Developer Not Entitled To Property Title As Remedy For Unjust Enrichment: PA Appeals Court

LOWER MORELAND, PA — A real estate developer was not entitled to a right to property in a deal that had soured with a local country club that subsequently sold to another entity, with the developer claiming the new owner benefited from legal and engineering work it had paid for at the time it was the potential buyer, a Pennsylvania appeals court panel found.

A three-judge panel of the Pennsylvania Superior Court on Sept. 17 ruled against North Penn Towns, LP, which had sought a constructive trust to the property owned by the Philmont Country Club, as well as title to the property, as remedies for unjust enrichment when it said a subsequent buyer benefited from services it had paid for during an earlier process to purchase the land.

North Penn Towns had filed consolidated appeals to lower court rulings that refused to grant the developer any property interest in the 61.6 acres of land that was owned by Philmont County Club in Lower Moreland Township.

The case dated back to July 2015, when North Penn Towns entered into an agreement with the country club to purchase the property for the purposes of residential development, the court record shows.

Delays subsequently arose during the township approval process involving issues surrounding residential density and other conditions that would be needed for the housing development to move forward.

The purchase agreement between the entities contained a due diligence period, necessary for negotiations, which was ultimately extended eight times by the parties, according to court papers.

A year later, in the summer of 2016, the relationship between the parties soured when North Penn learned the country club had “surreptitiously negotiated” a deal with a third party, Concert Golf Partners, LLC, to sell the property to it rather than North Penn, the court record states.

The record states that when North Penn was faced with yet another expiration of the due diligence period in September 2016, it decided to terminate the agreement of sale since any more extensions would cause it to lose its deposit for the sale.

Six months later, in March 2017, Concert Golf, through two newly formed entities, purchased all of the Philmont’s assets, including the entire 61.6-acre property.

North Penn subsequently sued both Philmont and the Concert Golf entities claiming, among other things, unjust enrichment, tortious interference with contracts and quiet title.

In late 2019, a trial court judge granted summary judgment in favor of the Concert Golf entities, according to the appeals ruling. The lower court partially based its ruling on the fact that North Penn’s proposed remedy of a constructive trust based on its contention that the Concert Golf entities unjustly benefited from engineering and legal work paid for by North Penn would be out of proportion to the benefit that was allegedly unjustly conferred on Concert.

The appellate panel ultimately sided with the lower courts, ruling that there was no merit to North Penn’s issues raised on appeal.

“While North Penn’s allegations, if accepted as true, make out a case for unjust enrichment, it was nevertheless not entitled to a constructive trust on the Property as a remedy for this unjust enrichment because awarding ownership of the Property to North Penn would not reflect the equity of the transaction, and specifically, would not correspond in any manner to the benefit unjustly conferred on the Concert Entities through the legal and engineering services paid for by North Penn but rather, would confer on North Penn a windfall wholly disconnected from the nature of its allegations,” the appeals panel wrote.

“North Penn failed to cite to any legal authority supporting its argument that when a third party tortiously interferes with a contract for real property and purchases the property, that party is liable for specific performance.”

The non-precedential decision was written by Superior Court President Judge Jack A. Panella, Judge Mary P. Murray and President Judge Emeritus Correale F. Stevens.