217 A.3d 1227
Pa.2019Background
- Gamesa leased 35,000 sq. ft. office space under a 10‑year commercial lease (tenant improvement allowance; sublease required landlord’s prior written consent not to be unreasonably withheld and a 30‑day response deadline).
- Gamesa vacated the premises May 18, 2012, continued paying rent, and had an existing subtenant (Viridity) on part of the space.
- On June 12, 2012 Gamesa requested landlord Ten Penn Center’s consent to sublease 5,200 sq. ft. to BSI; Ten Penn Center responded June 26 declaring Gamesa in default for vacating but requested BSI financials; on July 13 Ten Penn Center conditioned consent on forfeiture of Gamesa’s remaining tenant‑improvement allowance.
- Negotiations stalled, BSI sublease never executed; Gamesa sued (breach of contract, tortious interference, unjust enrichment) and sought either damages for breach or rescission/return of rents after an asserted termination date.
- Trial court found Ten Penn Center breached by unreasonably conditioning consent, awarded Gamesa both contract damages (BSI sublease value) and restitution (rents paid after a retroactive Lease termination) — awarding duplicative relief.
- Superior Court affirmed breach damages but reversed retroactive termination and restitution; Pennsylvania Supreme Court affirmed the Superior Court: pleading alternative remedies is permitted, but Gamesa’s continued performance precluded retroactive termination/restitution and double recovery, and no broad ‘‘commercial‑reasonableness’’ exception was adopted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a plaintiff plead and pursue inconsistent remedies pre‑judgment? | Gamesa: plaintiff should be allowed to plead and try alternative remedies and need not elect until after verdict to avoid forfeiting claims before facts known. | Ten Penn Center: procedural pleading of alternatives is allowed but substantive election by conduct can bar inconsistent relief. | Court: Pleading and pursuing alternative remedies is allowed pre‑judgment; an election becomes binding only when effectuated (e.g., by conduct, settlement, judgment). |
| Does continued performance by the non‑breaching party bar rescission/restitution (substantive election of remedies)? | Gamesa: continued performance was commercially reasonable and done to protect subtenant and avoid risks; should not forfeit rescission claim. | Ten Penn Center: Gamesa’s continued payment, possession, and benefit acceptance affirmed the Lease and elected against rescission; restitution barred. | Court: Continued performance and acceptance of benefits presumptively elects against rescission; Gamesa’s conduct barred restitution and retroactive termination. |
| Should a UCC/"commercial reasonableness" exception apply to leases to permit post‑breach performance without losing rescission? | Gamesa: analogized to UCC Article 2 (commercial reasonableness) and Northern Helex — continued performance can be reasonable and should not always bar rescission. | Ten Penn Center: UCC governs goods not real estate; Northern Helex is distinguishable and not controlling. | Court: Declined to adopt a broad commercial‑reasonableness exception for leases; UCC analogy and Northern Helex are inapposite except in rare, compelling circumstances. |
| Was the trial court’s award of both contract damages and restitution permissible? | Gamesa: sought alternative relief and did not seek double recovery. | Ten Penn Center: double recovery unjust; once Gamesa continued performance it could not rescind and get rents back. | Court: Trial court’s award was duplicative and inconsistent; Superior Court correctly reversed the restitution/retroactive termination portion and affirmed contract damages. |
Key Cases Cited
- Schwartz v. Rockey, 932 A.2d 885 (Pa. 2007) (permissive pleading of alternative remedies; election should be made before final judgment but not necessarily at pleading stage)
- Wedgewood Diner, Inc. v. Good, 534 A.2d 537 (Pa. Super. 1987) (election of remedies prevents inconsistent recoveries for same injury)
- Umbelina v. Adams, 34 A.3d 151 (Pa. Super. 2011) (pretrial election to pursue rescission barred later recovery on abandoned breach claim)
- McCausland v. Wagner, 78 A.3d 1093 (Pa. Super. 2013) (settlement or acceptance of one remedy precludes inconsistent remedies thereafter)
- Northern Helex Co. v. United States, 455 F.2d 546 (Ct. Cl. 1972) (court declined to find waiver where post‑breach continued performance was commercially or practically unavoidable)
- Gillard v. Martin, 13 A.3d 482 (Pa. Super. 2010) (continued performance with complaints and assurances may preserve rights; narrow exception to waiver by conduct)
- Colonial Trust Co. v. Flanagan, 25 A.2d 728 (Pa. 1942) (law will not permit double recovery via two inconsistent judgments)