Pops Pce TT, LP v. R&R Rest. Grp., LLC.
208 A.3d 79
Pa. Super. Ct.2019Background
- R&R Restaurant Group (tenant) leased commercial premises from Pops PCE TT, LP (landlord) for a 10‑year term (2013–2023) with an acceleration clause and a provision allowing confession of judgment for sums due.
- Lease Paragraph 49 required tenant to attempt transfer of a Landlord Liquor License (LLL), or obtain a Tenant Liquor License (TLL); if unable to obtain a TLL within the TLL Transfer Period, tenant could extend the period and ultimately terminate the lease by (1) delivering notice within two business days following the Transfer Period’s expiration and (2) including documentary evidence of efforts to obtain the TLL.
- Tenant sent a July 1, 2014 letter stating it intended to elect termination if it failed to obtain a TLL by the Transfer Period (which expired August 28, 2014); tenant never obtained a license and ceased paying rent in January 2015.
- Landlord obtained possession via a magisterial district judge judgment on January 29, 2015 (possession only), then confessed judgment for $2,334,608.87 (accelerated rent through lease end) on June 30, 2015.
- Tenant petitioned to open the confessed judgment arguing (inter alia) that the July 1 letter properly terminated the lease and that landlord was precluded from recovering accelerated rent after obtaining possession; trial court denied the petition post‑remand; Superior Court reversed and remanded to determine actual damages consistent with law and equity.
Issues
| Issue | Plaintiff's Argument (Pops) | Defendant's Argument (R&R) | Held |
|---|---|---|---|
| Whether Pops waived challenge to sufficiency of July 1, 2014 notice | Pops argued defenses were rejected by MDJ and that tenant’s defenses fail as a matter of law | R&R argued Pops never timely argued the letter was insufficient and is thus precluded by Pa.R.C.P. 2959(c) | Waiver claim by R&R waived for appeal; court found Pops had preserved its position and argued it post‑remand |
| Whether court erred by weighing sufficiency of termination letter (law vs. fact) | Termination requirements are contract interpretation (question of law); letter didn’t comply | Letter gave adequate notice and factual disputes (jury issue) over whether Pops had sufficient notice | Court held interpretation of Paragraph 49(B)(iv) is legal; July 1 letter insufficient as a matter of law to terminate because it was sent before the two‑day post‑expiration notice window and lacked required documentary evidence |
| Whether landlord may recover accelerated rent after obtaining possession | Pops sought accelerated rent for remainder of term via confessed judgment | R&R argued landlord, having taken possession, cannot also recover accelerated future rent (would be double recovery) | Court held as matter of law landlord may not obtain both possession and accelerated future rent; confessed judgment awarding accelerated rent was improper and must be reopened to ascertain actual damages |
| Whether equity/mitigation required opening judgment and further discovery | Pops argued confessed judgment valid and defenses barred | R&R argued equity prevents double recovery and landlord must mitigate (e.g., rents from new tenant) and sought discovery | Court found equitable concerns merited reopening judgment to determine actual damages; discovery issue rendered moot on remand to calculate damages |
Key Cases Cited
- Neducsin v. Caplan, 121 A.3d 498 (Pa. Super. 2015) (standard for opening confessed judgment and role of court versus jury on contract interpretation)
- Homart Development Co. v. Sgrenci, 662 A.2d 1092 (Pa. Super. 1995) (landlord cannot recover both possession and accelerated future rent; must elect remedies)
- Ferrick v. Bianchini, 69 A.3d 642 (Pa. Super. 2013) (acknowledging principle that landlord must choose between possession and future rents)
- John B. Conomos, Inc. v. Sun Co., 831 A.2d 696 (Pa. Super. 2003) (courts should not set aside contract terms absent fraud or unconscionability)
- H.A. Steen Industries, Inc. v. Richer Communications, Inc., 314 A.2d 319 (Pa. Super. 1973) (trial court erred by refusing to require landlord to mitigate damages; equitable mitigation applies)