L.A v. Associates v. V.G. Morrow Park v. Morrow ( 2021 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
L.A.V. MP HOLDING, LLC, : IN THE SUPERIOR COURT OF
INDIVIDUALLY A MEMBER OF, AND : PENNSYLVANIA
ON BEHALF OF, MORROW PARK CITY :
APARTMENTS, LLC :
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v. : No. 582 WDA 2019
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V.G. MORROW PARK CAPITAL, LLC :
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v. :
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MORROW PARK HOLDINGS, LLC, :
VILLAGE GREEN RESIDENTIAL
PROPERTIES, LLC, CCI HISTORIC,
INC., VG ECU HOLDINGS, LLC, AND
COMPATRIOT CAPITAL, INC.
APPEAL OF: VILLAGE GREEN
RESIDENTIAL PROPERTIES, LLC
Appeal from the Order Entered April 12, 2019
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): No. GD-17-006216
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BEFORE: SHOGAN, J., McLAUGHLIN, J., and MUSMANNO, J.
MEMORANDUM BY SHOGAN, J.: FILED: APRIL 21, 2021
Appellant, Village Green Residential Properties, LLC (“VGRP”), appeals
from an order entered on April 12, 2019,1 in the Allegheny County Court of
Common Pleas. In the April 12, 2019 order, the trial court concluded that
VGRP was in breach of an agreement to purchase an apartment building
located in Pittsburgh, Pennsylvania. Order, 4/12/19. As a result of VGRP’s
breach, the trial court concluded that pursuant to the terms of the agreement,
VGRP’s sales agreement terminated, and VGRP forfeited its down payment.
Id. Because the trial court concluded that the VGRP sales agreement was
terminated, the trial court approved the court-appointed Special Master’s
recommendation to sell the property to Appellees, Morrow Park Holdings, LLC,
CCI Historic, Inc., VG ECU Holdings, LLC, and Compatriot Capital, Inc.
(collectively “Appellees”).2 Id. After careful consideration, we affirm.
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1 The order on appeal was dated “April 11, 2019.” Throughout the record
and in the briefs, the order is, on occasion, noted as either the April 11, 2019
order or the April 12, 2019 order. We point out that the order was not filed
and entered on the docket until April 12, 2019. Accordingly, when referencing
the order on appeal, we refer to it as the April 12, 2019 order.
2 This is an appeal as of right from an interlocutory order. See Pa.R.A.P.
311(a)(2) (permitting an appeal as of right from an order confirming,
modifying, dissolving, or refusing to confirm, modify or dissolve an
attachment, custodianship, receivership, or similar matter affecting the
possession or control of property).
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The trial court summarized the relevant facts and procedural history of
this matter as follows:
This matter is an over[-]litigated business dispute between
and among the Defendants, two sophisticated real estate
development groups. These two out-of-state groups formed
Morrow Park City Apartments, LLC, (“MPCA”) along with Plaintiff,
L.A.V., Associates, LP (“LAV”, [which] owned the land upon which
the apartments were built), to develop and hold a successful
luxury apartment building. The building, Morrow Park City
Apartments, is on the corner of Bigelow Boulevard and Liberty
Avenue in the Shadyside/Bloomfield neighborhood of Pittsburgh.
L.A.V. contributed the land upon which the apartments were built
in consideration for a minority interest in MPCA.
The majority interest in MPCA is held by Defendant, V.G.
Morrow Park Capital, LLC (“VG Capital”), an entity controlled by
Morrow Park Holding, LLC (“Morrow Holding”). Village Green
Residential Properties, LLC (“VGRP”) and CCI Historic, Inc[.],
(“CCI”) in turn, share control of Morrow Holding and, through
these entities control MPCA. These entities were formed for the
specific purpose of developing and holding the Morrow Park
apartment complex.
In 2017, due to a deadlock between majority interest
holders in Morrow Holding, CCI and VGRP, MPCA was facing a
default on a 36.5 million dollar bank note. The note was the result
of the financing secured to construct the apartment building. The
Defendants could not agree on permanent refinancing to replace
the construction loan note and were holding each other hostage
in the process of refinancing. More importantly, however, the
majority interest holders were also holding LAV, the direct
minority interest holder, hostage as well. LAV had no interest in
the arm wrestling between the CCI entities and the Village Green
Entities (this contest over majority member interests in the MPCA
entities was and is pending in Delaware Chancery Court), but
certainly did not want to lose its investment to a foreclosure action
because of the majority deadlock. In the late Spring of 2017, this
management deadlock was preventing refinancing and default
under the terms of the note was imminent.
LAV petitioned this [c]ourt for the appointment of receiver
due to the deadlock in the majority ownership of MPCA, and this
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[c]ourt obliged. The receiver was designated by the [c]ourt as
“Special Master”1 and charged with immediately securing
financing to avoid default and subsequently charged to sell the
property to permanently resolve the deadlock, while at the same
time, maximizing the value of the asset and cashing LAV … out of
it[]s investment.
1 This [c]ourt appointed James D. Chiafullo, Esq. to be
the Special Master. Mr. Chiafullo is a Director at Cohen
& Grigsby and has practiced in the area of commercial
transactions for 37 years.
This [c]ourt’s [o]rder appointing the Special Master entered
on May 2, 2017 was appealed by the CCI parties to Superior Court.
CCI subsequently discontinued it[s] appeal on March 20, 2018.
After securing financing for the building and averting the
urgent financial issue, the Special Master was directed by the
[c]ourt on February 14, 2018 to proceed with the sale of the
building because the deadlock between the majority interest
holders was ongoing and had not abated nor had it been
adjudicated in Delaware.
After noteworthy procedural wrangling and significant effort
by the Special Master, the Morrow Park City Apartments were sold
to the CCI parties. VGRP, the losing bidder in the sale process,
now appeals this [c]ourt’s Order approving the Special Master’s
recommendation to sell the apartment building to CCI.
THE SALE PROCESS
On February 14, 2018, in an effort to resolve the deadlock
in the majority ownership of the MPCA entities and therefore
MPCA’s inability to function absent the continuing imposition of a
Special Master and the supervision of this [c]ourt, the Special
Master was directed by [c]ourt [o]rder to market the asset for sale
to a bidder making the highest and best offer to purchase the
building.
After vetting seven prominent Commercial Real Estate
Brokers, the [S]pecial Master engaged CBRE Capital Markets, Inc.
(“CBRE”)2 as the broker of record for the asset sale. CBRE
evaluated the property and advised the Special Master to list the
building for sale at $61,000,000.
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2 CBRE is the largest commercial real estate service
company in the world.
On July 13, 2018[,] VGRP through it[]s affiliate, City Club
Apartments, LLC, sent a Letter of Intent offering to purchase the
building for $58,500,000.00. In response, CCI sent a Letter of
Intent to buy the building at $58,750,000. CBRE [sought]
additional offers and received six additional offers. The Special
Master contacted these bidders requesting their best and final
offers. VGRP then submitted an offer purporting to match the CCI
offer at $58,750,000. Finally[,] CCI attempted a topping offer of
$58,850,000.
On September 28, 2018 the Special Master filed a
recommendation to approve sale of the building to VG[PR] for nine
different reasons,3 but primarily because even though VG[RP]
offer was $100,000.00 less than CCI’s final offer, the VGRP offer
was superior because of its favorable terms. VGRP’s terms
included that it was an all cash offer (CCI’s offer was partially
achieved through a promissory note), and did not include CCI
provisions regarding resolution of the ongoing litigation over
which neither the Special Master nor the seller had control.
Additionally, VGRP’s earnest money deposit of $1.5 million was
non-refundable which was more favorable than CCI’s earnest
money deposit of $1.2 million which was refundable. CBRE
concurred in the Special Master’s conclusion that the VGRP’s offer
was the best offer.
3The Special Master’s reasons for its recommendation
are as follows:
(i) City Club’s offer is superior to all but one of
the other offers in price[;]
(ii) Although City Club’s offer is $100,000 less
than Compatriot’s offer, City Club’s offer
contained more favorable terms[;]
(iii) City Club offer is all-cash, whereas
Compatriot’s offer involved a partial promissory
note;
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(iv) Compatriot’s offer also attempts to direct to
which entities the net sale proceeds of the sale
of the Asset would go;
(v) Specifically, Compatriot’s offer provides that
the net sales proceeds distributed to LAV
Associates, L.P.[,] would be funded by the seller
in cash, whereas the net sales proceeds to be
paid to VG Morrow Park Capital LLC would be
funded by a promissory note from Compatriot,
payable upon a judicial determination of the
proper distribution of the proceeds between its
members, unless the members of VG Morrow
park Capital agree upon the proper distribution
amongst themselves;
(vi) Compatriot’s offer also requires the
dismissal with prejudice of this case when the
net sale proceeds are distributed, a mutual
release between Morrow Park City Apartments
LLC, Compatriot, and LAV Associates, L.P., and
the termination of all duties of the Special
Master in connection with the Asset;
(vii) The proper distribution of the net sales
proceeds is the very subject of the litigation
between the parties, and the Special Master
lacks the authority to sell the Asset subject to
these contingencies[;]
(viii) Moreover, the use of a promissory note
between parties, rather than cash, creates
collection risk and may require further judicial
intervention to enforce; and
(ix) City Club’s earnest money deposit of $1.5
million (to be paid in two separate installments)
is nonrefundable, whereas Compatriot’s earnest
money deposit of $1.2 million is refundable in
the event that all of the aforementioned
conditions to closing do not occur.
Special Master’s Recommendation to Approve Sale of
Property, dated September 28th, 2018.
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CCI filed objections to the Special Master’s recommendation
on October 12th, 2018 and the [c]ourt held a hearing on
October 15, 2018. Following the hearing, the [c]ourt issued an
[o]rder approving the Special Master’s recommendations and the
sale to VGRP for $58,750,000 on the terms specified. On
October 18th, 2018, VGRP and MPCA entered into an Agreement
of Sale which required, among other provisions, that VGRP honor
its offer making a non-refundable down payment of $1.5 million;
$750,000.00 of which was due on October 21, 2018 with the
remaining $750,000.00 due on November 8, 2018. The
Agreement also provided that VGRP “understood and
acknowledged” that there was no right of inspection or a due
diligence period. The closing was set for November 19th, 2018,
with provision for a 30 day extension upon VGRP increasing its
non-refundable down payment by $500,000.00 to $2 million.
Despite its active participation in the sale process, CCI
appealed this [c]ourt’s [o]rder of October 15, 2018 approving the
sale of the Morrow Park City Apartment building to VGRP on
November 6, 2018, challenging the Special Master’s authority to
sell the building and also filed an Emergency Motion to Stay the
Sale pending the appeal.
On November 6, 2018, VGRP filed papers entitled
“Emergency Motion to Compel Access to Necessary Information
for Closing Relating to Morrow Park City Apartments, and for an
Order of Contempt against CCI Historic, Inc., VG ECU Holdings,
LLC and Compatriot Capital, Inc[.]” essentially complaining that it
had been denied access to the building to do “necessary
inspections”, despite the fact that it had specifically agreed that it
had no right to inspect.
Following a hearing on both CCI’s Motion to Stay and VGRP’s
Motion to Compel, this [c]ourt denied both motions effectively
clearing a path for the sale to close in favor of VGRP.
Curiously, VGRP on November 16, 2018 filed an Emergency
Motion to Stay the sale pending the CCI parties’ pending appeal
challenging the authority of the Special Master in which they
argued that CCI’s pending appeal in some manner invalidated the
VGRP/MPCA Sales Agreement. Compatriot immediately withdrew
its appeal on November 17, 2018, and then VGRP withdrew its
Emergency Motion to Stay on November 26, 2018.
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In the interim however, VGRP did not close on the sale of
the apartment building on the set closing date of November 19,
2018, nor did it extend the closing date under the terms of the
Sale Agreement by making the additional down payment of
$500,000.00.
On December 3, 2018, the Special Master notified VGRP that
it was in default of the Sales Agreement and because of its default,
the Seller terminated the Sales Agreement. The Special Master[]
also notified VGRP that it’s earnest money of $1.5 million was
being disbursed to the Seller.
Subsequent to default and termination of its Sales
Agreement on December 11, 2018, VGRP proposed an
amendment to the now terminated Sales Agreement permitting it
to do inspections that it claimed were necessary to obtain
financing and providing 45 additional days to close the transaction
without the payment of the additional $500,000.00.
In response to the proposed amendmen[t,] the Special
Master requested assurances from VGRP that it either had the
equity or had obtained financing sufficient to close the sale. The
Special Master received neither from VGRP and as a result, the
Special Master went back to seeking other purchasers for the
Morrow Park City Apartments.
On December 20, 2018, VGRP filed papers called a “Motion
to Amend and then Enforce Sales Agreement[“] which essentially
sought to have this [c]ourt reform the now terminated Sales
Agreement to include the amendment that it had proposed to and
that had been rejected by the Special Master. Very shortly
thereafter[,] CCI made a new offer to purchase MPCA on
December 28, 2018 for $57,500,000. The Special Master
recommended that CCI’s new and improved offer be approved by
the [c]ourt on January 8, 2019, for among other reasons,4
because CCI’s new offer was now an all cash offer without any
contingencies and CCI proposed to close within 21 days. CCI also
now agreed to assume the construction loan still outstanding on
the building and promised LAV … cash at the closing for [its]
minority interests.
4 The Special Master’s recommendation for approval
of sale to CCI was based upon the following reasons;
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(i) VGRP is in default of the VGRP Agreement
and, in any event, has provided no evidence of
the necessary equity or financing sufficient to
purchase the Asset;
(ii) the CCI is an all-cash offer that does not
require inspection or due diligence, nor does it
contain any contingencies;
(iii) CCI Historic has provided evidence to the
Special Master sufficient to prove that CCI
Historic has the wherewithal to close on the CCI
Offer;
(iv) although the CCI Offer is less than VGRP’s
offer, CCI has agreed to close the transaction
within 21 days, whereas; VGRP seeks 45
additional days, and the Special Master believes
that avoiding further delay in the Asset’s sale
would benefit Morrow Park City Apartments,
LLC;
(v) CCI Historic has agreed to assume the
$34,321,983 construction loan encumbering the
Asset and to provide the lender with a substitute
guarantor to replace Jonathan Holtzman,
whereas VGRP did not
so agree and would have to immediately obtain
a new loan;
(vi) Plaintiff LAV Associates, L.P. will receive
cash for their Morrow Park City Apartments, LLC
at closing.
Special Master’s Amended Recommendation to
Approve Sale of Property, dated March 4th, 2019.
Following a hearing on the Special Master’s Amended
Recommendations and VGRP’s “Motion to Amend” on January 31,
2019, the [c]ourt took the Motion to Amend and the Special
Master’s Recommendation under advisement and granted the
parties a short period of time to attempt to negotiate a settlement
of the matter. A settlement was not accomplished and ultimately,
this [c]ourt denied VGRP’s Motion to Amend and approved the
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even more favorable sale to CCI which newly provided that CCI
would pay off MPCA’s debt at closing rather than assuming it. The
[c]ourt approved the sale to CCI as recommended on April 1[2],
2019 …..
Trial Court Opinion, 1/27/20, at 1-7.
The trial court’s April 12, 2019 order on appeal provided, in relevant
part, as follows:
1. The October 18, 2018 sales agreement that the [c]ourt
authorized the Special Master to accept for Morrow Park City
Apartments, LLC (“MPCA”), on October 15, 2018, terminated on
its own terms by VGRP’s default of its obligations to close or pay
an additional $500,000 by November 19, 2018. Accordingly, the
Special Master’s March 5, 2019 Motion to Confirm Default is
granted, and VGRP’s December 20, 2018 Motion to Amend and
Enforce Sales Agreement is denied.
2. Pursuant to Paragraph 20 of the October 18, 2018 sales
agreement, MPCA is entitled to retain VGRP’s $1.5 million deposit
plus earned interest thereon (the “Down Payment”), which
represents appropriate and reasonable liquidated damages arising
from VGRP’s default and does not constitute an unlawful penalty.
See Palmieri v. Partridge, 853 A.2d 1076, 1080-81 (Pa. Super. Ct.
2004); Laughlin v. Baltalden, Inc., 159 A.2d 26, 29 (Pa. Super.
Ct. 1960); Kraft v. Michael, 70 A.2d 424, 425-26 (Pa. Super. Ct.
1950); and the cases cited therein. Accordingly, the Title
Company is ordered to immediately release and pay the Down
Payment to MPCA and shall not be liable to any party for its
compliance with this Order.
3. The Special Master’s March 5, 2019 recommendation for this
[c]ourt to approve the sale of Morrow Park City Apartments
(“Apartments”) to CCI Historic, Inc. under the terms of the sales
agreement (the “Offer”) attached hereto as Exhibit A is accepted.
The [c]ourt hereby authorizes the Special Master to accept the
Offer for MPCA and proceed to close the sale in accordance with
its terms.
4. The Compatriot Parties’ April 2, 2019 Motion to Approve
Proposed Distribution Schedule to Expedite Closing is granted.
The proposed distribution schedule attached hereto as Exhibit B is
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accepted. The Special Master is authorized to distribute the net
sales proceeds at closing to LAV and VG Morrow Park Capital, LLC,
in accordance with such schedule, subject to any adjustments that
may be required under the executed sales agreement or otherwise
to properly reflect the accounts as they appear on the actual
closing date. Absent written consent of both VGRP and the
Compatriot Parties, the Special Master shall pay the net sales
proceeds owing to VG Morrow Park Capital, LLC, including all
amounts currently held by MPCA, to the Delaware Chancery Court
for resolution of the disputes and claims between VG Morrow Park
Capital, LLC’s members.
5. Payment for Special Master Chiafullo as well as his reasonable
costs associated with this Order shall be made by MPCA from the
proceeds of the sale of the Apartments in accordance with the
process set forth in the prior Orders entered on February 14,
2018, May 2 and 3, 2017 and July 10, 2017.
6. VGRP’s February 25, 2019 Motions for Leave to File Complaint
under Seal and to Assign Case to the Commerce Case are granted,
and the Compatriot Parties’ March 9, 2019 Motion to Enforce the
[c]ourt’s February 14, 2018 Order is denied. VGRP may bring its
action against Morrow Park City Apartments, LLC, CCI Historic,
Inc., VG ECU Holdings, LLC, and Complaint Capital immediately,
and the record in that matter shall be sealed by the Prothonotary
to preclude public access to the docket and material of record,
including the initial filing of the Complaint. Once filed, VGRP’s new
action shall be assigned to the Commerce and Complex Litigation
Center, Judge Ward presiding.
Order, 4/12/19, at ¶¶ 1-6.
On April 18, 2019, VGRP filed a timely appeal, and on April 23, 2019,
the trial court directed VGRP to file a concise statement of errors complained
of on appeal pursuant to Pa.R.A.P. 1925. VGRP filed its Pa.R.A.P. 1925(b)
statement on May 14, 2019, and raised the following issues:
1. The trial court erred in its Order of Court dated April 1[2], 2019
(“April 1[2] Order”), by granting the Special Master’s Motion to
Confirm VGRP’s Default and by denying VGRP’s Motion to Amend
and Enforce Sales Agreement where CCI Historic, Inc. (“CCI”), VG
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ECU Holdings, LLC (“VG Holdings”) and Compatriot Capital, Inc.
(“Compatriot”) (collectively the “Compatriot Parties”) actively
interfered with the sale of the Property to VGRP;
2. The trial court erred in its April 1[2] Order by granting the
Special Master’s Motion to Confirm VGRP’s Default and by denying
VGRP’s Motion to Amend and Enforce Sales Agreement where
MPCA’s material default of the Sales Agreement occurred prior to
VGRP’s default;
3. The trial court erred in its April 1[2] Order by granting the
Special Master’s Motion to Confirm VGRP’s Default and by denying
VGRP’s Motion to Amend and Enforce Sales Agreement where the
court did not consider the complaint VGRP had sought leave to file
for specific performance against MPCA, did not conduct a hearing
on whether VGRP’s deposit could be forfeited as liquidated
damages and MPCA did not file an action against VGRP to hold it
in default under the Sales Agreement;
4. The trial court erred in its April 1[2] Order by granting the
Special Master’s Motion to Confirm VGRP’s Default and ordering
VGRP’s $1.5 million to be released to MPCA where the deposit
could only be forfeited as “liquidated damages”; and where MPCA
had not adhered the procedural predicates to secure damages,
established liability on the part of VGRP, or established that the
deposit constituted reasonable liquidated damages in the event
that it did establish liability;
5. The trial court erred in its April 1[2] Order by approving the
Second Amended Recommendation of Sale of the Property to CCI
and in approving the Proposed Distribution Schedule where:
a. the process by which the Special Master obtained CCI’s
offer to purchase the Property was conducted outside of the
bidding process, behind closed doors, and did not account
for MPCA’s failure to close on the Sales Agreement with
VGRP;
b. the sales price was $1.2 million less than VGRP’s offer;
c. the Special Master failed to provide the [c]ourt with
evidence that CCI was financially able to close the
transaction and misstated that VGRP did not have the
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financial ability to close, again without any evidence to
support that misstatement;
d. the court had VGRP’s complaint in which VGRP was
seeking the specific performance of MPCA to proceed with
the sale under the Sales Agreement.
VGRP’s Pa.R.A.P. 1925(b) Statement, 5/14/19, at 1-2. On January 27, 2020,
the trial court filed an opinion pursuant to Pa.R.A.P. 1925(a).
However, in its appellate brief, VGRP departs from the issues raised in
the Pa.R.A.P. 1925(b) statement and instead presents the following issues in
its statement of questions involved:
[A]. Did the trial court err by forfeiting VGRP’s entire down
payment to the seller?
[B]. Did the trial court err when permitting the Special Master to
sell the real estate to CCI when a sale to VGRP remained viable
and in the best interests of the seller?
VGRP’s Brief at 6. Confusing the issues further, VGRP attempts to expand on
these issues in the argument portion of its brief as follows:
A. VGRP Should Receive a Refund of its Down Payment.
1. The trial court overlooked the law of contract conditions
and materiality of breach.
2. VGRP did not forfeit its down payment because MPCA’s
appeal was a failure of a condition excusing VGRP’s duty to
close.
3. The Special Master’s failure to provide access to the
property excused VGRP from closing.
a) The extent to which the injured party will be
deprived of the benefit which he reasonably expected;
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b) The extent to which the injured party can be
adequately compensated for that part of the benefit
of which he will be deprived;
c) The extent to which the party failing to perform or
to offer to perform will suffer forfeiture;
d) The likelihood that the party failing to perform or
offer to perform will cure his failure, taking account of
all the circumstances including any reasonable
assurances;
e) The extent to which the behavior of the party failing
to perform or offer to perform comports with
standards of good faith and fair dealing.
4. Even if VGRP defaulted by failing to close, $1.5 million in
liquidated damages amounts to an unreasonable penalty.
B. The trial court erred by allowing the Special Master to sell the
real estate to CCI when a sale to VGRP remained viable and in the
best interests of the seller.
VGRP’s Brief at 26-38.
We note the disparity between VGRP’s statement of questions involved
and the headings of the discrete issues enumerated in the argument portion
of VGRP’s brief. Id. at 6, 26-38. See Pa.R.A.P. 2116(a) (providing that the
statement of questions involved must state concisely the issues to be resolved
without unnecessary detail and will be deemed to include every subsidiary
question fairly comprised therein; an issue will not be considered unless it is
stated in the statement of questions involved or is fairly suggested thereby);
see also Pa.R.A.P. 2119(a) (stating that the argument shall be divided into
as many parts as there are questions to be argued). Moreover, it is well
settled that any issues not raised in a court-ordered Pa.R.A.P. 1925(b)
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statement will be deemed waived on appeal. Commonwealth v. Castillo,
403, 888 A.2d 775, 780 (Pa. 2005); see also Lineberger v. Wyeth, 894
A.2d 141, 148 n.4 (Pa. Super. 2006) (noting that the principles enunciated in
criminal cases surrounding application of Rule 1925(b) and concise statements
of errors complained of on appeal apply equally to civil cases).
We are constrained to point out that our review is hampered by the
discrepancy between VGRP’s Pa.R.A.P. 1925(b) statement, which was
presented to the trial court, and the issues VGRP purports to raise in its
appellate brief. VGRP’s statement of questions involved and the sub-issues
later presented in the argument portion of the brief bear little, if any relation
to VGRP’s Pa.R.A.P. 1925(b) statement. The majority of VGRP’s issues in its
appellate brief never were presented to the trial court. For the reasons set
forth below, we deem these issues waived on appeal. See Pa.R.A.P.
1925(b)(4)(vii) (“Issues not included in the [Pa.R.A.P. 1925(b)] Statement ...
are waived.”); see also Pa.R.A.P. 302 (“Issues not raised in the lower court
are waived and cannot be raised for the first time on appeal.”). To the extent
that VGRP’s issues or sub-issues are fairly suggested by the statement of
questions involved and properly preserved for appeal, we attempt to address
them.3
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3 We also note that the trial court expressed its consternation with VGRP’s
failure to identify with specificity the issues it purported to raise on appeal and
concluded that it could not address issues of which it was not aware. Trial
Court Opinion, 1/27/20, at 9.
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In its brief, VGRP’s first issue and sub-issues concern the forfeiture of
its down payment made pursuant the October 18, 2018 agreement of sale
between VGRP and MPCA (“the agreement”). The issues concern the
interpretation of that contract. As such, the scope of our review is plenary,
and our standard of review is de novo. Michael and Linda, LLC v. Smith,
216 A.3d 262, 264 (Pa. Super. 2019).
VGRP contends that the trial court erred when it found VGRP in default
under the agreement and permitted MPCA to retain VGRP’s down payment of
$1.5 million. VGRP’s Brief at 26. VGRP then enumerates examples of the trial
court’s alleged errors. Id. at 26-36.
Relative to VGRP’s default as the buyer, the agreement provides as
follows:
20. Buyer’s Default. If Buyer shall default in performance of its
obligations under this Agreement, Seller’s sole remedy shall be to
waive any claim for loss of bargain, in which event the Down
Payment shall be retained by Seller as liquidated damages,
whereupon Buyer and Seller shall be relieved of all further liability
under this Agreement and this Agreement shall terminate
forthwith and be of no further force and effect, except for
obligations which expressly survive termination of this Agreement
and any indemnification obligations.
The Agreement, 10/18/18, at ¶ 20.
VGRP asserts that the trial court failed to weigh the “materiality” of its
breach. VGRP’s Brief at 26. In response, Appellees assert that VGRP did not
raise this issue before the trial court. Appellees’ Brief at 58. We agree and
conclude that VGRP never raised a claim concerning the materiality of the
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breach in its Pa.R.A.P. 1925(b) statement. Accordingly, this issue is waived.
Castillo, 888 A.2d at 780.
Next, VGRP alleges that it did not forfeit its down payment because
MPCA breached the agreement when it filed an appeal that later was
withdrawn. VGRP’s Brief at 31. However, VGRP failed to raise an issue
concerning MPCA filing an appeal in its Pa.R.A.P. 1925(b) statement.
Although, in a boilerplate fashion, VGRP did allege that MPCA was in default,
VGRP never informed the trial court what action or inaction constituted that
alleged default. Indeed, the trial court stated: “VGRP does not bother to
inform us what [its] claim of material default on the part of MPCA was. …
[T]his [c]ourt can[not] address something of which it is not aware.” Trial
Court Opinion, 1/27/20, at 9. We conclude that VGRP’s vague allegation of
error again results in waiver. See Satiro v. Maninno, 237 A.3d 1145, 1150
(Pa. Super. 2020) (a Pa.R.A.P. 1925(b) statement that is too vague to allow
the trial court to identify the issue results in waiver).
In its third sub-issue, VGRP alleges that the trial court erred in
concluding that VGRP was in breach because the Special Master failed to
provide access to the property. VGRP’s Brief at 32. This issue was not raised
in the VGRP’s Pa.R.A.P. 1925(b) statement. Accordingly, it is waived.
Castillo, 888 A.2d at 780. Nevertheless, although we conclude this issue is
waived, we note that in its opinion, the trial court pointed out that the
agreement specifically provided that VGRP was afforded no right to inspection
or due diligence. Trial Court Opinion, 1/27/20, at 5; The Agreement,
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10/18/18, at ¶ 5. VGRP’s argument concerning access to the property is a
benefit for which it did not bargain. However, insofar as VGRP now asserts in
its brief that having access to the property was an affirmative duty under ¶ 12
of the agreement, VGRP’s Brief at 14, that issue was not raised in VGRP’s
Pa.R.A.P. 1925(b) statement and is waived on appeal. Castillo, 888 A.2d at
780.
VGRP’s next sub-issues, (3)(a)-(e), enumerate factors from the
Restatement (Second) of Contracts concerning “materiality” of the breach that
the trial court allegedly failed to consider. VGRP’s Brief at 34-36. However,
as stated above, VGRP never mentioned the materiality of the breach before
the trial court. Moreover, VGRP did not raise the Restatement or any of its
factors in its Pa.R.A.P. 1925(b) statement. Therefore, we conclude that these
sub-issues are waived as well. Castillo, 888 A.2d at 780; Satiro, 237 A.3d
at 1150.
VGRP next contends that even if it defaulted by failing to close on the
sale of the property, forfeiting the $1.5 million down payment as liquidated
damages amounts to an unreasonable penalty. VGRP’s Brief at 36. Once
again, VGRP did not raise this issue in its Pa.R.A.P. 1925(b) statement.
Instead, VGRP alleged that the trial court erred in ordering VGRP’s $1.5 million
to be released to MPCA as liquidated damages “where MPCA had not adhered
[to] the procedural predicates to secure damages, established liability on the
part of VGRP, or established that the deposit constituted reasonable liquidated
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damages in the event that it did establish liability[.]” VGRP’s Pa.R.A.P.
1925(b) Statement, 5/14/19, at 2.
In its opinion, the trial court addressed this boilerplate issue as follows:
This [c]ourt held a hearing on April 10th, 2019 on the
Special Master’s March 5, 2019 recommendation to Approve the
Sale to CCI. In its Order of April 1[2], this [c]ourt approved the
sale to CCI and specifically confirmed the default of VGRP. VGRP
was given the opportunity to be heard on the issue of its default,
and it[s] unclear what other “procedural predicates” VGRP claims
were required.
Trial Court Opinion, 1/27/20, at 10. We reiterate that a Pa.R.A.P. 1925(b)
statement that is too vague to identify an issue results in waiver. Satiro, 237
A.3d at 1150.
However, assuming arguendo, that VGRP had properly preserved and
presented this issue on appeal, we would conclude that it is without merit.
Indeed, the trial court confirmed that VGRP forfeited its $1.5 million down
payment. Although VGRP contends that $1.5 million is an “illegal penalty,”
VGRP’s Brief at 36, were we to reach this issue, we would disagree.
This Court has opined:
Liquidated damages is a term of art originally derived from
contract law; it denotes “‘the sum a party to a contract agrees to
pay if he breaks some promise, and which, having been arrived at
by a good faith effort to estimate in advance the actual damage
that will probably ensue from the breach, is legally recoverable ...
if the breach occurs.’” In re Plywood Co. of Pa., 425 F.2d 151,
154 (3d Cir. 1970) (quoting Westmount Country Club v.
Kameny, 82 N.J.Super. 200, 197 A.2d 379, 382 (1964)). A
penalty, by contrast, is fixed, “not as a pre-estimate of probable
actual damages, but as a punishment, the threat of which is
designed to prevent the breach.” Westmount Country Club,
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197 A.2d at 382 (citing McCormick, DAMAGES § 146, pp. 599-
600). Thus, contracting parties may provide for pre-determined
liquidated damages in the event one party fails to perform,
particularly in circumstances where actual damages would be
difficult to estimate in advance or to prove after a breach occurs.
See Commonwealth v. Musser Forests, Inc., 394 Pa. 205,
213, 146 A.2d 714, 718 (1958); Kelso v. Reid, 145 Pa. 606, 611,
23 A. 323 (1892); RESTATEMENT (SECOND) OF CONTRACTS, §
356(1)(“Damages for breach by either party may be liquidated in
the agreement but only at an amount that is reasonable in the
light of the anticipated or actual loss caused by the breach and
the difficulties of proof of loss; a term fixing unreasonably large
liquidated damages is unenforceable on grounds of public policy
as a penalty.”). See generally Geisinger Clinic v. Di Cuccio,
414 Pa.Super. 85, 99, 606 A.2d 509, 516 (1992) (listing criteria
to differentiate liquidated damages from penalties).
Pantuso Motors, Inc. v. Corestates Bank, N.A., 798 A.2d 1277, 1282, (Pa.
2002). “Traditionally, a forfeiture that reflects nine percent, see Laughlin v.
Baltalden, Inc., 191 Pa.Super. 611, 159 A.2d 26 (1960), or ten percent, see
Kraft v. Michael, 166 Pa.Super. 57, 70 A.2d 424 (1950), of the purchase
price is not tantamount to a penalty.” Palmieri v. Partridge, 853 A.2d 1076,
1081 (Pa. Super. 2004).
Herein, the parties agreed that in the event of default, VGRP would
forfeit its down payment. The Agreement, 10/18/18, at ¶ 20. Moreover, the
$1.5 million down payment constituted substantially less than the nine or ten
percent forfeitures that this Court has not deemed penalties. Palmieri, 853
A.2d at 1081. Were we to reach this issue, we would conclude that VGRP’s
forfeited down payment, which represented approximately 2.6% of the $58.75
million purchase price, was not a penalty.
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In its final issue, VGRP asserts that the trial court abused its discretion
in permitting the sale of the property to CCI because a sale to VGRP remained
viable and in the best interests of the seller. VGRP’s Brief at 38. However, in
its brief, VGRP provided no citation to relevant authority to substantiate its
final claim of error. It is well settled that the “[f]ailure to cite relevant legal
authority constitutes waiver of the claim on appeal.” In re Estate of
Whitley, 50 A.3d 203, 209 (Pa. Super. 2012). Accordingly, we deem this
issued waived.
Were we to address this issue, we would affirm on the basis of the trial
court opinion, which addressed the issue as it was presented in VGRP’s
Pa.R.A.P. 1925(b) statement, as follows:
a) After the initial bids were placed, the Special Master proceeded
to negotiate with both CCI and VGRP to endeavor or close the best
deal for MPCA. Negotiation in the context of a sales process is the
norm, and there was no procedure in place or Order of Court that
prohibited the Special Master from communicating with each
potential buyer separately. That being said, it was apparent at
the [c]ourt hearings that both parties were consistently and
contemporaneously advised by the Special Master of all on going
negotiations.
b) This [c]ourt found and agrees with the Special Master and, his
broker, CBRE and that the CCI deal was the best offer for MPCA.
c) The Special Master did not state to the [c]ourt that VGRP did
not have the financial ability to close, but only stated to the [c]ourt
that the Special Master had requested and VGRP failed to supply
reasonable assurance that it had the financial resources to close.
The onus was on VGRP to produce evidence to the Special Master
and for whatever reason, it failed to do so.
d) The [c]ourt did indeed have VGRP’s Complaint Seeking Specific
Performance. VRGP had already defaulted and its Sales
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Agreement with MPCA had been terminated as of the Special
Master’s letter of December 3, 2019. Therefore, there was not an
agreement in existence upon which to Order specific performance.
CONCLUSION
The sale process utilized by the Special Master was a
success yielding the highest and best offer for MPCA, ending the
deadlock in it[s] ownership/management and producing the best
return for its owners. VGRP as the initial successful bidder had
every opportunity to buy the apartment complex under the terms
to which it had agreed. It[s] failure to do so does not create error
on the part of this [c]ourt.
Trial Court Opinion, 1/27/20, at 11.
For the reasons set forth above, we conclude that VGRP is entitled to no
relief.4 Accordingly, we affirm the April 12, 2019 order.
____________________________________________
4 Appellees assert that VGRP’s appeal should be dismissed as moot because
the apartment building was sold to CCI, the LAV defendant’s received their
distribution and cannot be made to return that payment, and VGRP did not
obtain a stay pending appeal. Appellees’ Brief at 41-46. Therefore, Appellees
claim that neither this Court nor the trial court has the authority to grant VGRP
relief. Id. at 44-46. Conversely, VGRP argues that despite the procedural
posture, the appeal is not moot. VGRP’s Reply Brief at 6. VGRP contends that
MPCA is the responsible party, the Special Master still holds $2.25 million in
escrow for outstanding liabilities, the LAV defendants were not a party the
agreement, and, pursuant to a public record search, CCI remains the owner
of the apartment building. Id. at 7-8 (citing VGRP’s Answer to Appellees’
Motion to Dismiss for Mootness). Thus, VGRP contends that this Court has
the authority to direct the payment of money and direct the transfer of title
to the property. Id. at 8. We note that “[a]n issue can become moot during
the pendency of an appeal due to an intervening change in the facts of the
case or due to an intervening change in the applicable law.” Deutsche Bank
Nat. Co. v. Butler, 868 A.2d 574, 577, (Pa. Super. 2005) (quotation
omitted). “An issue before a court is moot if in ruling upon the issue the court
cannot enter an order that has any legal force or effect.” Id. (citation
omitted). Because it appears that the facts of this matter have remained
unchanged, we do not find the appeal moot. Nevertheless, we conclude that
VGRP is entitled to no relief.
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Order affirmed.
Judge Musmanno joins the Memorandum.
Judge McLaughlin concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 04/21/2021
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