Bernie Enterprises, Inc. v. Foster, M. ( 2016 )

J. A15013/16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
BERNIE ENTERPRISES, INC., : IN THE SUPERIOR COURT OF
DONALD METZGER AND BAILEY & : PENNSYLVANIA
BILLERA ENTERPRISES, INC. :
:
v. :
:
MICHEAL FOSTER, INDIVIDUALLY, :
MICHEAL FOSTER, TRUSTEE, AND :
HEYWOOD E. BECKER : No. 55 EDA 2012
:
APPEAL OF: MICHEAL FOSTER :
Appeal from the Order, November 23, 2011,
in the Court of Common Pleas of Lehigh County
Civil Division at No. 2006-C-0035
BEFORE: FORD ELLIOTT, P.J.E., DUBOW AND JENKINS, JJ.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED AUGUST 17, 2016
Micheal Foster appeals from the order of November 23, 2011, granting
plaintiffs/appellees’ motion to declare the November 1, 2010 settlement
agreement complete and directing the clerk of courts to mark the matter
settled, discontinued, and ended with prejudice. We affirm.
The trial court has described the history of this matter as follows:
These attenuated matters proceeding under
the above-captioned consolidated cases stem from
disputes arising out of the disposition of proceeds
and properties relating to real-estate purchase and
investment schemes involving the parties. In the
most general sense, the controversy concerns
whether properties were purchased by Defendants
individually on behalf of themselves or, conversely,
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on behalf of their employers or beneficiaries and held
in trust therefor.
After protracted proceedings, including
arguments over disqualification of counsel and
various and sundry ancillary procedural wranglings
and recriminations, the parties entered into a
one-hundred-and-seventy-page settlement
agreement, which was adopted as an order of court
entered on November 1, 2010. A dispute thereafter
arose concerning compliance with the settlement
terms, whereupon Plaintiffs, on March 17, 2011, filed
a motion to enforce the settlement agreement,
contending in pertinent part that Defendant Heywood
Becker was obliged to convey his interests in a
subject Delaware corporation, Hanoverian, Inc., as
well as a Pennsylvania entity under a similar name.
Defendants countered with a motion for sanctions,
filed on April 15, 2011, arguing that Plaintiffs had
failed to discharge their responsibilities under the
settlement agreement in respect to, among other
things, proper recordation of the deeds to the
subject properties. Argument on both issues was
scheduled on June 15, 2011, and, thereafter, on
October 5, 2011, a rule setting a hearing date for
October 25, 2011, was issued on the parties to show
cause why a special master, identified by the Court,
should not be appointed to implement the settlement
agreement, with the parties to incur the expenses of
the master’s services.
At [the] hearing convened on October 25,
2011, Plaintiffs indicated they were now satisfied
that the settlement agreement had been fully
implemented and their motion was thus rendered
moot. Defendants were represented by
Ronald Clever, Esq., who was also proceeding
pro se. Mr. Clever did not offer any legal authority
or substantive evidence at the hearing to
demonstrate why a master should not be appointed
nor did he offer any evidence in support of the
motion for sanctions. Instead, in an attempt to exalt
form over substance, he contended, incorrectly, that
the sole matter before the Court consisted of
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Plaintiffs’ March 17, 2011, motion. (See N.T.,
10/25/2011, at 5-6, 9-10.) Counsel refused to
accede to the appointment of a master to address
the convoluted morass presented by his motion for
sanctions for alleged non-compliance with the
170-page settlement agreement. Accordingly, on
the basis of the evidence presented at [the] hearing,
the Court invited Plaintiffs to file a motion to declare
the settlement agreement resolved. (See id. at 11.)
On October 28, 2011, Plaintiffs filed such a motion.
After receiving Defendants’ response thereto on
November 17, 2011, the Court on November 23,
2011, entered an order declaring the settlement
agreement resolved and directing the clerk of judicial
records to mark the matter settled, discontinued,
and ended with prejudice.
Trial court opinion, 2/17/12 at 2-3. This timely appeal followed. Appellant
complied with Pa.R.A.P. 1925(b), and the trial court has filed an opinion.
Appellant has raised the following issues for this court’s review:
A. When the court (sua sponte) has summoned
the lawyers into court, to “show cause” why a
“special master” should not be appointed to
“implemen[t] the settlement agreement,” is it
error for the court – instead – to expect a
party to be prepared (then and there) to
litigate his motion (and it is [sic] error to
deem the motion “waived”)?
B. When the “settlement agreement” has
obligations that continue into the future, and
when there is a pending motion pointing out
fraud by one of the parties and breach of those
obligations, is it error to close the case
(especially “with prejudice”) (and especially
when the order to close the case arises
out of the kind of “waiver” addressed in
Argument Section “A” above)?
C. When deeds have already been signed,
notarized, and delivered,
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. . . and when this was done, pursuant to
a consent order,
. . . and when this was done, pursuant to
a stipulation (in which each and every
page of the deeds-to-be-signed had
been initialed in advance by counsel
for both parties),
. . . is it proper for the grantee/plaintiff to add
extra pages – (pages designed to show the
grantor making representations) (pages
designed to fraudulently avoid real estate
transfer taxes)?
Appellant’s brief at 4 (brackets in original; emphasis in original;
capitalization deleted).
At a hearing on April 15, 2011, appellant voiced his concerns that
appellees were making changes to the deeds before filing. (Notes of
testimony, 4/15/11 at 2-3, 17.) Counsel for appellee Bernie Enterprises,
Inc., Craig T. Edwards, Esq., explained that some of the deeds were not
accepted because appellant was not listed as the trustee. (Id. at 4-5.)
Therefore, Attorney Edwards inserted the word “trustee” in some of the
deeds. (Id. at 7.) Attorney Edwards also had to correct a deed that listed
the wrong parcel number. (Id. at 10.) According to Attorney Clever,
however, Attorney Edwards had made material and substantial changes to
the deeds before filing, including inserting trust agreements into them. (Id.
at 17.) The trial court expressed its impatience with the delay in
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implementing the settlement agreement, and set a new hearing date of
June 15, 2011:
THE COURT: You guys come back on June 15th, and
you bring all the corrected deeds that you need to
have signed in recordable form. And you bring your
clients, and you guys are going to sit in this
courtroom, and you are going to execute all of those
documents, whatever it takes to get them done
properly. I am not interested in anymore [sic]
motions. I’m really not. I am interested in
implementing an agreement that all of the parties
agreed to in open Court under oath.
Id. at 14-15.
I have got the date of June 15th on my calendar. We
are going to keep the date. You guys get this thing
resolved between now and then. To the extent that
you don’t, you come on back on June the 15th, and I
will decide whatever I have to decide, but I am
telling you right up front, I have no patience for this,
I really don’t. And I am going to start imposing
sanctions, including attorney’s fees, if there are
attorneys, and/or other kinds of fines;
reimbursements, to implement what you all agreed
to. Now go back and read the agreement, figure out
what you have got to do under the agreement, and
go ahead and do it.
Id. at 18.
On June 15, 2011, appellant again claimed that appellees had altered
the deeds and inserted pages prior to recording them. (Notes of testimony,
6/15/11 at 23-27.) Attorney Edwards explained that he was required to file
a trust agreement with the deeds and that appellees will pay any real estate
transfer taxes due on the properties. (Id. at 39-41.) He noted that the
settlement agreement contained an indemnification clause. (Id. at 39.)
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Attorney Edwards denied that there were any substantive changes made to
the deeds, except one in Bucks County which had the wrong parcel number.
(Id. at 42-43.)
The trial court proposed appointing a special master, knowledgeable in
real estate matters, to examine the deeds and recommend to the court
whether any other filings needed to be made in order to comply with the
parties’ settlement agreement. (Id. at 48.) The trial court observed that
the case had settled 1½ years prior and expressed its frustration with the
parties’ inability to execute the terms of the settlement agreement:
If you think that I am going to sit here -- that I have
the time to sit here, and to go through every one of
those deeds, and to see whether they are in
“substantial compliance” with what was part of the
settlement agreement, I am not going to do that. I
don’t have that kind of time.
Id. at 47. “And it astounds me how this case hasn’t been settled. And here
we are almost what, a year-and-a-half, two years, past the settlement date,
and we are still arguing about things -- about whether there was compliance
with the terms of the settlement agreement.” (Id.)
Frankly, I have no confidence in the litigants doing
any of this themselves, because you don’t have any
confidence in the other party doing it. We will be
right back here again. I am astounded as to -- I will
put it as charitably as possible -- the ineptitude that
has really marked this case, and almost everything
that has been done here, astounded by it. How
difficult should this have been?
Id. at 48-49.
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The trial court proposed that each side come up with an advance
deposit of $10,000 to pay for a special master:
So I have a pot of $20,000 to pay for the Master’s
time, to go over all of these things, to have the
master re-draw the documents if anything has to be
re-drawn, to have the master go ahead and file it, to
have the master get a certified copy of it, and to get
the master to get the receipt, and to provide it to
everybody. Anything short of that, I don’t think is
going to work.
Id. at 48. Counsel for both sides agreed to the appointment of a special
master. (Id. at 53-55.) Although co-counsel for appellant, Kevin T.
Fogerty, Esq., balked at the $10,000 deposit, he agreed to appointment of a
special master:
MR. FOGERTY: Judge, I am fine -- I don’t know
about the $10,000. That’s a little bit steep.
THE COURT: Someone is going to have to pay.
MR. FOGERTY: And I agree, and the only request I
would make, is that the master should have the
power to determine who was at fault for what
happened --
THE COURT: I have no problem with that.
MR. FOGERTY: -- and there should be a shifting of
that fee responsibility.
THE COURT: That may be, but someone is going to
advance the money.
Id. at 53.
Similarly, although he disputed that there were any material changes
made to the deeds, Attorney Edwards agreed to appointment of a special
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master: “They are not substantive changes. But if the master needs to
decide that, I am okay with that.” (Id. at 55.) On October 5, 2011, the trial
court issued a rule to show cause why Edward P. Sheetz, Esq., should not be
appointed special master for purposes of implementing the settlement
agreement reached between the parties, returnable October 25, 2011.
The parties appeared before the court on October 25, 2011. The trial
court expressed confidence that Attorney Sheetz, an experienced real estate
lawyer and counsel to a title company, would be able to “tie it up and get it
resolved.” (Notes of testimony, 10/25/11 at 3-4.) The trial court remarked,
“And as I indicated back in June, I thought given the complexity of the
issues that have to be addressed, and the numbers of deeds, and the history
between the litigants and/or the attorneys, that you needed some outside
help in order to consummate your settlement.” (Id. at 3.) “I don’t know
what else to do. I am open to suggestions, but this case can’t linger on like
this. And so it’s got to be dealt with.” (Id. at 4.)
At that time, Attorney Clever suggested that the plaintiffs’ motion to
enforce the settlement was moot, as Mr. Becker had assigned his interest in
Hanoverian, Inc., a Delaware Corporation. (Notes of testimony, 10/25/11 at
5.) Although Attorney Clever continued to insist that the recorded deeds
were not acceptable, he stated that appellant’s motion for sanctions, filed
April 15, 2011, was not before the court. (Id. at 6, 9.) According to
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Attorney Clever, the rule returnable only related to plaintiffs’ motion to
enforce the settlement. (Id. at 9.)
Patrick J. Reilly, Esq., counsel for appellee Donald Metzger, stated, “I
thought we were here because the Plaintiffs [sic] weren’t satisfied with
deeds that were filed. I agree that the Hanoverian, Inc., issue is not an
issue.” (Id. at 6.) Attorney Edwards indicated his continuing willingness to
put the issue before a special master: “That’s why we were going to the
Master, as I understood. And I am here today, to say we are perfectly
happy to go to a Master; show every deed that we filed, that we did them
appropriately and properly. And we are prepared to do so, Your Honor.”
(Id. at 7-8.) Attorney Clever, however, argued that sanctions are squarely
a matter for the court, not a special master. (Id. at 10.) Attorney Clever
objected to appointment of a special master. (Id.) At that point, the trial
court indicated that it would entertain a written motion to declare the matter
resolved and discontinue the case with prejudice. (Id. at 11.)
Appellant cites no authority for the proposition that a special master
could not be appointed to help decide the issue; and, in fact, at the hearing
of June 15, 2011, appellant agreed to appointment of a special master. See
In re Thirty-Fifth Statewide Investigating Grand Jury, 112 A.3d 624,
633-634 (Pa. 2015) (Baer, J., concurring) (“When a court seeks to engage in
fact-finding, it employs a special master. . . . The function of a special
master is to gather necessary factual information, consider pertinent legal
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questions, and provide the court with recommendations. Special masters
operate as an arm of the court, investigating facts on behalf of the court and
communicating with it to keep it apprised of its findings. . . .”) (footnote
omitted); In re City of Pittsburgh, 600 A.2d 630, 632 (Pa.Cmwlth. 1991)
(holding that “[c]ourts historically possess the inherent authority to appoint
masters to assist them in performing their various functions”). It was made
abundantly clear at the hearing of June 15, 2011, that the trial court
intended to address the allegations regarding appellees’ alteration of the
deeds by appointing a special master. Despite agreeing on the record to this
course of action, counsel for appellant appeared at the October 25, 2011
hearing and objected to appointment of a special master. Nor was appellant
prepared to move forward on his motion for sanctions, filed April 15, 2011.
As the trial court states,
As a review of the transcript of the October 25, 2011
hearing suggests, the Court and Plaintiffs were well
aware that the purpose of the hearing was to
address the need for, and the issues giving rise to,
an appointment of a master to address any
remaining dispute over compliance with the
settlement agreement. Counsel’s unwillingness to
address those matters on the merits and failure to
present any evidence in support of claims of
non-compliance was thus deemed a waiver and the
issues related to non-compliance with the settlement
agreement by either Plaintiffs or Defendants were
thus held to be resolved on the strength of the
superior credibility of Plaintiffs as represented at the
hearing on October 25, 2011. (See N.T.,
10/25/2011, at 6-7 (representations as to steps
Plaintiffs undertook in compliance with settlement
agreement).)
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Trial court opinion, 2/17/12 at 4. It is axiomatic that credibility
determinations cannot be disturbed on appeal. Furthermore, as the above
quotations from the hearings in this matter illustrate, the trial court was
justifiably losing its patience with the parties’ inability to comply with the
terms of the settlement agreement. The trial court eventually proposed
appointment of a special master to examine the deeds to determine whether
they complied with the settlement agreement, to which both sides agreed.
Then, inexplicably, Attorney Clever objected to appointment of a special
master at the October 25, 2011 hearing and insisted that his motion for
sanctions was not properly before the court. Under these circumstances, we
cannot find the trial court erred in declaring the settlement agreement
resolved and ordering the matter settled, discontinued, and ended with
prejudice.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/17/2016
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