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Pocono Summit Realty, LLC and Mt. Pocono Realty Partners, L.P v. Ahmad Amer

IN THE SUPERIOR COURT OF PENNSYLVANIA


June 22, 2012

POCONO SUMMIT REALTY, LLC AND MT. POCONO REALTY PARTNERS, L.P., APPELLANTS
v.
AHMAD AMER, LLC, APPELLEE

Appeal from the Order Dated July 6, 2011 In the Court of Common Pleas of Monroe County Civil Division at No(s): 607 CV 11

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

J-A08027-12

BEFORE: STEVENS, P.J., ALLEN, J., and OLSON, J.

OPINION BY STEVENS, P.J.

This is an appeal from the Order of the Court of Common Pleas of Monroe County, which entered a declaratory judgment in favor of Defendant/Appellee Mt. Pocono Retail, LLC, formerly known as Ahmad Amer, LLC, ("Amer")*fn1 and against Plaintiffs/Appellants Pocono Summit Realty, LLC and Mt. Pocono Realty Partners, L.P. ("PSR") on PSR's action to quiet title and seek declaratory relief regarding the interpretation of a restrictive covenant encumbering real estate owned by PSR. Specifically, the court ruled that a restrictive covenant providing that no part of the real property in question may be used in the operation of a grocery store prohibited PSR from using the property as a parking lot and storm water control for a grocery store situated on an adjoining lot. By interpreting the clause "operation of a...grocery store" to include such uses, PSR contends, the court contravened established precedent disfavoring restrictive covenants on the use of land and requiring courts to limit the reach of such covenants to their express terms. After careful review, we affirm.

The lower court's Opinion of July 6, 2011 provides an apt factual and procedural history of the matter as follows:

Plaintiffs commenced this action by filing a Complaint on January 24, 2011, seeking a declaration interpreting Plaintiff's rights under a land use restriction encumbering Plaintiff Pocono Summit ("PSR") property. Defendant filed an Answer to the Complaint with New Matter on February 16, 2011. Plaintiffs filed a Motion for Judgment on the Pleadings on March 18, 2011, and Defendant filed its response to Plaintiff's Motion on April 6, 2011. All parties have filed briefs and oral argument was heard before the Court on May 2, 2011.

Reviewing the record in the light most favorable to Defendant, the non-moving party, the relevant facts in this case follow. Plaintiff Pocono Summit Realty ("PSR") currently owns approximately 12.35 acres of property located on Pocono Summit Road (State Route 940) in the Borough of Mount Pocono (hereinafter the "PSR Property"). Defendant [Amer] owns approximately 21.386 acres of property contiguous with, and adjacent to, the PSR property on Pocono Summit Road (SR 940) in Mount Pocono (hereinafter the "Amer Property").

The PSR Property and Amer Property were formerly one parcel owned by Montovision Realty, Inc. The large parcel was subdivided to create what are now known as the PSR property and the Amer Property pursuant to a "Minor Subdivision of Lands" plan recorded on August 25, 1989 in Map Book 61, Page 347.[] The subdivision plan designates the Amer Property as Lot 1 and the PSR Property as Lot 2.

On August 30, 1989, Montovision Realty, Inc. conveyed the Amer Property to Mount Pocono Retail Associates, L.P., Defendant's predecessor in title. At the time of such conveyance, Montovision recorded a "Declaration of Covenants" dated August 30, 1989 and recorded in Book 1698, Page 1798. The Declaration contains several restrictive covenants including the following restriction (the "Restriction"):

1. No part of Lot 2 will be used for the operatioon of a discount department store (e.g., such as a K Mart, Ames or a Jamesway) or grocery store.

2. The foregoing restriction shall continue for the maximum period permitted under Pennsylvania law unless, prior to the expiration of such period, the Owner of Lot 1 agrees in writing to the termination of such restriction.

3. The restriction contained herein is a covenant running with the land.

On June 3, 1998, Defendant acquired title to teh Amer Property from Mount Pocono Retail Associates, L.P. by deed dated June 3, 1998, and recorded on June 9, 1998 in Book 0249, Page 2608. The Amer Property is developed with a shopping center. On January 11, 2006, Defendant agreed to modify the Restriction to clarify that a Convenience Store is not a "grocery store" as referred to in the Restriction and is not prohibited on the PSR Property.

On September 20, 2006, PSR acquired the PSR Property from Six Eleven Development Corp., by deed dated September 20, 2006 and recorded on October 31, 2006 in the Monroe County Recorder of Deeds Office, Book 2286, Page 553. PSR intends to develop the PSR Property with a shopping center comprised of a series of retail stores and an affiliated parking lot. On September 29, 2006, PSR entered into a Ground Lease with Plaintiff Mount Pocono Realty Partners ("MPRP"), whereby MPRP agreed to lease the PSR Property from PSR for a period of twenty years under and subject to the Restriction. PSR and MPRP are also the equitable owners of a 1.377 acre parcel of property, formerly Lot 211 on plat of lots "The Fells" Coolbaugh Township, adjoining the PSR Property (hereinafter "Adjoining

Property"). MPRP acquired said property by Agreement of Sale dated December 7, 2010, and recorded in Book 2381, Page 3156.

PSR and MPRP seek to develop the Adjoining Property with a supermarket or grocery store. The Adjoining Property is not encumbered by the Restriction and the proposed supermarket will be located entirely on the Adjoining Property. However, as part of the development of the proposed supermarket, PSR and MPRP intend to enter into a "shared parking" agreement whereby PSR and MPRP may use a portion of the parking lot on the PSR Propety to satisfy the parking requirments for the development of the proposed supermarket. PSR and MPRP also anticipate that all or a portion of the utilities and storm water management facilities servicing the proposed supermarket may be located on the PSR Property.

Defendant [Amer] contends that the use of any portion of the PSR Property to satisfy any parking requirements of a grocery store or to provide any utilities and/or storm water management facilities for a grocery store is prohibited under the Declaration. PSR and MPRP, collectively, support the postion that such use would not violate the Restriction.

Plaintiffs filed a Complaint for (1) quiet title and (2) a declaratory judgment, seeking a declaration that their proposed use of the PSR Property would not constitute a violation of the Restriction. Plaintiffs then filed [a] Motion for Judgment on the Pleadings arguing that the plain language of the Restriction does not restrict or prevent the proposed use of the PSR Property. As such, Plaintiffs argue[d] they [were] entitled to judgment on the pleadings because the parties admit[ted] the existence of a dispute regarding the interpretation of the Restriction. [The court, however, concluded that the proposed use violated the Restriction, as the proposed parking lot was a requisite part of the operation of the grocery store in question.]

Lower Court Opinion dated 7/6/11 at 1-6.

On the same day, the court filed an order entering judgment in favor of Appellee/Defendant Mt. Pocono Retail, LLC, formerly known as Ahmad Amer, LLC, and against Appellants/Plaintiffs Pocono Summit Realty, LLC and Mt. Pocono Realty Partners, L.P. The court further ordered that a declaratory judgment was entered ordering that the PSR Property shall not be used to fulfill parking and/or utility requirements for the operation of a grocery store located on adjoining property consistent with the Restriction.

Herein, Appellants raise the following issue for our review:

AS A MATTER OF LAW, DOES A RESTRICTIVE COVENANT PROHIBITING THE "OPERATION" OF A "GROCERY STORE" ON APPELLANT'S RESTRICTED PROPERTY PRECLUDE APPELLANTS FROM (1) CONSTRUCTING A PARKING LOT ON THE RESTRICTED PROPERTY WHICH WOULD SERVICE THE RESTRICTED PROPERTY AND A PROPOSED SUPERMARKET TO BE LOCATED ENTIRELY ON AN ADJOINING UNRESTRICTED PROPERTY, AND (2) INSTALLING UTILITIES ON THE RESTRICTED PROPERTY TO SERVICE THE PROPOSED SUPERMARKET, WHERE THE EXPRESS TERMS OF THE RESTRICTIVE COVENANT GO NO FURTHER THAN PROHIBITING THE "OPERATION" OF A "GROCERY STORE" AND WHERE SUCH RESTRICTIVE COVENANTS ARE DISFAVORED UNDER THE LAW AND ARE TO BE STRICTLY CONSTRUED?

Brief for Appellants at 4.

Our review of a trial court's disposition of a declaratory judgment is governed by the following standard of review:

Our standard of review in a declaratory judgment action is limited to determining whether the trial court clearly abused its discretion or committed an error of law. We may not substitute our judgment for that of the trial court if the court's determination is supported by the evidence.

State Automobile Mut. Ins. Co. v. Christie, 802 A.2d 625, 627-628 (Pa. Super. 2002) (citations and quotations omitted). Additionally, [w]e will review the decision of the lower court as we would a decree in equity and set aside the factual conclusions of that court only where they are not supported by adequate evidence. The application of the law, however, is always subject to our review.

O'Brien v. Nationwide Mut. Ins. Co., 455 Pa.Super. 568, 689 A.2d 254, 257 (Pa.Super.1997) (citation omitted).

Commerce Bank/Harrisburg, N.A. v. Kessler, 2012 WL 1610139, 3 (Pa. Super. May 9, 2012).

Our review of the record, party briefs, and the lower court opinion in the case sub judice reveals no reason to disturb the judgment entered below. Employing the strict standard governing the interpretation of restrictive covenants--which we need not reproduce herein--the lower court discerned in the proposed use of the PSR property (Lot 2) a "plain disregard" of the Restriction therein that no part of the lot be used in the operation of a grocery store. The record supports the court's determination, for, to comply with governing local ordinances, the operation of a grocery store as proposed on the adjoining lot would require the parking spaces and storm water management utilities as proposed on the PSR lot (Lot 2). As such, if used as proposed, the PSR lot would be a necessary component in the operation of a grocery store. This Court therefore agrees that a strict yet "common sense" reading of the ordinary language in the Restriction leads to the conclusion that the clause "operation of a...grocery store" contemplates parking and other utilities necessary to the store's lawful operation. Moreover, it is apparent from the record that the initial purpose of applying restrictive covenants to Lot 2 at the time of the 1989 subdivision--i.e., to prevent the use of Lot 2 from competing with the intended department store use of the much larger Lot 1--is still relevant to Appellee's investment in Lot 1. As such, the apparent object or purpose of the parties further militates in favor of the decision arrived at by the lower court.

We likewise find the restrictive covenant in Siciliano v. Misler, 399 Pa. 406, 160 A.2d 422 (1960), upon which Appellants rely, distinguishable. Contrary to Apppellants' contention, the restriction in Siciliano was not more restrictive than the Restriction presently at issue; it was merely more descriptive in defining the restriction as it related to use of the land as a parking lot. Indeed, the Pennsylvania Supreme Court interpreted this additional language to limit the scope of the parking restriction to include only those instances where proposed parking was for "such a store" as described earlier in the covenant, namely, a store situated on the lot. In stark contrast, the present Restriction broadly states that "no part of the lot shall be used in the operation of a grocery store," without specific reference to where the grocery store itself is situated. We thus concur with the lower court's analysis distinguishing Siciliano.

For the foregoing reasons, we adopt the cogent and comprehensive opinion authored by the Honorable Jennifer Harlacher Sibum in disposing of Appellants' appeal.

Order is affirmed.


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