Firetree, Ltd. v. Dept. of Gen. Services

• Decision Date: 30 July 2009
• Docket Number: No. 956 C.D. 2008,956 C.D. 2008
• Citation: 978 A.2d 1067
• Parties: FIRETREE, LTD., Petitioner v. DEPARTMENT OF GENERAL SERVICES, Respondent.
• Court: Pennsylvania Commonwealth Court

978 A.2d 1067

FIRETREE, LTD., Petitioner v. DEPARTMENT OF GENERAL SERVICES, Respondent.

No. 956 C.D. 2008

Commonwealth Court of Pennsylvania.

Submitted on Briefs September 19, 2008.

Decided July 30, 2009.

Daniel F. Schranghamer, Williamsport, for appellant.

David L. Narkiewicz, Asst. Chief Counsel and Harry R. Walter, III, Asst. Counsel, Harrisburg, for appellee.

BEFORE: PELLEGRINI, Judge, and LEAVITT, Judge, and McCLOSKEY, Senior Judge.

OPINION BY Judge LEAVITT.

Firetree, Ltd. petitions for review of an adjudication of the Board of Claims (Board) granting summary judgment to the Department of General Services (Department) on Firetree's breach of contract claim. Firetree asserts that the Department breached two oral settlement agreements by which the Department agreed to convey real property to Firetree and its affiliate, New Foundations, thereby causing Firetree to suffer damages in the form of lost rental income and lost profits. Concluding, inter alia, that the Statute of Frauds prohibits enforcement of oral contracts for the conveyance of real property, the Board granted judgment to the Department. Discerning no error, we affirm.

This case arises from Firetree's 2004 effort to purchase the Laurelton Center, located in Union County, from the Commonwealth. On April 6, 2005, Firetree filed an original jurisdiction action with this Court to compel the Department to convey Laurelton Center to Firetree and to restrain the Department from transferring the Laurelton Center property to anyone else. Firetree, Ltd. v. Department of General Services (Pa.Cmwlth., No. 165 M.D.2005, filed November 3, 2005). This Court transferred Firetree's contract claim to the Board, which the Board dismissed for the reason that the contracts in question had never been executed by the Secretary of General Services. This Court affirmed. Firetree, Ltd. v. Department of General Services, 920 A.2d 906 (Pa. Cmwlth.2007).

Prior to filing its 2005 original jurisdiction action with this Court, Firetree undertook to settle the Laurelton Center matter, as well as a dispute that its affiliate, New Foundations, Inc., had regarding the Commonwealth's alleged promise to sell it property on Arch Street in Philadelphia. On April 6, 2005, Governor Edward G. Rendell and representatives of the Department met with Allen Ertel and representatives of Firetree and New Foundations. First Amended Statement of Claim, ¶ 60 (Claim, ___). Firetree contends that the meeting resulted in a settlement that contained all the material terms needed to effect a valid and binding contract among the Department, Firetree and New Foundations. In essence, the so-called "April Settlement Agreement" required the Department to convey Laurelton Center to Firetree and the Arch Street property to New Foundations. Claim, ¶ 84.¹ The terms of this settlement were not reduced to writing.

When the closing on the April Settlement Agreement did not occur, Firetree initiated its April 2005 action against the Department. However, the parties undertook new settlement discussions in August of 2005. Claim, ¶ 105. Firetree contends that in this second round of discussions, the Secretary of General Services, James Creedon, and Ertel settled the April 2005 litigation. Claim, ¶ 107. In essence, this second settlement, the so-called "Creedon Settlement Agreement," required the Department: to convey the Arch Street property to New Foundations; to lease the Arch Street property from New Foundations; and to lease Danville State Hospital to Firetree. Claim, ¶ 108.² Again, however the Department did not execute a written agreement.³ Claim, ¶ 113.

On March 5, 2006, Firetree filed the present claim with the Board, seeking to recover its lost profits, lost rental income and increased operating expenses caused by the Department's breach of both the April Settlement Agreement and the Creedon Settlement Agreement.⁴ The Department filed an answer with the Board, denying that a settlement had been reached on April 6, 2005, or at any point thereafter. Department Answer, ¶¶ 80, 84, 108, 109. In new matter, the Department asserted several affirmative defenses to Firetree's claims including, inter alia, the Statute of Frauds and sovereign immunity.

Thereafter, the Department filed a motion for summary judgment asserting that: (1) the Board lacked jurisdiction to hear disputes arising from oral agreements; (2) the alleged settlement agreements, which purported to convey fee simple and leasehold interests in real estate, were unenforceable because they had not been reduced to writing as required by the Statute of Frauds; and (3) the parties had never reached a meeting of the minds on the essential terms of a settlement.

Firetree did not respond to the merits of the Department's motion for summary judgment. Instead, it opposed the Department's motion on the basis that additional discovery was needed to determine whether the parties had reached a meeting of the minds in April and later in August of 2005. The Rules of Civil Procedure provide in relevant part that:

An adverse party may supplement the record or set forth the reasons why the party cannot present evidence essential to justify opposition to the motion and any action proposed to be taken by the party to present such evidence.

PA. R.C.P. No. 1035.3(b). Firetree argued that it needed more discovery, which precluded a grant of summary judgment.

Because it was undisputed that there were no agreements reduced to writing, the Board concluded that discovery was unnecessary, at least with respect to the Statute of Frauds basis for the Department's summary judgment motion. Firetree's Statement of Claim was founded upon the Department's agreements to sell or lease real property to Firetree and New Foundations and the Department's unrebutted evidence confirmed that these agreements had not been reduced to writing. Accordingly, the Board concluded that there were no material facts in dispute on the question of whether Firetree's claims were barred by the Statute of Frauds. Indeed, the Board went further, concluding that it lacked jurisdiction to enforce any oral settlement agreement, regardless of its subject matter. In accordance with these conclusions, the Board dismissed Firetree's claim with prejudice, and the present appeal followed.

On appeal,⁵ Firetree presents three issues for our consideration. First, Firetree argues that the Board erred in entering summary judgment before the close of discovery. Second, it contends that an oral agreement to convey and lease real property can be enforced, notwithstanding the Statute of Frauds. Third, it contends that the Board has jurisdiction to enforce an oral settlement agreement.⁶

On the first issue, we conclude that the Board was correct that it could reach a decision on the merits of the Department's motion for summary judgment even though Firetree sought more discovery. This is because with respect to the Statute of Frauds issue decided by the Board, the only relevant factual issue was whether the agreements were written.⁷ Firetree's witness admitted in his deposition that "[t]here were no written agreements." Firetree's Answer to Motion for Summary Judgment, Exhibit D, at 246.

The Rules of Civil Procedure apply to matters before the Board of Claims, and they provide that the adverse party must respond to a motion for summary judgment within 30 days. PA. R.C.P. No. 1035.3.⁸ The response may not rest solely on allegations in the pleading but must produce evidence contravening evidence cited by the moving party. Firetree sought to avoid the 30-day response obligation by asserting it needed to continue discovery in order to determine "whether the parties came to a meeting of the minds on either or both agreements." Firetree's Answer to Motion for Summary Judgment, ¶ 5. Its effort in this regard, however, is unavailing.

The Department's Statute of Frauds defense was able to be decided on Firetree's allegations in its pleadings and on Firetree's admission that the agreements were not written. This is true also with respect to Firetree's second argument, i.e., that notwithstanding the Statute of Frauds, an action for damages can proceed when there is a breach of an oral agreement that creates an interest in real estate. Therefore, the Board did not err in considering the merits of the Department's motion, notwithstanding Firetree's request for more discovery.

We turn, then to the merits of the Board's decision, i.e., that the Statute of Frauds barred Firetree's action. The Statute of Frauds states as follows:

From and after April 10, 1772, all leases, estates, interests of freehold or term of years, or any uncertain interest of, in, or out of any messuages, manors, lands, tenements or hereditaments, made or created by livery and seisin only, or by parol, and not put in writing, and signed by the parties so making or creating the same, or their agents, thereunto lawfully authorized by writing, shall have the force and effect of leases or estates at will only, and shall not, either in law or equity, be deemed or taken to have any other or greater force or effect, any consideration for making any such parol leases or estates, or any former law or usage to the contrary notwithstanding; except, nevertheless, all leases not exceeding the term of three years from the making thereof; and moreover, that no leases, estates or interests, either of freehold or terms of years, or any uncertain interest, of, in, to or out of any messuages, manors, lands, tenements or hereditaments, shall, at any time after the said April 10, 1772, be assigned, granted or surrendered, unless it be by deed or note, in writing, signed by the party so assigning, granting or surrendering the same, or their agents, thereto lawfully authorized by writing, or by act and operation of law.

The Act of March 21, 1772, 1 Sm.L. 389, 33 P.S. 1 (emphasis added). In short, unless a contract for the lease of property for a term longer than three...