United States Gypsum Co. v. Schiavo Bros., Inc., Civ. A. No. 74-3165.

• Decision Date: 01 May 1978
• Docket Number: Civ. A. No. 74-3165.
• Citation: 450 F. Supp. 1291
• Parties: UNITED STATES GYPSUM CO. v. SCHIAVO BROTHERS, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

450 F. Supp. 1291

UNITED STATES GYPSUM CO. v. SCHIAVO BROTHERS, INC.

Civ. A. No. 74-3165.

United States District Court, E. D. Pennsylvania.

May 1, 1978.

COPYRIGHT MATERIAL OMITTED

Michael Baylson, Duane, Morris & Heckscher, Philadelphia, Pa., for plaintiff.

John Elliott, Philadelphia, Pa., for defendant.

OPINION AND ORDER

FOGEL, District Judge.

I. INTRODUCTORY STATEMENT:

Good name in man and woman, dear my Lord,

Is the immediate jewel of their souls; Who steals my purse steals trash; 'tis something, nothing:

'Twas mine, 'tis his, and has been slave to thousands;

But he that filches from me my good name

Robs me of that which not enriches him And makes me poor indeed.¹

(Emphasis supplied.)

The subject of this lawsuit concerns no one's good name; it does concern trash. While the actors in this saga do not quite reach the dramatic heights of an Othello or an Iago, the bitterness generated by this dispute between landlord and tenant with respect to the responsibility for cleaning up industrial land has produced quite a scenario (and has also provided us with more than one sideshow). It is the consequence of a long standing business relationship gone sour.

Plaintiff, United States Gypsum Company (USG), was the lessor of a tract of land in Southwest Philadelphia under a lease agreement which began in 1966 and ended in 1974. USG seeks to recover from the lessee under that lease, Schiavo Brothers, Inc. (Schiavo), costs incurred by USG in clearing a large amount of trash and debris left on the land by Schiavo at the termination of the lease. The cause of this accumulation of debris was the use to which the property was put; Schiavo, pursuant to the terms of the lease, sublet a substantial portion of the leasehold premises to junk car dealers. When these dealers vacated the property in 1974, they neglected to take with them a substantial amount of the remains of their operations, specifically tires and car seats. Additionally, the property accumulated, during the course of the lease, a large amount of debris which was the result of illegal dumping by third persons.

When the lease was terminated and Schiavo surrendered the land to USG, Schiavo denied any duty to clear the debris from the land. It based its position on the terms of the 1966 lease, which made no provision for the cleanup of the property at termination; Schiavo contends that such a duty cannot be implied.

Plaintiff contends that Schiavo is in breach both of its express duty to surrender peaceably the property, and its implied duty, as lessee, to return the property in substantially the same condition which existed at the inception of the lease, reasonable wear and tear excepted.

Schiavo also filed a counterclaim against USG, pursuant to Fed.R.Civ.P. 13; this counterclaim arises from another lease between USG as lessor and Schiavo as lessee. This lease was signed in 1970, and concerned a tract of land adjacent to the property which was the subject of the 1966 lease between the parties. Schiavo alleges that USG fraudulently misled Schiavo with respect to the duration of this lease; it contends that it expended a large sum of revenue in the purchase of new equipment, and in improving a road leading to the property in reliance on USG's misrepresentation; Schiavo claims USG then wrongfully terminated the lease, causing damage to it.

The trial, which was non-jury, took ten days, eight of which were devoted to trial of the main claim. Following the trial, the parties submitted extensive briefs and requests for findings of fact and conclusions of law. Thorough oral argument was heard. We are now prepared to issue our Findings of Fact and Conclusions of Law, pursuant to Fed.R.Civ.P. 52(a).

With respect to the main claim, we find that plaintiff has failed to prove, by a preponderance of the evidence, that Schiavo is in breach of either an express covenant to peaceably surrender the property, or an implied covenant to return the land in substantially the same condition as existed at the inception of the lease, (reasonable wear and tear excepted). With respect to the counterclaim, we find that Schiavo has also failed to meet its burden of proof.

II. FINDINGS OF FACT — MAIN CLAIM:

We will present our findings of fact, made pursuant to Fed.R.Civ.P. 52(a), in narrative form:

A. Introduction:

USG is a corporation engaged in the manufacture of gypsum building products; it is incorporated in Delaware, and its principal place of business is in Chicago, Illinois. Schiavo is in the business of waste disposal; its state of incorporation is Pennsylvania, and its principal place of business is located in Philadelphia. In January, 1966, the parties entered into a leasehold agreement for a tract of land located in Southwest Philadelphia which was owned by USG²; it is that lease which is the center of the dispute before us.

The leasehold property consisted of approximately 26 acres of territory, divided into two areas: Area A comprised slightly more than 23 of these acres, while Area B accounted for the remaining two-plus acres.³ This property is adjacent to Essington Avenue, and covers both sides of 67th Street in Philadelphia, an industrial area in Southwest Philadelphia which is near the Philadelphia International Airport and consists of much undeveloped land.

B. Pre-1966 Background:

The primary benefit which USG derived, over the years, from its ownership of the leasehold property, was the disposal of the company's waste through the operation of a landfill on the property. USG has a manufacturing plant located in Philadelphia, which produces a great amount of waste material that must be eliminated; USG's ownership of the leasehold property provided the necessary means for this disposal. Prior to 1959, the property was entirely below grade, and was, therefore, suitable for a landfill operation. In summary form, this operation consists of dumping successive layers of waste in trenches dug on the land, and covering each layer with a layer of dirt; this procedure is continued until the land is brought up to grade. In this fashion, a properly operated landfill can last for many years.

USG began to use the leasehold property for waste disposal approximately in 1959; USG leased Area B to a Mr. Archer, a waste hauler, who was to conduct a landfill operation on the property, using primarily USG waste material to bring the land up to grade; it took approximately one year to accomplish this. At that time, in 1960, Area B was leased by USG to a Mr. Spence and a Mr. Montgomery for the purpose of operating an automobile junk dealership on the property.

In the meantime, while Area B was being brought up to grade, USG also began to have its waste dumped on another part of the leasehold property; it leased a small section of Area A, which has been designated as Area F (this section has roughly the shape of a finger), to a Mr. Neely; Area F covers approximately 718 feet along Essington Avenue, to a depth of about 100 feet. Mr. Neely agreed to conduct a landfill on Area F, again using primarily waste material of the lessor, USG. When Area F was brought up to grade (within about a year), Neely began to operate a used truck business on the property, a use specifically permitted under the terms of his lease with USG.

In 1961, Neely had a heart attack, and he assigned his rights and obligations under the lease for Area F to Joseph Adiletto, who continued to conduct a used truck business on the land. Soon, however, Adiletto went beyond the uses permitted under the lease, and not only began to deal in automobile scrap himself, but also to sublet a part of Area F to two automobile junk dealers. When USG became aware of Adiletto's activities, it did not order removal of the junk car dealer operation, (Spence and Montgomery were already operating a junk car dealership on Area B), but increased the rental which Adiletto was to pay under the lease. Thus, the junk car dealers continued to occupy Area F.

By 1963, however, USG had become very unhappy with the manner in which Adiletto supervised the junk car dealers. The junk cars had expanded beyond the boundaries of Area F, and were constantly sprawling onto Essington Avenue, a public thoroughfare. In addition, the property was generally in an unkempt condition, with junk scrap and debris spread throughout the area; this generally poor maintenance of the property had prompted frequent complaints from the City of Philadelphia. For these reasons, USG cancelled the lease with Adiletto in 1963.

Throughout this period, defendant Schiavo had been carrying on a waste haulage and landfill operation on a parcel of land which it owned, and which was adjacent to the USG property. The real estate business relationship between plaintiff and defendant began in 1963 after USG had terminated the Adiletto lease. Area F was then leased to Schiavo by USG;⁴ USG believed that Schiavo would exercise more aggressive, and therefore, more effective supervision over the junk car dealers, and thus not only keep them within the confines of their areas, but also police them so that junk cars would not be placed on Essington Avenue.

The natural expansion of junk car dealers beyond their boundaries seems, however, to be an inevitable occurrence, and the junk car sublessees gradually began to encroach on Area A, beyond Area F. Rather than force the dealers back onto their property, seemingly a fanciful idea at best, USG agreed to lease to Schiavo a further part of Area A (beyond Area F), encompassing in part the land onto which the junk dealers had expanded. This area, the subject of a second 1963 lease,⁵ covered approximately 200 feet along Essington Avenue, to a depth of approximately 100 feet. Thus, after the signing of the second lease agreement, Schiavo had under lease from USG a section of Area A (encompassing Area F), extending a little more than 900 feet along Essington Avenue, to a depth of about 100 feet.

After the unhappy experience with Adiletto,...