Crystal Horn and Travis Ginnetto, v. Christopher Mumford and Elizabeth Davis

Crystal Horn and Travis Ginnetto, v. Christopher Mumford and Elizabeth Davis

Civil Action-Real Property Law-Quiet Title-Rent To Own Agreement-Incarcerated Property Owner-Breach of Contract-Implied Duty of Good Faith and Fair Dealing-Material Breach-Remedies

Through this action in Quiet Title, the parties dispute ownership of a condemned single dwelling property located at 443 North Twelfth Street in Lebanon City.  In 2009, Christopher Mumford (“Mumford”), who largely has remained incarcerated throughout, bought the property for $25,000.00.  On March 21, 2017, Mumford designed his cousin, Crystal Horn (“Horn”) as his agent under a Power of Attorney in light of his impending incarceration.  On April 7, 2017, a Rent-To-Own contract was signed by Mumford, Horn and Horn’s friend Travis Ginnetto (“Ginnetto”) requiring monthly payments of $500.00 per month.  Horn took possession of the property in May of 2017.  On February 8, 2022, Mumford served a Notice to Quit upon Horn and Ginnetto.  On February 11, 2022, Mumford signed a deed conveying the property to his mother, Elizabeth Davis (“Davis”) for $1.00.  On November 16, 2022, the property was condemned by the City of Lebanon, after which the current action to Quiet Title was filed with Plaintiffs alleging that Mumford breached the Rent-To-Own contract by selling the property to Davis and Defendants alleging that Plaintiffs breached the contract by failing to pay rent and to keep the property in good and clean condition.        

1.  When a breach of contract is alleged, the party alleging the breach must establish the existence of a valid contract, a material violation of one (1) of the terms of the contract and resultant damages.

2.  To be actionable, the breach of a contract must be deemed material, not a minor or technical breach. 

3.  When no contractual provision exists governing the parties’ responsibilities in the event of a default, a breach can be actionable without notice and an opportunity to cure.

4.  Every contract carries with it an implied duty of good faith and fair dealing.

5.  A material breach relieves the nonbreaching party of the duty of performance.

6.  When both parties are found to be in material breach of a contract, one (1) option is to deny both parties any relief.

7.  If a contract materially is violated by one (1) party, the other party is relieved of further responsibility under the contract.

8.  Where Plaintiffs are unable to provide any documentation corroborating payment of rent between May of 2017 and June of 2020 and the documentation provided of payments between June of 2020 and February of 2022 largely is inconclusive, they were in material breach of the contract by failing to pay rent required under the contract.

9.  In light of the fact that Mumford did not notify Plaintiffs of nonpayment of rent or default of the contract during times when he was not incarcerated, his inaction constitutes a breach of the implied covenant of good faith and fair dealing owed to Plaintiffs.

10.  Nonetheless, since no documentation was presented corroborating any payments to Mumford between May of 2017 and June of 2020, Horn was acting as Mumford’s agent under a Power of Attorney during that time and Mumford was incarcerated during the majority of the time, this material breach occurred before Mumford’s decision to transfer the property to David without notice of default, which entitled Mumford to vitiate his contractual responsibility under the Rent-To-Own contract.

L.C.C.C.P. No. 2022-00278, Opinion by Bradford H. Charles, Judge, April 4, 2024.

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

PENNSYLVANIA

CIVIL ACTION – LAW

CRYSTAL HORN and                                                         :

TRAVIS GINNETTO,                                                         :

Plaintiffs                                                                     :

            v.                                                                                 :           2022-00278

                                                                                                :

CHRISTOPHER MUMFORD and                        :

ELIZABETH DAVIS,                                                          :     

Defendants                                                     :

                                                            ORDER OF COURT

            AND NOW, this 4^th day of April 2024, in accordance with the following Opinion, the Plaintiffs’ Action to Quiet Title for the property located at 443 North Twelfth Street, Lebanon, Pennsylvania, is decided in the favor of Defendant Elizabeth Davis (hereafter DAVIS).  As such, the property located at 443 North Twelfth Street, Lebanon, Pennsylvania is deemed to be owned by DAVIS via the deed signed by Defendant Christopher Mumford (hereafter MUMFORD) on February 11, 2022, conveying the property to DAVIS.  The Court acknowledges that a Rent-to-own contract for said property was entered into by Christopher Mumford, Crystal Horn (hereafter HORN), and Travis Ginnetto (hereafter GINNETTO) on April 7, 2017.  However, the breach of that contract by Plaintiffs relieved MUMFORD of his contractual responsibility to deed the property to HORN and GINNETTO under the Rent-to-own agreement.

BY THE COURT,

                                                                        ______________________________, J.

                                                                        BRADFORD H. CHARLES

BHC/pmd

cc:        Michael Palermo, Esq.// 3300 Trindle Road, Suite 2, Camp Hill PA  17011

Timothy Engler, Esq.// 36 W. Main Ave., Myerstown PA 17067

Christopher Mumford// 83 Chestnut Street, Room 300, Lebanon PA 17042

            Court Administration

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

PENNSYLVANIA

CIVIL ACTION – LAW

CRYSTAL HORN and                                                         :

TRAVIS GINNETTO,                                                         :

Plaintiffs                                                                     :

            v.                                                                                 :           2022-00278

                                                                                                :

CHRISTOPHER MUMFORD and                        :

ELIZABETH DAVIS,                                                          :     

Defendants                                                     :

APPEARANCES:

MICHAEL PALERMO, ESQ.        FOR  Plaintiffs

TIMOTHY ENGLER, ESQ.                                               FOR  Elizabeth Davis

CHRISTOPHER MUMFORD                                            Self-represented litigant

Opinion, Charles, J., April 4, 2024

            This is a dispute about ownership of condemned property in the City of Lebanon.  In some ways, we lament the reality that we will have to issue a ruling in favor of any litigant now before this Court.  The equities of this case do not favor anyone.  However, our role today requires us to render a decision about whether Crystal Horn (HORN), Travis Ginnetto (GINNETTO) or Elizabeth Davis (DAVIS) should be deemed to be the owner of property located at 443 North Twelfth Street in the City of Lebanon.  For reasons we will articulate in more detail below, and with reservations that will also be cited, we rule today that the property should be deemed to be owned by DAVIS.

I.          SUMMARY OF DISPUTE

            This is a Quiet Title action involving a single residence dwelling located at 443 North Twelfth Street in the City of Lebanon.  (Hereafter referred to as “PROPERTY”).  In 2009, Christopher Mumford (hereafter MUMFORD) purchased PROPERTY for $25,000.  Today, three other people claim ownership.

DAVIS is MUMFORD’s mother.  HORN is MUMFORD’s cousin.  GINNETTO is a friend of HORN. Unfortunately, MUMFORD has an extensive history of violating criminal statutes.  For much of the time relevant to this dispute, MUMFORD was incarcerated as a result of his criminal difficulties. 

            On April 7, 2017, a Rent-to-own contract was entered into by MUMFORD, HORN and GINNETTO.  During the course of the Quiet Title action, MUMFORD denied that he signed the agreement.  Immediately following a Bench Trial that occurred on January 11, 2024, this jurist said to the parties:

“I’m going to tell you right here, right now I believe that Exhibit 18 is a valid contract.  I believe that that is Mr. Mumford’s signature on Exhibit 18.  I believe that is a binding contract.”

Today, we need to address the question of whether the binding Rent-to-own agreement was breached and whether it should be enforced.             

II.        TIMELINE

            In order to understand this dispute, it is necessary to set forth a timeline of relevant events.  This timeline will serve as a foundation for the analysis that will follow thereafter.

DATE	EVENT
10-23-09	PROPERTY was conveyed to MUMFORD for $25,000.
3-21-17	MUMFORD gives his Power of Attorney to HORN.  This was undertaken due to MUMFORD’s impending incarceration.
4-7-17	Rent-to-own contract was signed.
May of 2017	HORN took physical possession of PROPERTY.
2-8-22	MUMFORD serves Notice to Quit upon Plaintiffs.
2-11-22	MUMFORD signs deed conveying PROPERTY to DAVIS for $1.
3-10-22	Notice to Quit served upon HORN.  Notice does not afford any reason for eviction.
9-27-22	DAVIS gives HORN notice that she is behind in rent by $4,500.
10-6-22	Letter sent by the Lebanon City Housing Inspector seeking access to PROPERTY for purposes of an inspection.
10-17-22	City Inspector arrives at PROPERTY.  HORN refuses to give access to the inspector.
10-27-22	DAVIS files Landlord-Tenant Complaint against HORN and GINNETTO seeking back rent of $4,000.
11-10-22	Magisterial District Judge dismisses the Landlord-Tenant Complaint without prejudice.
11-16-22	Police called to PROPERTY in order to investigate a complaint about an altercation.  Police notify City Inspector, who was able to complete an inspection of PROPERTY in conjunction with the investigation undertaken by police.
11-16-22	PROPERTY was condemned by the City of Lebanon.  The Notice of Condemnation indicates that HORN, GINNETTO, Faith Simpson, Randall Boyer and Robert Waltman were all residents of PROPERTY.
3-14-22	Quiet Title Action now before this Court filed.

III.   LEGAL PRINCIPLES

To create a binding contract there must be proof of an offer, an acceptance and the existence of consideration.  See¸ Schreiber v. Olan Mills, 627 A.2d 806, 808 (Pa. Super. 1993). As a general rule, a binding contract need not be in writing and signatures on a document are not required unless such signing is expressly required by law or by the intent of the parties. Shovel Transfer and Storage inc. v. Pennsylvania Liquor Control Bd., 739 A.2d 133, 136 (Pa. 1999) citing L.B. Foster Co. v. Tri–W Construction Co., 186 A.2d 18, 19 (Pa. 1962).    When the terms of a contract are clear and unambiguous, the language must be enforced as it is written.  See¸  Hornberger v. Dave Gutelius Excavating, Inc., 176 A.3d 939, 944 (Pa. Super. 2017).  The terms of an unambiguous contract cannot be altered by a Court under the guise of interpretation. See¸ Riverview Carpet & Flooring, Inc. v. Presbyterian Senior Care, 299 A.3d 937, 983 (Pa. Super. 2023). 

When breach of a contract is alleged, the party seeking to establish a breach must prove the following elements:

• The existence of a valid contract;
• A material violation of one of the terms of the contract; and
• Resulting damages.

See¸ e.g., Linde v. Linde, 21 A.3d 1083, 1090 (Pa. Super. 2019);  Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 137 A.3d 1247, 1258 (Pa. 2016). 

            To be actionable, the breach of a contract must be deemed “material”.  Books have been written about the question of what constitutes a “material breach”.  However, almost every case that addresses materiality of a breach speaks about the concept of “substantial performance”. 

            Substantial performance has been described in case law as existing notwithstanding the existence of contract violation that is deemed minor or technical in nature: when an alleged breach is deemed to be an “immaterial failure of performance”, the contract can still be deemed to be substantially performed.  Crimina v. Bronich, 537 A.2d 1355, 1358 (Pa. 1988), quoting P.L.E. Contracts § 367. The Superior Court in First Mortgage Co. of Pennsylvania v. Carter, 452 A.2d 835 (Pa. Super. 1982) put it this way:

“The doctrine of substantial performance has been developed by the courts as an instrument of justice intended to avoid forfeiture because of technical, inadvertent or unimportant omissions.  It is ‘intended for the protection and relief of those who have faithfully and honestly endeavored to perform their contracts in all material and substantial particulars, so that their right to compensation may not be forfeited by reason of mere technical, inadvertent or unimportant omissions or defects.’”

Id at page 502, citing Schlein v. Gross, 142 A.2d 329, 333 (Pa. Super. 1958).

In determining whether violation of a contract is minor or material, courts must “weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter and the cruelty of enforced adherence.”  First Mortgage Co. of Pennsylvania v. Carter, supra at page 502.^[1] 

            In order for a breach of contract to be actionable, there is no formal requirement that the non-breaching party afford the party in breach with notice of the violation unless the contract itself contains a “notice and cure” or some other type of clause governing the parties’ responsibilities in the event of a default.  See¸ LJL Transp., Inc. v. Pilot Air Freight Corp., 962 A.2d 639, 652 (Pa. 2009).  When no contract provision exists that governs the parties’ responsibilities in the event of a default, a breach can be actionable without notice and an opportunity to cure being afforded. See¸ International Diamond Imported, Ltd., v. Singularity Clark, L.P., 400 A.3d 1261, 1271 (Pa. Super. 2012). 

            With the above being said, every contract carries with it an implied duty of good faith and fair dealing.  Pursuant to 13 Pa.C.S.A. § 1304, every contract imposes an obligation of good faith in its performance and enforcement.  In the case of Somers v. Somers, 613 A.2d 1211 (Pa. Super. 1992), an uncle and his nephew entered into a stock purchase agreement in which the uncle sold to his nephew a portion of his stock in a construction company and surrendered to the corporation for redemption the remainer of his outstanding shares.  In conjunction with the stock transfer agreement, the parties entered into an employment agreement whereby the uncle was employed as a consultant for the business.  The nephew and uncle disagreed over the handling of a business decision, and, as a result, the nephew terminated the uncle’s employment.  The uncle alleged that the nephew breached the implied general duty of good faith and fair dealing in the performance of the contract.  The Superior Court declared:

“The general duty of good faith and fair dealing in the performance of a contract as found in The RESTATEMENT (SECOND) OF CONTRACTS § 205, has been adopted in this Commonwealth in Creeger Brick & Building Supply Inc. v. Mid–State Bank & Trust Co., 560 A.2d 151, 153 (Pa. Super. 1989), and Baker v. Lafayette College, 504 A.2d 247, 255 (Pa. Super. 1986), aff’d, 516 Pa. 291, 532 A.2d 399 (1987). A similar requirement has been imposed upon contracts within the Uniform Commercial Code by 13 Pa.C.S. § 1203. The duty of “good faith” has been defined as “[h]onesty in fact in the conduct or transaction concerned.” See 13 Pa.C.S. § 1201.

The obligation to act in good faith in the performance of contractual duties varies somewhat with the context. Baker, supra, at 255.  While a complete catalogue of types of bad faith is impossible, bad faith includes, evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party’s performance. RESTATEMENT (SECOND) of CONTRACTS, § 205(d).

            Under Pennsylvania law, a material breach relieves the non-breaching party of its duty of performance.  International Diamond Imported, supra at 1270.   When both parties are found to be in material breach of a contract, the analysis is a bit more complicated.  

One option is to deny both parties any relief.  In Cottman Transmission Systems, Inc. v. Dubinsky, 550 F.Supp. 133, 136 (W.D. Pa. 1982) , the Third Circuit ruled that when parties to a contract each commit a material breach, the law will give relief to neither.  The Court explained:

“Each of the parties in the case sub judice argues that it is entitled to damages because of the breaches of the other party.  Such an argument is valid where the party has fulfilled its obligations under the contract; the argument is not valid where the party has failed to fulfill its obligations.  The rule in Pennsylvania and elsewhere is that when parties to a contract each commit a material breach, the law will give relief to neither party.”

The Pennsylvania Superior Court cited Cottman in denying both parties relief in the case of Nikole, Inc. v. Klinger, 603 A.2d 587, 594 ([Pa. Super.] 1992).  However, it did leave the door open for one or both contracting parties to receive limited relief.  The recovery, by either party, is limited to that benefit which is in excess of the loss said party has caused by his/her own breach. Citing  In re Spagnol Enterprises, Inc., 81 B.R. 337, 353 (W.D.Pa.1987); See also Lancellotti v. Thomas, 491 A.2d 117 (Pa. Super. 1985). 

This Court could also allow a contract recission by a finding of mutual mistake.  We may allow for the contract’s rescission if “(1) the mistake relates to an ‘essential fact which formed the inducement to [the contract],’ and (2) ‘the parties [can be] placed in their former position with reference to the subject matter of [the contract.]’ ” Murray v. Willistown Twp., 169 A.3d 84[, 90 (Pa. Super. 2017),] citing Vrabel v. Scholler, 85 A.2d 858, 860 (Pa. 1952); Gocek v. Gocek, 612 A.2d 1004, 1006 (Pa. Super. 1992). 

Yet another option may be to apply the doctrine of unclean hands. In the case of Terraciano v. Dep’t. of Transp., Bureau of Driver Licensing, 753 A.2d 233, 237-38 (Pa. 2000), the Pennsylvania Supreme Court explained the unclean hands doctrine as follows:

“[A] court may deprive a party of equitable relief where, to the detriment of the other party, the party applying for such relief is guilty of bad conduct relating to the matter at issue. The doctrine of unclean hands requires that one seeking equity act fairly and without fraud or deceit as to the controversy in issue….”

However, unclean hands is a doctrine available only when a Court sits in equity, and equity has jurisdiction only in the absence of a full, complete, and adequate remedy at law.” St. Joe Minerals Corp. v. Goddard, 324 A.2d 800, 802 (Pa. Cmwlth.1974). Moreover, the application of the unclean hands doctrine is confined to willful misconduct which concerns the particular matter in litigation. It does not apply to collateral matters not directly affecting the equitable relations which exist between the parties.” Shapiro v. Shapiro, 204 A.2d 266, 268 (Pa. 1964). 

            In this case, both parties have alleged that the other breached the Rent-to-own contract.^[2]  As will be addressed in more detail below, there is evidence to support both parties’ arguments as to breach.  That said, we cannot deny relief to both parties because someone needs to be designated as owner of PROPERTY. Recission is not appropriate because no fraud or impropriety was alleged as it relates to formation of the contract.  Similarly, unclean hands is an equitable doctrine and breach of contract is an action at law.  More important, both parties have unclean hands as it relates to their conduct in this case.  Because of the above, we have been placed in the unenviable position of rendering an “all or nothing” decision even though our visceral reaction is that justice would require a compromise.

IV.       BREACHES ALLEGED BY THE PARTIES

            We conclude that neither the Plaintiffs nor the Defendants have acted honorably as it relates to this dispute.  With that having been emphasized, we will proceed to analyze the allegations of breach proffered by both sides and our findings with respect to those allegations. 

• Breach by HORN and GINNETTO

MUMFORD and DAVIS allege that HORN and GINNETTO committed two material breaches of the Rent-to-own agreement.  First, MUMFORD and DAVIS claim that HORN and GINNETTO failed to pay the $500 monthly rent that was to comprise the $30,000 price for conveyance of PROPERTY.  Second, MUMFORD and DAVIS allege that HORN and GINNETTO failed to keep PROPERTY in “clean, good working order” as required by the agreement. 

            As it relates to payment of rent, the parties produced dramatically different testimony.  MUMFORD stated that HORN “hardly ever paid anything.”  HORN responded that she made every payment until MUMFORD materially breached the agreement by conveying PROPERTY to DAVIS. 

            Typically, payment of rent is something that can easily by proven or disproven by looking at checks, bank transfers or other financial records.  Not so in this case.  Here, HORN asserts that she fulfilled her obligation under the Rent-to-own agreement through a variety of different payment methods.  On some occasions, she paid the $500 monthly amount by check.  On other occasions, she gave MUMFORD cash.  On other occasions, she deposited money into MUMFORD’s prison account.  On still other occasions, she paid money to MUMFORD’s lawyer for payment of his services rendered to MUMFORD. 

When asked to provide documentation to corroborate her claims, HORN was able to provide records between June of 2020 and February of 2022.  The records provided by HORN depicted cash withdrawals from ATMs, payments by check to The McShane Law Firm, withdrawals undertaken at the bank and “Internet Transfer to Freestyle” payments.  For the twenty (20) months covered by HORN’s documentation, thirteen (13) payments were in the amount of $500.  All of the payments made to The McShane Law Firm were in the amount of $300.  The cash withdrawals were in various amounts between $50 and $200.  Interestingly, during some months, such as February of 2022, HORN purportedly paid more than $500.  In other months, such as those that occurred during the summer of 2021, HORN paid nothing at all.  We cannot accept as gospel truth the totality of the “proof” offered by HORN about her payments to MUMFORD between June of 2020 and February of 2022.

            More problematic is the utter lack of any documentation as to amounts paid by HORN between May of 2017 and June of 2020.  Even though three years have passed since June of 2020, we cannot conceive that it was impossible for HORN to provide some documentary proof about amounts that she paid to or for MUMFORD’s benefit.  Cancelled checks.  Deposit slips.  Receipts from MUMFORD’s lawyer.  Documents reflecting deposits into MUMFORD’s prison account.  Copies of HORN’s own bank records reflecting regular $500 per month debits.  None of the above were provided for the period of time between May 2017 and June 2020.  The absence of such documentation causes us to question whether HORN made any of the payments required under the Rent-to-own agreement during this period of time.^[3] 

            Based upon the totality of everything presented, we determine as a Finding of Fact that HORN and GINNETTO paid some, but not all, of the amounts that were owed under the Rent-to-own agreement.  Unfortunately for Plaintiffs, “some” is not enough to establish strict compliance with the Rent-to-own agreement.  We determine today that HORN and GINNETTO were in material breach of the Rent-to-own agreement by virtue of their non-payment of $500 per month.

MUMFORD and DAVIS also allege that Plaintiffs violated the Rent-to-own agreement by failing to maintain PROPERTY in good and clean condition.  As proof, MUMFORD and DAVIS point to the fact that PROPERTY was condemned on Plaintiffs’ watch.  In addition, MUMFORD and DAVIS point out that they hired a contractor to examine PROPERTY once they gained access to it.  The contractor declared that it would cost $79,139.84 to remediate problems with the structure.  Moreover, MUMFORD testified that when he entered PROPERTY with the contractor, it was “filthy” and “cluttered”. 

The problem for MUMFORD and HORN is that they had no proof of how PROPERTY appeared during the term of the Rent-to-own agreement.  For the period of time between May of 2017 and May of 2022, neither MUMFORD, DAVIS nor anyone on their behalf inspected PROPERTY or could testify about its condition.  We did hear testimony that when the Rent-to-own agreement was executed, PROPERTY was occupied by vagrants and was in horrible condition.  We know from independent evidence that in November of 2022, water leakage occurred that was significant enough to cause the City to declare that PROPERTY was unfit for human habitation.  We know from the Lebanon City Public Safety Inspector that multiple people were living in PROPERTY who were not named in the lease agreement.  We also know that HORN refused to allow the Lebanon City Public Safety Inspector into PROPERTY on October 17, 2022.  Had the Rent-to-own agreement still been in force during the fall of 2022, we would have determined the above to be sufficient for us to find a breach.  Unfortunately for the Defendants, there is a gap of evidence as to how PROPERTY was maintained during the time between May of 2017 and November of 2022.

The burden of proving breach of an agreement is upon the party asserting a breach.  See,  Snyder v. Gravell, 666 A.2d 341, 343 (Pa. Super. 1995) .  As it relates to the allegation that Plaintiffs breached the agreement by failing to maintain PROPERTY in good and clean condition between May of 2017 and May of 2022, the evidence presented fails to meet that burden.

• Breach by MUMFORD and DAVIS

In terms of a breach by MUMFORD and DAVIS, Plaintiffs allege that MUMFORD violated the Rent-to-own agreement by deeding PROPERTY to his mother for $1 during the term of the agreement.  The Plaintiffs assert that MUMFORD owed them a duty of good faith and fair dealing as an implied covenant of the contract and that he violated that covenant by deeding PROPERTY to someone else without any prior notice.^[4] 

            It is clear to this Court that MUMFORD trusted HORN; he gave her his Power of Attorney shortly before the Rent-to-own agreement was signed.  This trust perhaps explains why many of the formalities governing contracts were not employed by the parties.  However, even familial contracts formed with trust are accompanied by the implied duty to act in good faith. 

            Here, it certainly appears as though MUMFORD washed his proverbial hands of PROPERTY once the Rent-to-own agreement was signed.  However, he certainly relied upon the woman to whom he gave a Power of Attorney.  Moreover, MUMFORD was incarcerated for a significant period of time following May of 2017.  During the pendency of MUMFORD’s incarceration, we cannot and will not declare that he could or should have afforded Plaintiffs with a Notice of Default by virtue of their failure to pay $500 each and every month. 

            The situation changed when MUMFORD was released from prison.  If in fact HORN and GINNETTO failed to pay $500 per month during periods of time when MUMFORD lived in the community, MUMFORD could and should have notified HORN and GINNETTO that their missing payments could be considered a default.  As we understand it, MUMFORD lived in the community for months prior to February of 2022.  During this period of time, never once did he notify HORN or GINNETTO that they were in default of the Rent-to-own agreement.  Even though no “notice and cure” provision existed in the agreement, we conclude based upon all evidence presented that MUMFORD’s implied covenant of good faith and fair dealing required him to notify HORN and GINNETTO of a default before he took action to convey PROPERTY out from under them.  Because MUMFORD did not communicate this notice, we would find his inaction to be a breach of the implied covenant of good faith and fair dealing that he owed to Plaintiffs. 

V.        ANALYSIS

  The equities of this case do not favor anyone.  As it relates to HORN and GINNETTO, they did not pay the full amount of rent that was due under the Rent-to-own agreement.  Just as disturbing, HORN and GINNETTO were in exclusive possession of PROPERTY between 2017 and November of 2022, and they allowed PROPERTY to deteriorate to the point where it was condemned.  Moreover, HORN refused to cooperate with Lebanon City Inspectors who could have helped to develop a remediation plan that would have helped everyone involved in this dispute.  As it relates to MUMFORD and DAVIS, never once prior to February of 2022 did either individual provide Notice of Non-payment to HORN or GINNETTO.^[5]  Never once between May of 2017 and June of 2020 did either MUMFORD or DAVIS seek permission to inspect PROPERTY in order to ascertain its condition.  Then, when the term of the Rent-to-own agreement was three (3) months from expiring, MUMFORD deeded PROPERTY to his mother for $1 without ever having provided notice to HORN or GINNETTO that he considered them to be in default of the Rent-to-own contract.  Moreover, when the Quiet Title Action was filed, MUMFORD lied by claiming that the signature on the agreement was not his, when ample evidence existed that it was. 

On top of the above, all of the parties to this dispute have saddled the City of Lebanon with the responsibility to deal with a condemned property.  Had any of the parties to this dispute acted responsibly, the actions undertaken by the City of Lebanon would not have been necessary.  As it is, the City has had to expend resources to monitor PROPERTY in order to ensure that it does not become a nuisance to neighbors. 

If the above were not enough, the existence of MUMFORD’s Power of Attorney given to HORN creates another shroud of tenebrosity upon this dispute.  Under Pennsylvania law, an agent acting under a Power of Attorney has a fiduciary relationship with the principal.  See, In Re: Estate of Bechtel, 92 A.3d 833, 839 (Pa. Super. 2014), citing 20 Pa. C.S.A. §5601.  A fiduciary has been defined as “A person who is required to act for the benefit of another person on all matters…one who owes to another the duties of good faith, trust, confidence and candor…one who must exercise a high standard of care in managing another’s money or property.”  See, Black’s Law Dictionary (9^th Ed. at page 702).^[6] 

Ultimately, we have chosen to rely primarily upon two unassailable facts:

(1) Not one scintilla of documentary proof was offered to prove that HORN and GINNETTO paid anything to MUMFORD between May of 2017 and June of 2020; and

(2) During the period of time for which no proof was offered, HORN served as MUMFORD’s Power of Attorney. 

During the majority of the time between May of 2017 and June of 2020, MUMFORD was incarcerated.^[7]  It was simply not possible for him to collect rent, inspect property or otherwise protect his interests.  Recognizing this, MUMFORD gave HORN his Power of Attorney to act on his behalf.  This Power of Attorney created a fiduciary obligation on the part of HORN to act in the best interests of MUMFORD.  This fiduciary duty carried with it an obligation to ensure that $500 per month made its way from HORN and GINNETTO to MUMFORD and to report when it did not.  Because MUMFORD was in prison and could not monitor the obligation, the fiduciary relationship also required HORN to scrupulously document all payments made under the Rent-to-own agreement.  These things simply were not done. 

We conclude based upon the totality of evidence presented that HORN did not scrupulously pay $500 per month to MUMFORD in accordance with the Rent-to-own agreement.  The absence of these payments, combined with HORN’s fiduciary responsibility to MUMFORD, causes us to conclude that HORN materially breached the Rent-to-own agreement. 

            Even though we rue MUMFORD’s lack of good faith in failing to declare a default and his decision to unilaterally deed PROPERTY to his mother without providing advance notice to HORN and GINNETTO, the breach of HORN pre-dated MUMFORD’s aberrant conduct.  Thus, HORN and GINNETTO were already in breach of the Rent-to-own agreement by the time MUMFORD acted dishonorably.

            Under Pennsylvania law, if a contract is materially violated by one party, the other party is relieved of any further responsibility under the contract.  In Widmer Engineering Inc. v. Dufalla, 837 A.2d 459 (Pa. Super. 2003), the Court was asked to determine whether one party’s failure to pay monies due under an agreement relieved the other party of its obligations under the contract.  The Court stated:

“We begin our analysis by noting a settled principle of contract law: A material breach by one party to a contract entitled the non-breaching party to suspend performance…

When performance of a duty under a contract is due, any non-performance is a breach.  If a breach constitutes a material failure of performance, then the non-breaching party is discharged from all liability under the contract.  If, however, the breach is an immaterial failure of performance, and the contract was substantially performed, the contract remains effective…

Id at page 467-468, citing in part Lane Enterprises v. L.B. Foster, 700 A.2d 465 (Pa. Super. 1997) and Restatement (2^nd) of Contracts §241. (All other citations omitted).

            In this case, HORN and GINNETTO failed to pay the monetary amounts due under the Rent-to-own agreement.  This failure by HORN and GINNETTO began while MUMFORD was incarcerated and occurred while HORN enjoyed Power of Attorney status on MUMFORD’s behalf.  We find Plaintiffs’ failure to pay all amounts due under the contract to be a material breach.  Because this breach occurred before MUMFORD’s decision to deed PROPERTY to DAVIS without providing prior Notice of Default occurred, the breach by Plaintiffs entitled MUMFORD to vitiate his contractual responsibility to deed PROPERTY to HORN and GINNETTO under the Rent-to-own agreement.  Thus, we are compelled to rule in favor of Defendants.  An Order to accomplish this will be entered today’s date.

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[1] The court in Carter also required that a court must weigh whether “the significance of the default is grievously out of proportion to the oppression of the forfeiture.” Id at page 502.

[2] To be fair, this was a secondary argument of MUMFORD.  His primary position was that he never signed the Rent-to-own agreement.

[3] In an effort to be thorough, we obtained records regarding MUMFORD’s payments toward satisfaction of his $15,977.17 in accumulated fines, costs and restitution.  Between May of 2017 and June of 2020, MUMFORD paid a total of $665.92.  All of the sums paid by MUMFORD during this period of time were in amounts less than $60.  All were direct debits by the Pennsylvania Department of Corrections from MUMFORD’s prison account.  Had $500 been deposited into MUMFORD’s account each month, the auto-debits would have been greater.  In addition, although records do reflect that DAVIS paid amounts on behalf of MUMFORD during periods of time after June of 2020, never once do the payment records reveal that HORN paid anything on MUMFORD’s account. 

[4] Plaintiffs also alleged that MUMFORD violated the agreement by failing to pay real estate taxes, thus forcing Plaintiffs to pay those taxes themselves.  The agreement is silent as to real estate taxes.  Typically, the owner is responsible for paying taxes on a property.  However, in absence of language in the agreement we cannot and will not declare MUMFORD’s failure to pay taxes to be a material breach of the agreement.

[5] Had a Notice been provided to both HORN and GINNETTO, it could have alleviated confusion such as exists today.

[6] Under Pennsylvania law, a fiduciary duty is breached by failure to disclose material facts.  See, Resolution Trust Corp. v. Lutz, 914 F.Supp. 1163 (E.D. Pa. 1996). Non-payment of rent by a tenant would certainly fall within the category of “material” under the facts of this case.

[7] In fact, from looking at MUMFORD’s fines, costs and restitution payment record, it appears as though MUMFORD was an inmate in a State Correctional Facility for the entirety of the period between early 2018 and August of 2020.