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CLOVERLEAF DEVELOPMENT v. HORIZON FINANCIAL F.A. SUCCESSOR TO CENTURY FEDERAL SAVINGS AND LOAN ASSOCIATION AND GREGOR F. MEYER (11/01/85)

filed: November 1, 1985.

CLOVERLEAF DEVELOPMENT, INC. AND LEONARD E. PRICE AND DOROTHY J. PRICE, HIS WIFE, APPELLANTS,
v.
HORIZON FINANCIAL F.A. SUCCESSOR TO CENTURY FEDERAL SAVINGS AND LOAN ASSOCIATION AND GREGOR F. MEYER, EDWARD L. FLAHERTY, JR. AND MEYER AND FLAHERTY, P.C., A PROFESSIONAL CORPORATION, APPELLEES



Appeal from Order of the Court of Common Pleas, Civil Division, of Allegheny County, No. GD 83-08595

COUNSEL

Robert F. Hawk, Assistant District Attorney, Butler, for appellants.

Vincent J. Grogan, Pittsburgh, for appellees.

Wieand, Cirillo and Johnson, JJ.

Author: Wieand

[ 347 Pa. Super. Page 78]

In this appeal from an order sustaining preliminary objections in the nature of a demurrer to five of six counts of a complaint, we are asked to determine whether appellants have sufficiently pleaded causes of action for intentionally inflicted emotional distress and for intentionally interfering with prospective contractual relations. Before deciding these issues, however, we must first determine whether the order of the trial court was final and appealable.

On June 23, 1970, Cloverleaf Development, Inc., hereinafter "Cloverleaf," obtained a loan of $1,515,000.00 from Century Federal Savings and Loan Association, hereinafter "Century," who was the predecessor of Horizon Financial, F.A., hereinafter "Horizon." As security for the loan, Cloverleaf executed a note and delivered to Century a mortgage constituting a lien on an apartment complex in Moon Township, Allegheny County. The terms of the loan required Cloverleaf to repay the principal indebtedness in 25 years with interest at the rate of 7.75%. The note also contained a clause vesting an option in Century, in the event of default for two or more months, to demand an increased interest rate not to exceed 9.30%. When so increased, the new rate was to remain in effect until the loan was paid in full. In the event of prepayment, Cloverleaf was to become liable for a penalty in the amount of six percent of the balance being pre-paid.

After a default had occurred, Century made a demand in 1980 that Cloverleaf pay interest at the rate of 9.3% on the unpaid loan balance. Leonard E. Price, who was president of Cloverleaf, refused Century's demand. Century then proposed several amendments to the loan agreement. In a proposed, written modification, Century suggested an annual

[ 347 Pa. Super. Page 79]

    interest rate of 13.75%, without any option to increase the same, and a reduced term of 38 months. Cloverleaf, through its attorney, rejected the offer to modify the loan agreement. Nevertheless, after September, 1981, Century's monthly statements included computations of interest at the rate of 13.75%. This increased each monthly payment by $2,000.00. Cloverleaf, allegedly because of inadvertence, paid the increased monthly statement without protest and without comment until March, 1982. Although it protested the increased interest rate thereafter, Cloverleaf nevertheless continued to make the increased monthly payments.

In February and March, 1982, Leonard Price received several offers to purchase his Cloverleaf stock. Attempts were made to obtain an agreement from Century to reduce the interest on the loan to the original 7.75%, but Century rejected all such requests and demanded an 18% balloon mortgage from any purchaser who assumed the mortgage and continued to use its money. A Century vice president allegedly said to one of the prospective buyers: "Nobody is going to assume Price's mortgage if I have anything to do about it. I know that Price cannot afford to continue making the extra $2,000.00 a month payments and when he misses the next payment, we are going to take over the whole property and let Price swing." All requests to allow an assumption of the mortgage at a 7.75% rate of interest were rejected.

The apartment complex was thereafter sold on a cash basis but at a price lower than that which had been offered by buyers who had been interested in assuming the existing mortgage. When Century computed and submitted a mortgage payoff figure, it included a prepayment penalty of six percent. This was pursuant to the provisions of the original loan agreement which, however, had been omitted from the modification agreement proposed by Century and never accepted by Cloverleaf. The payoff figure also ...


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