The opinion of the court was delivered by: LORD, III
In Count I of its complaint, plaintiff landlord, 202 Marketplace, alleges that defendant tenant, Evans Products Company, surrendered a thirty year leasehold interest by orally notifying plaintiff of its intention not to exercise its right to renew their lease for a second five year term.
In Count II of its complaint, plaintiff alleges that it has the right to terminate the lease because defendant defaulted in its covenants under the lease by (a) failing to maintain the exterior of the premises; (b) using areas of the premises which it was not permitted to use under the lease; (c) permitting trash and debris to accumulate in areas where they are not permitted; and (d) advertising on the exterior portion of the store.
In its motion for summary judgment as to Count I, defendant advances three independent reasons why plaintiff's claim must fail: (1) the statute of frauds requires that a surrender of a leasehold interest greater than three years be in writing; (2) the alleged oral statement by defendant's employee did not constitute adequate notice of termination and surrender under Pennsylvania law; and (3) the employee who allegedly made the oral statement was not authorized to terminate the lease or give notice of defendant's alleged surrender of its leasehold interest.
Because the statute of frauds argument is sufficient for defendant to prevail on its motion for summary judgment as to Count I, I will not consider the merits of its other arguments. Plaintiff's motion in limine, which argues that the statute of frauds is inapplicable in this case, is simply the counterargument to defendant's arguments concerning the statute of frauds. Since I accept defendant's arguments, I will reject plaintiff's.
The lease between the parties was for a period of five years and further provided that defendant tenant was entitled to six successive renewals, each for a term of five years. App. 25a. According to the lease, silence on the part of the defendant was sufficient to exercise its option to renew. Id.
The statute of frauds bars plaintiff's claim that defendant's oral notification was sufficient to terminate the lease. 68 Pa. C.S.A. § 250.203 provides as follows:
No lease of any real property made or created for a term of more than three years shall be assigned, granted or surrendered except in writing signed by the party assigning, granting or surrendering the same or his agent, unless such assigning, granting or surrendering shall result from operation of law. (Emphasis added).
Plaintiff relies solely on the case of McClelland v. Rush, 150 Pa. 57, 24 A. 354 (1892), to support its contention that the statute of frauds is inapplicable to this case. In McClelland, the landlord conveyed property to a tenant for a term of five years and, at the tenant's sole option, for a second five year term. The lease required the tenant to give the landlord written notice if it chose to accept the second five year term. Although the tenant did not give the required written notice, the tenant claimed that it had orally notified the landlord that it accepted the second five year term. The tenant and two additional witnesses testified that such oral notice was given and that the landlord had acknowledged it and informed the tenant that no further notice was necessary. 150 Pa. at 61-63.
The Pennsylvania Supreme Court rejected the argument that the statute of frauds prevented the oral notice from being effective. The court held that the statute of frauds did not apply because the landlords, by conveying the five year option in the written lease, "were bound to accept the enlarged tenancy upon the same terms already provided by the existing lease, and, as to them, nothing was to be done on their part for the creation of the full term of ten years." 150 Pa. at 61. Because the parties creating the interest, the landlords, had signed a document reflecting their unqualified intention to create and convey a property interest, the purpose of the statute of frauds was satisfied; there was written evidence that the landlords had in fact created the property interest. The court analyzed the case in terms of contract law. Although the terms of the lease required written notice of the tenant's decision to exercise its option to extend the lease, the court held that, under contract law, the landlords may have waived their right to enforce the lease requirement of written notice by assuring the tenant that oral notice was sufficient.
McClelland, however, is inapposite to this case. Whereas the tenant in McClelland reserved the right to notify the landlords of its renewal of its lease, the tenant defendant in the present case reserved the right to surrender its leasehold interest. This distinction is crucial.
"Where the extended term of the lease is fixed by and is a part of the original written lease and comes into existence merely by the lessee exercising his option and giving the required notice, no question as to the statute of frauds arises. . . . The holding for the extended term is under the original lease, and not under the notice, and hence the statute does not apply to the notice." 37 Corpus Juris Secundum § 113. But "a surrender, cancellation, or recision, or agreement to surrender, ...