U.S. v. Tabor Court Realty Corp.
| Decision Date | 10 September 1991 |
| Docket Number | No. 90-5802,90-5802 |
| Citation | 943 F.2d 335 |
| Parties | .; Raymond Colliery Co., Inc.; McClellan Realty Co., Inc.; Lackawanna County; Pagnotti Enterprises, Inc.; Loree Associates; James J. Tedesco; Henry Ventre; Louis Pagnotti, II; Blue Coal Company; Gillen Coal Mining Co.; Carbondale Coal Co.; Moffat Premium Anthracite; Northwest Mining, Inc.; Maple City Coal Co.; Powderly Corporation; Clinton Fuel Sales, Inc.; Great American Coal Co.; Joseph Solfanelli, individually and as trustee; General Electric Credit Corp.; Comm. of Pa, Dept. of Mines & Mineral Industries, Dept. of Environmental Resources and Dept. of Revenue; Borough of Olyphant; John J. Gillen; Thomas J. Gillen; Robert W. Cleveland & Sons, Inc.; William T. Kirchoff; Jay W. Cleveland; Royal E. Cleveland; City of Scranton Sewer Authority; Lackawanna River Gleneagles Investment Co., Inc.; Jeddo Highland Coal Co.; Olyphant Premium Anthracite, Inc.; Olyphant Associates; Minindu Corporation; Glen Nan, Inc.; Gilco, Inc.; Jay W. Cleveland, As Administrator of the Estate of Royal E. Cleveland. Carrier Coal Enterprises ("Carrier"), Appellant. United States Court of Appeals, Third Circuit |
| Court | U.S. Court of Appeals — Third Circuit |
John G. Whelley, Jr. (argued), Francis G. Wenzel, Jr., Joseph G. Ferguson, Rosenn, Jenkins & Greenwald, Wilkes-Barre, Pa., for appellant Carrier Coal Enterprises.
Thomas I. Vanaskie (argued), Thomas D. Brown, Dilworth, Paxson, Kalish & Kauffman, Scranton, Pa., George A. Spohrer, Hourigan, Kluger, Spohrer & Quinn, P.C., Wilkes-Barre, Pa., for appellee Scott F. Linde.
Thomas P. Brennan, Gallagher, Brennan & Gill, Wilkes-Barre, Pa., for appellee Thomas H. Kiley, Receiver for Raymond Colliery Co., Inc.
Before BECKER, NYGAARD and HIGGINBOTHAM, Circuit Judges.
This appeal is from the denial of Appellant's motion for an order directing a court-appointed Receiver to convey property pursuant to an assignment of an Agreement of Sale. Subject matter jurisdiction in the district court was based on 28 U.S.C. § 1331 and 26 U.S.C. § 7402(a). This court has appellate jurisdiction pursuant to 28 U.S.C. § 1291.
This dispute arises out of the district court's protracted efforts to dispose of the foreclosed upon properties of the Raymond Colliery Co., Inc. Thomas H. Kiley, Receiver of the properties, was authorized by the district court to seek purchasers and apply to the court for approval of the sale. (App. at 38). The highest appraisal value for the land and coal was $1,283,294. The Receiver was authorized to receive not less than 110% of the appraised value of the property (i.e., $1,411,234). (App. at 40). Scott F. Linde began negotiations with the Receiver for the seven parcels of land in May, 1988. 1 The Receiver provided Linde with a copy of a proposed Agreement of Sale which expressly prohibited assignment of the agreement without the Receiver's written approval. Linde's co-investors only agreed to invest, however, on the condition that the entire agreement of sale be assignable to Carrier Coal Enterprises. (App. at 850). At a meeting with the Receiver on May 20, 1988, Linde requested two modifications of the agreement which the Receiver granted without consulting his counsel--1) the agreement was modified to divide the realty transfer taxes equally between buyer and seller; and 2) the paragraph prohibiting assignment without the Receiver's written permission was deleted and the buyer designated as "Scott F. Linde or his assigns." (emphasis added). The agreement of sale was then executed under the above conditions for $1,483,000. There is no evidence of record that Linde had any discussion with Carrier concerning the subject matter of the agreement of sale prior to entering into the agreement of sale with the Receiver. (App. at 851).
On August 8, 1988, the district court approved the agreement of sale on the condition that the sale was subject to certain requirements. The requirements included advertisement of the sale, the acceptance of higher bids and final confirmation by the court. (App. at 853). The advertisement provided that until 10:00 a.m., September 2, 1988, any person might bid on the land so long as the purchase price was not less than 110% (i.e. $1,631,300) of the price that Linde was to pay. Two weeks prior to September 2, 1988, Murray Ufberg, attorney for Carrier, telephoned Allan Kluger, attorney for Linde, and proposed the assignment. Kluger asked for $200,000 plus a reconveyance of one of the parcels of land 2 which had an appraised value of $74,000. (Supplemental Briefing Documents). On September 2, 1988, Linde and Carrier negotiated in the hallway outside of the Receiver's office for approximately fifteen minutes and agreed to the assignment. 3 The parties then informed the Receiver, in his office, that Linde would be assigning his rights to Carrier and Carrier would not be submitting a bid to the Receiver. (App. at 855-56). Although the Receiver voiced his disapproval, the parties returned to the hallway and finalized the assignment agreement.
On September 13, 1988, the Receiver, believing that Linde had breached the agreement of sale by the assignment to Carrier, refused to proceed with the sale, and filed a motion to impose remedies for unlawful interference with a court directed sale of real property. (App. at 47). The Receiver maintained that Linde had breached the agreement and that the assignment was collusive and an unlawful frustration of the bidding process. Both Linde and Carrier opposed the Receiver's motion.
On January 9, 1989, the district court ordered a hearing to determine if Linde and Carrier had entered into a collusive agreement. On January 24, 1989, the district court found that the assignment improperly stifled the competitive bidding process and depressed the price to be paid to the Receiver. (App. at 140). The court expressed the belief that it was not necessary to decide whether there was actual collusion between Carrier and Linde. (App. at 145). The court invalidated the sale to Linde, explicitly disapproving the assignment between Carrier and Linde, and ordered the Receiver to reopen the bidding process.
Linde appealed the district court's decision, filing a Notice of Appeal on February 22, 1989. On March 29, 1989, the district court denied Linde's motion to stay the bidding proceedings pending appeal. In keeping with the district court's holding that the sale to Linde was invalid, the Receiver scheduled a second public sale. At the second public sale on May 26, 1989, Carrier offered, and the Receiver accepted, a bid of $1,631,300, the minimum required bid. Linde opposed approval of the sale to Carrier arguing that the first sale was valid.
On March 15, 1989, Allan Kluger, one of Linde's attorneys who was also acting as Escrow Agent, wrote to Murray Ufberg, Carrier's attorney and the other Escrow Agent. In that letter, Kluger proposed to return the $200,000 assignment payment to Carrier. "It would appear to me that in view of the decision of Judge Muir, the money should be returned to your client." (Supp. Briefing, Exhibit D). On March 29, 1989, Carrier's other attorney, Robert Spielman, stated that Carrier preferred to permit the payment to remain in escrow until the appeal of "Judge Muir's decision concerning the legal propriety and enforceability of the assignment agreement" was resolved. (Supp. Br. Exhibit E). Spielman also added that it was Carrier's understanding that it would be entitled to the return of the accrued interest in addition to the principal if the Third Circuit found that the assignment agreement was unenforceable or otherwise legally invalid.
On May 30, 1989, Murray Ufberg wrote to Allan Kluger requesting that he "forward a check to him today made payable to Carrier." (Carrier Supp. Briefing, Exhibit B). Ufberg also requested that Kluger obtain a check for the interest made payable to Carrier, "after you have had an opportunity to verify the appropriateness of doing so with the Lindes." (Carrier Supp. Briefing, Exhibit B). On May 31, 1989, after receiving the check for $206,805.67, Ufberg forwarded it to Carrier, explaining that he and Kluger had agreed that the return of the money did not invalidate the assignment for the purpose of the Linde appeal pending before the Third Circuit. The appeal only "obviate[d] the continued need for escrowed funds in connection therewith." (Carrier Supp. Briefing Exhibit C).
Following the Third Circuit's reversal of the district court's disapproval of the sale, Ufberg wrote to Kluger on November 15, 1989 to protest Linde's statement in its response to Carrier's motion for rehearing (discussed below) that Carrier had requested the return of the money. "In our initial discussion [following Kluger's offer to return the money] we agreed that, whether our client wanted the money or not, your intent in making the offer was only to eliminate further administration of the money and was not intended to obviate the Assignment." (Carrier Supp. Briefing, Exhibit D). On December 14, 1989, Kluger (Linde's attorney) wrote to Thomas Vanaskie (Linde's appellate counsel) explaining his agreement with Ufberg that the return of the $200,000 would not affect the assignment. (Linde Supp. Briefing, Exhibit H).
On appeal to the Third Circuit, Linde's appellate brief argued that he had the right under the agreement of sale to assign his interest. He requested that the district court's January 24, 1989 order be reversed and that the court be required to enforce the agreement between Linde and the Receiver. Carrier filed a separate two-page brief in which it adopted Linde's brief in full and raised an additional argument about allegedly imprecise...
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