Glen Willow Properties v. Industrial Orchards Land
Glen Willow Properties v. Industrial Orchards Land No. 1334 EDA 2016
| Pa. Super. Ct. | Apr 24, 2017Background
- Orchards agreed to sell a Bucks County parcel to Glen Willow for $5,000,000; Glen Willow paid a $150,000 non‑refundable escrow deposit and was to post a $1,000,000 letter of credit after zoning approval.
- Parties orally agreed to an amendment: waive the letter of credit and give Glen Willow a one‑year option to extend the approvals period for $200,000 payable on or before June 8, 2007; a written Amendment was later signed by both parties but did not include the explicit one‑year language.
- Orchards’ general partner, Choudhury, later claimed the Amendment had been altered (removing the one‑year limitation); Orchards voided a $200,000 cashier’s check Glen Willow sent to exercise the option and terminated the Contract after Glen Willow failed to produce the letter of credit.
- Glen Willow sued for specific performance and recorded a lis pendens; Orchards counterclaimed for breach and damages. Orchards also sued JPMC (issuer of the cashier’s check) for payment; JPMC sought indemnification from Glen Willow. Actions were consolidated and tried nonjury.
- Trial court found Glen Willow breached the Contract, awarded Orchards the $150,000 escrow plus $733,333.33 based on pro‑rated $200,000/year from June 2007 to Feb 2011 (when the lis pendens was struck), and ordered JPMC to pay $200,000 (with JPMC indemnified by Glen Willow for fees and the $200,000). The Superior Court affirmed the $150,000 award, reversed the extra damages and the $200,000 payment by JPMC, but affirmed JPMC’s recovery of attorneys’ fees from Glen Willow.
Issues
| Issue | Orchards' Argument | Glen Willow's Argument | Held |
|---|---|---|---|
| Whether fraud/tort findings could underpin relief for the disputed Amendment | Orchards alleged Glen Willow procured the Amendment by fraudulent alteration and Orchards reasonably relied on it | Glen Willow said there was no misrepresentation to induce signature and mutual mistake/vitiated consent barred enforcement | Court: Claims arise from the contract; gist‑of‑the‑action bars fraud/tort theory so treat as contract dispute; trial court erred to base contract relief on fraud findings |
| Whether Glen Willow breached by failing to post the $1,000,000 LOC and whether the $200,000 option was effective | Orchards: Glen Willow failed to post LOC, the cashier’s check was voided by Orchards so no valid exercise; Orchards properly terminated | Glen Willow: Attempted to exercise the Option; if Amendment was mutually mistaken, enforcement and damages were improper | Court: Glen Willow breached by failing to deliver LOC; the cashier’s check was voided so Option not exercised; Orchards properly terminated |
| Whether damages beyond liquidated escrow (reformation/pro‑rated $200,000/year and lis pendens‑based award) were available | Orchards sought reformation and pro‑rated recovery tied to the lis pendens period (value of extension) | Glen Willow argued contract limited remedies to escrow liquidated damages under ¶17; extra damages barred | Court: Contract ¶17 limited seller’s recovery to escrow as liquidated damages; trial court erred to award additional $733,333.33 or to reform Amendment and base damages on lis pendens |
| Whether Glen Willow must indemnify JPMC for the $200,000 cashier’s check and for JPMC’s attorneys’ fees | JPMC: Indemnification arises from Glen Willow’s account agreements and UCC protections for stale cashier’s checks; alternatively indemnity in account terms | Glen Willow: Stop‑payment affidavit limited indemnity to checks stopped within 90 days; UCC §3312 contains no indemnification provision for the bank | Court: Reverse indemnity for $200,000 (no JPMC liability to Orchards because check was voided); affirm indemnity for JPMC’s attorneys’ fees and costs under the parties’ general account indemnity provision |
Key Cases Cited
- Allegheny Energy Supply Co., LLC v. Wolf Run Min. Co., 53 A.3d 53 (Pa. Super. 2012) (standard of review for nonjury trial findings and legal conclusions)
- Wyatt, Inc. v. Citizens Bank of Pennsylvania, 976 A.2d 557 (Pa. Super. 2009) (appellate review of nonjury trial conclusions of law)
- Hart v. Arnold, 884 A.2d 316 (Pa. Super. 2005) (gist‑of‑the‑action doctrine bars tort claims grounded in contract)
- eToll, Inc. v. Elias/Savion Adver., 811 A.2d 10 (Pa. Super. 2002) (articulation of gist‑of‑the‑action test)
- Step Plan Servs., Inc. v. Koresko, 12 A.3d 401 (Pa. Super. 2010) (contract interpretation is a question of law reviewed de novo)
- Empire Properties, Inc. v. Equireal, Inc., 674 A.2d 297 (Pa. Super. 1996) (purpose of contract damages is to compensate and place injured party in position but for breach)