Horsham Blair Mill Arct, LLC v. TFV Inv'rs Assocs.

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HORSHAM BLAIR MILL ARCT, LLC v. TFV INVESTORS ASSOCIATES, LP, HORSHAM 1130 GP LLC and THOMAS F. VERRICHIA

Civil Action No. 23-2745

United States District Court, E.D. Pennsylvania

February 28, 2024

MEMORANDUM

Juan R. Sanchez, C.J.

SB PB Victory, LP (“Victory”) moves to re-open this case and intervene as a plaintiff in this action, asserting its interest in enforcing its contract with Defendant Thomas F. Verrichia will be jeopardized if it cannot participate in these proceedings. Because Victory's motion is untimely and its interests in this matter can be adequately represented by the existing parties, the motion shall be denied.

BACKGROUND

On July 18, 2023, Plaintiff Horsham Blair Mill ARCT, LLC (“ARCT Partner”) filed a complaint against Defendants TFV Investors Associates, LP (“TFV”), Horsham 1130 GP LLC (“Horsham GP”), and Thomas F. Verrichia (“Verrichia”), alleging breach of contract and seeking a declaratory judgment. Compl. ¶¶ 81, 93 98, ECF No. 1. On September 8, 2017, ARCT Partner and the Defendants entered into a Partnership Agreement and thereby created Horsham - Blair LP.^[1]The Agreement established Horsham GP as the General Partner of Horsham - Blair LP with a 0.5% ownership interest, and granted Horsham GP powers to manage the Partnership and serve as its agent for purposes of its business. Compl. Ex. 1. TFV and ARCT Partner were established as the limited partners of Horsham - Blair LP with respective ownership interests of 49.5% and 50% of the partnership. Id. The Agreement also outlines the terms and purpose of the partnership: to acquire, develop and own a shopping center in Horsham, Montgomery County, Pennsylvania, commonly known as Horsham Commons (the “Horsham Project”). Compl. ¶¶4-5; Ex. 1.

The Partnership Agreement also binds the partners to perform duties in good faith and in the best interests of the partnership, but protects them from liability for any loss or damage to the partnership unless it resulted from fraud, deceit, gross negligence, willful misconduct or wrongful taking. Compl. Ex.1, §6.1. Recognizing that irreparable harm would result if any of the provisions were not performed in accordance with the specific terms, and money damages would not adequately compensate for such harm, the Agreement also provides the partners with the remedies of specific performance and injunctive relief. Id. Article XII of the Agreement also outlines the partners' rights to initiate a Buy-Sell procedure if a dispute arises:

In the event of Deadlock between the Partners and the failure of the Partners to resolve the Deadlock in accordance with the provisions of Section 11.7, any Partner may initiate a Buy-Sell procedure (hereinafter a “Buy/Sell”). The Partner who initiates the Buy/Sell is referred to as the “Proposing Partner”. The remaining Partner shall be referred to as the “Other Partner” . . . Notwithstanding anything contained in this Agreement, no Partner may institute a Buy/Sell under this Agreement until the earlier of (a) thirty-six (36) months after the date of this Agreement or (b) commencement of the term of the Lease with the Tenant.

Compl. Ex. 1, §12.1. The Buy-Sell procedure gave the Other Partner the option to either sell its ownership interest in the partnership to the Proposing Partner or buy the Proposing Partner's Ownership Interest. Compl. Ex.1, § 12.4. Failure by the Other Partner to make an election within forty-five days resulted in a default election to sell its interest to the Proposing Partner. Id.

Believing Defendants had mismanaged the Horsham Project and engaged in other improper and self-dealing actions beginning in December 2021, ARCT Partner sought to invoke the BuySell remedy provided in the Agreement. Compl., ¶ 21. Defendants, however, refused to effect the sale of the property. Id. ¶ 22. On March 21, 2022, ARCT Partner filed suit against Defendants to compel the Horsham Property's sale. Id. at ¶ 23. Shortly thereafter, the parties negotiated a settlement under which Defendants agreed to purchase ARCT Partner's interest for $13.1 million, and ARCT Partner voluntarily withdrew its action without prejudice. Id. at ¶¶ 24-27. Closing on the property was to occur by April 19, 2023. Id. at ¶ 31. It did not, and on June 29, 2023, ARCT Partner notified Defendants it intended to market and sell the Horsham Project. Id. at ¶ 38. Defendants never responded or acknowledged the letter. Id. ARCT Partner therefore brought this suit on July 18, 2023, seeking declaratory judgment and damages for breach of contract. Id. at ¶¶ 81, 93, 98.

Defendants failed to respond to the Complaint, and, on November 28, 2023, the Court entered default judgment in Plaintiff's favor. The Default Judgment gave ARCT Partner “the right to market and sell the Horsham Project consistent with the parties' agreements.” Order, Nov. 28, 2023, ECF No. 18. The Default Judgment also directed Defendants to “comply with reasonable closing obligations and efforts on any compliant third-party sale,” and set forth the complete purchase price for the sale of the Horsham Project. Id. The Court further ordered the Clerk of Court to close the case. Order, Nov. 29, 2023, ECF No. 19.

On December 7, 2023, SB PB Victory, LP (“Victory”) filed the instant Motion to Reopen Case and Intervene as a plaintiff. Mot. Intervene 1, ECF No. 21. Victory is a creditor of Verrichia by way of a loan it made to Tonnelle North Bergen, LLC (“Tonnelle”), which Verrichia personally guaranteed. Id. Both Tonnelle and Verrichia defaulted on Victory's loan in 2019. Id. The parties then entered into binding arbitration proceedings in Colorado, which culminated in a two-phase award in Victory's favor. Id. at 1-2. Victory petitioned to confirm the award in this Court, and following litigation, this Court confirmed the Phase I award and entered judgment for $16,573.835.18 in principal, $2,762,141.11 in pre-judgment interest, and post-judgment interest at the rate of 15% from January 6, 2022, until payment. Ex. D, ECF No. 21-4. The Phase II Award in the amount of $5,127,443.48 plus interest, which continues to accrue at various rates has also been confirmed, and judgment has been entered.^[2] Ex. F, ECF No. 21-6. On July 17, 2023, Victory transferred the Phase I Judgment to the Court of Common Pleas of Montgomery County, Pennsylvania. Id. at 2.

Victory also sought multiple charging orders.^[3]Id. at 3. Relevant to this case, the Montgomery County Court of Common Pleas entered a charging order on October 17, 2023. Ex. 8, ECF No. 21-8. The Montgomery County Order provides:

“any and all distributions, contributions, disbursements, transfers, monies, funds and payments then due and owing or thereafter due and owing to Verrichia, including (...) distributions made from proceeds of the sale of any assets” of TFV and Horsham GP, among other listed entities, shall be delivered to Victory until Victory's Judgment is paid in full.

DISCUSSION

Victory now moves to intervene as of right in this case pursuant to Federal Rule of Civil Procedure 24(a), claiming it has an interest in any proceeds due and owing to Defendants TFV Horsham GP, and Verrichia pursuant to the Montgomery County Orders. In support of its motion, Victory asserts it has had difficulty enforcing prior court orders regarding the debts owed to it by the Defendants, who have been uncooperative. Br. Support Mot. Intervene at 10, ECF No. 21. ARCT Partner opposes Victory's intervention motion because the motion is untimely, reopening the judgment and permitting intervention would unduly delay its right to sell the property, and Victory has no injury in fact or interest in the outcome of this litigation. Because the instant motion is untimely and the existing parties in this matter can adequately represent Victory's interests, the motion will be denied.

Under Federal Rule of Civil Procedure 24(a), “the court must permit anyone to intervene who (1) is given an unconditional right to intervene by a federal statute; or (2) claims an interest relating to the property or transaction that is the subject of the action[.]” A litigant is entitled to intervene as a matter of right if it can show: (1) a timely application for leave to intervene; (2) a sufficient interest in the litigation; (3) a threat that its interests will be impaired or affected, as a practical matter, by the disposition of the action; and (4) that its interests are not adequately represented by existing parties to the litigation. Kleissler v. U.S. Forest Serv., 157 F.3d 964, 969 (3d Cir. 1998).

Turning to the first element, an application to intervene must be timely. See In re Fine Paper Antitrust Litig., 695 F.2d 494, 500 (3d Cir. 1982). Timeliness is determined by the court based upon the totality of the circumstances. Nat'l Ass'n for Advancement of Colored People v. New York, 413 U.S. 345, 365-66 (1973); see also United States v. Alcan Aluminum, Inc., 25 F.3d 1174, 1181 (3d Cir. 1994). In evaluating timeliness, the court considers three factors: “(1) the stage of the proceeding; (2) the prejudice that delay may cause the parties; and (3) the reason for the delay.” Mountain Top Condo. Ass'n v. Dave Stabbert Master Builder, Inc., 72 F.3d 361, 369 (3d Cir. 1995). The “stage of the proceeding is inherently tied to the question of the prejudice the delay in intervention may cause to the parties already involved;” therefore, the analysis for the three timeliness factors overlap. Id. at 370. Generally, the court maintains a “reluctance to dispose of a motion to intervene as of right on untimeliness grounds because the would-be intervenor actually may be seriously harmed if not allowed to intervene.” Wallach v. Eaton Corp., 837 F.3d 356, 37172 (3d Cir. 2016). However, a “motion to intervene after entry of a decree should be denied...