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Tri-State Professionals, Inc. v. Barney

March 12, 2008

TRI-STATE PROFESSIONALS, INC. PLAINTIFF
v.
SMITH BARNEY A DIVISION OF CITIGROUP GLOBAL MARKETS, INC. DEFENDANT



The opinion of the court was delivered by: Mannion, M.J.

AMENDED

MEMORANDUM AND ORDER

Pending before the court is the defendant's partial Motion to Dismiss Counts II and III of the plaintiff's complaint. (Doc. Nos. 3, 4). Upon review of the record, the defendant's motion will be granted.

I. Background and Procedural History

On July 19, 2002, the defendant ("tenant") entered into a lease with the plaintiff ("landlord") for a term of ten years. (Doc. No. 3-2, Ex. A). The lease requires the tenant to pay rent in the amount of $705,000.00, payable in equal monthly installments, in order to occupy commercial premises of the landlord's building located in Milford, Pennsylvania. Id. art. I. In addition to fixed rent, the tenant is also required to pay a proportionate share of the landlord's annual operating expenses.*fn1 The relevant clause, Payment of Operating Expenses, provides in pertinent part:

Tenant will pay to Landlord, in equal monthly installments payable with each installment of Fixed Rent, the cost of Estimated Operating Expenses. Estimated Operating Expenses shall be Landlord's estimate of Operating Expenses due from Tenant for the current calendar year of the Term. . . . Operating Expenses shall be determined on a accrual basis for each calendar year. Within sixty (60) days from the end of each calendar year in the Term, Landlord shall furnish to Tenant a written statement showing in reasonable detail the information relevant or necessary to the exact calculation and determination of Landlord's true and actual Operating Expenses for the preceding calendar year. . . . If the Operating Expenses payable by the Tenant for the preceding calendar year are more than the Estimated Operating Expenses paid by Tenant, then Tenant shall pay to Landlord within sixty (60) days after Tenant's receipt of Landlord's statement of Operating Expenses due from Tenant, the difference between (1) Tenant's Proportionate Share of the actual Operating Expenses for the preceding calendar year and (ii) the total sum paid by Tenant during the preceding calendar year for Operating Expenses.

Id. art. 5.2(B). The tenant has a right to audit the landlord's statement of operating expenses: "Tenant's employees, accountants, or representatives shall have the right to audit Operating Expenses and in connection therewith to examine Landlord's Operating Expenses . . . ." Id. art. 5.2(D). The lease is silent, however, concerning whether the tenant, when exercising the right to audit, is allowed to withhold payment of operating expenses while the audit is occurring.*fn2 As of May 2007, the defendant has commenced an audit of the 2006 operating expenses and has vacated the premises, but continues to pay monthly fixed rent due to the plaintiff. (Doc. Nos. 1 Ex. A; 5).

On June 6, 2007, the plaintiff commenced this action by filing a complaint in the Court of Common Pleas of Pike County, Pennsylvania, claiming anticipatory breach of the lease and seeking damages in excess of $75,000. (Doc. No. 1 Ex. A). In Count I of the complaint, the plaintiff seeks to recover operating expenses due for 2006. Id. In Count II, the plaintiff seeks to accelerate and recover the operating expenses due for the remainder of the lease term. Id. And in Count III, the plaintiff alleges that the defendant's vacating of the premises without written notice constitutes an anticipatory breach of the lease agreement, which entitles the plaintiff to an acceleration of fixed rent due for the remainder of the lease term. Id. On July 6, 2007, the defendant filed in this court a Notice of Removal asserting diversity jurisdiction. (Doc. No. 1). The parties consented to proceed before the undersigned, which was so ordered on August 20, 2007. (Doc. No. 9). On July 12, 2007, the defendant filed the instant partial motion to dismiss Counts II and III of the complaint, (Doc. Nos. 3, 4), together with a supporting brief, (Doc. No. 5). The plaintiff filed a brief in opposition on August 3, 2007. (Doc. No. 6). The defendant did not file a reply. This matter is now ripe for disposition.

II. Standard of Review

The defendant's motion to dismiss is brought pursuant to Federal Rule of Civil Procedure 12(b)(6). This rule provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Review of a motion to dismiss is limited to the face of the plaintiff's complaint, whereby the court must accept all factual allegations as true and draw all reasonable inferences therefrom in the plaintiff's favor. Langford v. City of Atlantic City, 235 F.3d 845, 847 (3d Cir. 2000) (citing Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996)); NAPA Transp., Inc. v. Travelers Prop. Cas., No. 06-cv-1866, 2006 U.S. Dist. LEXIS 84166, at *4 (M.D. Pa. Nov. 20, 2006). A court may also consider the exhibits attached to the complaint, matters of public record, and "undisputably authentic" documents which the plaintiff has identified as the basis of his or her claim. Delaware Nation v. Pennsylvania,446 F.3d 410, 413 n.2 (3d Cir. 2006) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)).

To prevail on a Rule 12(b)(6) motion, the defendant bears the burden of establishing that the plaintiff's complaint fails to state a claim upon which relief can be granted. Martella v. Wiley, No. 06-cv-1702, 2007 U.S. Dist. LEXIS 28242, at *9 (M.D. Pa. Apr. 17, 2007) (citing Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000)); see also F. R. Civ. P. 12(b)(6). Under the federal notice pleading standard, "a complaint requires only 'a short and plain statement' to show a right to relief, not a detailed recitation of the proof that will in the end establish such a right." Pryor v. NCAA, 288 F.3d 548, 564 (3d Cir. 2002) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)); F. R. Civ. P. 8(a)(2). Because of this liberal pleading policy, a court should not grant dismissal unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Trump Hotel & Casino Resorts, Inc. v. Mirage Resorts, Inc., 140 F.3d 478, 483 (3d Cir. 1998) (holding that dismissal is appropriate "only if . . . no relief could be granted under any set of facts consistent with the allegations of the complaint"); accord Martella, 2007 U.S. Dist. LEXIS at *8.

III. Discussion

As a preliminary matter, Pennsylvania law governs this action. See 28 U.S.C. § 1652 ("The laws of the several states, except where the Constitution or treaties of the United States or acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply."). In addition, Article 10.2(A) of the lease states, "This Lease shall be governed by and construed in accordance with the laws of the State or Commonwealth in which the Building is located." Under Pennsylvania's choice of law rules, courts will follow a contractual choice of law provision set out by the parties provided that the state chosen bears a reasonable relation to the parties or the transaction.

Novus Franchising Inc. v. Taylor, 795 F. Supp. 122, 126 (M.D. Pa. 1992). Because the subject premises is located in Milford, Pennsylvania, and because leases are in the nature of contracts, this court shall apply Pennsylvania substantive contract law to this case. See 2401 Pa. Ave. Corp. ...


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