Eugene POLLOCK and Rose One-Hour Cleaners, Inc. t/a Great Valley One-Hour Cleaners, a Pennsylvania Corporation, Appellants, v. Thomas MORELLI t/a Great Valley Center
Superior Court of Pennsylvania
Decided Nov. 22, 1976.
Argued March 19, 1976.
369 A.2d 458
In summary, the majority, relying solely on Rule 1406, has approved a practice hitherto forbidden by the Act of May 28, 1937, supra,
I would affirm the conviction but vacate the sentence and remand for resentencing consistent with this opinion.
JACOBS and HOFFMAN, JJ., join in this opinion.
Joseph R. Polito, Jr., West Chester, for appellee.
JACOBS, Judge:
This appeal arises from the adjudication of the chancellor that the implied covenant of quiet enjoyment in the appellants’ lease was not breached by their lessor, Thomas Morelli, and the consequent failure of the chancellor to find damages in the form of relocation expenses and lost profits of appellants’ business.
In January and early February 1971, appellant Eugene Pollock purchased a dry cleaning business situated in Great Valley Shopping Center. In the process of acquiring the business, Mr. Pollock entered into a seven and one half year lease, with appellee as lessor, for the premises in which the dry cleaning establishment was located. At that time the shopping center was composed of two rectangular blocks of stores which met at their inside corners to form, roughly, an L shape, leaving a large open area for parking in the inside angle of the L and a small square of parking in the corner where the two blocks joined. Appellants’ store was in this corner immediately adjacent to the small parking area, recessed from the sidewalk fronting all the other shops in such a way as to permit access directly from both parking areas, some spaces of which were as close as 20 feet from the door. Appellants’ show windows and overhead sign were easily visible to potential customers using the shopping center. Conveniently for shoppers, the dry cleaning store was next door to a large supermarket.
In November of 1971, without prior notice to appellant, construction began for what appellee termed a “mini mall” which was to enclose and surround appellants’ establishment. Individual appellant, Eugene Pollock, immediately protested this development and continued to object directly to appellee. However, the con-
Appellants brought a complaint in equity seeking an injunction compelling appellee to relocate appellants’ cleaning business to a situation comparable to that previously enjoyed by them. As an alternative form of relief, they sought an injunction ordering the appellee to demolish the store in front of appellants’ shop or to lease that store to appellants. The final prayer was for an award of damages and such further relief as is required. Due to an agreement between the parties by the terms of which appellants vacated the premises and were released from their obligations under the lease, we will limit our consideration to the issues of liability and damages.
In every lease of real property there will be implied a covenant of quiet enjoyment. Raker v. G. C. Murphy Co., 358 Pa. 339, 58 A.2d 18 (1948); Minnich v. Kauffman, 265 Pa. 321, 108 A. 597 (1919). The covenant is between the landlord and his tenant and it is breached when a tenant‘s possession is impaired by acts of the lessor or those acting under him, or of the holder of a better title. No. 14 Coal Co. v. Pennsylvania Coal Co., 416 Pa. 218, 206 A.2d 57 (1965); Einfeld v. Shermer, 56 Pa.Super. 4 (1914). “[T]here is an implied covenant for the quiet enjoyment of the demised premises, and it is settled in this State that any wrongful act of the landlord which results in an interference of the tenant‘s possession, in whole or in part, is an eviction for which the landlord is liable in damages to the tenant.” Kelly v. Miller, 249 Pa. 314, 316-17, 94 A. 1055, 1056 (1915). Recovery for breach of this covenant has been allowed in Pennsylvania where a landlord has evicted the tenant by locking up the leased premises and denying the tenant access, Minnich v. Kauffman, supra; Stein v. McGinley, 123 Pa.Super. 122, 186 A. 231 (1936), and where the landlord so substantially altered some essential features of the premises as to render the property unsuitable for the purpose for which it was leased. Kelly v. Miller, supra; McCandless v. Findley, 86 Pa.Super. 288 (1926). In Kelly v. Miller, supra, the landlord sealed off doors by which the building leased by the tenant to be used as a theater was connected to the adjoining building, which was used for theater related purposes such as dressing rooms, storage and offices. Closing off the connecting apertures was found to detract from the demise to the tenant and violate the covenant of quiet enjoyment implied in the lease. “[The openings] were part of the demised premises at the date of the lease, and any change in them to the detriment of the tenant was a violation of the tenant‘s implied covenant for the quiet enjoyment of the property.” Kelly v. Miller, supra at 317, 94 A. at 1056.
Appellants point to the construction of the mini mall as a substantial alteration of the leased premises, detrimental to the business which the parties understood would be conducted thereon, and contend that this action by the landlord breached the covenant of quiet enjoyment. It is pointed out that when the store was leased for a dry cleaning establishment it was an outside store
The alteration of the premises in question is analogous to that in Kelly v. Miller, supra. In both situations the utility of the property leased is substantially decreased due to the basic structural changes wrought by the landlord. Just as in Kelly, where the feature that made the property desirable, the connecting doors, was eliminated, in the present case the attractive features of the demised premises were eliminated by the acts of the landlord. These acts substantially interfered with the tenant‘s anticipated use of the premises and represent a breach of the covenant of quiet enjoyment.1
In view of the decisions of the court of this Commonwealth and other jurisdictions which recognize a tenant‘s right to the use of the leased property without disruption by the landlord, it is clear that a remedy exists in favor of the appellant-tenants in the present case due to the landlord‘s activity in making structural changes detrimental to the tenant without obtaining his consent. Because the parties have already come to an agreement releasing the tenants from their rights and obligations under the lease, the equitable remedy of injunction is no longer appropriate. However, appellants can be awarded damages. Barndollar v. Groszkiewicz, 178 Pa.Super. 110, 113 A.2d 154 (1955). In cases of breach of the covenant of quiet enjoyment, or where the tenant is deprived of the beneficial enjoyment of the premises, it has been held that damages can be awarded for losses which can be proved. Minnich v. Kauffman, supra; Kelly v. Miller, supra. “The general rule laid down in the cases cited is, that the lessee may recover . . . for all losses which he can prove he has actually sustained, or which he will necessarily sustain, under the circumstances, as a result of the unlawful eviction. The measure of damages has been liberally extended to include even well established profits of the business . . .” Minnich v. Kauffman, supra, at 323, 108 A. at 598. Accord, Pierce v. Nash, 126 Cal.App.2d 606, 272 P.2d 938 (1954) (loss of prospective earnings); James v. Haley supra (recovery of any damages resulting from whole or partial eviction); Carner v. Shapiro, 106 So.2d 87 (Fla.App.1958) (damages for invasion of tenant‘s rights); Winchester v. O‘Brien, supra (injunctive relief denied but damages allowed for interference with tenant‘s beneficial enjoyment).
Damages for alleged lost profits however, cannot be awarded where they are merely speculative. Evidence must be introduced which forms a sufficient basis for estimating with reasonable certainty the amount of the lost anticipated profits. Exton Drive-In, Inc. v. Home Indemnity Co., 436 Pa. 480, 261 A.2d 319 (1969), cert. denied, 400 U.S. 819, 91 S.Ct. 36, 27 L.Ed.2d 46 (1970); Western Show Co. v. Mix, 308 Pa. 215, 162 A. 667 (1932); Restatement of Contracts § 331 (1932). Whereas recovery for the lost profits of an established business are considered ascertainable to a reasonable degree of certainty, Guady v. Seaman, 188 Pa.Super. 475, 149 A.2d 523 (1959), when a business is new and untried, courts have declared the measure of anticipated profits too speculative to provide a basis for an award of damages. Exton Drive-In, Inc. v. Home Indemnity Co.,
In the present case, appellants’ dry cleaning business was only in operation for nine months before the landlord commenced construction of the mall. Appellant sought to show a reduction of profits by introducing an accountant who testified that the store‘s profits did not increase according to his projections. The estimation of the anticipated increase was of necessity based only on the nine months of operation preceding the construction which allegedly marked the beginning of the decline of the business. The lower court found, and we agree, that the basis for the accountant‘s projections and estimation of increasing profits is not established in the record. No foundation is laid for the assumption that the business would increase annually or that it would increase at the percentage the accountant estimated from the first few months of operation. Consequently we cannot permit a recovery for lost profits.
However, our holding that the anticipated profits were too speculative to support an award of damages does not defeat appellant‘s claim for damages. There was evidence in the record relating to the cost of moving appellants’ enterprise to a suitable location. Appellant would be entitled to recover such an expense from the landlord whose actions compelled the relocation of the business, Minnich v. Kauffman supra, and the difficulties of proof involved in establishing such uncertain matters as future profits are not present. Guady v. Seaman, supra. Because the lower court neglected to consider this element of damages in its adjudication, the case must be remanded to determine appellants’ moving
Decree reversed and case remanded for proceedings consistent with this opinion.
SPAETH, J., files a concurring and dissenting opinion.
SPAETH, Judge, concurring and dissenting:
I agree with the majority that appellee should pay damages for denying appellant the quiet enjoyment of the demised premises. However, I disagree in two respects with the majority‘s instructions on remand.
1
The majority says that “the case must be remanded to determine appellants’ moving expenses, if any, and enter the same in judgment for appellants.” Majority opinion at p. 398. I assume, from the “if any,” that this means that the lower court is free on remand, either to enter judgment in the amount of the moving expenses appellants proved, or to say that because it does not (for some reason) accept that proof, it will enter judgment in a lesser amount or even for no amount at all. I do not think this fair to appellants. Appellants proved their moving expenses. The proof was not contradicted; the lower court simply ignored it. The least we should do is remand with instructions that judgment be entered for appellants in the amount of the moving expenses proved, specifically for $10,000.00.
2
The majority characterizes appellants’ proof of loss of anticipated profits as “too speculative to support an award of damages.” Majority opinion at p. 398.
While it is true that appellants had operated the business for only nine months before appellee started build-
The majority seems to reach its conclusion that the business was “new and untried” by a comparison of appellants’ business with the business described in Exton Drive-In, Inc. v. Home Indemnity Co., 436 Pa. 480, 261 A.2d 319 (1969), cert. denied, 400 U.S. 819, 91 S.Ct. 36, 27 L.Ed.2d 46 (1970). Such a comparison leads me to an opposite conclusion. In Exton the business had never been in operation before the time of the alleged breach of contract. Thus appellants’ business has been operated twenty-three months longer than that in Exton; I suggest that is sufficient to remove it from the category of “new and untried.” The majority also cites Guady v. Seaman, 188 Pa.Super. 475, 149 A.2d 523 (1959). There we held that testimony as to lost profits was admissible when based on three periods of actual operation of the business in question: eight and one-half months at a first location; two weeks and “two or three days” at the location where the defendant-lessor allegedly breached his duty to supply water; and an indefinite period of time (from sometime in 1954 until the time of trial) at a third location. The present case thus falls between the poles of Exton and Guady. For me, it is closer to Guady than to Exton. I would therefore hold that appellants presented sufficient proof of lost profits.
Finally, if in fact the basis for the accountant‘s projections was inadequate, the fault was largely appellee‘s. The majority says, “No foundation is laid for the assumption that the business would increase annually . . .” Majority opinion at p. 398. A foundation could have been laid if appellee had not within less than a year entirely, and in the most high-handed way, altered
In my opinion, the fairest way to handle this case would be to remand for a new trial limited to damages. We regularly do that in other cases where the liability has been clearly established but the damages awarded are clearly inadequate. Rosen v. Slough, 212 Pa.Super. 398, 402, 242 A.2d 898, 900 (1968). I would do it here.