United States District Court, E.D. Pennsylvania
BARCLAY SURRICK, J.
before the Court are Defendant's Motion for Partial
Summary Judgment (ECF No. 34) and Plaintiff's Motion for
Summary Judgment (ECF No. 35). For the following reasons, the
Motions will be denied.
action is a dispute over the terms of a purported settlement
agreement between Plaintiff Nationwide Insurance Company
(“Nationwide”) and Defendant Franklin Mills
Associates Limited Partnership (“Franklin
The Assessment Litigation
the second time that these parties have been before this
Court to settle a dispute over a property located at 1933
Franklin Mills Circle, a/k/a 4301 Byberry Road, Unit M3,
Philadelphia, Pennsylvania (the “Property”). The
Property is part of a parcel of land that was developed as
the Franklin Mills Mall. (Compl. ¶ 7, ECF No. 1.) In the
first action (the “Assessment Litigation”),
Franklin Mills filed a complaint alleging that Nationwide
owed it promotional and maintenance assessment payments (the
“Assessments”) related to the Property.
(See Compl., Franklin Mills Assocs., L.P. v.
Nationwide Life Ins. Co., No. 09-3045 (E.D. Pa. July 8,
2009), ECF No. 1.) The parties filed cross-motions for
summary judgment at the close of discovery. We determined
that “the covenant to pay Annual Assessments runs with
the land and is binding on subsequent property owners.
Accordingly, summary judgment in favor of Plaintiff on its
breach of contract claim is appropriate with respect to
Defendant's liability to pay Annual Assessments.”
Franklin Mills Assocs., L.P. v. Nationwide Life Ins.
Co., 836 F.Supp.2d 238, 250 (E.D. Pa. 2011). Summary
judgment with respect to damages was denied pending further
discovery and a trial, if necessary. Id. at 250-51.
The Settlement Agreement
our summary judgment decision, the parties engaged in a
settlement conference (the “Settlement
Conference”) before then-Magistrate Judge L. Felipe
Restrepo. Jay Kagan, Esq., represented Franklin Mills at the
conference, while Paul Scheuritzel, Esq., represented
Nationwide. Each party also had a corporate representative
present for the negotiations, namely James Owen, Esq. for
Franklin Mills and Dana Anthony, Esq. for Nationwide. At the
Settlement Conference, which took place on May 31, 2012,
Nationwide and Franklin Mills reached an agreement (the
“Settlement Agreement”) to settle the Assessment
Action, the essence of which was read into the record before
Judge Restrepo as follows:
Mr. Kagan: We have resolved the litigation for a total sum of
$1, 450, 000. Of that amount, $636, 000 is to be paid to my
client on or before June 10th, 2012. The remaining
$814, 000 will be paid at the closing of a real estate
transaction which I'm going to discuss.
As a secondary part of the resolution of this case, Franklin
Mills has agreed to take-take ownership of this particular
parcel of land from Nationwide subject to a couple of
conditions. The first: Franklin Mills will be afforded an
opportunity to expect [sic] the premises and Mr. Scheuritzel
and I will workout [sic] some language setting forth the
criteria for that inspection and any limitations relating
Nationwide has also indicated that it will provide insurable
title to Franklin Mills. We have advised Nationwide that this
entire transaction has to be approved by David Simon, the CEO
of Simon Property Group and, also, has to be approved by
Franklin Mills and Simon Property Group's lenders.
Mr. Scheuritzel: And, just, it's my understanding that
these points will be reduced to a-a settlement agreement with
mutual releases according to customary terms before June
Mr. Kagan: Yes.
Mr. Scheuritzel: And-and that we would like a confidentiality
provision as well. I imagine you would, too.
Mr. Kagan: Yes.
(May 31, 2012 Hr'g Tr. 3:25-5:1, Compl. Ex. A.)
Nationwide alleges that during negotiations with Judge
Restrepo, the parties agreed that Franklin Mills' right
to reject the Property would be limited to a situation in
which the inspection revealed the building to be structurally
unsound (the “Structural Inspection Limitation”).
(Compl. ¶ 14.) Nationwide also alleges that it disclosed
that there were issues regarding water infiltration with the
Property, and that it would not accept this as a reason for
Franklin Mills to reject the Property. (Id.) On May
31, 2012, understanding that the matter had been settled, we
entered an order dismissing the Assessment Action pursuant to
parties focused on the June 10 date to put the Settlement
Agreement in writing because the trial on damages was
scheduled to begin on June 11, 2012. (Compl. ¶¶ 8,
15.) In the weeks following the Settlement Conference,
Nationwide and Franklin Mills engaged in a series of
communications in an attempt to fulfill the terms of the
Settlement Agreement. Excerpts from the email chain between
Messrs. Scheuritzel and Kagan read as follows:
June 5, 2012 (1:35 PM): Mr. Kagan (Franklin Mills) to Mr.
Please forward the [$636, 000] check to me on or before June
10 (which I just realized is a Sunday-so preferably by Friday
6/8). Thank you. Jay June 5, 2012 (2:49 PM): Mr.
Scheuritzel to Mr. Kagan Thanks. Have Mr. Simon and the
lenders approved the settlement?
June 7, 2012 (2:20 PM): Mr. Kagan to Mr. Scheuritzel
Paul-we need a current Phase 1. Thereafter, the documentation
needed to close will include an acceptable property condition
report, title report, survey, zoning compliance, no legal
violations rep and closing adjustments for real estate taxes.
Please be reminded that the check for $636, 000 should be
delivered to my office tomorrow.
June 7, 2012 (6:26 PM): Mr. Scheuritzel to Mr. Kagan
Please take a look at the attached agreement, which I believe
embodies our discussions. In it, I have tried to address your
concerns expressed below. Zoning compliance will be shown by
an ALTA survey. We'll also need an L&I cert to
transfer the property, so I think the items you raise are
unlikely to cause problems.
My client has yet to review the attached, so I need to
reserve their comments.
(Compl. Ex. C.)
attachment to this email is a draft of the written Settlement
Agreement (“June 7 Proposed Written Agreement”)
created by counsel for Nationwide. It contains the following
2.Transfer of the property. Subject only to
a physical inspection of the Property by a reputable and
independent third-party inspector reasonably acceptable to
Nationwide engaged by Franklin Mills, which inspection shall
be completed within thirty (30) days after execution of this
Confidential Settlement Agreement and Release and documented
in a written report, Nationwide shall transfer and Franklin
Mills will accept by quit claim deed insurable title . . . to
the Property. Such transfer shall occur within forty-five
(45) days after execution of this Confidential Settlement
Agreement and Release. Simultaneous with the transfer of
title to the Property from Nationwide to Franklin Mills,
Nationwide shall make an additional payment to Franklin Mills
in the amount of Eight Hundred Fourteen Thousand Dollars
($814, 000.00), to be paid to Franklin Mills Associates
Limited Partnership by check . . . .
The purpose of Franklin Mills' physical inspection of the
Property is to determine whether the structural elements
(those that are load bearing) of the existing improvements at
the Property are sound. Franklin Mills agrees to accept
transfer of the Property unless structural repairs are
required and necessary to render such improvements suitable
for occupation and such repairs will cost more than $1, 000,
000 to implement . . . .
Except as otherwise provided herein, Franklin Mills shall
accept the Property “as is.”
separate June 7, 2012 email exchange between Kagan and
Scheuritzel each sought to clarify his client's position:
2012 (4:14 PM): Mr. Kagan to Mr. Scheuritzel
Thx. Just to clarify--your email to me earlier asked about
Mr. Simon and the lenders approving the
“settlement”. Your question was a bit broad. They
have already approved the settlement of the lawsuit for $636,
000. We advised of that at the mediation last week. They are
now in the process of looking at, evaluating and approving
the transaction taking the property into the Simon portfolio.
My last email to you contained a list of items we need to
complete that process. Thx.
June 7, 2012 (4:23 PM): Mr. Scheuritzel to Mr. Kagan
As far as we are concerned there is one settlement
transaction that needs to be approved in principle before the
$636, 000 is paid. Nationwide will pay the $636, 000 subject
to a later inspection for structural problems and delivery of
insurable title (which ...