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[U] Lewis Road Associates, LLC v. Re/Max Services, Inc.

Superior Court of Pennsylvania

March 13, 2014

LEWIS ROAD ASSOCIATES, LLC, Appellee
v.
RE/MAX SERVICES, INC., Appellant LEWIS ROAD ASSOCIATES, LLC, Appellee
v.
RE/MAX SERVICES, INC., Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Judgment Entered April 26, 2013, In the Court of Common Pleas of Montgomery County, Civil Division, at No. 2009-39027.

Appeal from the Judgment Entered April 26, 2013, In the Court of Common Pleas of Montgomery County, Civil Division, at No. 2008-32399.

BEFORE: GANTMAN, SHOGAN and PLATT [*] JJ.

MEMORANDUM

SHOGAN, J.

Appellant, Re/Max Services, Inc. ("Re/Max"), appeals from the judgment entered on April 26, 2013, in favor of Lewis Road Associates, LLC ("Lewis Road").[1] We affirm.

The trial court set forth the relevant facts and procedural history of this matter as follows:

This landlord-tenant dispute began with a lease entered into in October of 2003 between Plaintiff Appellee/Lewis Road Associates, LLC (hereinafter: [Lewis Road]) and Defendant/Appellant, Re/Max Services, Inc. (hereinafter: [Re/Max]) for commercial space located in Limerick Township, Montgomery County, Pennsylvania. [Lewis Road] was managed and marketed by Pennmark Management Company, Inc. (hereinafter: Pennmark). The lease's original term ran for a period of three and a half (3.5) years and was set to expire in March of 2007. The rent began at $26, 075/year and escalated each subsequent year. Additionally, the lease also included provisions for common area maintenance in the building. Representatives of Pennmark and [Re/Max] discussed a lease extension agreement over the telephone, after which Pennmark's representative prepared a written Lease Extension Agreement (hereinafter: the Agreement). The Agreement contained a "time is of the essence" clause declaring the Agreement to be null and void if not extended by February 7, 2007. [Re/Max] executed the Agreement on February 14, 2007, and returned a copy to Pennmark's representative on February 15, 2007. [Lewis Road] also signed the Agreement and both parties' conduct indicated performance of the Agreement. In July-August of 2008, a potential new tenant, Wetherill Associates, Inc. expressed interest in leasing the space occupied by [Re/Max] and another tenant in the building. Accordingly, Pennmark approached [Re/Max] about vacating the space, and on behalf of [Lewis Road], prepared a written Option Notice granting Pennmark the right to terminate [Re/Max's] lease with thirty (30) days' notice. Additionally, the Option Notice granted [Lewis Road] thirty (30)
days to utilize this notice, which had to be given in writing, from August 22, 2008. [Re/Max's] representative signed this Option Notice and had telephone conversations with Pennmark's representative about the status of the Wetherill Associates deal, which eventually fell through due to the uncooperative actions of another tenant in the building. [Lewis Road] never issued a written notice to terminate the lease to [Re/Max], however, [Re/Max] believed that the oral communications between it and Pennmark's representative indicated that the Agreement was terminated and moved out of the property. [Re/Max's] representative testified that he believed [Re/Max] to have vacated the premises by early September of 2008, whereas Pennmark's representative testified that he became aware of the vacancy on or about October 14, 2008 when the property was inspected.
[Lewis Road] filed an action [in Magisterial District Court], which [Re/Max] appealed on November 13, 2008. This action was docketed in this Court as 2008-32399, with a Complaint filed on December 11, 2008 asserting counts of breach of contract and unjust enrichment. Additionally, [Lewis Road] instituted a separate civil action with a Complaint filed on December 1, 2009, docketed in this Court as 2009-39027, also for breach of contract and unjust enrichment to recover money damages. These actions were consolidated by Order of the Honorable Bernard Moore on September 27, 2010. This matter proceeded as a trial before the Undersigned, sitting without a jury, on May 8-9, 2012. The Undersigned requested that the parties submit proposed Findings of Fact and Conclusions of Law before issuing a verdict in this matter, which they filed on August 1 and 2, 2012. The Undersigned then issued his Order finding in favor of [Lewis Road] and against [Re/Max] on September 20, 2012. [Re/Max] filed a timely Motion for Post-Trial Relief on October 1, 2012, then appealed to the Superior Court of Pennsylvania before this Court had the opportunity to hear argument on and dispose of the outstanding Motion for Post-Trial Relief. By Order of December 11, 2012, the Superior Court of Pennsylvania quashed the first appeal pursuant to Chalkey v. Roush, 805 A.2d 491 (Pa. Super. 2002), as an appeal lies from judgment entered subsequently to the trial court's disposition of post-verdict motions.

Trial Court Opinion, 4/29/13, at 1-3 (footnotes omitted).

After the appeal was quashed, the trial court filed an order denying Appellant's post-trial motion on January 30, 2013. Judgment was entered in favor of Lewis Road on April 26, 2013, and this appeal followed.

On appeal, Re/Max presents four issues:
[1.] WHETHER THE TRIAL COURT ABUSED ITS DISCRETION OR COMMITTED AN ERROR OF LAW IN FINDING THAT THE LEASE EXTENSION WAS ENFORCEABLE?
[2.] WHETHER THE TRIAL COURT ABUSED ITS DISCRETION OR COMMITTED AND [sic] ERROR OF LAW IN FAILING TO ENFORCE A LEASE TERMINATION AGREEMENT BETWEEN THE PARTIES?
[3.] WHETHER THE TRIAL COURT COMMITTED ERROR OR ABUSED ITS DISCRETION IN PERMITTING A REPRESENTATIVE OF PENNMARK MANAGEMENT COMPANY, INC. TO TESTIFY ABOUT WHEN LEWIS ROAD ASSOCIATES, LLC EXECUTED A LEASE EXTENSION OR WHETHER LEWIS ROAD ASSOCIATES, LLC "WAIVED" A WRITTEN PROVISION OF THE LEASE EXTENSION?
[4.] WHETHER THE TRIAL COURT ABUSED ITS DISCRETION OR COMMITTED AND [sic] ERROR OF LAW IN PERMITTING ANY EVIDENCE OF MITIGATION OF DAMAGES GIVEN THAT LEWIS ROAD ASSOCIATES, INC. FAILED TO PROVIDE ANY SUCH EVIDENCE DURING DISCOVERY?

Re/Max's Brief at 4.[2]

Our standard of review in nonjury trials is to assess whether the findings of facts by the trial court are supported by the record and whether the trial court erred in applying the law. Skiff re Business, Inc. v. Buckingham Ridgeview, LP, 991 A.2d 956, 962 (Pa. Super. 2010). Upon review, this Court considers the evidence in the light most favorable to the verdict winner, and we will disturb the trial court's determinations only where the findings are not supported by the evidence of record or are based on an error of law. Id. Our scope of review regarding questions of law is plenary. Id.

In its first issue, Re/Max claims that the trial court erred in finding that the lease extension was enforceable. Re/Max argues that, because the lease extension had a "time is of the essence" clause requiring its execution by February 7, 2007, the extension was unenforceable because it was not executed until February 14, 2007. We disagree and point out that even when there is a "time is of the essence" clause, the time for execution may be extended by oral agreement, and it may be waived by the conduct of the parties. Warner Co. v. MacMullen, 112 A.2d 74, 78 (Pa. 1955). "Where the parties treat the agreement as in force after the expiration of the time specified for settlement it becomes indefinite as to time and neither can terminate it without reasonable notice to the other." Id.

It is well settled in Pennsylvania that leases are in the nature of contracts and are thus controlled by principles of contract law. 2401 Pennsylvania Ave. Corp. v. Federation of Jewish Agencies of Greater Philadelphia, 466 A.2d 132, 136 (Pa. Super. 1983). When the Court is tasked with interpreting a contract, "the intention of the parties must be determined, and in ascertaining that intention, effect must be given to all provisions of the contract." Robert F. Felte, Inc. v. White, 302 A.2d 347 (Pa. Super. 1973). Further, in a written contract, the intent of the parties is "the writing itself and when words are clear and unambiguous, the intent is to be determined
only from the express language of the agreement." Id., citing East Crossroads Center, Inc. v. Mellon-Stuart Co., 205 A.2d 865 (Pa. 1965). With regard to a time is of the essence clause, [the Pennsylvania] Supreme Court has recognized that "even though the time fixed in an agreement for settlement is stated to be of the essence of the agreement, it may be extended by oral agreement or be waived by the conduct of the parties, and where the parties treat the agreement as in force after the expiration of the time specified for settlement it becomes indefinite as to time and neither can terminate it without reasonable notice to the other." Davis v. Northridge Development Associates, 421 A.2d 381, 385 (Pa. Super. 1993), citing Warner Company v. MacMullen, 112 A.2d 74, 78 (Pa. 1955). Warner was particularly instructive to this Court. Although it involved a contract for the sale of real estate and not a lease, the Pennsylvania Supreme Court found the parties had waived the time is of the essence clause by their conduct of continuing to perform their contractual duties as though the clause had not existed.
In the matter sub judice, the Undersigned determined from the testimony and evidence presented at trial that while the Lease Extension Agreement contained a "time is of the essence" clause and was signed by both parties approximately a week after the time had passed, the parties conducted themselves as though the Agreement was valid and thus, waived the time is of the essence clause by their conduct and performance of the contract at issue. [Re/Max] continued to occupy the premises and paid rent at the higher rate called for under the terms of the Agreement. (N.T. 5.9.12, p. 50). Further, [Re/Max's] representative testified at trial that he intended to extend the Lease when he signed the Lease Extension Agreement, despite signing after the "time is of the essence" date had passed as did [Lewis Road's representative]. (N.T. 5.9.12, p. 36, N.T. 5.8.12, p. 14). The Undersigned determined at trial that [Re/Max's] representative intended to extend the lease when he signed the Agreement. (N.T. 5.9.12, p. 36).

Trial Court Opinion, 4/29/13, at 6-7. We agree. Re/Max conceded that it intended to extend the lease, and through its conduct, it illustrated that it was proceeding as though the lease had been extended and as though the time is of the essence clause did not exist. Thus, the parties waived the time is of the essence clause by their conduct and through their performance of the contract. We discern no error of law or abuse of discretion in the trial court's conclusion, and Re/Max is entitled to no relief on this claim of error.

In its next issue, Re/Max asserts that the trial court erred in failing to enforce a lease termination agreement. Re/Max's Brief at 18. Re/Max argues that Lewis Road exercised its option to terminate the lease in September of 2008 as a result of conversations concerning leasing the premises to a third party for larger lease payments. Id. We conclude this issue is meritless.

The option to terminate the lease reads as follows:
In regard to the Lease Agreement dated October 13, 2003 and Lease Extension Agreement dated February 14, 2007 with regard to 3, 725 square feet of space located in the Limerick Professional Building, 649 North Lewis Road, Limerick PA the Landlord would like the option to terminate the Lease prior to the March 31, 2010 termination date with thirty (30) days written notice exercising such option to Tenant.
If Landlord does not exercise this termination option within thirty(30) days of the date of this letter [August 22, 2008], the option would be considered null & void.

Re/Max Pretrial Statement, Exhibit 3 (emphasis added).

The interpretation of a contract is a question of law, and this Court's scope of review is plenary. Humberston v. Chevron U.S.A., Inc., 75 A.3d 504, 509 (Pa. Super. 2013) (internal quotation marks and citations omitted). "In interpreting a contract, the ultimate goal is to ascertain and give effect to the intent of the parties as reasonably manifested by the language of their written agreement." Id. at 510. "When construing agreements involving clear and unambiguous terms, this Court need only examine the writing itself to give effect to the parties' understanding." Id. (emphasis added). We review and construe the contract as written, and we may not modify the plain meaning under the guise of interpretation. Id.

As noted above, Re/Max refers only to conversations concerning the possibility of leasing the space to a third party. Re/Max's Brief at 18. The fatal flaw in Re/Max's argument is that there is absolutely no evidence of any written notice illustrating that Lewis Road or its representative Pennmark exercised the option to terminate the lease. In clear and unambiguous terms, the agreement specifically required written notice. As such, we conclude there was no error in the trial court's refusal to enforce the termination agreement.

In its third issue, Re/Max argues that the trial court erred in permitting a representative of Pennmark to testify regarding Lewis Road's execution of the lease extension. We are constrained to conclude this issue is waived.

In order to properly preserve an issue for appeal in a civil matter, an appellant must make a timely, specific objection at trial and raise the issue in a post-trial motion. Brown v. Philadelphia Tribune Co., 668 A.2d 159, 162 (Pa. Super. 1995) (citation omitted).[3] Here, Re/Max failed to object to the Pennmark representative's testimony concerning the lease extension, and Re/Max failed to raise this issue in its post-trial motion. Accordingly, this issue is waived on appeal.

In its fourth issue, Re/Max claims the trial court erred in permitting evidence of mitigation of damages because Lewis Road allegedly failed to provide such evidence during discovery. For the same reasons enumerated in our discussion of Re/Max's third issue, we deem this issue waived because Re/Max never mentioned a discovery violation or an evidentiary ruling in its post-trial motion.

We do note that Re/Max did reference mitigation of damages in its post-trial motion. Post-Trial Motion, 10/1/12, at 2. However, the issue presented in the post-trial motion was that "[t]he trial court erred in concluding that [Lewis Road] had complied with its obligation to mitigate its damages pursuant to the agreement." Id. The issue Re/Max attempts to raise in this appeal is very different as Re/Max is now challenging an evidentiary ruling and an alleged discovery violation, which were not raised in the post-trial motion: "Whether the trial court abused its discretion or committed and [sic] error of law in permitting any evidence of mitigation of damages given that Lewis Road Associates, Inc. failed to provide any such evidence during discovery?" Re/Max's Brief at 4 (full capitalization omitted and emphasis added). As such, Re/Max did not properly preserve this issue for appeal.

For the reasons set forth above, we conclude that Re/Max is entitled to no relief. Accordingly, we affirm the judgment entered on April 26, 2013.

Judgment affirmed.

Judgment Entered.


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