550 F.Supp.3d 216
E.D. Pa.2021Background:
- McDonald’s leased Philadelphia property from the Rita Getz Feldman Trust since 1994; lease included a purchase option exercisable within 12 months after notice of Feldman’s death.
- Feldman died in 2004; Trust (through Denise Krekstein as trustee) alleges it notified McDonald’s circa November 15, 2004; McDonald’s says it first learned of the death in 2019.
- In 2019 McDonald’s sent a letter purporting to exercise the 2004-priced purchase option; the Trust rejected that attempt as untimely and void.
- Trust sued in state court for breach of contract (purchase option) and declaratory relief; McDonald’s removed to federal court based on diversity.
- The district court accepted the Trust’s factual allegation that notice was provided in 2004 but dismissed the breach claim, retaining the declaratory-judgment claim and denying leave to amend at that time.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McDonald’s 2019 attempt to exercise a 2004-priced option can constitute breach of the purchase option provision | Krekstein: McDonald’s knew notice was given in 2004, so attempting to exercise the expired option breached the contract | McDonald’s: The option confers a permissive right, not a contractual duty; lack of authorization does not create a duty | Court: Option creates no duty to refrain from attempting exercise; no plausible breach of that provision; claim dismissed |
| Whether alleged conduct supports an independent breach of the implied duty of good faith and fair dealing | Krekstein: McDonald’s acted in bad faith by attempting to exercise a forfeited option | McDonald’s: Pennsylvania law ties good-faith duty to existing contractual duties and disfavors independent bad-faith causes of action | Court: Pennsylvania law bars an independent good-faith claim here because no underlying contractual duty existed to be breached; bad-faith allegations insufficient to state claim |
| Pleading/relief posture: leave to amend and declaratory claim jurisdiction | Krekstein: seeks relief that the 2019 notice is null and void; implied request to pursue related claims | McDonald’s: disputes damages but does not oppose declaratory jurisdiction | Court: Dismisses breach claim without leave to amend now; retains jurisdiction over declaratory-judgment claim; may allow amendment after discovery if supported by record |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requiring plausible factual allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must rise above speculation)
- Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78 (3d Cir. 2000) (limits use of implied good-faith duty to create new contractual obligations)
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (Pennsylvania: good-faith obligation is tied to duties the contract actually imposes)
- Frank B. Fuhrer Wholesale Co. v. MillerCoors LLC, [citation="602 F. App'x 888"] (3d Cir. 2015) (refusal to import unbargained terms via good-faith duty)