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SCHULMAN v. J.P. MORGAN INV. MGMT.

August 10, 1993

ROBERT D. SCHULMAN t/a MAXI'S EXPRESS
v.
J.P. MORGAN INVESTMENT MANAGEMENT, INC. and WIDENER FUNDING CORP., INC.



The opinion of the court was delivered by: BY THE COURT; J. WILLIAM DITTER

 In this case, plaintiff contends that the lenders who financed the renovation of an office building tortiously interfered with his existing and prospective contractual relations with the building's owners. Defendants, the lenders, move for summary judgment on plaintiff's claims and for the imposition of sanctions. They also move for summary judgment on their counterclaim seeking declaratory judgment that plaintiff has no lease for space in the building.

 For the reasons stated below, I will grant defendants' motions for summary judgment and declaratory judgment but refuse their motion for sanctions.

 I. Stipulated Facts

 Pursuant to a court order, the parties submitted a set of stipulated facts. (See Baum Aff. PP 3-42.) The pertinent ones are as follows.

 The plaintiff, Robert D. Schulman, is a chef and former manager of several prominent Philadelphia restaurants. In 1990, he was approached by Jeffrey Kelter, a general partner of Widener Associates Limited Partnership ("WALP"), about opening a food service operation on the ground floor of the Widener Building. The Widener Building is a commercial office building on South Penn Square, Philadelphia, Pennsylvania. The opening of the new store was to be part of WALP's $ 63 million renovation of the building.

 Schulman was interested. He and Kelter began planning "Maxi's Express," a 1,400 square-foot store offering coffee, muffins, sandwiches, beverages, cards, and other items. Kelter sent Schulman four successive draft leases for this space, dated June 4, 1990, March 19, 1991, August 6, 1991, and January 31, 1992. Although no lease had been executed, Maxi's construction began and Schulman opened the store in December, 1991, in time for the building's grand re-opening celebration.

 Almost immediately thereafter, Kelter began telling Schulman he was dissatisfied with the store's appearance and operations. Specifically, Kelter objected to Maxi's second-hand equipment, food smells, dirty floors, and other features which Kelter said made Maxi's more of a "drawback" to the building "than an amenity." Other tenants of the building and its broker evidently also complained to Kelter about Maxi's.

 Over the next three months, Schulman and Kelter talked about improving Maxi's, but reached no successful resolution. In March of 1992, Kelter instead told Schulman that there would be no lease, that Schulman's prior rent checks and out-of-pocket expenses would be returned, and that Schulman should vacate the premises immediately. When Schulman refused, Kelter initiated an ejectment action on behalf of WALP in the Philadelphia Court of Common Pleas. *fn1"

 It was evidence in a preliminary injunction hearing in that action which has given rise to this suit. In April, 1992, Schulman heard the testimony of Anne Pfeiffer, a vice-president of J.P. Morgan Investment Management, Inc. in charge of the $ 63 million loan to WALP. J.P. Morgan manages an open-end real estate fund which served as the lender. (The loan itself was made through a feeder company, wholly-owned by Morgan, called the Widener Funding Corporation ("WFC"). WFC is the other defendant in this suit.) Pfeiffer testified that after seeing Maxi's in operation the morning after the grand opening, she told Kelter the store "represented [her] worst nightmare."

 Based on this testimony, Schulman sued WFC and Morgan for intentional interference with actual and prospective contractual relations. He claims that: 1) he and Kelter had agreed on "all the significant terms" of the purported lease by August, 1991; 2) the lease came into existence when construction began on Maxi's in the fall of 1991; and 3) the terms of the lease are set forth in the draft dated January 31, 1992.

 II. Defendants' Motion for Summary Judgment

 A. Intentional Interference with Contractual Relations

 As a matter of law, Schulman had no existing contract with WALP, and his first intentional interference claim must therefore fail. *fn2"

 1. No Executed Lease

 First, there was no contractual relationship between WALP and Schulman because WALP never executed a lease for Schulman's space. The draft lease dated January 31, 1992, which Schulman claims sets forth the terms of his lease, expressly bars the agreement from taking effect until both the landlord and tenant have signed and delivered it. Paragraph 57 states:

 
57. DELIVERY FOR EXAMINATION. DELIVERY OF THE LEASE TO TENANT SHALL NOT BIND LANDLORD IN ANY MANNER, AND NO LEASE OR OBLIGATION SHALL ARISE UNTIL THIS INSTRUMENT IS SIGNED BY BOTH LANDLORD AND TENANT AND DELIVERY IS MADE TO EACH.

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