True Railroad Associates, L.P. v. Ames True Temper, Inc.
152 A.3d 324
| Pa. Super. Ct. | 2016Background
- True Railroad leased ~44 acres to True Temper (successor Ames) under a 1994 Lease containing a detailed Purchase Option (Article 42) exercisable Jan 1–Oct 31, 2011; fair market value was to be determined by appraisers with a tied-third appraiser if necessary.
- An October 22, 2010 amendment renewed the lease and stated Ames would receive $250,000 (tendered earlier by True Railroad for repairs) "upon execution" of the Purchase Option; lease language separately used the terms "exercise" (to give written notice during Option Period) and "execution" (closing).
- Ames gave written notice exercising the option on Oct 26, 2011 but did not tender $250,000 with that notice; it tendered the funds after True Railroad refused to honor the notice. True Railroad sued for declaratory relief claiming the option was invalid without concurrent tender.
- Trial court (Mar 21, 2012) held Ames validly exercised the option and that the amendment did not require concurrent tender; that order was appealed and previously quashed by this Court as untimely, a ruling True Railroad sought to revisit later.
- True Railroad filed a second declaratory action (2014) alleging Ames’ appraiser was not independent and sought to void the sale; bench trial consolidated issues, and the court found Ames’ appraiser independent (or any failure was not material), awarded Ames rent credit and contractual attorneys’ fees to be escrowed.
- This appeal package: several interlocutory appeals were quashed; the Superior Court affirmed the final orders denying post-trial relief and upheld res judicata as to the earlier March 21, 2012 declaration.
Issues
| Issue | Plaintiff's Argument (True Railroad) | Defendant's Argument (Ames) | Held |
|---|---|---|---|
| Whether Ames validly exercised the Purchase Option without tendering $250,000 during the Option Period | "Execution" in the amendment was intended to mean the same as "exercise"; $250,000 had to be tendered concurrently with written exercise | Amendment used distinct terms; $250,000 was payable "upon execution" (closing), not upon exercise (notice) | Court: Amendment unambiguous; Ames validly exercised the option without concurrent tender; prior March 21, 2012 ruling on this is res judicata |
| Whether the March 21, 2012 declaratory order was interlocutory or final (and thus appealable) | Order was interlocutory because other claims / counterclaims remained | Order disposed of all claims in True Railroad’s 2011 declaratory complaint and was therefore final | Court: March 21, 2012 was final and appealable; prior appellate ruling stands; law-of-the-case/res judicata bars relitigation |
| Whether Ames’ appraiser was not "independent" and whether that justified voiding the sale | CBRE had a pre-existing professional relationship with Ames and undervalued the property; lack of independence voids contract | Evidence did not prove lack of independence; even if impaired, any defect was immaterial because court-appointed appraiser resolved valuation | Court: Trial factfinder crediting Ames; independence construed in ordinary sense; no material breach — True Railroad cannot avoid sale |
| Whether the trial court properly awarded rent credit and attorneys’ fees | Rent-credit and fee award were procedurally improper and unsupported by contract | Rent credit compensates foreseeable damages from True Railroad’s refusal to close; attorneys’ fees are contractually authorized (Article 38) | Court: Rent credit was appropriate as consequential, provable damages; attorneys’ fees permissible under lease; $500,000 escrow ordered pending detailed fee determination |
Key Cases Cited
- Motorists Mut. Ins. Co. v. Pinkerton, 830 A.2d 958 (Pa. 2003) (post-trial motion requirement and timing of appeals in declaratory judgment actions)
- Nationwide Mut. Ins. Co. v. Wickett, 763 A.2d 813 (Pa. 2000) (declaratory judgments are final and immediately appealable under the Declaratory Judgment Act)
- Commerce Bank/Harrisburg, N.A. v. Kessler, 46 A.3d 724 (Pa. Super. 2012) (orders resolving declaratory relief may be immediately appealable)
- Franciscus v. Sevdik, 135 A.3d 1092 (Pa. 2016) (prior interlocutory orders can be called into question after final order in a declaratory action)
- Widmer Eng'g, Inc. v. Dufalla, 837 A.2d 459 (Pa. Super. 2003) (materiality standard for breach permitting discharge of contractual duties)
- Helpin v. Trustees of Univ. of Pennsylvania, 10 A.3d 267 (Pa. 2010) (measure and foreseeability of consequential damages from breach)