York Development v. Atlantic Wireless
1519 MDA 2016
| Pa. Super. Ct. | Oct 2, 2017Background
- York Development (landlord) and Atlantic Wireless (tenant) entered a 10-year commercial lease (Aug 12, 2004) for a retail site at Northwest Plaza through Aug 2014.
- Atlantic ceased business at Northwest Plaza on July 31, 2012, opened a nearby store at Arsenal Road on Aug 1, 2012 (within ~2 miles), moved inventory/fixtures, and stopped paying August 2012 rent (stop-payment placed).
- York secured the vacant Northwest Plaza premises after tenant left and sent a default notice on Sept 4, 2012; York attempted to relet but did not immediately find a new tenant.
- York sued for unpaid rent and related damages; Atlantic counterclaimed. A bench trial resulted in a judgment for York of $110,719.99 (trial court found breach by Atlantic but also found York had duty to mitigate and awarded damages for ~1 year).
- On appeal, Superior Court affirmed breach/abandonment, reversed trial-court rulings that landlord had duty to mitigate and that damages were limited to a one-year relet period; remanded for recalculation of damages (including addressing liquidated damages and prejudgment interest).
Issues
| Issue | Plaintiff's Argument (York) | Defendant's Argument (Atlantic) | Held |
|---|---|---|---|
| Whether Atlantic abandoned the premises or was evicted | York: Atlantic voluntarily abandoned by moving out and not communicating; landlord permissibly re-entered | Atlantic: York locked tenant out (eviction); tenant left fixtures and intended to continue some use | Court: Atlantic abandoned the premises; York’s re-entry was not an eviction |
| Whether landlord had duty to mitigate after abandonment | York: No duty to mitigate; lease ¶24 does not impose mitigation obligation | Atlantic: Lease ¶24 requires York to mitigate; trial court correctly limited damages to one year | Court: No duty to mitigate after abandonment; ¶24 merely allows credit if landlord relets, does not create mitigation duty |
| Entitlement to attorneys’ fees under lease | York: Lease ¶6 (additional rent) permits recovery of sums paid to enforce lease, including attorney fees | Atlantic: ¶6 ambiguous and does not expressly provide for attorneys’ fees; eviction/notice defenses bar recovery | Court: ¶6 is ambiguous as to attorneys’ fees; trial court did not err in denying attorneys’ fees |
| Liquidated damages for non-compete and prejudgment interest | York: ¶13 entitles landlord to 50% increased minimum rent after tenant opened competing store; prejudgment interest is owed as contract damages | Atlantic: Liquidated clause is a penalty; York’s alleged wrongful lockout bars relief; no entitlement to prejudgment interest | Court: Trial court found breach of non-compete but failed to rule on liquidated damages and prejudgment interest; remand required to determine enforceability of ¶13 and appropriate prejudgment interest; rent damages must be recalculated through lease end (less any re-rental) |
Key Cases Cited
- Baney v. Eoute, 784 A.2d 132 (Pa. Super. 2001) (standard of appellate review for non-jury trials)
- Trizechahn Gateway, LLC v. Titus, 930 A.2d 524 (Pa. Super. 2007) (contract/lease interpretation and American Rule on attorneys’ fees)
- Stonehedge Square Ltd. P’ship v. Movie Merchants, Inc., 715 A.2d 1082 (Pa. 1998) (landlord has no duty to mitigate where tenant abandons)
- Ferrick v. Bianchini, 69 A.3d 642 (Pa. Super. 2013) (abandonment test and mitigation principles)
- Kahn v. Bancamerica–Blair Corp., 193 A. 905 (Pa. 1937) (distinguishing eviction from landlord resuming possession after tenant abandonment)
- Pantuso Motors, Inc. v. Corestates Bank, N.A., 798 A.2d 1277 (Pa. 2002) (liquidated damages vs. penalty analysis)
- Geisinger Clinic v. Di Cuccio, 606 A.2d 509 (Pa. Super. 1992) (factors for determining whether damages clause is liquidated or a penalty)