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Hankin Family Partnership, et al v. Upper Merion Township

January 5, 2012

HANKIN FAMILY PARTNERSHIP, ET AL., PLAINTIFFS,
v.
UPPER MERION TOWNSHIP, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Slomsky, J.

OPINION

TABLE OF CONTENTS

I. INTRODUCTION .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. SUMMARY OF FACTS AND PROCEDURAL HISTORY .. . . . . . . . . . . . . . . . . . . . . . 2

A. Relevant Background.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1. Joint Prosecution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Realen and Township Defendants' Settlement Negotiations.. . . . . . . . . . 5

3. Relevant State Proceedings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

a. The Spot Zoning Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

b. The Inverse Condemnation Action . . . . . . . . . . . . . . . . . . . . . . . . . 9

c. The Declaratory Judgment Action . . . . . . . . . . . . . . . . . . . . . . . . 10

d. The Rescission Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

B. The Instant Federal Case .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1. Township Defendants' Motion to Dismiss . . . . . . . . . . . . . . . . . . . . . . . . 13

2. Plaintiffs' Motion for Partial Summary Judgment . . . . . . . . . . . . . . . . . . 14

3. Realen's Rule 41(a) Motion to Voluntarily Dismiss . . . . . . . . . . . . . . . . 15

4. April and May 2010 Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

5. Motion to Supplement Amended Complaint . . . . . . . . . . . . . . . . . . . . . . 16

III. STANDARD OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

A. Leave To File A Supplemental Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B. Leave To File A Cross-Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

IV. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

A. Leave To File Supplemental Pleading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

1. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

2. Civil Rights Conspiracy in Count VII and Civil Conspiracy Under Pennsylvania Law in Count IX are Futile . . . . . . . . . . . . . . . . . . . . . . . . . 27

a. Conspiracy Claims Against Realen .. . . . . . . . . . . . . . . . . . . . . . . 27

i. Civil Conspiracy Under Pennsylvania Law

Against Realen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ii. Civil Rights Conspiracy Against Realen . . . . . . . . . . . . . 32

b. Conspiracy Claims Against Township Defendants .. . . . . . . . . . . 34

i. Civil Conspiracy Under Pennsylvania Law Against Township Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ii. Civil Rights Conspiracy Against Township Defendants . 35

3. Conspiracy to Intimidate Witnesses in Count VIII is Futile . . . . . . . . . . . 36

a. Witness Intimidation Claim Against Realen .. . . . . . . . . . . . . . . . 37

b. Witness Intimidation Claim Against Township Defendants .. . . . 39

4. First Amendment Retaliation Claim in Count X is Futile . . . . . . . . . . . . 40

5. Undue Delay, Bad Faith, or Dilatory Motive . . . . . . . . . . . . . . . . . . . . . . 42

V. CONCLUSION .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

I. INTRODUCTION

This case involves a civil rights action brought by two plaintiffs: (1) Plaintiff Thomas J. Timoney, Esquire, as Receiver for the Hankin Family Partnership ("Plaintiff Timoney")*fn1 and (2) Plaintiff Realen Valley Forge Greenes Associates ("Realen"). The named defendants are Upper Merion Township, the Board of Supervisors of Upper Merion Township, and the Upper Merion Township Zoning Hearing Board (together "Township Defendants"). The Complaint was originally filed on April 3, 2001 (Doc. No. 1), and was amended on May 17, 2001 (Doc. No. 7).*fn2

Before the Court is Plaintiff Timoney's Motion for Leave to Supplement the First Amended Complaint. (Doc. No. 115.) He seeks to add four new claims against Township Defendants, and also to bring the same four claims against the second plaintiff in this litigation, Realen. If the supplement is allowed, Plaintiff Realen would become a cross-claim defendant in this litigation. To support the request to file a supplemental pleading, Plaintiff Timoney asserts a change in circumstances since the First Amended Complaint was filed on May 17, 2001 (the "Amended Complaint"). The change involves an alleged conspiracy among Realen, the law firm of Kaplin Stewart Meloff Reiter & Stein, P.C. ("Kaplin"), which is Plaintiff Timoney and Realen's former counsel in this litigation, and Township Defendants. Plaintiff Timoney alleges that Realen, Kaplin, and Township Defendants engaged in a conspiracy to prevent Plaintiff Timoney and the Hankin Family Partnership ("Hankin") from obtaining the fair market value of certain property in which the Hankins have an interest. Because the Court finds that each of the proposed new claims fails on the ground of futility, the Court will deny Plaintiff Timoney's Motion.

II. SUMMARY OF FACTS AND PROCEDURAL HISTORY

A. Relevant Background

This lawsuit stems from a land dispute spanning seven decades and multiple layers of litigation in both state and federal court.*fn3 The dispute is over a 135-acre plot of land located in Upper Merion Township (the "Property"). As far back as the 1940s, the land was owned by the Hankin Family. In 1953, it was zoned for agricultural use. The approved use of the land under the "agricultural" rubric was for open space or a golf course. For years, Hankin and potential purchasers challenged the agricultural use zoning designation and sought to have the land rezoned for commercial use. In 1996, Realen became involved with the Property by entering into a Purchase Agreement with Hankin and agreeing to buy the Property contingent upon Realen obtaining the right to develop the Property commercially, either through rezoning or through a successful challenge to the validity of the agricultural zoning designation. The Agreement was amended in October 1997, and once again on May 8, 2003 (the "2003 Purchase Agreement").

(Doc. No. 120, Appendix ("App.") Tab 2.)

The 2003 Purchase Agreement set the sale price of the Property at $25 million plus financing costs. It also included an additional purchase price provision whereby Plaintiff Timoney would receive additional payment from Realen based on future profits if the Property were rezoned for commercial use (the "Additional Purchase Price"). The 2003 Purchase Agreement required Realen to challenge the Township's agricultural zoning designation before the Board of Supervisors or Zoning Hearing Board ("ZHB"), and to appeal any adverse decision to the Montgomery County Court of Common Pleas. (Id. ¶ D(1).)

Before and after Realen closed on the Property, Plaintiff Timoney, Realen, and Township Defendants were embroiled in litigation to establish the proper use and value of the Property. The multiple litigations are explained in more detail below. At this point, it is pertinent to know that in 1997 Realen challenged the agricultural use zoning designation before the ZHB, and, in 2001, appealed the ZHB's adverse decision to the Montgomery County Court of Common Pleas.*fn4

Also in 2001, Plaintiff Timoney filed a claim in Montgomery County Court of Common Pleas alleging that zoning restrictions on the Property amounted to an unconstitutional taking without just compensation. The same claim is made in the instant litigation. (See Doc. No. 7, Counts V and VI.)

As noted above, in 2001, Plaintiffs Timoney and Realen filed the instant action in federal court. Several years later, on June 24, 2004, Realen and Plaintiff Timoney closed on the sale of the Property. (Doc. No. 115 at 2.) Thereafter, the relationship between Plaintiff Timoney and Realen became strained. In 2005, Realen filed a claim in the Montgomery County Court of Common Pleas seeking a declaratory judgment that it could unilaterally dismiss this federal litigation and the state case involving the unconstitutional taking without just compensation without first obtaining the approval of Plaintiff Timoney. (Doc. No. 118 at 8.) By 2007, the acrimony between Plaintiff Timoney and Realen reached the point where Plaintiff Timoney filed a rescission action in the Montgomery County Court of Common Pleas seeking to overturn the 2003 Purchase Agreement, to regain control of the Property, and to rescind a Joint Prosecution Agreement between Plaintiff Timoney and Realen which allowed the Kaplin law firm to bring the instant suit in federal court and other suits in state court jointly on their behalf and individually on behalf of Realen. (Doc. No. 118 at 9.)

At the June 24, 2004 closing on the Property, Realen received title to the land and Hankin received payment of $27,046,106.56, which included finance costs added to the $25 million purchase price. (Doc. No. 120 at 4; Id., App. Tab 5 ¶ 54.) No Additional Purchase Price was paid. A dispute over Realen's failure to pay the Additional Purchase Price and the meaning of the Additional Purchase Price provision in the 2003 Purchase Agreement led to years of litigation, including the new claims being asserted in the instant federal action by Plaintiff Timoney.

1. Joint Prosecution Agreement

On May 17, 2001, Plaintiffs Timoney and Realen filed the Amended Complaint in this case against Township Defendants alleging denials of equal protection, substantive due process, procedural due process, and a taking without just compensation, all relating to the Board of Supervisors' opposition to rezoning the Property for commercial use and the denial of a validity challenge by the ZHB. (Doc. No. 7.) Prior to filing the original Complaint, Hankin and Realen entered into a contract on January 23, 2001 to confirm their mutual interest and agreement in all future litigation (the "Joint Prosecution Agreement"). (See Doc. No. 120, App. Tab 1.) Kaplin was retained as counsel for both Plaintiffs Timoney and Realen. Included in the Joint Prosecution Agreement is a conflict of interest waiver granting unilateral settlement power to Realen under certain circumstances. (Doc. No. 120 at 4; Id., App. Tab 1 ¶ 7F.) The Joint Prosecution Agreement states, in pertinent part:

Realen shall have the authority to cause Kaplin to settle either or both of the Additional Actions on behalf of Hankin and the consent of Hankin and/or Timoney shall not be required; but only if any such settlement shall entitle Realen to develop the Property for the Permitted Uses (as defined in Paragraph 5A(a) of the Amended Purchase Agreement). Realen shall not have the right to cause the settlement of the Additional Actions in a manner that would not permit the development of the Property for the Permitted Uses. (Id., App. Tab 1 ¶ 7F.) Paragraph 5A(a) of the Amended Purchase Agreement defines "Permitted Uses" as either Plan A*fn5 or Plan B*fn6 or "such other combination of uses as is satisfactory to the Purchaser." (Doc. No. 120, App. Tab 2 ¶ 5A(a)(i)-(iii).)

2. Realen and Township Defendants' Settlement Negotiations On October 28, 2004, Kaplin sent to Plaintiff Timoney a letter stating that the Township was willing to discuss settlement and that Realen believed it would be appropriate to stay the federal case pending settlement negotiations. (Doc. No. 120 at 5.) The letter provided that it was Kaplin's position that pursuant to Section 7 of the Joint Prosecution Agreement, Realen had authority to unilaterally stay the instant litigation and to pursue settlement discussions with Township Defendants. (Doc. No. 120, App. Tab 13 at 8978a.) The docket in the federal litigation reflects that, after the date of this letter, no party filed any challenge to Realen's authority to unilaterally seek a stay of the proceeding. On December 17, 2004, Judge Giles entered a stay of the case pending settlement negotiations between the parties. (Doc. No. 50.) No entries appear on the federal docket until almost a year later when, on October 5, 2005, current counsel for Plaintiff Timoney entered their appearance. (Doc. No. 51.)

On May 25, 2005, Realen (represented by Kaplin), together with Township Defendants, filed a Joint Motion and Proposed Settlement Agreement in the Montgomery County Court of Common Pleas, attaching a settlement proposal and seeking permission to dismiss a related inverse condemnation action pending in that court (see section II.A.3.b infra) and the instant federal action, if the Settlement Agreement was finalized. (Doc. No. 125, Exhibit ("Ex.") J.) Plaintiff Timoney was not named as a party in this state action and was not served with a copy of the joint motion. (Doc. No. 115, Ex. A ¶ 48.) Plaintiff Timoney was informed of the Proposed Settlement Agreement on September 29, 2005. (Id., Ex. A ¶ 49.)

On April 20, 2006, Realen and Township Defendants entered into a settlement agreement. (Doc. No. 120 at 6.) The agreement required Realen to cause the dismissal of the instant federal action as well as the pending state court inverse condemnation action. In exchange, Township Defendants would approve Realen's proposed "Plan C," which allowed for nonagricultural development of the Property. Realen would also release all claims that "could have been asserted against [the Township] in [the instant federal action] . . . even if it is determined that Realen may not dismiss the claims of Timoney and Hankin in [the instant federal action]."*fn7 (Doc. No. 115, Ex. A ¶¶ 51-54.)

3. Relevant State Court ...


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