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Phelan v. Adelphia Communications

July 8, 2009

KEVIN PHELAN, PLAINTIFF,
v.
ADELPHIA COMMUNICATIONS, CORPORATION, OFE II, LLC, AND ADELPHIA CONSOLIDATION, LLC, DEFENDANTS.



The opinion of the court was delivered by: (Judge McClure)

MEMORANDUM

I. Introduction

On April 18, 2008, plaintiff Kevin Phelan ("Phelan"), a citizen and resident of the Republic of Ireland, instituted this civil action against defendants Adelphia Communications Corp, OFE II, LLC, and Adelphia Consolidation, LLC (collectively "Adelphia"). Plaintiff's complaint is for Declaratory Judgment (Count I), Unjust Enrichment (Count II), and Breach of Implied Covenant of Good Faith and Fair Dealing (Count III). On January 29, 2009, this court approved the stipulation of dismissal of Count III. Thus, the only remaining counts are Counts I and II.

II. Procedural History

On March 23, 2009, plaintiff filed a Partial Motion for Summary Judgment moving for summary judgment on Count I of his complaint. (Rec. Doc. No. 34). He filed his supporting brief on March 25, 2009. (Rec. Doc. No. 41). Defendants filed their opposing brief on April 27, 2009, and plaintiff filed his reply brief on May 8, 2009. (Rec. Doc. Nos. 56 and 58).

Additionally, defendants filed a Motion for Oral Argument on April 27, 2009. (Rec. Doc. No. 54). As the motion had the concurrence of both parties and the reasons for the motion are fully stated therein, no briefs are required.

Thus, all matters are ripe for disposition. Now, therefore, we will defer decision on plaintiff's motion for summary judgment pending resolution of what amount, if any, damages are appropriate. We hold that $999,750 as liquidated damages, in this particular case, is a penalty, unenforceable as a matter of law. We will deny defendants' motion for oral argument, and instead will order further briefing.

III. Factual Background

The facts, taken in the light most favorable to the non-moving party, Adelphia are as follows.*fn1 As a result of bankruptcy proceedings, Adelphia was selling, among many other properties, a parcel of real estate which included their corporate headquarters building in Coudersport, Pennsylvania. The property was appraised as having a fair market value of $6,300,000. Adelphia hired a real estate brokerage firm and a marketing firm to assist in the sale of this, and other properties.

Through an on-line bidding process which closed on October 31, 2007, a bidder, Joy 2001, LLC ("Joy") made a winning bid of $3,400,000. Joy made a deposit of 10% of the purchase price, $340,000. Joy was unable to obtain financing to complete the purchase, and on December 17, 2001, forfeited its $340,000 deposit to Adelphia.

After Joy's default, potential buyers were required to submit a letter of intent along with a deposit of one-million dollars ($1,000,000) to ensure that interested parties had the financial wherewithal to close the transaction. On January 21, 2008, Phelan entered into an agreement with Adelphia to purchase the property on January 31, 2008 for $3,400,000. Phelan was required to make the deposit of one-million dollars ($1,000,000). The agreement contained a liquidated damages clause, which entitled Adelphia to retain the deposit as liquidated damages if Phelan failed to close on the property. The liquidated damages clause was standard language in all of Adelphia's real estate sales, and was not negotiated between Phelan and Adelphia. Phelan transferred $2,000,000 to his attorney for closing. His attorney misappropriated this $2,000,000, and Phelan was unable to complete the closing*fn2 .

The title company delivered $999,750.00 of Phelan's deposit to Adelphia. As a result, Adelphia was forced to re-market the property, and was able to find a substitute buyer for the property.

IV. Standard of Review

Summary judgment is appropriate when 1) there are no material facts in dispute; and 2) one party is entitled to judgment as a matter of law. Int'l Union, United Mine Workers of Am. v. Racho Trucking Co., 897 F.2d ...


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