The state Supreme Court has upheld a jury verdict of more than $5.8 million for the owners of a 166-acre Bucks County farm that Lower Makefield Township tried to turn into a golf course.
The verdict was the third-largest result in Bucks County in more than a decade, according to a review of the top verdicts as reported in PaLaw magazine.
The six-justice high court unanimously ruled that a December 1998 letter of intent from Pulte Home Corp. to purchase the property for $8 million was admissible at trial despite the township's protests that the offer should be barred as merely speculative because it did not result in an agreement of sale.
Justice J. Michael Eakin, writing for the court, said there is no bright-line rule prohibiting the admittance of "bona fide offers" into evidence.
"This was not some 'fly-by-night' contractor rushing to make a bid and betting the farm on the success of a development it might not have the resources to complete," Eakin said. "As the Commonwealth Court stated, the offer 'indicated [Pulte's] intention and ability to carry out the transaction. The Pulte offer was a firm offer that [appellees] could have accepted upon receipt.' If the goal of the trial is to ascertain the fair market value, we fail to see a reason why testimony regarding a bona fide offer like this should be automatically excluded from consideration."
Eakin was joined by Chief Justice Ronald D. Castille and Justices Thomas G. Saylor, Max Baer, Debra Todd and Seamus P. McCaffery.
In Lower Makefield Township v. Dalgewicz, according to court documents, landowners Chester, Christine, Chester W., John and Richard Dalgewicz, along with Jane Cichocki and Christine K. Newman, alleged the township did not act in good faith in its taking of their land for use as a municipal golf course in 1996, according to court papers.
The landowners asserted in court documents that the price for which the township took the property, $3.3 million, was too low and that the township purposely hurried the process along before the land could be appraised, while also attempting to stall the landowners from entering into a developer agreement that would have set the price of the property much higher.
In 2003, a board of view awarded $4 million to the landowners, who appealed to the trial court, and, in 2008, a unanimous 12-member jury awarded them $5.9 million according to court documents.
The land was turned into the Makefield Highlands Golf Club in 2004.
On appeal to the Commonwealth Court, according to court documents, the township argued that the letter amounted to hearsay and that a rejected offer does not accurately show fair market value, according to court documents.
The township also argued that the Eminent Domain Code only allows valuation experts to testify regarding sales or contracts to sell, according to court documents.
But Judge Bernard L. McGinley, writing for the court, said the trial court did not err in allowing the evidence because both the landowners and the township stipulated to the letter's authenticity and out-of-court statements are not hearsay if they're offered to prove simply that the statement was made, rather than that the statement was true.
McGinley said that, while offers that do not result in agreements of sale are generally inadmissible, the court would make an exception in Dalgewicz because "a sufficient foundation was laid to establish that the offer was made in good faith, by a party acquainted with the value of the property, and of sufficient intention and ability to pay."
McGinley also said that because there was no evidence Pulte made the offer in bad faith, the trial court did not err in finding the offer demonstrated the fair market value of the property.
"Moreover, the township has not demonstrated any prejudice from the introduction of the Pulte letter of intent," McGinley added.
While the Supreme Court arrived at the same conclusions as the Commonwealth Court, Eakin said the carving out of a narrow exception was unnecessary because the General Assembly broadened the scope of admissible evidence in its 1964 amendments to the Eminent Domain Code.
The Supreme Court previously ruled in the 1966 case Anderson v. Department of Highway Safety and Motor Vehicles and the 1963 case Kelly v. Redevelopment Authority of Allegheny County that offers were inadmissible to prove the value of property because their allowance would lead to investigations in "collateral" issues. But the General Assembly's 1964 amendments to the code provided that qualified valuation experts — which the landowners, as condemnees, automatically are — may "state any or all facts and data which the expert considered in arriving at an opinion," Eakin said.
"The General Assembly's liberalization of the Eminent Domain Code explicitly permits testimony that may introduce 'collateral issues' in direct contrast to the reasoning relied on in Kelly and Anderson; thus, continued reliance on their dictates is misplaced," Eakin said. "In light of the significant revisions to the code and explicit 'liberalization of the examination of the expert,' testimony regarding the Pulte letter of intent, which constituted a bona fide offer and was relied on by a qualified valuation expert in formulating an opinion, was admissible evidence of the fair market value of this property."
As for the relevance of that evidence, Eakin said the landowners received the Pulte offer around the same time they reached an agreement with Toll Brothers home builders that said the company would purchase the land for $7 million.
"Indeed, the only significant difference between the Pulte offer and the Toll Brothers offer, besides the price, is the fact that appellees accepted the Toll Brothers offer," Eakin said. "Therefore, the Pulte offer was helpful in demonstrating the demand for the property and the legitimacy of the Toll Brothers offer. This was necessary because appellant argued at trial that Toll Brothers did not intend to actually purchase the property and its offer was unrealistic."
Counsel for the landowners, Marvin L. Wilenzik of Elliott Greenleaf in Blue Bell, Pa., said the township paid his clients $4 million following the board of view's award.
Now, factoring in interest, the township owes an additional $3.6 million, Wilenzik said.
Wilenzik said the high court's ruling was "gratifying" for his clients.
Counsel for the township, Allan D. Goulding Jr. of Curtin & Heefner in Morrisville, Pa., could not be reached for comment.
(Copies of the 10-page opinion in Lower Makefield Township v. Dalgewicz, PICS No. 10-3042, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •