After 15 Years, New Neighbors Force Winery Bankruptcy

There is something fundamentally unjust in Moon Dancer Vineyards & Winery having to filed for Chapter 11 Bankruptcy Act protection on Monday (9/11). It says it has between $100,000 and $500,000 in assets and owes more than $1 million.

Its largest unsecured creditors include M&T Bank, owed over $757,000; U.S. Small Business Administration, owed over $500,000; McNees Wallace & Nurick LLC, a law firm, owed $450,000; and First Data – Clover Capital, owed $30,000. That's a total of $1,737,000.

How did it get into this mess? It wasn't because of the decreasing demand for alcoholic beverages.

For 13 years, Moon Dancer Winery operated in Wrightsville, Pa. It had 10 acres of vineyards, with Cabernet Franc and Chardonnay as its primary grapes.

Then Matthew S. Balsavage and Amenda Perko bought an adjacent residential property in 2016. When the couple moved in, they learned that the winery’s operations included a tasting room, a pizzeria restaurant with regular business hours, a wedding venue, and a site for music festivals.

The couple claimed to be beset by the Winery’s substantial noise and by patrons of the Winery utilizing a driveway between the couple’s property and Mr. Miller’s residential property.

So Balsavage and Perko sued. They sought and obtained a preliminary injunction prohibiting use of the common driveway for winery access.

But Balsavage and Perko weren't finished. They then filed a new complaint arguing the winery was commercial, and violated a deed restriction. The winery's owner, James P. Miller, responded that the winery was agricultural, not commercial.

If this was the extent of the case, we would say Balsavage and Perko knew the winery was there and shouldn't be allowed to force its closure. That in itself, we think is enough reason for their complaint to be rejected. But that wasn't the end of the matter.

Affter some legal back-and-forth, on April 12, 2019, the homeowners filed a request for discovery. According to the appellate court decision, "After receiving no response from the Winery, the homeowners filed a motion to compel discovery on May 28, 2019. The trial court entered an order on June 18, 2019, compelling discovery and warning of the imposition of sanctions in the event of non-compliance. For whatever reason, this order was not docketed."

In September 2021, the court clerk issued a notice of proposed termination of the case to which Balsavage and Perko filed a statement of intention to proceed. The trial court's June 2019 order compelling discovery was finally filed Nov. 23, 2022.

There was no response from the winery. At that point, the trial court issued a series of orders basically prohibiting the winery from introducing evidence it was not engaged in a commercial enterprise and awarding the homeowners attorneys fees. Again, this order was ignored.

Then the homeowners moved for summary judgment. The trial court found the winery was commercial in nature and only residential uses were permitted under the restrictive covenants governing the properties. Miller was ordered to cease operations, close the winery and pay attorneys fees.

At this point, the Winery's lawyer withdrew and it hired a new lawyer, who filed a motion asking the trial court to rescind the summary judgment and, in order to prevent injustice, allow the Winery to respond to the Balsavage motion for summary judgment.

That motion was denied, with the court saying it didn't matter that the Winery's former attorney had failed to effectively communicate the status of their case.

On appeal, the Pennsylvania Superior Court emphasized that “an aggrieved party in a civil case, involving only private litigants, unlike a defendant in a criminal case, does not have a constitutional right to the effective assistance of counsel.”

So, the winery has closed, and it's unlikely it will be able to reopen, given the fact the Pennsylvania courts chose to enforce the restrictive covenants, even though the winery had been operating for 13 years before Balsavage and Perko moved in.

It seems unjust to us that the failure of the Winery's counsel to do his job should result in Moon Dancer being denied the right to make its case that the winery is an agricultural, not commercial, operation. Certainly, the various activities taking place on the property are common at many wineries.

But Moon Dancer couldn't make that argument because its prior attorney failed to clearly communicate the various orders from the trial court to his client.

Can Moon Dancer recover from him for malpractice? To a layperson, that would be justice. But does it meet the legal standard for malpractice? We don't know.