Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Township of Bristol v. 1 Enterprises, LLC

Commonwealth Court of Pennsylvania

January 5, 2018

Township of Bristol
v.
1 Enterprises, LLC, Appellant Township of Bristol, Appellant
v.
1 Enterprises, LLC

          Argued: December 4, 2017

          BEFORE: HONORABLE ROBERT SIMPSON, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE JAMES GARDNER COLINS, Senior Judge.

          OPINION

          JAMES GARDNER COLINS, SENIOR JUDGE

         These are consolidated cross-appeals from a judgment entered by the Bucks County Court of Common Pleas (trial court) in an eminent domain case in the amount of $61, 500 in favor of African Century Industries, LLC (Condemnee) and against the Township of Bristol (Township), following a nonjury trial. For the reasons set forth below, we affirm.

         On October 27, 2006, the Township filed a Declaration of Taking condemning a property situated at 1248/1250 Murphy Drive (also known Marie Lowe Drive), Bristol Township and identified on the Bucks County Tax Map as Tax Map Parcel 5-61-499 (the Property) for the purpose of constructing a recreation and community center. (Declaration of Taking, Reproduced Record (R.R.) at 17a-33a.) Condemnee, a Delaware limited liability company, had purchased the Property on January 10, 2006 for $40, 000 and was the owner of the Property at the time of the taking. (Declaration of Taking ¶2, R.R. at 17a; Deed, R.R. at 25a-26a.) At the time that Condemnee purchased the Property, there were recorded Internal Revenue Service (IRS), Pennsylvania Department of Labor & Industry (Department of Labor & Industry), and Bristol Borough Water & Sewer Authority (Water & Sewer Authority) liens against the Property. (Petition to Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-44a; Memorandum of Law in Opposition to Petition to Distribute Just Compensation, R.R. at 67a-68a.) These liens were filed against the Property between 1997 and 2003 and the amount of those liens, as of the dates that they were filed, totaled $94, 700.60. (Petition to Distribute Just Compensation Ex. A, Title Report, R.R. at 42a-44a; Memorandum of Law in Opposition to Petition to Distribute Just Compensation, R.R. at 67a-68a.) Condemnee did not pay down any of these liens during its ownership of the Property. (Trial Transcript at 86-87.)

         In the Declaration of Taking, the Township estimated the just compensation for the Property at $115, 000. (Declaration of Taking ¶10, R.R. at 18a.) Condemnee filed a petition for appointment of a board of viewers on March 9, 2007, and the trial court appointed a board of viewers to determine just compensation. On April 2, 2007, the Township filed a petition to distribute just compensation seeking to pay the estimated $115, 000 just compensation into court because Condemnee would not consent to payment of the liens on the Property. In response, Condemnee admitted that the $94, 700.60 in IRS, Department of Labor & Industry, and Water & Sewer Authority liens shown on the Township's title report for the Property were valid liens on the Property when the Declaration of Taking was filed. (Answer to Petition to Distribute Just Compensation ¶¶6, 10-11, R.R. at 54a-55a; Memorandum of Law in Opposition to Petition to Distribute Just Compensation, R.R. at 67a-68a.) Condemnee also admitted that the Township could pay the $94, 700.60 face amount of these liens to those three lienholders from the just compensation, but contended that the Township could not pay any interest or penalties on those liens. (Answer to Petition to Distribute Just Compensation ¶¶6, 10-11, R.R. at 54a-55a; Memorandum of Law in Opposition to Petition to Distribute Just Compensation, R.R. at 67a-68a.) On October 26, 2007, the trial court issued an order denying the Township's request to pay the estimated just compensation into court and ruling that the Township "shall distribute damages to the Condemnee directly in the sum of $115, 000 less any liens (with any interest, penalties and fees allowable by law) existing as of the date of the Declaration of Taking, October 27, 2006." (R.R. at 77a.)

         On September 27, 2007, while the Township's petition was pending, the board of viewers filed its report awarding $140, 000 in just compensation and $2, 500 for Condemnee's appraiser's fees. (Report of the Board of View, R.R. at 182a-185a.) Condemnee appealed the board of viewers' decision to the trial court the same day and demanded a jury trial. On November 10, 2008, the Township paid the $140, 000 awarded by the board of viewers to the three holders of liens and municipal claims on the Property, paying $116, 474.15 to the IRS, $7, 082.47 to the Department of Labor & Industry, and $16, 443.38 to the Water & Sewer Authority. (Certified Record Item 37, Condemnee's Petition for Declaratory Relief ¶¶11-13 & Exs. 7-9; Certified Record Item 40, Township Petition to Strike Petition for Declaratory Relief ¶¶3-4 & Ex. B.)

         Between April 2009 and October 2014, Condemnee filed several unsuccessful motions in the trial court, variously titled as motions for declaratory judgment and for contempt, challenging the Township's payment of the $140, 000 to the lienholders, and filed three appeals from denial of those motions, which this Court quashed as interlocutory. (Docket Entries, R.R. at 6a-12a.) On September 9, 2012, the trial court ordered that discovery and expert reports be completed by December 1, 2012. (Id., R.R. at 8a.) Between October 2012 and the end of 2015, the case was placed on the trial list multiple times, but no trial was held. (Id., R.R. at 8a-12a.) Following a May 2014 trial court order placing the case on the trial list and a contempt motion filed by Condemnee that was scheduled for a hearing on August 8, 2014, the Township, on August 1, 2014, served a notice to attend and produce documents on Condemnee. (Notice to Attend and Produce, R.R. at 129a-130a.) Condemnee filed a motion to quash the notice; the trial court did not rule on the motion to quash and denied the contempt motion. (Docket Entries, R.R. at 10a.)

         On February 4, 2015, Condemnee executed a document assigning all of its rights to the Property and all of its rights in the condemnation proceeding to 1 Enterprises, LLC (Assignee), a Delaware limited liability company formed on January 22, 2015. (Assignment of Property Rights, R.R. at 262a-264a; Township Motion to Dismiss Ex. B, R.R. at 250a.) On March 9, 2015, counsel for Condemnee filed a praecipe to substitute Assignee as a party in the condemnation as the successor in interest to Condemnee and entered his appearance as counsel for Assignee. (Praecipe to Substitute, R.R. at 260a-261a; Docket Entries, R.R. at 12a.) The Township did not file any motion to strike this substitution or challenge the validity of the assignment in response to this praecipe. (Docket Entries, R.R. at 12a.)

         On March 4, 2016, the trial court ordered the case placed on the April 4 to April 15, 2016 trial list. (Docket Entries, R.R. at 13a.) On April 1, 2016, the Township filed a motion to dismiss the appeal from the board of viewers for lack of standing on the ground that Condemnee's certificate of formation had been canceled by the state of Delaware. (Township Motion to Dismiss, R.R. at 239a-254a.) The Township based its motion to dismiss on a September 17, 2014 printout from the Delaware Department of State, Division of Corporation website showing that Condemnee's certificate had been canceled on June 1, 2009 for nonpayment of taxes. (Id. Ex. A, R.R. at 248a.) The Township also filed a pretrial motion in limine on March 29, 2016 to exclude the testimony of Condemnee's appraiser. (Township Motion in Limine, R.R. at 211a-238a.)

         On April 4, 2016, the case came to trial. The trial court denied the Township's motion in limine to exclude Condemnee's appraiser on the grounds that the Township's arguments were issues of credibility. (Trial Transcript at 77.) On the Township's motion to dismiss, the trial court held that Condemnee was the real party in interest, rather than Assignee, because the cancelation of Condemnee's certificate invalidated its 2015 assignment, and ruled that the trial would proceed with Condemnee, and not Assignee, as a party. (Id. at 50-74, 100-05, Supplemental Reproduced Record (Supp. R.R.) 3b.) Following these rulings and rulings on motions and arguments made by Condemnee, the parties waived jury trial. (Id. at 136, Supp. R.R. at 27b.) The trial court then held a one-day nonjury trial and viewed the Property the next day, April 5, 2016. (Id. at 136-211; Trial Court Findings and Verdict at 1.) At the trial, Condemnee put in evidence its appraiser's testimony before the board of viewers opining that the fair market value of the Property at the date of the October 27, 2006 taking was $455, 000 and its appraiser's report. The Township called as an expert witness an appraiser who inspected the Property in 2008 and opined that the fair market value of the Property at the date of the taking was $150, 000, and introduced in evidence its appraiser's report and supporting documents.[1]

         On April 6, 2016, the trial court entered a verdict awarding Condemnee $200, 000 for the value of the Property on the date of the taking, finding that the Township was entitled to a credit of $140, 000 against this amount for its lien payments, and awarding Condemnee appraisal and attorney fees of $4, 000, as to which the Township was entitled to a credit of $2, 500 for appraisal fees already paid. (Trial Court Findings and Verdict at 4.) Both parties filed motions for post-trial relief. The trial court denied the post-trial motions on May 12, 2016, but did not enter judgment. On June 7, 2016, before judgment was entered by the trial court, counsel for Condemnee and Assignee filed a praecipe to substitute Assignee as a party, attaching a May 25, 2016 Certificate of Good Standing from the State of Delaware showing that Condemnee had been restored to good standing. (Praecipe to Resubstitute Party, R.R. at 255a-258a.) The Township did not file any motion to strike or challenge this substitution. (Docket Entries, R.R. at 15a.) On April 25, 2017, on the praecipe of counsel for Condemnee and Assignee, the trial court entered judgment in favor of Condemnee in the amount of $61, 500 in accordance with its April 6, 2016 verdict. (Id.; Certified Record Item 153.) Both Assignee and the Township appealed from the judgment and the appeals were consolidated by this Court.[2]The Township's Appeal

         The Township argues as the primary ground of its appeal that the trial court's judgment must be reversed because Condemnee did not have standing to pursue its claim for just compensation.[3]

         Delaware's Limited Liability Company Act, under which Condemnee was formed, provides that a limited liability company's certificate of formation may be canceled for nonpayment of taxes and that a limited liability company "may not maintain any action, suit or proceeding" while it is not in good standing due to nonpayment of taxes. 6 Del. Code § 18-1107(h), (1); 6 Del. Code § 18-1108. The Delaware Limited Liability Company Act also prohibits maintenance of any action or proceeding by an assignee of a limited liability company that is not in good standing where the assignment was made while the limited liability company was not in good standing. 6 Del. Code § 18-1107(1). Condemnee's certificate had been canceled for nonpayment of taxes in 2009 and Condemnee's and Assignee's counsel admitted that Condemnee had not yet paid the outstanding tax liabilities to be restored to good standing at the time the case came to trial. (Township Motion to Dismiss Ex. A, R.R. at 248a; Trial Transcript at 100-01.)

         The cancelation of Condemnee's certificate was a curable defect, however, not a permanent bar to Condemnee's and Assignee's rights in this eminent domain case. Under the Delaware Limited Liability Company Act, cancelations and loss of good standing for nonpayment of taxes do not dissolve the limited liability company or permanently divest it or its assignees of rights. 6 Del. Code § 18-1107(i), (k), (1), (m); Chantz Enterprises, LLC v. JHL Brighton Design/Decor Center, LLC, (Del. Super. No. 09C-06-072 MJB, filed June 30, 2010), 2010 WL 2642885 at *3; Western States Federal Contracting, LLC v. Department of Veterans Affairs, 667 Fed.Appx. 775, 777 (Fed. Cir. 2016). The statute expressly provides for restoration of the company to good standing upon payment of all taxes, interest and penalties and limits its prohibitions to the period before the company has been restored to good standing. 6 Del. Code § 18-1107(i), (1).[4] A limited liability company's cause of action therefore may not be dismissed on the ground that its certificate was canceled or it was otherwise not in good standing earlier in the litigation, if it later pays the taxes, interest and penalties and is restored to good standing while the litigation is pending. Chantz Enterprises, LLC, 2010 WL 2642885 at *3; Western States Federal Contracting, LLC, 667 Fed.Appx. at 777. In addition, the Delaware Limited Liability Company Act provides that loss of good standing for failure to pay taxes does not invalidate the company's contracts or bar the company from defending proceedings against it. 6 Del. Code § 18-1107(m). In May 2016, after the trial and verdict but before judgment was entered, Condemnee was restored to good standing. (Certificate of Good Standing, R.R. at 258a.)

         The Township contends that the trial court was required to grant its motion to dismiss Condemnee's appeal from the board of viewers for lack of standing because it was statutorily barred from litigating at the time of trial and because Condemnee had no interest in the litigation as a result of its assignment of its rights to Assignee.[5] We conclude that this claim of error is barred by waiver because the Township failed to timely challenge Condemnee's standing and agreed at trial that the proceeding could be adjudicated with Condemnee as a party.

         Lack of standing is not a jurisdictional defect. Commonwealth v. Allen, 107 A.3d 709, 711 n.1 (Pa. 2014); City of Philadelphia v. Rivera, 171 A.3d 1, 6 (Pa. Cmwlth. 2017). Objections to lack of standing, including claims of lack of capacity to sue, must be raised at the earliest opportunity and are waived if not promptly raised. Erie Indemnity Co. v. Coal Operators Casualty Co., 272 A.2d 465, 467 (Pa. 1971); Hall v. Episcopal Long Term Care, 54 A.3d 381, 399 (Pa. Super. 2012); Carroll v. Exeter Township, (Pa. Cmwlth., No. 1580 C.D. 2013, Aug. 4, 2014), slip op. at 16-17 n.18, 2014 WL 3812323 at *6 n.18.[6]

         The Township did not raise its objections to Condemnee's standing at the earliest opportunity. It was aware of the cancelation of Condemnee's certificate in 2014, as it attached a September 2014 printout of Condemnee's status as the basis for its motion to dismiss. (Township Motion to Dismiss Ex. A, R.R. at 248a.) The Township also received notice in March 2015 that Condemnee asserted that it had assigned all of its rights in the case to Assignee. (Praecipe to Substitute, R.R. at 260a.) Notwithstanding this knowledge, the Township did not raise its claim that Condemnee lacked standing until April 1, 2016, three days before trial, over a year after it knew of the bases on which it challenged Condemnee's standing. Because the Township did not timely raise the issue, its challenge to Condemnee's standing as a party at trial was waived and cannot constitute a ground for reversal of the trial court's judgment. Hall, 54 A.3d at 399 (challenge to plaintiff's standing was barred by waiver where it was first raised at trial in a directed verdict motion); Carroll, slip op. at 16-17 n.18, 2014 WL 3812323 at *6 n.18 (challenge to party's right to litigate eminent domain case under assignment of rights was barred by waiver where it was first raised by motion in limine).[7]

         In addition, the Township's counsel waived his objection to Condemnee's standing in his statements to the court at trial. Although the Township sought dismissal of Condemnee's claims in its motion, after the trial court indicated reluctance to dismiss the case in its entirety since Condemnee still had rights that it could enforce if restored to good standing, counsel for the Township agreed that the case could proceed with Condemnee as a party and expressed only concern with evidence rather than capacity to sue or standing:

THE COURT: Well, are you saying that they have to somehow resurrect ACI [Condemnee] with the Delaware Corporation Bureau before it can do anything?
MR. SACCO [Township Counsel]: Yes.
THE COURT: Okay. And that if they don't do that the rights vanish or the rights ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.