Gior G.P., Inc. v. Waterfront Square Reef, LLC

• Decision Date: 14 January 2019
• Docket Number: No. 805 C.D. 2017,805 C.D. 2017
• Citation: 202 A.3d 845
• Parties: GIOR G.P., INC., the General Partner of and trading as Gior, LP, Piers 36-39 North Management Reef, Inc., the General Partner of and Trading as Isle of Capri Associates Reef, LP, Appellants v. WATERFRONT SQUARE REEF, LLC, Waterfront Square Condominium Association, GH Property Management, LLC v. Isle Capri Associations, LP
• Court: Pennsylvania Commonwealth Court

202 A.3d 845

GIOR G.P., INC., the General Partner of and trading as Gior, LP, Piers 36-39 North Management Reef, Inc., the General Partner of and Trading as Isle of Capri Associates Reef, LP, Appellants

v.WATERFRONT SQUARE REEF, LLC, Waterfront Square Condominium Association, GH Property Management, LLC

v.Isle Capri Associations, LP

No. 805 C.D. 2017

Commonwealth Court of Pennsylvania.

Argued: November 13, 2018

Decided: January 14, 2019

Reargument Denied March 6, 2019

David P. Heim, Philadelphia, for appellants.

Jason M. Yarbrough, Pittsburgh, for appellees.

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION BY PRESIDENT JUDGE LEAVITT

Gior G.P., Inc., the general partner of Gior, L.P. (Gior), and Piers 36-39 North Management Reef, Inc., the general partner of Isle of Capri Associates Reef, L.P. (IOC-Reef), appeal an order of the Court of Common Pleas of Philadelphia County granting summary judgment to Waterfront Square Reef, LLC (Waterfront), Waterfront Square Condominium Association (Association), and GH Property Management, LLC.¹ In so ruling, the court held that Gior did not hold an ownership interest in certain parking licenses associated with a condominium project, which were sold by IOC-Reef after the condominium was foreclosed. For the following reasons, we affirm.

Background

The facts are undisputed. In July 2006, Isle of Capri Associates, L.P. (IOC) created a condominium complex, known as the Waterfront Square Condominium (Master Condominium), by recording a declaration of condominium (Master Declaration) under the Pennsylvania Uniform Condominium Act (Condominium Act).² The Master Declaration provided for the development of five undeveloped pad sites, i.e ., Pad Units 1 to 5. Phase I called for IOC's construction of two condominium towers, called the Peninsula and the Regatta, and a parking garage on Pad Units 1 and 2. The Master Declaration provided that the parking garage was a common element of the Master Condominium and that IOC, as declarant, or "the declarant of such residential condominiums, if not [IOC]," may grant parking licenses to the purchasers of the condominium units. Reproduced Record at 33a (R.R. ––––). Phase II called for the construction of a tower, called the Reef, on Pad Unit 3 by IOC-Reef. In April 2009, IOC-Reef recorded a declaration under the Condominium Act for the Reef Condominium (Reef Declaration). IOC planned to construct additional towers on Pad Units 4 and 5, to be known, respectively, as the Horizon and the Tides; these two pad sites were never developed.

In May 2007, IOC borrowed $39,265,840 from Union Labor Life Insurance Company (Lender) to finance construction of the condominium complex. The mortgage agreement (IOC Mortgage Agreement) identifies "mortgaged property" as follows:

2.1.1 All that certain Pad Unit 3 (as defined in the [Master Declaration] ) in the Master Condominium and the undivided twenty percent (20%) ownership interest in the Common Elements appurtenant to Pad Unit 3 under the terms of the [Master Declaration], all as more particularly described in Exhibit "A" attached hereto and made a part hereof,^{[3 ]} upon which Mortgagor intends to construct a residential condominium project to be known as the Reef Condominium and Spa at Waterfront Square (hereinafter collectively referred to as the "Reef Pad Unit");

2.1.2 All that certain Pad Unit 4 (as defined in the [Master Declaration] ) in the Master Condominium and the undivided twenty percent (20%) ownership interest in the Common Elements appurtenant to Pad Unit 4 under the terms of the [Master Declaration], all as more particularly described in Exhibit "A" attached hereto and made a part hereof, upon which Mortgagor intends to construct a residential condominium project to be known as the Horizon Condominium and Spa at Waterfront Square (hereinafter collectively referred to as the "Horizon Pad Unit");

2.1.3 All that certain Pad Unit 5 (as defined in the [Master Declaration] ) in the Master Condominium and the undivided twenty percent (20%) ownership interest in the Common Elements appurtenant to Pad Unit 5 under the terms of the [Master Declaration], all as more particularly described in Exhibit "A" attached hereto and made a part hereof, upon which Mortgagor intends to construct a residential condominium project to be known as the Tide Condominium and Spa at Waterfront Square (hereinafter collectively referred to as the "Tide Pad Unit");

2.1.4 The Peninsula Units, together with the undivided ownership in the Common Elements appurtenant to such Peninsula Units , all as more particularly described in Exhibit "A" attached hereto and made a part hereof;

2.1.5 The Regatta Units, together with the undivided ownership in the Common Elements appurtenant to such Regatta Units , all as more particularly described in Exhibit "A" attached hereto and made a part hereof;

2.1.6 [A]ll structures, improvements, buildings and any additions and alterations thereto or replacements thereof, now or hereafter erected upon the Reef Pad Unit, the Horizon Pad Unit and the Tide Pad Unit (hereinafter collectively referred to as the "Master Condominium Units"), including but not limited to parking facilities and other infrastructure , or constructed within the Peninsula Units or the Regatta Units (all of the foregoing being collectively referred to as the "Improvements") ...

* * *

2.1.12 All of Mortgagor's right, title and interest in and to all trade leases, subleases, lettings, licenses and other occupancy agreements, and guarantee thereof, for the Premises or any part thereof ...

* * *

2.1.15 All licenses , permits, and warranties attributable or allocable to all or any portion of the Premises , both real and personal;

* * *

2.1.19 All of Mortgagor's right, title and interest in and to the [Master Declaration] , the Peninsula Condominium Declaration, the Regatta Condominium Declaration and any Declaration of Condominium hereafter recorded in connection with the Reef Pad Unit, the Horizon Pad Unit and/or the Tide Pad Unit ... or any interest therein or rights thereunder, now owned or hereafter acquired.

IOC Mortgage Agreement at 4-7; R.R. 429a-432a (emphasis added).

To finance Phase II of the construction, in November 2007, IOC-Reef borrowed $97,300,000 from Lender, secured by IOC-Reef's interest in the condominium complex. This included Pad Unit 3; the Reef Condominium units; the associated common elements; and IOC-Reef's "right, title and interest in and to the Master [ ] Declaration and all other Condominium Documents." IOC-Reef Mortgage Agreement at 6; R.R. 495a.

IOC and IOC-Reef defaulted on the loans. On September 26, 2011, Lender commenced two foreclosure actions in the Philadelphia County Court of Common Pleas. Against IOC, it sought $25,337,351.88, plus costs, taxes and interest; against IOC-Reef it sought $79,020,015.54, plus costs, taxes and interest.⁴ That same day, Lender petitioned for the appointment of a receiver over the mortgaged property. On December 19, 2011, the parties agreed to a receivership, and to have GH Property Management, LLC (Receiver) appointed to serve as the receiver.

On December 20, 2011, the Philadelphia County Court of Common Pleas approved the parties' agreement, which placed "all of the Mortgaged Property (as that term is defined in the Petition [for Appointment of a Receiver] )^{[5 ]} in which [Lender] has a lien and/or security interest" into receivership. Receivership Order, 12/20/2011, at 1, ¶ 2; R.R. 224a, 235a. The receivership order appointed Receiver and stated, in pertinent part, as follows:

Receiver shall, as of the date of this Order, enter upon, receive and take complete possession of all of the Mortgaged Property, including all personalty located thereon ... and such other personalty as may be found thereon or off the Mortgaged Property which relate to the operation of all portions of the Mortgaged Property and which are subject to the security interest of [Lender], including without limitation, all of [IOC and IOC-Reef's] interest in the Condominium Associations .

Receivership Order at 2, ¶ 3; R.R. 225a, 236a (emphasis added). The order directed Receiver to "perform a complete inventory of the Mortgaged Property coming under its control or possession under this appointment." Id . at 3, ¶ 8; R.R. 226a, 237a. The order further enjoined IOC and IOC-Reef from "interfering in any way with the management of the Mortgaged Property (including the sale or lease of the Units) or the Condominium Associations by Receiver until further order of this Court." Id . at 5, ¶ 12; R.R. 228a-229a, 239a.

In February 2012, Lender, IOC, and IOC-Reef entered into an agreement (Settlement Agreement) to settle the foreclosure actions with the entry of a consent judgment and Lender's foreclosure on the mortgaged property. The Settlement Agreement included a general release, which states in pertinent part:

Provided that [IOC and IOC-Reef] fully cooperate with [Lender] in the Foreclosure Actions as provided herein, upon completion of the Foreclosure Actions, in consideration of the promises and covenants of [IOC and IOC-Reef] set forth herein, [Lender] on behalf of itself, its agents, servants, officers, directors, shareholders, employees, affiliated entities and persons, successors and assigns, does hereby release, remise and forever discharge [IOC and IOC-Reef] ... from any and all claims, demands, controversies, causes of action, suits, judgments, and debts....

Settlement Agreement at 10, ¶ 3.2; R.R. 213a.

On February 17, 2012, the Philadelphia County Court of Common Pleas entered a consent judgment against IOC in the foreclosure action in the amount of $25,337,351.88, plus costs, taxes and interest. The court also entered a consent judgment against IOC-Reef in the amount of $79,020,015.54, plus costs, taxes and interest. Subsequently, in March 2012, writs of execution were filed, and a sheriff's sale was scheduled for June 5, 2012....