Hankin, M v. Kion Defense Technologies

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MARK HANKIN AND INDUSTRIAL REAL IN THE SUPERIOR COURT OF
ESTATE MANAGEMENT, INC., D/B/A PENNSYLVANIA
HANMAR ASSOCIATES, MLP
v.
CLARIANT CORPORATION AND KION
DEFENSE TECHNOLOGIES, INC.
APPEAL OF: CLARIANT CORPORATION No. 359 EDA 2016
Appeal from the Order December 28, 2015
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): No. 2015-16284
BEFORE: PANELLA, J., SHOGAN, J., and PLATT, J.*
MEMORANDUM BY PANELLA, J. FILED MARCH 07, 2017
Appellant, Clariant Corporation, appeals from the order granting a
preliminary injunction to Appellees, Mark Hankin and Industrial Real Estate
Management, Inc. In granting the injunction, the trial court required Clariant
to actively maintain a commercial property that Appellees had leased to Kion
Defense Technologies, Inc., who is not a party to this appeal. Clariant had
agreed to be a guarantor for Kion’s performance under the lease. On appeal,
Clariant argues that the trial court applied the incorrect standards in
granting the preliminary injunction. After careful review, we affirm.
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
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The essential facts of this case are undisputed, as the central
argument involves the interpretation of a commercial lease and a
subsequent assignment of the lease. Kion’s corporate predecessor leased the
relevant property (“the Property”) from Appellees in 2002. The lease had a
ten year term, which expired on July 31, 2012.
It provided for two mechanisms to extend the term. First, the lease
would extend for one year automatically if neither party timely notified the
other of its intent to terminate the lease. This one-year term was classified
as an “Extension Term,” and continued with the terms and conditions
currently applicable under the lease.
The second option was classified as a “Renewal Term.” Under this
option, the lessee could elect to renew the lease for five years pursuant to a
timely notice. In order to exercise this option, the lessee could not have
previously defaulted under the lease.
Clariant purchased and merged with Kion’s predecessor in 2006.
Clariant therefore assumed Kion’s predecessor’s obligations under the lease.
In 2008, in a tripartite agreement, Clariant assigned the lease to Kion with
Appellees’ approval. Under the assignment, Clariant agreed to act as a
surety for Kion under the lease, guaranteeing not only rent payments, but
also “performance … of all other terms and conditions and covenants of the
Lease and all amendments or renewals thereof …”
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In February 2011, Kion defaulted on the lease, allegedly by failing to
make timely rent payments. Kion apparently never provided notice of its
intent to terminate the lease, as four separate Extension Terms followed the
end of the initial term in July 2012.
In January 2015, Appellees notified Clariant that Kion’s arrears totaled
approximately $1,500,000. Appellees requested that Clariant honor its
obligations under the assignment by paying off the arrears. Clariant
objected, arguing that it was not liable under the assignment for any
Extension Terms, only the initial term and any Renewal Terms.
It is apparent that, at some point, Kion abandoned the Property, as in
October 2015, Appellees reminded Kion of its obligation to maintain the
Property during the coming winter months. Specifically, Appellees called on
Kion to heat the Property. It is also apparent that Appellees were not
pleased with Kion’s response, if there was any.
On December 22, 2015, appellees filed the instant petition for
emergency injunction. Appellees asserted that Clariant, as guarantor of
Kion’s performance under the lease, was required to maintain and heat the
Property throughout the winter. After hearing oral argument from the
parties, the trial court, without a hearing, signed Appellees’ proposed order
and granted the preliminary injunction. This timely appeal followed.
Our scope of review of preliminary injunction matters is plenary. See
Warehime v. Warehime, 860 A.2d 41, 46, n. 7 (Pa. 2004). Our standard
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of review of a trial court’s order granting or denying a preliminary injunction
is “highly deferential”. Id. (citation omitted). This “highly deferential”
standard of review states that in reviewing the grant or denial of a
preliminary injunction, an appellate court is directed to “examine the record
to determine if there were any apparently reasonable grounds for the action
of the court below.” Id. (citation omitted).
A petitioner seeking a preliminary injunction must establish every one
of the following prerequisites:
First, a party seeking a preliminary injunction must show that an
injunction is necessary to prevent immediate and irreparable
harm that cannot be adequately compensated by damages.
Second, the party must show that greater injury would result
from refusing an injunction than from granting it, and,
concomitantly, that issuance of an injunction will not
substantially harm other interested parties in the proceedings.
Third, the party must show that a preliminary injunction will
properly restore the parties to their status as it existed
immediately prior to the alleged wrongful conduct. Fourth, the
party seeking an injunction must show that the activity it seeks
to restrain is actionable, that its right to relief is clear, and that
the wrong is manifest, or, in other words, must show that it is
likely to prevail on the merits. Fifth, the party must show that
the injunction it seeks is reasonably suited to abate the
offending activity. Sixth, and finally, the party seeking an
injunction must show that a preliminary injunction will not
adversely affect the public interest.
Summit Towne Centre, Inc. v. Shoe Show of Rocky Mt., Inc., 828 A.2d
995, 1001 (Pa. 2003) (citations omitted).
Clariant’s first argument on appeal is that the trial court applied the
incorrect standard in evaluating the petition for preliminary injunction.
Clariant does not challenge the above stated Summit Towne standards.
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Rather, it asserts that the preliminary injunction in this case is mandatory,
as it requires the opposing party to take affirmative action. Clariant
distinguishes mandatory injunctions from prohibitory injunctions, which
prohibit the other party from acting. Clariant contends that a more stringent
standard is applied to mandatory injunctions.
Appellees, while arguing that the instant injunction was prohibitory in
nature, concede that a higher burden is placed on petitioners seeking a
mandatory injunction. See Appellees’ Brief, at 12. However, they contend
that the higher burden only applies to the fourth Summit Towne factor, a
showing of a clear right to relief.
We agree with Clariant that the injunction sought in this case was
mandatory in nature. However, we agree with appellees that the heightened
standard applicable to mandatory injunctions applies only to the fourth
Summit Towne factor. See, e.g., Greenmoor, Inc. v. Burchick Const.
Co., Inc., 908 A.2d 310, 313 (Pa. Super. 2006). We therefore proceed to
review the trial court’s order under the heightened standard applicable to
mandatory injunctions.
Clariant contends that the trial court failed to apply the “enhanced
evidentiary standard applicable to mandatory injunctions.” However, as
noted above, there was no hearing. Thus, there was no evidence to which to
apply the enhanced standard.
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A thorough review of the briefs of the parties and the record reveals
that there are no material factual disputes between the parties. The only
issue involved is the interpretation and construction of the two relevant
agreements. Thus, the only issue before the trial court was a pure issue of
law. See Humberston v. Chevron, U.S.A., Inc., 75 A.3d 504, 509 (Pa.
Super. 2013). The trial court’s decision to rule on the petition without a
hearing was reasonable - evidentiary burdens were not at issue.
Next, Clariant argues that the trial court erred in concluding that
Appellees had established a clear right to relief under the relevant
agreements. Clariant contends that under Paragraph 10 of the assignment
agreement, its obligations as surety only extended to obligations of “the
Lease and all amendments or renewals thereof …”. Clariant asserts that the
term “renewal” used in Paragraph 10 is to be given the particular meaning
that the original lease gave to the term “Renewal Term.”
We, much like the trial court before us, are therefore tasked with
interpreting the assignment agreement. Interpretation of a contract poses a
question of law and our review is plenary. See Charles D. Stein Revocable
Trust v. General Felt Industries, Inc., 749 A.2d 978, 980 (Pa. Super.
2000). “In construing a contract, the intention of the parties is paramount
and the court will adopt an interpretation which under all circumstances
ascribes the most reasonable, probable, and natural conduct of the parties,
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bearing in mind the objects manifestly to be accomplished.” Id. (citation
omitted).
To give effect to the intent of the parties, we must start with the
language used by the parties in the written contract. See Szymanski v.
Brace, 987 A.2d 717, 722 (Pa. Super. 2009). Generally, courts will not
imply a contract that differs from the one to which the parties explicitly
consented. See Kmart of Pennsylvania, L.P. v. M.D. Mall Associates,
LLC, 959 A.2d 939, 944 (Pa. Super. 2008). We are not to assume that the
language of the contract was chosen carelessly or in ignorance of its
meaning. See id.Where the language of the contract is clear and unambiguous, a court
is required to give effect to that language. See Prudential Property and
Casualty Ins. Co. v. Sartno, 903 A.2d 1170, 1174 (2006). Contractual
language is ambiguous “if it is reasonably susceptible of different
constructions and capable of being understood in more than one sense.”
Hutchison v. Sunbeam Coal Co., 519 A.2d 385, 390 (Pa. 1986) (citation
omitted). “This is not a question to be resolved in a vacuum. Rather,
contractual terms are ambiguous if they are subject to more than one
reasonable interpretation when applied to a particular set of facts.” Madison
Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999)
(citations omitted).
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We conclude that Clariant’s attempt to conflate the term “renewal” in
the assignment agreement with the term “Renewal Term” in the original
lease is unavailing. While we endeavor to construe the two contracts in a
manner that recognizes that they are part of the course of dealing between
the two parties, we recognize that they are two separate agreements,
executed approximately five years apart in time. We therefore do not
assume that terms used in one must necessarily be given the same
construction in the other.
Furthermore, the term “renewal” in Paragraph 10 of the assignment
agreement is not capitalized in the manner that “Renewal Term” is
capitalized in the original lease. Just as importantly, “renewal” in the
assignment agreement does not include the word “term.” We therefore see
no reason that they must be construed identically. Rather, the natural and
reasonable construction of the term “renewal” in the assignment includes
both forms of extensions set forth in the original lease.
This conclusion is bolstered by the nature of Clariant’s suretyship in
the assignment agreement. It is “absolute[] and unconditional[].”
Assignment Agreement, at ¶ 10. Clariant waived any right to the benefit of
any law that required prior or timely enforcement of the terms of the lease.
See id. Clariant also waived “all notices whatsoever with respect to this
guaranty and with respect to the liabilities of [Kion] to Lessor under the
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Lease, including but not being limited to, notice of any default by [Kion]
under the Lease.” Id.We therefore conclude that the trial court did not err in determining
that Appellees had established a clear right to mandatory injunctive relief.
The assignment agreement provides that Clariant is Kion’s guarantor for all
covenants under the lease, including the obligation to maintain the premises
properly pursuant to any extension of the lease.
Next, Clariant argues that the trial court erred in finding that the
injunction was necessary to prevent immediate and irreparable harm.
Clariant argues that Appellees had the right, under the lease, to enter the
Property to ensure it was properly maintained and heated through the
winter. Clariant thus argues that an injunction was unnecessary.
However, Clariant’s argument ignores the distinction between
Appellees undertaking this responsibility and Clariant undertaking this
responsibility. Certainly, Appellees had this right. But clearly they preferred
that Clariant honor its obligation to perform these acts under the assignment
agreement. While there is arguable merit to the contention that had they
exercised their right to enter the Property to ensure proper maintenance, the
only damages that Appellees would have suffered would have been
monetary damages, we refuse to conclude that the trial court erred in
determining that the primary responsibility for maintenance of the Property
rested squarely with Clariant.
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Similarly, Clariant contends that the injunction did not preserve the
status quo, but rather altered it. We disagree. As noted above, the
assignment agreement establishes that the primary responsibility for
maintaining the Property rests with Clariant. If the trial court had concluded
that Appellees were required to exercise their right to enter the Property to
maintain it despite Clariant’s primary responsibility, that would have altered
the status quo. However, the trial court enforced Clariant’s primary
responsibility to maintain the Property. It did not alter the status quo and
therefore did not err.
Clariant also argues that the injunction imposes a greater harm than
would have occurred in its absence. Once again, we conclude that Clariant’s
argument falls away given the most appropriate construction of the
assignment agreement. Under the agreement, Clariant was responsible for
maintaining the Property. Thus, the injunction, which requires Clariant to
maintain the Property, does not impose any harm. In contrast, failing to
issue the injunction would have subjected Appellees to the possible risk that
Clariant would later be found to be insolvent and thus unable to reimburse
them for the expense of maintaining the Property. This reasoning also
disposes of Clariant’s arguments that the injunction was not narrowly
tailored or in the public interest.
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As we conclude that the trial court did not err in construing the
assignment agreement, we affirm the order granting the preliminary
injunction.
Order affirmed. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/7/2017
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