terminated by either party upon 120 days written notice.
The subject matter of the dispute on the counterclaim concerns the alleged wrongful termination of the lease by USG in April, 1972, after the property had been sold by USG to Swann Oil Company (the same corporation which subsequently purchased Areas A and B). Schiavo alleges that it was assured by USG during 1970 and 1971 that the property would not be sold until the landfill operation was completed, and that based upon these assurances, Schiavo expended approximately $200,000 in building an access road to Area C, and in purchasing new landfill equipment to be used in that area.
The original expectation of the parties was that Area C would be available as a landfill area for approximately two years; however, new technology and new equipment in the field convinced Schiavo that the period could be extended to approximately four years. It was believed by Schiavo that it was in the interest of both parties to extend the life of the landfill for as long as possible. Nevertheless, USG had had the property available for sale since 1966, a fact of which Schiavo was aware.
Initial consideration was given by Schiavo to the purchase of new landfill equipment early in 1970, prior to the execution of the lease for Area C. At that time, John Lamb, president of Schiavo, sought assurance from USG that the landfill property would not be sold until it had been raised to grade, and that the purchase of the equipment would be a worthwhile investment for Schiavo. It is not clear from the record whether Lamb was inquiring only about Area A, on which the landfill operation was presently proceeding, or also about Area C, on which the parties anticipated continuing the landfill.
John Lamb testified that in seeking reassurance from USG, he spoke to Roy Starner, the USG Philadelphia plan manager; Lamb told Starner that he was "thinking" about purchasing the equipment, and "wanted to feel comfortable" as far as the continuation of the landfill was concerned. Starner responded that he would check with USG's main office in Chicago; approximately a week later, Starner telephoned Lamb, and told him that "as far as I can find out and as far as I know, there is absolutely nothing in the wind with respect to a prospective buyer or the sale of that land." (Trial, 9.100.) When the lease was executed in July, 1970, however, there was no provision made guaranteeing the completion of the landfill. Indeed, Schiavo made no objection to the provision in the lease permitting termination upon 120 days notice. While the record is not entirely clear on precisely when Schiavo purchased the new equipment, it was apparently not until after the lease for Area C was signed by the parties; the cost of the equipment was approximately $100,000.
When the lease for Area C was executed in 1970, a problem existed with respect to access to that area; there was no public thoroughfare running to the property. There were only two means of access: 1) across Area A, and over railroad tracks which separated Areas A and C;
and 2) over a rough, dirt roadway which ran to Passayunk Avenue, a distance of approximately three tenths of a mile.
Schiavo originally hoped to reach Area C with its equipment by traveling through Area A; however, it was soon discovered that the equipment was too heavy to operate across the recently landfilled Area A, and, in addition, the landfill vehicles could not maneuver the incline over the railroad tracks. Schiavo then attempted to reach Area C by means of the unfinished access road from Passayunk Avenue; this also proved unfeasible, due to the weight of the equipment.
Confronted with this situation, Schiavo considered the possibility of improving the Passayunk Avenue road to permit the movement of heavy equipment upon it. As this operation involved a substantial expense, however, Lamb, in early 1971, again sought assurance from USG, specifically from Starner, that Area C would not be sold in the near future, but would be available for the life of the landfill. Starner again checked with USG's main office in Chicago, and again told Lamb that as far as Starner could determine, there was no immediate plan to sell the property. We find, however, that no specific promise or assurance was given by USG to Schiavo that the property would not be sold. Starner's statements to Lamb relative to the sale of the property were clearly not absolute; they contained the obvious disclaimer that Starner had only checked "as far as he could determine." Schiavo neither sought, nor received, any written assurance that the property would continue as a landfill. In any case, following the discussion between Lamb and Starner, Schiavo improved the access road from Passayunk Avenue; this was done in early 1972.
The improvement of the road increased the value of Area C to some degree, since it provided immediate and functional access to the land.
USG began initial negotiations with Swann Oil Company for the sale of Area C during July or August of 1971; these negotiations became serious sometime during December, 1971, and January, 1972; an agreement of sale was signed by USG and Swann in February, 1972. During the course of these negotiations, Swann requested that USG keep the potential sale confidential; consequently, USG did not inform Schiavo of the possibility that Area C might be sold to Swann. However, at a luncheon meeting on December 2, 1971, attended by Lamb, Starner, and Frank Hansen, the Real Estate Manager of USG, Lamb was informed by Hansen that there was "interest to sell this property." (Trial Exhibit P-37.) At this meeting, Hansen informed Lamb that USG would keep Lamb abreast of any developments with respect to the land. We find again, however, that no absolute assurance of communication was given by Hansen; in particular, Hansen made no commitment which would include a breach of the duty of confidentiality which USG owed to Swann.
Following the sale of Area C to Swann, USG on April 5, 1972, gave proper notice of termination of the 1970 lease; the termination was to become effective July 6, 1972. (Trial Exhibit P-35.) During the period following notice of termination, Schiavo accelerated the landfill operation on the property. As a result, when the termination became effective and Schiavo vacated the land, we find that Area C was raised to grade, and in fact, was slightly above grade.
V. DISCUSSION OF THE LEGAL ISSUES:
Schiavo contends that the alleged misrepresentations of USG with respect to the potential sale of Area C give rise to causes of action for: 1) unjust enrichment; 2) equitable estoppel; and 3) deceit. We find these contentions to be without merit on the record before us.
A. Unjust Enrichment:
Under Pennsylvania law, to recover under the equitable doctrine of unjust enrichment, plaintiff must prove two elements: first, an enrichment to another; and second, a resulting injustice if recovery for the enrichment is denied. Meehan v. Cheltenham Township, 410 Pa. 446, 189 A.2d 593 (1963); Bailis v. Reconstruction Finance Corp., 128 F.2d 857 (3d Cir. 1942).
Initially, we note that unjust enrichment in the matter before us can only apply to the building of the road, since USG clearly received no benefit from Schiavo's purchase of new equipment. With respect to the road, Schiavo avers that the road benefitted USG by solving the problem of access to Area C, and thus making the property more easily saleable. Schiavo further contends that USG's retention of this benefit, without payment to Schiavo for the cost of building the road, is unjust, because USG fraudulently induced Schiavo to build the road by informing Schiavo that there were no immediate plans to sell Area C.
While it is true that USG received some benefit from the building of the road, it is clear beyond peradventure that it is not unjust for USG to retain this benefit. In the first instance, USG did not fraudulently induce Schiavo to improve the road; this was entirely Schiavo's own business judgment. While Lamb sought reassurance from USG that the land would not be sold, the response from Starner, on behalf of USG, was far from absolute. There was simply no guarantee given, nor would a reasonable man have interpreted Starner's words as a guarantee. Second, the lease contained a clause permitting termination upon 120 days notice. Schiavo, a sophisticated corporation, knew the terms of this lease, and cannot complain that it was legally enforced to its alleged detriment. Third, the record shows that no misrepresentation was in fact made; Lamb inquired about potential sale in early 1971, and the road was built at that time; negotiations with Swann did not commence until July or August of that year. Therefore, USG did not mislead Schiavo when Starner informed Lamb that there were no immediate plans to sell the property. Fourth, the record shows that Schiavo in fact received full benefit from the road; the road was built to provide access for a landfill operation. When the land was vacated by Schiavo, the land had been brought up to grade, and, therefore, the landfill was completed.
Based upon these findings, we hold that Schiavo has failed to prove a cause of action for unjust enrichment.
B. Equitable Estoppel:
Under the second head of Schiavo's claim for recovery, Schiavo seeks to apply the doctrine of equitable estoppel. Schiavo contends that USG should be estopped from exercising the right of termination under the lease without compensating Schiavo for the equipment and the road.
The elements of equitable estoppel were succinctly stated by the Supreme Court of Pennsylvania in Northwestern Nat. Bank v. Commonwealth, 345 Pa. 192, 27 A.2d 20, 23 (1942):
Equitable "estoppel arises when one by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. In this situation, the person inducing the belief in the existence of a certain state of facts is estopped to deny that the state of facts does in truth exist, aver a different or contrary state of facts as existing at the same time, or deny or repudiate his acts, conduct, or statement."
See also, Blofsen v. Cutaiar, 460 Pa. 411, 333 A.2d 841 (1975).
Again, Schiavo has clearly failed to prove the elements of this cause of action with respect to either the road, or the equipment. First, USG made no misrepresentation, since negotiations with Swann did not commence until after Starner's "reassurances" to Lamb. Second, Schiavo did not rightfully rely on any representations which were made with respect to potential sale of the land, since the statements were not absolute and contained an obvious disclaimer. Moreover, Schiavo was fully aware of the terms of the lease, including the termination clause. We hold that judgment must be rendered against Schiavo on this cause of action.
Finally, Schiavo argues that the actions and misrepresentations of USG constitute a cause of action for the tort of deceit. The elements of this action under the law of Pennsylvania are: 1) a misrepresentation; 2) a fraudulent utterance thereof; 3) an intention that another person will thereby be induced to act, or to refrain from acting; 4) justifiable reliance by the recipient; and 5) damage to the recipient. Savitz v. Weinstein, 395 Pa. 173, 149 A.2d 110 (1959). See also, Thomas v. Seaman, 451 Pa. 347, 304 A.2d 134 (1973).
We need go no further than an examination of elements (1) and (4) to find that Schiavo has not proven a cause of action for deceit. We have already determined that USG made no misrepresentation, and in any case, Schiavo did not justifiably rely upon any representation which was made. Judgment must, therefore, be rendered against Schiavo on this final cause of action.
An appropriate order will issue.
AND NOW, this 1st day of May, 1978, after trial of the above captioned matter without a jury, consideration of the briefs and oral arguments of counsel, and for the reasons cited in the accompanying Opinion, it is hereby Ordered, Adjudged and Decreed that Judgment is hereby entered in favor of SCHIAVO BROTHERS, INC. and against UNITED STATES GYPSUM COMPANY. On the counterclaim of SCHIAVO BROTHERS, INC. against UNITED STATES GYPSUM COMPANY, Judgment is hereby entered in favor of UNITED STATES GYPSUM COMPANY and against SCHIAVO BROTHERS, INC. Each party shall bear its own costs.
BY THE COURT:
HERBERT A. FOGEL, J. UNITED STATES DISTRICT COURT