Saturday, October 8, 2016

Minority owner in Upper Makefield horse farm seeks to evict majority owners

Michelle and Michael Gara
Posted: Sep 21, 2016


The minority owner of an Upper Makefield horse farm that is the centerpiece of multimillion-dollar civil suits filed in Bucks County Court wants a judge to evict her business partners from the 36-acre property.
The eviction complaint is the latest maneuver in an ongoing, bitter legal dispute between Patricia "Penny" Silcox, who until January ran Hickory Run Farm on Pineville Road alone for 30 years, and her one-time clients, Michael and Michelle Gara. The couple is suing Silcox to force her to honor an alleged verbal agreement to essentially sell them her farm for a stake in a new business worth no more than $150,000. An appraisal last October valued the property at $1.5 million. 
While the Garas, who also live in Upper Makefield, have majority ownership of the horse farm business and its assets, they do not have any ownership of the property it sits on. That's held in a separate company, RSPC Inc., which is controlled by Silcox and her brother Roy Silcox Jr.
Penny Silcox’s attorney, Daniel Sweetser, filed a formal complaint in Bucks County Court on Friday seeking to have the Garas’ business evicted from the property, alleging they are “currently illegally occupying and conducting business on the property” without legal title to the property or a valid lease.
“Due to the deterioration of RPSC’s relationship with the Gara defendants (as evidenced by their various lawsuits) RSPC does not want any further dealings with the Gara defendants and seeks to terminate their illegal occupation of RPSC’s property,” according to the complaint.
Sweetser said his client is well within her legal rights to evict the Garas, who are essentially her tenants. Hickory Run Farm has a lease agreement with RSPC Inc., but the lease was not updated after the Garas allegedly obtained majority ownership of the business. The complaint also alleges the Garas' “illegal occupancy” has deprived RSPC of the “use and enjoyment” of the property and seeks unspecified damages.
“(Silcox) and her brother are the owners of the property,” Sweetser said. “The Garas and their company do not have a lease with my clients and my clients want them off the property.”
In the complaint, Sweetser said he served the Garas with an eviction notice on Aug. 25, giving them until Sept. 30 to vacate the farm.
This news organization was unsuccessful in attempts to reach Neal Jacobs, the attorney representing the Garas in their civil suit, for comment. But in an August email, which is referenced in the complaint, Jacobs told Sweetser that his clients had no intention to comply with the eviction notice, labeling “any such attempted action by RSPC as unlawful, invalid and ineffective."
Penny Silcox


Silcox is currently barred from taking any action involving Hickory Run Farm under a temporary restraining order the Garas obtained in July, after they filed their lawsuit against her.
In their lawsuit, the Garas contend that Silcox made a verbal agreement in May 2015 to consolidate Hickory Run Farm and RSPC Inc. and transfer them into a new business, Newtown Equestrian Center. The Garas hold 90 percent ownership interest in Newtown Equestrian Center. Silcox holds 10 percent and, under the verbal agreement, she would continue to work on the farm as a full-time horse trainer.
The Garas then invested $1.3 million into the failing farm’s operations and to pay off Silcox’s personal and professional debts, according to their lawsuit. The couple contends that Silcox took two private mortgage loans with them using her Pineville Road property as collateral, which would be satisfied after she transferred the businesses into the Newtown Equestrian Center.
On Dec. 31, 2015, Silcox transferred 37.5 percent ownership interest in Hickory Run Farm to each of the Garas and retained 25 percent ownership interest. Silcox maintains she gave the Garas an ownership interest after Michael Gara told her that was the only way he could get a tax benefit from lending her money. Sweetser said Gara told Silcox he'd reduce her loan amount by the amount of his tax credit, which Sweetser said hasn’t happened.
Silcox also has denied that she agreed to either partner with the Garas or sell them her financially troubled farm, according to Sweetser. She also denied that she gave the Garas a second mortgage on the property for nearly $890,000, three months after she agreed to give them a $309,000 mortgage against the property last year.
In court filings, Sweetser has maintained the Garas' claims are moot because they have not produced written, legal documentation memorializing the alleged verbal agreement, as required by Pennsylvania law.
“Nowhere in these various lawsuits filed ... do the Gara defendants allege the existence of a document signed by RPSC (or Ms. Silcox) transferring an ownership interest to any one of them, which is a fundamental legal requirement for an enforceable claim to any ownership interest in real property in this commonwealth,” according to Sweetser’s latest motion seeking to evict the Garas.
In a Sept. 8 email, Jacobs, the Garas' attorney, said that the "general rule" about oral agreements did not apply in his clients' case.
“Most attorneys will give you the general rule and stop there,” he said. “I can tell you that oral agreements are enforceable when specific circumstances exist, the very circumstances that exist in this exact case.”
Several real estate and mortgage professionals interviewed by this news organization, however, said they believe the Garas might find it difficult to convince a judge to enforce the verbal agreement. They uniformly stated that verbal agreements involving transfer or purchase of real estate are not binding in Pennsylvania.
“That is a joke," said John Councilman, a former president of the National Association of Mortgage Brokers and president of the AMC Mortgage Corp. in Fort Myers, Florida. "The court should not recognize a verbal contract for real estate.” 
Jo Ciavaglia: 215-949-4181; email: jciavaglia@calkins.com; Twitter: @JoCiavaglia

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