The opinion of the court was delivered by: BECHTLE
In this action plaintiff, The Sports Factory, Inc., seeks to recover treble damages from the defendants, William Chanoff and Daniel Greenberg, for violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 ("RICO"), federal securities law, and Pennsylvania common law. Presently before the court is plaintiff's motion for summary judgment, and defendants' cross-motion to dismiss or for summary judgment. For the reasons set forth below, defendants' motion will be granted in part and plaintiff's motion will be denied.
Plaintiff, The Sports Factory, Inc., operates a health and racquetball club which sells memberships to the general public. Pursuant to a lease executed in April of 1980, between plaintiff and a limited partnership known as Ridley Park Associates ("Ridley Park"), plaintiff is a tenant of the Woodlyn Shopping Center, a commercial property owned by Ridley Park. Defendant William Chanoff is a general partner of Ridley Park, as well as its managing partner. The only other general partner to the limited partnership is Chanoff's wife. Defendant Daniel Greenberg is Chanoff's personal business manager and is purportedly not an employee of Ridley Park.
Plaintiff's claims against Chanoff and Greenberg stem from events related to plaintiff's lease agreement with Ridley Park. Plaintiff alleges that defendants engaged in the following course of conduct beginning in early 1980, when plaintiff contacted an agent of Ridley Park concerning the availability of lease premises in Woodlyn Shopping Center. Plaintiff asserts that at that time it was told that: 1) with one small exception all of the space in the Shopping Center was under lease to other tenants; 2) all the stores in the Shopping Center would be open by mid-March 1980; and 3) the zoning of the available space in the Shopping Center was proper for the operation of plaintiff's health spa. Relying on these representations, plaintiff signed a lease in February 1980, and sent it to Chanoff for approval. Thereafter, having been told by Chanoff's employees that the lease had been accepted and executed, plaintiff incurred substantial expenses on initial improvement of the lease premises.
The first concrete sign of trouble appeared in April of 1980, when municipal authorities ordered plaintiff to stop further construction of improvements to the leased premises because the Shopping Center was not properly zoned for the operation of a health club. Plaintiff phoned Ridley Park's manager, Bruce Hoffman, and asked when the Sports Factory would receive an executed copy of the lease it had signed in February. Hoffman informed plaintiff that Ridley Park wanted to make a few changes in the lease before returning it. Because of its desire to make these changes, the February lease signed by plaintiff was in fact never executed by Ridley Park and on April 21, 1980, Ridley Park and plaintiff both entered into a "new" lease, which was actually the first lease. This lease, as amended on June 23, 1980, provided that Ridley Park would build plaintiff a two story structure capable of housing 13 regulation size racquetball courts. Under the terms of the lease the first story was to be completed by September 15, 1980, and the second story by October 15, 1980.
Sometime in August, 1980, defendant Chanoff decided that two one story racquetball buildings would be preferable to one two story building, and he directed his architect to prepare appropriate plans. Plaintiff claims it was never advised of the change prior to September 15, 1980, and was instead assured that construction of the racquetball building would be partially completed, as scheduled, on that date. Relying on this representation plaintiff continued and completed construction of its improvements on the existing leased premises, and advertised for membership sales by promoting that its grand opening would take place on September 15, 1980. Despite defendant's alleged representations, however, construction of the racquetball building did not even begin until late October, 1980. Plaintiff claims that as a result of the delay it was forced to both cancel membership contracts and refund the cash realized from those contracts, money which it had intended to use to install racquetball courts in the racquetball building.
On October 14, 1980, plaintiff met with Chanoff to discuss the situation. Chanoff indicated that he had no intention of curing Ridley Park's breaches of the lease unless plaintiff agreed to additional amendments to the lease, including changes in the completion date of the racquetball building, increased rent, and a release as to all of plaintiff's claims against Ridley Park arising from the existing breaches of the lease. At about the same time Chanoff agreed to loan plaintiff $ 101,000.00 to purchase the racquetball courts. However, to obtain this loan, plaintiff was required to execute three promissory notes at interest rates above prime, as well as an agreement to pay Chanoff 5% of plaintiff's net profit. When plaintiff agreed in principle to accede to Chanoff's demands on the lease amendments, construction of the racquetball building was initiated.
Plaintiff asserts that it was only during the actual construction of the building itself that it learned that Ridley Park was building just a one story racquetball facility capable of holding only 6 courts. When plaintiff questioned this, Chanoff and Greenberg represented that in order to satisfy the obligation to provide space for 13 courts, Ridley Park would let plaintiff additional space contiguous to plaintiff's existing premises and would build a structure on that space which could hold 7 standard racquetball courts. Allegedly due to financial pressures plaintiff agreed to a second amendment to the lease on June 9, 1981, which embodied this change. At or about the same time, plaintiff also executed a promissory note and an agreement to pay Chanoff 5% of its profits.
Plaintiff claims that in alleged contravention of the 1981 amendment, construction of the second racquetball building has been hindered, apparently up to the present day, since plaintiff requires a portion of the architectural plans of the neighboring tenant in order to complete its own plans, and defendant has refused to provide plaintiff with the necessary portion of the neighboring business's plans. Plaintiff asserts that despite their representations in 1981, Chanoff and Greenberg never intended to build the second building.
Plaintiff's final allegations concern the fire sprinkler system protecting its leased area, and the heating, ventilation and air conditioning equipment supplied by Ridley Park to service plaintiff's premises. Plaintiff claims that contrary to Greenberg's promises and assurances during the winter of 1981-1982 that the sprinkler system was in proper working order and would be operable at all times, Greenberg knew that the system was then frozen and not operating. Plaintiff also claims that Ridley Park's air conditioning expert reported to Greenberg that the heating, ventilation and air conditioning equipment installed by Ridley Park in plaintiff's pool area was inadequate to serve that area, but that Greenberg nonetheless disclaimed that the problem was Ridley Park's responsibility.
The above paragraphs summarize plaintiff's version of the underlying facts of this dispute. Defendants, not surprisingly, contest almost all aspects of plaintiff's factual presentation and this would seem to preclude further consideration of plaintiff's motion for summary judgment. The present circumstances, however, are somewhat novel and plaintiff argues that these circumstances entitle it to summary judgment despite what appears at first glance to be the existence of genuine issues of material fact.
Plaintiff directs the court's attention to the following uncontested facts. On March 30, 1982, pursuant to the arbitration clause in the April, 1980 lease, plaintiff filed a demand for arbitration against Ridley Park. The demand asserted claims for breach of the lease and fraudulent inducement to enter into amendments to the lease. Plaintiff sought temporary rent abatement, money damages for work performed on the leased premises at plaintiff's expense as a result of defendants' negligent construction, money damages for membership contract cancellations and resulting costs including profits, recission of the second amendment to the lease dated June 9, 1981, recission of plaintiff's ...