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Greens at Greencastle Limited Partnership v. Greencastle GIBG LLC

September 28, 2009

GREENS AT GREENCASTLE LIMITED PARTNERSHIP, PLAINTIFF
v.
GREENCASTLE GIBG LLC, DEFENDANT



The opinion of the court was delivered by: Chief Judge Kane

MEMORANDUM

Before the Court is Plaintiff's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (Doc. No. 42.) This case concerns the applicability of certain land-use restrictions contained in the chain of title to a parcel of property once held by Plaintiff Greens at Greencastle Limited Partnership ("Greens") and now owned by Defendant Greencastle GIBG LLC ("GIBG"). Plaintiff Greens seeks injunctive relief preventing Defendant GIBG from developing the land in a manner inconsistent with the restrictions contained in the chain of title.

The Court has heard oral argument, all briefing is complete, and the motion is ripe for disposition. For the reasons that follow, Plaintiff Greens's motion for summary judgment will be granted.

I. BACKGROUND

General Information

Plaintiff Greens is a limited partnership registered and with its principal place of business in the state of Maryland. (Doc. No. 43 ¶ 1.) Defendant GIBG is a Delaware limited liability company with its principal place of business in Connecticut. (Id. ¶ 2.) GIBG is the current owner of the real estate located in Antrim Township, Franklin County, Pennsylvania (the "Property"), that is at the center of this dispute. (Id. ¶ 3.)

From a deed transfer in 1990, Plaintiff Greens became the owner of the Property and adjacent land in Franklin County; at the time, Greens was developing the adjacent land into residential houses for a golf course community. (Id. ¶ 4.) GIBG admits that the Property was owned by Greens at the time, but refuses to concede that the deeds attached as exhibits to the statement of facts establish that the adjacent land was owned or retained by Greens in 1990. (Doc. No. 45 ¶¶ 4; 6.) By deed dated December 7, 1990, Greens deeded the Property to Robert L. Elder and Diane S. Elder, husband and wife. (Doc. No. 43 ¶ 5.) The 1990 deed to the Elders contained a restrictive covenant, which was drafted at least in part by Daniel Sheedy, the owner of a corporation that was Greens's general partner. (Doc. No. 46-3 Ex. B, Deposition of Daniel Sheedy at 65:25-66:13 (hereinafter "Sheedy Dep.").) In particular, the Elder Deed restricted the use of the property to "the construction, operation and maintenance of one or more regulation eighteen (18) hole golf course facilities . . . and for . . . purposes incidental or related thereto . . . ." and provided that the property "shall be used for no other purpose" than those specified in the deed. (Doc. No. 43-2, Ex. A. at 122 (hereinafter "Elder Deed").) In addition, the Elder Deed prohibited any further subdivision of the property without Greens's consent. (Id.)

Financing for the Golf Course Project

As set out in the Elder Deed, contemporaneous with the transfer of property, the Elders arranged for a $1.5 million dollar loan from Citizen's National Bank of Southern Pennsylvania, which was secured by a first mortgage on the Property; the purpose of the loan was to provide funds for the golf course and related facilities. (Elder Deed at 123.) In August of 1991, after approval from Greens as required by the Elder Deed, the Elders refinanced their loan with Hagerstown Trust Company in the amount of $2.4 million. (Sheedy Dep. at 116:22-117:7; Doc. No. 45-4 Ex. C.) This loan was also secured by a first mortgage on the Property, and contained a provision authorizing Hagerstown in the event of default to "sell the whole or, from time to time, any part of the Mortgaged Property at public auction or a private sale . . . on such terms as the Mortgagee in their uncontrolled discretion may determine . . . ." (Doc. No. 46-4 Ex. C, ¶ 6.02.)

The Elder Deed also contains a provision that is labeled "Lender's Exception." It generally provides that upon default of the mortgage, the Elder's lender may elect, in its sole discretion, to sell the property free of the primary restrictions set out in the deed. (Elder Deed at 123-24.) Notably, the Lender's Exception does not provide any procedure to conclusively demonstrate the lender's election to convey the property free of the restrictive covenants.

Foreclosure

In 1993, Hagerstown Trust instituted foreclosure proceedings against the Elders because of an event of default, as defined in the Hagerstown Mortgage, and caused it to be sold at a Sheriff's sale. (Doc. No. 46-5, Ex. D.) The statutory notice that the Property would be sold at the Sheriff's sale did not contain any reference to the restrictions set forth in the Elder Deed, and the bank's assistant vice president, Linda Mowen, did not recall any announcement at the sale that the property was subject to such restrictions. (Doc. No. 46-6 Ex. E; Doc. No. 46-8, Ex. G, Deposition of Linda Mowen at 59:10-15 (hereinafter "Mowen Dep.").) On January 31, 1996, Greencastle Links, LP, became the deed owner of the Property after purchasing it at the auction for $1.5 million dollars. (Doc. No. 43 ¶ 8.)

Transferring of the Property

On February 18, 1998, Greencastle Links, LP, deeded the Property to Greencastle Golf Club Limited Partnership, and then on July 1, 2005, Greencastle Golf Club LP conveyed the Property by deed to Defendant GIBG. (Id. ¶¶ 9-10.) The GIBG deed provided that the "conveyance is made subject to the restrictions and conditions contained in the deeds forming the chain of title to the above described property." (Id. ¶ 11.) GIBG intends to subdivide the Property and ...


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