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International Diamond Importers v. Singularity Clark

March 22, 2012


Appeal from the Order Entered of June 7, 2011 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD-07-9127

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



Appellants International Diamond Importers, Ltd., The Engagement Store, Inc., and Robert Goldstein (collectively "Appellants") appeal the trial court's order entered June 7, 2011. That order, entered after a five-day trial, granted Appellee Singularity Clark, L.P. ("Singularity"), a directed verdict on Appellants' claim for breach of contract and a non-suit as against Appellants' claim for tortious interference with contractual relations.*fn2 Appellants also challenge an evidentiary ruling that they claim adversely affected their remaining claims for conversion and negligence, which went to a jury solely as a negligence claim*fn3 and resulted in a defense verdict. We affirm the verdict as to negligence. However, because we find that the trial court misapplied governing legal standards to the record before it, and further abused its discretion with regard to critical aspects of the breach of contract and tortious interference claims by denying the jury the opportunity to pass on disputed questions of fact that were material to those claims, we reverse. Accordingly, we remand for a new trial on those claims.

Factual Background and Procedural History

The trial court offered the following summary of the case's factual background:

[This matter] arises out of a commercial lease of Suites 201A, 204W and 205 on the second floor of the Clark Building [in downtown Pittsburgh].[*fn4 ] International Diamond Importers, Ltd., ("IDI"), the Engagement Store, Inc., ("Engagement") and Robert Goldstein, ["Goldstein"] known collectively as the [Appellants,] . . . operated retail jewelry stores until early 2003 when Goldstein held a retirement liquidation sale. Since the retirement liquidation sale Suites 201A, 204W and 205 have remained closed to the public.

In July 2006, Singularity Clark ["Singularity"] purchased The Clark Building from Hoban Realty, L.P. ["Hoban"]. The lease agreement between Hoban Realty and IDI and Engagement and thereafter between IDI and Engagement and [Singularity], provided[ ]that tenants would be in breach of the lease for 201A if it abandoned or vacated the premises; and in breach of 204W- 205 if it failed to open or keep the premises continuously or uninterruptedly open for business each business day.

Once the Plaintiffs closed the doors in 2003, they remained closed and remained dark until December 2006.

Trial Court Opinion (T.C.O.), 6/6/2011, at 1-2.

On or about October 17, 2006, Singularity transmitted a letter to Appellants purporting to furnish "notice" that, within 90 days, Singularity intended to "exercise its right to relocate" the businesses in, and all contents of, suites 201A, 204W, and 205 from the second floor to suites on the fourth floor of the Clark Building. Singularity Clark Letter to Robert Goldstein, 10/17/2006, Reproduced Record (R.R.) at 535a. The letter did not aver that Appellants had breached the leases corresponding to those suites; did not cite lease provisions establishing Singularity's right to relocate; and did not suggest that the relocation was in lieu of, or a step toward, termination of the leases. On or about November 17, 2006, Appellants responded by letter disputing Singularity's authority to relocate Appellants' business. International Diamond Importers Letter to Ira Gorman, Singularity Clark, 11/17/2006, R.R. at 536a-37a. Following this exchange, Appellant Goldstein visited the Clark Building on November 20. He testified that he proceeded to work in his Clark Building office for four full days. Notes of Testimony at 168-170 (N.T.), R.R. at 174a-76a.*fn5 Thereafter, between November 24, 2006, and Appellant Goldstein's next visit on December 20, 2006 - and hence shy of the 90 days that Singularity's notice promised - Singularity forcibly entered Appellants' suites and relocated Appellants' property into storage on the second and / or fourth floors. N.T. at 170-71, R.R. at 176a- 77a.

Following the relocation of their property, Appellants filed a complaint in the court of common pleas alleging two counts of breach of lease; one count each of conversion and negligence arising from the alleged disappearance during the relocation of silver coins worth approximately $50,000; and one count of tortious interference with contractual relations. The latter count arose from alleged interference with Appellants' prospective sale of their business(es) and assignment of their Clark Building leases to Uri Hakami, an Israel-based American citizen who had known and done business with Appellant Goldstein for many years, and who sought to purchase a retail diamond business in the United States. In preliminary objections, Singularity contended, inter alia, that Appellants had materially breached and repudiated the leases by failing to maintain an open retail business in the assigned suites and by failing to maintain the premises in a neat, clean, orderly condition. Preliminary Objections in the Nature of a Demurrer and Brief in Support Thereof, 5/16/2007.

Singularity's objections were overruled. The case proceeded to trial. Following Appellants' presentation of their case-in-chief, Singularity moved for non-suit on all of Appellants' claims. The trial court granted non-suit on Appellants' tortious interference with contractual relations claim, but denied Singularity's motion as to the other counts. Specifically, the trial court ruled that Singularity had "no knowledge" of Appellants' discussions with Mr. Hakami, the purported buyer, and expressed doubt that "Uri would have passed muster on the creditworthiness." N.T. at 348, R.R. at 354a. This last aspect of the court's ruling was based upon its reading of the identical assignment-related amendments to both leases, which, as we discuss below, are facially ambiguous. The court explained: "[T]hese things are not freely alienable like you're selling widgets. If you want to assign that contract, you do it with the approval of the landlord, which he's going to give - I suppose the law would say he cannot reasonably withhold, but he has a right to see your creditworthiness." N.T. at 348-49, R.R. at 354a-55a. Thus, the court concluded that approval was required for assignment; that such approval could not unreasonably be withheld; and that the landlord would be entitled to see particular evidence of creditworthiness before permitting assignment.

Following the close of evidence, the trial court revisited whether Appellants had stated claims upon which relief could be granted for breach of contract and negligence. As for breach of contract, the court ruled that Appellants themselves were in material breach, such that any breach by Singularity was not actionable. Id. The court thus entered a directed verdict on that claim, ruling that there were no disputed issues of material fact to submit to the jury as to breach of contract. N.T. at 485-89, R.R. at 491a-95a. As set forth above, supra n.2, the court opted to submit Appellants' separate conversion and negligence claims to the jury solely on a negligence theory, without objection by the parties. N.T. at 485, R.R. at 491a.

Following deliberation on the remaining negligence claim, the jury returned a defense verdict. The jury found that Appellants had been 100% contributorily negligent, and that Appellants' negligent failure to secure or remove the silver coins had proximately caused the alleged loss of $50,000 in those coins. This appeal followed.

Appellants raise the following issues for our consideration:

1. Did the Court err in directing a verdict against appellants on their breach of contract claim?

2. Did the Court err by entering a non-suit on appellants' claim for tortious interference with contractual relations?

3. A. Did the court err in denying appellants' objection to questioning J. Robert Goldstein relating to default under the prior lessor's lease, and at the same time not allowing him to discuss the settlement agreement pertaining thereto?

B. Did this error impact the jury appraisal of J. Robert Goldstein's character?

Brief for Appellant at 3 (verbatim).

Appellants' first and third issues challenge the grant or denial of directed verdict or judgment notwithstanding the verdict (JNOV).*fn6

Appellants challenge, in their first issue, the grant of a directed verdict to Singularity on the breach of contract issue. In their third issue, they challenge the trial court's refusal to enter JNOV in Appellants' favor on the jury's defense verdict on negligence. Accordingly, we begin by setting forth the standard of review that this Court applies to challenges implicating both directed verdicts and judgments notwithstanding the verdict:

Our standard of review when considering motions for a directed verdict and [JNOV] are identical. We will reverse a trial court's grant or denial of a judgment notwithstanding the verdict only when we find an abuse of discretion or an error of law that controlled the outcome of the case. Further, the standard of review for an appellate court is the same as that for a trial court.

There are two bases upon which a [JNOV] can be entered[:] one, the movant is entitled to judgment as a matter of law and/or two, the evidence is such that no two reasonable minds could disagree that the outcome should have been rendered in favor of the movant. With the first, the court reviews the record and concludes that, even with all factual inferences decided adverse[ly] to the movant, the law nonetheless requires a verdict in his favor. Whereas with the second, the court reviews the evidentiary record and concludes that the evidence was such that a verdict for the movant was beyond peradventure.

Janis v. AMP, Inc., 856 A.2d 140, 143-44 (Pa. Super. 2004) (internal quotation marks and citations omitted). We address Appellants' third issue - pertaining to their negligence claim - first.

Conversion and the Exclusion of Rehabilitation Evidence

In their third issue, Appellants challenge the trial court's ruling barring Appellants from introducing evidence detailing their settlement agreement with the prior landlord, Hoban. That settlement had resolved a separate dispute that arose before Singularity acquired the Clark Building from Hoban. Appellants contend that the trial court should have granted them judgment notwithstanding the jury's defense verdict on their negligence claim. The jury found that Appellants were 100% causally negligent for the loss, and hence could not recover.*fn7 Appellants argue that the jury was irreparably tainted when the court permitted Singularity to adduce testimony from Appellant Goldstein of the underlying default, but did not permit Appellants to rehabilitate Mr. Goldstein by reference to settlement details. Brief for Appellants at 17-18.

Our standard of review of evidentiary rulings is narrow:

When we review a trial court's ruling on admission of evidence, we must acknowledge that decisions on admissibility are within the sound discretion of the trial court and will not be overturned absent an abuse of discretion or misapplication of law. In addition, for a ruling on evidence to constitute reversible error, it must have been harmful or prejudicial to the ...

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