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Gamesa Energy USA, LLC v. Ten Penn Center Associates, L.P.

Superior Court of Pennsylvania

March 19, 2018


          Appeal from the Judgment Entered May 20, 2016 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): March Term, 2013 No. 03678

          BEFORE: PANELLA, J., LAZARUS, J., and STEVENS [*] , P.J.E.


          PANELLA, J.

         This appeal involves a commercial landlord/tenant dispute. Ten Penn Center Associates, L.P. and SAP V Ten Penn Center NF G.P. L.L.C (collectively, "TenPC"), appeal from the judgment entered in favor of Appellee, Gamesa Energy USA, LLC and Gamesa Technology Corporation, Inc. ("Gamesa"), by the Philadelphia Court of Common Pleas following a nonjury trial. The record supports the trial court's factual findings regarding the breach of the sublease provision. Gamesa, however, elected contract damages over the remedy of rescission. And the trial court improperly conflated the terms "vacate" and "abandon." Accordingly, we affirm in part and reverse in part.

         In 2008, Gamesa signed a contract (the "Lease") with TenPC to lease approximately 35, 000 square feet of office space in TenPC's building, located at 1801 Market Street, Philadelphia (the "Premises"). The Lease, which was scheduled to run until September 1, 2018, provided Gamesa with a credit, named "the tenant improvement allowance, " for Gamesa to construct the office space to its specifications. The Lease also permitted Gamesa, with TenPC's prior approval, to enter into subleases for portions of the Premises.

         In May 2011, TenPC approved Gamesa's request to sublet approximately 15, 000 square feet of office space to Viridity Energy, Inc. Gamesa's sublease with Viridity was scheduled to run until August 30, 2018. TenPC permitted Gamesa to use a portion of its tenant improvement allowance to outfit the office space for Viridity's needs.

         Subsequently, after giving one month's notice to TenPC, Gamesa vacated the Premises in May 2012. Viridity remained at the Premises under the terms of its sublease with Gamesa. Additionally, while Gamesa submitted its June rent payment late, both parties agree that Gamesa continued to make rent payments after it vacated the Premises.

         On June 12, 2012, Gamesa submitted a request for TenPC's consent to sublet a portion of its remaining office space to Business Services International, LLC ("BSI"). TenPC's initial response to this request was to inform Gamesa that it defaulted on the terms of the Lease by vacating the Premises and making a late rent payment, and thus absolved TenPC of the responsibility of entertaining any requests for subleases. Nevertheless, TenPC requested additional information concerning BSI's financials from Gamesa to evaluate the sublease request under the terms of the Lease.

          Gamesa responded to TenPC's letter on July 5, 2012, denying the alleged default, once again requesting the approval of the BSI sublease, and providing TenPC with the requested information about BSI. In response, TenPC reiterated its belief that it was not required to entertain the proposed sublease, and proposed Gamesa waive its right to use its remaining tenant improvement allowance in exchange for TenPC's approval of the sublease. Following this correspondence, negotiations between the parties stalled.

         On March 23, 2013, Gamesa filed a complaint against TenPC, asserting claims including breach of contract, unlawful interference in business relations, and unjust enrichment. Gamesa alleged TenPC breached the Lease by failing to accept or reject the proposed BSI sublease within 30 days, pursuant to the terms of the lease. As a result, Gamesa alleged that TenPC had materially breached the terms of the Lease and asked for damages arising from the breach, as well as a declaration that the Lease had been terminated as of the date TenPC failed to accept or reject the sublease. Further, through its claim for unjust enrichment, Gamesa requested the return of the rent paid following the alleged material breach. TenPC denied these allegations.

         The matter proceeded to a nonjury trial. Only two witnesses were called: Jamie Rodriguez, Gamesa's general services manager, and Daniel Busch, a managing member of one of TenPC's limited partners. Rodriguez testified the sublease with BSI was never consummated due to TenPC's delay in approving or denying the proposed BSI sublease. Rodriguez also confirmed Gamesa continued to pay rent under the Lease, had used its remaining tenant improvement allowance to improve space within the building, and, at the time of trial, was looking for a subtenant with TenPC's approval. And he confirmed Viridity continued to pay Gamesa rent under the terms of the sublease from the time Gamesa vacated the Premises until the time of trial.

         Busch established the course of action TenPC took, as described above, and reiterated that Gamesa was in default in the summer of 2012 after vacating the Premises. Busch also claimed TenPC's reluctance in approving the proposed sublease with BSI stemmed partially from TenPC's belief that BSI did not appear to be a financially stable company. Therefore, he did not believe TenPC's action in conditioning approval of the sublease upon Gamesa's waiver of the remaining tenant improvement allowance was unreasonable.

         Ultimately, the trial court ruled in favor of Gamesa. The court found TenPC had materially breached the lease by advising Gamesa it was in default and by failing to approve or reject the proposed BSI sublease within 30 days of its presentation. Because of this breach, the court awarded Gamesa damages equal to the amount it would have received under the three-year BSI sublease. And the court found TenPC's material breach was sufficient to terminate the lease as of July 22, 2012. As a result, the court found TenPC was unjustly enriched in the amount of rent Gamesa paid to TenPC from that date through December 2015. Lastly, the trial court found that despite the termination of the lease, Viridity's sublease was to remain in effect until its August 30, 2018 expiration date.

          Both Gamesa and TenPC filed post-trial motions. Gamesa requested the court mold the verdict to include pre- and post-judgment interest. In contrast, TenPC requested the court vacate its judgment against it. And it presented a motion to supplement the trial record with evidence that Gamesa had subleased space in the building after trial. The trial court granted Gamesa's request to mold the verdict and denied TenPC's motions.

         After the entry of judgment, this timely appeal followed. TenPC presents seven issues for our review. See Appellant's Brief, at 4-6.

We apply the following standard of review to a nonjury trial verdict:
Our appellate role in cases arising from nonjury trial verdicts is to determine whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in any application of the law. The findings of fact of the trial judge must be given the same weight and effect on appeal as the verdict of the jury. We consider the evidence in a light most favorable to the verdict winner. We will reverse the trial court only if its findings of fact are not supported by competent evidence in the record or if its findings are premised on an error of law. However, [where] the issue … concerns a question of law, our scope of review is plenary.
The trial court's conclusions of law on appeal originating from a non-jury trial are not binding on an appellate court because it is the appellate court's duty to determine if the trial court correctly applied the law to the facts of the case.

Allegheny Energy Supply Co., LLC v. Wolf Run Min. Co., 53 A.3d 53, 60-61 (Pa. Super. 2012) (citation and quotation marks omitted; brackets and ellipses in original). The trial court, as the finder of fact, is free to believe "all, part or none of the evidence presented." Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880, 888 (Pa. Super. 2006) (citation omitted). "Issues of credibility and conflicts in evidence are for the trial court to resolve; this Court is not permitted to reexamine the weight and credibility determination or ...

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