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Greenwood Land Co. v. Omnicare, Inc.

United States District Court, W.D. Pennsylvania

May 23, 2014

GREENWOOD LAND COMPANY, Plaintiff,
v.
OMNICARE, INC., NCS HEALTHCARE OF NEW YORK, INC., and OMNICARE OF NEW YORK, LLC, Defendants

OPINION

DAVID STEWART CERCONE, District Judge.

Plaintiff commenced this diversity action seeking redress for the alleged (1) loss of rent and (2) loss of prorated taxes and insurance due to Omnicare, Inc., NCS Healthcare of New York, Inc., and Omnicare of New York, LLC's ("defendants") failure to provide timely notice of termination under a commercial lease and (3) property damage to the leased premises. Presently before the court is defendants' renewed motion for summary judgment. For the reasons set forth below, the motion will be granted in part and denied in part.

Federal Rule of Civil Procedure 56(c) provides that summary judgment may be granted if, drawing all inferences in favor of the non-moving party, "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's claim, and upon which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett , 477 U.S. 317 (1986). The moving party bears the initial burden of identifying evidence which demonstrates the absence of a genuine issue of material fact. When the movant does not bear the burden of proof on the claim, the movant's initial burden may be met by demonstrating the lack of record evidence to support the opponent's claim. National State Bank v. National Reserve Bank , 979 F.2d 1579, 1582 (3d Cir. 1992). Once that burden has been met, the non-moving party must set forth "specific facts showing that there is a genuine issue for trial, " or the factual record will be taken as presented by the moving party and judgment will be entered as a matter of law. Matsushita Electric Industrial Corp. v. Zenith Radio Corp. , 475 U.S. 574 (1986) (quoting Fed.R.Civ.P. 56 (a), (e)) (emphasis in Matsushita). An issue is genuine only if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242 (1986).

In meeting its burden of proof, the "opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita , 475 U.S. at 586. The non-moving party "must present affirmative evidence in order to defeat a properly supported motion" and cannot "simply reassert factually unsupported allegations." Williams v. Borough of West Chester , 891 F.2d 458, 460 (3d Cir. 1989). Nor can the opponent "merely rely upon conclusory allegations in [its] pleadings or in memoranda and briefs." Harter v. GAF Corp. , 967 F.2d 846 (3d Cir. 1992). Likewise, mere conjecture or speculation by the party resisting summary judgment will not provide a basis upon which to deny the motion. Robertson v. Allied Signal, Inc. , 914 F.2d 360, 382-83 n.12 (3d Cir. 1990). If the non-moving party's evidence merely is colorable or lacks sufficient probative force summary judgment must be granted. Anderson , 477 U.S. at 249-50; see also Big Apple BMW, Inc. v. BMW of North America , 974 F.2d 1358, 1362 (3d Cir. 1992), cert. denied, 113 S.Ct. 1262 (1993) (although the court is not permitted to weigh facts or competing inferences, it is no longer required to "turn a blind eye" to the weight of the evidence).

In 1994, Greenwood Land Company ("Greenwood"), as landowner of commercial property located in Sharon, Pennsylvania ("the property"), entered into a lease ("the lease") with Thrift Drug, Inc. ("Thrift"). In late 1997 or early 1998, the assets and liabilities of Thrift were acquired by NCS Healthcare of New York, Inc. ("NCS"), and, on January 20, 1998, Thrift assigned its tenancy under the lease to NCS, a wholly-owned subsidiary of NCS Healthcare, Inc. In January 2003, Omnicare, Inc., acquired NCS Healthcare, Inc., and according to Greenwood became the de facto assignee of the lease. Amended Complaint (Doc. 3) at ΒΆ 20(j).

The lease covered a term beginning March 2, 1994, and ending April 1, 2004. It contained two options to extend which were to run from April 1, 2004 to April 1, 2009, and April 1, 2009 to April 1, 2014. These extensions were automatic in that the lease continued in force unless the tenant provided notice of intent not to renew at least six months prior to the expiration of the current term.

The lease provided for annual rent of $171, 749.04 during the first ten years to be paid in monthly installments of $14, 312.42. If the "Options to Extend" were enacted, the annual rate was to increase to $200, 000.04 with monthly installments of $16, 666.00. In the event that the tenant failed twice to pay rent in one year, the section entitled "Late Charges" required a late fee of five percent (5%). Also, the "Default Clause" required the tenant to pay real estate taxes and insurance on the property in the event of a default. The election of the lessor to pursue any one or more of these remedies did not foreclose the use of any other rights or remedies under the lease.

Moreover, the lease provided for the payment of rent as it became due. It did not contain an acceleration clause permitting the recovery of future rent in the event of a default.

The lease contained a section entitled "Right of First Refusal." It provided that the "[l]andlord shall not during the term of this lease sell or otherwise dispose of any property... to anyone other than [t]enant" until the tenant is notified and fails to purchase the entire premises within 60 days of notification. Finally, the lease provided:

Tenant agrees that upon the termination of this lease, whether by expiration of time or otherwise, possession of the demised premises will be surrendered to Landlord in good, tenantable condition, broom clean except for damages caused by ordinary wear and tear or damage or destruction by acts of God or cause beyond Tenant's control, and except for any conditions which, under the provisions of this lease, it is the obligation of the Landlord to remedy.

[Exhibit 7.a, p.21]

Thrift and ultimately Omnicare rented the property pursuant to the lease through the ten year term and the first five year renewal term. Property damages to the premises existed at the end of the first five year option term. This included interior water damage from a leaking roof, mold and disrepair of the parking lot. Defendants' employees were aware of mold inside the building no later than November 15, 2007.

Plaintiff did not receive timely notice of defendants' intent not to renew the lease for the second option term. Defendants claim to have sent a letter from their real estate representative, Gene Slageter, Jr., on June 23, 2008, indicating the tenant would vacate the premises on March 31, 2009. Plaintiff never received that letter.

On February 6, 2009, plaintiff received a letter from Slageter advising that the tenant would vacate the premises on March 31, 2009, and requesting a walk-through be scheduled prior to that date. On February 27, 2009, plaintiff's attorney sent a letter to Slageter indicating plaintiff expected defendants to honor the rental payment obligations during the second five-year option term. In a follow-up letter of March 24, 2009, plaintiff expressed the ...


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