         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


C.T. Fuller a/i/a C. Thomas Fuller       :
and WBF Associates, L.P.                 :
                                         :
            v.                           :
                                         :
Lehigh-Northampton Airport               :
Authority                                :
                                         :   No. 2106 C.D. 2016
Appeal of: WBF Associates, L.P.          :   Argued: September 11, 2017


BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE JOSEPH M. COSGROVE, Judge
            HONORABLE JAMES GARDNER COLINS, Senior Judge


OPINION
BY JUDGE COSGROVE                            FILED: November 1, 2017


            WBF Associates, L.P. (WBF) appeals from a December 1, 2016 order
of the Lehigh County Court of Common Pleas (trial court) which directed WBF to
refund $77,315.08 to the Lehigh-Northampton Airport Authority (Airport
Authority) and released to the Airport Authority $580,041.00 held in escrow.
            On September 27, 1990, WBF purchased from C. Thomas Fuller
(Fuller) a 632-acre tract of undeveloped farmland located north of the Lehigh Valley
International Airport (Airport), upon which WBF intended to build a planned
residential development (PRD). Fuller held a first mortgage on the property in the
amount of $3,075,850.00. Fuller also granted to WBF a $300,000.00 line of credit
secured by a second mortgage. WBF entered into a joint venture agreement with
Lanid Corporation (Lanid) for purposes of building the PRD. In January of 1994,
the Airport Authority announced a proposed expansion of the Airport.           This
expansion involved acquiring approximately 1,500 acres, which included the
entirety of the property purchased by WBF. After the Airport Authority began to
acquire land which adjoined WBF’s property, Lanid terminated its joint venture
agreement. Unable to move forward with its development project due to lack of
funding, WBF defaulted on its first and second mortgages.
             On September 30, 1996, WBF filed a Petition for Appointment of a
Board of Viewers, alleging a de facto taking of its property as a result of the Airport
Authority’s announced expansion project. The trial court granted the Petition on
June 15, 1998. This Court affirmed in a published opinion filed May 26, 1999.
Lehigh-Northampton Airport Authority v. WBF Associates, L.P., 728 A.2d 981 (Pa.
Cmwlth. 1999)(WBF I). By agreement of the parties, the Airport Authority paid to
Fuller estimated just compensation (EJC) in the amount of $3,150,000.00.
             The matter finally proceeded to trial in 2008, after which a jury returned
a verdict of $10,410,000.00 as just compensation for the Airport Authority’s de facto
taking of WBF’s property. An evidentiary hearing was held May 2, 2008 to receive
evidence on delay compensation, mortgage interest, and attorneys’ fees payable to
WBF. The trial court entered an order dated September 17, 2008 which molded the
verdict to award WBF $9,503,426.00 of delay compensation from September 30,
1996 through August 31, 2008, accruing thereafter at the rate of prime plus 1%,
$6,898,658.00 in mortgage interest from September 30, 1996 to August 31, 2008,
with interest accruing thereafter at a rate of $1,462.81 per day; and $437,125.02 for
attorneys, engineering, and appraisal fees through March 31, 2008. The total molded
verdict was $24,099,236.02, after deduction of the $3,150,000.00 paid to Fuller as
EJC.   Judgment was entered against the Airport Authority in the amount of
$24,219,887.61, reflecting additional interest which accrued after the September 17,
2008 order. This Court affirmed the trial court’s order on April 28, 2009. In re



                                            2
DeFacto Condemnation and Taking of Lands of WBF Associates, L.P., 972 A.2d
576 (Pa. Cmwlth. 2009)(WBF IV).
             On January 12, 2011, the parties filed a joint stipulation (Stipulation)
which, in pertinent part, established the amounts due WBF by the Airport Authority.
Those amounts were established as follows: $9,963,393.47 remaining of the jury
verdict for just compensation; $5,176,486.25 remaining of delay compensation; and
$644,268.13 of attorneys, engineering, and appraisal fees, which amount included
post-verdict costs. The Stipulation was approved and entered as an order of the trial
court on January 13, 2011.
             The trial court entered an order dated October 12, 2011 directing a
schedule of payments for the remaining sums owed WBF. Pursuant to this order,
the Airport Authority was to pay WBF $2,000,000.00 no later than December 1,
2012, $3,000,000.00 no later than December 1, 2013, $5,000,000.00 no later than
December 1, 2014, and the entire balance still due no later than December 1, 2015.
The Airport Authority was further directed to pay any additional counsel fees, costs
of WBF, and Master’s fees as might be further ordered by the court.
             On August 18, 2015, WBF filed a Motion for entry of an Order
declaring the amount due from the Airport Authority and requesting other relief.
Following oral argument, the trial court, by order and opinion filed October 19,
2016, directed that the Airport Authority’s payments made subsequent to November
15, 2010 should be applied first toward satisfaction of the just compensation award,
then toward reimbursement of attorneys, engineering, and appraisal fees, then
toward delay compensation.      The Airport Authority was ordered to submit a
schedule of all payments made since November 15, 2010 and a proposed allocation
of such payments consistent with the trial court’s October 19, 2016 order. On
December 1, 2016, the trial court ordered WBF to refund to the Airport Authority

                                           3
an overpayment in the amount of $77,315.08 and directed the Airport Authority to
release to itself $580,041.00, plus any interest accrued thereon, held in escrow
pending resolution of the matter. This appeal followed.1

                                         Discussion

              As set forth in WBF’s brief, the following issues are raised:


              I. When a condemnor is allowed to satisfy a judgment
                 through installment payments, should those payments
                 be applied first to principal, with no interest accruing
                 on the previously accrued interest, and in so doing
                 deprive the property owner of full and fair
                 compensation for the taking of his land, also lowering
                 the rate of interest paid to the property owner below the
                 prime-plus-one-percent rate required under 26
                 Pa.C.S.A.[sic] Section 713?

              II. Is [the Airport Authority] barred and precluded by the
                  doctrines of judicial estoppel, collateral estoppel, law
                  of the case and/or res judicata, from now contending
                  that its installment payments should have been applied
                  first to principal and then to interest, after [the Airport
                  Authority] had previously entered into a stipulation,
                  adopted as an order of court, agreeing that a substantial
                  prior payment should be applied to interest before
                  principal?

(WBF’s Brief at 5.)

              First, WBF argues payments by the Airport Authority should be applied
first to accrued interest and, after interest has been paid in full, against the principal.

       1
          In eminent domain cases, this Court reviews whether the trial court committed an abuse
of discretion or an error of law. When an appeal presents a question of law, such as statutory
interpretation, our scope of review is plenary. Lang v. Department of Transportation, 135 A.3d
225 (Pa. Cmwlth. 2016).
                                                4
To apply payments first to the principal, then to interest accrued, results in the
condemnee receiving less than the interest rate set forth in the Eminent Domain Code
(Code).2 Nothing in the Code, WBF argues, alters the rule of law that requires
payment of interest owed before application of moneys to the outstanding principal.
               The Airport Authority argues payments are to be applied first in
satisfaction of the just compensation award; only after the just compensation is paid
is delay compensation calculated and payments applied thereto. WBF’s application
of payments reflects compounding of interest, which is specifically prohibited by
Section 713(a) of the Code. The Airport Authority cites this Court’s decision in
Lang v. Department of Transportation, 135 A.3d 225 (Pa. Cmwlth. 2016) as
supporting its position.
               Section 713(a) of the Code provides that “[c]ompensation for delay in
payment shall be paid at an annual rate equal to the prime rate as listed in the first
edition of the Wall Street Journal published in the year, plus 1%, not
compounded…” 26 Pa.C.S. § 713(a). Delay compensation shall be paid from the
date possession of the condemned property is relinquished by the condemnee or the
date of condemnation, if possession is not required to effectuate condemnation. Id.
Section 713(c) provides that delay compensation is calculated at the time of payment
of the award or judgment and “[t]here shall be no further or additional payment of
interest on the award or verdict.” 26 Pa.C.S. § 713(c).



       2
          26 Pa.C.S. §§ 101 – 1106. The current incarnation of the Code applies to condemnations
occurring on or after September 1, 2006, and this matter arose more than a decade prior to that
date. Therefore, the provisions of the repealed Code apply to this case. See Eminent Domain
Code of 1964, Act of June 22, 1964, Special Sess., P.L. 84, as amended, 26 P.S. §§ 1-101 – 1-901,
repealed by Act of May 4, 2006, P.L. 112, No. 34, § 5(2). An exception to the applicability of the
repealed Code is Section 713(a), which applies to “all periods of time after the effective date of
this section with respect to condemnations effected prior to the effective date of this section.” Act
of May 4, 2006, P.L. 112, No. 34, § 6(2).
                                                   5
             In Lang, the Department of Transportation (DOT) filed a declaration of
taking relating to property owned by Andrew Lang (Lang). DOT paid Lang
$2,000,000.00 as EJC. Following a jury trial, Lang was awarded $3,750,000.00 as
just compensation for his property. The parties stipulated to the date of DOT’s
possession of the property, selected the date upon which final payment was to be
made to Lang, and set an interest rate for delay compensation. The parties did not
agree on the amount of delay compensation due. Lang argued delay compensation
should be calculated consistent with commercial loans, with payments first applied
to interest, and then to principal, and DOT’s initial payment of EJC should have been
applied to delay compensation calculated on that date. This Court explained that
calculation of the delay compensation could not be calculated when the EJC was
paid because payment of EJC did not constitute “payment of the award or judgment”
under Section 713(c) of the Code. Lang, 135 A.3d at 230. No award or judgment
existed at the time the EJC payments were made.
             WBF argues Lang is distinguishable because it involved application of
a payment of EJC, whereas, in the case sub judice, application of the Airport
Authority’s payment of EJC is not at issue. Rather, WBF asserts that the issue
presented here relates solely to payments made in connection with an installment
payment plan to satisfy a judgment entered in 2008. WBF denies its calculations
result in compounding of interest. To the contrary, WBF has calculated the delay
compensation based on the remaining principal owed, and has not rolled forward
any accrued interest when making those calculations.
             We agree Lang is distinguishable from the facts presented here as that
case focused on a payment of EJC and calculation of delay compensation. Further,
the appellant in Lang was clearly attempting to collect compound interest. Despite
the characterization of its first question presented, WBF asserts it is not attempting

                                           6
to collect compound interest, a request of which is clearly not permitted by Section
713 of the Code and this Court’s decision in In re Condemnation of Property Located
in Lower Windsor Township, 986 A.2d 190 (Pa. Cmwlth. 2009) (interest on interest
is not authorized or required under the Code). WBF’s assertion appears to be correct.
Clearly, however, WBF benefits from a different payment scheme because delay
compensation will accrue on the larger balance of just compensation remaining after
monies are applied first to delay compensation.
             The authority upon which WBF relies is somewhat sparse. WBF
merely contends the payment scheme adopted by the trial court does not allow it to
receive full and fair compensation, in contravention of case law generated by WBF’s
own litigation. The fundamental principle behind accrual of delay compensation
“arises because a property owner is not fully compensated for [his or her] loss unless
[he or she] receives, not only the value of [the] property, but receives it as nearly as
may be to the date of the loss.” In re De Facto Condemnation and Taking of Lands
of WBF Associates, L.P. ex rel. Lehigh-Northampton Airport Authority, 903 A.2d
1192, 1199 (Pa. 2006)(WBF III). WBF has not alleged that the specific interest rate
applied by the Airport Authority is less than that set forth in the Code, only that it is
not receiving the total amount of interest it believes is due. It is not clear, therefore,
how WBF is receiving less than its statutory right.
             As evidenced by a statutory scheme which disallows compound
interest, delay compensation is not to be treated like a commercial loan. Where
public funds are used to pay down a debt, logic tells us that delay compensation
should be limited to the extent possible. We are not persuaded by WBF’s argument
that the payment of delay compensation should be guided by practices utilized for
the payment of commercial loans. As our Supreme Court has stated, a property
owner should receive the value of his or her property as nearly as may be to the date

                                             7
of the loss. WBF III. An allocation of payment for a matter arising under the Code
must effectuate this principle by first reducing the balance of just compensation
owed, followed by any accrued delay compensation.
            Next, WBF argues the Stipulation, specifically, paragraph 4 of that
document, evidences an agreement by the parties that payments will be made first to
outstanding and accruing delay compensation and then to the principal debt owed.
The Airport Authority responds that at no point does the Stipulation require payment
of delay compensation prior to satisfaction of the just compensation award.
            Paragraph 4 of the Stipulation provides as follows:


            [The Airport Authority] and WBF agree that the amount
            owed by [the Airport Authority] to WBF as of November
            15, 2010 – assuming [the Airport Authority] timely and
            fully pays Fuller all monies owed to him under Fuller/[the
            Airport Authority] Settlement – is $15,784,147.85,
            consisting of: (a) $9,963,393.47 remaining of the jury
            verdict for just compensation; (b) $5,176,486.25
            remaining of delay damages; and (c) $644,268.13 of
            attorneys, engineering and appraisal fees and costs,
            consisting of $437,125.02 which was part of the Judgment
            and $207,143.11 of additional post-Molded Verdict
            attorneys, engineering and appraisal fees and costs (with
            WBF reserving the right to pursue recovery and collection
            of post-November 15, 2010 attorneys, engineering and
            appraisal fees and costs, with [the Airport Authority]
            reserving the right to dispute any such amounts sought)
            and with WBF being entitled to recover applicable post-
            November 15, 2010 delay damages. Provided further,
            WBF contends that it is owed, which [the Airport
            Authority] disputes – and WBF reserves the right to
            pursue, initially before the Master appointed pursuant
            hereto, collection of – recovery of post-judgment interest
            at the statutory rate of six (6%) percent per year on the
            aforesaid $437,125.02 portion of the Judgment, as well as
            pre-and post-Judgment interest on the post-March 31,

                                          8
            2008 attorneys’, engineering and appraisal fees incurred in
            connection with this proceeding as well as in the de facto
            taking case. [The Airport Authority] reserves the right to
            dispute any attempt by WBF to claim or collect, either in
            this case or in the de facto taking case, interest on
            attorneys, engineering and appraisal fees incurred in
            connection with this proceeding and/or the de facto taking
            case. US Bank and Fuller agree that they will not
            challenge any amount stipulated to in this paragraph and
            reserve the right to challenge the recovery of any amount
            not stipulated to in this paragraph.

(Reproduced Record (R.R.) at 161a-162a.)

            WBF’s reliance on the Stipulation is misplaced. WBF references
payments which reflect that, when the Airport Authority made its first payment
following entry of the October 10, 2008 judgment, credit was first applied to
mortgage interest owed to WBF and the balance applied to the delay compensation
balance existing at that time, with no portion of the payment being applied to the
principal. WBF argues that, having previously agreed to pay mortgage interest first
and delay compensation second, the Airport Authority is barred from suggesting a
different payment scheme. The Stipulation, however, does not explicitly provide for
any particular distribution and order of payments, nor does it explicitly reference
prior payments and suggest the remainder of the Airport Authority’s obligations
should follow that lead. Merely because the parties agreed to pay mortgage interest,
which accrued on the principal debt of outstanding mortgages held by Fuller, before
applying payment to the principal due does not indicate a willingness to treat delay
compensation, which is purely a creature of statute, in the same manner.
            WBF points out that the amount of delay compensation was frozen as
of November 15, 2010, but it did not receive payment of that amount until years
later. Section 713 of the Code does not address installment payments, but provides

                                          9
that delay compensation is calculated at the time of payment of the award or
judgment. Per the trial court’s October 12, 2011 order, the Airport Authority was to
pay its award in four installments. (R.R. at 78a-79a.) Under paragraph 4 of the
Stipulation, WBF is entitled to recover applicable post-November 15, 2010 delay
compensation. Id. at 161a-162a. A review of the Airport Authority’s payment
allocation chart indicates an accrual of additional delay compensation following
each installment payment. Id. at 237a.
            WBF is unquestionably entitled to delay compensation.          It is not
entitled to the greatest amount of delay damages possible. The fact that WBF will
have realized something less than the greatest sum of delay compensation possible
does not render the amount received less than what is required to fully compensate
WBF for its loss.
            For these reasons, the order of the trial court is affirmed.




                                       ___________________________
                                       JOSEPH M. COSGROVE, Judge




                                          10
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


C.T. Fuller a/i/a C. Thomas Fuller      :
and WBF Associates, L.P.                :
                                        :
            v.                          :
                                        :
Lehigh-Northampton Airport              :
Authority                               :
                                        :   No. 2106 C.D. 2016
Appeal of: WBF Associates, L.P.         :



                                     ORDER

            AND NOW, this 1st day of November, 2017, the order of the Court of
Common Pleas of Lehigh County is affirmed.




                                      ___________________________
                                      JOSEPH M. COSGROVE, Judge
