task is to ensure that the record is
free from legal error and to determine if the orphans’ court’s
findings are supported by competent and adequate evidence and
are not predicated upon capricious disbelief of competent and
credible evidence.
When the trial court has come to a conclusion through the
exercise of its discretion, the party complaining on appeal has a
heavy burden. It is not sufficient to persuade the appellate court
that it might have reached a different conclusion if, in the first
place, charged with the duty imposed on the court below; it is
necessary to go further and show an abuse of the discretionary
power. An abuse of discretion is not merely an error of
judgment, but if in reaching a conclusion the law is overridden or
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misapplied, or the judgment exercised is manifestly
unreasonable, or the result of partiality, prejudice, bias or ill-will,
as shown by the evidence [of] record, discretion is abused. A
conclusion or judgment constitutes an abuse of discretion if it is
so lacking in support as to be clearly erroneous.
We are not constrained to give the same level of deference to
the orphans’ court’s resulting legal conclusions as we are to its
credibility determinations. We will reverse any decree based on
palpably wrong or clearly inapplicable rules of law. Moreover,
we are not bound by the chancellor's findings of fact if there has
been an abuse of discretion, a capricious disregard of evidence,
or a lack of evidentiary support on the record. If the lack of
evidentiary support is apparent, reviewing tribunals have the
power to draw their own inferences and make their own
deductions from facts and conclusions of law. Nevertheless, we
will not lightly find reversible error and will reverse an orphans’
court decree only if the orphans’ court applied an incorrect rule
of law or reached its decision on the basis of factual conclusions
unsupported by the record.
In re Paxson Trust I, 893 A.2d 99, 112-113 (Pa. Super. 2006) (citations
and quotation marks omitted)
On appeal, the Estate raises three issues. However, we need only
address the Estate’s first issue, as its resolution requires a remand to the
orphans’ court. The Estate contends that the orphans’ court erred in
concluding that the defense of laches did not apply in this case.
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. In order to apply the doctrine to bar
prosecution of a stale claim, the following elements must be
demonstrated: (1) a delay arising from [plaintiff’s] failure to
exercise due diligence; and (2) prejudice to the [defendant]
resulting from the delay.
Kern v. Kern, 892 A.2d 1, 9 (Pa. Super. 2005) (citations omitted).
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The orphans’ court noted the complexity of the issue of application of
laches under the circumstances of this case:
Notwithstanding diligent research, the [c]ourt has been unable
to find a case where the doctrine of laches was upheld as the
basis to void a previously entered judgment or final order in
equity. Any cases located by the [c]ourt or cited by the parties
involve laches being applied to a suit filed to attempt to enforce
an agreement or contract. Thus, it appears a matter of law that
laches is not available where a matter has been fully litigated
resulting in an enforceable judgment. This [c]ourt has struggled
with this issue, as common sense would seem to indicate that at
some point enough time would have passed where some
doctrine of delay would negate Eagle from attempting to enforce
the judgment which it had already obtained to force a deed from
the Estate. Here the period of delay is either eight (8) years or
twelve (12) years, depending upon which way you look at it. If
this [c]ourt had not brought the issue to the attention of Eagle,
who knows how many years may have passed with nothing
occurring. So the question is, how many years are too many[?]
Is ten (10), twenty (20), or fifty (50) or more? In the
alternative, does the Estate have to wait for twenty-one (21)
years to pass and make a claim for adverse possession? This
[c]ourt cannot answer these questions. However, the case law
appears to be clear that the doctrine of laches is not applicable
where a matter was fully litigated resulting in a vested equitable
title to the claimant. This [c]ourt holds as such and rules that
laches does not apply in this case.
Orphans’ Court Opinion, 2/20/15, at 12-13.
We agree with the orphans’ court that the issue of the availability of
the defense of laches to an action seeking enforcement of a judgment is at
best murky. We cannot agree, however, that case law clearly makes laches
inapposite to the present case. It is well established that a court will not
order specific performance of a contract if such performance violates
applicable law. See Messina v. Silberstein, 528 A.2d 959, 961 (Pa. Super.
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1987). See also Holden v. Kay, 601 A.2d 453, 455 (Pa. Cmwlth. 1991).
Nevertheless, a court can order specific performance pending approval of a
subdivision application. See id.; Silberstein.
Here, though, we are not faced with a situation where approval was
pending. The subdivision applications and zoning variance applications were
in fact denied by the various relevant authorities. Thus, specific performance
of the contract became illegal the moment the subdivision and zoning
variance applications were denied.2 At that time, Eagle’s rights were, as
noted, clearly spelled out by this Court’s March 6, 2000 decision:
If subdivision approval, or a modification or variance, is not
granted, and the co-executors cannot convey good title to that
portion of the property located in Clearfield County, then Eagle
must decide whether to take title to property the co-executors
are able to convey, or rescind the agreement.
Thus, the burden was upon Eagle to choose its remedy at that point in time.
It is uncontested that Eagle took no action to pursue either remedy until
2013.
Under these circumstances, it is clear that Eagle has slept on its right
to choose a remedy in this matter. However, it is not clear from the record
before us that the Estate is entitled to relief under this doctrine. Equitable
relief is a matter of discretion in the orphans’ court, and must be exercised
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2
While Eagle appealed from the Washington Township decisions, it later
abandoned the appeals and therefore those decisions stand as final
adjudications on the applications.
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only upon a consideration of all the attendant circumstances. See Snow v.
Corsica, 329 A.2d 887, 889 (Pa. 1974). As noted, the orphans’ court
grappled with this issue, but ultimately concluded that laches was not
available as a matter of law.3 Furthermore, it is clear from this record that
the Estate has, at times during the pendency of this matter, also acted in an
obdurate manner. Resolution of the issue of prejudice and the balance of
equity in this case is within the discretion of the orphans’ court, not this
Court.
We therefore vacate the order in part, and remand for the limited
purpose of consideration of whether the Estate was prejudiced by Eagle’s
delay, and whether such prejudice is sufficient to tip the equities involved in
the Estate’s favor.
Order affirmed in part and vacated in part. Case remanded for further
proceedings consistent with this memorandum. Jurisdiction relinquished.
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3
The orphans’ court does conclude, in its opinion and order, that the Estate
did not establish that Eagle’s delay prejudiced the Burketts with respect to
their claim of ownership to a portion of the option property. We can find no
fault in the orphans’ court’s reasoning on this issue, and therefore affirm its
decision to this extent. Our remand is limited to the issue of whether the
Estate as a whole was prejudiced by Eagle’s failure to diligently prosecute its
rights under the option contract after subdivision approval and zoning
variance were denied.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/22/2016
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