Eisele v. Holloway (In re Eisele)

132 B.R. 696, 1991 U.S. Dist. LEXIS 19280
CourtDistrict Court, W.D. Pennsylvania
DecidedOctober 9, 1991
DocketCiv. A. Nos. 91-916, 91-1123; Bankruptcy No. 88-3168 JKF; Adv. No. 90-66
StatusPublished
Cited by5 cases

This text of 132 B.R. 696 (Eisele v. Holloway (In re Eisele)) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eisele v. Holloway (In re Eisele), 132 B.R. 696, 1991 U.S. Dist. LEXIS 19280 (W.D. Pa. 1991).

Opinion

MEMORANDUM OPINION

BLOCH, District Judge.

Presently before the Court is an appeal filed by defendant John Holloway, and cross-appeal filed by debtor/plaintiff, Gladys B. Eisele, from a final judgment of the United States Bankruptcy Court for the Western District of Pennsylvania, Judge Judith K. Fitzgerald, entered April 29, 1991, and from the Memorandum Opinion and Order dated April 17, 1991, which preceded it.1 For the reasons stated below, the judgment and order of the Bankruptcy Court is affirmed in part and vacated and remanded in part.

I. Facts

On January 18, 1986, Eisele entered into three separate listing agreements with Holloway to market her farm in Allegheny County, Pennsylvania. The listings were for the sale of three parcels of Eisele’s land, parcel A, B, and C.

In April of 1986, Holloway consented to a co-broker agreement with Sandra Goldsmith, an agent for another realty agency, Northwood Realty Company (Northwood), for the sale of Eisele’s three parcels. The co-broker agreement required Goldsmith to present any offers through Holloway, and entitled Holloway to fifty percent of all fees earned if Northwood procured the buyer.

On May 30, 1986, Eisele signed an agreement of sale presented to her by Goldsmith, without Holloway’s knowledge, whereby Eisele agreed to sell Parcel A to the Rosenblooms (Rosenbloom Agreement). The Rosenbloom Agreement provided that the Rosenblooms would pay Eisele $102,-850 for parcel A and gave them an option to purchase parcels B and C within one year. The agreement obligated the Rosen-blooms to “indemnify” Eisele for fifty percent of any real estate commission incurred by her on the sales of parcels B or C. The Rosenbloom Agreement also contained a “time of the essence clause,” which read:

If the full performance of this Agreement is not completed by the date set forth in paragraph 7,2 either party shall have the right after that date to declare time to be of the essence of this Agreement by giving written notice to the other party. Such notice shall contain a declaration that time is of the essence and shall fix the time, date and place of final settlement, which date may not be sooner than fifteen (15) days nor later than thirty (30) days following the effective date of giving such notice.

Soon after discovering the sales agreement, defendant Holloway contacted Ei-sele’s attorney, Keith West, urging that the time of essence clause “be instituted and force Rosenblooms’ [sic] to close within 15 days from the time of notice.” In re Ei-sele, 125 B.R. 922, 925 (Bkrptcy.W.D.Pa. 1991). At the same time, Holloway was also encouraging Eisele directly to invoke the clause. He told Eisele that doing so would “kill” the Rosenbloom Agreement. On October 15, 1986, Eisele telephoned West and instructed him to send a letter implementing the clause. Eisele told Holloway that day that she had told her attorney to implement the clause. In fact, West sent the time of the essence letter the following week, on October 23, 1986.

Eight days later (the same day West actually sent the time-of-the-essence letter), Holloway presented Eisele with an offer from the Halls (Hall Agreement). Holloway encouraged Eisele to sign the Hall Agreement immediately and represented to her that it had to be signed that night and [699]*699closed within thirty (30) days or the offer would terminate. The agreement itself stated an acceptance deadline of October 24, 1986, the next day. Under the Hall Agreement, the entire farm was to be sold to the Halls for $436,000. On closing, Holloway would be entitled to a commission of $43,600. This compares to $22,077.50 that Holloway would have received if all three parcels of the Rosenbloom Agreement closed. Eisele signed the Hall Agreement that night.

Eisele did not appear at the Rosenbloom closing on November 8, 1986. As a result, the Rosenblooms filed a state equity action for specific performance. On May 13, 1988, the court approved a settlement which modified the original Rosenbloom Agreement, decreasing the price due to an uninsured fire loss on the property. One week later, the Halls filed a separate complaint for specific performance of the October 23 sales agreement.

On November 23, 1988, Eisele filed a voluntary petition under Chapter 11 of the Bankruptcy Code exclusively to remove the cloud on the title created by the Halls’ suit. On September 19, 1989, the Bankruptcy Court, Judge Fitzgerald, entered an order authorizing the rejection of the Hall Agreement and the assumption of the second Rosenbloom Agreement. In re Eisele, Bankr. No. 88-03168, Motion No. 88-7329-M, 1989 WL 109090 (Bankr.W.D.Pa. Sept. 19, 1989). Eisele and the Rosenblooms closed on Lot 1 on December 12, 1989, for $282,050. On July 20, 1990, the parties closed on the remaining land for $150,000.

II. Action before the Bankruptcy Court

On April 17, 1991, Judge Judith K. Fitzgerald entered her Memorandum Opinion. Judge Fitzgerald found:

Debtor alleged and proved that Holloway breached his fiduciary duty to her, negligently performed the agency contract between them, and intentionally induced her not to perform her contract with the Rosenblooms in order to achieve a sale to a buyer with whom Northwood had no connection, thereby relieving Holloway of any obligation to share his corn-mission. Debtor established that Holloway intentionally and negligently misrepresented to her that merely invoking the time of the essence clause the Rosen-bloom Agreement would be “dead.” His misconduct resulted in the very act he sought, i.e., to have Debtor sign the Hall Agreement. The consequent cloud on title was the issue in all of Debtor’s legal battles.

In re Eisele, 125 B.R. at 932.

As a result, Judge Fitzgerald ordered total judgment in favor of Eisele in the amount of $41,790.74, comprised of: $22,-736.72, “representing the difference between Debtor’s current pecuniary loss from liability for attorney’s fees and litigation settlement costs and the amount she would have been out of pocket absent Holloway’s conduct,” plus $19,054.02, representing the lost interest earnings on the Rosenbloom note and mortgage as to original Parcel A. In re Eisele, 125 B.R. at 928.

Holloway’s liability was premised on the tort of intentionally and improperly interfering with contracts. See, e.g., Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 393 A.2d 1175 (1978). In addition to the finding by the Bankruptcy Court that Holloway’s conduct constituted such a tort, the Court offered further substantiation. “Violations of statutes also constitute improper conduct under [this tort]. We find that Holloway violated the Real Estate Licensing and Registration Act, 63 P.S. § 455.101, et seq. (as amended in 1984) (RELRA), which imposes a standard of conduct upon real estate brokers for the public’s protection.” In re Eisele, 125 B.R. at 930.

Judge Fitzgerald dismissed Holloway’s contributory negligence defense. Stating that “[w]e find that Holloway’s misconduct was intentional and negates any effect of Debtor’s minimal contributory negligence.” Id. at 932.

Finally, the Court declined to award Ei-sele punitive damages. Id. at 929.

Holloway has appealed Judge Fitzgerald’s ruling.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Skinner v. Skinner (In re Skinner)
532 B.R. 599 (E.D. Pennsylvania, 2015)
Windsor Securities, Inc. v. Hartford Life Insurance
986 F.2d 655 (Third Circuit, 1993)

Cite This Page — Counsel Stack

Bluebook (online)
132 B.R. 696, 1991 U.S. Dist. LEXIS 19280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eisele-v-holloway-in-re-eisele-pawd-1991.