The opinion of the court was delivered by: Judge Simpson
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.
This is the fifth appeal in an ongoing dispute between DuBois Dutch, LLC and John A. Guido arising from a lease option for the purchase of 2.605 acres of land upon which DuBois Dutch operates its Dutch Pantry Restaurant (Restaurant Parcel). The only issue presented is whether Guido is entitled to interest on the purchase money from the date DuBois Dutch last paid rent on the Parcel to the date of settlement on the real estate transaction. The Court of Common Pleas of Clearfield County (trial court) denied Guido's petition for the assessment of interest. Discerning no error in the trial court's order, we affirm.
The facts are as follows. In 1982, Phillip Dieringer entered into a lease agreement with Harley Hotels for lease of the Restaurant Parcel. The lease term expired on February 28, 1989, and provided a purchase option during the term of the lease or any extension of it. The lease could be extended for two, five-year periods. Dieringer subsequently sold Guido a 3.379-acre parcel of land (Lot), which included the Restaurant Parcel. Harley Hotels later transferred its lease interest to DuBois Dutch, and Guido acknowledged the terms of the lease remained fully enforceable. The agreement effectively separated the Lot into two parcels, the Restaurant Parcel, and a smaller parcel consisting of .772 acres upon which Guido operated a gas station and convenience store (Gas Station Parcel). Both uses were permitted under the Township of Sandy (Township) zoning ordinance at the time the lease was entered.
In 1996, before expiration of the lease and before DuBois Dutch exercised its purchase option, the Township repealed its zoning ordinance and adopted a new zoning ordinance. The new ordinance imposed minimum lot size requirements in the zoning district in which the Lot is located.
In November 1998, DuBois Dutch notified Guido of its intent to exercise the purchase option. Guido refused to convey the Restaurant Parcel. He maintained that subdivision of the Lot would render the Gas Station Parcel undersized and commercially useless. Also in November 1998, DuBois Dutch sought subdivision of the Lot from the Township's planning commission. Guido objected and, consequently, the planning commission rejected DuBois Dutch's subdivision request.
In February 1999, DuBois Dutch commenced an action for specific performance against Guido. Relevant here, DuBois Dutch alleged that a title search revealed an existing mortgage on the Lot. DuBois Dutch further alleged it notified Guido of the outstanding mortgage. In answer to the claim for specific performance, Guido again asserted subdivision of the Lot would render the Gas Station Parcel undersized in violation of the 1996 zoning ordinance.
Guido also filed a separate lawsuit seeking to eject DuBois Dutch from the Restaurant Parcel. Following argument on preliminary objections to Guido's ejectment action, the trial court directed the parties to return to the Township planning commission for formal subdivision of the Lot. The trial court also stayed all litigation until DuBois Dutch received subdivision approval.
Before the planning commission, DuBois Dutch maintained that the 1982 agreement effected a per se lawful subdivision of the property. Alternatively, DuBois Dutch argued its ownership interest related back to 1982 and, thus, even if the 1996 zoning ordinance applied, Guido's Gas Station Parcel was a valid non-conforming lot. The planning commission agreed and approved DuBois Dutch's subdivision request.
Guido appealed to the trial court, which upheld the subdivision approval. After hearing the matter anew, the trial court held the 1982 lease and DuBois Dutch's attempt to exercise the purchase option constituted a subdivision of the Lot under the Pennsylvania Municipalities Planning Code (MPC).*fn1 The court then considered whether the Gas Station Parcel satisfied the earlier zoning ordinance's minimum lot requirements. Relying on exceptions in the zoning ordinance, the trial court held the Gas Station Parcel satisfied the definition of a nonconforming lot because its size was lawful under the ordinance even though the Lot had not been formally subdivided. Accordingly, the court determined the Gas Station Parcel constituted a pre-existing nonconforming lot under the 1996 ordinance.
On Guido's appeal, this Court reversed. We determined that a leasehold interest coupled with an option to purchase does not create a subdivision of the property and, as such, DuBois Dutch could not establish the Gas Station Parcel as a pre-existing nonconforming lot by exercising its purchase option after the 1996 zoning ordinance took effect. See Guido v. Twp. of Sandy, 809 A.2d 1036 (Pa. Cmwlth. 2002).
On further appeal, the Supreme Court affirmed. Guido v. Twp. of Sandy, 584 Pa. 93, 880 A.2d 1220 (2005). The Court determined that upon exercise of the lease option, DuBois Dutch's equitable title reverted back to the date of the lease. Having so determined, the Court then logically concluded the exercise of the option created a division-in-fact of the Lot that relates to the date of the agreement. However, as the Supreme Court noted, division-in-fact is a concept distinct from formal subdivision, meaning one that is accomplished under a subdivision ordinance, and the exercise of the option could not result in legal subdivision. Accordingly, the Supreme Court referred the parties back to the planning commission to pursue relief under the modification provisions of the MPC and to complete litigation of DuBois Dutch's specific performance claim.
As instructed, DuBois Dutch filed a written request with the planning commission for subdivision approval. Guido objected, and also submitted his own request for subdivision of the Lot. In his request, Guido proposed enlarging the Gas Station Parcel by taking some of the Restaurant Parcel away from DuBois ...