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Inc. v. Apria Healthcare, Inc.

United States District Court, E.D. Pennsylvania

October 31, 2014

1120 INDUSTRIAL BOULEVARD, INC. t/a 1120 INDUSTRIAL BOULEVARD ASSOCIATES,
v.
APRIA HEALTHCARE, INC. 1120 INDUSTRIAL BOULEVARD, INC. t/a 1120 INDUSTRIAL BOULEVARD ASSOCIATES,
v.
APRIA HEALTHCARE, INC. No. 14-2953.

MEMORANDUM OPINION

TIMOTHY J. SAVAGE, District Judge.

Introduction

In this breach of contract action based on a commercial lease, the plaintiff, 1120 Industrial Boulevard, Inc., t/a 1120 Industrial Boulevard Associates, ("1120") contends that Apria Healthcare, Inc. ("Apria") breached the lease by failing to pay rent and restore the property to its original condition. In moving for summary judgment, it argues that the lease was automatically extended by the warranty provision in the assignment executed by Apria, 1120 and Praxair Healthcare Services, Inc. ("Praxair"), Apria's predecessor in interest. It relies on language in the assignment that Apria contends was surreptitiously added by 1120's principal, Mark Hankin. Apria has moved for summary judgment, contending that the warranty provision did not nullify the timely expiration notice sent by Praxair. Consequently, according to Apria, it did not breach the lease when it vacated the premises. 1120 and Hankin also move for summary judgment on Apria's counterclaims for fraud in the inducement and breach of contract.

Because we conclude that the warranty provision did not nullify and supersede the expiration notice, we shall deny 1120's motion for summary judgment and grant Apria's motion for summary judgment. Apria has failed to produce evidence showing that 1120 and Hankin made a false misrepresentation. There remains a genuine dispute whether Apria complied with its restoration obligations under the lease. Therefore, 1120 and Hankin's motion will be granted in part and denied in part.

Factual Background

To provide the parties with the basis for our ruling as early as possible without postponing the trial, we do not write a comprehensive opinion reciting all of the facts and legal reasoning. Instead, we refer only to those facts necessary to explain our decision. A more detailed opinion will issue later.

On September 1, 2005, 1120 and Praxair entered into a lease of the commercial real property known as Section 3 of 1120 Industrial Boulevard, Southampton, Pennsylvania ("Premises"). The lease was for a six-year term, commencing on November 1, 2005, and ending on November 30, 2011. Apria Appx. 49 (Lease) at ¶ 2.A(i). The lease contained a notice of termination clause that provided that the lease would continue for an additional one year term unless notice of termination was given one year prior to the original termination date. Lease ¶ 25. On July 29, 2010, Praxair sent 1120 a timely expiration notice, indicating that the lease would terminate at the end of the lease term of November 30, 2011. See Pl.'s Ex. D (First Termination Notice).

On February 1, 2011, Apria and Praxair, both represented by counsel, entered into a written asset purchase agreement by which Apria purchased the assets of Praxair. As part of that agreement, Apria assumed various leases from Praxair. In assuming the various leases, Apria developed a form assignment and assumption agreement. Paragraph four of the Form Assignment and Assumption Agreement contained a warranty which read:

Warranty. Assignor represents and warrants to Assignee as of the date hereof and as of the Effective Date that the Lease has not been modified or amended, the Lease is in full force and effect, the Lease has not been assigned or otherwise encumbered and, no default has occurred or is continuing, and no event has occurred or condition exists which would, with the giving of notice or the expiration of any grace period, constitute a default under the Lease.

Pl.'s Ex. F (Form Assignment and Assumption Agreement) ¶ 4.

On February 11, 2011, Praxair forwarded to 1120 a draft assignment and assumption agreement consisting of four pages. See Pl.'s Ex. F. In response, 1120 insisted on the following changes: (a) a warrant of attorney to confess judgment clause; (b) Pennsylvania rather than Delaware law would be the governing law; (c) Praxair would provide a surety for Apria's obligations under the lease; and (d) the warranty that the lease had not been terminated. These requirements were included in 1120's revisions to the draft agreement. The changes proposed by 1120 included revisions to the warranty provision in paragraph 4 as follows:

4. Warranty. Assignor represents and warrants to Assignee as of the date hereof and as of the Assignment Effective Date that the Lease has not been terminated, modified or amended, the Lease is in full force and effect, the Lease has not been assigned or otherwise encumbered and, no default has occurred or is continuing and no event has occurred or condition exists which would, with the giving of notice or the expiration of any grace period, constitute a default under the Lease.
The above notwithstanding, as of March 4, 2011, Assignor owes Landlord Fifteen Thousand Three Hundred Sixteen and 64/100 Dollars ($15, 316.64) in Additional Rent. (See Detailed Aged ...

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