Main Street Mansion v. Tomasulo, K. ( 2019 )

J-S30031-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MAIN STREET MANSION, LLC AND : IN THE SUPERIOR COURT OF
MAJESTIC MANSION, LLC, : PENNSYLVANIA
:
:
v. :
:
:
KRISTIAN R. TOMASULO AND :
JOSEPH GRANDE, JR., :
:
Appellants : No. 2875 EDA 2017
Appeal from the Order Dated August 11, 2017
in the Court of Common Pleas of Bucks County
Civil Division at No(s): 2017-01261
MAIN STREET MANSION, LLC AND : IN THE SUPERIOR COURT OF
MAJESTIC MANSION, LLC, : PENNSYLVANIA
:
:
v. :
:
:
KRISTIAN R. TOMASULO AND :
JOSEPH GRANDE, JR., :
:
Appellants : No. 2185 EDA 2018
Appeal from the Order Dated June 19, 2018
in the Court of Common Pleas of Bucks County
Civil Division at No(s): 2017-01261
MAIN STREET MANSION, LLC AND : IN THE SUPERIOR COURT OF
MAJESTIC MANSION, LLC, : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
:
KRISTIAN R. TOMASULO AND :
JOSEPH GRANDE, JR. : No. 2253 EDA 2018
J-S30031-19
Appeal from the Order Entered April 13, 2018
in the Court of Common Pleas of Bucks County
Civil Division at No(s): 2017-01261
BEFORE: PANELLA, P.J., KUNSELMAN, J., and MUSMANNO, J.
MEMORANDUM BY MUSMANNO, J.: FILED AUGUST 14, 2019
Kristian R. Tomasulo (“Tomasulo”) and Joseph Grande, Jr. (“Grande”)
(collectively, “Defendants”) appeal from the Orders entered on August 11,
2017, which denied their Emergency Petition for Preliminary Injunction, and
June 19, 2018, which entered monetary Judgment and Judgment in
possession against Defendants. Main Street Mansion, LLC (“Main”) and
Majestic Mansion, LLC (“Majestic”) (collectively, “Plaintiffs”) cross-appeal from
the Order entered on April 13, 2018, ejecting Defendants from certain
property, and awarding damages to Plaintiffs.1 We affirm.
In its Opinion, the trial court set forth the relevant factual and procedural
history underlying these appeals, which we adopt as though fully stated
herein. See Trial Court Opinion, 4/13/18, at 1-10.
Defendants now raise the following claims for our review:
A. Whether the trial court abused its discretion and violated due
process in its pre-trial administration of the case[?]
B. Whether the trial court both erred legally and abused its
discretion in rendering a verdict without taking account of
Defendants’ evidence or [the] law[?]
____________________________________________
1 The separate appeals (docketed at Nos. 2875 EDA 2017, 2185 EDA 2018,
and 2253 EDA 2018, respectively) were consolidated at 2875 EDA 2017. We
note that Defendants have abandoned any argument relating to the denial of
their Emergency Petition for Preliminary Injunction. Thus, the matter is not
addressed herein and is included in the caption only by virtue of consolidation.
-2-
J-S30031-19
C. Whether Plaintiff[s] [were] entitled to judgment when [they]
did not demonstrate [] compliance with the Lease and
demonstrably breached it and inequitably exploited its
breach[?]
D. Whether the trial court erred by subverting the law of quiet
enjoyment[?]
Brief for Defendants at 4-5 (unnecessary capitalization omitted).2
Our standard of review of a non-jury verdict is limited to
determining whether the findings of the trial court are supported
by competent evidence and whether the trial court committed an
error in any application of the law. We consider the evidence in a
light most favorable to the verdict winner[,] and will reverse only
if the trial court’s findings of fact are not supported by competent
evidence in the record or if its findings are premised on an error
of law.
Hornberger v. Dave Gutelius Excavating, Inc., 176 A.3d 939, 943-44 (Pa.
Super. 2017) (internal citations and quotation marks omitted); see also L.B.
Foster Co. v. Charles Caracciolo Steel & Metal Yard, Inc., 777 A.2d 1090,
1093 (Pa. Super. 2001) (stating that, in a non-jury trial, the fact-finder is free
to believe all, part, or none of the evidence).
DEFENDANTS’ APPEAL
In their first claim, Defendants contend that the trial court violated their
rights to due process by entering a case management Order, sua sponte, that
restricted the timeframe for discovery. Brief for Defendants at 19-21.
Additionally, Defendants assert that the trial court precluded Defendants from
____________________________________________
2 We note that Defendants’ fifth claim has been omitted, as it merely
constituted a counter-statement of the question raised in Plaintiff’s cross-
appeal.
-3-
J-S30031-19
engaging in discovery, while affording Plaintiffs full discovery. Id. at 4,
21-24.
Defendants primarily focus on the language of Pa.R.C.P. 4007.3, which
provides:
Unless the court upon motion, for the convenience of parties and
witnesses and in the interests of justice orders otherwise,
methods of discovery may be used in any sequence and the fact
that a party is conducting discovery, whether by deposition or
otherwise, shall not operate to delay any other party’s discovery.
Pa.R.C.P. 4007.3 (emphasis added); see also Brief for Defendants at 19-21.
Defendants’ focus is misplaced. Rule 4007.3 addresses restrictions on
the sequence and methods of discovery, not the overall timeframe during
which discovery may be conducted. Nothing in Rule 4007.3 prohibits a trial
court from establishing a discovery schedule to which both parties are bound
and which affords adequate pursuit of discovery by the parties. Rather, the
Rules of Civil Procedure contemplate the entry of such orders by the trial court.
See, e.g., Pa.R.C.P. 212.3 (providing that “[i]n any action at any time the
court, sua sponte or on motion of any party, may direct the [] parties … to
appear for a conference to consider … [t]he entry of a scheduling order.”).
The second half of Defendants’ first claim expounds upon the
overarching principles of justice embodied in Pa.R.C.P. 126, which states, in
relevant part, that the “rules shall be liberally construed to secure the just,
speedy and inexpensive determination of [] action[s]….” Pa.R.C.P. 126.
Defendants baldly claim that “[n]othing about the trial court’s administration
-4-
J-S30031-19
of pre-trial proceedings comports with these requirements. The [trial c]ourt
not only denied [Defendants’] discovery but fully indulged a strategy of
[Plaintiffs] to aggress through discovery demands both pre-trial and in trial.”
Brief for Defendants at 22.
Defendants fail to cite to any authority or evidence illuminating the trial
court’s purported violations of Rules 4007.3 or 126. At most, Defendants
support their argument with a generic citation to the Rules themselves, a note
to “See Docket.” Brief for Defendants at 22-23. Therefore, this claim waived.
See Commonwealth v. Murchinson, 899 A.2d 1159, 1162
(Pa. Super. 2006) (holding that a claim was waived on appeal where the
appellant failed to develop meaningful argument).
Moreover, were we to address the merits of Defendants’ claim, we
would agree with the trial court’s analysis as to why Defendants’ due process
rights were not violated, and would affirm on that basis as to Defendants’ first
claim. See Trial Court Opinion, 4/13/18, at 23-25.
In their second claim, Defendants contend that the trial court did not
adequately consider the evidence presented by Defendants “insofar as the trial
court did not adjudicate but advocated exclusively to vindicate []
Plaintiff[s]….” Brief for Defendants at 4. Defendants claim that the verdict
“has no correspondence with competent evidence” and “improperly shunts all
of the law centered on the implied covenant of quiet enjoyment….” Id. at 24.
Defendants emphasize that the trial court made independent factual
-5-
J-S30031-19
determinations, rather than adopting or being guided by Defendants’ or
Plaintiffs’ Proposed Findings of Fact. Id.
Upon review, we agree with the trial court’s analysis and conclude that,
viewing the evidence in the light most favorable to Plaintiffs, the trial court’s
verdict is supported by the record and is not the result of legal error or an
abuse of discretion. See Trial Court Opinion, 4/13/18, at 13-19, 25-27. Thus,
we affirm on this basis as to Defendants’ second claim. See id.
In their third claim, Defendants contend that the trial court erred by
disregarding that the evidence unquestionably demonstrated that Plaintiffs
deliberately breached their obligation to transfer Majestic’s liquor license with
the purpose of severely damaging Defendants. Brief for Defendants at 4, 28-
31. Defendants’ argument centers on Plaintiffs’ alleged breaches of the
Lease—i.e., Plaintiffs’ failure to convey a valid liquor license, as well as the
professed constructive eviction of Defendants. Id. at 28-31. Defendants
claim that such breaches entitled them to withhold rent and preclude Plaintiffs
from recovering the same. Id.
Upon review, we agree with and adopt the trial court’s analysis and
conclusion that, viewing the evidence in the light most favorable to Plaintiffs,
the verdict is supported by the record and is not the result of legal error or an
abuse of discretion. See Trial Court Opinion, 4/13/18, at 13-22, 25-29. Thus,
we affirm on this basis as to Defendants’ third claim. See id.
-6-
J-S30031-19
In their fourth claim, Defendants contend that the trial court ignored
explicit provisions of the Lease as well as the body of law protecting tenant
interests. Brief for Defendants at 5, 31-33. Specifically, Defendants claim
that the trial court erred in finding that the Lease was entered into “as is.” Id.
Further, Defendants argue that the trial court erred in determining that an
“as is” lease bars assessment of a landlord’s interference with quiet
enjoyment. Id.
We initially note that, contrary to Defendants’ assertion, the trial court
did not rely on the “as-is” language of the Lease to exclude consideration of
their claim to quiet enjoyment. Instead, the trial court considered the claim
and found the argument unconvincing, based on the evidence of record. See
Trial Court Opinion, 4/13/18, at 13.
Upon review, we agree with the trial court’s analysis and conclude that,
viewing the evidence in the light most favorable to Plaintiffs, the trial court’s
verdict is supported by the record and is not the result of legal error or an
abuse of discretion. See Trial Court Opinion, 4/13/18, at 13-19, 25-27. Thus,
we affirm on the basis of the trial court’s Opinion as to Defendants’ fourth
claim. See id.
-7-
J-S30031-19
PLAINTIFFS’ CROSS-APPEAL
Plaintiffs raise the following question for our review:
Whether, following a hearing and after finding that landlord Main
[] is the owner of all ownership interests of tenant Majestic [], the
trial [c]ourt erred by not finding that individual guarantors[,
Tomasulo and Grande,] lacked standing to advance
[c]ounterclaims for breach of a fully integrated written lease to
which neither [Tomasulo nor Grande] were individual parties?
Brief for Plaintiffs at 3.
“Threshold issues of standing are questions of law; thus, our standard
of review is de novo and our scope of review is plenary.” Rellick-Smith v.
Rellick, 147 A.3d 897, 901 (Pa. Super. 2016).
Plaintiffs assert that the trial court erred in allowing Defendants to raise
counterclaims because Defendants lacked standing to do so. Brief for Plaintiffs
at 16-18. Specifically, Plaintiffs argue that any claim arising from a breach of
the Lease belonged to Majestic, the sole tenant under the Lease. Id. Since
the trial court found that Main was the sole owner of Majestic, and thus that
Defendants had no ownership interest in Majestic, Defendants were not
entitled to bring claims on behalf of Majestic. Id.
In the instant case, the underlying rights to legal action resulting from
a breach of the Lease, and thus the requisite standing, were inseparable from
a determination of the merits, as determination of the merits simultaneously
determined whether Defendants had an ownership interest in Majestic that
would allow them to bring a derivative action.
-8-
J-S30031-19
In its Opinion, the trial court determined that the claim lacks merit. See
Trial Court Opinion, 10/3/18, at 2-3. Upon review, we agree with the trial
court’s cogent analysis and affirm on this basis as to Plaintiffs’ sole issue on
appeal. Id.
Orders affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/14/19
-9-
Circulated 07/17/2019 04:09 PM
IN THE COURT OF COMMON PLEAS OF BUCKS com-rrv, PENNSl(LVA.'ITA
CIVIL DIVISION
�LUN STREET MANSION,. LLC and No. 2017..01261...W
· =::1:: ,'IMtiNIII
MAJESTIC MAi.'iSION; LLC
v.
2875 EDA 2017 e=it.101,-01:.s1-01ss 1201sw
-" (Pttbllc)
KRJSTL.\i'-i R. TOMASULO and Co®: 52'!4 Judge: 40
Rcpt Z20.."0613 10/4f.201a 12:51:$5 ?M
JOSEPH GRA.i.'IDE� JR.
OPINION
L PROCEDURAL. 'HISTORY
Main Street Mansion,., LLC ("Main Street'; and Majestic Mansion, U..C ("Dlfu.jesci.c'") (or
't • .
Tomasulo and Joseph Grande, Jr. ("Defendants") on Feb:roru;y 28,. 2017. Defendants filed their
Answer and Counterclaim on April 7, 2017. The matter proceeded to a five ('5) day non-jury tcial
�·
before this Court ending November 15, 2017. On April 13, 2018, this Court issued i� verdict and
on Defendants' guann.ty of the contractual rent, late fees, interest, and unpaid real estate ta.�es- In
of post-trial motions, which this O::mtt denied on May 25, 2018 as being fully answered by the
. -
comneeheasive Decision and Order of April 13, 2018.
Defendants filed a Notice of Appeal to the Superior Court on July 19, 2018. Defendants filed
their Concise Seatemenr of Errors on Aug..:ist 14, 2018. Plaintiffs Bled a Notice of Cross-Appeal on
July 25, 2G18, and a Concise Statement of Errors on August 15, 2018. Pursuant to Pencsyivania Rule
44
APPENDIX
of Appellate Procedure 1925(a), the Court now files this Opinion. in the above-captioned matter in
support of the Court's ruling.
H.. MATTERS COMPLAINED OF ON APPEAL
This Court fully incorporates its original thirty-one (31) page Decision and Order dated April
13, 2018 attached hereto as an Appendix. All material.matters raised by Defendants in their Concise
Statement concern issues raised previously and which were addressed and disposed of by this Court
in its Opinion.
Plaintiffs in their cross-appeal raise the only matter not directly addressed in the Opinion of
'< .
April 13, 2018. Plaintiffs seek a ruling that Defendants lacked standing to raise their counterclaims,
and so should not have obtained a ruling on the merits. Plaintiffs' objection as to standing derives
from Mam Street's claim to ownership of Majestic. Tb.at ownership claim was in turn based on the
Pledge Agreement and Defendants' default of its terms th.rough 1ie nonpayment of rent. The standing
argument against the counterclaims thus rises and falls �-i�. M�.tteet's, and hence Majestic's,
affirmative case.
,,
If the Defendants, instead, were correct that their nonpayment was excused by Plaintiffs' own
breach, then no default occurred under the Pledge Agreement, and Defendants are the owners of
Majestic and therefore have standing.
Plaintiff s ru:gument, if accepted, requires Defendants to Erst prevail on the merits in Plaintiffs'
suit in order to recover control of Majestic before filing for relief on the basis of the counterclaims.
The same transaction or occurrence would then require a second round of litigation, in contravention
of the purposes of the joinder rules set forth at Pa.R.C.P. 1020. This Court properly considered the
2
45
APPENDIX
counterclaims in !:his litigation because MM..., Street's claim to ownezship of �fajesti.c in Pfainti.ffs'
lawsUlt cannot be separated &:0-m the tta.,,sacti.on or occurrence giving rise to the counterclaims .
. For the foeegoiog reasons, this �urt respectfully �U&,,�ts thac �ts Order below be affirmed.
ORDER
&"ID NOW. th.is t3•h d�y of Apt-i� 2018, based on the facts and reasons as set forth above,
it is hereby ORDERED and DECREETh
1. Judgment is entered in favorof Plaintiff(s) and.agrunst Defendants Kristian R. Tomasulo
at 9 S. Main S1ttet, New Hope, Pe:nnsylvsnia. 18938.
2. Verdict is entered in favor of Piainriff(s) :a.r.,d agrunst Defendants in the amount of Two
Hundred Forty-Nine Thousand One Hundred Fifteea Dollars and Eighty-Nine Cents
($249,115.89) plus reasonable atto.m.eys' fees and c�ts as ma:y subsequently be determined
due and owing.
3. Verdict is entered in favor of Plmriff(s) and � Defen'lnts on all Counterclaims.
,,
BY THE C01JR.T:
Date: October l, 2018
46
APPENDIX
Circulated 07/17/2019 04:09 PM
IN THE COURT OF COMMON PLEAS OF BUCKS COUNTY, PENNSYLVANIA
CIVIL DIVISION
MAIN STREET MANSION, LLC and
MAJESTIC MANSION, LLC
v. No.2011�01261-40
lr' ------ .. ·---·-····-- -
I ·-- ....
KRISTIAN R. TOMASULO and i
. JOSEPH GRANDE, JR. '
DECISION AND ORDER .
I. PROCEDURAL HISTORY
Main Street Mansion, I.LC C''Main Street") and Majestic Mansion, llC f'Majestic") (or
collectively, "Plaintiffs"), commenced this action through its Complaint seeking ejectment and
damages against Kristian R. Tomasulo and Joseph Grande, Jr. ("'Defendants"). The Complaint sets
forth the following actions: Count I.:.... Ejectment; Count II -·Trespass; and Count ill - Breach of
Guaranty. On April 7, 2017, Defendants filed 3-1?- Answer, New Matter, and �ounten:laim.
Defendants' Counterclaims are as follows: Count I - Breach of Contract; Count II - Breach of Implied
Covenant of Quiet Enjoyment/Constmctive Eviction; and Count ID - Fraud.
Plaintiffs' Motion for Judgment on the Pleadings was denied by this Court on June 7. 2017.
On June 19, 2017, Defendants filed an Emergency Petition for Preliminary Injunction. _The Petition
. alleged Plaintiffs acted to harm Defendants' ongoing business by wiongfully .converting Hotel Liquor
License Number 59762 ("Liquor License") to safekeeping with Pennsylvania Liquor Control Board
f'PLCB"). A hearing on the injunction request was held June 23, 2017. This Court entered an Order
on August 10, 2017 denying Defendants' Preliminary Injunction, which Defendants thereafter
appealed on August 28, 2017. Said Appeal is currently pending before Superior Court under Docket .
No. 2875 EDA 2017. The Court issued its October 27, 2017 Opinion in support of the ruling denying
Defendants' request for a Preliminary Injunction.
On September 22, 2017, September 29, 2017, October 27, 2017, November 13, 2017, and
November 15, 2017, a five (5) day non-jury trial was held before the undersigned on Plaintiffs' Claims
and Defendants' Counterclaims. At the conclusion of Defendants' case in chief, the Court dismissed
all claims based on fraud as alleged in Count III of the Counterclaim. At the conclusion of the trial,
Plaintiffs' claims and Defendants' remaining counterclaims were taken under advisement. The parties
were directed to submit proposed findings of facts and conclusions of law.
II. FACTUAL HISTORY
This action arises from a lease transaction for a commercial property located at 9 S. Main
Street, New Hope Borough, Bucks County, Pennsylvania (''Property''), being Bucks County Tax Map
Pa.reel 27-010-046, as more fully described in the legal description set forth in. the Deed recorded in
Bucks County Land Records at Deed Book 5737, page 2202 (See Pls.' Comp!. at ,i 5). The Property
consists of a three (3) story and hotel building and restaurant ("The Mansion Inn"), a detached duplex
dwelling ("Carriage House") and a parking lot (N.T. 11/13/17, pp. 5-7). The Mansion Inn's first
floor includes a parlor, lounge (including a bed), bar area, dining room and kitchen (N.T. 11/13/17,
pp. 17-19; See Defs.' Ex. 30). The second and third floors each consist of a common hallway and
landing with four (4) bedrooms and two (2) dcbors on each side of the hallway which provide separate
access to those bedrooms (N.T. 11/13/17, pp. 14-18). The Carriage House is a separate two (2) story
duplex dwellin.g and each floor contains a separate unit (N.T. 11/13/17, pp'. 6-7, 8�). Majestic, a
limited liability company, owns the Liquor License approved by PLCB for use at the Property (Pls.'
Bx. 1).
2
In March 2016, the Property was vacant and available for rent or sale (N.T. 9/22/17, P: 213).
Following several months of negotiations between the parties and their legal counsel, Plaintiff Main
Street as landlord and Majestic as tenant executed a thirty-one (31) page lease agreement ("Lease") for
the commercial use of the Property on August 12, 2016 (Pls.' Ex. 2). The Commercial Lease included
-
a Lease Guaranty Rider ("Guaranty"). Id_ Under the terms of the Lease, Defendants are personally
the guarantors to the obligations under the Lease, including the obligation to pay the agreed monthly
rent of Twelve Thousand Five Hundred Dollars ($12,500.00) (Pls.' Ex. 4; See Pls.' Ex. 2). Defendants
personally guaranteed the Lease for only the first three (3) years of the five (5) year term (Pls.' Ex. 2;
N.T. 9/22/17, pp. 29. 57). Prior to the 2016 negotiations and transaction, Defendant Tomasulo had
extensively researched the Property and its uses as a restaurant and hotel. Tomasulo had previously
visited the Property in 2014 with a business broker and also inspected it a second time in January 2015
with a representative of Main
.
Street (N.T. 9/22/17, p. 210; N.T. 10/27 /17, pp.
. 31, 32).
Contemporaneously with the execution of the Lease in 2016, Defendants individually executed
a Pledge Agreement (''Pledge Agreement") under which they pledged One Hundred Percent (100%)
. of their interests in Majestic and its ownership of the Liquor License to Main Street to secure and
guarantee payment obligations under the Lease for a three (3) year period beginning August 12, 2016
(See Pls.' Ex. 3; Pls. Ex. 4; N.T. 9/22/17, P: 31). Majestic's primary asset was the Liquor License
which was used in conjunction with the Property(� Pls.' CompL at ,i 10, 11). Defendants purchased
the LLC ownership interests in Majestic, pursuant to the terms of a written agreement ("Membership
Agreement") executed with the transactional documents (N.T. 6/23/17; P: 13).
The evidence presented at trial established that prior to signing the Commercial Lease, Main
Street granted Defendants full and complete access to the Property on multiple occasions to engage
in due diligence and/or inspection(s) of the Property (N.T. 10/27 /17, pp. 154-162; N.T. 6/23/17, P:
3
42). Professional inspectors and contractors were independently hired by Defendants and a
comprehensive inspection of the Property was conducted on June 9, 2016. lg. As a result of the
inspection and sixty-nine (69) page report issued by National Property Inspections, Defendants
prepared a proposed repair and rent credit punch list ("Punch List") on June 13, 2016 and sent it to
Main Street during the parties' negotiations (See Pls.' Ex. 20; N.T. 10/27 /17, pp. 145 -146, 155; N.T.
11/15/17, pp. 214-215). The record further demonstrates that Defendants and their representatives
were permitted unlimited access to the Property beginning mid-July 2017 with Main Street's consent
as Defendants began making various repairs and commenced the fit-out process of The Mansion Inn
interior bar and other public areas (N.T. 9/22/17, pp. 212, 213; N.T. 9/29/17, pp. 35-37; N.T.
10/27 /17, pp. 157-159).
As of July 15, 2016, Defendants effectively took physical possession of the Property (See Pis.'
Ex. 2; N.T. 9/22/17, P-r· 51-53). The Lease initially (before Defendants amended the Lease with
their Final List) provided Defendants with the opportunity to carve out certain Landlord "repair
items" (N.T. 11/13/17, P: 116). After commencing the fit-out work at the Property in preparation
for their business opening, Defendants generated additional requests for -credirs and repairs which
included the front and back deck, a first floor bathroom, a second floor bathroom, ceiling and
plumbing repairs, and a supplemental repair and credit request which was sent to Main Street on July
27, 2016 (� Pls.' Ex. 11, Ex. 29; N.T. 10/27 /17, pp. 36-38, 154-162). Defendants also submitted,
by and through their attorney, Brian Keyes, Esquire, a finalized repair and credit list, which was
subsequently titled "Landlord Repair Items For Which Tenant Has Assumed Responsibility." This
document became Exhibit "B" attached to the Lease (Pls.' Ex. 2, Exhibit B). With the exception of
the items included in Exhibit ''B," the Lease indicated that Defendants leased the Property in "as-is"
condition (Pls.' Ex. 2, pp. 1, 7; N.T. 11/13/17, p. 116).
4
On August 12, 2016, the parties executed a thirty�one (31) page Commercial Lease and
exchanged all related commercial transactional documents (See Pls.' Ex. 2; N .T. 9 /22/ 17, P.P· 51-52).
The Lease documents contain a merger and integration clause that warrants there were no oral
agreements between the parties and the final executed transactional documents superseded any prior
! •
negotiations or oral understandings. At the time the Lease was signed on August ·.12, 2016,
Defendants had been making repairs and performing tenant fit-out to prepa;e the Property for their
business operations since mid-july 2016 (N .T. 11 I 15 I 17, pp. 172-17 5). Defendants' business plan
and fit-out process included :new; restaurant facilities at The Mansion Inn includin& separate
improvements not part of the negotiated rent credit (N.T. 11/15/17, P: 174). Under the terms of the
August 2016 Commercial Lease, Defendants were provided the agreed-upon rent credits at Twelve
Thousand Five Hundred ($12;500.00) monthly from July 15, 2016 through October 1, 2016 in
. exchange
for perfonning the work agreed
.
upon by the
'
parties including: cleaning the swimming
\
pool
and making it operational; repairing the porch, back door, and left side of the house; removing mold
from the basement; cleaning various kitchen equipment; cleaning gutters; repairing the dining and
front room ceilings; repairing the front wall; repairing the front patio decking and front door; repairing
the first floor bathroom; repairing the second floo; bathroom; performing certain plumbing work;
repairing identified termite damage; and exterminating any live tenn.ite infestation (N.T: 11/15/17,
pp. 172-175; Pls.' Ex. 2).
The Lease also set forth a separate provision requiring Defendants to deposit the sum of One
Hundred Fifty Thousand Dollars ($150,000.00) called "Key Money," in an escrow fund to ensure
improvements, credits, reductions, investments or recapture for capital investment. Id. Effective as
of the signing of the Lease in August 2016, Defendants were credited Thirty-Six Thousand Six
Hundred Eighty-One Dollars ($36,681.00) against the One Hundred Fifty Thousand Dollars
($150 ,000. 00) for repairs they had completed under this separate contractual provision (N .T.· 9 /22/ 17,
5
pp. 50, 109, 157, 207). The Lease terms also required Defendants to deposit the post-credit balance
. .
of Key Money in the sum of One Hund.red Thirteen Thousand Three Hund.red Nineteen Dollars
($113,319.00) into an escrow fund to be expended, as agreed by the parties, for limited purposes
identified as: 1) capital improvements as defined in the Lease; 2) furniture, fixture and equipment; 3)
carpentry and flooring; and 4) exterior �ork and landscaping (Pls.' Ex. 2; N.T. 9/22/17, pp. 50-51;
N.T.10/27/17,p.172;N.T.11/15/17,p.94).
Prior to the opening of the business, a use and occupancy ("U&O") inspection was scheduled
with New Hope Borough officials fo� October 6, 2016 (Pls.' Ex. 9; N.T. 9/14/17, pp. 14-15). The
Property was inspected as scheduled by Jesse Hill ("Building Inspector") and Kevin Doherty ("Fite
Marshall") (N.T. 9/14/17, pp. 14-15; N.T. 9/22/17, pp. 162-163, 182). The Building Inspector issued
a U&O permit for the first floor of The Mansion Inn consisting primarily of the restaurant and bar
areas and issued a punch list for items that remained to be completed on the second and third floors
(Pls.' Ex. 10; N.T. 9/14/17, pp. lS-16, 21-28; N.T. 9/22/17, p. 163). The Building Inspector's punch
list included: replacing two (2) smoke/ CO:z detectors; replacing fixtures for two (2) bathrooms, one
(1) on the second floor and one (1) _on the third floor; and installing missing lightbulbs on the third
floor (Pls.' Ex. 10; N.T. 9/14/17, pp. 15-19, 26-27). The Building Inspector anticipated issuing a final
U&O permit upon completion of the minor punch list items for the second and third floors within
days of October 6, 2016 (N.T. 9 /14/17, pp. 27-28). The record before the Court indicated the Fire
Marshall had observed The Mansion Inn hotel rooms and bathrooms were apparently already being
utilized at the time of the inspection (N.T. 9 /22/17, pp. 184-188).
Defendants began operating the restaurant, serving alcohol and renting rooms on the second
and third floors to the public in October 2016 prior to obtaining the Borough's final approval in
March 2017 (N.T. 11/13/17, pp. 16-19; N.T. 11/15/17, pp. 142-143). Defendants did not apply for
6
any plumbing or other permits for additional work on the second or third floors after the initial U&O
inspection on October 6, 2016 (N.T. 9/22/17, P: 173). Following the commencement of this legal
action, Defendants contacted Bo.rough officials and scheduled a re-inspection of the Property for
March 28, 2017 after which the Borough finally approved the second and third floors for hotel guest
occupancy (N.T. 9/22/17, pp. 163, 169; N.T. 11/13/17, pp. 24-26).
On September 26, 2016, PLC:B had inspected and approved the Property for the use of the
hotel Liquor License (N.T. 11/13/17, P: 18). However, neither Majestic nor Defendants notified
PLCB of any change in the corporate officer or management structure of Majestic following the
signing of the Lease, and neither.party took any steps thereafter to ensure the Liquor License.remained
valid and current (N.T. 9 /29 /17, p. 2·11). The License was later deemed by PLCB to have expired on
November 30, 2016 (N.T. 9/29/17, pp. 259-260).
During trial, Main Street's contractor, McGowan Builders ("McGowan Builders"),
demonstrated through a color-coded roof plan dated October 18, 2016 ("Roof Plan") that The
Mansion Inn has different types of roofs with different levels and each roof section functioned
independently (Defs.' Ex. 40; N.T. 11/15/17, pp. 251-254). The Roof Plan shows seven (?);different
roof sections, numbered 1 through 7 (� Defs.' Ex. 40; N.T. 11/15/17, pp. 255-257). Theevidence
presented to this Court dearly established that no indication of any .roof leaks were detected and no
roof repairs were determined necessary when the Property was professionally inspected on June 9,
. .
2016 (� Pls.' Ex. 19; N.T. 10/27 /17, p. 138). On July 27, 2016, Defendants initi.ally discovered two
(2) leaks in The Mansion Inn, both on the single part of the first floor, one above a back door and
one in the first floor lounge area, both being below single-story Roof Three (3) on the Roof Plan (Pis.'
Ex. 29� N.T. 11/15/17, p. 255). On or about September 30, 2016, Defendants reported to Main Street
a "massive emergency" related to a second roof leak (See Defs.' Ex. 6; N.T. 9 /22/17, pp. 70-71, 152;
7
N.T. 9/29/17, pp. 109-111; N.T. 11/13/17, pp. 150, 262). McGowan Builders responded to the
tenants' report by examining the Property and the roofs and performing repairs (N.T. 11 /13/17, P:
83). McGowan Builders kept records of the various roof repair work performed such as a flood spray
test, replacing sub-roofing, capping the chimney, installing a membrane roof, performing moisture
tests and tarring roof sections as applicable to address the roof leak(s) (See Pls.' Ex. 28, E.."'{. 32, Ex.
40; N.T. 11/15/17, pp. 255-258, 266-270) ..
Defendants met with Main Street representatives in early November 2016 to inspect The
Mansion Inn as completed and discuss their claims for additional rent credits. While Defendants paid
the November 2016 Lease payment due and continued to operate their business at the Property,
Defendants did not pay any monthly Lease rents due- for December 2016, January 2017, and February
2017 and all months thereafter, all of which constituted an event of default under the Commercial
Lease(� Pls.' Ex. 5). A written Notice of Default was issued to Defendants on January 13, 2017
setting forth the events of defaults under the Lease and under the Pledge Agreement including: failure
co pay rent; failure to pay utility bills; failure to pay real estate tax bills; failure to meet required PLCB
certifications; failure to submit proof of required payment of sales and use taxes; failure to provide
required accounting information according to Generally Accepted Accounting Principles ("GAAP,,);
failure to establish a required escrow account in the amount of One Thousand Thirteen Three
Hundred Nineteen Dollars ($113,319.00); and failure to complete the required agreed-upon work on
The Mansion Inn including the overhang on the left front side of the house, the back door and the
retaining wall (N.T. 9/22/17, pp. 29-30, 59-60; See Pis.' Ex. 5, Ex. 2, Ex. 30).
Plaintiffs issued a subsequent notice dated February 27, 2017 advising Defendants Main Street
was exercising its right as attorney in fact under the Pledge Agreement to transfer the pledged collateral
under the Agreement consisting of the ownership interests in Majestic (and its Liquor License for the
8
Property) back to Plaintiff Main Street � Pls.' Ex. 4). Thereafter, Main Street exercised its rights
under the Pledge Agreement and the Liquor License was placed in safekeeping with PLCB on Jnne· 8,
2017 (N.T. 9/22/17, P: 31). During the time between the PLCB inspection of September 26, 2016
until the Borough's approval of the U&O for the second and third floors on March 29, 2017, The
Mansion Inn was not compliant as a bona fide hotel (� Defs.' Ex. 21; N.T. 9/29/17., P: 259).
Pennsylvania State Police investigated and issued the results of their investigation in an August 2017
incident report citing three (3) specific claims: 1) not a bona fide hotel where.the public m!ly stay; 2)
sold liquor and/or malt beverages after the Liquor License expired on November 30, 2016 and had
not renewed and/or validated; and 3). failed to notify PLCB within fifteen (15) days of a change of
officers, directors and/ or stockholders (� Defs.' Ex. 21; N.T. 9 /29 /17, pp. 259- 260).
As a result of the default under the Lease, Main Street and Majestic (as a tenant out of
possession) filed this action against Defendants to regain possession of the Property and to recover
monetary damages including unpaid rent, unpaid real estate taxes for 2016 and:2017, late fees, interest,
counsel fees, and other damages from December 1, 2016 to present. Main Street additionally: demands
recovery of counsel fees as authorized under the Commercial Lease. In its Proposed Findings of Fact
and Conclusions of Law filed with the Court on February 16, 2018, Mair). Stteet provided the Court
with an updated and itemized calculation of accelerated lease damages and requested the entry of a ·
monetary judgment in the sum of Seven Hundred Nine Thousand Two Hundred Three Dollars and
Fifty Cents ($709,203.50).
Defendants claim they properly withheld rent payments as a result of.Main Street's failure to
make necessary repairs. In April 2017, Defendants filed their Answer and Counterclaims alleging
· Main Street breached the Lease by: failing to make necessary repairs to the Property including roof
repairs; fraudulently or negligently misrepresenting it had "marketable title" to the Liquor License; and
9
not fully conveying the Liquor License to Defendants. Defendants argue they lawfully withheld rent
due under the Lease as a result of Main Street's failure to cure continuing breaches under the Lease,
thereby forcing Defendants to undertake essential repairs to preserve their business operations at the
Property. Defendants request the entry of judgment in their favor and against Main Street for various
alleged damages including monetary damages for the monies spent on performing necessary repairs
together with lost profits due to defects in the Property and loss of the Liquor License. Defendants
also demand punitive damages, interests, attorney's fees and costs. After reviewing the record and
examining all evidence presented, the Court now issues this w.rii:ten Decision and Order.
III. DISCUSSION·
a. Fraud Claims
In their Counterclaim filed against Plaintiffs, Defendants claim the Lease was the product of
fraud, was induced by false representations, essential lease terms not stated in the Lease were implied,
and Plaintiffs' default under the Lease resulted in their constructive eviction (See Defs.' Answer, New
Matter & Couotercl, P: 11). After examining the record and weighing and assessing the credibility of
all testimony and evidence presented, the Court finds that the Lease was not the product of fraud due
to the various actions which proceeded the execution of the Lease. The parties are sophisticated
businesspersons who did not reasonably rely on any oral representations related to this commercial
transaction. Defendants' testimony at trial confirmed they had spent considerable ti.me reviewing the
market for available commercial properties, developing a detailed business plan, and personally and
professionally inspecting this specific property known as The Mansion Inn.
Both parties in this matter are clearly experienced businesspersons who were independently
.represented by legal counsel. Legal counsel assisted in the negotiation and documentation of all terms
of th.is commercial transaction. Defendants further had access to the advice of legal counsel regarding
all potential post-dispute contractual remedies as may be contained in the commercial documents as
10
well as all legal remedies otherwise available under Pennsylvania law. Defendant Tomasulo testified
all terms of the commercial transactional documents were negotiated and reviewed by legal counsel
(N.T. 6/23/17, pp. 50, 55, 63). Defendant Tomasulo acknowledged being an experienced
businessperson arid that during bis career on Wall Street he personally managed client funds worth
approximately half-a-billion dollars (N.T. 6/23/17, pp. 4, 40).
The record clearly evidences Defendants were given every opportunity to personally and
professionally inspect the Property prior to the signing of the Lease. Tomasulo testified he was
familiar with the Property and its uses as a restaurant and hotel and had examined the Property initially
in 2014 with a business broker:
BY MR. GOULD:
Q. Okay. Now, let's go back a little bit to the initiation of the
process entering into this agreement with the plaintiff. How
did you come to approach them?
A. I actually saw the property about a year-and-a-half prior to
seeing it in I guess it was the beginning of 2016. So I looked
at it. I believe it was the beginning of the fall of 2014 prior to
them entering the agreement with Sammy Stanelli.
Q. And Sammy Stanelli is the person I referred to as the Staten
Island group?
A. That's correct.
(N.T. 9/22/17, p. 210).
Tomasulo later visited the Property in 2015 as well as 2016:
BY MR. GOULD:
THE COURT. Is that the first time that you had access to the
interior of the property?
THE WITNESS. Besides the - I mean. I've done a couple
walk-throughs with Sean Holmes prior. One was -
THE COURT. Okay. Let's -- hold on. Let's do this. The very
first time you went into the interior of the building, describe
what you did, the walk-through, second ti.me, third time,
inspector. I want to know how many ti.mes - go ahead.
A. I actually saw the property about a year-and-a-half prior co
seeing it in I guess it was the beginning of 2016. So I looked
at it. I believe it was the beginning of the fall of 2014 prior to
them entering the agreement with Sam.my Stanelli.
11
THE WI1NESS. January 2015 was the first time I viewed the
building. I had Valerie Hegarty there. Did a 20-minute walk-
through.
THE COURT. What did you look at?
THE WITNESS: I looked at the interior, the exterior kitchen
mostly. You know, kind of a full, very superficial walk-
through.
THE COURT. And the inn wasn't operating.at that time?
THE WITNESS. Correct,
(N.T. 10/27 /17, pp. 30-31).
Tomasulo and Grande hired a professional inspector and contractors and engaged in further
due diligence to assess the Property (N.T. 10/27 /17, pp. 22-24). The record reflects Defendants'
professional inspections were completed on or around.june 9, 2016 and included: a comprehensive
property inspection completed by National Property Inspections; a comprehensive written inspection
of the existing swimming pool completed by Raines Pool Service; and a comprehensive inspection of
the exterior of the Property completed by a landscape contractor, Fox Landscaping (Pls.' Ex. 19; N.T.
10/27/17, pp. 154-155; N.T. 10/27/17, pp. 134, 137; N.T. 9/22/17, p. 230). Following the
completion of the inspections, Defendants submitted to Main Street a written proposed repair and
credit list with proposed rent credits (Pls.' Ex. 20). After submission of the list, Main Street continued
to allow Defendants access to the Property while negotiations continued between the parties and
through their attorneys (N.T. 10/27 /17, pp. 153-155).
The Cow:t also notes that each transactional document, signed by the parties following the
advice of their respective legal counsel, contains a merger and integration clause. Defendants
attempted at trial to introduce oral and/ or implied terms to supplement the transactional documents.
The Court did not consider nor accept any evidence in violation of the parol evidence rule. "Once a
writing is determined to be the parties' entire contract, the parol evidence rule applies and evidence of
any oral or written negotiations of agreements involving the same subject matter as the contract is
almost always inadmissible." Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa. 2004).
12
Absent fraud or unconscionability, courts should 1;10t set aside contractual terms on which
sophisticated parties agreed. See Vasillis v. Bell of Pa., 598 A.2d 52, 54 (Pa. Super. 1991). The record
before the Court is wholly devoid of any evidence of fraud or unconscionable contract terms.
Rather, the Court finds the instant Lease to be a fully integrated contract between sophisticated
business parties. The Court therefore properly entered a non-suit on the "fraud" count of Defendants'
Counterclaim at the conclusion of individual Defendants' case in chief. The Court holds Defendants
contractually obligated to the terms of the written documents which they negotiated and signed in this
commercial transaction.
b. Constructive Eviction and Covenant of Quiet Enjoyment Claims
Defendants contend Main Street is the party which initially and substantively breached the
Lease due to its: failure to take reasonable action to ensure the Property was in usable condition prior
to leasing it; failure to keep. the Property in. good repair; failure to conduct all necessary repairs
including fixing the roof; and failure to disclose the non-compliant status of the Liquor License.
During the trial, Defendants' counsel argued to this Court that constructive eviction is a subset of the
implied covenant of quiet enjoyment doctrine, and therefore, based on their allegations of Main
Street's breach, Defendants were constructively evicted from the Property entitling them to withhold
ren� under Pennsylvania law (N.T. 10/27 /17, pp. 88, 89; N.T. 11/15/17, pp. 227- 229):
Based on the factual record in this case, the Court finds Defendants' arguments unavailing and
rejects the contention they were constructively evicted. Under the law of this Commonwealth, the
landlord's interference with a tenant's enjoyment of the premises must be of a substantial nature to
constitute constructive eviction:
To constitute a constructive eviction, the interference by a
landlord with the possession of bis tenant or with the tenant's
enjoyment of the demised premises must be of a substantial
nature and so injurious lo the tenant as lo deprive him of the beneficial
13
enjoyment of a part or the lflhole of the demised premises, ... to which the
tenantyields, abandoning the possession within a reasonable lime. But,
[h]owever much the tenant may be disturbed in the beneficial
enjoyment of the premises by the landlord's wrongful act, there
is no constructive eviction if he continues in possession of the
whole of the premises. Possession must be given up by the
tenant in consequence of the landlord's acts.
Kuriger v. Cramer, 498 A.2d 1331, 1338 (Pa. Super. 1985)(emphasis added).
In order for a tenant to establish constructive eviction, the tenant must abandon the premises.
Chelten Ave, Bldg. v. Mayer, 172 A. 675, 677 (Pa. 1934). One of the few undisputed facts in this
matter is that Defendants never surrendered possession of the Property. Rather, Defendants continue
to occupy the Property and operate their business from The Mansion Inn, a fact which was confirmed
by the testimony of Defendant Tomasulo:
THE COURT. So the restaurant began - the restaurant began
operation when?
THE W1TNE$S. Second week in October.
THE COURT. And it continued to operate the whole time?
THE WITNESS. That's correct.
THE COURT. And how many -- how many people can you
seat in the restaurant?
THE WITNESS. Approximately 54 inside and another 18
outside, and probably another ten to 12 at the bar.
(N.T. 9/29/17, p.117).
Further evidence confirmed Defendants used and continue to use the Property throughout as
a bed and breakfast and Defendants received monies for this use from members of the public (N.T.
11/13/17, pp. 28-29). The record before this Court further established Defendants, unlike. prior
commercial occupants, elected not to rent the Carriage House as part of the restaurant and hotel (NT.
11/13/17, pp. 5-6). Rather, Defendants Tomasulo and Grande both chose to personally reside in and
occupy the Carriage House (NT. 11/13/17, pp. 5-7). Further contradiction 'is evident as Defendants
assert they are justified in not paying rent because they were "constructively evicted due to the
business's building" being in bad repair and such fact injured their business and ability to pay rent, yet
14
they never ceased business operations and did not vacate the main building or the Carriage House at
. . .
any point following the execution of the August 2016 Lease (See Defs.' Answer, New Matter i&
Countercl., p. 11). Defendants, throughout this litigation, remained in possession of the Property and
continued to operate the restaurant as BYOB and a hotel despite their admission of failing to make
the contractual monthly Lease payments due following their tender of the November 2016 Lease
payment.
The Court finds based on the record that Defendants failed to present any evidence to support
their theory of constructive eviction or otherwise the showing of Plaintiffs' interference in any manner
with Defendants' use and enjoyment of the Property. The Court concludes Defendants have
unlawfully withheld rent, and therefore, unlawfully remain in possession of the Property while they
have continually operated their business throughout these proceedings.
c. Property Claims
Defendants also allege in their counterclaim entitlement to damages arising from Plaintiffs'
failure to conduct necessary repairs to the Property, including "multiple roof leaks." ''While
commercial tenants may be entitled to a rent rebate where the landlord has failed to provide a space
in conformity with lease expectations, the only expectation herein was that the premises would be
rented 'as is.' " Ferrick v. Bianchini, 69 A.3d 642, 657 (Pa. Super. 2013). The record supports the
Court's finding that Defendants leased The Mansion Inn Property in "as-is" condition. Defendants
had unconditional access to the Property since at least May 2016 (N.T 6/23/17, pp. 41, 42).
Defendants had the Property professionally inspected on June 9, 2016 by National Property
Inspections as part of their due diligence prior to signing the final Lease. The Property's alleged
defective conditions, including mold, termite infestation, poor ceilings and inoperable bathrooms,
were known to Defendants prior to the effective date of the Lease (Pls.' Ex. 1). As noted previously,
both parties were experienced in business and represented throughout by legal counsel Prior to
15
executing the Final Lease in August 2016, Defendants had the opportunity, with the assistance of theic
. .
attorney, to carve out certain Landlord "repair items." Defendants submitted a proposed list entitled
"Landlord Repair Items For Which Tenant Has Assumed Responsibility" in return for the negotiated
rent credits. Once the parties reached this agreement regarding repairs in exchange for rent credits,
they effectively rendered the "as-is" Lease provision fully effective without exceptions.
The negotiated terms of the Lease expressly provided that the parties agreed to rent credit
from the commencement of the Lease through October 1, 2016 "in lieu of Landlord's repairing items"
(Pls.' Ex. 2, Section 1.3; N.T. 9 /29 /17, P: 40). The Lease also required Defendants to deposit a sum
of One Hundred Fifty Thousand Dollars ($150,000.00), called "Key Money," in an escrow fund to
ensure improvements,· credits, reductions, investments or recapture for capital investment (N.T.
10/27 /17, P: 172; N.T. 11/13/17, pp. 54, 57-60). The Lease executed by the parties evidences that
Defendants were also separately credited Thirty-Six Thousand Six Hundred Eighty-One Dollars
($36,681.00) against the One Hundred Fifty Thousand Dollars ($150,000.00) Key Money provision
for the various property improvements they had made as contemplated by the parties under this
paragraph of the Lease (N.T. 9/22/17, pp. 50, 109, 157, 207). The record is clear Defendants failed
to deposit the remaining One Hundred Thirteen Thousand Three Hundred Nineteen Dollars
($113,319.00) Key Money into an escrow fund following the execution of all transactional documents
by the parties (N.T. 9/22/17, p. 50).
The evidentiary record before this Court supports a conclusion that Defendants performed
some repairs which were not agreed upon by the parties, despite the provisions requiring Main Street's
consent. For instance, Defendants had proposed in the aforesaid addendum to the Lease to repair
the outside bar (Pls.' Ex. 2, Exhibit B). Instead, Defendants completely demolished the outside bar
and built a different bar without the consent of Main Street or a permit from the Borough. (N.T.
9/22/17, pp. 107-108). James Kopchak, New Hope Borough building code official, testified:
16
BYMR. WILD:
Q. What's P-13, Mr. Kopchak?
A. P-13 appears to be a legal Stop Werle Notice that I posted
at the location.
Q. And why did you do that?
A. They constructed and did alterations to an outdoor bar and
patio without. securing the proper building permits in
accordance with PA Act 45.
(N.T. 9 /22/17, P: 174). Kopchak also testified on cross:
BY MR. GOULD:
Q. All right, Mr. Kopchak, is the outdoor bar and patio
completed?
A. Yes, sir, they completed it without securing the permits.
Q. How would that happen if you issued a Stop Work Order?
A. I issued a Stop Work Order and your clients ignored my
Stop Wor\t Order and continued to work.
Q. You don't remember them making applications for the
permission? ·
A. They made application and never paid for the permit
application, and it was a long, drawn out process getting them
to make the application.
Q. And have you seen the completed outdoor bar and patio?.
A. I have' seen the completed outdoor bar and patio.
Q. And how does it pass muster?
A. I didn't have a footing inspection, didn't have a rough
framing inspection, didn't have the required electrical
inspections. So it did not pass muster. It's in violation bf
Pennsylvania Act 45.
(N.T. 9/22/17, pp. 174-175).
· The record further supports a finding that no evidence of roof leaks was present or kp.own to
either Main Street or Defendants as of the date the Property was professionally inspected on June 9,
2016 (Pls.' Ex. 19; N.T. 9/22/17, pp. 148-149; N.T. 10/27/17, p. 138). The Building Inspector and
the Fire Marshall observed no evidence of flooding or leaking on the second or third floors during
the October 6, 2016 Use and Occupancy inspection(� Pls.' Ex. 6; N.T. 9/14/17, pp. 46-:47). On
September 30, 2016, between the PLCB inspection on Monday September 26, 2016 and the Borough
inspection on October 6, 2016, Defendants reported a "massive emergency" to Main Street (See Defs.'
Ex. 6; N.T. 9/22/17, pp. 117-119, 122). A representative of McGowan Builders, Main Street's
17
contractor, testified to the multiple occasions work was performed on the Property and the roofs
(N.T. 11/15/17, pp. 254-270). McGowan kept records of all repair work done including repairs to
the Property's roofs (� Pls.' Ex. 28; N.T. 11/15/17, pp. 264-270). McGowan further evaluated
possible subsequent roof repairs to an area identified as the first floor lounge roof on March 13, 2017 ·
and confirmed the roof was not leaking but made interior repairs on March 24, 2017 to correct
improper construction previously performed by or on behalf of Defendants (N.T. 11/15/17, pp. 259-
261).
At trial, Defendants were unable to produce corresponding receipts, estimates, invoices,
payment records or verified documents to confirm any repair work performed by them or their
contractors between September 30, 2016 and October 6, 2016. Defendants only presented testimony
from their contractor Frank Martines \'Martines") (N.T. 11/13/17, P: 213). Martines testified he was
not able to recall specific dates of work performed or any amounts paid for any specific work
performed at the Property as he was not good at keeping records (N.T. 11/13/17, pp. 217, 225, 248).
Defendants consistently failed to produce corresponding financial documents or· verified
documents of any kind to confirm repair work they alleged to have performed. Defendants. did not
present adequate documentary support to corroborate their testimony. The Court finds Defendants
clearly had ample access and opportunity to fully inspect all aspects of the Property prior to signing
the Lease. Defendants had the Property professionally inspected, and based on the sixty-nine (69)
page written report produced, were fully aware of the Property's condition. Prior to signing the Lease,
Defendants used this knowledge and information to negotiate a rent credit in exchange for their
agreement to make the necessary repairs. As previously indicated, Defendants' own testimony
established they are sophisticated business people represented by legal counsel throughout in ·
negotiating and preparing the transactional documents ultimately signed by the parties. The Court
finds Defendants are not entitled to damages based on their claims against Main Street.
18
d. Nonpayment of Rent Claims
"[Ljeases between landlords and tenants are governed by contract law." Stonehedge Square
Ltd. v. Movie Merchants, Inc., 685 A.2d 1019, 1025 (Pa. Super. 1996) (internal citation omitted). A
contract is enforceable when the parties reach mutual agreement, exchange consideration and have
outlined the terms of their bargain with sufficient clarity. See Com. Dept. of Transp. y. First Penna.
Bank, 466 A.2d 753 (Pa. Cmwlth. 1983). Parties have the right to make their own contract and it is
not the function of the court to rewrite it or give it a construction in conflict with the plain meaning
of the language used. See Baker v. Commonwealth of Pennsylvania, Department of Transportation,
315 A.2d 669 (Pa. Cmwlth. 1974). Courts must interpret contracts as written, and in construing a
contract each and every part _of it must be taken into consideration and be given effect; the intention
of the parties must be ascertained from the entire instrument. John McShain, Inc. v. General State
Authority, 307 A.2d 469, 472 (Pa. Cmwlth 1973).
"To successfully maintain a cause of action for breach of contract a party must establish: (1)
the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract;
and (3) resultant damages. There is no need to allege any degree of negligence, as negligence is
irrelevant to a contract action, unless the alleged breach is based on a contractual duty to provide
professional skills consistent with those expected in a given field." See Bailey v. Tuckex:, 621 A.2d 108,
112 (Pa. 1993). A party seeking damages for breach of contract "must be able to prove such damages
with reasonable certainty." Wilcox v. Regester, 207 A.2d 817, 822 (Pa. 1965)'.
Defendants argue that Main Street is the breaching party under the Commercial Lease due to
its failure to: take reasonable action to ensure the Property was in usable condition prior to leasing it;
keep the Property in good repair; conduct the necessary repairs including fixing the roof; and disclose
. the non-compliant status of the Liquor License. Defendants further allege that Main Street leased the
19
Property with "hidden defects" which Main Street knew or should have known, and that such defects
rendered the Property defective and deprived Defendants of their benefit of the bargain contained in
the Lease. Defendants state that based on these allegations they are entitled to withhold all rent
payments because Main Street materially deprived them of quiet enjoyment of their leasehold.
The Court finds Defendants' contentions contrary to the facts of this case and Pennsylvania
law. "The parties to a lease roust be able to rely on the terms foe which they bargained in an arms-
length transaction." Ross v. Gulf Oil Corp., 522 A.2d 97, 99 (Pa. Super. 1987). All parties of this
commercial transaction are sophisticated businesspersons represented by legal counsel in the.
negotiation and drafting of the agreements at issue before the Court. Defendant Tomasulo testified
prior to operating The Mansion Inn he had over twenty (20) years of experience in asset management
mostly in the healthcare sector and that he had previously worked as a hedge fund manager (N .T.
9/22/17, p. 191). Defendant Grande had worked in stock trading with Goldman Sachs, Citigroup
and Deutschebank as a financial advisor (N.T. 11/15/17, p. 72). Defendants were represented by an
attorney, Brian Keyes, Esquire, in negotiating the terms of the transactional documents signed with
Main Street and Majestic (N.T. 9/22/17, pp. 234, 235; 10/27 /17, pp. 38, 39). All documents were
signed not in reliance upon any statements by Main Street but rather afte.r Defendants had the benefit
of complete access to the Property over a substantial period of time and the benefit of a professional
inspection resulting in a comprehensive written sixty-nine (69) page report addressing all aspects of
the Property.
Defendants were sued in their capacity as guarantors of the Lease. The record clearly
establishes that Defendants, as gi.iax:antors under the Lease, are obligated for monthly rent payments
(See Pls.' Ex. 2). The record fully supports the Court's finding that Defendants defaulted under the
Lease after failing to tender monthly lease payments due for December 2016 and the months thereafter·
(See N.T. 6/23/17, pp. 36, 37). The testimony before this Court also proves Defendants never funded
20
the independent escrow fund as required under the Lease (N.T. 9/22/17, p. 218). Despite completing
an independent professional inspection of the Property and indicating on the June 13, 2016 punch list
that the swimming pool was "operational, cleaned, and running," Defendants neglected to maintain
the swimming pool, and it substantially deteriorated and was never subsequently made operational
(Pls.' Ex. 20; N.T. 10/27 /17, pp. 145-146; N.T. 9/22/17, pp. 106-.107). Defendant Tomasulo
testified:
THE COURT. So let me just go down the list. You could just.
say yes or no. Did you do the cleaning of the swimming pool
and making it operational?
THE WITNESS. No.
THE COURT. And your reason is because you didn't believe
you could do that?
THE WITNESS. We had an estimate, and it was over $10,000
to-
THE COURT. Okay. How about door handle installed --
(N.T. 9/22/17, p. 223-224).
Section 2.3 of the Lease also requites "(c)enant shall be responsible for the full a.mount of real
property taxes and all special assessments and governmental charges of very character imposed on the
Premises .. ." (Pls.' Ex. 2, p. 3). Consequently, Defendants, as guarantors of Tenant, are responsible
for payment of the Property's real estate taxes. The testimony and evidence presented to this Court
established conclusively that Defendants did not pay the real estate truces and that a tax lien filing was
placed against the Property due to Defendants' failure to pay real estate taxes due (Pls.' Ex. �5; N.T.
9/14/17, p. 8; N.T; 9/22/17, pp. 43-45; N.T. 11/15/17, p. 166).
Kristian Tomasulo testified that Defendants have continuously operated The Mansion Inn
since Fall 2016. The business consists of a restaurant, overnight accommodations and a bar under
Hotel Liquor License Number 59762. He testified he and Joseph Grande, Jr. purchased the License
through the vehicle of the Membership Agreement (N.T. 6/23/17, pp. 14, 15). Tomasulofurther
testified that around February 2017, a PLCB inspector conducted a routine audit after it was
21
determined th.at the ownership/transfer of the License was in question (N.T. 6/23/17, pp. 20, 21).
The PLCB inspector noted Valerie. Hegarty was still named president of Majestic Mansion, not
Defendants (N.T. 6/23/17, p. 21). Tomasulo's testimony further confirmed Defendants were
contractually required to diligently pursue all necessary PLCB applications and changes necessary as
part of the transaction and yet ha'.d not done so despite being represented by legal counsel during all
negotiations, preparation of the, transactional documents and these litigation proceedings (N.T.
6/23/17, pp. 48, 49).
"Ejectment is the proper action for the recovery of possession of [property]." Irwin v,
Hoffman, 179 A. 41, 45 (Pa. 1935). Ejectment is an action filed by a plaintiffwhc does not possess
the land but has the right to possess it, against a defendant who has actual possession. See Soffer v,
�. 409 A.2d 337 (Pa. 2002). Plaintiffs have provided compelling evidence regarding Defendants'
Lease defaults, and as a consequence, Plaintiffs' entitlement to possess the Property. The Court
accordingly finds Plaintiffs are entitled to immediate possession of the Property. Defendants have no
. .
right to continue to occupy the Property under the terms of the written transactional documents
agreed between the parties, as they have only made the November 2016 monthly lease payment.
This Court concludes Defendants breached their payment obligations by failing ;o make
required agreed-upon monthly payments due under the Lease. The Court finds that Plaintiff Main
Street is entitled to the unpaid contractual lease payments since December 2016 until the current
month of April 2018, totaling Two Hundred Thirty-Six Thousand Four Hundred Twenty Dollars and
Fifty-One Cents ($236,420.51 ). Main Street is further entitled to the unpaid .real estate taxes: totaling
Nineteen Thousand Eight Hundred Twelve Dollars and One Cent ($19,812.01).1
I The Court
incorporates the calculations of unpaid rent and unpaid real estate taxes as included in Appendix "A" to
Plaintiffs' Proposed Findings of Fact Brief filed on February 16, 2018.
22
e. Fairness and Due Process Claims
Throughout these proceedings, Defendants' counsel baselessly argued that this Court's ruling
resulted in a deprivation of Defendants' "due process" (N.T. 9/14/17, pp. 73-74). Defendants'
counsel alleged his clients were denied discovery by the Court. "The Court's sua sponte prosecution of
expedited proceedings without consideration for Defendants' litigation preparation needs and their
solo practitioner counsel's time and resources prejudicially affected their case" (Defs.' Proposed
Findings of Fact ("FOP'), p. 2). Initially, the Court does not and will not enter rulings based upon
whether the parties to an action are represented by a solo practioner, a small law firm or a large law
firm. All parties are free to retain counsel of their choice and all counsel are free to determine whether
they do or do not have the resources and expertise to handle a specific case before accepting a client's·
matter for representation.
The record is clear that both parties were bound by the same discovery schedule. This Court
did not have any personal knowledge of or contact with any of the parties prior to this case. It should
be further noted that this case is based primarily upon the commercial transactional documents which
both parties agreed upon and executed prior to the initiation of this action, and presumably had full
and complete copies of since the signing in 2016. On June 23, 2017, this Court held its initial
courtroom proceeding with the parties which was a full day hearing on Defendants' Emergency
Petition for Preliminary Injunction. Defendant Tomasulo was the only witness to testify at the
hearing. Following this evidentiary hearing, all parties were given fair and ample opportunity to
present their case, witnesses and all relevant evidence during trial from September 22, 2017 through
November 15, 2017. The Court duly considered all parties' claims and testimony presented on the
record as well as the post-trial briefs prepared and submitted by counsel. At trial, the examination of
Defendant Tomasulo was -conducted over a period of two and one-half (2 %) days. Defendant
Tomasulo's testimony was lengthy an� exhaustive as the record reflects. The Court heard testimony
23
from Frank Martines, Defendants' contractor, and Joseph Grande. Defendants' counsel clearly had
. . .
sufficient opportunity to cross and re-cross examine all of Plaintiffs' witnesses and to present any
witnesses and documents to support his clients' case, subject to the Pennsylvania Rules of Evidence.
Despite being confusing and contradictory at times, the Court considered all witness testimony
presented by the defense, assessed witness credibility and gave all witness testimony and documentary
evidence the weight the Court, as the fact-finder, deemed appropriate. During trial, on multiple
occasions, Defendants' counsel and co-Defendant Grande were observed whispering and making
non-verbal gestw:es to communicate with the testifying witness. After taking a brief afternoon recess
on day four (4) of the trial, Plaintiffs' counsel finally objected on the record to this conduct and in'
response, Defendants' counsel stated as follows:
THE COURT. Mr. Gould, your response?
MR. GOULD. Yow: Honor-
THE COURT. Is it true?
MR. GOULD. No.
THE COURT. Oh, it's not true. .
IYIR. GOULD. I was discussing what I was going to ask my
client when he was on the stand. And my purpose in doing that
is because I am restricted in how I get to ask him questions. So
I need to make sure that he understands that I'm asking him a
question, if I ask him a "what" question, what I'm looking for.
I just need - It's a way of preparing a witness so he can testify.
My client's been - -
THE COURT. Is it appropriate for counsel to prepare a
witness in the middle of his testimony, direct, cross, recross,
redirect? ·
MR. GOULD. My client has been on the stand for four
consecutive days and we've been divided up in trial rime. Every
rime we come back to trial I have to re-prepare just to be able
to come back into trial two weeks after the last one because
we're having this trial over a period of time where there is a
two-week interim. I just need to make sure that he understands
what I'm asking when I'm asking him a question. That's my
purpose in going through that with him. I certainly did ask
questions of -- I asked Mr. Grande to go th.rough his
deposition testimony to demonstrate that Mr. Wild's cross of
my client relying on Joe Grande's testimony was not quite
24
complete with the evidence. But I wasn't preparing him in his
testimony. I wasn't asking him to change his testimony.
THE COURT. Have you or your client, Mr. Grande, been
making sort oI signals and gestures · to Mr. Tomasulo
throughout the testimony, kind of seeking to influence his
answer?
MR. GOULD. I know that my -- Mr, Grande had, as you
observed before.
THE COURT. Okay.
(N.T. 11/13/17, pp. 147-149).
This record is devoid of any bias, prejudice or other evidence tending to show the appearance
of such bias or prejudice by the Court. The Court's decision herein is solely based on the commercial
transactional documents in the evidentiary record, the testimony of all witnesses, and the Court's
assessment of credibility thereof as required under Pennsylvania law.
f. Damages
The purpose of damages in a breach of contract case is to return the parties to the position
they would have been in but for the breach. Birth Center v. St. Paul Companies. Inc., 787 A.2d 376
(Pa. 2001). "At common law, the mitigation of damages in a lease was regarded as being controlled
by property law. Because the lease was a conveyance of real property, the tenant owned a non-freehold
estate, and the landlord had no duty to mitigate damages arising from the tenant's breach of the lease."
Id. In a breach of contract action, damages must be proven with reasonable certainty. Spang & Co.
y. U.S. Steep Corp., 545 A.2d 861, 866 (Pa. 1988).
Our Supreme Court has held that a non-breaching landlord whose tenant has abandoned the
property in violation of the lease does not have a duty to mitigate damages under a commercial lease.
See Stonehedge Square Limited Partnership v. Movie Merchants Inc., 715 A.2d 1082 (Pa. 1998). In
Stonehedge, the Supreme Court of Pennsylvania stated:
In 1882 this court held that "if the relation of landlord and
tenant.was not ended by contract, he was not bound to rent to
another during the term for relief of the defendant." Milling v.
25
Becker, 96 Pa. 182 (1880). Two years later, in Auer v. Penn,
this court held that "[t]he landlord may allow the property to
stand idle, and hold the tenant for the entire rent; or he may
lease it and hold him for the difference, if any." Id., 99 Pa. 370,
375-76 (1882). And in 1928 this' court held that "[r]eletting is
not imposed on a landlord as a duty." Ralph v. Oeiley, 293 Pa.
90, 141 A. 640, 643 (1928).
Stonehedge, 715 A.2d at 1084.
In summary, where a commercial tenant abandons property, a non-breaching commercial
landlord has no duty to mitigate damages. lg. The Superior Coun stated:
Stonehedge does not disturb the general principle that a landlord
must choose between taking possession of the property and
collecting future rents. However, pursuant to that decision,
where a commercial tenant vacates the leasehold, the landlord
may seek accelerated rent if the lease so provides, and re-let the
premises. The landlord, however, must credit tenant at
execution for sums paid by the replacement tenant The
Restatement (Second) of Property similarly treats such
situations where a landlord seeks both accelerated rent and
possession. If the landlord terminates the lease and evicts the
tenant before the acceleration clause is enforced, the landlord
cannot recover rent for the post-eviction period. If the
landlord collects accelerated rent and receives possession of
the p.coperty by abandonment, the landlord may keep the
accelerated rent, but is required to account to the tenant for
rent received from a new tenant. If the tenant abandons the
property, the I.and.lord may sue and collect accelerated rent.
However, the landlord must account to the tenant for rent
from a new tenant. See Restatement (Second) of Property, §
12.1, Comment k.
Ferrick v. Bianchini, 69 A.3d 642, 656 (Pa. Super. 2013).
"A tenant may agree, when entering into a lease, that the maturity of rent may be accelerated;
the parties may agree that the whole rent for the term may be payable in advance or that it shall become
payable at once on default of payment periodically, ·in accordance with the terms of the contract, or
that it may become due if the tenant remove or attempts to remove from the premises before the end
of the term, without having paid the rent for the term. On the happening of the contingency provided
26
for, the rent that was theretofore payable by installments becomes immediately due as provided in the
lease." Brumbaugh v. Feldman, 47 Pa. Super. 10, 16 (1911). "If the landlord terminates the lease and
evicts the tenant before the acceleration clause is enforced, the landlord cannot recover for the post-
eviction period:' Ferrick, 69 A.3d at 656. In Matovich v. Grad.ich, 187 A. 65 (Pa. Super. 1936), the
Superior Court held that in cases where the lease contains an· acceleration clause, the landlord can
accelerate for future rent accruing under the lease or eject the tenant, but not both. See Matovich v.
Gradich, 187 A. 65 (Pa. Super. 1936). "The tenant, then, does not forfeit all of his rights when the
landlord accelerates, but must thereafter be accorded his possessory rights on payment of the
accelerated rent." lg. at 66.
In the instant case, the parties executed and exchanged their commercial transactional
documents at settlement on August 12, 2016. Defendants pledged their ownership and voting
interests in Majestic as encumbered collateral to Main Street to guarantee all tenant Lease obligations
(Pls.' Ex. 4). Tomasulo and Grande personally guaranteed for a three (3) year period the obligations
under the Tenant's Lease which commenced on August 12, 2016. (Pls.' Ex. 2; N.T. 9/22/17, pp. 29,
57). Defendants' personal guaranty extends only for the first three (3) year.; of the five (5) year Lease
term (Pis! Ex. 2; N.T. 9/22/17, pp. 29, 57). The record clearly supports our finding that Defendants
defaulted under the Lease after failing to tender the monthly Lease payments due for December 2016
and all months thereafter (� N.T. 6/23/17, pp. 36, 37). Due to Defendants' default of their
obligations under the Lease, Plaintiffs filed this action demanding the Court award' immediate
possession of the Property to Main Street and Majestic.
Plaintiffs claim that in addition to establishing the elements for an ejectment action and their
right for possession of the Property, they are also entitled to the unpaid rent and real estate taxes due
together with the accelerated remaining balance of the three (3) year guaranty. Plaintiffs claim that
unlike a commercial landlord which is required under Pennsylvania law to elect to either confess for
27
accelerated rent or, in the alternative, to confess for possession and accrued damages to date, Main
Street needs not elect one (1) remedy or the other. Main Street argues they established the elements
of an ejectment action and, in addition, are entitled under Pennsylvania law to also proceed against
Guarantors under the contractual guaranty for their contractually based monetary damages.
The Court concludes Plaintiffs are entitled to. immediate possession of the Property as a
consequence of Defendants' default. The record indicates Defendants performed various repairs
and/ or improvements to the Property to operate their business. The Court finds Plaintiffs will
repossess the Property and its contents as repaired and/ or improved. As noted by Plaintiffs' own
witness Sean Holmes:
BY J\iffi... GOULD:
Q. Okay. Now, you've been able to go down and see what
my clients have actually done with the inn, have you not?
A. We had that right, sir.
Q. So then you know that they have made substantial
improvements to the inn. That they've made investments into
the inn.
A. I know they've made some -- yeah, they've done some work
for sure, yeah.
(N.T. 9/22/17, p. 96).
Furthermore, under Section 8.2(b) of the Lease, Landlord agreed to use reasonable efforts to
mitigate damages:
Landlord shall use commercially reasonable efforts to mitigate
damages hereunder; provided however, that Landlord shall not
be obligated to: (1) lease the Premises to any replacement
tenant that does not, in Landlord's reasonable opinion, have
(a) sufficient financial resources, (b) operating experience or (c)
good reputation in the business community; or (2) lease the
Premises to any replacement tenant where the replacement
tenant's use of the Premises would violate any mortgage,
reciprocal easement agreement, other encumbrances on the
Premises; or (3) lease of the Premises for any rental below the
fair market rental for the Premises or be required to renovate
or improve the Premises.
(Pls.' Ex. 2, pp. 17-18). .
28
Additionally, when addressing a claim for attorneys' fees in the context of the breach of a
lease, the Superior Court of Pennsylvania has held:
The general rule in this Commonwealth is that there is. no
recovery of attorney's fees from an adverse party in the
absence of an express statutory authorization, clear agreement
between the parties, or the application of a clear exception.
Generally, landlords and tenants can include in a lease any
terms and conditions that are not prohibited by statute or other
rule of law. ·The Landlord and Tenant Act of 1951 does not
specifically provide for the recovery of attorney's fees nor does
it prohibit inclusion of a fee shifting provision in rental
agreements. Furthermore, we are not presented with any
applicable exceptions to the general rule. Consequently, the
validity of the instant provision is solely dependent upon
contract law. Where the language of a lease is clear and
unequivocal, its meaning will be determined by its contents
alone in ascertaining the intent of the parties.
Bayne v. Smith, 965 A.2d 265, 267 (Pa. Super. 2009).
The Court will accordingly award Plaintiffs immediate possession of the Property together
with monetary damages based upon the unpaid rent through April 2018, including contractual late
fees, interest and unpaid real estate taxes. The Court finds from the record that Plaintiffs are
contractually entitled to reasonable attorneys' fees and costs as may subsequently be determined due
and owing before the Court. The Court will not grant Pla.i.ntiffs the balance of the three (3) 'yeu
guaranty as requested, nor will the Court consider the unfunded escrow account balance as an element
of Plaintiffs' damages as the Court finds that Defendants' collective overall fit-outs, Key Money
improvements and additional repairs co the Property offset those specific claims. This decision is
entered subject to the possibility that future damages, if any, incurred by Plaintiffs may be subject co
reassessment by the Court.
rv. CONCLUSION
For the foregoing reasons, the Court grants Main Street's immediate possession of the
Property. The Court further concludes Defendants unlawfully withheld contractual rent payments
29
due since December 2016 and all months thereafter. Defendants were fully aware of the Lease
payment default and the transactional documents evidence the Liquor License was subject to a
collateral pledge. At no time have Defendants cured the Lease payment default, nor did Defendants
seek to pay any monthly rents into an escrow account while the parties attempted to resolve their
differences. Finally, the Court finds no default by the Landlord under the Lease and Tenant was not
entitled under the Lease or Pennsylvania law to withhold �ent.
For the foregoing.reasons, the Court enters the following Order:
ORDER.
AND NOW, this 13th day of April, 2018, based on the facts and. reasons as set forth above,
it is hereby ORDERED and DECREED:
1. Judgment is entered in favor of Pla.intiff(s) and against Defendants Kristian R. Tomasulo
and Joseph Grande, Jr. and Occupants for immediate possession of the Property located
at 9 S. Main Street, New Hope, Pennsylvania 18938.
2. Verdict is entered in favor of Plaintiff(s) and against Defendants in the amount of Two
Hundred Forty-Nine Thousand One Hundred Fifteen Dollars and Eighty-Nine Cents
($249,115.89) plus reasonable attorneys' fees and costs as may subsequently be dete.rmi.ned
due and owing.
3. Verdict is entered in favor of Plainriff(s) and against Defendants on all Counterclaims.
,1... umo:1 S'>�Jns JO
· /·J-:1 "1!. ONOH l O};! d
t \ :\\ 'V ( \ ll�� �\O�
n� ;-. t":i ;)·3�
Date: April 13, 2018 � ·�· r ' \ �.\.,;) · � · ·
N.B. It &I ,our Nspon�· •' 30
� �- an inte�ted PHti1ttJ