Penn-Aire Aviation v. Adapt Appalachia ( 2017 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PENN-AIRE AVIATION, INC. IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
ADAPT APPALACHIA, LLC.
No. 565 WDA 2016
Appellant
Appeal from the Judgment Entered April 12, 2016
In the Court of Common Pleas of Venango County
Civil Division at No(s): 2012 - 01252
BEFORE: BOWES, OLSON AND STRASSBURGER,* JJ.
MEMORANDUM BY BOWES, J.: FILED JULY 26, 2017
Adapt Appalachia, LLC (“Adapt”) appeals from the April 12, 2016
judgment entered in favor of Penn-Aire Aviation, Inc. (“Penn-Aire”). After
careful review, we affirm in part, reverse in part, and remand for a new trial
limited to damages.
In early April 2012, Adapt’s managing member, Lorenzo Cola,
contacted Bruce Taylor, the President of Penn-Aire, about leasing space in
the Hi-Tone Building located at the intersection of Otter and 12 th Streets in
Franklin, Venango County, Pennsylvania. The parties met, and shortly
thereafter, Mr. Taylor hired Ron Matthews of Matthews Construction and
Painting to clean and renovate the building as Mr. Taylor had a “prospective
tenant.” N.T. Non-Jury Trial, 8/11/15, at 73.
The record reflects that the premises had been occupied by a dry
cleaner until November 2011. The space had no heat or air conditioning.
* Retired Senior Judge assigned to the Superior Court.
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According to Mr. Matthews, the existing walls would have to be demolished
and replaced to accommodate any tenant. In addition, although there was a
bathroom on the premises, new plumbing and fixtures were required. Thus,
a build out of the space was contemplated for any tenant.
After four or five meetings with Mr. Cola, Mr. Taylor sent him a letter
dated April 30, 2012, proposing a three-year, triple net lease,1 starting July
1, 2012, with an option to renew for two years, and a monthly rent of
$3,000. Exhibit 10. Mr. Matthews met with Mr. Cola prior to applying for a
building permit on May 1, 2012. He subsequently met with Mr. Cola and/or
Mr. Ream, another member of Adapt, eight or ten times over the next few
weeks to discuss Adapt’s requirements for electrical, computer, and air
conditioning. The contractor relayed that Mr. Cola requested soundproof
windows, a level interior cement floor, and a new walk and ramp, all of
which were installed after Mr. Taylor approved the expenditures. Id. at 78.
Mr. Matthews’ work was directed by Mr. Taylor. Id.
On or about May 10, 2012, Mr. Taylor asked his attorney, Henry W.
Gent, III, Esquire, to prepare the lease. A draft lease was sent to Sterling
Ream on May 15, 2012. The lease provided that “Prior to the
Commencement Date, Lessor shall, at Lessor’s sole cost and expense,
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1
A triple net lease required lessee to pay one-third of taxes and insurance.
Herein, taxes would amount to $282.88 and insurance would cost $703.66
per year.
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renovate the Premises for use as business offices.” That first draft, as well
as successive drafts, also contained a provision that both parties were
required to sign the lease in order for it to be effective. See Exhibit 2. Mr.
Ream marked up the draft lease with suggested additions and changes and
returned it.
Attorney Gent testified that when he first prepared the lease, he was
unaware that Adapt expected a June 1, 2012 effective date, but a
commencement date for payment of rent of August 1, 2012. In a June 5,
2012 email, Mr. Ream asked Attorney Gent when they should expect to
receive the revised lease, and requested that, since they were past June 1,
“which we thought would be the effective date,” that he make the rent
commencement date sixty days after the new effective date. Exhibit 3. A
June 5 draft lease contained a floor plan for the interior space, but did not
reflect a new commencement date. It was represented that the premises
would not be ready for occupancy until August 1, 2012.
After Adapt offered additional comment on the proposed lease,
another draft was prepared and forwarded to Adapt with correspondence
dated June 12, 2012. On July 2, 2012, Mr. Cola advised Mr. Taylor that he
was having trouble with the company and Adapt was not going to sign the
lease. In response, Mr. Taylor did not suspend the renovations because Mr.
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Ream’s recent purchase of chairs and cubicles from him led him to believe
that Adapt still intended to lease the premises.2 After July 2, the parties’
discussions resumed regarding the lease, and Adapt made some additional
requests.
On July 10, Attorney Gent’s paralegal forwarded a revised lease to
Adapt, and noted in the cover email that the lease was modified to reflect
that August and September would be rent-free and that the lease would
begin on October 1, 2012. The email also related that Mr. Taylor had not
reviewed the changes yet and that the revised lease was being sent to him
at the same time. The correspondence concluded that, if Mr. Cola had any
comments with regard to the revisions, he should let them know.
Otherwise, he was asked to execute two originals and return them with a
check for the security deposit.
Mr. Cola emailed additional suggested changes on July 17, 2012, one
of which was a request for exclusive parking. After reviewing the suggested
revisions with Mr. Taylor, Attorney Gent conveyed that parking would be on
a non-exclusive basis, but assured Mr. Cola that there would be adequate
parking to meet Adapt’s needs. The attorney forwarded a revised lease
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2
By certified mail dated July 6, Attorney Gent advised Adapt that the lease
was agreed to and that Mr. Taylor had made significant improvements to the
property requested by Adapt in reliance upon that representation. Adapt
was unaware of the contents of that correspondence as it did not retrieve
the certified mail, and the letter was returned to Attorney Gent.
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consistent with that representation, and asked Mr. Cola to arrange for
execution of the lease. Mr. Cola responded via email, “Okay thank you.”
One week later, on July 25, Attorney Gent’s office asked Mr. Cola and
Mr. Ream to “advise when the attached Lease will be signed on behalf of
Adapt. Subsequently, we will arrange for execution on behalf of Penn-Aire
and return one original to you.” See Exhibit 6 (Email 7/25/12, at 3). When
Attorney Gent did not receive a response, he advised Mr. Cola and Mr. Ream
via an August 1, 2012 email that “the leased premises are ready for
occupancy and the renovations requested by Adapt have been completed.”
Exhibit 6. He recited therein that, since Penn-Aire had not received a
security deposit from Adapt, Penn-Aire assumed that Adapt did not intend to
lease the premises. Adapt did not respond.
Penn-Aire commenced this action by praecipe for writ of summons on
September 26, 2012. In its January 16, 2013 complaint, Penn-Aire alleged
that the correspondence between the parties, together with the unexecuted
lease, formed the final lease agreement. It averred that Adapt breached the
lease agreement by failing to pay rent due and owed and sought damages
representing the rental payments. Penn-Aire also pled that, based on
Adapt’s express commitment to lease the premises, it was entitled to
recover costs and expenses totaling more than $75,000 that it expended to
renovate the premises to Adapt’s specifications, together with attorney fees.
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Adapt filed an Answer specifically denying that any agreements,
written or otherwise, were reached. Answer, 2/15/13, at ¶8. Furthermore,
Adapt denied that it demanded improvements and maintained that all
negotiations regarding improvements to the premises were contingent upon
a lease. It denied that it promised to lease the premises, that a final
agreement was reached, or that a lease was ever entered into. Id. at ¶¶8,
9. Adapt maintained that unresolved issues led to the failure to finalize the
lease, among them: the duration of the lease, the amount of the rent, and
the availability of exclusive parking. In New Matter, Adapt pled, inter alia,
that Penn-Aire had already commenced renovating the space at issue before
Adapt inquired about leasing the space. It averred that there was no
agreement as to the final terms of any lease, and any alleged oral
agreement was barred by the Statute of Frauds.
Penn-Aire countered that the aforementioned issues were pretexts that
were asserted only after the lawsuit was filed and never raised during the
negotiations or communicated to Penn-Aire. Furthermore, Penn-Aire
maintained that Adapt made very specific requests for the build out, which
Mr. Taylor undertook in reliance upon Adapt’s representations that it would
lease the property.
At the non-jury trial, Mr. Taylor acknowledged that the premises
required renovation in order to be suitable for any tenant, but maintained
that the renovations were more elaborate than necessary. N.T. Non-Jury
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Trial, 8/12/15, at 11. He testified that he would not have made these same
improvements if he did not have an agreement for rent at $3000 per month
for at least three years. Id. at 27. He also stated that he agreed to a later
commencement date on the lease because Mr. Ream bought twenty-six call
center cubicles that Mr. Taylor possessed in Oil City, which Mr. Taylor
assumed would be used in the leased space, and which contributed to his
“impression there would not be any problem on the lease.” Id. at 22.3
At the close of Penn-Aire’s case, Adapt moved for a non-suit “based on
the fact that [Penn-Aire] has acknowledged and admitted that the situation
was controlled by a written lease,” that there were ongoing negotiations
regarding the lease, that the lease provided that it was not effective unless
executed by both parties, and it was not so executed. N.T., 8/12/15, at 35.
In opposition, Penn-Aire argued that the parties had reached an agreement
on the essential terms, as evinced in the emails and correspondence, and
Adapt breached it. Penn-Aire argued further that Adapt’s participation in the
build out reflected an understanding and agreement that it was going to
lease the premises. Id. at 36. Adapt countered that Penn-Aire could not
use the build out as a rationale for why there was a lease. Furthermore,
since Penn-Aire relied upon the lease as the essential agreement, and that
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3
Mr. Taylor assumed that the furniture was intended for the Venango
County space, but the cubicles were actually purchased and installed in
Adapt’s Mercer County office. N.T. Non-Jury Trial, 8/12/15, at 23.
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agreement required an executed lease in order to be effective, Adapt
contended that Penn-Aire should not have commenced the build out without
a signed lease. The court deferred its decision on the motion. The court
similarly deferred its ruling when Adapt moved for a directed verdict on the
same basis at the close of the evidence.
The trial court issued its findings on October 28, 2015. It found that
there was no legally enforceable contract “as the negotiations were ongoing
and . . . there were still significant issues that had not been agreed upon and
terms would be changed.” Findings, 10/28/15, at 1. The court looked at
the language of the proposed lease, strictly construed the language against
the drafter, Penn-Aire, and concluded “it was the intent of all parties
throughout this process that until a full and final agreement had been
reached and signed by all parties[,] that it was simply an offer and
negotiations and the contract was not executed and created.” Id. at 2.
Nonetheless, the court found that Adapt’s members “directed and requested
significant alterations to the building to fit their needs[,] . . . that they were
actively involved in the design and request for said alterations[,]” and that
Penn-Aire relied on the indications that Adapt was going to lease the
property. Id. at 2. The court found Adapt liable for all costs associated with
the “build out” of the premises to suit Adapt’s specifications and awarded
$75,456.23 in damages, representing the entire cost of the build out,
together with attorney fees.
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Adapt filed a motion for post-trial relief seeking judgment n.o.v.
(JNOV), a new trial, or a remittitur, which the court denied. Adapt appealed
on April 18, 2016, timely filed its Pa.R.A.P. 1925(b) concise statement of
errors complained of on appeal, and the trial court issued its Rule 1925(a)
opinion. Adapt presents two questions for our review:
1. Whether the trial court erred in entering judgment in favor
of Appellee/Plaintiff and against Appellant/Defendant,
Adapt Appalachia, LLC in the amount of $75,456.23 based
on a theory that the Appellee/Plaintiff, in making
alterations to a commercial property, relied on
Appellant/Defendant’s indications that it was going to lease
the property.
2. Whether the trial court erred in entering judgment in favor
of Appellee/Plaintiff for renovation costs where there was
no evidence entered that allowed for separation of any
renovation costs unique to the alleged requests made by
Appellant/Defendant, from the renovation costs
Appellee/Plaintiff would have incurred for any other tenant.
Appellant’s brief at 4.
Adapt’s first issue is a challenge to the trial court’s refusal to grant
JNOV on Penn-Aire’s promissory estoppel claim. In reviewing the trial
court’s denial of JNOV,
we must consider the evidence, together with all favorable
inferences drawn therefrom, in a light most favorable to the
verdict winner. Our standard of review when considering
motions for a directed verdict and judgment notwithstanding the
verdict are identical. We will reverse a trial court’s grant or
denial of a judgment notwithstanding the verdict only when we
find an abuse of discretion or an error of law that controlled the
outcome of the case. Further, the standard of review for an
appellate court is the same as that for a trial court.
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Polett v. Public Communications, Inc., 83 A.3d 205, 211
(Pa.Super. 2013) [(en banc)].
Drake Mfg. Co., Inc. v. Polyflow, Inc., 109 A.3d 250, 258-59 (Pa.Super.
2015).
When reviewing a case tried by a judge sitting without a jury, we are
limited to determining whether the trial court's factual findings are
supported by competent evidence, and whether the court properly applied
the pertinent law. See Prestige Bank v. Inv. Properties Group, Inc.,
825 A.2d 698, 700 (Pa.Super. 2003). Those findings must be afforded the
same weight and effect as a jury verdict, and will not be disturbed on appeal
absent an error of law or an abuse of discretion. Id. Furthermore, absent
error or abuse of discretion, we are bound by the trial court's credibility
determinations. See Viener v. Jacobs, 834 A.2d 546, 554 (Pa.Super.
2003).
After concluding that there was no enforceable contract between the
parties, the trial court found that “Adapt essentially promised to enter into
the lease, through its communications and assistance in the pre-execution
build out of the office.” Trial Court Opinion, 6/3/16, at 5. The court
reasoned that Adapt’s “[a]ssisting in the build out would reasonably lead a
party, such as Penn-Aire, to believe that Adapt intended on entering the
lease.” Id. The only way to avoid injustice, according to the trial court, was
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to enforce the promise to the extent of the renovations. Thus, liability
rested on a promissory estoppel theory.
Promissory estoppel is a doctrine invoked when there is no enforceable
agreement between the parties due to lack of consideration. To avoid
injustice, the doctrine renders “enforceable a promise made by one party to
the other when the promisee relies on the promise and therefor changes his
position to his own detriment.” Restatement (Second) Contracts § 90; see,
e.g., Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa.
1997).
In order to maintain an action for promissory estoppel, “the aggrieved
party must show that 1) the promisor made a promise that he should have
reasonably expected to induce action or forbearance on the part of the
promisee; 2) the promisee actually took action or refrained from taking
action in reliance on the promise; and 3) injustice can be avoided only by
enforcing the promise.” Crouse v. Cyclops Indus., 745 A.2d 606, 610 (Pa.
2000) (quoting Shoemaker, supra at 1006).
In Pennsylvania, promissory "statements" must objectively evidence a
sufficient commitment or assurance on which a reasonable person would
rely. "The promisor is affected only by reliance which [the promisor] does or
should foresee, and enforcement must be necessary to avoid injustice."
Paul v. Lankenau Hosp., 543 A.2d 1148 (Pa.Super. 1988) (reversed on
other grounds 569 A.2d 346 (Pa. 1990)). “[M]isleading words, conduct or
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silence by the party against whom the estoppel is asserted" constitute a
sufficient "promise" to invoke the doctrine. Novelty Knitting Mills, Inc. v.
Siskind, 457 A.2d 502, 503 (Pa. 1983).
Preliminarily, Adapt contends that Penn-Aire did not plead or argue
promissory estoppel in response to Adapt’s motion for nonsuit or motion for
directed verdict. Penn-Aire counters first that Adapt failed to preserve this
claim in its motion for post-trial relief. Second, since Adapt’s motions for
nonsuit and directed verdict were directed solely to the issue of whether
there was an enforceable lease agreement, Penn-Aire maintains that Adapt
did not preserve entitlement to JNOV on the promissory estoppel claim.
The threshold issue before us is whether sufficient facts were pled and
proved to apprise Adapt that promissory estoppel was at issue. See Fudula
v. Keystone Wire & Iron Works, Inc., 464 A.2d 446, 448 (Pa.Super.
1983) (noting facts, not theories, are to be pleaded, and finding sufficient
facts pled to support court’s application of promissory estoppel). A plaintiff
is not obligated under the Pennsylvania Rules of Civil Procedure to state the
legal theory or theories underlying his complaint. Del Conte v. Stefonick,
408 A.2d 1151, 1153 (Pa.Super. 1979). Pa.R.C.P. 1019(a) requires a
plaintiff to plead only allegations of the "material facts on which a cause of
action . . . is based."
The record reveals the following. Penn-Aire alleged that, after
exchanging drafts of a proposed lease, “[e]ventually, the parties reached an
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agreement” of terms acceptable to both parties, as evidenced in the email
correspondence between the parties and the draft lease. Complaint,
1/16/13, at ¶¶ 11, 12. Penn-Aire also pled, however, that “it agreed to
make and pay for the improvements requested by Defendants but only so
long as Defendants committed to entering into a lease agreement for the
Subject Premises.” Id. at ¶9. It further averred that, “Due to the
Defendants’ express commitment to lease the Subject Premises, Plaintiff
incurred costs and expenses to renovate the Subject Premises.” Id. at ¶13.
It alleged that Adapt was obligated to pay as reliance damages the amounts
expended to renovate the property. Id. at ¶17. The trial court found that
the Complaint alleged an “express commitment to lease the Subject
Premises[,]” which, together with Penn-Aire’s allegations that it relied upon
that promise in undertaking the renovation, was sufficient to support a cause
of action sounding in promissory estoppel. Trial Court Opinion, 6/3/16, at 8.
We agree. Furthermore, the record contains additional indications that
Penn-Aire was proceeding under that theory. Adapt filed a motion for
summary judgment based on the statute of frauds. In opposition to the
motion, Penn-Aire argued that the statute of frauds would not affect its
“cause of action for reliance damages.” Plaintiff’s Supplemental Brief in
Opposition to Summary Judgment, 9/30/13, at 2. Penn-Aire also supplied
Mr. Taylor’s affidavit to the effect that he agreed to pay for the requested
renovations based on Adapt’s express commitment to rent the premises.
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Thus, we find no merit in Adapt’s position that promissory estoppel was not
sufficiently pled or argued to support relief.
Having concluded that facts supporting promissory estoppel were pled,
thus placing Adapt on notice that Penn-Aire was seeking reliance damages
based on that theory, we turn to Penn-Aire’s contention that, since Adapt did
not move for a nonsuit or directed verdict on the promissory estoppel claim,
it is not entitled to JNOV on that claim. The law is well settled that a trial
court may only grant post-trial relief if the “grounds therefor . . . were raised
in pre-trial proceedings or by motion, objection, point for charge, request for
findings of fact or conclusions or law, offer of proof or other appropriate
method at trial.” Pa.R.C.P. 227.1(b)(1). An oral or written motion for
nonsuit at the close of the plaintiff’s case, Pa.R.C.P. 230.1(c), or a Rule
226(b) motion for directed verdict at the close of all the evidence, will also
suffice to preserve issues. See Haan v. Wells, 103 A.3d 60 (Pa.Super.
2014). However, in order “to preserve the right to request a JNOV post-
trial, a litigant must first request a binding charge to the jury or move for a
directed verdict or a compulsory non-suit at trial.” Youst v. Keck's Food
Serv., 94 A.3d 1057, 1071 (Pa.Super. 2014).
Adapt moved for a non-suit and directed verdict. However, the
motions implicated only the breach of contract claim based on the lease
agreement and did not challenge the promissory estoppel claim. Thus,
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Adapt waived any sufficiency challenge to that claim, and we affirm the trial
court’s refusal to grant JNOV on that alternative basis.
Moreover, even if we did not find Adapt’s claim waived, it would not
entitle Adapt to relief. Adapt contends that the language in the proposed
lease to the effect that “there are no representations, inducements,
promises or agreements, oral or otherwise between the parties[,]”precludes
any finding of a promise and Penn-Aire’s “supposed reliance could not have
been reasonable as a matter of law.” Appellant’s brief at 10. Penn-Aire
relies upon Shoemaker, supra, in support of its contention that the
reasonableness of reliance is a question of fact for the factfinder.
This Court reaffirmed in Eigen v. Textron Lycoming Reciprocating
Engine Div., 874 A.2d 1179 (Pa.Super. 2005), a fraud in the inducement
case, that justifiable reliance upon the representation of another must be
reasonable, and that such reliance is a question of fact. In an action on an
insurance policy based on an oral representation that differed from
provisions in the written policy, we held that an insured was not barred from
asserting that he justifiably relied upon the oral representations. Toy v.
Metro. Life Ins. Co., 863 A.2d 1 (Pa.Super. 2004).
Next, Adapt alleges that there was no proof that Penn-Aire actually
relied upon Adapt’s representations that it was going to lease the premises.
It points to Mr. Taylor’s admission that, even before a draft lease was
tendered, he engaged Mr. Matthews to build out the space.
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The trial court, sitting as the fact-finder, found that “[Penn-Aire] relied
on the indications that [Adapt was], in fact, going to lease said properties in
making the alterations specific to their needs.” Findings, 10/26/15, at 2.
We must give the trial judge’s findings in this non-jury case the same
deference we would accord to a jury verdict. Olmo v. Matos, 653 A.2d 1,
5-6 (Pa.Super. 1994). Since the renovations had to be completed prior to
Adapt’s occupancy of the leased premises, and Adapt initially desired a June
1, 2012 effective date, it was not unreasonable for Penn-Aire to rely upon
Adapt’s promise to enter the lease and commence the build out while the
lease terms were being finalized. The trial court concluded just that: “Adapt
essentially promised to enter into the lease, through its communications and
assistance in the pre-execution build out of the office[,]” which “induc[ed]
Penn-Aire to undertake some of its obligations of the lease prior to
execution.” Trial Court Opinion, 6/3/16, at 5.
Finally, Adapt contends that Penn-Aire failed to prove that Adapt
should have expected that its words or actions would induce Penn-Aire to
incur the costs of renovation, an unlikely scenario given the terms of the
lease. This position is untenable where Adapt’s members met with Penn-
Aire’s contractor, advised him of their needs, and observed the build out of
the premises. For all of the foregoing reasons, we find no merit in Adapt’s
challenge to the court’s application of promissory estoppel as the basis for
relief.
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Adapt’s second issue is a challenge to the trial court’s award of
damages and to the amount of those damages. It contends that Penn-Aire
was only entitled to compensation for the costs of the “elaborate”
renovations it undertook in reliance upon Adapt’s promise to lease the
premises. Although Penn-Aire had the burden of proving those damages
with reasonable certainty, Adapt maintains that it neglected to parse out the
expenses associated with Adapt’s unique renovations and those that were
required for any tenant. Adapt contends that the trial court’s award of all
the damages of the renovation was improper and requires a new trial.
With respect to a request for a new trial, our standard and scope of
review follows:
To review the two-step process of the trial court for
granting or denying a new trial, the appellate court must also
undertake a dual-pronged analysis. A review of a denial of a new
trial requires the same analysis as a review of a grant. First, the
appellate court must examine the decision of the trial court that
a mistake occurred.
At this first stage, the appellate court must apply the
correct scope of review, based on the rationale given by the trial
court. There are two possible scopes of review to apply when
appellate courts are determining the propriety of an order
granting or denying a new trial. There is a narrow scope of
review: where the trial court articulates a single mistake (or a
finite set of mistakes), the appellate court's review is limited in
scope to the stated reason, and the appellate court must review
that reason under the appropriate standard.
Conversely, if the trial court leaves open the possibility
that reasons additional to those specifically mentioned might
warrant a new trial, or orders a new trial in the interests of
justice, the appellate court applies a broad scope of review,
examining the entire record for any reason sufficient to justify a
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new trial. Even under a narrow scope of review, the appellate
court might still need to examine the entire record to determine
if there is support for any of the reasons provided by the trial
court.
The appropriate standard of review also controls this
initial layer of analysis. If the mistake involved a discretionary
act, the appellate court will review for an abuse of discretion. If
the mistake concerned an error of law, the court will scrutinize
for legal error. If there were no mistakes at trial, the appellate
court must reverse a decision by the trial court to grant a new
trial because the trial court cannot order a new trial where no
error of law or abuse of discretion occurred.
Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 891 (Pa.Super. 2011).
The trial court found, as a matter of law, that Penn-Aire was entitled to
recover reliance damages, i.e., the amount it spent improving the property
to meet Adapt’s specifications. It specifically rejected Adapt’s position that
Penn-Aire was not entitled to recover all of the costs of the renovations it
undertook. The court reasoned: “Even assuming it was true that the build
out would be necessary regardless of the prospective tenant, Penn-Aire
undertook specific renovations at the specific time due to Adapt’s promises
to enter into the contract.” Trial Court Opinion, 6/3/16, at 5. The court
added that reliance damages included the expenses incurred by the
promisee in reliance upon the promise, and since Penn-Aire undertook the
build out in reliance upon Adapt’s promise, it was “immaterial if any of the
costs of the build out would have been required for another tenant.” Id. at
6.
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We disagree. The reliance interest is an attempt to place the promisee
back in the position in which he would have been had the promise not been
breached and should be only the amount necessary to prevent injustice.
The damage award herein was a windfall for Penn-Aire. Penn-Aire retained
the benefit of a fully renovated and ready-to-lease space, which was
undoubtedly of greater value than the unimproved space. In addition, it was
awarded damages of $75,000, the entire cost of making the renovations.
Mr. Taylor and his contractor acknowledged that many of the
renovation expenses would have been incurred to remediate the property
just to make it habitable for any tenant. The rental space had no heat or air
conditioning, old windows, an uneven concrete floor, walls that required
demolition and replacement, and the existing bathroom needed new
plumbing and fixtures. Mr. Taylor maintained, however, that he would not
have spent as much on the build out without the assurance of the multi-year
$3,000 per month lease. In other words, the promise of a multi-year $3,000
lease induced him to spend more than he normally would have spent. 4 The
difference between what Mr. Taylor would have spent and the amount
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4
We note that Penn-Aire pled that it relied on indications that Adapt was
going to lease the property when it made alterations specific to Adapt’s
needs. See Reply to New Matter, 2/27/13, at ¶¶ 7, 8.
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actually spent in reliance upon Adapt’s promise is the proper starting point
for calculating reliance damages.
Additionally, evidence was adduced that Penn-Aire was able to re-lease
the property to another tenant without substantial modification and was
receiving rental income. In short, by awarding damages in the full amount
of the improvements, and refusing to acknowledge and offset Penn-Aire’s
retention of the benefit of those improvements, the trial court placed Penn-
Aire in a far better position than it would have been in had the promise not
been breached. For these reasons, we remand for a new trial limited to
damages.
Judgment affirmed in part and reversed in part, and case remanded
for further proceedings consistent with this decision. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/26/2017
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