Police Athletic League of Phila. v. Darrah Sch. Realty Co.

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POLICE ATHLETIC LEAGUE OF PHILADELPHIA Appellant v. DARRAH SCHOOL REALTY CO., L.P.

No. 1875 EDA 2022

No. J-A03024-23

Superior Court of Pennsylvania

August 2, 2023

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

Appeal from the Order Dated July 6, 2022 In the Court of Common Pleas of Philadelphia County Civil Division at No(s) 220101111

BEFORE: KING, J., SULLIVAN, J., and STEVENS, P.J.E ^[*]

MEMORANDUM

SULLIVAN, J.

Police Athletic League of Philadelphia ("PAL") appeals from the order sustaining the preliminary objections filed by Darrah School Realty Co., L.P. ("Darrah") and dismissing PAL's amended complaint with prejudice. We affirm in part, reverse in part, and remand for further proceedings.

The following averments are taken from the amended complaint, which we must accept as true. In 1993, PAL purchased a building ("the property") from Darrah Associates, which also owned an adjacent apartment complex. PAL has operated the property as the Cozen PAL Center to provide charitable programs and services to disadvantaged youth in low income/high crime communities. The deed to the property gave Darrah Associates and its successors the right of first refusal "so long as the owner of the Apartment is an organization of which a majority of the shareholders, members[,] or directors (if there are no shareholders or members of such organization) are residents of a majority of the occupied units of the Apartments ("Coop")." Deed, 10/27/93, at unnumbered 5. The deed further provided that "[i]f there shall not be a Coop in existence at the time [PAL] receives a bona fide offer to sell the Premises, there shall be no Right of First Refusal." Id. Darrah is the successor to Darrah Associates and owns the apartment complex. Thus, Darrah would have the right of first refusal if PAL were to receive a bona fide offer for the property, and the apartment complex was still a coop at the time the offer was tendered. However, at some point, the apartment complex no longer met the definition of a "coop," and the right of first refusal ceased to exist.

Since 1993, the area surrounding the property has become gentrified and is no longer the type of low income/high crime community that PAL seeks to serve. Thus, PAL purchased vacant real estate in another section of Philadelphia which is low income/high crime. PAL intended to sell the property and use the sale proceeds to build a new PAL center on the vacant property. Consistent with this plan, PAL contracted to sell the property to North Broad Living Management Company ("North Broad"). However, Darrah asserted a right of first refusal to purchase the property, and Darrah's employees and counsel advised North Broad of Darrah's purported right of first refusal. The sale to North Broad thereafter fell through.

PAL commenced the instant litigation by filing a complaint asserting a single count which consisted of a claim for quiet title to establish that Darrah does not have a right of first refusal with respect to the property due to the absence of any coop in the apartment. Darrah filed preliminary objections, and PAL filed an amended complaint which included the first count for quiet title and added a second count for declaratory judgment. Darrah filed additional preliminary objections which PAL opposed. In its preliminary objections, Darrah argued: (1) PAL's claim for quiet title at count one of the amended complaint failed to state a cause of action under Pa.R.Civ.P. 1061(b)(2) because a right of first refusal is not an interest "in land;" (2) PAL's claim for declaratory judgment at count two of the amended complaint will not lie because there is no actual controversy between the parties given that a right of first refusal does not cloud title to the property; and (3) the trial court should strike certain averments throughout the amended complaint as scandalous or impertinent pursuant to Pa.R.Civ.P. 1028(a)(2) (i.e., that Darrah's conduct was "duplicitous" and "deceitful," that Darrah made "false statements," and that it deprived numerous youths from access to PAL programs). The trial court entered an order dismissing the amended complaint with prejudice. However, the trial court did not issue an opinion explaining the basis for its ruling.

PAL filed a timely notice of appeal, and the trial court ordered PAL to file a Pa.R.A.P. 1925(b) concise statement. PAL raised three issues in its concise statement. However, in its Rule 1925(a) opinion, the court did not address PAL's issues, and instead merely requested that this Court vacate its dismissal order and remand the case for further proceedings.

PAL raises the following issues for our review:

1. Did the trial court err in dismissing [PAL's] claim for quiet title as a matter of law?

2. Did the trial court err in dismissing [PAL's] claim for declaratory judgment as a matter of law?

3. Did the trial court err in appearing to strike certain averments in the amended complaint pursuant to Pa.R.Civ.P. 1028(a)(2)?

PAL's Brief at 5 (unnecessary capitalization omitted).

Our scope and standard of review of an order sustaining preliminary objections is well-settled:

Our standard of review of an order of the trial court overruling or [sustaining] preliminary objections is to determine whether the trial court committed an error of law. When considering the appropriateness of a ruling on preliminary objections, the appellate court must apply the same standard as the trial court.

Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief. If any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections.

Fiedler v. Spencer, 231 A.3d 831, 835-36 (Pa. Super. 2020) (citations omitted).

In its first issue, PAL challenges the trial court's ruling that its claim for quiet title was legally insufficient. Pennsylvania Rule of Civil Procedure 1061 governs quiet title actions. PAL asserted a claim for quiet title pursuant to subsection (b)(2), which provides that an action for quiet title may be brought:

(2) where an action of ejectment will not lie, to determine any right, lien, title or interest in the land or determine the validity or discharge of any document, obligation or deed affecting any right, lien, title or interest in land;

Pa.R.Civ.P. 1061(b)(2).

PAL contends that the right of first refusal contained in the deed to the property is a right in land. Accordingly, PAL maintains that its claim for quiet title states a claim for relief under Rule 1061(b)(2) because it seeks to determine the validity or discharge of a deed affecting a right in land.

Darrah contends that PAL's claim for quiet title fails to state a claim for relief because, pursuant to Rule 1061(b)(2), the "right, lien, title, or interest" in question must be "in land" itself, rather than merely the personal obligations of a party who owns the land. Darrah argues that a right of first refusal is not an interest in land, nor a claim to title of the property, nor a covenant which runs with the property. Instead, Darrah maintains that it is a right that is personal to the contracting parties. Darrah also argues that a party may not bring an action under Rule 1061(b)(2) unless the party is not in possession of the subject property.^[1] , ^[2]

A right of first refusal is not an interest in land. See Citimortgage, Inc. v. Comini, 184 A.3d 996, 1000 (Pa. Super. 2018) (explaining that a right of first refusal is a stipulation that gives "no title to or interest in the land, and creates only a personal obligation . . . [ which is] 'exclusively contractual'"). Moreover, a plaintiff asserting a claim for quiet title under Rule 1061(b)(2) must be out of possession of the property. See Siskos v. Britz, 790 A.2d 1000, 1006-07 (Pa. 2002) (holding that "[a] party will file a Rule 1061(b)(2) Action to Quiet Title when she is not in possession, does not have the right to possess the land, and wishes to determine all rights in the land"). Thus, we discern no error by the trial court in sustaining Darrah's first preliminary objection on the basis that PAL's claim for quiet title failed to state a cause of action under Rule 1061(b)(2). We therefore affirm the trial court's order as it pertains to Darrah's first preliminary objection.

In its second issue, PAL challenges the trial court's ruling that its claim for declaratory judgment at count two of the amended complaint was legally insufficient. The Declaratory Judgment Act ("the Act") provides, in relevant part:

Any person interested under a deed, will, written contract, or other writings constituting a contract, or whose rights, status, or other legal relations are affected by a statute,

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