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Bayne v. Smith

January 26, 2009


Appeal from the Judgment entered August 29, 2007 in the Court of Common Pleas of Washington County, Civil Division, at No. 2006-9338.

The opinion of the court was delivered by: Orie Melvin, J.



¶ 1 Appellants, James and Rose Bayne (Landlord), appeal from the trial court's refusal to include attorney's fees as part of the judgment entered against Appellee, Ashlee Smith (Tenant), in this Landlord/Tenant dispute. After review, we find the trial court erred in refusing to permit recovery of attorney's fees and remand for further proceedings in accordance with this opinion.

¶ 2 The facts and procedural background of this matter may be summarized as follows. The parties entered into a written month-to-month residential lease for the premises located at 1079 Michigan Avenue in Washington County, Pennsylvania. Landlord instituted an action before the Magisterial District Justice seeking recovery of possession for failure to pay rent and damages to the premises. Following a judgment in favor of the Landlord, Tenant filed an appeal for a trial de novo before the Court of Common Pleas. On May 1, 2007, the trial court entered an order upon the consent of the parties, finding judgment in favor of the Landlord and against Tenant in the amount of $410.14, for breach of the lease. This amount represented property damages and partial rent, less the security deposit of $175.00 previously paid by Tenant. Additionally, the order directed that entry of said judgment would be stayed pending a determination by the trial court on Landlord's request, pursuant to paragraph 13 of the lease, for inclusion of attorney's fees. The court granted the parties until May 30, 2007 to submit written briefs on the issue of attorney's fees. Following the submission of briefs and oral argument thereon, the trial court entered an Order and Judgment on August 29, 2007 finding judgment in favor of Landlord in the amount of $410.14 but denying Landlord's request for inclusion of attorney's fees in the amount of the judgment. This timely appeal followed, wherein the sole issue concerns the enforceability of paragraph 13.

¶ 3 It is well-established that Pennsylvania courts apply principles of contract law to cases involving residential leases. Pugh v. Holmes, 384 A.2d 1234, 1240 (Pa. Super. 1978), affirmed, 486 Pa. 272, 405 A.2d 897 (1979). Thus, contract remedies are available to both the landlord and the tenant. Id. "The interpretation of a contract is a question of law." Halpin v. LaSalle University, 639 A.2d 37, 39 (Pa. Super. 1994), appeal denied, 542 Pa. 670, 668 A.2d 1133 (1995). As with all questions of law, the appellate standard of review is de novo and the appellate scope of review is plenary. In re Private Crim. Complaint of Wilson, 879 A.2d 199, 214 (Pa. Super. 2005) (footnotes omitted).

¶ 4 Landlord asserts that the lease represents a clear agreement between the parties altering the general rule concerning recovery of attorneys' fees from an adverse party, and, as such, it is enforceable. Tenant counters that while there was a provision in the lease for attorney's fees, there was no evidence submitted by Landlord that there was a clear meeting of the minds or bargained-for exchange regarding this provision. Consequently, Tenant submits that the lease is an adhesion contract, and the attorney's fee provision is unconscionable and, therefore, unenforceable.

¶ 5 The general rule in this Commonwealth is that there is no recovery of attorney's fees from an adverse party in the absence of an express statutory authorization, clear agreement between the parties, or the application of a clear exception. Neal v. Bavarian Motors, Inc., 882 A.2d 1022, 1032 n.11 (Pa. Super. 2005), allocatur denied 589 Pa. 722, 907 A.2d 1103 (2006). Generally, landlords and tenants can include in a lease any terms and conditions that are not prohibited by statute or other rule of law. The Landlord and Tenant Act of 1951*fn1 does not specifically provide for the recovery of attorney's fees nor does it prohibit inclusion of a fee shifting provision in rental agreements. Furthermore, we are not presented with any applicable exceptions to the general rule. Consequently, the validity of the instant provision is solely dependant upon contract law. See Pugh v. Holmes, supra at 1240 (stating "a lease, be it written or oral, periodic or at will, is to be controlled by the principles of contract law."). Where the language of a lease is clear and unequivocal, its meaning will be determined by its contents alone in ascertaining the intent of the parties. Seven Springs Farms v. Croker, 569 Pa. 202, 207-208, 801 A.2d 1212, 1215 (2002).

¶ 6 "An adhesion contract is defined as a 'standard form contract prepared by one party, to be signed by the party in a weaker position, [usually] a consumer, who has little choice about the terms.'" Robson v. EMC Ins. Cos., 785 A.2d 507, 510 (Pa. Super. 2001) (quoting Black's Law Dictionary (7th ed. 1999)). Moreover, our Supreme Court has found that the common-law application of the doctrine of unconscionability is largely consonant with Section 208 of the Second Restatement of Contracts, and provides that a contract or term is unconscionable, and therefore avoidable, where there was a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the party asserting it. See Denlinger, Inc. v. Dendler, 415 Pa. Super. [164,] 177, 608 A.2d [1061,] 1068 [(1992)] (citing Witmer v. Exxon Corp., 495 Pa. 540, 551, 434 A.2d 1222, 1228 (1981)).

The aspects entailing lack of meaningful choice and unreasonableness have been termed procedural and substantive unconscionability, respectively. See generally 17A Am. Jur. 2d Contracts § 278 (2006). The burden of proof generally concerning both elements has been allocated to the party challenging the agreement, and the ultimate determination of unconscionability is for the courts. See Bishop v. Washington, 331 Pa. Super. 387, 400, 480 A.2d 1088, 1094 (1984); accord 13 Pa.C.S. § 2302.

Salley v. Option One Mortg. Corp., 592 Pa. 323, 331-332, 925 A.2d 115, 119-120 (2007). Accordingly, in order to find the instant fee-shifting provision unenforceable it was incumbent upon Tenant to show that she lacked a meaningful choice about whether to accept the provision in question and that the challenged provision unreasonably favored Landlord. Id.

¶ 7 In concluding Tenant was not liable for Landlord's legal fees, the trial court opined that: many residential tenants enter into standard form leases, such as the lease in question, and the lease is seldom the result of any negotiating between the parties. In Galligan v. Arovitch, 421 Pa. 301[, 219 A.2d 463] (1966), the Pennsylvania Supreme Court recognized that many residential landlords are unwilling to strike clauses that favor them; as a result, the tenant has no bargaining power and must accept the landlord's terms. . In [Commonwealth by Creamer v. Monumental Properties, Inc., 459 Pa. 450, 485-486, 329 A.2d 812, 830 (1974)], the [Supreme] Court concluded that a party who seeks to enforce a provision in a standard form lease has the burden of showing that the provision was in fact explained to the tenant by the landlord, that it came to the tenant's knowledge, and that there was in fact a "real and voluntary meeting of the minds and not merely an objective meeting." Id. at 830.

Trial Court Opinion, 11/13/06, at 3. We find that the trial court's reliance on Galligan and Monumental Properties is misplaced, and Tenant has failed to satisfy her burden as to unconscionability.

ΒΆ 8 In Galligan, the tenant had been injured on the lawn of the landlord's apartment building. The standard form lease the tenant had signed contained a lengthy exculpatory clause which listed, among other things, seven places from which the landlord was relieved of liability for injury or damage. Although hallways and sidewalks were listed exclusions, lawns were not. Thus, following the rule that any document which reduces legal rights that would otherwise exist must spell out "with the utmost particularity" the intention of the parties, Morton v. Ambridge Borough, 375 Pa. 630, 635, 101 A.2d 661, 663 (1954), and the rule of construction that a written instrument is to be strictly construed against the maker, Darrow v. Keystone, 365 Pa. 123, 74 A.2d 176 (1950), our Supreme Court found the exculpatory clause did not protect the landlord in that particular case. Galligan, 421 Pa. at 304, 219 A.2d at ...

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