Pollekoff v. Blumenthal

WILNER, Judge. Morris Pollekoff, his brother Jack, and their respective wives appeal from an order of the Circuit Court for Frederick County ratifying the sale of certain land in which they had an interest to Potomac Woods Development Corp. (Potomac Woods). A number of issues are presented in the appeal, but, as we find no error in the court’s disposition of the action, we shall affirm. In February, 1962, the Pollekoffs, together with Walter M. Blumenthal and his wife, acquired three parcels of land consisting of some 267 acres in the aggregate.

Each of the couples, as tenants by the entireties, took title to an undivided one-third interest in the properties. It was apparently agreed that Mr. Blumenthal would manage the properties and account to his co-owners for all rents and profits. On July 1, 1983, the Pollekoffs sued the Blumenthals for accounting. Charging that the Blumenthals were in possession of and collecting rents from the property and that they had failed to respond to a demand for accounting, the Pollekoffs asked for orders requiring an accounting and appointing a receiver.

Mr. Blumenthal responded that some of the land had been sold over the years and that he had, in fact, accounted for all sales proceeds and other monies received by him; Mrs. Blumenthal alleged that she and Mr. Blumenthal had become divorced, that they therefore each had a one-sixth interest in the properties, and that she had no knowledge of what was received from the properties. After some discovery, all parties agreed to a consent judgment entered October 31, 1984, requiring an accounting by Mr. Blumenthal of all rents and profits from the properties since December 31, 1980, and appointing W. Jerome ⁸⁸ Offutt (counsel for the Pollekoffs) and G. Edward Dwyer, Jr. (then counsel for Mr. Blumenthal) as receivers of the approximately 130 acres of property still owned by the parties. Upon his appointment to the Bench, Mr. Dwyer was replaced, both as counsel for Mr. Blumenthal and as a receiver, by Charles B. Frey. The receivers were vested with “all the usual powers, rights, and duties of Receivers appointed by this Court” plus certain specific powers enumerated in the judgment that dealt principally with the management of the property and the collection and accounting of rents and profits from it.

In August, 1985, the receivers, facing the need to negotiate a right-of-way easement with the telephone company, requested and received permission from the court to have the property appraised. Following receipt of the appraisal, which valued the land at $460,000, the receivers sought and received authority to grant the easement at the price offered by the company. A few months later, in December, 1985, the receivers filed another petition captioned “PETITION FOR AUTHORITY TO SELL PROPERTY.” Reciting their general authority under the consent judgment and their recent sale to the telephone company, they averred that they “have determined and believe it to be for the best interest of the Parties to this Proceeding that the remainder of the tract of land described in the deed aforesaid recorded in Liber 664, folio 190, the Owners thereof not being compatible in the management and utilization of said property.” 1 On this and the other averments of the petition, the receivers asked for an order authorizing them “to list the property with one or more reputable Real Estate Brokers dealing in the sale of the above described property.” Without objection, the ⁸⁹ court granted the petition and, by order dated December 3, 1985, authorized the receivers “to enter into a Contract with Real Estate Brokers for the purpose of selling the remainder of the Receivership Estate ... and to pay the prevailing Commission to such Broker that procures a Purchaser of the said real estate that is finally ratified by this Court.” The order further directed the receivers to “report to the Court any Offer to Purchase submitted in any Contract for final ratification by this Court.” Pursuant to that authority, the receivers listed the property with a broker (Long & Foster Real Estate, Inc.) for a price of $2,100,000. In October, 1986, the receivers reported that they had received a contract through Long & Foster from Alan I. Kay Company, Inc. to purchase the property for $2,151,000, which was far in excess of the appraised value, and they asked the court to approve and ratify the sale.

After a hearing on the petition, the court did approve the sale and authorize the receivers to consummate it. A month later, however, the receivers informed the court that the buyer had withdrawn from the contract, as it had a right to do under the contract. A year later, a second sale, for $1,750,000 to Omega Holding Group, Inc., also fell through. As with the first proposal, the contract was procured by the broker, the receivers reported the contract to the court and petitioned for authority to accept it, and, without objection, the court approved the sale and authorized execution of the contract.

The record does not reflect why that sale was not consummated; we note that, as in the first contract, the buyer reserved the option to withdraw if certain feasibility studies proved unsatisfactory. Six months after the failure of the second contract, the receivers were back with another petition for authority to sell the property, this time to Potomac Woods Development Corp., Inc. for $1,500,000. As with the previous contracts, this too was procured by the brokers (Long & Foster and Shannon & Luchs), but unlike the earlier contracts, this one did not allow the buyer to disavow at its option. The receivers averred that, based on the 1985 appraisal, the ⁹⁰ offer was a fair and reasonable one and that acceptance was in the best interest of the parties, and they asked the court to approve and ratify the sale.

It appears that, subject to court approval, they and Potomac Woods had already signed the contract. Upon that petition, which the court regarded as a Report of Sale, the court scheduled a hearing for July 14,1988, “for an Order confirming the Sale of the remainder of the real estate ... in accordance with the Report of Sale ... and for such other and further relief as the Court may deem proper.” Although Potomac Woods was not listed as an interested person in the petition, the company was sent a copy of the petition and was informed of the time and place of the hearing. Assuming from the notice that the contract would be approved routinely, Potomac Woods chose not to attend the hearing. The company’s assumption proved to be unfounded.

After a brief presentation by the receivers, including a representation that Mrs. Blumenthal, who then lived in Florida, had consented to the petition, the court was informed that Morris Pollekoff wished to make a statement. Mr. Pollekoff then informed the court that he did not wish to sell the property at all “because it’s not to my advantage to sell it right now.” In place of the offer from Potomac Woods, he offered to buy the property for $1,510,000 — $10,000 more than the Potomac Woods offer. He agreed to a “no contingency” sale with settlement to occur within 30 days. Morris’s brother Jack then stated that he would join Morris in that offer.

After some further discussion about whether the deposit check should be payable to the receivers or to Mr. Blumenthal, the court declared that the offer from the Pollekoffs should be accepted. It concluded the hearing with the commitment that “if you’ll [the receivers] present an order to me as soon as you can, I will order that the property be sold to them within thirty days from the date of the order that I signed.” The receivers promptly prepared a written contract listing themselves as sellers and the Pollekoffs as buyers and showing a price of $1,510,000. On July 19, 1988, the court ⁹¹ confirmed and ratified that contract subject to the caveat that the oral representations made by the Pollekoffs in open court would prevail “should there be any conflict with the written Agreement.” Nine days later, having learned what occurred, Potomac Woods filed a petition for rehearing and to intervene. Complaining that the hearing of July 14 was supposed to be solely on the issue of ratifying the sale to it and not for the purpose of entertaining additional bids, Potomac Woods charged that the receivers, when informed of the Pollekoffs’ last minute offer, had an obligation to allow Potomac Woods to make a counter-offer.

The court decided to hold a hearing first on whether to allow Potomac Woods to intervene in the proceeding. Prior to that hearing, which eventually occurred on November 22, 1988, the receivers received yet another offer, from Real-Prop, Inc., in the amount of $1,800,000, and, in a Motion for Appropriate Relief, they submitted the entire matter to the court “for its consideration and guidance.” The hearing on intervention was wide-ranging, with a great deal of discussion on the merits of Potomac Woods’s position. Eventually, the court decided to allow intervention, finding that the notice of the July 14 hearing did not apprise the company that another offer might be submitted, that it “justly believed” that the hearing would be limited to whether its offer should be approved, and that it had an equitable interest in the matter. An order granting leave to intervene and setting the whole matter for rehearing was entered the same day.

The Pollekoffs responded to this turn of events with a petition to terminate the receivership. In the petition and accompanying memorandum, they took the position that as both they and the Blumenthals had consented to the $1,510,-000 offer made at the July hearing, the ratification of that agreement “settled all