Fiore v. Oakwood Plaza Shopping Center, Inc.

• Decision Date: 15 January 1991
• Parties: Leonard S. FIORE, Sr., et al., Appellee, v. OAKWOOD PLAZA SHOPPING CENTER, INC., Joseph H. Aronow, Anthony Galioto, Appellants. (Two Cases)
• Court: Pennsylvania Superior Court

Page 1012

585 A.2d 1012

401 Pa.Super. 446

Leonard S. FIORE, Sr., et al., Appellee, v. OAKWOOD PLAZA SHOPPING CENTER, INC., Joseph H. Aronow Anthony Galioto, Appellants. (Two Cases)

Superior Court of Pennsylvania.

Argued Oct. 11, 1990.

Filed Jan. 15, 1991.

Roy A. Powell, Pittsburgh, for appellee.

Before POPOVICH, HUDOCK and MONTGOMERY, JJ.

POPOVICH, Judge:

This case involves an appeal from the October 2 and 18, 1989, orders of the Court of Common Pleas of Centre County dismissing the defendants/appellants' rules to show cause and holding them in contempt of court. We affirm.

To appreciate the result we reach in the case, a detailed account of the events leading to the present appeal is necessary. Toward that end, the record indicates that Saul Waxman, a real estate broker in central Pennsylvania, was approached by a Doctor David Hadden in regard to property he wished to sell in Centre County. Mr. Waxman, at all times thereafter, represented the partnership of FL & S Associates. ¹

Waxman made contact with Joseph Aronow and Anthony Galioto, both New York residents, who showed interest in purchasing the land in question and constructing a shopping center on the site.

The parties had agreed, at least at first, that the purchase price was to be paid in cash. However, Mr. Aronow altered his position and wanted a subordinated purchase money mortgage to be issued. To this, FL & S agreed without objection. To accommodate Mr. Waxman, the FL & S group offered to secure the payment of the balance of his commission (he had been paid $27,000.00 and could have been owed, depending on the square footage of the center when completed, up to $70,000.00) by assigning him a 6% interest in the mortgage FL & S held on the property sold to the defendants as their security for the remaining monies to be paid.

To validate the sale of the the property between the parties, an indenture with Bond and Warrant, along with an accompanying addendum, were executed by the defendants and FL & S. Both the Bond and Warrant and Mortgage documents contained confession of judgment clauses authorizing acceleration of payment of the $1.1 million purchase price plus attorney's fees upon default of the prescribed monthly payments of principal and interest.

Upon failure of the defendants to make payments as required by the various documents the plaintiffs filed a complaint in confession of judgment demanding a total of $1,216,145.00 (in principal, attorney's commission and 9% interest as of August 26, 1989) from the defendants for "default[ing] ... under the terms of ... [a] Bond and Warrant ... to make agreed upon payments" calculated as $9.00 per square feet times total interior square footage on permit for building less $700,000.00 but not less than $750,000.00. The document was dated December 23, 1986, and executed by Anthony Galioto, as President of Oakwood Plaza Shopping Center, Inc., and individually as did Joseph M. Aronow. The $700,000.00 figure, however, did not appear anywhere in the "form" Bond and Warrant document. Rather, attached thereto was an "addendum" in which the defendants agreed to:

... pay to Obligee [plaintiffs] one-half of the entire principal amount of the obligation secured hereby[*] The entire principal then be due and payable on or before four months after the Commencement date; and *such principal amount is calculated as nine ($9.00) Dollars/per square foot times total interior square footage on permit for building less seven hundred thousand dollars but not less than $750,000.00.[ ²

By notice of even date, the prothonotary of Centre County entered judgments in favor of the plaintiffs and against each of the defendants, separately. Pursuant to Pa.R.Civ.P. 4006, 4009 and 4019, the plaintiffs requested of the defendants that they produce various documents and respond to interrogatories for the discovery of assets to aid in the execution of the judgments.

On January 6, 1989, the plaintiffs filed Motions to Compel and For Sanctions for failure of the defendants to answer interrogatories and/or produce documents. On May 10, 1989, a petition to open or strike judgment was filed by Joseph M. Aronow and Anthony Galioto. It was alleged therein that, on December 16, 1986, the plaintiffs had agreed to sell and the defendants to buy a parcel of land. In furtherance of the sale, the succeeding instruments were signed: (a) agreement of sale with rider; (b) purchase money mortgage with addendum; and (c) warrant with addendum.

It was the contention of the defendants that the plaintiffs had obligated themselves to "obtain all necessary approvals from authorities having jurisdiction over the site for use ... as a shopping center ... and to obtain building permits." Paragraph 10. Further, the defendants averred that the plaintiffs, by way of agreement, were to provide: (a) all municipal water and sanitary sewers; and (b) a road around the perimeter of the site for ingress and egress with water, storm and sanitary sewer pipe lines. Paragraphs 12 and 15.

The plaintiffs were held to have failed to comply with any of the "condition[s] precedent to the payments to become due under the Note." Paragraph 24. Because the addendum (which was recorded with the mortgage) took precedence over the Note, and the former was not attached to the Note when confession of judgment was made, it was the defendants' position that the Note was "not collectible" and unenforceable for the "[P]laintiffs' fail[ure]" to give material consideration as they promised as an inducement to obtain the Note. Paragraphs 35, 37 and 39. The defendants also argued that, because the principal balance due to the plaintiffs under the addendum to the Note was "based on a formula using the total interior square footage as shown by the building permit," the complaint's failure to set forth the square footage permitted by the building permit, or that it was ever issued, justified striking the confession of judgment. Paragraphs 42 and 43.

At this point, it requires that we recite the substance of the Agreement of Sale signed by the interested parties hereto and dated July 14, 1986, with respect to the 14.8 acres of land situate in Patton Township, Centre County. In Paragraph 1, the parties provided that, as a condition to the contract, the plaintiffs/sellers:

... shall obtain approval by all necessary authorities having jurisdiction over the site for use of the site as a Shopping Center or Strip of no less than 161,200 square feet and no more than 200,000 square feet ground coverage for interior commercial space useable for retail shopping.

That said approval shall include provision for municipal water, municipal sanitary sewers to within 50 feet of the site, and acceptable storm sewers or collection pools, all with the right to install, hook-up and utilize at no additional cost or expense for construction other than normal hook-up fees, connecting pipes of up to 50 feet and on-site storm pipes and pool constriction.

As for the purchase price, it was to be computed based on the square footage of the shopping center to be used for commercial space times $9.00. Paragraph 5. Affixed to the Agreement of Sale was a Rider that took precedence over the Agreement of Sale and required that the plaintiffs/sellers: "present all prepared engineering and architectural studies to local authorities for approval of the exact site plan required by [defendants/]Purchaser." Paragraph 9.

A motion to strike the petition of Joseph M. Aronow and a response thereto were filed. In the latter instrument, the plaintiffs averred that judgment was entered properly based on the defendants' default. The plaintiffs denied that the Agreement of Sale and Rider "were pursuant to any offer" by the plaintiffs. Paragraph 8. And, the allegations in Paragraphs 10, 12, 21 and 27 of the defendants' petition were claimed to be "misstatements of said agreement." Also, the plaintiffs denied not obtaining all necessary approvals and refuted the contention that they had any obligation to obtain building permits. Paragraphs 11, 15, 16, 22, 25, 30, 39, 40 and 43. Lastly, the plaintiffs admitted that the terms of the addendum were incorporated as part of the Bond and Warrant, see Paragraphs 29 and 32, but it was denied that the "Bond and Warrant" was incomplete, altered or failed to include the addendum. Paragraphs 31, 34 and 35. As for the lack of consideration on the obligation to provide a road for ingress and egress, this was denied as well by the plaintiffs. Paragraphs 15 and 39.

In support of the motion in opposition to the petition to open or strike judgment, the affidavits of David Sweetland and Harry K. Sickler, Jr. were submitted by the plaintiffs.

Sweetland's affidavit indicated that, between 1981 and 1986, he was township engineer for Patton Township, Centre County, and was familiar with all regulations required in connection with land development in that area. As is applicable here, he was involved with the "planning for and obtaining approvals in connection with the Oakwood Plaza Shopping Center Development." Paragraph 4. Sweetland also averred that the defendants had taken court action in the Supreme Court of New York, County of New York. There, Sweetland submitted responses, under oath, in support of his Motion For Summary Judgment In Lieu Of Complaint And In Opposition To Defendants' Cross Motions.

Sweetland's affidavit, prepared for presentment before and submitted to the Supreme Court of New York to buttress his motion for summary judgment, indicated that he was hired to perform engineering and consulting services for Joseph M. Aronow and Anthony Galioto with regard to the construction of a shopping center on the 14.8-acre site in Patton Township, Centre County. The architectural and buildings plans were to be prepared by CDA International, Inc. for Aronow and Galioto. Paragraph 9. It was never Sweetland's understanding that FL & S Associates was responsible for or in any way involved...