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Warminster Equities, LLC v. Warminster Commerce

August 4, 2011

WARMINSTER EQUITIES, LLC, PLAINTIFF,
v.
WARMINSTER COMMERCE, LLC,
DEFENDANT. WARMINSTER COMMERCE, LLC, COUNTERCLAIM/THIRD-PARTY PLAINTIFF,
v.
WARMINSTER EQUITIES, LLC, COUNTERCLAIM DEFENDANT, AND ABINGTON SAVINGS BANK, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court are the following: (1) Plaintiff Warminster Equities, LLC's ("Plaintiff") Motion for Partial Summary Judgment on Defendant's Counterclaim; (2) Defendant Warminster Commerce LLC's ("Defendant") Motion for Summary Judgment on its Counterclaim; (3) Defendant's Motion for Summary Judgment on Third Party Defendant Abington Savings Bank's ("Abington") Counterclaim; and (4) Abington's Motion for Summary Judgment on its Counterclaim and Count I of Defendant's Counterclaim. For the following reasons, the Motions are granted in part and denied in part as set forth in the accompanying Order.

I. FACTUAL HISTORY

This action stems from a dispute over a commercial lease ("the Lease" or "the Ground Lease") between Plaintiff and Defendant. The Lease, which commenced in 1973, was originally between American Property Investors ("API"), the lessor, and Pennfood Associates ("Pennfood"), the lessee. (Def.'s Mot. Summ. J. Countercl. 2.) The Lease had an initial term of twenty-seven years, but provided the lessee with the option of exercising seven consecutive ten-year extensions. (Id.) The Lease stated that "[a]ll notices and other communications hereunder shall be in writing" and sent via first class mail. (Id., Ex. A, Lease Agreement between API and Pennfood ("Ground Lease"), at COM-0033, ¶ 19.)

Pennfood properly exercised the option for the first ten-year extension on December 1, 1998, and assigned the Ground Lease to Plaintiff in 2001. (Def.'s Mot. Summ. J. Countercl. 2.) Plaintiff financed its purchase of the Lease with a mortgage from Abington and subleased the property to Commerce Bank, the predecessor to TD Bank. (Pl.'s Mot. Partial Summ. J. 4-5.) At present, TD Bank remains on the premises as subtenant. (Id. at 6.)

Defendant purchased the property from API and became Plaintiff's landlord in 2004. (Def.'s Mot. Summ. J. Countercl. 2.) In the spring of 2009, Defendant informed Plaintiff that it had not received written notice of Plaintiff's intent to extend the Lease for the second ten-year term, and that the Leasehold would therefore expire on December 31, 2009. (Compl. ¶ 28.) On April 2, 2009, Plaintiff sent a letter to Defendant, which allegedly served as written notice of Plaintiff's intent to renew the Lease. (Id. ¶ 14.) Plaintiff also claimed that it orally informed Defendant of its intent to renew prior to the December 31, 2008 option deadline, but Defendant maintained its position that the Lease had been terminated. (Id. ¶¶ 27-28.)

On December 17, 2009, Defendant sent a letter to Abington explaining that Plaintiff would no longer have an interest in the leased premises as of December 31, 2009, that the mortgage between Abington and Plaintiff would expire on that date, and that Abington should satisfy the mortgage immediately after January 1, 2010. (Abington's Countercl. ¶ 25.) That same day, Defendant also informed sublessee TD Bank that the Lease would expire at the end of 2009 and that it should thereafter send all rent payments directly to Defendant. (Id. ¶ 26.) In letters dated December 22, 2009, December 23, 2009, and December 29, 2009, Plaintiff informed Defendant, TD Bank, and Abington, respectively, of its position that it had properly exercised its option to extend the Lease. (Compl. ¶ 36.) TD Bank advised Plaintiff, on January 28, 2010, that it would place its future rent payments into an escrow account until the dispute between Plaintiff and Defendant was resolved. (Id. ¶ 39; id. Ex. J.)

The Ground Lease also provides that, upon the termination of the Lease, the lessee may elect to sell to the lessor any improvements made upon the property. (Ground Lease at COM-0038, ¶ 22(c)(iii).) In addition to the dispute over whether the Ground Lease was properly renewed, Plaintiff and Defendant also disagree over what, if any, compensation Plaintiff is entitled to for the bank building and other improvements that were made on the leased premises. (Def.'s Am. Countercl. ¶¶ 20-21.)

II. PROCEDURAL HISTORY

Plaintiff filed a Complaint in this Court on February 4, 2010, seeking a declaratory judgment that the Lease remains in full effect and requesting damages for Defendant's intentional interference with its contractual relationships with TD Bank and Abington. (Compl. ¶¶ 42-48.) On April 19, 2010, Defendant filed an Amended Answer to the Complaint, including affirmative defenses, a Counterclaim against Plaintiff, and a Third-Party Complaint against Abington. In its Counterclaim, Defendant seeks the following: (i) a declaration that the Ground Lease expired on December 31, 2009 and that Abington's leasehold mortgage shall be marked satisfied or released; (ii) the ejectment of Plaintiff from its property; (iii) a declaration that Plaintiff has no right to any rent or other amounts due from TD Bank; (iv) in the alternative to Count III, holdover rent from Plaintiff for the period between January 1, 2010 and the date Plaintiff vacates the property; and (v) "a declaration that the sole improvement located on the Property whose fair market value is to be determined pursuant to the Land Lease" is Plaintiff's "reversionary interest" in the bank building. (Def.'s Am. Countercl. ¶¶ 27-57.)

Abington filed its Answer and Counterclaim against Defendant on June 14, 2010. In Count I of its Counterclaim, Abington requests a declaration that "(a) the Land Lease has not expired; (b) Abington continues to hold a leasehold mortgage interest; or, alternatively, if the Court determines that the Land Lease has expired, (c) that Abington maintains an interest in the Improvements and the rents from the Improvements," which takes priority over Defendant's interest. (Abington's Countercl. ¶ 38.) Count II is a claim for conversion of collateral, and Count III is a claim for intentional interference with contractual relations. (Id. ¶¶ 39-46.)

On October 5, 2010, Defendant filed a Motion for Summary Judgment on Plaintiff's claims, which this Court granted on December 21, 2010.*fn1 Neither Defendant nor Abington's Counterclaims were addressed in Defendant's initial Motion for Summary Judgment. On June 2, 2011, Plaintiff filed a Motion for Partial Summary Judgment on Defendant's Counterclaim, Defendant filed separate Motions for Summary Judgment on its own Counterclaim and on Abington's Counterclaim, and Abington filed a Motion for Summary Judgment on its Counterclaim and Count I of Defendant's Counterclaim. Responses in Opposition to Defendant's Motions for Summary Judgment were filed by Plaintiff and Abington on June 23, 2011. The following day, Defendant filed separate Responses in Opposition to Plaintiff and Abington's Motions for Summary Judgment. Finally, on July 11, 2011, Defendant filed two Reply Briefs in support of its Motions for Summary Judgment.

III. STANDARD OF REVIEW

Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be "genuine," a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, it is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. County of Allegheny, Pa., 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., Inc., 998 F.2d 1224, 1230 (3d Cir. 1993)). Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (citing U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence ...


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