Kollias, P. v. Chriskoll, Inc., 3327 EDA 2015

Background

K & C Real Estate Holding Co. (a partnership of Kollias and Christie) owned commercial property leased to Chriskoll, Inc., successor to the original tenant operating a Burger King franchise.
Kollias and Christie frequently intermingled personal and business finances and used personal credit to fund Chriskoll; Chriskoll and K & C were co-borrowers on a 2006 Eagle National Bank loan later refinanced by Irwin.
New owners (Nawn and Stasen, with Rizzo) bought majority of Chriskoll in 2007; Chriskoll later fell into arrears under a 2009 amended lease (base rent, percentage rent, and certain taxes).
K & C terminated the lease effective October 15, 2012, sued for unpaid rent/taxes and sought eviction; Chriskoll counterclaimed, seeking offsets for payments it made on behalf of K & C or the partners and other claimed credits.
After a bench trial, the court awarded K & C damages (including delinquent taxes) and denied Chriskoll’s counterclaims; Chriskoll appealed.
The Superior Court affirmed most rulings but reversed the tax-damage calculation and remanded for recalculation; several defendant issues were deemed waived for appeal because not raised in a post-trial motion.

Issues

Issue	Plaintiff's Argument (K & C)	Defendant's Argument (Chriskoll)	Held
1. Correct amount of delinquent taxes owed under amended lease	Trial court award of $300,920.82 reflects total charges	Chriskoll says it paid $231,365.02 and should only owe $69,555.80	Trial court erred by ignoring payments; remanded to recalculate tax damages taking payments and taxes due in May/June 2015 into account
2. Whether loan documents/tax returns or conduct modified lease to allow offsets for Chriskoll’s payments on K & C’s mortgage	No oral modification created offset rights; written lease required amendments in writing	Chriskoll claims loan docs, tax returns, admissions and course of conduct show oral modification or waiver of written-modification requirement permitting rent offsets	Affirmed: Chriskoll failed to prove oral modification by clear, precise and convincing evidence; trial court credibility findings upheld
3. Whether Chriskoll may offset rent with payments made directly to partners or creditors (including payments to Christie/Kollias personally)	Such payments do not satisfy rent due under the lease	Chriskoll contends payments to partners/creditors were effectively rent or should be credited/added to shareholder loan accounts and offset	Partly waived (payments to partners were not raised post-trial) and as to mortgage-related offsets, court affirmed denial because no proven oral modification; default finding stands except tax recalculation
4. Whether Chriskoll was in default as of Oct 15, 2012	Chriskoll remained in default because no proved offsets relieved obligations	Chriskoll argues cumulative payments exceeded amounts due and thus it was not in default	Affirmed: Chriskoll was in default; related offset arguments rejected or waived; judgment otherwise affirmed except as to tax calculation

Key Cases Cited

Mackall v. Fleegle, 801 A.2d 577 (Pa. Super. 2002) (post-trial motion styled as motion to reconsider may preserve issues when it functions as a post-trial motion)
Gemini Equipment Co. v. Pennsy Supply, Inc., 595 A.2d 1211 (Pa. Super. 1991) (issues not raised in post-trial motions are waived on appeal)
Lane Enterprises, Inc. v. L.B. Foster Co., 710 A.2d 54 (Pa. 1998) (post-trial motion requirement under Pa. R. Civ. P. 227.1; failure to raise issue waives it on appeal)
Somerset Community Hosp. v. Allan B. Mitchell & Associates, Inc., 685 A.2d 141 (Pa. Super. 1996) (written-contract modification clause may be waived by parties’ conduct; oral modification requires clear, precise and convincing proof)
GMH Associates, Inc. v. Prudential Realty Group, 752 A.2d 889 (Pa. Super. 2000) (appellate review: factual findings bind appellate court if supported by competent evidence; credibility and discretionary findings reviewed for abuse)