Temple University of the Com. System of Higher Educ. v. Allegheny Health Educ. and Research Foundation

• Citation: 456 Pa.Super. 314,690 A.2d 712
• Parties: , 116 Ed. Law Rep. 1077 TEMPLE UNIVERSITY OF THE COMMONWEALTH SYSTEM OF HIGHER EDUCATION, Appellee, v. ALLEGHENY HEALTH EDUCATION AND RESEARCH FOUNDATION and St. Christopher'S Hospital for Children, Appellants.
• Decision Date: 22 January 1997
• Court: Pennsylvania Superior Court

Page 712

690 A.2d 712

456 Pa.Super. 314, 116 Ed. Law Rep. 1077

TEMPLE UNIVERSITY OF THE COMMONWEALTH SYSTEM OF HIGHER

EDUCATION, Appellee, v. ALLEGHENY HEALTH EDUCATION AND RESEARCH FOUNDATION and St.

Christopher'S Hospital for Children, Appellants.

Superior Court of Pennsylvania.

Argued Oct. 2, 1996.

Filed Jan. 22, 1997.

Richard Sprague, Philadelphia, for appellants.

Mark A. Aronchick, Philadelphia, for Temple University, appellee.

Before McEWEN, President Judge, and EAKIN and HOFFMAN, JJ.

McEWEN, President Judge:

We here address an appeal from an order which (1) granted the petition of Temple University (hereinafter "Temple" or appellee) for a temporary restraining order and temporary injunction against Allegheny Health Education and Research Foundation (hereinafter "AHERF") and St. Christopher's Hospital for Children (hereinafter "SCHC"), the two defendants in the underlying action who will for the purpose of this discussion be designated appellant, and (2) directed that, inter alia, AHERF and SCHC rescind their purported termination of agreements into which they had entered with Temple. While the scrutiny of the record by the majority reveals the exemplary patience and insight of the trial judge throughout the extended and vexing proceedings, we are obliged to reverse the order and remand the case to the trial court.

The factual history underlying this litigation can best be supplied by reference to the contracts underlying the relationship between the parties, since the issues presented by this appeal arise from three agreements into which the parties have entered:

A 1990 Affiliation Agreement which formalized a prior relationship and affiliation between the parties, entered into on March 23, 1990.

A Sub-Lease Agreement entered into on that same date, March 23, 1990, which called for appellant to lease to Temple specified areas of the facility and for Temple to pay a monthly rental sum.

A second Affiliation Agreement entered into by the parties on June 14, 1994, which superseded the earlier Affiliation Agreement of March 23, 1990.

The 1990 Sub-Lease Agreement called for Temple to pay an annual rental in 12 equal installments on the first day of each month, at a designated location, more specifically:

2.1. Annual Rent. During the term of this Lease, Tenant [Temple] covenants and agrees to pay to Landlord [St. Christopher's] without demand a first year annual rent ("Base Year Rent") equal to Two Million One Hundred Fourteen Thousand Four Hundred Fifty One Dollars ($2,114,451) application to the whole of the Demised Premises, subject to the annual increases in Base Year Rent specified in Paragraph 2.2 hereof. Payment of the Base Year Rent shall be made in twelve equal monthly installments.... Payment of each installment shall be made on the first day of each month, without prior notice or demand, at 100 W. Laurel Avenue, Cheltenham, Pennsylvania 19012.

That 1990 Sub-Lease Agreement conferred upon Temple the right to cure any default in the payment of rent within 15 days of the default, and extended to appellant the prerogative to terminate the Sub-Lease Agreement in the event of the failure of Temple to cure such a monetary default as the payment of rent, the specific provisions of which follow:

13.1. Default, Notice, Termination. If Tenant defaults in the payment of rent or additional rent or defaults in the performance of any of the terms, covenants, or conditions of this Lease, Landlord may give to Tenant written notice of such default, and if Tenant does not cure any monetary default within fifteen (15) days, or other default within thirty (30) days, after the giving of such notice (or, if such other non-monetary default is of such nature that it cannot be completely cured within such thirty (30) days, if Tenant does not commence such curing within such thirty (30) days and thereafter proceed with reasonable diligence and in good faith to cure such default), the Landlord may terminate this Lease on not less than seven (7) days written notice to Tenant, and on the date specified in said notice the term of this Lease shall terminate, and Tenant shall then quit and surrender the Demised Premises to Landlord, but Tenant shall remain liable as hereinafter provided. If this Lease shall have been so terminated by Landlord, Landlord may at any time thereafter resume possession of the Demised Premises by any lawful means and remove Tenant and other occupants and their effects.

That Sub-Lease Agreement was also designated as a no waiver agreement by the following provision:

18.1 No Waiver. The failure of either party to insist on strict performance of any term, covenant, or condition hereof, or to exercise any option herein contained, shall not be construed as a waiver of such term, covenant, condition, or option in any other instance.

The 1990 Affiliation Agreement, executed contemporaneously with that Sub-Lease Agreement, provided:

That appellant would make monthly AS&T services (Administration, Supervision, and Teaching services) payments to Temple, and

That Temple could offset a monthly rental sum which the Sub-Lease Agreement called for Temple to pay to St. Christopher's against what would always be the greater sum which St. Christopher's was obliged to pay Temple for AS&T services.

When the parties replaced the 1990 Affiliation Agreement with the new Affiliation Agreement of June 14, 1994, the Sub-Lease Agreement of 1990 remained intact. The 1994 Affiliation Agreement (1) once again obliged appellant to provide for AS&T services payments, (2) but restructured the method of the payment for those AS&T services, and (3) failed to extend to Temple the right to offset monthly rental payments which the Sub-Lease Agreement obliged Temple to make to St. Christopher's pursuant to Paragraph 2.1 of the Sub-Lease Agreement.

The parties, however much the June 14, 1994, Affiliation Agreement might have altered their rights and duties, continued until the end of 1994, the prior practice which saw appellant make estimated monthly AS&T payments to Temple after calculation of the offset or rental sum due from Temple to appellant. Appellant halted in December, 1994, its monthly AS&T payments to Temple, and subsequently called upon Temple to pay to it the monthly rental sum due under the Sub-Lease Agreement of 1990. When Temple failed to do so, appellant, on October 11, 1995, declared Temple in monetary default, and, when Temple failed to cure the declared default, appellant on November 1, 1995, declared the termination of both

The Sub-Lease Agreement of 1990, and

The 1994 Affiliation Agreement, pursuant to paragraph 18 of that 1994 Affiliation Agreement, specifically:

18. [Temple] and [St. Christopher's] are parties to a lease agreement entered into between United Hospitals, Inc. and Temple University dated March 23, 1990 (the "Lease Agreement"), which shall continue in effect through the term of this Agreement. The Lease Agreement and this Agreement shall each be subject to the other; the termination of one shall constitute immediate termination of the other.

Temple commenced the instant litigation promptly thereafter and secured the entry of a temporary restraining order on November 17, 1995. When the trial court, following several days of hearings, granted the application of appellee for a preliminary injunction and, inter alia, directed rescission of the termination declarations, appellant undertook the instant appeal.

The principles of law which guide our consideration are rather elementary, however enormous the impact upon the parties, and have, as appellee acknowledges, been correctly presented by appellant:

"The interpretation of a contract is a question of law". Halpin v. LaSalle University, 432 Pa.Super. 476, 481, 639 A.2d 37, 39 (1994), allo. denied, 542 Pa. 670, 668 A.2d 1133 (1995).

"It is well established that the intent of the parties to a written contract is to be regarded as being embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement. As this Court stated in East Crossroads Center, Inc. v. Mellon-Stuart Co., 416 Pa. at 230-231, 205 A.2d at 866, '[w]hen a written contract is clear and unequivocal, its meaning must be determined by its contents alone. It speaks for itself and a meaning cannot be given to it other than that expressed. Where the intention of the parties is clear, there is no need to resort to extrinsic aids or evidence.' " Steuart v. McChesney, 498 Pa. 45, 48-49, 444 A.2d 659, 661 (1982) (emphasis added) (citations omitted).

The particular issue for special scrutiny is whether the terms of the 1994 Affiliation Agreement between the parties reflect such ambiguity as to require the admission of extrinsic evidence such as: the intention of the parties, the motive of appellant, the practices in which the parties engaged under the prior agreement, and the conduct of, as well as the procedures in which, appellant engaged during the months following execution of the 1994 contract. If the 1994 Affiliation Agreement is ambiguous, it follows (1) that the trial court properly admitted the extrinsic evidence, and (2) the extrinsic evidence so supplements the 1994 Affiliation Agreement as to preclude the termination by appellant of that 1994 Affiliation Agreement and the 1990 Sub-Lease Agreement, and thereby the declaration by appellant of breach and default by appellee. If, on the other hand, the provisions of the 1994 Affiliation Agreement are not ambiguous, the proffered extrinsic evidence is not admissible, and the courts are precluded from complementing the explicit terms of the agreements between the parties and from interference with the declaration by appellant of breach and default on the part of appellee.

Our study compels the conclusion that the provisions of the 1994 Affiliation Agreement are so tight, clear, and certain as to preclude the admission of such extrinsic...