Luria Bros. & Co., Inc. v. Allen

• Decision Date: 05 March 1981
• Docket Number: Civ. A. No. 77-137.
• Parties: LURIA BROTHERS & CO., INC., a corporation, Plaintiff, v. Thomas R. ALLEN, Jr. and Morton J. Greene, trading as Economy Industrial Properties, a partnership, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

512 F. Supp. 596

LURIA BROTHERS & CO., INC., a corporation, Plaintiff, v. Thomas R. ALLEN, Jr. and Morton J. Greene, trading as Economy Industrial Properties, a partnership, Defendants.

Civ. A. No. 77-137.

United States District Court, W. D. Pennsylvania.

March 5, 1981.

Charles R. Taylor, Jr., Moorhead & Knox, Pittsburgh, Pa., for plaintiff.

Edward C. Leckey, Charles J. Duffy, Jr., Pittsburgh, Pa., for defendants.

OPINION

TEITELBAUM, District Judge.

This opinion should dispose of the outstanding motions and claims of the parties before this Court in the matter sub judice. Before turning to the pending problems, however, a brief review of the history of this litigation seems in order.

In February of 1977, the plaintiff filed the instant action alleging that the distraint of the plaintiff's property by the defendants illegally deprived the plaintiff of its goods. Jurisdiction was said to exist both on the basis of diversity and federal civil rights legislation. The defendants denied the material allegations of the plaintiff and filed a counterclaim contending that the distraint was proper and seeking judicial authorization for the sale of the distrained property. The plaintiff denied the substance of that counterclaim.

Out of consideration for judicial economy and convenience of the parties, the trial of the merits of this complex litigation was severed into three stages. The first stage, the plaintiff's allegations, was tried before the Court without a jury. On May 11, 1978 this Court found the defendants were liable to the plaintiff.¹

Thereafter, a jury considered the amount of damages, if any, to be awarded the plaintiff.² The jury was asked in deliberating to consider and answer special interrogatories. From the answers provided by the jury, the Court then framed a judgment awarding the plaintiff $26,858.52 as compensatory damages, $15,000.00 as punitive damages and $2,336.81 as interest, as well as costs.

As originally contemplated, the third stage of this litigation was to be a consideration by the Court of the defendants' counterclaim. The time for a decision on the counterclaim has now arrived. In addition, the Court has been presented with the plaintiff's motion for an award of attorney fees and the defendants' motions for judgment n. o. v. and/or a new trial. The resolution of these motions is also ripe for determination.

Having reviewed the procedural posture of this litigation, a review of the facts seems to be appropriate. The earlier findings of this Court provide the most convenient statement.

On a continuing basis prior to December of 1976, Luria Bros. stored certain steel plate in a building located in Ambridge, Pennsylvania. In mid-December of 1976, Luria received word through Ogden Metals, Inc. ("Ogden Metals"), its parent corporation, that the steel plate had been distrained upon by Economy, owner of the building. Upon further inquiry, Luria determined that all access gates through which the steel plate could be removed had been locked.

The building in question located in Ambridge was leased by Economy to Bollinger Corporation under a lease dated June 13, 1975. Thereafter, a portion of the building, approximately one-half, was leased by Bollinger to Ogden Metals under a sublease dated July 7, 1975.

Although there was some discussion about the advisability of making Luria the sublessee under the sublease, Ogden Metals remained on the sublease as sublessee at the time the sublease was executed by the parties in July and August of 1975.

At the time the sublease was executed by Allen on behalf of Bollinger, Allen was both a partner in Economy and the President of Bollinger. At that time he was also a member of the Board of Directors of Bollinger. Greene at the time was an officer of Bollinger and a member of its Board of Directors. Various members of the Greene family owned a substantial number of the shares of Bollinger and Greene himself is a trustee of the Morton J. Greene Company Pension Trust which holds in excess of 200,000 Bollinger shares.

By December of 1976, Luria, acting through Ogden Steel a division of Luria Bros., had placed 407 tons of steel plate on the subleased premises with the consent and permission of Ogden Metals.

Ogden Metals paid $24,000 in rent in advance at or about the time it entered into the sublease with Bollinger. In Paragraph 20 both the lease and the sublease contain identical language relating to the distraint rights of the landlord and sublandlord, as follows:

As security for rent, LESSEE grants, bargains and sells to LESSOR all property of every kind on or to be brought on the DEMISED PREMISES, and whenever rent, or anything reserved as rent, is unpaid, LESSOR may seize or distrain said property, on or off the premises, and sell the same on due legal notice for all rent or other payment due as rent, expenses, etc., and for all rent not due hold the same as security.

On March 31, 1976, Bollinger filed a petition for an arrangement under Chapter XI of the Bankruptcy Act in the United States District Court for the Western District of Pennsylvania at No. 76-282. At the time the Petition was filed, an order was entered by the Bankruptcy Judge staying any and all proceedings relating to Bollinger. Carl L. Bigler was appointed Receiver for Bollinger by the court and through him the Chapter XI proceedings were conducted until March 14, 1977 when Bollinger was adjudicated a bankrupt. The Receiver continued to operate Bollinger until on or about October 31, 1976 when most of the remaining employees were terminated.

On or about November 3 or 4, 1976, the Receiver discontinued any further activity at the leased premises and by November 5 had removed everything to a facility in the near vicinity owned by Bollinger. Both prior and subsequent to the removal, the Receiver and Robert G. Sable his attorney, advised both Greene and Allen that the Receiver did not intend to use the premises any longer.

On November 16, 1976, Messrs. Bigler, Sable, Allen and Greene met at the Marriott Inn to discuss various outstanding matters involving Economy and Bollinger. Areas of concern related to a forklift being held by Economy which Bollinger wanted to reacquire; administrative rent to be paid during the period of occupancy by the Receiver from April 1 through November 5; outstanding real estate taxes and other matters of a business nature. On November 23, 1976 Sable sent a letter confirming the meeting to Bigler, Allen and Greene. Greene redrafted the letter and forwarded a copy of same to Sable. Allen, on the other hand, made only a few written changes to the letter and returned it with an indication that it was "okay as noted." One of the handwritten notices provided that "Receiver will formally terminate & abandon lease on Nov. 5."

In early December of 1976, Greene took certain steps to prevent third parties from removing any items contained in the subject premises, including the steel plate owned by Luria. On or about December 1 or 2, 1976, Greene caused Economy padlocks to be placed on the primary gates leading into the subleased premises and through which the steel plate could have been removed. After a telephone discussion with counsel on December 3, 1976, Allen entered the subleased premises on December 4, 1976, through an adjoining building owned by Economy and thumbtacked a notice of distraint on a doorway leading into certain offices located within the subleased premises. The notice was signed by Allen on behalf of Economy and contained the following language:

NOTICE OF DISTRAINT

TO: BOLLINGER CORPORATION and OGDEN METALS, INC.

TAKE NOTICE, that ECONOMY INDUSTRIAL PROPERTIES, owner of the premises and landlord, on December 4, 1976, distrained upon the goods and chattels of OGDEN METALS, INC., to wit, 300 tons of steel plate, more or less, located in the premises at Eleventh Street and P.C.R.R. Belt Line, Borough of Ambridge, Beaver County, Pennsylvania, for Two Hundred Ninety-three Thousand One Hundred Forty-five and 70/100ths ($293,145.70) Dollars rent due ECONOMY INDUSTRIAL PROPERTIES. If the said rent is not paid, or replevin action instituted to recover the said goods within five (5) days after notice hreof, (sic) the undersigned may cause the said goods to be appraised and sold.

Give (sic) by the undersigned this 6th day of December, 1976.

ECONOMY INDUSTRIAL

PROPERTIES

By /s/ Thomas R. Allen, Jr. Partner

The $293,145.70 figure set forth in the Notice of Distraint is a total of $9,600 rent due prior to the receivership, $7,945.70 in administrative rent due during the period of receivership ($1,464.90 per month was paid by the Receiver during this period) and the balance, namely, $275,600 is accelerated rent due for the remaining period of the lease which expires on August 31, 1985.

Between November of 1976 and May 13, 1977, Luria was denied access to the subleased premises and was unable to remove the steel plate in question.

Luria Bros. & Co. v. Allen, 452 F.Supp. at 734-35.

The defendants have urged this Court to enter judgment n.o.v. on the claims asserted under 42 U.S.C.A. § 1983. The principal argument advanced by the defendants is that state action, a prerequisite to a finding of liability under section 1983, is lacking. In the earlier opinion issued in this case, the Court was acting as a fact-finder and so devoted its greatest attention to determining the factual basis for liability and only briefly delineated one of the several legal foundations for the finding of state action. Because the defendants continue to passionately urge the lack of state action relying on the decision in Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978)³, this Court is persuaded that a few additional remarks explaining its earlier opinion are in order.

The earlier decision of this Court followed the analysis suggested by the decision of Parks v. Mr. Ford, 556 F.2d 132 (3rd Cir. 1977). That analysis requires examination of the origin of...