Stonehedge Square Ltd. Partnership v. Movie Merchants, Inc.

• Decision Date: 25 November 1996
• Citation: 454 Pa.Super. 468,685 A.2d 1019
• Parties: STONEHEDGE SQUARE LIMITED PARTNERSHIP, Appellant (at 930), v. MOVIE MERCHANTS, INC. d/b/a Movie Merchants, Appellee. STONEHEDGE SQUARE LIMITED PARTNERSHIP, Appellee, v. MOVIE MERCHANTS, INC. d/b/a Movie Merchants, Appellant (at 915).
• Court: Pennsylvania Superior Court

Page 1019

685 A.2d 1019

454 Pa.Super. 468

STONEHEDGE SQUARE LIMITED PARTNERSHIP, Appellant (at 930), v. MOVIE MERCHANTS, INC. d/b/a Movie Merchants, Appellee.

STONEHEDGE SQUARE LIMITED PARTNERSHIP, Appellee, v. MOVIE MERCHANTS, INC. d/b/a Movie Merchants, Appellant (at 915).

Superior Court of Pennsylvania.

Argued Sept. 11, 1996.

Filed Nov. 25, 1996.

Jordan D. Cunningham, Harrisburg, for Movie Merchants.

George B. Faller, Jr., Carlisle, for Stonehedge.

Before McEWEN, President Judge, and SCHILLER and BROSKY, JJ.

SCHILLER, Judge.

In these cross-appeals, the parties appeal the orders of the Court of Common Pleas of Cumberland County finding defendant Movie Merchants liable for breach of a commercial rental lease and awarding a new trial on the issue of damages only. We affirm in part and reverse in part.

FACTS:

Appellant, Stonehedge Square Limited Partnership [appellee on the cross-appeal, hereinafter referred to as "Landlord"] owns and operates the Stonehedge Square shopping center on Walnut Bottom Road in Carlisle, Cumberland County, Pennsylvania. Landlord entered into a written lease agreement for a store in the shopping center with General Video Corporation that began on July 6, 1990 and ended on July 5, 1995. On July 31, 1992, General Video assigned the lease to Appellee Movie Merchants, Inc. [appellant on the cross-appeal; hereinafter referred to as "Tenant"]. Tenant operated a video rental store at the shopping center from July 1992 to October 27, 1994, when it vacated the premises. Landlord filed the present action to recoup unpaid rent from November 1, 1994 to July 5, 1995.

The case was tried without a jury before the Honorable Kevin A. Hess. Following the trial, the court made findings of fact as follows:

The defendant [Tenant] had notified the plaintiff [Landlord] of its intention to vacate the premises. The plaintiff, initially , expressed optimism concerning the ability to rent the property to another tenant. No final understanding was reached, however, and, in the final analysis, the defendant's departure from the leased premises was unilateral.

The defendant, upon learning that the leased premises were now vacant, permitted a realtor to pursue its re-rental. There were almost no efforts to re-rent the premises after December of 1994.

The premises remained vacant until the expiration of the lease term in July of 1995 with the exception that other leases in the mall, most notably Nell's Market, were permitted to use the former video store for the storage of equipment. Eventually, the locks were changed on the leased premises.

The trial court then made the following conclusions of law:

The surrender of the demised premises by the tenant was, in this case, not accepted by the lessor and the evidence in this case does not create the presumption of a surrender.

The fact that Stonehedge took possession of the premises and used it for temporary storage does not rise to the level of adverse use to warrant an acceptance of the tenant's surrender nor does the changing of some of the locks of the leased building warrant an acceptance, particularly where the tenant remained able to enter the building through other entrances.

The circumstances of this case do not give rise to a duty on the part of the plaintiff to negate its damages by reletting the premises following the defendant's abandonment, nor is the defendant discharged from the covenant to pay rent on this account.

Slip Opinion, Stonehedge Square Limited Partnership v. Movie Merchants, Inc., d/b/a Movie Merchants, Court of Common Pleas, Cumberland County, No. 94-6625 at 1-2.

As a result of these findings, the trial court on August 11, 1995, found in favor of the Landlord in the amount of $46,797.09, plus interest. Both parties filed post-trial motions. On November 22, 1995, the trial court reversed itself on the question of damages and found that Pennsylvania law imposes a duty on lessors to mitigate damages, and ordered a new trial. Both parties have appealed these orders before this Court.

DISCUSSION:

The parties have raised, inter alia, the following issues: ¹ (1) whether the trial court erred in finding that the Landlord had not accepted the tenant's surrender of the lease (Tenant's issue); (2) whether the trial court erred in finding that the representations of the Landlord as to the demised premises being relet did not preclude the Landlord from seeking damages under the doctrine of equitable estoppel (Tenant's issue); and (3) whether Pennsylvania law imposes a duty to mitigate on commercial lessors when the lessee breaches the lease (Landlord's issue).

Our standard of review in a non-jury trial is clear. We must determine whether the findings of the trial court are supported by competent evidence and whether the trial judge committed error in the application of law. Additionally, findings of the trial judge in a non-jury case must be given the same weight and effect on appeal as a verdict of a jury and will not be disturbed absent error of law or abuse of discretion. Olmo v. Matos, 439 Pa.Super. 1, 5-6, 653 A.2d 1, 3 (1994), alloc. denied, 541 Pa. 652, 664 A.2d 542 (1995).

Regarding the first issue, Tenant claims that it informed the Landlord in August, 1994, of an opportunity it had to relocate to another location and of the necessity to remove various trade fixtures from the Stonehedge Square store by the end of September. A meeting of the parties was held on September 2, 1994, where, according to Tenant, Landlord stated that it had no objection to the move and could re-let the premises with little difficulty. Throughout September, 1994, Tenant tried unsuccessfully to contact Landlord. On October 4, 1994 Landlord wrote to Tenant that Landlord would not consider an early termination of the lease. By that time, Tenant claims that it had already removed the fixtures. Tenant then left the premises in late October, 1994.

Approximately one month after the Tenant vacated the premises, the Landlord began storing materials in the vacated premises, including some belonging to another tenant in the shopping center. In April, 1995, the Landlord changed some of the locks. Tenant argues that these actions by the Landlord evinced an acceptance of the Tenant's surrender of the lease.

Before an act of surrender by a tenant can be held to relieve the tenant from further liability under a lease, the landlord must accept the surrender. Hochman v. Kuebler, 53 Pa.Super. 481, 484 (1913). When determining if a surrender of the lease occurred, the intention of the parties govern. Lawton v. De Angelo, 169 Pa.Super. 380, 382, 82 A.2d 900, 901 (1951). Whether the landlord accepted the tenant's surrender is a question of fact for the jury. Id. The burden is on the tenant to show by clear and convincing evidence that the landlord's actions constituted acceptance of the tenant's surrender. See Brill v. Haifetz, 158 Pa.Super. 158, 162, 44 A.2d 311, 313 (1945). It must be shown that the landlord made some "unequivocal act" that would constitute acceptance of the tenant's surrender. Ralph v. Deiley, 293 Pa. 90, 94, 141 A. 640, 642 (1928). According to the Supreme Court:

where a tenant, during the term [of the lease], abandons the demised premises, the landlord is not bound, under the penalty of loss of his right to receive rent, to permit the tenement to remain wholly unoccupied with the consequent possible or probable loss of his insurance, destruction by waste, or other like injuries. The mere fact that he resumes possession is not of itself a sufficient foundation upon which to predicate ... an acceptance of a surrender ... It must further be found on evidence that such resumption of possession is not merely for the protection of the property during the absence of the tenant, but is adverse to a reoccupation of it by him and a renewal of the relations created by the lease.

Kahn v. Bancamerica-Blair Corp., 327 Pa. 209, 213-14, 193 A. 905, 907 (1937) (citation omitted).

It was shown at trial that the items in question were not moved into the demised premises until approximately one month after the Tenant had vacated the store, and that the items would have been moved out of the store if the Tenant had indicated a desire to resume operation of the store. ² In addition, only some of the locks were changed, and the tenant was still able to enter the store at will via a different door. N.T., June 22, 1995, 122. Based on this evidence, the trial court found that the Landlord's actions did not constitute such an "unequivocal act" as to constitute acceptance of the Tenant's surrender. This was a factual determination and will not be disturbed absent an abuse of discretion or an error of law. Lawton, supra. Neither exist here.

Tenant's next issue is whether the trial court should have prevented the Landlord from seeking damages under a theory of equitable estoppel. Tenant argues that the Landlord made representations that it had secured a replacement tenant for the store, or that it did not anticipate a problem in finding a replacement tenant. According to Tenant, it was in reliance on these representations that it vacated the premises and relocated to a new location.

Whether equitable estoppel exists in a given case is a question of law for the court to decide. Nesbitt v. Erie Coach Company, 416 Pa. 89, 96, 204 A.2d 473, 476 (1964). When reviewing questions of law the trial court's conclusions of law are not binding on this court, whose duty is to determine whether there was a proper application of the law to the facts by the trial court. Thatcher's Drug Store v. Consolidated Supermarkets, Inc., 535 Pa. 469, 477, 636 A.2d 156, 160 (1994). ³ "Equitable estoppel, a doctrine sounding in equity, acts to preclude one from doing an act differently than the manner in which another was induced by word or deed to expect." Zitelli v. Dermatology Educ. & Res., 534 Pa. 360, 370, 633 A.2d 134, 139 (1993). It may be applied:

where the party asserting estoppel...