Supreme Court Says Damages Award Was Inconsistent in Contract Case
"We hold a non-breaching party to a contract may, by its conduct following a breach, conclusively elect its remedy and be bound by it to one theory for recovery of damages," Justice Kevin Dougherty wrote for the majority.
September 26, 2019 at 03:56 PM
3 minute read
The Pennsylvania Supreme Court has upheld a ruling that a trial judge in a commercial landlord/tenant contract dispute rendered an inconsistent award for the tenant that simultaneously rescinded and enforced the lease contract.
The justices' ruling Sept. 26 affirmed the state Superior Court's holding in Gamesa Energy v. Ten Penn Center.
In that case, a Philadelphia trial judge found the landlord had breached the lease contract by failing to timely respond to its tenant's request to sublease part of its premises. The judge retroactively rescinded the contract and awarded the tenant damages for unjust enrichment. But the judge also awarded the tenant damages equal to the amount it would have received under the proposed sublease.
In March 2018, the state Superior Court reversed in part and denied in part the trial judge's ruling in favor of Gamesa Energy USA in its case against Ten Penn Center Associates. The high court agreed with the Superior Court's reasoning, according to Justice Kevin Dougherty, who wrote the court's Sept. 26 majority opinion.
"We hold a non-breaching party to a contract may, by its conduct following a breach, conclusively elect its remedy and be bound by it to one theory for recovery of damages," Dougherty said. "The Superior Court correctly determined the trial court erred by retroactively terminating the lease agreement between the parties, and by awarding Gamesa damages for both breach of and rescission of the lease."
Chief Justice Thomas Saylor issued a separate, concurring opinion, in which he supported the majority's conclusion. However, Saylor said the issue was one better suited for the legislature.
Gamesa alleged Ten Penn breached the lease by failing to make a decision on a proposed sublease with another company, BSI, within the timeframe dictated by the lease. Gamesa claimed that Ten Penn had broken the terms of the lease and demanded damages based on expectation. But Gamesa also sought a ruling that the lease had been rescinded as of the date Ten Penn failed to accept or reject the sublease request. Based on a theory of unjust enrichment, Gamesa sought reimbursement of the rent it paid after that point.
The trial judge held that Ten Penn breached the lease contract, that the breach effectively rescinded the contract and that Ten Penn was unjustly enriched by any rent payments it subsequently received from Gamesa. But the judge also awarded Gamesa the amount it would have received under the three-year sublease with BSI.
Judge Jack Panella wrote in the Superior Court's opinion that those rulings were inconsistent and noted the plaintiff can only recover for breach of contract because that was the remedy it chose by continuing to pay rent to Ten Penn and collect rent for its sublease following the breach.
"The remedy Gamesa had chosen for trial was to enforce the contract and recover based on expectation, i.e., recover the expected rent from the BSI sublease. Thus, the trial court's actions in retroactively terminating the contract and awarding Gamesa damages based upon a theory of unjust enrichment was clearly in error," Panella said.
The Superior Court upheld the trial court's determination that Ten Penn imposed unreasonable conditions for subleasing and affirmed the judge's award of $265,000 damages based on the amount due under the BSI sublease.
Jeffrey Batoff of Obermayer Rebmann Maxwell & Hippel represents Gamesa and William Hangley of Hangley Aronchick Segal Pudlin & Schiller represents Ten Penn. Neither responded to requests for comment.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllPittsburgh Judge Rules Loan Company's Online Arbitration Agreement Unenforceable
3 minute readDe-Mystifying the Ethics of the Attorney Transition Process, Part 1
Risk Mitigation: Employee Engagement Results in Fewer Lawsuits (and Other Benefits)
5 minute readTrending Stories
- 1Tuesday Newspaper
- 2Judicial Ethics Opinion 24-85
- 3Decision of the Day: Administrative Court Finds Prevailing Wage Law Applies to Workers Who Cleaned NYC Subways During Pandemic
- 4Trailblazing Broward Judge Retires; Legacy Includes Bush v. Gore
- 5Federal Judge Named in Lawsuit Over Underage Drinking Party at His California Home
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250