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Kristel, Inc. v. Cenveo Corp.

United States District Court, W.D. Pennsylvania

September 1, 2017

KRISTEL, INC., Plaintiff,
v.
CENVEO CORPORATION, Defendant.

          MEMORANDUM OPINION

          KIM R. GIBSON UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Before the Court is Defendant's motion to enforce settlement. (ECF No. 23.) The issues have been fully briefed (see ECF Nos. 24, 25), and the motion is ripe for disposition. For the reasons that follow, Defendant's motion will be GRANTED in part and DENIED in part.

         II. Jurisdiction

         The Court has subject matter jurisdiction over the instant action pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1441. Venue is proper pursuant to 28 U.S.C. § 1391.

         III. Background

         Plaintiff initiated this action by filing a complaint in the Court of Common Pleas of Blair County, Pennsylvania, on July 15, 2016. (ECF No. 1.) Defendant removed the case to this Court on August 8, 2016. (Id.)

         Plaintiff leased commercial property to Defendant. After Defendant defaulted on its lease, Plaintiff brought suit to accelerate rent and confess judgment pursuant to the written commercial lease agreement (the "Lease Agreement"). (See ECF No. 1, exhibit 3.) Plaintiff sued to enforce Article XV of the Lease Agreement, titled "Default by Lessee." The relevant paragraph reads:

"LESSOR may, at its option while such default or violation of covenant or condition continues, declare all the rent reserved for the full term of this Lease remaining due and payable at once; and LESSEE does hereby empower any attorney of any Court of Record in the State of Pennsylvania, or elsewhere to appear for it and waive the issuance and service of process and confess a judgment against it for the whole or any part of said rent and thereafter to release all errors and warrant all rights of appeal and stay of execution. The initial exercise or use of this warrant of attorney shall not exhaust the same, but the same may be used and exercised without limitation as often as necessity for the use of the same may arise. The exercise or use of this warrant of attorney shall not prevent LESSOR from subsequently terminating this Lease, by giving Notice to LESSEE of its election to do so, and upon its tender to LESSEE of a sum equal to the amount, if any, paid by the LESSEE for rents accruing after the date of termination."

         After the case was removed to this Court (see ECF No. 1, exhibit 1), Defendant filed a motion to dismiss and a brief in support. (ECF Nos. 4, 5.) While Defendant's motion to dismiss was pending, the parties underwent mediation and executed a Post-Mediation Settlement Agreement (the "Settlement Agreement") on November 1, 2016. (See ECF Nos. 19, 20.) This Court marked the case administratively closed on November 2, 2016. (ECF No. 20.)

         The Settlement Agreement provides that the parties will "enter into an Addendum to the 5th Amendment to Lease which will address rent penalty; ADR; and eliminate the confession of judgment provisions and the... arbitration provisions." (See ECF Nos. 24, 26.)[1] The Settlement Agreement also contains a graduated rent penalty scale; this scale specifies the penalties (as a percentage of rent) that Defendant will be liable for in the event of default, from the 6th through the 21st day after rent is due. (Id.)[2] The Settlement Agreement does not mention the acceleration provision.

         After the parties executed the Settlement Agreement, they exchanged numerous proposed drafts of the Addendum to the Lease Agreement. (See ECF Nos. 24, 26.) But the parties have been unable to agree on the final language of the Addendum, because they disagree about whether the Settlement Agreement eliminated the acceleration provision.

         Defendant argues that the confession of judgment provision and the acceleration provision are "inextricably intertwined." (ECF No. 24 at 4.) Thus, Defendant contends that when the parties agreed to "eliminate the confession of judgment provision" pursuant to the Settlement Agreement, they also agreed to eliminate the acceleration provision. (Id.) Therefore, Defendant insists that the Addendum to the Lease Agreement should not contain the acceleration provision. (Id.)

         Plaintiff disputes that it ever agreed or intended to eliminate the acceleration provision (ECF No. 26, at 3-4.) Plaintiff argues that the acceleration provision and the confession of judgement provision are separate remedies, and thus contends that the Settlement Agreement did not eliminate the acceleration remedy. Therefore, ...


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