Kalian at Poconos v. Saw Creek Estates Community
| Decision Date | 05 August 2003 |
| Docket Number | No. 3:CV-02-1901.,3:CV-02-1901. |
| Citation | 275 F.Supp.2d 578 |
| Parties | KALIAN AT POCONOS, LLC., Plaintiff v. SAW CREEK ESTATES COMMUNITY ASSOCIATION, INC., Rose Giovinco, Jene Farrell, Nathan Lubow, John Sivick, Richard Krauthamer, Henry Ramirez, Richard Sanderman, Louis Scaltrito, and Nicholas J. Mazzarella, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
H. Peter Nelson, Jeffrey G. Trauger, Grim, Biehn & Thatcher, Perkasie, PA, for Plaintiff.
Janet Marsh Catina, Office of the District Attorney, Stroudsburg, PA, Zygmunt R. Bialkowski, Jr., Margolis Edelstein, Scranton, PA, for Defendants.
On October 23, 2002, plaintiff Kalian at Poconos, L.L.C. ("Kalian") commenced this action, alleging that defendants Saw Creek Estates Community Association, Inc. ("the Association"), Rose Giovinco, Jene Farrel, Nathan Lubow, John Sivick, Richard Krauthamer, Henry Ramirez, Louis Scaltrito, Nicolase J. Mazzarella (collectively, "the defendants"), and Richard Sanderman infringed upon its rights as a declarant and developer of Saw Creek Estates by requiring Kalian to pay certain fees and assessments. Kalian also alleges a civil rights violation under 42 U.S.C. § 1983; a violation of the civil racketeering statute, 18 U.S.C. § 1962; and state tort claims for interference with contractual relations, interference with prospective contractual relations, and slander of title/commercial disparagement. The defendants have filed a motion to dismiss, (Dkt. Entry 19), and Kalian has filed a motion for partial judgment on the pleadings.1
Because Kalian cannot show that the defendants' disputed actions were conducted under color of state law, the defendants' motion to dismiss will be granted as to Count XI, the civil rights claim. Count XII, the civil racketeering claim, will also be dismissed because Kalian has not alleged that the defendants committed two or more predicate acts amounting to racketeering. Count X, the slander of title/commercial disparagement claim, will be dismissed because Kalian fails to adequately allege publication of the alleged slanderous statements to a third party. The motion to dismiss will be denied, however as to all other counts, because diversity jurisdiction exists in this case, and because the allegations underlying the counts for declaratory judgment and tortious interference with contract are adequate to state claims for which relief may be granted. Kalian's motion, in which it seeks a declaratory judgment that it possesses declarant and developer rights and that the Association may not impose certain fees and assessments, will be granted.
This litigation concerns Saw Creek Estates, a large planned community of single-family homes and townhomes located in Lehman Township, Pike County, Pennsylvania, and Middle Smithfield Township, Monroe County, Pennsylvania (hereinafter, "the Community"). In 1975, Lehman-Pike Development Corp. ("Lehman-Pike") began constructing the Community. In doing so, Lehman-Pike recorded certain covenants and restrictions, and amendments thereto, applicable to each of the lots in the Community, and established the Association to manage the day-to-day operation of the Community.
In the late 1990s, a lawsuit was filed against Lehman-Pike by certain property owners within the Community. On September 15, 1999, Lehman-Pike and the Association entered into a Settlement Agreement to resolve this lawsuit. As part of the agreement, Lehman-Pike transferred certain rights and facilities to the Association. Pertinent to this litigation, paragraph twelve of the agreement stated:
a. Lehman Pike, its successors and assigns, shall retain the rights stated in Exhibit 2 for the Development. It shall exercise those rights for the exclusive purposes directly related to the sale of its existing unsold Lot inventory and for no other purpose. . . . The Property Owners Association and the Community Association agree to take no other action to interfere with or disrupt any of the activities permitted by Exhibit 2, and to act in a manner contemplated by and expressed in the Community's legal documents and state law.
b. Lehman Pike shall not be required to pay any dues or assessments on any unimproved Lots owned by it which are held for sale to the public, and shall have no votes in the Community Association for these Lots[.] Lehman Pike shall be required to pay dues and assessments on all improved Lots it owns. . . .
(Ex. 1, Dkt. Entry 29, Settlement Agreement, at 23.) Exhibit 2 of the Settlement Agreement contains an "Assignment of Declarant Rights"2 from Lehman-Pike to the Association dated April 10, 2000. In relevant part, it states that:
As a fundamental part of the general plan of development for the Saw Creek Estates, Lehman-Pike hereby assigns to [the Association], its successors and assigns, the rights of Lehman-Pike so designated in the Exhibit to this Agreement. . . . Lehman-Pike, its successors and assigns, shall also retain the status as a Declarant for the sale of its remaining lot inventory, and as to the rights retained by it under this Assignment.3
(Ex. 2, Dkt. Entry 29.) Finally, the Settlement Agreement concluded with a paragraph that stated that "[t]his Agreement shall bind and inure to the benefit of the parties and their respective heirs, successors and assigns." (Ex. 1, Dkt. Entry 29, ¶ 19.)
On June 1, 2000, Lehman-Pike conveyed 178 unimproved building lots in the Community to Silver Ridge, L.L.C. ("Silver Ridge") and 36 unimproved building lots to Philip Rizzo. On the same day, Lehman-Pike, Rizzo, and Silver Ridge entered into an agreement whereby certain declarant and developer rights held by Lehman-Pike were to be assigned to Rizzo and Silver Ridge. (See Ex. 3, Dkt. Entry 29, Assignment of Developer Rights and Interests.) That agreement provided that "[a]s required by the Purchase Agreement, Lehman-Pike desires to assign and Purchaser desires to accept an assignment of certain of the declarant and developer rights retained by Lehman-Pike, which rights shall be exercised jointly by the parties to this assignment." (Id., ¶ 6.) The "certain" rights assigned by Lehman-Pike included "[t]he rights, duties and interests . . . set forth in Paragraph 12, Subsections (a) and (b), of the Settlement Agreement." (Id., ¶ 1.) In addition, the June 1, 2000 Assignment of Developer Rights and Interests provided that declarant rights were assigned to Kalian as follows:
(a) in that portion of the last sentence of Paragraph 1 of the Assignment of Declarant Rights which provides that Lehman-Pike, its successors and assigns, "shall also retain the status as a Declarant for the sale of its remaining lot inventory," and
(b) the rights granted pursuant to declaration No. 7 of the Declarations of Covenants and Restrictions for Saw Creek Estates, which provides the right of ingress, egress and regress within Saw Creek Estates, which rights were retained by Lehman-Pike in the Assignment of Declarant Rights.
(Id., ¶ 2.)
Kalian argues that this agreement constituted a valid assignment of Lehman-Pike's declarant rights to Rizzo/Silver Ridge. The defendants, on the other hand, contend that the assignment of declarant rights to Rizzo/Silver Ridge was not effective until the Association ratified the assignment in an agreement between the Association and Lehman-Pike dated September 21, 2000. This agreement stated:
1. DUES ON RIZZO LOTS. The Association hereby agrees and acknowledges that the June 1, 2000 Assignment of Developer Rights and Interests between Lehman-Pike and Rizzo constituted a valid and effective assignment and retention by Lehman-Pike to Rizzo of the "Declarant Rights" of Lehman-Pike, as such term is defined in the Assignment and in settlement agreement dated effective September 15, 1999, of which Lehman-Pike and the Association are parties. Consequently, the Rizzo Lots4 shall not be subject to annual dues or any special assessments adopted by the Board of Directors or membership until such time that the Rizzo Lots are transferred or leased to third parties, whichever occurs first. The Rizzo Lots, however, are otherwise subject to the covenants and restrictions of record, the rules and regulations and the By-Laws of the Association, and applicable laws.
* * * * * *
10. ASSIGNMENT. This Agreement shall not be assigned in whole or in part or transferred by either party hereto in any manner whatsoever without the prior written consent of the other party being first had and obtained. Subject to the prohibitions and limitations on assignment herein set forth, this Agreement shall extend to and bind the heirs, executors, administrators, successors and assigns of the parties hereto.
(Id., ¶¶ 1, 10.)
On April 15, 2002, Kalian purchased 109 unimproved building lots from Rizzo and Silver Ridge and agreed to acquire title to their remaining unimproved building lots on or before April 1, 2003. Additionally, Kalian acquired certain rights in and to mortgages on other unimproved building lots located in the Community. These mortgages were previously acquired by Silver Ridge from Lehman-Pike. Simultaneously with these acquisitions, Rizzo and Silver Ridge executed an assignment of certain declarant and developer rights to Kalian. (See Ex. 4, Assignment of Declarant and Developer Rights and Interests, Dkt. Entry 29.) Rizzo and Silver Ridge purported to assign to Kalian "all of the declarant rights, obligations and interests assigned to Seller by Lehman-Pike for the lots being purchased by [Kalian] . . . includ[ing] those set forth in Paragraph 12 of the Settlement Agreement . . . ." (Id., ¶ 1.)
Trouble began shortly after Kalian's purchase of the building lots. Subsequent to Kalian's purchase, the Association allegedly established a $1,000 per lot application and appraisal fee on all new construction, raised the minimum required habitable floor space area for any new...
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