Cambria-Stoltz Enterprises v. TNT INVEST.

Citation747 A.2d 947
PartiesCAMBRIA-STOLTZ ENTERPRISES and Camstol Corporation, Appellants, v. TNT INVESTMENTS, Appellee.
Decision Date28 February 2000
CourtSuperior Court of Pennsylvania

John J. Miravich, Reading, for Cambria-Stoltz Enterprises, appellant.

Stephen Price, Reading, for appellee.

Before POPOVICH, EAKIN and OLSZEWSKI, JJ.

OLSZEWSKI, J.:

¶ 1 Cambria-Stoltz Enterprises ("Cambria-Stoltz") and CAMSTOL Corporation ("Camstol")1 appeal from the order entered against them in the Court of Common Pleas. We affirm.

¶ 2 On June 1, 1993, Cambria-Stoltz, consisting of Mr. Joseph Cambria and Mr. Michael Cambria, entered into two five-year leases with TNT Investments ("TNT"), consisting of Mr. Kevin Timochenko and Mr. Joseph Templin. Appellants leased 2 North Sixth Street to use as a sandwich shop ("sandwich shop property"), and 4-6 North Sixth Street for use as a café ("café property"). Before executing a written lease for either property, appellants made more than $92,000 worth of improvements to both. TNT knew of the improvements and did not object.

¶ 3 The written leases for both properties were virtually identical, though the amounts of the security deposits varied. TNT required a $700 deposit for the sandwich shop property and a $1,325 deposit for the café property. TNT, however, acknowledged in the leases that it waived the security deposits because of the vast improvements the Cambrias made to the properties.

¶ 4 The leases contained several provisions now at issue. First, the leases provided that Cambria-Stoltz would name TNT as co-insured on the liability insurance for both properties. Moreover, the leases entitled TNT to see a certificate from the insurer proving such. Another provision provided that in the event of a breach by Cambria-Stoltz, TNT could give written notice to Cambria-Stoltz, then terminate the lease twenty days later. Further, the leases specified that TNT's subsequent acceptance of rent from Cambria-Stoltz would not waive the breach. The leases also contained a provision that TNT would not allow another similar business to rent space in the complex "within reason." The leases also prohibited Cambria-Stoltz from assigning or subletting either property without TNT's written consent. Lastly, the leases provided that any improvements Cambria-Stoltz made to the property became TNT's property.

¶ 5 Trouble did not appear on the horizon until the summer of 1994, when the sandwich shop began having problems. The Cambrias wanted to concentrate on the café, so they sublet the sandwich shop property to Mr. Mike Waselus,2 who began running an ice cream shop there. In February 1995, the Cambrias abandoned the sandwich shop property because of poor business. In March 1995, TNT leased a nearby property to a Subway, a competitor in the sub business. The Cambrias did complain to TNT in October 1994 regarding the construction of the Subway, but TNT did not respond.

¶ 6 In November 1994, an agent for TNT, Ms. Susan Grim, notified Cambria-Stoltz by mail that it had to pay the security deposits,3 name TNT as co-insured, and forward "this" to TNT. The Cambrias failed to respond within twenty days, and on November 29, 1994, pursuant to the default language in the lease, TNT sent notice of termination to Cambria-Stoltz and told it that the lease was now a month-to-month lease. Mr. Joseph Cambria admitted that he ignored TNT's request for a certificate of insurance because he assumed that the insurance company had already named TNT as co-insured (though this was not the case). In fact, at trial, the only insurance document offered was dated December 16, 1994, as was the certificate of proof. This was after TNT's termination of the lease. Further, the certificate of proof listed "Metropolitan Management Corp." as co-insured, not TNT. Mr. Timochenko and Mr. Templin also owned Metropolitan, but neither Mr. Timochenko nor Mr. Templin told the Cambrias to list Metropolitan as the co-insured. Further, the title to the café property was either in TNT's name, Mr. Timochenko's name, or Mr. Templin's name, but not in Metropolitan's name.

¶ 7 As noted above, Cambria abandoned the sandwich shop property in February 1995, but remained in possession of the café property. In February, the parties began to dispute the heating problems in the café. Mr. Carmelo Cambria signed, with Mr. Joseph Cambria's knowledge, an agreement on a napkin that TNT could turn the heat off by February 14, 1995, by which time the Cambrias would have had a new heating system installed. TNT did turn off the heat, but the Cambrias had access to the heating system and could turn it back on if they wanted to.

¶ 8 On November 30, 1995, TNT notified Cambria-Stoltz that it was terminating its month-to-month lease of the café property, effective December 31, 1995. Cambria-Stoltz, however, remained in possession of the property until January 18, 1997, without TNT's permission, and paid rent into an escrow account from January to December 1996. In February 1996 TNT told the Cambrias that it should inform them in writing of any problems. The Cambrias did not do so, and on January 18, 1997, a ceiling tile fell and injured a café employee. An inspection revealed structural damage, and the Cambrias closed the café and ceased making rent payments. ¶ 9 On January 2, 1997, TNT filed a Complaint in Ejectment to evict the Cambrias. On about the same date, Cambria-Stoltz filed an action in equity seeking both enforcement of the leases and damages. The court below consolidated these two matters on February 14, 1997. A bench trial commenced on November 19, 1997, and Camstol Corporation was added as a plaintiff on December 9, 1997. The court below heard testimony on November 19, 20, and 24, 1997, and April 14 and 15, 1998. On December 31, 1998, the court below held that TNT had the right to possession of the café property and the rent payments in the escrow account. The court evicted Cambria-Stoltz. The court also refused to grant damages to Cambria-Stoltz. This appeal followed.

¶ 10 Appellants raise four issues on appeal: (1) whether the trial court erred in holding that Cambria-Stoltz breached the lease by failing to provide TNT with proof of insurance; (2) whether the trial court erred in holding that Cambria-Stoltz acquiesced to a month-to-month lease; (3) whether the trial court erred in failing to award damages to Cambria-Stoltz for TNT's failure to heat the premises or fix the roof; and (4) whether the trial court erred when it failed to award Cambria-Stoltz damages under breach of contract, breach of covenant of quiet enjoyment, or unjust enrichment. We discuss each in turn.

¶ 11 We first note that this is an equity matter. "Our scope of review in an equity matter is very limited. We must accept the trial court's findings of fact, and cannot reverse the trial court's determination absent a clear abuse of discretion or error of law." Gurenlian v. Gurenlian, 407 Pa.Super. 102, 595 A.2d 145, 147 (1991) (citing Walley v. Iraca, 360 Pa.Super. 436, 520 A.2d 886, 889 (1987)).

¶ 12 Appellants first argue that the court below erred in holding that Cambria-Stoltz breached the lease. They point to two errors: first, they say that the court's factual findings were erroneous because it disregarded the testimony of appellants' witnesses, and second, they contend that the court below erred in finding the breach was material.

¶ 13 Regarding the court's factual findings, our review is quite limited. "[W]here the chancellor's findings are largely dependent upon the credibility of witnesses, the findings are entitled to particular weight, as the chancellor had the opportunity to observe the demeanor of the witnesses." Walley, 520 A.2d at 889 (citing Dudash v. Dudash, 313 Pa.Super. 547, 460 A.2d 323, 326 (1983)). We will not disturb the trial court's findings simply because appellants would have preferred another outcome.

¶ 14 Regarding the breach, we look to the lease itself. "[L]eases between landlords and tenants are governed by contract law." Stonehedge Square Ltd. v. Movie Merchants, Inc., 454 Pa.Super. 468, 685 A.2d 1019, 1025 (1996) (citing Pugh v. Holmes, 486 Pa. 272, 405 A.2d 897, 903 (1979)),aff'd, 552 Pa. 412, 715 A.2d 1082 (1998). Further, we "`will not imply a contract different than that which the parties have expressly adopted.'" Id. (quoting Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385, 388 (1986)). "This rule is particularly apt when reviewing a contract involving two parties of relatively equal bargaining power, as is generally the case in a commercial lease setting." Id. Here, provision 9 in both leases stated: "The Tenants agree to take out ... public liability insurance against property damage or personal injury.... The Landlord shall be named as co-insured on all insurance policies and shall be entitled to a certificate of the insurer showing said coverage being in effect." The first provision of the contract clearly identifies "TNT Investments" as "Landlord." Appellants argue that they maintained liability insurance as required, but merely confused who was to be named co-insured. Appellants also contend that listing Metropolitan as co-insured was not a material breach because Mr. Timochenko and Mr. Templin managed both TNT and Metropolitan. Appellants further argue that they assumed that their insurance company mailed the proof to Metropolitan, even after receiving Ms. Grim's letter.

¶ 15 The court below found that appellants did not name TNT as co-insured, nor did appellants' insurance company provide the requested proof of insurance to TNT. See Memorandum Opinion, 8/3/99, at 9-10. Appellants did not prove that the certificate was ever placed in the mail, and appellants' documents proving they were insured were dated December 16, 1994, well after Ms. Grim's November 7 letter. See id. In fact, there is no evidence that TNT was ever listed as co-insured. See id. While it is true that appellants maintained insurance,...

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