Opinion
Civil Action 03-5248.
June 4, 2004
ORDER
AND NOW, this day of June, 2004, upon consideration of the Defendant TC5 Grantor Trust's Motion for Summary Judgment (Document No. 14), it is hereby ORDERED that the Motion is GRANTED in part and DENIED in part as follows:
1) Defendant's motion for summary judgment as to Count I of Plaintiffs' Complaint is DENIED.
Summary judgment shall be granted where, viewing the record in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Michaels v. New Jersey, 222 F.3d 118, 121 (3d Cir. 2000); Jones v. School District of Philadelphia, 198 F.3d 403, 409 (3d Cir. 1999). Under Rule 56(c), a court is compelled to look beyond the bare allegations of the pleadings to determine if they have sufficient factual support to warrant their consideration at trial. Liberty Lobby, Inc. v. Dow Jones Co., 838 F.2d 1287 (D.C. Cir. 1988), cert. denied, 488 U.S. 825, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988); Aries Realty, Inc. v. AGS Columbia Associates, 751 F. Supp. 444 (S.D.N.Y. 1990). In considering a summary judgment motion, the court must view the facts in the light most favorable to the non-moving party and all reasonable inferences from the facts must be drawn in favor of that party as well. Troy Chemical Corp. v. Teamsters Union Local No. 408, 37 F.3d 123, 126 (3rd Cir. 1994); Williams v. Borough of West Chester, 891 F.2d 458, 460 (3rd Cir. 1989); U.S. v. Kensington Hospital, 760 F. Supp. 1120 (E.D.Pa. 1991).
In Count I of the Complaint, Plaintiffs seek various forms of declaratory relief based on their claim that they have overpaid the Jefferson Bank Loan ("construction loan") by $410,799.48. Plaintiffs' allegation that they have overpaid the construction loan is apparently based on two premises which are disputed by Defendant.
First, Plaintiffs allege that the construction loan in the amount of $5,560,000.00 included the funds necessary to pay the balance due on loans which had been previously made by the Bank of Chester County to Plaintiff Edward W. Weingartner, Jr. Plf.'s Complaint ¶ 27. The construction loan commitment letter references the Liquidation and Forbearance Agreement which restructured the terms and conditions of four existing loans, two of which are at issue here ("Existing Weingartner Indebtedness"). The commitment letter provides that, at the Lender's discretion, a portion of the construction loan and sale proceeds from each of the townhouse units could be allocated towards repayment of the "Existing Weingartner Indebtedness." The commitment letter also provides that the price for release of the lien on each individual townhouse unit includes a payment of $101,000 (subsequently modified) towards the construction loan and an additional payment of $7,500 to be applied to the "Existing Weingartner Indebtedness." We do not believe that these provisions suggest that the construction loan superseded the "Existing Weingartner Indebtedness."
Turning to the Construction Loan Agreement, it states that the proceeds of the loan are to be used to "finance certain site improvements, other fees and costs, and the construction of up to fifty-four (54) single family homes." Nowhere does the Loan Agreement provide that the loan included funds to pay the balance on the "Existing Weingartner Indebtedness." We note, however, that paragraph 4 of the Loan Agreement provides that the Lender has the right to satisfy obligations of the Borrower to the Lender, including obligations unrelated to the construction project, directly with fund advances. While Plaintiff has not specifically alleged that Defendant applied fund advances to satisfy the "Existing Weingartner Indebtedness," Defendant has not provided the Court with any information regarding when and for what purposes construction loan funds were advanced. Furthermore, even subtracting the $7,500 release payment per unit (54 units total) to be applied to the "Existing Weingartner Indebtedness" from the total payments made by Plaintiff, Plaintiff's payment records indicate payments totaling $5,565,799.00 ($5,970,799.42-$7,500 × 54). For the reasons stated below, there is a genuine issue of fact as to whether payments totaling this amount constitute an overpayment of the construction loan.
Plaintiffs' second premise underlying their overpayment claim is that the construction loan included funds to pay the interest and other fees charged by the Bank in connection with the Loan. Plf.'s Complaint ¶ 26. Defendant denies that the loan included such funds. The Promissory Note states that "[the Borrower] promises to pay . . . the principal sum of Five Million Four Hundred and Sixty Thousand Dollars ($5,460,000.00) (subsequently increased to $5,560,000.00 by the March 7, 1997 Note Modification), or so much thereof as may be advanced by Lender pursuant to a certain Construction Loan Agreement . . . together with interest from the date hereof on the unpaid principal balance advanced until repaid in full. . . ." The Construction Loan Agreement provides that advances shall be disbursed in accordance with the budget attached to the Agreement. The budget allocates a portion of the construction loan to an "Interest Reserve" and "Fees and Costs." Again, this Court is without information as to whether this budget was followed, and if it was followed, we are unable to discern the meaning of "Interest Reserve" and "Costs and Fees" as intended by the loan documents.
Furthermore, the Court would ask the Defendants to reconcile their assertion that the "total debt owed" by Plaintiffs as to the principal on the construction loan is $6,107,119.00 (a figure apparently arrived at through calculation of the payments of the release prices for the units as stated in the original note and in subsequent note modifications) with the Promissory Note and Mortgage and Security Agreement which state the principal amount of the loan to be $5,460,000.00 and subsequently increased to $5,560,000.00. It is also unclear whether the modified release prices included the $7500 to be paid toward the "Existing Weingartner Indebtedness."
Therefore, taking the evidence in the light most favorable to the Plaintiffs, we find that there are genuine issues of fact that preclude us from entering summary judgment at this time.
2) Defendant's motion for summary judgment as to Count II of Plaintiffs' Complaint is GRANTED.
Plaintiffs allege that as security for repayment of the construction loan, Defendant retained possession of a $100,000 Certificate of Deposit that had been previously pledged by Plaintiff Weingartner as security for repayment of a loan and line of credit which he had obtained from a Jefferson Bank predecessor, the Bank of Chester County. Plf.'s Complaint ¶ 19. Plaintiffs also allege that another $100,000 Certificate of Deposit was delivered to Jefferson Bank as additional security for repayment of the construction loan. Plf.'s Complaint ¶ 20. Upon review of the loan documents, this Court has found no mention of these Certificates of Deposit as security for repayment of the construction loan. Because Plaintiffs have not come forth with any evidence supporting this claim, we GRANT Defendant's Motion for Summary Judgment with respect to Count II of Plaintiff's Complaint which seeks return of the Certificate of Deposits and an award of damages for Defendant's alleged unjust retention of the two Certificates of Deposit.
3) Defendant's motion for summary judgment as to Count III of Plaintiffs' Complaint is GRANTED.
Count III of Plaintiffs' Complaint seeks damages under 21 P.S. §§ 681-682 for Defendants' failure to release from escrow proceeds from the sale of the last unit and to mark certain mortgages as satisfied. Plaintiffs have not alleged when or in what manner they requested Defendant enter satisfaction pieces on these mortgages as required under sections 681-682. See O'Donoghue v. Laurel Savings Ass'n, 728 A.2d 914, 556 Pa. 349 (1999). At this summary judgment stage, it is incumbent upon Plaintiffs to put forth some evidence of this request. Furthermore, the statute relied upon by Plaintiffs was repealed in December 2002, and replaced by the Mortgage Satisfaction Act, 21 P.S. § 721-1, et seq. Section 721-6(d) provides that in order for a mortgagor to be entitled to damages for the mortgagee's failure to present for recording a satisfaction piece, the mortgagor must deliver to the mortgagee a written request for the satisfaction piece. Plaintiffs have not alleged, nor provided evidence, that such a written request was made. We therefore GRANT Defendant's motion with respect to this claim.
4) Defendant's motion for summary judgment as to Count IV of Plaintiffs' Complaint is GRANTED with the exception of Plaintiffs' claim relating to Defendant's failure to release escrow funds.
In Count IV, Plaintiffs seek damages for breach of contract based on the Defendant's alleged failure to (1) properly credit payments made by Plaintiff Windon Country Homes following the sale of various townhouses, (2) return the two Certificates of Deposit, (3) release the escrow funds, and (4) mark the mortgages satisfied. Defendant's Motion is GRANTED with respect to Plaintiff's claim for breach of contract, with the exception of Plaintiff's claim relating to Defendant's failure to release escrow funds. The motion is granted with respect to Defendant's alleged failure to properly credit payments made by Plaintiffs because Plaintiffs have failed to present any evidence to support this claim. The motion is granted with respect to the two CDs for the reasons stated in note 2 supra. The motion is granted with respect to the mortgage satisfactions for the reasons stated in note 3 supra, as well as 21 P.S. § 721-6(d)(4) which provides that an action under that section is the exclusive remedy for failure of a mortgagee to issue and present for recording a satisfaction piece. The motion is DENIED with respect to release of the escrow funds because there are genuine issues of material fact regarding repayment of the construction loan.
5) Defendant's motion for summary judgment as to Counts I, II, and III of its counterclaims is DENIED.
Defendants move for summary judgment as to their counterclaims which allege that Plaintiffs are in default under the Promissory Note ("Construction Loan") and the Liquidation and Forbearance Agreement ("Existing Weingartner Indebtedness"). This Court finds that summary judgment cannot be entered on this record. In addition to the issues of fact identified in note 1supra, this Court finds Defendant's evidence of "payment histories" on these loans to be wholly inadequate to support their motion for summary judgment. The Court has been provided with no information to support the accuracy or authenticity of these "payment histories," or information regarding the manner in which they were generated. We therefore DENY Defendant's motion for summary judgment as to its counterclaims.