BIRD HILL FARMS v. US CARGO & COURIER

• Decision Date: 16 March 2004
• Citation: 845 A.2d 900
• Court: Pennsylvania Superior Court
• Parties: BIRD HILL FARMS, INC., Appellee, v. The UNITED STATES CARGO & COURIER SERVICE, INC., Appellant, v. Courier Unlimited, Inc., Appellee. Appeal of: The United States Cargo & Courier Service, Inc., Appellant.

845 A.2d 900

BIRD HILL FARMS, INC., Appellee, v. The UNITED STATES CARGO & COURIER SERVICE, INC., Appellant, v. Courier Unlimited, Inc., Appellee.

Appeal of: The United States Cargo & Courier Service, Inc., Appellant.

Superior Court of Pennsylvania.

Argued June 10, 2003.

Filed March 16, 2004.

Delano M. Lantz, Harrisburg, for appellant.

Daniel S. Coval, Ardmore, for Courier Unlimited, appellee.

Stanley J.A. Laskowski, Harrisburg, for Bird Hill Farms, Inc., appellee.

BEFORE: MUSMANNO, BOWES and POPOVICH, JJ.

OPINION BY BOWES, J.:

¶ 1 United States Cargo & Courier Service, Inc. ("Appellant") appeals from the orders granting summary judgment in favor of Appellees, Bird Hill Farms, Inc. ("Bird Hill") and Courier Unlimited, Inc. ("Courier"). We affirm.

¶ 2 The following facts are relevant. Bird Hill owns commercial property located at 4250 Chambers Hill Road, Harrisburg, Pennsylvania. On March 1, 1995, Bird Hill leased the building to Courier for thirty-six months at a monthly rental of $3,600. The lease required Courier to obtain written consent before assigning its contractual rights. On June 23, 1995, Courier executed an asset purchase agreement with Appellant and ceased operations shortly thereafter. Under the terms of the purchase agreement, Courier agreed to obtain Bird Hill's consent to assign its rights and obligations under the lease. Further, the terms of the assigned lease were subject to Appellant's negotiations and approval.

¶ 3 Appellant and Bird Hill were not able to negotiate acceptable lease terms, and Courier failed to obtain Bird Hill's written consent for assignment. During the negotiations, Appellant paid the monthly rent and utility obligations. However, in May 1996, Appellant abandoned the site without notice and moved its operations. The building remained unoccupied until a new tenant took possession in December 1996.

¶ 4 On October 4, 1996, Bird Hill filed a landlord-tenant complaint seeking accelerated rent, repairs, and maintenance totaling $75,600 against Appellant. In response, Appellant filed an answer and new matter claiming that it was not bound by the lease between Courier and Bird Hill and that it vacated the building due to its poor condition and Appellant's inability to negotiate acceptable lease terms. Appellant also filed a joinder complaint against Courier, to which Courier filed an answer and new matter.

¶ 5 On June 13, 1997, Bird Hill moved for summary judgment. After the parties submitted briefs, a three-judge panel of the common pleas court determined that Appellant implicitly assumed the lease as a matter of law under the principles of corporate successor liability, see Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106 (1981), and on April 30, 1998, it granted judgment in favor of Bird Hill and against Appellant for breach of contract. The trial court did not address damages. After Appellant filed a motion for reconsideration, the trial court vacated the order temporarily; ultimately, however, it denied the motion for reconsideration and reinstated the April 30, 1998 order. To facilitate a final judgment, Bird Hill and Appellant stipulated that Bird Hill incurred damages totaling $63,371.81.

¶ 6 Appellant filed an appeal to this Court, which we quashed since the action remained pending against Courier.¹ After additional discovery, Courier filed a motion for summary judgment that the trial court granted without opinion on September 4, 2002. This appeal followed. Once an appeal is filed from a final order, all prior interlocutory orders are subject to review. K.H. v. J.R., 573 Pa. 481, 826 A.2d 863 (2003). We therefore review the trial court's April 30, 1998 order granting summary judgment in favor of Bird Hill and the September 4, 2002 grant of summary judgment in favor of Courier.

¶ 7 Pursuant to Pa.R.A.P 1925(b), Appellant filed a concise statement of matters complained of on appeal asserting that the trial court erred in holding that (1) there were no outstanding questions of fact and granting summary judgment in favor of Bird Hill when only preliminary discovery had been conducted; (2) Appellant's actions created an implied assumption of the lease when factual issues existed concerning Appellant's willingness to assume the lease; and (3) Courier was entitled to summary judgment. The trial court addressed these contentions in an opinion supporting its orders granting summary judgment in favor of Bird Hill and Courier.

¶ 8 Our scope and standard of review are as follows:

This court's scope of review is plenary when reviewing the propriety of a trial court's entry of summary judgment. Summary judgment is appropriate where there is no genuine issue of any essential fact and the moving party is entitled to judgment as a matter of law. Pa.R.C.P. 1035.2(1). In considering the motion, the trial court must examine the record in the light most favorable to the non-moving party, resolving all doubts against the moving party, who bears the burden of proving there is no genuine issue of material fact. An appellate court will reverse an order granting summary judgment only where there has been an error of law or clear abuse of discretion.

Vitow v. Robinson, 823 A.2d 973, 976 (Pa.Super.2003) (citation omitted). Therefore, absent a manifest abuse of discretion or an error of law, we will uphold the trial court's determination.

¶ 9 We disagree with Appellant's primary contention that a genuine issue of material fact existed concerning Appellant's implicit assumption of the lease. Throughout its argument, Appellant attempts to characterize the underlying legal issue concerning the implied assumption of liability as a material dispute of fact. Whether Appellant implicitly assumed the lease is a question of law, albeit one that is dependent on the facts relating to Appellant's conduct. However, where, as here, the relevant facts are undisputed, there are no credibility questions for a fact-finder to resolve at trial. Appellant's position confuses the legal dispute with the uncontested facts of the case. Consequently, Appellant continually ignores that the relevant facts are not challenged and that this action is a proper candidate for summary judgment.

¶ 10 The trial court reached its determination on the basis of the undisputed facts regarding Appellant's conduct, which we recite as follows. After executing the purchase agreement with Courier, Appellant occupied the premises for eleven consecutive months performing the same operations as Courier. Appellant paid the monthly rent in a timely manner, and it paid the utilities in its own name rather than leaving the accounts in its predecessor's name. Moreover, Appellant maintained the property and installed fire extinguishers as required under the terms of lease. The trial court determined that Appellant's actions constituted an implied assumption of the lease, and therefore, Appellant was liable for Courier's obligations under the lease. See Dawejko, supra (generally, successor company does not acquire liabilities of transferor corporation unless, inter alia, successor expressly or implicitly agrees to assume obligations). As there was no genuine issue of material fact, this matter was ripe for summary judgment.²

¶ 11 Having confirmed the absence of a factual dispute, we now address Appellant's argument challenging the soundness of the trial court's legal conclusion. In this regard, Appellant levels the claim that the trial court misapplied the principles of corporate successor liability. Appellant contends that it could not have impliedly assumed the lease because it expressly refused to assume the lease unless certain conditions were satisfied. Appellant relies upon Philadelphia Electric Co. v. Hercules, Inc., 587 F.Supp. 144 (E.D.Pa.1984), rev'd on other grounds, 762 F.2d 303 (3d Cir.1985), in support of its position. In Philadelphia Electric Co., the District Court for the Eastern District of Pennsylvania espoused the principle that a successor corporation can effectively avoid the implied assumption of a liability by expressly excluding it from an enumerated list of liabilities that it agreed to assume. Hence, Appellant posits that the terms of the purchase agreement preclude a finding of an implied assumption of the lease.

¶ 12 Appellant essentially denies that it impliedly assumed the lease, and relying on the following facts, further contends that it never intended to assume the lease between Courier and Bird Hill. Despite expressly assuming other liabilities in the purchase agreement with Courier, Appellant did not expressly assume the lease for the property located at 4250 Chambers Hill Road. Instead, Appellant conditioned assignment of the lease upon its approval of the terms and conditions of the lease and upon the success of the subsequent negotiations with Bird Hill. Moreover, although Bird Hill knew of Appellant's tenancy and accepted its rental payments, Courier never obtained written consent from Bird Hill to assign its obligations under the lease to Appellant. Neither Bird Hill nor Courier contested Appellant's account of the facts. ¶ 13 Initially, we observe that we are not bound by the decisions of a federal district court even when it applies Pennsylvania law. Lilley v. Johns-Manville Corp., 408 Pa.Super. 83, 596 A.2d 203 (1991). Moreover, in Philadelphia Electric Co., supra, the district court did not purport to apply Pennsylvania law for the principle upon which Appellant relies; rather, it cited cases from its sister jurisdictions. Id. at 148. Finally, even if we were bound by the district court's supposition drawn from other jurisdictions, the principle for which Appellant cites that case is dictum since the court ultimately held that the successor corporation therein assumed liability from its predecessor.

¶ 14 Under Pennsylvania jurisprudence, a successor company is not responsible for its predecessor's liabilities unless one of the following conditions is established: (...