Nicholas Malfitano Jun. 9, 2015, 3:37pm


PHILADELPHIA – Recently, a federal judge ruled an attorney for Nationwide must testify in a lawsuit in which it alleges a corporation breached its agreement to purchase property at Philadelphia Mills Mall, which was once known as Franklin Mills Mall.

On May 21, Judge Richard Barclay Surrick, of the U.S. District Court for the Eastern District of Pennsylvania, ruled to allow the deposition of one of Nationwide’s attorneys who was present during a certain settlement conference, but blocked the depositions of two others who were not present.

The settlement in question was reached on May 31, 2012, at the conclusion of a prior legal action in which Franklin Mills sued Nationwide for breach of contract related to the alleged owing of “certain promotional and maintenance assessment payments” for a parcel of land at the Franklin Mills Mall. Franklin Mills won summary judgment in that prior case.

Per the terms of that settlement, Nationwide was to pay Franklin Mills $1.45 million in two installments and transfer ownership of the property to it.

The first installment of $636,000 was to be made on or before commencement of the trial, June 10, 2012.

The second payment of $814,000, was to be made at the time of the transfer of the property from Nationwide to Franklin Mills, and meant to fund any needed improvements to the property.

The one caveat put forth by Franklin Mills was to conduct a structural inspection of the property – however, despite that inspection, Nationwide claims Franklin Mills agreed to assume ownership of the property “as is” regardless of its condition otherwise, and knowing full well there were issues with water infiltration on the site.

Contrary to the settlement terms, Nationwide’s counsel allegedly sent its initial $636,000 check on June 11, 2012, and instructed Franklin Mills counsel Jay E. Kagan to hold the funds in escrow since a written copy of the settlement was not completed and property inspection had not yet taken place.

Court records show Franklin Mills did not authorize an inspection until June 25, 2012, which then took place the following week – though it did deposit the $636,000 settlement check, against Nationwide’s instructions to hold the funds in escrow.

Franklin Mills also refused to accept ownership of the property, citing major mold remediation that needed to take place.

However, Nationwide again referred back to the settlement agreement, which stipulated Franklin Mills knew of the issues with water infiltration and still agreed to accept the property “as is.”

On Jan. 3, 2013, Nationwide sued Franklin Mills for breach of contract with regards to the settlement agreement, specific performance and equitable estoppel.

As to the pending litigation, Surrick opted to deny Nationwide’s motion to strike Franklin Mills’ unsigned discovery responses, because it has since provided signed copies of those documents, rendering the original point moot.

With respect to Franklin Mills’ motion to compel production of documents by Nationwide, again Surrick found the point moot since Nationwide has since produced more than 4,000 pages of documents for the purposes of Franklin Mills’ discovery process. Plus, Surrick approved the content and responsiveness of Nationwide’s objections.

“We are satisfied that Nationwide has provided sufficient information in its responses, rather than boilerplate answers, and we see no indication of bad faith in its objections. Nationwide has sufficiently responded to Defendant’s request for admissions,” Surrick said.

As to Nationwide’s motion for a protective order preventing deposition of three of its attorneys - Seth Abel, Simon Reeve and Dana Anthony - Surrick granted the motion regarding Abel and Reeve, but denied it as to Anthony.

Surrick’s rationale for his decision was Abel and Reeve were not in attendance for the May 31, 2012, conference during which the settlement was reached, and thus their testimony would not be relevant – but Anthony was, and court transcripts show she actively participated in the settlement discussions.

Nationwide is seeking a number of judgment actions in this case, including:

-A declaration that Franklin Mills is equitably estopped from denying the terms of the settlement agreement as stated in open court;

-An amount in excess of $150,000 sufficient to compensate it for the ongoing obligation as owner of the property to pay the promotional and maintenance assessment claimed by Franklin Mills;

-A declaration that Nationwide and any future owners of the property are not obligated as owners of the property to pay the promotional and maintenance assessment claimed by Franklin Mills; and

-Requiring Franklin Mills to accept a deed conveying the property to it, pursuant to the parties’ settlement agreement, and/or a declaration Nationwide may immediately demolish the building and any improvements located on the property.

In addition, the plaintiff seeks attorneys fees, court costs and any other relief the Court deems just and proper in this matter.

The plaintiff is represented by Charles Paul Scheuritzel and Justin K. Miller of Larsson & Scheuritzel, in Philadelphia.

The defendant is represented by Jay E. Kagan and Jordan M. Rand of Dilworth Paxson, also in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:13-cv-00038

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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