Stobba Residential Assoc. v. FS Rialto ( 2023 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT OP 65.37
STOBBA RESIDENTIAL ASSOCIATES, : IN THE SUPERIOR COURT OF
L.P. AND STOBBA ASSOCIATES, L.P. : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 487 EDA 2023
FS RIALTO 2019-FL 1 HOLDER, LLC :
AND RIALTO CAPITAL ADVISORS, :
LLC :
Appeal from the Order Entered February 7, 2023
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 210602543
BEFORE: NICHOLS, J., MURRAY, J., and McCAFFERY, J.
MEMORANDUM BY McCAFFERY, J.: FILED DECEMBER 11, 2023
Stobba Residential Associates, L.P. and Stobba Associates, L.P.
(collectively Borrower) appeal from the order entered in the Philadelphia
County Court of Common Pleas granting summary judgment in favor of FS
Rialto 2019-FL 1 Holder, LLC and Rialto Capital Advisors, LLC (collectively
Lender), in this action seeking damages for, inter alia, breach of contract in
connection with a mortgage loan. On appeal, Borrower argues the trial court
erred or abused its discretion in granting summary judgment to Lender when
there are genuine issues of material fact concerning whether Lender breached
a duty of good faith by failing to respond to Borrower’s forbearance request,
whether Lender committed a material breach of the Loan Agreement by
instituting a money judgment action, and whether Lender tortiously interfered
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with Borrower’s contract with a third-party lessee. Borrower also contends
the trial court erred in granting summary judgment on its declaratory
judgment claim, which was contingent on the other claims. For the reasons
below, we affirm.
The relevant facts underlying this appeal are aptly summarized by the
trial court as follows:
On August 2, 2019, Lender’s predecessor in interest FS Creit
Originator LLC made a loan to Borrower in the amount of
$24,250,000. The Loan is evidenced by a Loan Agreement (“The
Loan Agreement”) and a Promissory Note (the “Note”) and is
secured by an Open-End Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing (“Mortgage”).
Borrower also executed a Deposit Account Control Agreement (the
“DACA”).
The Loan Agreement requires Borrower to make monthly
payment to Lender on each payment date. The Loan Agreement
provides that an “Event of Default” occurs if, “any portion of the
Debt is not paid on or before the date the same is due and
payable.”
Borrower granted Lender a security interest in the Property
defined to include specific units within Headhouse Flats and
Abbots Square developments in Philadelphia, and all Leases and
Rents in connection with the Property. To protect the security
interest in the Property, Borrower is required to have all tenants
deposit rents into the DACA Account at Wells Fargo. The contents
of DACA are to be disbursed into the Cash Management Account
at Wells Fargo daily.
Borrower has not made any payments on the Loan since
December 2020. Additionally, the Loan matured on August 9,
2022[,] and Borrower has not paid the Loan in full. Borrower
contends its performance under the Loan Agreement is excused
due to Lender’s pre occurring breaches.
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Pending Lawsuits
On May 21, 2021, Lender commenced an action alleging
breach of contract against Borrower. Lender alleges that Borrower
breached the Loan Agreement by failing to make the required
monthly payments, failing to provide financial reporting and
misrepresenting the status of tenant leases at the Property.
Borrower filed an Answer with New Matter and Counterclaims.
In June 2021, Lender filed a Petition to Appoint a Receiver.
The [trial c]ourt denied the Petition to Appoint a Receiver but
ordered Borrower to provide Lender and the Court with certain
records and required that Borrower instruct the tenants to pay
rent as required by the Loan Agreement. The Order has been
appealed to the Pennsylvania Superior Court by Borrower and
Lender.[1]
Lender also filed an action to Confess Judgment against the
Guarantor Eric Blumenfeld, which is currently stayed pending the
resolution of the Lender Action and this action. Additionally,
Lender filed a Mortgage Foreclosure action against Borrower.
The Giant Lease
On March 9, 2016, Fresh Formats, LLC (“Fresh Formats”)
entered into a Lease with Borrower for commercial space at
Abbotts Square to operate a “Bfresh” Market. The Fresh Formats’
Lease was assigned to Giant Food Stores, LLC (“Giant”) on
December 31, 2017. Giant agreed to accept the premises “as is”
and began paying rent to Borrower.
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1 Both Lender and Borrower appealed, and on March 1, 2023, a panel of this
Court vacated the trial court’s order and remanded for further proceedings.
See SKW-B Acquisitions Seller C, LLC v. Stobba Residential Assocs.,
L.P., 73 EDA 2022 & 101 EDA 2022 (unpub. memo. at 2) (Pa. Super. Mar. 1,
2023). First, the panel vacated the trial court’s decision to grant alternate
relief to Lender because Lender only requested “an order for a receivership[;]”
thus, the panel concluded there was “no proper foundation in the record for
alternative relief.” Id. at 12. With regard to Lender’s request for the
appointment of a receiver, the panel determined the trial court did not
properly consider “whether appointment of a receiver is warranted under
common law.” Id. at 17. Accordingly, the panel remanded the matter for
further proceedings. See id.
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In December 2019, Giant began to fit the space for use as
a grocery store and discovered the leased space was not serviced
by 277/480-volt, 800 amp electric, the electric service Giant
required for its purposes. In March 2020, due to the COVID 19
Pandemic, the City of Philadelphia and the Commonwealth of
Pennsylvania issued orders shutting down Giant’s fitting out of the
space. Additionally, construction stalled because PECO required
the entire building be converted to High Tension Service to
accommodate Giant’s electric needs.
On August 31, 2020, Giant issued a notice of default to
Borrower because Borrower failed to provide Giant with 277/480-
volt, 800 amp electric service. On November 20, 2020, Giant
stopped paying rent to Borrower and on December 23, 2020,
Giant filed a lawsuit against Borrower in the Eastern District of
Pennsylvania alleging breach of the Lease.
On February 18, 2021, during an email exchange between
Borrower and Lender, Borrower provided an update to Lender
regarding the Giant electric issue including the lawsuit filed by
Giant against Borrower. At Lender’s request, Borrower provided
Lender with documents including its engineering report, Giant’s
default letter, engineering drawings and the Lease. Thereafter,
the following emails were exchanged between Lender and
Borrower regarding the Giant issue:
─ On March 1, 2021, Lender emailed Borrower as follows:
“we [Lender] have some contacts at Giant that we have
worked with a lot in the past. Do you mind if we [Lender]
reach out to them to discuss their thoughts on what’s going
on here?[”]
─ On March 1, 2021, Borrower responded, “. . . if you feel
that a conversation between Rialto [Lender] and Giant will
be helpful then please do so . . . I hope the conversation is
fruitful.”
─ On March 2, 2021, Lender sent an email to Giant stating
in part, “. . . We [Lender] are involved in this deal as the
lender and understand that there is a little bit of a
disconnect regarding the delivery of the specific electrical
service that you require, so we wanted to quickly touch
base[ ] with you on this. Might you have some time this
week for a quick call?”
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─ On March 4, 2021[,] 10:36 a.m., after having received no
response from Giant to the March 2, 2021 email, Lender
sent a follow up email.
─ On March 4, 2021, 10:35 a.m., Borrower emailed Lender
stating that after speaking with Blumenfeld, “and apologies
for the reversal but Blumenfeld did not want lender/tenant
communications. We have an opportunity to right size our
process and he feels your involvement might skew our
process.”
─ On March 4, 2021, at 10:51 a.m., Lender emailed Giant
and asked them to “. . . please disregard the request for the
call . . . .”
─ On March 4, 2021[,] at 11:33 a.m., Giant emailed Lender
and apologized for the delayed response and stated “. . .
After talking with counsel I’ve been advised not to comment
because of pending litigation. I would suggest you seek a
copy of the pleadings.”
Kimley-Horn, an engineering firm hired by Lender regarding
the electric issue, conducted an onsite investigation of the Giant
space on March 12, 2021[,] and issued a report to Lender on April
12, 2021.
On May 20, 2021, Borrower emailed Lender with the following
update:
Borrower provided Lender with correspondence from Giant’s
Chief engineer outlining the additional requirements from
PECO over and above the cost of installing the HT service at
Abbots Square. We [Borrower] believe that the
approximate cost of these 2 components will be in the range
of $500k. We are currently working with the local code
officials to see if some concessions can be made to address
Giant’s concerns as outlined in the letter. It is our intention
to resolve these issues and then agree to split these costs
with Giant to move forward. Eric [the Guarantor] has asked
that I keep you advised as to the progress on a regular
basis.
On July 1, 2021, Giant voluntarily dismissed the action filed
against Borrower without prejudice and entered into a consensual
Stay and Tolling Agreement to attempt resolution of their dispute
consensually.
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Forbearance Requests
The Borrower submitted two requests to Lender for loan
forbearance, [on] April 27, 2020[,] and September 3, 2020.
Lender received the requests, requested information to support
the requests but, Lender never presented Borrower with a
forbearance agreement.
This Action
On July 1, 2021, Borrower filed this action against Lender
(“Borrower Action”). Lender filed Preliminary Objections to the
Complaint which were overruled by the [trial c]ourt. On January
18, 2022, Borrower filed an Amended Complaint. The Amended
Complaint alleges causes of action for breach of contract/breach
of the duty of good faith and fair dealing (count I), tortious
interference with contract (count II), promissory
estoppel/detrimental reliance (count III), and seeks a declaratory
judgment (count IV). Lender filed Preliminary Objections to the
Amended Complaint which were overruled . . . on March 8, 2022.
On March 23, 2022, Lender filed an Answer with New Matter to
the Amended Complaint. . . .
Trial Ct. Op., 2/7/23, at 1-7 (footnotes & record citations omitted).
Lender filed a motion for summary judgment and accompanying
memorandum of law on October 17, 2022. Borrower responded on November
17th with an answer and memorandum of law. On February 6, 2023, the trial
court filed an order and concomitant opinion granting Lender’s motion and
entered judgment in favor of Lender and against Borrower on all claims. See
Order, 2/7/23. This timely appeal follows.2
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2 The trial court did not direct Borrower to file a Pa.R.A.P. 1925(b) concise
statement of errors complained of on appeal. Further, on March 7, 2023, the
trial court filed an opinion which “adopted and incorporated . . . by reference”
its February 7th opinion as support for its decision. See Trial Ct. Op., 3/7/23,
at 1 (unpaginated).
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Borrower presents the following four issues for our review:
1. Did the trial court err as a matter of law and/or abuse its
discretion by granting summary judgment in [Lender’s] favor on
[Borrower’s] claim for breach of contract/breach of the duty of
good faith and fair dealing where there is a genuine issue of
material fact for a fact finder as to whether [Lender] reasonably
exercised its discretion to approve or deny loan forbearance
requests?
2. Did the trial court err as a matter of law and/or abuse its
discretion by granting summary judgment in [Lender’s] favor on
[Borrower’s] claim for breach of contract where: (1) the trial court
incorrectly interpreting the Exculpation Clause in the Loan
Agreement; and (2) there is a genuine issue of material fact for a
fact finder as to whether [Lender’s] breaches of the Loan
Agreement are material?
3. Did the trial court err as a matter of law and/or abuse its
discretion by granting summary judgment in [Lender’s] favor on
[Borrower’s] claim for tortious interference with contract where
genuine issues of material fact exist relating to the claim?
4. Did the trial court err as a matter of law and/or abuse its
discretion by granting summary judgment in [Lender’s] favor on
[Borrower’s] claim for a declaratory judgment that, inter alia,
[Lender’s] first-occurring material breaches of the loan documents
. . . excused and/or discharged [Borrower’s] performance under
the loan based upon the trial court’s erroneous reasons for
denying [Borrower’s] other claims?
Borrower’s Brief at 2-3 (some capitalization omitted).3
When considering an order granting summary judgment, our “standard
of review is de novo, and our scope of review is plenary.” Khalil v. Williams,
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3 Borrower does not challenge that portion of the trial court’s order dismissing
its claim for promissory estoppel. See Borrower’s Brief at 21 n.4.
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278 A.3d 859, 871 (Pa. 2022) (citation omitted). We are guided by the
following:
[A] trial court should grant summary judgment only in cases
where the record contains no genuine issue of material fact, and
the moving party is entitled to judgment as a matter of law. It is
the moving party’s burden to demonstrate the absence of any
issue of material fact, and the trial court must evaluate all the
facts and make reasonable inferences in a light most favorable to
the non-moving party. The trial court must also resolve any
doubts as to the existence of a genuine issue of material fact
against the moving party and “may grant summary judgment only
where the right to such a judgment is clear and free from doubt.”
[Thus, a]n appellate court may reverse a grant of summary
judgment only if the trial court erred in its application of the law
or abused its discretion. . . .
Id. (citation omitted & paragraph break added).
In its first issue, Borrower contends the trial court erred when it granted
summary judgment on its claim that Lender breached its duty of good faith
and fair dealing by refusing to respond to its two requests for forbearance
relief. See Borrower’s Brief at 21. While Borrower acknowledges Lender had
the discretion to grant or deny its requests for forbearance relief, it insists the
fact that Lender “never reasonably considered the requests or, at bare
minimum, communicated to [Borrower] that its requests were going to be
denied is indicative of a breach of good faith and fair dealing[.]” See id. at
22-23. Moreover, Borrower contends the trial court erred by failing to consider
whether Lender “reasonably exercised its discretion” when, in fact, at the time
of its requests, Borrower was “routinely granting forbearance to [other]
borrowers” due to the COVID-19 pandemic. Id. at 24.
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We have recognized that “[e]very contract imposes upon each party a
duty of good faith and fair dealing in its performance and its enforcement.”
Creeger Brick & Bldg. Supply Inc. v. Mid-State Bank & Tr. Co., 560 A.2d
151, 153 (Pa. Super. 1989), citing Restatement (Second) of Contracts § 205.
However, “[s]uch an inherent duty of good faith does not extend to the
lender-borrower relationship.” Cable & Assocs. Ins. Agency, Inc. v. Com.
Nat. Bank of Pa., 875 A.2d 361, 364 (Pa. Super. 2005). Rather:
It seems reasonably clear from the decided cases that a
lending institution does not violate a separate duty of good faith
by adhering to its agreement with the borrower or by enforcing its
legal and contractual rights as a creditor. The duty of good faith
imposed upon contracting parties does not compel a lender
to surrender rights which it has been given by statute or by
the terms of its contract. Similarly, it cannot be said that a
lender has violated a duty of good faith merely because it has
negotiated terms of a loan which are favorable to itself. As such,
a lender generally is not liable for harm caused to a borrower by
refusing to advance additional funds, release collateral, or assist
in obtaining additional loans from third persons. A lending
institution also is not required to delay attempts to recover from
a guarantor after the principal debtor has defaulted. . . .
Creeger, 560 A.2d at 154 (emphasis added).
In Creeger, this Court concluded a borrower could not state a cause of
action against its lender based upon the lender’s purported “failure to deal
with its borrower in good faith” when the lender did not breach any specific
provision of the loan agreement, but instead allegedly failed to modify the
terms of the agreement to permit the borrower to obtain supplemental
funding. See Creeger, 560 A.2d at 153, 155. Similarly, in Cable, this Court
determined that a lender’s refusal to “surrender its security interest on [the
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borrower’s] property (accounts receivable) so that [the borrower] could sell
or transfer the property” could not “as a matter of law, . . . constitute a breach
of contractual good faith.” See Cable, 875 A.2d at 364.
Here, the trial court found that, pursuant to Section 9.2 of the parties’
Loan Agreement, Lender had the absolute discretion to grant or deny a
request for forbearance, and its refusal to grant forbearance did not “excuse
Borrower’s performance” under the agreement. See Trial Ct. Op. at 12-13.
We agree.
Section 9.2 provides, in relevant part:
Section 9.2 Lender’s Discretion. Whenever pursuant to this
Agreement Lender exercises any right given to it to approve or
disapprove any matter, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or
disapprove such matter or to decide whether arrangements or
terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole and absolute
discretion of Lender and shall be final and conclusive. . . .
Borrower’s Amended Complaint, 1/18/22, Exhibit A, Loan Agreement, 8/2/19
(Loan Agreement) at § 9.2 (emphasis added). Pursuant to the explicit terms
of the Agreement, Lender’s refusal to grant Borrower’s requests for
forbearance is a “final and conclusive” decision, not subject to review on
appeal. See id.
Nevertheless, Borrower asserts that the determination of whether
Lender “reasonably exercised its discretion” by either refusing to consider or
outright denying its requests for forbearance constitutes “a genuine issue of
material fact” for the jury. See Borrower’s Brief at 24. We disagree. As
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explained in Creeger and Cable, the implied contractual duty of good faith
does not “compel a lender to surrender rights . . . conferred to the lender by
the terms of the loan contract” ─ such as the timely payment of funds due.
See Cable, 875 A.2d at 364; Creeger, 560 A.2d at 154. Thus, contrary to
Borrower’s argument, Lender had no obligation to even consider its
forbearance request, and the trial court properly granted summary judgment
to Lender on Borrower’s breach of duty of good faith and fair dealing claim.
Next, Borrower insists the trial court misinterpreted the Exculpation
Clause in the Loan Agreement, and, therefore, “robbed the finder of fact of
the opportunity to consider” whether Lender committed a material breach of
the Agreement which excused Borrower’s performance. See Borrower’s Brief
at 28. Borrower contends the Exculpation Clause “clear[ly] and
unambiguous[ly]” prohibits Lender from recovering any money damages for
the “Debt of the Loan.” Id. at 26. Instead, Lender’s only option is to “institute
a foreclosure or other action [seeking] an in rem judgment against
[Borrower’s] interests in the Property, the Rents, and any other collateral.”
Id. It insists that Lender breached this clause by instituting the May 2021
breach of contract action seeking a monetary judgment, and that Lender’s
breach excuses its own non-performance. See id. at 25. Thus, Borrower
maintains a question of fact remains as to whether Lender’s breach constituted
a “material breach . . . excusing [its own] performance[.]” Id. at 28.
The Exculpation Clause in the parties Loan Agreement provides, in
relevant part, as follows:
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Section 8.6 Exculpation. Subject to the qualifications
below, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in this
Agreement, the Note or the Security Instrument by any action or
proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action,
action for specific performance or other appropriate action or
proceeding to enable Lender to enforce and realize upon the Note,
the Security Instrument, the other Loan Documents, and the
interest in the Property, the Rents and any other collateral given
to Lender created by this Agreement, the Note, the Security
Instrument and the other Loan Documents; provided, however,
that any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower's
interest in the Property, in the Rents and in any other collateral
given to Lender. Lender, by accepting this Agreement, the Note
and the Security Instrument, agrees that it shall not, except as
otherwise provided in the Security Instrument, sue for, seek or
demand any deficiency judgment against Borrower in any such
action or proceeding, under or by reason of or under or in
connection with this Agreement, the Note, the other Loan
Documents or the Security Instrument. The provisions of this
Section 8.6 shall not, however, . . . (g) constitute a waiver of the
right of Lender to enforce the liability and obligation of Borrower,
by money judgment or otherwise, to the extent of any Losses
arising out of or in connection with the following:
(i) fraud or intentional or material misrepresentation by
Borrower, Guarantor or any of their respective Affiliates or agents
in connection with the Loan;
(ii) the gross negligence or willful misconduct by or on behalf
of Borrower, Guarantor or any of their respective Affiliates or
agents in connection with the Loan;
* * *
(iv) the misappropriation, misapplication or conversion by
Borrower of (A) any Insurance Proceeds paid by reason of any
Casualty, (B) any Awards or other amounts received in connection
with a Condemnation of all or a portion of the Property, or (C) any
Rents; . . . .
Loan Agmt at § 8.6.
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In its opinion, the trial court explained it “already ruled that the Loan
Agreement does permit Lender to bring a money judgment action against
Borrower under the Exculpation Clause” in its January 24, 2023, order denying
Borrower’s motion for summary judgment in the money judgment action
brought by Lender. See Trial Ct. Op. 11 (emphasis added). In that action,
Borrowers argued, inter alia, that “Lender’s [c]omplaint improperly seeks a
monetary judgment for the “Debt” of the Loan in violation of the Exculpation
Clause contained in § 8.6 of the Loan Agreement.” See SKW-B Acquisitions
Seller C, LLC v. Stobba Residential Assocs., L.P., May Term 2021 No.
1951, Order, 1/24/23, at 1 n.1.4 The court ruled against Borrower for two
reasons: (1) the Exculpation Clause permitted Lender to “recover monetary
damages . . . but only to the extent of Borrower[’s] interest in the Property,
the Rents and any other collateral given to Lender in this action[;]” and (2)
the Exculpation Clause permitted Lender to recover “Losses” independent
from the debt “arising out of or in connection with[, inter alia,] fraud or
intentional or material misrepresentations, gross or willful misconduct,
misappropriation or misapplication of rents[.]” Id. at 2 n.1.
We need not determine whether the trial court’s ruling in Lender’s action
was correct as we conclude that, even assuming arguendo Lender breached
the Exculpation Clause by instituting the other action, such a breach would
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4 The trial court’s January 24, 2023, Order in the other action is included in
the Appendix of Borrower’s brief.
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not excuse Borrower’s non-payment of its loan obligations. Rather, the
remedy for Lender’s breach of the Exculpation Clause would be dismissal of
Lender’s money judgment action ─ not excusal of Borrower’s non-payment of
the loan. Moreover, Lender alleged that Borrower failed to pay its “Monthly
Debt Service Payment Amount” beginning in December of 2020, and
continuing through November of 2021. See Lender’s Motion for Summary
Judgment, 10/17/22, at ¶ 24.5 Therefore, Borrower breached its obligations
under the Loan Agreement before Lender filed the May 2021 money judgment
action. Thus, we conclude the trial court did not err in determining there was
no genuine issue of material fact concerning a potential breach of the
Exculpation Clause.
In its third issue, Borrower contends the trial court erred in concluding
it “failed to adduce sufficient evidence” to support a claim of tortious
interference with a contract based upon Lender’s purported interference with
Borrower’s contractual relationship with Giant. See Borrower’s Brief at 28
(citation & quotation marks omitted). Borrower insists it demonstrated the
following: (1) Lender had an existing relationship with Giant; (2) Lender
purposely communicated with Giant regarding the alleged electrical issue
when Borrower instructed it not to do so; (3) Lender’s actions were not
privileged and a genuine issue of material fact exists as to its motivation; and
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5 The only exception was in February of 2021, when Borrower apparently made
the required payment. See Lender’s Motion for Summary Judgment at ¶ 24.
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(4) the “escalation of the dispute” due to Lender’s interference “resulted in
legal damages . . . vis-à-vis the related costs of litigation” from Giant’s lawsuit
against Borrower. See id. at 29-30.
In order to establish a cause of action for intentional interference with a
contractual relationship, a plaintiff must demonstrate:
(1) the existence of a contractual relationship between the
complainant and a third party; (2) an intent on the part of the
defendant to harm the plaintiff by interfering with that contractual
relationship; (3) the absence of privilege or justification on the
part of the defendant; and (4) the occasioning of actual damage
as a result of defendant’s conduct.
Walnut St. Assocs., Inc. v. Brokerage Concepts, Inc., 982 A.2d 94, 98
(Pa. Super. 2009), aff’d, 20 A.3d 468 (Pa. 2011).
In concluding Borrower did not present sufficient evidence to support its
claim, the trial court opined:
[W]hile a contractual relationship existed between Borrower and
Giant, there is no evidence that Lender caused any harm to
Borrower by interfering with that relationship. Lender, with
Borrower’s consent, did email Giant to schedule a time to discuss
the electrical service at the leased space, but the record clearly
shows that Lender and Giant never spoke about the electrical
issue. Even before Giant responded to Lender’s request for a call,
Borrower reversed course, and asked Lender not to discuss the
matter with Giant. This [c]ourt could not find any evidence and
Borrower did not direct this [c]ourt to any evidence that Lender
disregarded Borrower’s email and engaged in any discussions with
Giant to harm Borrower’s relationship with Giant. The record is
clear that Lender honored Borrower’s request and emailed Giant
telling them to disregard the request for the call.
Additionally, not only does the record show that Lender
honored Borrower’s request, but it also shows that Giant did not
wish to engage in any such discussions with Lender and was
instructed by its legal counsel not to speak to Lender about the
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issue due to the pending lawsuit. At best, the evidence shows
that Lender attempted to “interfere[,”] but the attempted
“interference” was with the consent of Borrower.
[Moreover], there is no evidence that Lender’s
“interference” caused Borrower actual damage. Borrower alleges
and argues that as a result of Lender’s “interference[,”] Giant
stopped paying rent and filed a lawsuit. However, Lender’s
“interference” in March 2021 could not have caused Giant to stop
paying rent in November of 2020 and to file the lawsuit in
December 2020 as Lender’s “interference” occurred after the
harm which Borrower attributes to Lender. [Further, after the
alleged interference, Giant voluntarily dismissed the lawsuit
against Borrower without prejudice in July of 2021.]
Trial Ct. Op. at 8-9 (footnotes & record citations omitted; paragraph break
added).
We detect no error or abuse of discretion in the trial court’s decision.
Put simply, Borrower presented no evidence to support its assertion that
Lender intentionally interfered with its contract with Giant in an attempt to
harm Borrower or that Borrower suffered any actual damages resulting from
Lender’s purported interference. The evidence Borrower cites in its brief does
not support its claim. See Borrower’s Brief at 29-30.
First, the relevant emails demonstrate that while Lender did attempt to
reach out to Giant in March of 2021 ─ with Borrower’s permission ─ it never
actually discussed the electrical issue with Giant. See Lender’s Motion for
Summary Judgment at Exh. M, Emails dated 3/1/21 (Lender informing
Borrower it had “some contacts at Giant” and asking, “Do you mind if we reach
out to them to discuss their thoughts on what’s going on here?” to which
Borrower responds, “if you feel that a conversation between [Lender] and
Giant will be helpful then please do so.”); Exh. N, Emails dated 3/2/21 and
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3/4/21 (Lender emailing Giant on March 2, 2021, to “touch base” on the issue,
and then, on March 4th, informing Giant to “disregard [its] request for a
call[,]” after which Giant responded to Lender that it had been advised by
counsel “not to comment because of pending litigation”). See also id. at Exh.
O, Email dated 3/4/21 (Borrower sending “apologies” to Lender on March 4th
“for the reversal” but explaining it did not want “lender/tenant
communication”).
Second, although Lender did commission an engineering firm, Kimley-
Horn, to investigate the electrical issue, the report issued by the firm was
never shared with Giant. See Lender’s Motion for Summary Judgment at Exh.
H, N.T., 11/12/21, at 80.6 We fail to see how the commissioning of the report,
in and of itself, establishes that Lender interfered with Borrower’s contractual
relationship with Giant.
Third, although Borrower’s representative ─ Eric Blumenfeld ─ testified
that one of Lender’s employees told him “they were in touch with Giant[,]” he
admitted the employee provided no specifics as to what was said. See
Lender’s Motion for Summary Judgment at Exh. L, N.T., 11/18/21, at 15, 31.7
Thus, this testimony does not establish any more alleged “interference” than
the email exchanges cited above.
____________________________________________
6This hearing was conducted in Lender’s money judgment action against
Borrower.
7 This hearing was also conducted in Lender’s action.
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Fourth, Borrower cites no evidence supporting its bald assertion that
“[i]t was only after [Lender] meddled in the situation that Giant began
insisting on [an] upgrade [for] the electrical service” of the property. See
Borrower’s Brief at 30. Indeed, the letter from Giant to Borrower that
Borrower references ─ in which Giant informed Borrower the electric load of
the building is insufficient ─ is dated August 31, 2020, six months before
Lender requested permission to contact Giant in an attempt to help resolve
the issue. See Borrower’s Response to Lender’s Motion for Summary
Judgment & Counterstatement of Facts, 11/17/22, at Exh. 17 (Letter from
Giant to Borrower dated 8/31/20). Accordingly, Borrower’s third issue fails.
Lastly, Borrower contends the trial court erred in granting Lender
summary judgment on its declaratory judgment cause of action. See
Borrower’s Brief at 31. However, as Borrower acknowledges, its request for
a declaratory judgment is based upon its other claims ─ namely, that Lender
breached its duty of good faith by refusing to consider Borrower’s forbearance
requests and breached the Loan Agreement by instituting the money
judgment action, both of which would excuse Borrower’s own non-
performance and void the purported default. See id. Accordingly, Borrower
asserts: “Because the [t]rial [c]ourt’s decision to dismiss the claim for
declaratory relief is based on its decisions denying [the] other causes of
action,” the court’s decision is “erroneous for the reasons discussed above.”
Id.- 18 -
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However, as explained supra, we conclude the trial court did not err in
granting summary judgment to Lender on Borrower’s other claims. Thus, we
agree Borrower’s claim for declaratory judgment fails as well. See Trial Ct.
Op. at 14.
Order affirmed.
Date: 12/11/2023
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