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Phelan v. Adelphia Communications Corp.

December 1, 2009

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



The opinion of the court was delivered by: James F. McClure, Jr. United States District Judge

(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.

II. Procedural History

On July 8, 2009, this Court decided, based on plaintiff's partial motion for summary judgment, that the almost one-million dollars ($1,000,000) in liquidated damages that plaintiff paid pursuant to a provision in the parties' contract was invalid as a penalty. However, we deferred entering declaratory judgment on Count I, pending briefing from the parties on the appropriate amount of damages, if any, due to defendants. (Rec. Doc. No. 60). In our order, we noted in footnote 1 that although the standard on a motion for summary judgment is to take the facts in the light most favorable to the non-moving party, defendants failed to file a responsive statement of material facts pursuant to Middle District Local Rule 56.1. Therefore, all facts were taken from plaintiff's statement of material facts, and all such facts were deemed to have been admitted by defendants. Id.

Upon the entering of this Court's July 8, 2009 Order, the parties filed a plethora of motions. First, even though the motion for partial summary judgment had been decided in plaintiff's favor, plaintiff filed a motion to amend and revise our July 8, 2009 Memorandum and Order and a supporting brief. (Rec. Doc. Nos. 61 and 62). Plaintiff requested that we delete footnote 1 and replace it with language regarding the deposition testimony of defendants' employee. Plaintiff pointed out that defendants did file a statement of material facts, but the statement was mislabeled on the docket as defendant's opposing brief. Plaintiff further argued that we should not consider the affidavit of Paul Hemann, Adelphia's treasurer, provided by defendants, as the affidavit contradicted the deposition testimony of Hemann and is a "sham affidavit" under Third Circuit case law. In their opposing brief, defendants argued that this Court needed to reconsider the motion for partial summary judgment using the facts defendants set forth in their statement of material facts, which defendants admitted is mislabeled on the docket. (Rec. Doc. No. 67). Defendants further argued that the affidavit is not a "sham affidavit" under Third Circuit case law. Plaintiff filed a reply brief arguing that the affidavit was in fact a "sham affidavit." (Rec. Doc. No. 71).

On July 21, 2009, defendants filed their Brief Regarding Actual Damages pursuant to our July 8, 2009 Order. (Rec. Doc. No. 63). In their four-line brief, defendants, the parties that would be the beneficiaries of the amount of damages ordered, chose to "forego[] the filing of a brief regarding the amount of damages so that the Order may now be considered final." Id. In his responsive brief, plaintiff argued that we should consider defendants' brief a waiver of any claim to damages. (Rec. Doc. No. 70). Plaintiff also argued that because his motion to amend the July 8, 2009 Order was still outstanding, and had been fully briefed by both parties, defendants' foregoing the filing of a brief regarding damages would not convert our July 8, 2009 Order into a final order.

On July 23, 2009, the defendants filed a motion for relief from the July 8, 2009 Order and a supporting brief. (Rec. Doc. Nos. 65 and 66). Defendants requested that we vacate our July 8, 2009 Order pursuant to Fed. R. Civ. P. 60(b), including our denial of oral argument on the motion for partial summary judgment, and requested that we schedule oral argument on the motion for partial summary judgment. Plaintiff filed an opposing brief arguing, once again, that we should not consider Hemann's affidavit, as it is a "sham affidavit," and that we should not grant defendants' Rule 60(b) motion, as our July 8, 2009 Order is not a final judgment or order. (Rec. Doc. No. 72). In their reply brief, defendants argued that material facts remain in dispute, they did file a statement of material facts, Hemann's affidavit is not a "sham affidavit," and Rule 60(b) does apply because they waived their damages argument so that the July 8, 2009 Order would be final. (Rec. Doc. No. 73).

Pursuant to an order dated September 2, 2009, this Court denied plaintiff's motion to amend and revise the July 8, 2009 Order. (Rec. Doc. No. 74). We also denied, without prejudice, the defendants' motion seeking to vacate the July 8, 2009 Order. Id. Also pursuant to the order dated September 2, 2009, we informed the defendants that they were permitted to file a motion for reconsideration, in lieu of a Rule 60(b) motion, by September 22, 2009.

On September 21, 2009, the defendants filed a motion for reconsideration of this Court's July 8, 2009 Memorandum and Order, as well as a supporting brief. (Rec. Doc. Nos. 75 and 76). On that same date, defendants also filed a motion for oral argument on their motion for reconsideration. (Rec. Doc. No. 78). On September 28, 2009, the plaintiff filed a brief in opposition to the defendants' motion for reconsideration. (Rec. Doc. No. 79). The defendants filed a reply brief in support of their motion for reconsideration on October 5, 2009. (Rec. Doc. No. 80).

The defendants' motion for reconsideration is therefore ripe for disposition. In light of the following, this Court will grant the defendants' motion for reconsideration. Upon our reconsideration of our July 8, 2009 Memorandum and Order, we conclude that genuine issues of material fact remain in dispute. Therefore, we cannot conclude, as a matter of law, that the liquidated damages provision of the contract between the plaintiff and defendants is invalid as a penalty. Defendants' motion for oral argument is denied.

III. Factual Background

The facts, taken in the light most favorable to the non-moving party, Adelphia, are as follows.*fn1 Because 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, Grubb and Ellis, and a marketing firm, LFC Marketing Services, Inc. ("LFC"), to assist in the sale of this and other properties.

Through an on-line bidding process which closed on October 31, 2007, Joy 2001, LLC ("Joy") placed a winning bid of approximately $3,400,000. Pursuant to a real estate purchase and sale agreement, Joy made a deposit of 10%, a sum equaling $340,000, of the purchase price. Joy did not obtain financing to complete the purchase, forfeiting its $340,000 deposit to Adelphia on December 17, 2007.

After Joy's default, potential buyers were required to submit a letter of intent along with a deposit of $1,000,000. At his deposition on January 27, 2009, Hemann testified that Bill Lange of LFC had proposed the increase to a $1,000,000 deposit "in order to make sure that it was serious buyers that were coming . . . ." (Hemann Depo., at 36). Hemann stated that an additional reason for the $1,000,000 deposit was "[t]o make sure that we had parties that were able to close on whatever the ultimate purchase price was, that they had the financial wherewithal to close." Id.

In an affidavit dated and filed on April 21, 2009, Hemann attempted to clarify his deposition testimony concerning the required $1,000,000 deposit. (Rec. Doc. No. 46 at 4). In his affidavit, Hemann stated that the $1,000,000 deposit "was a reasonable forecast in my mind as to the potential damage Adelphia might incur if a successful bidder like Mr. Phelan*fn2 defaulted on the purchase transaction." Id. Hemann stated that, in late 2007 and early 2008, he was concerned that another failed sale would impose nearly $700,000 in carrying costs related to the property for the subsequent year, cause additional attorney's fees, and stigmatize the property. Id. In his ...


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