Opinion
Civil Action No. 18440
Date Submitted: October 10, 2001
Date Decided: November 27, 2001
Daniel R. Losco, Esquire, of LOSCO MARCONI, Wilmington, Delaware, Attorney for Plaintiff(s).
Leo John Ramunno, Esquire, of LAW OFFICE OF LEO JOHN RAMUNNO, Wilmington, Delaware, Attorney for Defendant.
MEMORANDUM OPINION
In this action, the parties to a sale-leaseback transaction (the "Sale-Leaseback") have asked the court to determine precisely which parcels of land were conveyed to the original owner/lessor, and which were retained by the purchaser/lessee. The principal source of conflict is the ownership of a concrete block building on the property located at 242 South DuPont Highway, Smyrna, Delaware (the "Route 13 Property" or "Property"). Plaintiff Carriage Realty Partnership ("Carriage Realty" or "Carriage"), the original owner of the entire Route 13 Property, contends that consistent with the prior understanding and previous contracts of the parties, the building was leased back to it as part of the Sale-Leaseback. Defendant All-Tech Automotive, Inc. ("All-Tech"), through its principal Anthony M. Favazza, maintains that the building was sold to All-Tech but never leased back to Carriage, thus placing ownership in the hands of All-Tech.
Based upon my evaluation of the survey maps admitted into evidence as joint exhibits, as well as the testimony, evidence of prior understandings, and contractual undertakings of the parties, I find that Carriage Realty did lease the block building. I also reject All-Tech's several arguments challenging the validity of the Sale-Leaseback, grant Carriage Realty's motion for permanent injunctive relief, and order that All-Tech refrain from entering upon the challenged premises.
Carriage Realty also seeks an order to compel All-Tech to remove a portion of a fence that intrudes upon certain of their leased-back property. I find that while Carriage's permission to allow All-Tech to build the fence partially on their leasehold was a revocable license; Carriage has not demonstrated why All-Tech should pay for the fence's removal.
I. Introduction A. The Route 13 Property
John Gambacorta is a general partner of Carriage Realty, an entity he owns jointly with his father. While Carriage Realty currently owns several pieces of real estate, it was formed in 1986 as a vehicle to acquire one parcel: the Route 13 Property. When acquired, the site was home to an auto dealership, which was later sold. When the dealership ceased operations, Carriage Realty decided to subdivide and sell a portion of the Property.
Though his father owned a one-half interest in Carriage Realty, John Gambacorta was Carriage's singular voice with respect to this dispute. Thus, I use the name "Gambacorta" to refer to John Gambacorta.
Though it is a single tax parcel, the Route 13 Property is comprised of three contiguous sections of land. The first, upon which the auto dealership was formerly housed, is a triangular section of land bounded by Rt. 13 and East Street (the "Triangular Parcel"). The second is a swath of land bounded by East and Locust Streets (the "Middle Parcel"). In the northeastern corner of the Middle Parcel sits a concrete block building (the "Block Building"). The final section of the property, a rectangular piece of land due east of Locust Street (the "Tower Parcel"), houses a cellular communications tower enclosed by a chain-link fence.
Gambacorta's understanding was that he needed to gain subdivision approval from the Town of Smyrna before a portion of the Property could be sold separately from the rest. He intended to sell off the Triangular Parcel, site of the former dealership, as well as a western portion of the Middle Parcel abutting East Street not including the Block Building.
B. Favazza Contracts to Buy a Portion of the Route 13 Property
In an agreement of sale dated December 21, 1998, Carriage Realty, with the help of real estate agent Albert DiClemente, agreed to sell the above-referenced portion of the Route 13 Property to Anthony Favazza for $185,650. Though the closing was not scheduled to occur for several months, Favazza was granted possession of the premises under a lease-purchase arrangement in early January of 1999.
Favazza, a skilled auto mechanic, is described by himself and his business associates as an unsophisticated man with poor reading skills. In the months before purchase, his auto repair business was displaced from its previous location by a highway construction project. He planned to use his new property as the site of his business.
Included by reference in the agreement of sale was a drawing marked. "Exhibit A," an unscaled rendering by Gambacorta of the property to be conveyed. In it, Gambacorta drew hatch marks across the diagram to indicate that the Triangular Parcel and the western portion of the Middle Parcel, not including the Block Building, were to be included in the deal. The easterly portion of the Middle Parcel (including the Block Building) and the Tower Parcel were not "shaded in" as part of the conveyed land.
The agreement further stipulated that the parties "[had] read and do fully understand" the attached exhibits, and had initialed each page of the exhibits as evidence of such understanding. JX 1, § 18. The initials of neither party appear on the attached Exhibit A, however.
After executing the agreement, Favazza moved in as a lessor. While engaging in a "walk-through" with Gambacorta, he asked for — and was granted — permission to erect a fence on the Middle Parcel.
C. The Parties Enter Into a Second Agreement
Complications arose following the execution of the agreement. On his end, Favazza found himself unable to obtain the financing needed to complete the purchase. On the other, Gambacorta discovered that in order to gain subdivision approval, he would have to provide access to the Block Building on an improved ( i.e., paved) road. To address the problems on both sides, the parties entered into a second agreement of sale on February 26, 1999.
That agreement differed from the first in only two material respects. First, to cure his financing problems, Anthony Favazza added his father Vincent as a party to the sale. Second, to solve the issues associated with the subdivision and gain access to the Block Building, Gambacorta carved out a 50-foot right-of-way across the "bottom" portion of the Middle Parcel — in essence, converting the land he would receive in the Middle Parcel from a "block" to something resembling an L-shaped swath. The price remained the same.
The problems did not end there, however. In the subdivision approval process, Gambacorta had become embroiled in a dispute with the Town of Smyrna over their decision to make approval contingent upon sidewalk and curbing improvements to the property. The improvements, Gambacorta contends, would have cost nearly $40,000 to implement and (arguably) been uneconomic in view of the overall value of the Route 13 Property.
D. The Sale-Leaseback Transaction
As a way around the Town's requirements, the Gambacorta camp devised a plan to put each party in possession of the lands it wanted without subdividing the property. The proposal was the Sale-Leaseback transaction, whereby Carriage would deed the entire Route 13 Parcel to Favazza. Simultaneously, Carriage Realty would enter into a lease for the portions of the property it wanted to keep for itself.
The plan also included a provision under which Carriage could purchase the land it had leased should it receive subdivision approval under terms more to its liking.
Though the notion of entering into such an agreement had been bounced around for several days, it was not until the parties convened on July 16, 1999 — ostensibly for settlement — that Favazza and his attorney, Frederick Funk, were fully briefed on the specifics of the plan. The settlement meeting took place at the office of Favazza's attorney, and included Funk; Anthony and Vincent Favazza; Gambacorta and his father; DiClemente; Gambacorta's attorney, Michael Goodrick; and a representative from the mortgagee bank.
The meeting was something of a mess. In addition to hearing the plan for the first time, Anthony Favazza and his counsel faced the unexpected contingency of having to file papers on the spot in order to incorporate the entity they had hoped to establish to complete the transaction — the company that came to be known as All-Tech. In addition, there was discussion about precisely what land would be leased back, with Carriage Realty focused primarily on ensuring that it would be able to lease the tower and its surrounding property. Because of these complications, the actual settlement was rescheduled for July 20, 1999.
Apparently, Favazza's lender insisted that the business be incorporated as a condition of financing.
Gambacorta's focus on the tower was understandable, as it was under lease to Comcast Corp. and generating a monthly revenue stream.
At the second meeting, Carriage Realty and All-Tech executed, among other things, an agreement of sale and a lease. Section 4 of the agreement stated that the property to be sold was "outlined in yellow on [the] attached" exhibit. At settlement, Goodrick prepared and distributed several copies of a land survey prepared by Robert Larrimore (the "Larrimore Survey"), with the areas to be leased back to Carriage shaded by hand with a yellow highlighting pen. Little if anything was explicitly said about the Block Building. For his part, attorney Funk testified that he did not even know of the Building's existence at that time.
JX 22, § 4.
Funk Dep. at 16.
It is undisputed that the Route 13 Property was conveyed to All-Tech, with a portion simultaneously leased back to Carriage for a 30-year term with a 30-year renewal option. It is also undisputed that Carriage was to pay a nominal $10 a month in rent, and the property taxes on the Property were to be split 40%-60% between Carriage and All-Tech, respectively. Both parties further agree that All-Tech is the owner of the Triangular Parcel, and that Carriage leased back the Tower Parcel.
What is in dispute is whether the Middle Parcel, including the Block Building, was leased back to Carriage. Carriage Realty asserts that the highlighted surveys prepared by Goodrick — which included yellow shading over both the Tower Parcel and the L-shaped swath in the Middle Parcel — were distributed to all parties at settlement, agreed upon, and accepted as the final understanding of the parties to the transaction.
Under the shaded surveys favored by Carriage Realty, then, All-Tech retained ownership of the Triangular Parcel and the land situated in the northwest corner of the Middle Parcel, extending from East Street to a survey line. Simultaneously, Carriage Realty leased back the Tower Parcel and the L-shaped portion of the Middle Parcel, which included the Block Building.
Defendant All-Tech, on the other hand, asserts that contrary to the prior negotiations of the parties, the Middle Parcel in its entirety belongs to it. This assertion is largely based on alleged conversations between DiClemente and Lawrence P. Gillen, Jr., Favazza's longtime friend and business associate, with whom Favazza entrusted his more complicated business decisions. Gillen argues that he had threatened to have Favazza sue Gambacorta for failing to consummate the second sales agreement. Using the threat of a lawsuit as leverage, he claims to have extracted a concession for Favazza under the Sale-Leaseback: the entire Middle Parcel, including the Block Building. In support of his claim, All-Tech has produced a shaded Larrimore Survey of its own — one which is highlighted only over the area of the Tower Parcel.
E. Dougherty Moves Into the Block Building
It was not until a year after the transaction that this dispute blossomed. After the sale, Carriage Realty continued to use the Block Building as a storage facility for Gambacorta's property. Favazza claims he permitted this use out of generosity. In addition, pursuant to a discussion he had with Gambacorta around the time of the first agreement of sale in January 1999, Favazza erected a fence that partially encroached upon Carriage's 50-foot right-of-way.
Neither party's briefs or trial presentations were helpful regarding precisely when the fence went up. Testimony from several sources in this case suggests it was sometime in the summer of 2000. It is clear, however, that it was built some months after the July 20, 1999 settlement.
The relationship took a sharp downward turn after Gambacorta permitted his friend Charles Dougherty to set up shop temporarily as an auto mechanic in the Block Building in October of 2000. That transient arrangement took on a more permanent character in April of 2001, when Gambacorta subleased the Building to Dougherty for one year.
When Favazza discovered that a competitor had set up on lands he purportedly thought he owned, he called his lawyer to complain. On October 18, 2000, with the assistance of local police, Favazza and Gillen confronted Dougherty and demanded that he vacate the Block Building. The police directed that Dougherty remain out of possession until granted permission to return. This court has previously granted a preliminary injunction in favor of Carriage Realty, permitting Dougherty to re-occupy the Building and requiring All-Tech to refrain from interfering with that use. Carriage Realty now comes before the court seeking permanent injunctive relief to restrain All-Tech from entering upon these premises and to have the fence removed from the right-of-way at All-Tech's expense.
II. Discussion A. The Evidence Supports Carriage Realty's Theory
The dispute hinges to a large extent upon the factual determination of which shaded version of the Larrimore Survey was intended to reflect the understanding of the parties at the time of closing. While a document memorializing the Sale-Leaseback was filed with the Kent County Recorder of Deeds, no exhibit delineating the parties' respective interests was filed.
JX 11.
Tr. at 130-31.
The evidence presented by the parties, coupled with the prior understanding of the parties as evidenced by their previous contractual undertakings, leads me to conclude that Carriage Realty did in fact lease back the L-shaped parcel, including the Block Building.
As part of the joint exhibit binder prepared for trial, versions of the Larrimore Survey were submitted from the files of four different individuals: Funk, Goodrick, DiClemente, and Favazza. The surveys were shaded in one of two ways: either with yellow highlighting over the L-shaped portion of the Middle Parcel (the "Goodrick version") or without (the "Favazza version").
JX 8, 9, 10, 20.
Of the four sources submitting surveys, three submitted copies of the Goodrick version. Not surprisingly, two of those surveys are from the files of Goodrick and DiClemente. What is surprising — and significant, in my view — is that four separate copies of the Goodrick version were taken from the files of Favazza's own lawyer, Frederick Funk, during a deposition in this case. Thus, there existed several copies of a document in Funk's file that directly support Gambacorta's contention — and directly contradict Favazza's own.
JX 9 and 10.
JX 8.
At trial, Funk was asked if the documents were taken from his file. He answered affirmatively. He was then asked if those documents "were the very same documents that were presented to you at the settlement on July 20, 1999 as being the agreed area to be leased back to Carriage Realty?" He again answered yes.
Tr. at 190.
Id.
By contrast, the only pieces of evidence All-Tech has produced to support its position are its own copy of the Larrimore Survey, with yellow highlighting over only the Tower Parcel, and Gillen's testimony that he used the threat of a lawsuit as leverage to extract an implicit oral commitment from DiClemente in the days before settlement that All-Tech would retain the entire Middle Parcel.
JX 20.
Even if true, Gillen's testimony does not conclusively support Favazza's contention that All-Tech would keep the Middle Parcel. Rather, Gillen merely testified that based on his conversations with DiClemente, he assumed that ownership of the Middle Parcel would remain with All-Tech. But the only parcel specifically discussed in these negotiations was the Tower Parcel:
Q: And in that third call with Mr. DiClemente, exactly what did he say to you?
A: They were going to retain the tower and the land. Mr. Favazza would retain everything else. That was their main concern, was the revenue on the tower . . .
* * *
Q: Your assumption, then, is that Mr. DiClemente meant to exclude the Block Building [from the lease back to Carriage Realty] when he said those words to you. Correct?
A: Absolutely.
Q: The Block Building wasn't discussed in conversation three. Correct?
A: No.
Q: So that you had to assume that the Block Building would stay with Tony and not go to Carriage Realty. Correct?
A: Yes.
* * *
Q: Except you didn't ever talk about the Block Building with DiClemente. Correct?
A: All we talked about was the tower, with the land.
I also find Gillen's testimony less than credible in light of the meetings that followed his supposed meeting of the minds with DiClemente. After the conversation with DiClemente, Gillen purportedly told Favazza that All-Tech would receive the Middle Parcel and Block Building. Yet Gillen — who had a close, almost fiduciary-like relationship with Favazza — chose to attend neither the July 16 nor July 20 meetings. Instead, he sent the supposedly unsophisticated Favazza off to settlement with his lawyer, Funk, who according to Funk's own deposition, was "not even aware" of the Block Building's existence at that time. That behavior is inconsistent with Gillen's testimony that his zealous work on behalf of his friend led to DiClemente's concession. If Gillen was so intent on protecting Favazza and ensuring that his hard-fought concession was honored, why did he not attend the closing? And if Gillen knew he was not going to attend, why did he not ensure that Favazza's attorney memorialized the deal with DiClemente in the formal closing documents?
Funk Dep. at 16.
In sum, the most logical reading of the evidence suggests that at best, Favazza was mistaken in any impression he had that All-Tech kept the Middle Parcel. I give more credence to the testimony of Gambacorta, Goodrick, and Funk, who all testified to the effect that the Sale-Leaseback was crafted to put the parties in roughly the same position they would have been in had the first agreement of sale gone through. DiClemente stated that based on his dealings with Gambacorta, the Tower Parcel and the area surrounding the Block Building "[were] always to be retained by Carriage Realty." The goal, according to Gambacorta, was that
Tr. at 230.
[T]his was supposed to go through just like the way we had planned it from day one. There was not going to be a significant change other than the way that I was going to retain use of the block building and the tower and that was through a lease agreement, [a] leaseback rather than a sub-division. It was perfectly clear. Everyone in the room understood it.
Tr. at 35.
This conclusion is logical in the context of the previous documented intentions of the parties. It is a maxim of modern contract law that when an ambiguity exists in a contract, courts may look to the prior course of conduct of the parties to assist in determining its meaning.
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., Del. Supr., 702 A.2d 1228, 1233 (1997); see also RESTATEMENT (SECOND) OF CONTRACTS § 212, cmt. c (1981); 3A CORBIN, CORBIN ON CONTRACTS § 543 (1960).
While not conclusive, the prior dealings of the parties provide useful insight into their intentions. Favazza and Gillen both acknowledge that Favazza agreed to purchase the land depicted in Exhibit A in the first agreement of sale. They understood that Exhibit A did not include either the Block Building or the easterly portion of the Middle Parcel. While there is some dispute over whether the second agreement of sale incorporated a second survey providing for the 50-foot right-of-way, the fact remains that Favazza and Gillen both thought they were getting substantially the same land under that contract as under the first agreement of sale — which did not include the Block Building. For all these reasons, I conclude that Carriage Realty is the lessor and rightful possessor of the L-shaped portion of the Middle Parcel, including the Block Building.
See Gillen Testimony, Tr. at 312; Favazza Testimony, Tr. at 404.
Section 18 of both agreements of sale state that "Pages marked A through D are hereby incorporated as an integral part of this NCCBOR Agreement of Sale. Buyer and Seller acknowledge that they have read and do fully understand pages A through D and have initialed each page as evidence of this." In neither of the first two agreements of sale did the respective parties initial the survey map in Exhibit A.
B. All-Tech's Attempts to Invalidate the Transaction are Unavailing
Having so concluded, I now turn to All-Tech's arguments challenging the Sale-Leaseback transaction. All-Tech first argues that the transaction is invalid under the premise that Favazza lacked corporate authority to bind the company, because he "signed the [Sale-Leaseback] Agreement without a corporate resolution or any meeting [or] vote." This curio us argument essentially asserts that Favazza's own failure to follow the requisite formalities before entering into the Sale-Leaseback provides him with an ultra vires argument to nullify the transaction.
Def. Post-Tr. Br. at 1.
All-Tech's Certificate of Incorporation, filed on July 16, 1999, shows Anthony Favazza as the sole director of the company. Favazza also attested that he is the company's sole shareholder. He is also All-Tech's President, and believes himself to have appointed his father as the only other officer of the company.
JX 21 at § 6.
See e.g., A. Favazza Aff., Ex. H of App. to All-Tech Ans. Br. in Opp. of Mot. for Prelim. Inj. at § 1; A. Favazza Aff., Ex. G. of App. to Carriage Realty Op. Br. in Sup of Mot. for Prelim. Inj. at 4. Despite these statements, Favazza — who testified that he knows nothing about the intricacies of business — probably never issued such stock. But the fact that he was the only individual in July of 1999 who could have issued stock pursuant to § 4 of All-Tech's Certificate of Incorporation is enough to show that he was essentially the only individual who had an economic stake in the company.
Because Anthony Favazza had apparent authority to bind All-Tech under the Sale-Leaseback, the formal status of Vincent Favazza as an officer is ultimately irrelevant.
Thus, for all intents and purposes, Anthony Favazza is All-Tech. As such, at the very least, he had the apparent authority to bind that entity under the Sale-Leaseback. An individual who serves as President, sole director, and sole shareholder of a corporation cannot cause that corporation to deny the validity of an action he took on its behalf on the grounds that he lacked corporate authority.
Anthony and Vincent Favazza were both present at both the July 16 and July 20 settlement meetings. Simply put, it was not Carriage Realty's responsibility to ensure that the two individuals holding themselves out as All-Tech had the authority to enter into the Sale-Leaseback transaction. To the extent All-Tech has a claim against Anthony Favazza himself for acting outside the scope of his authority, it is free to bring it.
See, e.g., 8 Del. C. § 124, which reads, in pertinent part, that "[n]o action of a corporation and no conveyance or transfer of real or personal property to or by a corporation shall be invalid by reason of the fact that the corporation was without capacity or power to do such an act or to make or receive such conveyance or transfer . . ."
All-Tech next asserts that the Sale-Leaseback is invalid for lack of consideration. Its argument appears to be as follows: the parties had a valid contract under the second agreement of sale that was not contingent upon Carriage Realty obtaining subdivision approval. The later Sale-Leaseback, All-Tech implies, was effected as a way to avoid the Town of Smyrna's decision to require improvements. While under the transformation All-Tech gave up certain rights, among them its right to sue Carriage Realty to compel them to close, Carriage itself supposedly gave up nothing in consideration for the new transaction.
I disagree. The Sale-Leaseback agreement represented a compromise by all the parties to the second agreement of sale — and as such, all parties gave up something of value. In choosing to enter a later agreement which provided that Carriage would lease portions of the Route 13 Property from it, All-Tech gave up its right to seek enforcement of the second agreement of sale. Under the compromised transaction, Carriage Realty also gave up something of value: its ability to free itself entirely of All-Tech's property interests by choosing not to honor the second agreement of sale.
Of course, had Carriage Realty chosen to back out of that second agreement, All-Tech could have brought an action to compel specific performance — a suit All-Tech might well have won. Strong as All-Tech's case may have been, however, Carriage Realty still maintained the right to take the position that it was not legally required to complete the sale, on grounds of commercial impracticability. Under our system of law, Carriage Realty's forsaking this right, and its concomitant opportunity to "wash its hands" of the second agreement, constitutes adequate consideration — however risky the foregone course of action might have been.
See e.g., 17A Am Jar 2d CONTRACTS § 135 ("[C]ourts do not ordinarily go into the question of equality or inequality of considerations, but act upon the presumption that parties capable to contract are capable of regulating the terms of their contracts, granting relief only when the inequality is shown to have arisen from mistake, misrepresentation, or fraud."); see also Affiliated Enterprises, Inc v. Waller, Del. Supr., 5 A.2d 257, 260 (1939).
Next, All-Tech argues that even though Carriage was never billed, the lease is in default because plaintiff failed to pay the $10 annual rent and its portion of the taxes. This argument is rebutted by the plain language of Title 25, Chapter 57 of the Delaware Code, which requires owners or landlords seeking to recover possession of a premises to bring a summary proceeding in a Justice of the Peace Court closest to the leased premises that handles civil cases.
25 Del. C. § 5701 (2000). While commercial leases are generally excluded from the provisions of the Delaware Landlord-Tenant Code, Chapter 57 of Title 25 — which requires summary proceedings in the event of lease default — is specifically applicable to commercial leases by the plain language of 25 Del. C. § 5101(b).
The parties dispute whether the nominal $10 rent was paid during the first year of the lease. That issue is immaterial. What is important is that defendants have not brought a summary default proceeding under Chapter 57 of the Landlord-Tenant Code. There is no self-help remedy under Delaware law that allows a landlord to unilaterally declare a lease default and terminate lease rights without a magistrate's order. Unless and until a landlord institutes such a proceeding and wins, and the tenant fails to cure the default, the lease remains valid.
For instance, as under a good-faith dispute for rent pursuant to 25 Del. C. § 5716.
I assume that after this litigation is resolved, All-Tech and Carriage Realty will come up with a commercially sensible approach to ensuring prompt rental and tax payments.
All-Tech's final two arguments are also unavailing. First, its contention that there was a oral understanding that Carriage Realty would not rent the land to a competitor is not supported by credible evidence. All-Tech's assertion that "no one explained the document[s] to [Favazza]" is similarly without merit. I do not credit the argument that Favazza was so unsophisticated that he did not understand the substance of the transaction. While it may be true that Favazza had trouble reading and comprehending complex matters, I find that he at least had the capacity — with his attorney and his father at his side — to read a simple shaded survey at settlement and understand what parcels were to be conveyed to him.
Def. Let. Br. at 6.
For whatever reason, All-Tech chose not to have Vincent Favazza testify to support its case.
All-Tech asserts, however, that equitable considerations should compel this court to treat the license as a non-revocable interest in land. There is considerable divergence of authority as to when a court may treat a license as non-revocable under principles of equity. Adding to this muddle is the fact that neither party to this case adequately addressed this issue in their factual presentations or legal arguments.
Under this broad rubric, All-Tech specifically asserts that the doctrine of laches precludes Carriage Realty from revoking their license. Because Carriage sought a preliminary injunction against All-Tech in November of 2000, only a few months after the fence was erected, I find this argument to be unavailing.
See ARNOLD O. GINNOW AND MILORAD NICOLIC, 53 C.J.S. LICENSES § 96 (1987).
Based on the sparing amount of pertinent Delaware case law as well as the particular equities of this case, I conclude that Carriage Realty can revoke All-Tech's license for that part of the fence intruding upon its right-of-way. By contrast, Carriage has failed to convince me that All-Tech should bear the expense of removal. The reasons for these conclusions follow.
First, there is some authority outside this jurisdiction for the proposition that a license may be transformed into a non-revocable interest in land ( e.g., an easement) when the licensee has acted under the license in good faith, and has incurred expense in the execution of it. The venerable Delaware cases which have addressed this issue have taken a narrower view. They suggest that absent evidence of intent to create an enduring privilege or fraud, a parol license is freely revocable by the licensor.
Id.; see also Kovach v. Gen. Telephone Co. of Pennsylvania, 489 A.2d 883, 885 (Pa.Super. 1983); Murduck v. City of Blackwell, 176 P.2d 1002, 1011 (Okla. 1947).
See Baynard, 77 A. 885 (1910) (Absent evidence of intent to create an enduring privilege, misrepresentation of fact, or other evidence of bad faith, principles of equitable estoppel are inapplicable, and license to use sewer pipe through licensor's property is revocable, even though licensee expended money pursuant to license and agreement was advantageous to both parties); Jackson Sharp Co. v. Philadelphia, Wilmington Baltimore R.R., Del. Ch., 1871 WL 2084 (Sept. Term 1871) (Although the licensee had expended money and would suffer considerable hardship by revocation of license to connect car works with licensor's railroad track, equitable estoppel does not apply absent fraud or intent to create enduring right. As the court stated, "Hardship is not a ground for equitable relief, except in favor of one who, without any negligence in securing his rights by the appropriate legal modes, has been misled to his prejudice through some fraud . . . or by such conduct of the latter as renders it an act of bad faith to take advantage of the mistake." Id. at *8.)
Neither fraud nor evidence to create an enduring privilege are present here. It appears to be All-Tech's argument that when Gambacorta and Favazza discussed placement of the fence sometime around the first agreement of sale, the parties understood that it would stand in that mutually-agreed-upon location at least until the property was subdivided and sold off. Unfortunately for All-Tech, there is no evidence to suggest that such an agreement was forged. Rather, All-Tech seems to have extracted nothing more than an indefinite promise to permit construction of the fence. Under our case law, this is insufficient to create a property right in the hands of All-Tech.
Nor do the equities of this case compel a different conclusion. The original license was granted in early 1999; the July, 1999 transformation of the transaction into a Sale-Leaseback represented a significant departure from that previous understanding. By the time the July 20, 1999 settlement came around, All-Tech knew that the fence they had planned to construct would, under the terms of the new agreement, impede on Carriage's right-of-way. Even with that knowledge, it chose to erect the fence anyway without any consultation with Carriage Realty about whether the fence's location should be changed. Having done so, All-Tech cannot compel this court under the guise of equity to protect its reckless act.
That said, the fact that the license is revocable does not logically mean that All-Tech must pay for the removal of the encroaching portion of the fence. Rather, while Carriage has asked this court for an order seeking All-Tech to remove the fence at its own expense, it has not cited any authority mandating such a result. While Carriage may have the right to revoke the license at any time, it stood by and let All-Tech erect an expensive fence designed to last for years. My sense of equity therefore suggests that Carriage should bear the costs of removal. I give effect to this sense in view of Carriage's failure to cite legal authority compelling a contrary outcome.
One on-point (though admittedly obscure) case cited above suggests the opposite conclusion. The action which spurred litigation in Jackson Sharp Co. was an effort by the licensor railroad to remove the railroad tracks granted to plaintiffs under a parol license. That is, the licensor sought permission to pull up the tracks itself 1871 WL 2084 at *1.
I also encourage Carriage to consult with All-Tech regarding the manner of removal and for both parties to consider with cool heads and warm hearts whether a more rational solution than removal might exist.