Sears v. 69th Street Retail Mall

J-A11039-15

2015 PA Super 208

SEARS, ROEBUCK & CO. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee

v.

69TH STREET RETAIL MALL, L.P., 69TH
STREET RETAIL OWNER, L.P., 69TH
STREET GP, LLC, 69TH STREET GP II,
LLC, AAC MANAGEMENT CORP., AND
ASHKENAZY ACQUISITION CORP.

Appellants No. 2359 EDA 2014

Appeal from the Judgment Entered on July 23, 2014
In the Court of Common Pleas of Delaware County
Civil Division at No.: 12-50500

SEARS, ROEBUCK & CO. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant

v.

69TH STREET RETAIL MALL, L.P., 69TH
STREET RETAIL OWNER, L.P., 69TH
STREET GP, LLC, 69TH STREET GP II,
LLC, AAC MANAGEMENT CORP., AND
ASHKENAZY ACQUISITION CORP.

Appellees No. 2506 EDA 2014

Appeal from the Judgment Entered on July 23, 2014
In the Court of Common Pleas of Delaware County
Civil Division at No.: 12-50500

BEFORE: FORD ELLIOTT, P.J.E., OLSON, J., and WECHT, J.

OPINION BY WECHT, J.: FILED OCTOBER 02, 2015
J-A11039-15

In this case, Sears, appellee and cross-appellant before this Court,

sued the above-captioned appellants, who are also the cross-appellees in

this matter, alleging, inter alia, that the appellants had constructively evicted

Sears from a building that Appellant entities variously owned, marketed, and

maintained. Sears’ claim was based upon a years-long history of Appellants’

alleged failure to maintain the interior and exterior of the building occupied

by Sears, as well as the parking garage that serviced the building, in

violation of Appellants’ obligations under the parties’ lease agreement (“the

Lease”). Sears alleged that these necessitated Sears’ extensive and ongoing

self-help and adversely impacted their business to such an extent that it

effectively forced them to abandon the property. The jury found in Sears’

favor, entitling Sears to withhold all rent obligations remaining on the Lease

at the time of their abandonment. As well, the jury awarded Sears damages

for intentional interference with contractual relations.

Appellants, which all are related to each other and were formed to

administer the property at issue (“the Premises”), appeal the trial court’s

refusal to enter judgment in their favor notwithstanding the jury’s verdict

(hereinafter “JNOV”). They maintain that Sears failed to present evidence

sufficient to satisfy the stringent standard governing claims for constructive

eviction. They also dispute the jury’s award of damages for intentional

interference with contractual relations. In its cross-appeal, Sears argues

that the trial court erred in denying it the opportunity to submit its punitive

damage claim to the jury. After careful review, we must vacate the

-2-
J-A11039-15

judgment. However, we do so for only one narrow purpose—to allow Sears

the opportunity to try its claim for punitive damages, which we find that the

trial court improperly declined to submit to the jury. In so doing, we deny

all of Appellants’ issues on appeal.

Before we may address the factual underpinnings of, or the issues

raised in, this case, it is necessary to review the parties and their complex

interrelationships. Sears is simply the tenant in this matter; the

complications arise thanks to the intertwined corporate entities named as

defendants in this litigation, whose relationships must be understood to

grasp the arguments presented in this case.

 Monarch, Inc. (“Monarch”), was the original lessee with Sears.
Monarch’s entire interest in the Premises later was acquired by the
entities with “69th Street” in their names.

 69th Street Retail Mall, L.P.; 69th Street Retail Owner, L.P.; 69 th Street
GP, LLC; and 69th Street GP II, LLC, who collectively purchased the
relevant assets from Monarch and served as assignees of the Lease.
These entities are collectively identified throughout this Opinion as the
“Landlord.”

 Ashkenazy Acquisition Corp. (hereinafter, “Ashkenazy”1) served as the
Landlord’s leasing and development agent.

 AAC Management Corp. was the property manager (hereinafter,
“AAC”). AAC eventually was dismissed as a party from this litigation.

____________________________________________

1
Confusingly, Appellants identify Ashkenazy as “AAC,” despite the trial
court’s use of “Ashkenazy” and the presence of AAC Management Corp., a
separate entity, as a party to this litigation. We adhere to the trial court’s
convention.

-3-
J-A11039-15

When possible, we refer to these parties collectively as Appellants as a mere

convenience, recognizing that not in all instances are all captioned

Appellants actually involved in the question under examination. However, in

certain instances we must refer to the non-Landlord parties individually, and

we do so according to the above conventions.

The trial court has provided the following account of the factual and

procedural history of this case:

[O]n May 28, 2013, [Sears] filed an Amended Complaint which
contained the following three (3) counts requesting relief:
1) breach of the [L]ease/covenant of quiet enjoyment by [the
Landlord] (Count I); 2) constructive eviction of Sears by [the
Landlord] (Count II); and 3) intentional interference with the
[L]ease contract between Sears and [the Landlord] by AAC (later
removed as a party) and Ashkenazy (Count III). Sears sought
compensatory and punitive damages for the alleged intentional
interference. . . .[2] [The Landlord] and Ashkenazy . . ., by
Counterclaim for breach of contract, sought to have Sears pay
the accelerated balance of all rent due through August 16, 2018.

Trial was conducted on March 17, 2014 through March 25, 2014.

****

Sears averred, in its Amended Complaint, that, pursuant to [the
Lease,] dated April 19, 1988, [Sears] commenced operating a
department store at the [P]remises . . . . On August 2, 2007,
Sears invoked its right to extend [the L]ease for an additional
ten (10)[-]year period until August 16, 2018 pursuant to the
[Lease’s] terms. Sears was to initially conduct business on the
first two (2) floors of the building, an area consisting of
approximately [133,373] square feet with options to occupy
additional spaces. The [Premises] also included common areas
____________________________________________

2
As set forth at greater length, infra, the prescribed remedy for Counts
I and II is abatement of Sears’ rent obligations under the lease.

-4-
J-A11039-15

that contained a [four-level] parking deck and [a] surface
parking lot. . . .

An entity known as Monarch Inc. was the original landlord. On
or about June 23, 2005, Monarch assigned its contractual rights
under the [L]ease to [the Landlord]. Sears alleged . . . that
after it declined a February 2006 offer from [the Landlord] to
consider a buyout of the [L]ease, that the maintenance and
attention to the property was insufficient to maintain the building
as provided for in the [Lease]. Sears alleged [L]andlord default
in deficient lighting and electric systems in the parking deck,
deteriorated structural aspects of the parking deck, water and
sewer leaks, sewage backup inside the department store,
deterioration of the store façade, and failure to maintain, clean
and landscape the [Premises] pursuant to the [Lease].

Sears issued a series of notices of default to the [L]andlord
commencing on May 1, 2009 to provide notice of intent to
perform self-help remedies pursuant to the [Lease]. Sears was
told by [AAC] not to self-remedy and told by [the L]andlord’s
lawyers that they would be in default if they resorted to self-
help. Sears averred that during the ensuing three (3) years,
repeated commitments to make repairs were never fulfilled by
[the Landlord]. Sears claimed that Ashkenazy, through AAC, its
property managers, and its own leasing agents, desired to force
Sears out of the [Premises] due to their attempt to secure other
tenants for the space and their failed attempts to buy Sears out
of the balance of the [Lease]. [The Landlord] countered that the
alleged conditions in the parking areas and store did not prevent
or deprive Sears of operating its business on a day to day basis
up through May of 2012. [The Landlord] countered that Sears is
obligated to pay the balance of the [Lease] and that the closing
of the Sears store . . . was due to the nationwide economic
downturn of the Sears Corporation. Specifically, Sears
announced in December of 2011 its closing of approximately one
hundred fifty-seven (157) stores nationwide, which included the
[P]remises.

At the close of [Sears’ case, AAC] was removed as a party by
stipulation. After the close of the record evidence, [the trial
court] granted [Appellants’] Motion for a Directed Verdict as to
punitive damages. . . .

The jury found that [the Landlord] breached the [Lease] by
constructively evicting Sears[,] thereby suspending Sear[s’]

-5-
J-A11039-15

obligation to pay rent. The jury further found that
Ashkenazy . . . was not an agent of [the Landlord] acting within
the scope of its authority and that Ashkenazy intentionally
interfered with the [Lease] between [Landlord] and Sears. The
jury awarded $66,119.30 as compensatory damages as a result
of the intentional interference with contractual relations.

Trial Court Opinion (“T.C.O.”), 11/13/2014, at 2-7 (record citations omitted).

Appellants raise the following issues on appeal:

1. When the [Lease] explicitly obligated [Sears] to continue
to pay rent even if the Landlord breached its repair and
maintenance duties under the Lease, did the trial court err by
failing to enter judgment as a matter of law in favor of the
Landlord on its counterclaim for unpaid rent and on [Sears’]
constructive eviction claim when [Sears] failed to introduce any
evidence of substantial interference by the Landlord with
[Sears’] possession of the Premises, and [Sears] at all times
used the Premises as a full-line Sears department store as the
Lease contemplated?

2. Did the trial court err by failing to enter judgment as a
matter of law in favor of [Ashkenazy] on [Sears’] claim for
tortious interference with contract (i.e., the Lease) when the
undisputed evidence showed that the Landlord was a single-
purpose corporate entity that had no employees and acted solely
through its leasing and management agents[, respectively
Ashkenazy and AAC,], and [Sears] did not introduce any
evidence to prove that [Ashkenazy] acted outside the scope of
its agency?

3. Did the trial court err by failing to grant the Landlord’s
motion for a new trial on [Sears’] constructive eviction claim and
the Landlord’s counterclaim for unpaid rent, when: (a) the
[c]ourt incorrectly instructed the jury that it could find a
constructive eviction based on nothing more than a substantial
decrease in the “utility” of the Premises; and (b) the jury’s
verdict was against the overwhelming weight of the evidence?

Brief for Appellants at 3-4. In its cross-appeal, Sears raises the following

issue: “Whether the trial court erred when it refused to instruct the jury on

-6-
J-A11039-15

Sears’ claim for punitive damages against [Ashkenazy] because of its

tortious interference?” Brief for Sears at 5.

We begin our review with Appellants’ first issue, but then skip to its

third issue, insofar as the jury instruction question is informed by and

informs our discussion of Appellants’ first asserted basis for JNOV. We then

turn to Appellants’ second issue, which would only require relief as to one

aspect of the judgment subject to this appeal. Finding ultimately that

Appellants are not entitled to relief on any of their issues, we conclude by

addressing Sears’ argument concerning punitive damages, which we find

requires relief.

Appellants’ first and second issues in the order in which they are

presented both assert bases upon which Appellants believe that the trial

court should have granted JNOV. Our standard of review of a trial court’s

order declining to grant JNOV is as follows:

Appellate review of a denial of JNOV is quite narrow. We may
reverse only in the event the trial court abused its discretion or
committed an error of law that controlled the outcome of the
case. Hutchinson v. Penske Truck Leasing Co., 876 A.2d
978, 984 (Pa. Super. 2005). “Abuse of discretion occurs if the
trial court renders a judgment that is manifestly unreasonable,
arbitrary or capricious; that fails to apply the law; or that is
motivated by partiality, prejudice, bias or [ill will].” Id.

When reviewing an appeal from the denial of a request for
[JNOV], the appellate court must view the evidence in the
light most favorable to the verdict[-]winner and give him
or her the benefit of every reasonable inference arising
therefrom while rejecting all unfavorable testimony and
inferences. . . . Thus, the grant of [JNOV] should only be
entered in a clear case and any doubts must be resolved in
favor of the verdict[-]winner. . . .

-7-
J-A11039-15

Hutchison ex rel. Hutchison v. Luddy, 896 A.2d 1260, 1265
(Pa. Super. 2006) (citations and quotation marks omitted).

Thomas Jefferson Univ. v. Wapner, 903 A.2d 565, 569 (Pa. Super. 2006)

(citations modified).

It is axiomatic that[] there are two bases upon which [JNOV] can
be entered: one, the movant is entitled to judgment as a matter
of law, and/or two, the evidence was such that no two
reasonable minds could disagree that the outcome should have
been rendered in favor of the movant. To uphold JNOV on the
first basis, we must review the record and conclude that even
with all the factual inferences decided adverse[ly] to the movant
the law nonetheless requires a verdict in his favor, whereas with
the second we review the evidentiary record and conclude that
the evidence was such that a verdict for the movant was beyond
peradventure.

Rohm & Hass Co. v. Continental Cas. Co., 781 A.2d 1172, 1176

(Pa. 2001). In connection with the latter, evidence-based grounds for JNOV,

relief will only be granted “when the jury’s verdict is so contrary to the

evidence as to shock one’s sense of justice.” Samuel-Bassett v. Kia

Motors Am., 34 A.3d 1, 39 (Pa. 2011).

Appellants’ first argument in favor of JNOV hinges upon the legal

standard for constructive eviction and the adequacy of the evidence to

satisfy the elements thereof. This Court has made the following

observations regarding the standard governing a claim of constructive

eviction:

If the tenant is entitled to the beneficial enjoyment of the
premises under the terms of his lease, and if he is
deprived of this by the act of the landlord[,] it amounts to
an eviction, and will suspend the rent. . . .

-8-
J-A11039-15

Weighley v. Muller, 51 Pa. Super. 125, 131 (1912).

The legal implication of the covenant [for quiet
enjoyment], express or implied, is that the lessor will
permit the tenant to enjoy fully the demised premises
subject to any rights of the lessor . . . . ‘The covenant . . .
is breached when a tenant’s possession is impaired by the
acts of the lessor or those acting under him . . . .’ The
impairment of the lessee’s possession need not be total,
but the utility of the premises must be substantially
decreased by the landlord’s interference with a right or
privilege which is necessary to the enjoyment of the
premises . . . .

Checker Oil Co. of Del., Inc., v. Harold H. Hogg, Inc., 380
A.2d 815, 818-19 (Pa. Super. 1977). . . .

Recovery for breach of this covenant . . . has been allowed
in Pennsylvania where a landlord has evicted the tenant by
locking up the leased premises and denying the tenant
access . . ., and where the landlord so substantially altered
some essential feature of the premises as to render the
property unsuitable for the purpose for which it was
leased.

Pollock v. Morelli, 369 A.2d 458, 460 (Pa. Super. 1976)
(emphasis added).

Jonnet Dev. Corp. v. Dietrich Inds., Inc., 463 A.2d 1026, 1033

(Pa. Super. 1983) (citations modified).

“To constitute a constructive eviction, the interference by a
landlord with the possession of his tenant or with the tenant’s
enjoyment of the demised premises must be of a substantial
nature and so injurious to the tenant as to deprive him of
the beneficial enjoyment of a part or the whole of the
demised premises, . . . to which the tenant yields, abandoning
the possession within a reasonable time.” 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 . . . .” 49 Am.Jur.2d §§ 302,
303; see also Chelten Ave. Bldg. Corp. v. Mayer, 172 A. 675,

-9-
J-A11039-15

677 (Pa. 1934) (“In order that a tenant may rely on constructive
eviction . . . he must abandon the premises. . . .”); id.
(collecting cases).

Kuriger v. Cramer, 498 A.2d 1331, 1338 (Pa. Super. 1985) (emphasis

added; citations modified; footnote omitted).

Appellants’ first argument in support of JNOV hinges upon the

sufficiency of the evidence to establish the level of substantiality and

injuriousness necessary to enable a jury to find that a constructive eviction

occurred. Its second argument, in seeking relief based upon the terms of

the Lease, seeks to establish that Appellants are entitled to judgment as a

matter of law.

We begin with the trial court’s account of the evidence presented at

trial that bore upon constructive eviction, mindful that our standard of

review requires us to view the evidence in the light most favorable to Sears

as the verdict-winner:

Joseph Monahan, who worked for Sears as its district sales
manager and whose responsibility included the store in question,
testified about the major maintenance issues and repairs that
went unremedied despite repeated requests. He stated that the
parking garage had concrete falling out of the ceiling and that
seventy percent (70%) of the lights in the garage were burnt out
at one point. He was “afraid to get out of [his] car” due to the
chance of falling debris. He noted cracks in the side of the
building that caused rain water to enter the store, flooding the
interior and causing “anywhere from an inch to two (2) inches of
water on the floor throughout the whole first floor” when it
rained hard. Mr. Monahan recalled having to replace sheet rock
on one whole side of the building and the carpet on the first floor
more than ten times during a two (2)[-]year period. He also
testified that these problems were reported to his superiors,
Ms. Cheryl Schwartz and Mr. [Joseph] Kaminski (who also

- 10 -
J-A11039-15

testified about these same issues)[,] and that he reported the
issues to the local [L]andlord representative.[3] He spoke to the
[L]andlord representative at least thirty (30) times during the
two (2) years that he managed the [Premises]. He testified that
the [L]andlord would fix twenty percent (20%) of the broken
lights and leave the other eighty percent (80%) unfixed. He
detailed serious drainage problems in the garage that led to
deteriorating concrete that was falling out of the ceiling in the
garage, neglected landscaping, snow accumulation, leaks in the
ladies[’] room and break room, sewage overflow of human waste
from the upstairs tenant, an ugly and unkempt building exterior,
and an unsafe environment.

The testimony of Patrick Sweeney, the district facilities manager
for Sears, and former store manager in training at the
[Premises,] corroborated the testimony of Mr. Monahan,
highlighting what he described as the “horrific” condition of the
outside of the Sears building. He noted the falling bricks from
the façade (one striking a customer who came into the store
with a bleeding head), the numerous cracks, leaks in the interior
(having to tarp the products), slipping hazards, the neglected
landscaping, the water cascading down the building and staining
the building where the gutters had rusted away, concrete chunks
falling from the garage ceiling (striking vehicles) and a rat
infestation problem. He testified about the darkness of the
garage and how Sears had to pay out of its pocket to add some
lighting to the garage because there were homeless people living
in the garage and illicit activity, including drug sales and
prostitution in the parking garage. He testified that conditions
were brought to the attention of the local property managers.
He described the unsuccessful temporary patch[-]type fixes that
were occasionally provided by the [L]andlord, but were never
____________________________________________

3
This reference likely pertains to either Nick Veros (who is identified in
the trial transcript as Mr. Vros but by Appellants as Mr. Veros) or Andrew
LoFredo. Mr. Veros identified himself as a director of property management
for the “Ashkenazy organization” from 2004 until 2014. See Notes of
Testimony (“N.T.”), 3/19/2014 vol. I, at 143-44. He indicated as well that
he worked “through” AAC. Id. at 145. Mr. LoFredo joined Ashkenazy in
2010 as the director of property management, but it is less clear from his
testimony whether he worked directly for Ashkenazy or for the “Ashkenazy
organization” in the guise of AAC. See N.T., 3/18/2014 vol. II, at 7-8.

- 11 -
J-A11039-15

close to adequate. He noted that the ongoing issues were
repeated[ly] raised to [t]he “[L]andlord representative[,”] but
never properly remedied.

Christine Shearburn testified that she worked at the Upper Darby
Sears for thirty-two (32) years in various capacities and was the
operation manager in the store from 1998 to 2010. She was
responsible for the physical appearance of the store and, among
other things, loss prevention. She corroborated Mr. Sweeney
and Mr. Monahan’s testimony regarding the condition of the
[Premises]. She testified to the negative impact that the
exterior . . . had on the [Premises] and the customer’s
impression. Some customers were afraid to return to their cars
in the parking garage after dark.

Numerous photographs were admitted during the trial [to
support, inter alia,] the testimony of [Mr.] Kaminski, the regional
vice president for Sears during the time in question, who noted
the terrible condition of the [Premises] as he observed and went
through a number of photographs depicting the condition of the
[Premises]. Specifically, Mr. Kaminski outlined letters and
emails that noted deficiencies at the [Premises] and in April
2009 he described photos of the [Premises] and what he saw.
He was “blown away” [by] the severity of the condition of the
[Premises]. . . . He noted the deficiencies to Cheryl Schwartz,
the real estate manager for Sears, and sent photographs
depicting the problems to her. . . . He testified that, during the
three (3) years he had responsibility for the Upper Darby Sears
Store, the [L]andlord never did anything to make the problems
he noted noticeably better.

Kirk Harman, a structural engineer, testified for [Sears] that the
parking garage was structurally unsound and not fit for use for
its intended purpose. He noted the multiple code violations of
Upper Darby Township[’s building code] and he testified that the
parking garage was in a state of substantial disrepair due to
long[-]term neglect . . . .

[Ms.] Schwartz, the real estate manager for Sears Holdings
Corporation, stated that if, after a certain period of time, the
facility manager or store and district representatives cannot get
a result on maintenance and repairs[,] they are brought to her
attention. The problems with the [Premises] were reported to
her many times. She reached out to the store manager and she
tried to work with Mr. Veros . . . . He told her repeatedly that

- 12 -
J-A11039-15

things would be fixed and they were not. The best result that
Ms. Schwartz said she could get out of him on any given issue
was a “band aid” fix, nothing that ever resolved an issue. . . .
She noted repeated excuses and delays from the [L]andlord.
The jury saw many emails that were intended to show the lack
of response and unfulfilled promises that Ms. Schwartz was
experiencing. The emails contained repeated requests by
[Sears’] representatives to achieve maintenance and adequate
repairs at the [Premises] and representations that the work
would be performed. When Mr. Veros was replaced by
Mr. LoFredo, a new director of property management,
Ms. Schwartz noted that things did not improve. There were
more emails presented, showing more representations . . . .

James Terrell, the vice president of real estate holding for Sears,
testified that the subject property was trending negatively
financially from the time that the complaints about maintenance
and repairs began in 2008. While the [L]ease itself was . . . a
below[-]market[-]value rental, Mr. Terrell stated that this Sears
store closed because the [Premises] had deteriorated. He
described the store closing as “death of 1000 knives,”
deterioration caused by the cumulative effect over a number of
years of promises made and promises never kept. He stated
that Sears was forced to close the store and discontinue use of
the [Premises] for its intended purpose due to the “thousand
knives[.”] Sears decided to close its store in December 2011
and sent a termination of operations letter in January 2012.[4]
Mr. Terrell reached out to Mr. [Barry] Lustig at Ashkenazy
regarding his repair and maintenance issues with the [Premises,]
and Mr. Lustig’s first response to Mr. Terrell was a buyout
offer. . . . They constantly were being told that they were
getting bids or proposals to do work and they never came
through. Ashkenazy said that they had engaged an engineer to
fix the garage when they had not. They repeatedly said the
garage would be fixed and it was not, even after violations were
cited by Upper Darby Township. Mr. Terrell became aware at
some point that Ashkenazy was talking to alternative tenants
and he said that it is not unusual for them to be looking at
alternative tenants. However, what was unusual was for
____________________________________________

4
The ultimate liquidation and closure of the store was completed in May
2012.

- 13 -
J-A11039-15

Ashkenazy to be looking at a tenant (in this case on that would
require demolition of the existing structures) when the existing
tenant, Sears, had so much time left on the [L]ease.

T.C.O. at 10-16 (citations to the certified record omitted).

Appellants’ argument that the evidence was insufficient to establish

the requisite level of injury includes the following review of case law:

Well-reasoned cases applying Pennsylvania law persuasively hold
that a [l]andlord’s failures to provide maintenance, make repairs
or comply with local building codes do not provide a sufficient
legal basis for a finding of constructive eviction unless those
failures result in substantial interference with the [t]enant’s
possession of the premises by causing a nearly total deprivation
of the ability to use the premises for the purpose contemplated
by the [l]ease. See, e.g., Rittenhouse v. Barclay White,
Inc., 625 A.2d 1208 (Pa. Super. 1993) (granting the landlord’s
preliminary objections in the nature of a demurrer to tenant’s
constructive eviction claim . . . [when] the town agreed to allow
the tenant to remain in possession of the premises while the
landlord corrected the building code violation).

Federal courts applying Pennsylvania law likewise repeatedly
have rejected, as a matter of law, constructive eviction claims
based on a landlord’s failure to perform maintenance, make
repairs or comply with building codes. See Wm. H. McGee &
Co. v. Richard I. Rubin & Co., No. Civ. 95-0237, 1995
WL 366075 (E.D. Pa. June 20, 1995) (applying Pennsylvania law
and granting the landlord’s motion to dismiss a constructive
eviction claim, holding that the landlord’s “failure to properly
maintain [a] building and failure to comply with applicable
building codes,” which may have contributed to the spread of a
fire at the premises, did not constitute “deliberate actions
serving to render the premises unsuitable for the purpose for
which it was leased”); W.G. Nichols, Inc., v. Ferguson,
No. Civ.A. 03-824, 2004 WL 868222 (E.D. Pa. Apr. 21, 2004)
(interpreting Pennsylvania case law and granting summary
judgment in favor of landlords/defendants on tenant’s
constructive eviction claim when tenant failed to demonstrate
any “affirmative wrongful act on the part of the landlord[s]”
because a landlord’s “failure to comply with applicable building
codes will rarely constitute a breach of the covenant of quiet

- 14 -
J-A11039-15

enjoyment absent ‘an affirmative wrongful act on the part of the
landlord which results in an interference with the tenant’s
possession’”).

In order for a landlord’s failure to maintain or repair the
premises or comply with local building codes to constitute a
constructive eviction, the tenant must establish that the
landlord, for all intents and purposes, made it impossible for
the tenant to use the premises in the manner contemplated by
the [l]ease. See, e.g., Elfman v. Berman, 56 Pa. D. & C.4th
171, 184 (Phila. Cty. May 8, 2001) (holding that landlord’s
failure to “comply with the City code” to the point that the city
“shut down the building,” coupled with the landlord’s affirmative
wrongful acts of “changing the locks” and refusing to take steps
to remove the code violations such that the City would re-open
the building supported a finding of constructive eviction); Vakos
v. Hoff, 30 A.2d 367, 390 (Pa. Super. 1943) (finding a building
untenantable when the defendant landlord “started to raze the
building, tearing down partitions and taking out windows”);
Checker Oil Co., 380 A.2d at 819 (holding that the landlord had
rendered the premises unsuitable for use as a gas station when
the landlord cut off direct access to the gas station from the
main road).

Sears’ own evidence plainly demonstrated that Sears
continuously operated the Premises for the purpose
contemplated by the Lease. Sears’ cash registers did not lie;
they conclusively established Sears’ ability to operate the
Premises as a full-line department store as the Lease
contemplated. . . .

****

Sears and its customers actively used the parking garage and
the department store every business day until May 2012 when
Sears completed its liquidation sale . . . .

Brief for Appellants at 37-40 (emphasis in original; citations modified).

Sears responds that Appellants’ argument isolates each of Sears’

numerous issues, and establishes no more than that each maintenance

failure, standing alone, did not suffice to warrant a constructive eviction.

- 15 -
J-A11039-15

Sears maintains that it is the cumulative effect of all of the problems for

which it provided evidentiary support at trial—the “thousand knives”—that

amounted to constructive eviction, and that they must be considered in

concert rather than separately. We agree.

We begin by reviewing Appellants’ case law. In Wm. H. McGee, an

unreported federal decision that does not bind this Court, the district court

did not speak as broadly as Appellants suggest. Rather, the court rejected

the plaintiff’s constructive eviction claim because the plaintiff had “not

suggest[e]d that [defendant-lessor] engaged in deliberate actions serving to

render the premises unsuitable for the purpose for which it was leased.”

1995 WL 366075, at *4 (quoting Pollock, 369 A.2d at 460). Thus, it is a

reach to cite this case for a proposition that stretches beyond the narrow

facts at issue therein.

Although court of common pleas decisions provide, at most,

persuasive but not binding authority, we note that Appellants’ reliance upon

Elfman is misplaced insofar as substantial revisions were made upon

reconsideration. See Elfman v. Berman, no. 2080, control no. 70359 2001

WL 1807940 (CCP Phila. Cty. Aug. 30, 2001). Furthermore, nothing about

the court’s decision in Elfman, which involved an extraordinarily gratuitous

and unabashed effort to oust the plaintiff-tenant, suggests that “the tenant

must establish that the landlord . . . made it impossible for the tenant to

use the premises in the manner contemplated by the lease,” as Appellants

- 16 -
J-A11039-15

maintain, Brief for Appellants at 38-39 (emphasis modified), only that such

evidence is sufficient to establish a constructive eviction.

While Appellants’ description of the facts in Vakos is accurate, nothing

in that decision suggests that “impossibility” in the sense ventured by

Appellants is actually required to sustain a constructive eviction claim, only

that when such impossibility is presented constructive eviction will be found.

Notably, not only did Checker Oil state the governing standard less

dramatically than the proposition for which it is cited, see 380 A.2d at 819

(“[T]he utility of the premises must be substantially decreased by the

landlord’s interference . . . .”), but it also found constructive eviction when

one means of entry—amongst several, albeit others were indirect5—to the

complainant gas station were blocked by the landlord.

Our own review of Pennsylvania case law has turned up no truly on-

point authority. Instead, most cases involve either utterly untenable

landlord conduct or a circumstance involving less far-reaching and enduring

problems than Sears’ evidence established in this case. Thus, we must infer

certain principles from the cases we do have and determine whether the

jury’s verdict fits within their bounds such that the trial court had a valid

basis for denying JNOV.

____________________________________________

5
See Checker Oil, 380 A.2d at 817 & n.4.

- 17 -
J-A11039-15

We find guidance in our decision in Pollock. However, to

contextualize our review of that case, we first must note that constructive

eviction is one species of a violation of the lessee’s right to quiet enjoyment.

While one might gain relief for such a violation without being constructively

evicted, one cannot be constructively evicted absent such a violation. In

effect, constructive eviction occurs when a lessor’s violation of a lessee’s

entitlement to quiet enjoyment is so extreme as to interfere seriously with

the lessee’s ability to use the leasehold as it was intended to be used, and

the violation prompts the tenant to abandon the property within a

reasonable amount of time. This explanation is necessary because Pollock

involved a violation of the right to quiet enjoyment, not a constructive

eviction. Nonetheless, Pollock provides guidance as to how a landlord’s

actions may constitute a crippling violation of a business tenant’s right of

quiet enjoyment, as reflected in its reliance upon numerous constructive

eviction cases, including Wm. H. McGee, supra.6

In Pollock, the plaintiff purchased a dry cleaning business located in a

shopping center. In tandem with his purchase, he entered into a seven and
____________________________________________

6
Notably, in Pollock, in reviewing the principles that govern quiet
enjoyment, this Court drew heavily from constructive eviction cases such as
Kelly v. Miller, 94 A. 1055 (Pa. 1915) (holding that blocking certain rooms
in a theater, but not the theater itself, constituted a constructive eviction),
and McCandless v. Finley, 86 Pa. Super. 288 (1925) (finding constructive
eviction where, after execution of lease with plaintiff but before plaintiff
occupied the premises, defendant removed various plumbing and electric
fixtures).

- 18 -
J-A11039-15

one half-year lease with the defendant lessor. At the time he entered into

the lease, the dry cleaner was located in a prominent location, with parking

spaces as close as twenty feet to the store’s entry. As well, the dry cleaner

was located next to a grocery store, a manifestly optimal location for the

business. See 369 A.2d at 459-60.

Less than a year after the parties entered the lease, and without prior

notice, the lessor began construction to expand the shopping center by

adding structures that effectively enclosed and surrounded plaintiff’s

business.

[After the construction, the dry cleaner was] no longer occupying
an outside store with visible display windows next to a parking
lot. Instead, [it] now [had] a six and one half[-]year lease for
one of eleven shops in a mall that extend[ed] over what had
formerly been the small parking area [near the dry cleaner]. A
store [was] located directly in front of the cleaning establishment
and access [was] gained by entering a set of double doors into
the mall and proceeding down a hallway. The display windows
[were] only visible from inside the mall and [could] be
completely viewed only when a customer . . . passed through
the double doors, traveled the full length of the hallway and
turned the corner. The sign once directly over the store [was]
outside the mall over the discount center[,] which [was] the
store directly in front of the [dry cleaner]. The nearest parking
spaces . . . [were] 100 feet away.

Id. at 460.

The trial court found that the landlord had not violated his covenant of

quiet enjoyment. The parties ultimately agreed that the plaintiff could

vacate the premises and be released from his obligations under the Lease,

hence any suggestion of a constructive eviction had become moot.

- 19 -
J-A11039-15

However, the plaintiff’s claim for damages arising from the situation

remained, and was the subject of the plaintiff’s appeal to this Court. See id.

This Court concluded as follows:

[T]he utility of the property leased [was] substantially decreased
due to the basic structural changes wrought by the landlord. . . .
[T]he attractive features of the demised premises were
eliminated by the acts of the landlord. These acts substantially
interfered with the tenant’s anticipated use of the premises and
represent a breach of the covenant of quiet enjoyment.

The use of windows and pathways granting access to the leased
structure, as well as a visible location, has been found in other
jurisdictions to be protected by the covenant for quiet
enjoyment. Thus in Owsley v. Hamner, 227 P.2d 263
(Cal. 1951)[,] it was held that where tenants leased a store
which enjoyed an adjacent patio with display windows and
passageways connecting the patio with the store and two
streets, an attempt by the landlord to close the passages and
eliminate the patio would be detrimental to the tenants’ business
and so substantially impair the leased premises as to violate the
covenant of quiet enjoyment. . . . The Supreme Court of
Massachusetts in Winchester v. O’Brien, 164 N.E. 807
(Mass. 1929)[,] found for the tenant on the basis of similar
reasoning[,] stating that a substantial and continued interference
with the tenant’s dentistry practice occurred when the noise, dirt
and obstruction of prolonged construction embarked upon by the
landlord, plus sporadic interruptions of utilities incident thereto,
impaired the character and value of the leased premises.

Pollock, 369 A.2d at 461-62 (citations modified; footnotes omitted).

This Court also favorably cited other out-of-jurisdiction cases, including

Reste Realty Corp. v. Cooper, 251 A.2d 268 (N.J. 1969), which warrants

discussion. In Reste Realty, an office tenant’s demised premises were

regularly penetrated by water during rainstorms, evidently due to poor

grading of a driveway adjacent to the exterior wall. After a period of time

- 20 -
J-A11039-15

during which the first landlord would promptly address these problems as

they arose, a successor landlord took control of the property and was less

responsive to the tenant’s complaints. After more than two years of these

problems, the tenant vacated the premises. The landlord filed suit to

recover unpaid rent from the tenant for the balance of the lease term.

Id. at 271. The trial court agreed with the defendant-tenant that the

evidence “overwhelmingly” established that the water penetration coupled to

the landlord’s lack of remediation and the substantial deprivation of tenant’s

ability to use the premises constituted a constructive eviction. Id.

The New Jersey Supreme Court agreed.

Where there is [a covenant of quiet enjoyment] and it is
breached substantially by the landlord, the courts have applied
the doctrine of constructive eviction as a remedy for the tenant.
Under this rule any act or omission of the landlord or of anyone
who acts under authority or legal right from the landlord . . .
which renders the premises substantially unsuitable for the
purpose for which they are leased, or which seriously
interferes with the beneficial enjoyment of the premises,
is a breach of the covenant of quiet enjoyment and constitutes a
constructive eviction of the tenant. . . .

Examples of constructive eviction having close analogy to the
present case are easily found. . . . [W]hen the main waste pipe
of an apartment building was permitted to become and remain
clogged with sewage for a long period of time causing offensive
odors and danger to health, the covenant of quiet enjoyment
was breached and justified the tenant’s abandonment of his
premises. McCurdy v. Wyckoff, 63 A. 992 (N.J. Super. Ct.
1906). . . . The same rule was applied in White v. Hannon, 11
N.J.L.J. 338 (Dist. Ct. 1888)[,] where it appeared that the
plumbing in the rooms to the rear of the demised premises
became so old and worn out as to emit strong and unhealthy
odors which came through into the tenant’s quarters. The
tenant’s removal was held justified. . . .

- 21 -
J-A11039-15

[T]he trial court found sufficient interference with the use and
enjoyment of the leased premises to justify the tenant’s
departure and to relieve her from the obligation to pay further
rent. In our view the evidence was sufficient to warrant that
conclusion . . . . If [the flooding’s] recurrence follows regularly
upon rainstorms and is sufficiently serious in extent to amount to
a substantial interference with use and enjoyment of the
premises for the purpose of the lease, the test for constructive
eviction has been met.

Reste Realty, 251 A.2d at 274-75 (emphasis added; citations modified;

additional harmonious case citations omitted).

Notably, the Reste Realty court addressed a second topic that also is

raised by Appellants herein. Specifically, the landlord in that case argued

that the tenant’s ongoing occupancy despite the continuing issue with water

penetration, i.e., the tenant’s failure to vacate the premises within a

reasonable amount of time, amounted to a waiver of constructive eviction.

Pennsylvania law offers very little guidance on what constitutes a reasonable

amount of time, but the New Jersey Supreme Court’s discussion of this issue

is persuasive:

What constitutes a reasonable time depends upon the
circumstances of each case. In considering the problem[,]
courts must be sympathetic toward the tenant’s plight. Vacation
of the premises is a drastic course and must be taken at his
peril. If he vacates, and it is held at a later time in a suit for
rent for the unexpired term that the landlord’s course of action
did not reach the dimensions of constructive eviction, a
substantial liability may be imposed upon him. That risk and the
practical inconvenience and difficulties attendant upon finding
and moving to suitable quarters counsel caution.

Id. at 277. Thus, in Reste Realty, the fact that the plaintiff continued his

occupancy while complaining to his landlord for nearly one year (and despite

- 22 -
J-A11039-15

the fact that the problem had actually persisted for years including the prior,

more responsive landlord’s tenure) was not dispositive against constructive

eviction.

We find that Pollock and Reste Realty, in tandem with our standard

of review, which counsels restraint in granting JNOV, support affirmance of

the trial court’s ruling in the instant matter. Pollock stands for the

proposition that a business’ commercial “attractiveness” has bearing upon

the constructive eviction inquiry in the commercial context. Reste Realty

establishes that problems that might not constitute a constructive eviction

were they isolated, rare, and promptly addressed by the landlord may rise to

a constructive eviction when they persist, remain unremedied, and

substantially interfere over time with the tenant’s quiet enjoyment of the

leasehold.

As the trial court’s account of the evidence establishes, the jury heard

extensive testimony regarding a panoply of problems that presented safety

and sanitation hazards, made the Premises considerably less attractive to

customers, and remained unremedied for years on end, despite Sears’

frequent complaints. The jury also heard that Appellants not only insisted

that they would rectify the problems, but also threatened Sears with default

should Sears exercise its right under the Lease to address the problems itself

and seek reimbursement from the Landlord. The jury heard testimony

concerning the recurring remedial action Sears was required to take, ranging

from replacing considerable amounts of carpet and drywall on several

- 23 -
J-A11039-15

occasions to installing supplementary lighting in the parking garage when

Appellants failed adequately to maintain the original lighting. This evidence

taken as a whole provided an adequate evidentiary basis upon which a jury

could conclude that the complained of deficiencies and non-responsiveness

were of “a substantial nature and so injurious to the tenant as to deprive [it]

of the beneficial enjoyment of a part or the whole of the demised premises.”

Kuriger, 498 A.2d at 1338.

Furthermore, we find that a jury could have concluded that Sears

vacated in a reasonable amount of time relative to the above-stated events.

As did the tenant in Reste Realty, Sears exercised patience in seeking to

remain in Appellants’ increasingly dilapidated building rather than vacate at

the first sign of trouble. It demonstrated faith in Appellants’ willingness and

ability to cure the maintenance issues when it renewed the Lease and

rejected Appellants’ buyout offers. It repeatedly remediated damage caused

by Appellants’ maintenance failures at its own expense. Under these

circumstances, the jury reasonably could have concluded that Sears sought

to adhere to the Lease until the thousandth cut finally prompted Sears to

decide in December 2011 to begin the process of abandoning the Premises.

That Sears did not physically vacate the Premises until May 2012 does not

change our view. Packing up a department store is not a weekend’s affair.

As occurred in this case, an arduous process of winding down and liquidation

must be undertaken to facilitate vacatur of the premises. As the court

cautioned in Reste Realty, it is incumbent upon courts to be sympathetic to

- 24 -
J-A11039-15

the facts and circumstances of a given case. In this case, the scale of the

Premises and Sears’ operations therein provided a sufficient basis for a jury

to have determined that Sears vacated reasonably promptly under the

circumstances.7

We now turn to Appellants’ contention that the Lease bound Sears to

satisfy its rent obligation no matter how persistent or serious the neglect or

how unresponsive the Landlord was to complaints about same. “[A] lease is

in the nature of a contract and is controlled by principles of contract law.”

Amoco Oil Co. v. Snyder, 478 A.2d 795, 798 (Pa. 1984). “[W]here

language is clear and unambiguous, the focus of interpretation is upon the

terms of the agreement as manifestly expressed, rather than as, perhaps,

silently intended.” Id. (quoting Steuart v. McChesney, 444 A.2d 659, 661

(Pa. 1982)) (emphasis in original); see Lott v. Guiden, 211 A.2d 72, 75

(Pa. Super. 1965) (“Where . . . the lease is in writing and free of ambiguity

____________________________________________

7
We appreciate Appellants’ suggestion that Sears’ more or less
contemporaneous decision to close well over a hundred stores at the same
time that it decided to close the Upper Darby store could support the
inference that Sears’ decision was not driven by the state of the Premises or
Appellants’ record of neglect. However, we find it similarly plausible that the
Upper Darby store was selected for inclusion in the group of stores to be
closed because of Appellants’ pattern of neglect. Certainly, the jury was free
to draw such an inference. This evidence was put before the jury, and we
can infer that the jury was unpersuaded that Sears pursued the instant
action simply to escape a lease that no longer served its business interests.
To supplant that judgment would exceed our province.

- 25 -
J-A11039-15

its interpretation and construction are for the court and words must be given

their ordinary meaning.”).

The primary objective of a court when interpreting a contract is
to ascertain the intent of the parties. See Shovel Transfer &
Storage, Inc. v. Penna. Liquor Control Bd., 739 A.2d 133
(Pa. 1999). When “a written contract is clear and unequivocal,
its meaning must be determined by its contents alone.” Robert
F. Felte, Inc. v. White, 302 A.2d 347, 351 (Pa. 1973) (quoting
East Crossroads Center, Inc. v. Mellon–Stuart Co., 205 A.2d
865, 866 (Pa. 1965)). Courts are not to assume that a
contract’s language was chosen carelessly or that the parties
were ignorant of the meaning of the language they utilized.
Steuart, 444 A.2d at 662.

Seven Springs Farm, Inc. v. Croker, 801 A.2d 1212, 1215 (Pa. 2002).

Appellants contend that “plain and unambiguous” provisions of the

Lease “barred Sears from defending against the Landlord’s counterclaim for

unpaid rent based on allegations that the Landlord breached its duty to

maintain and repair the Premises or otherwise breached the Lease.” Brief

for Appellants at 44. Thus, “the Lease did not give Sears any right to

terminate the Lease if the Landlord failed to provide maintenance and

repairs,” and “Sears’ constructive eviction claim plainly and impermissibly

attempted to do exactly what the Lease forbids Sears from doing.” Id. In

support of their argument, Appellants rely exclusively upon the Lease itself.

Notably, while they direct this Court by citation to sections of the Lease,

they do not quote any of the language at issue, nor do they explain by

reference to the terms utilized in the cited provisions of the Lease how those

terms precluded Sears from seeking a rent abatement in the face of ongoing

- 26 -
J-A11039-15

neglect. This failure to develop a plain-language argument by specific

discussion of the language in question arguably should be deemed fatal to

their argument. See Parker Oil Co. v. Mico Petro & Heating Oil, LLC,

979 A.2d 854, 858 (Pa. Super. 2009).

In any event, Appellants’ argument, such as it is, is unpersuasive.

While they are correct that the Lease provided for tenant self-help and

entitled Sears to seek reimbursement of the costs thereof, see Lease at 22-

23 § 13, that does not, by itself, insulate Appellants from a constructive

eviction claim and the associated rent-abatement. Our review of the cited

provisions, which, given the deficiencies in Appellants’ argument we shall not

review at length, shows only that the Lease immunized Appellants from

liability for “consequential damages or damages for loss of business” derived

from its own nonperformance. Lease at 36 § 27(g); see id. at 23 § 13

(same). Moreover, the Lease expressly provided that the Landlord’s breach

of various covenants, including those at issue in this case, “shall be deemed

a default of Landlord entitling Tenant to exercise its rights and remedies

hereunder, or otherwise available at law or equity, including, without

limitation, Tenant’s right of self[-]help as set forth in Section 27(c).” Id. at

20 § 11(c) (emphasis added). Thus, the Lease appears to reflect the parties’

intention that Sears would be entitled to pursue redress beyond self-help

with reimbursement. Accordingly, this argument is unavailing.

For the foregoing reasons, we find that the trial court did not err or

abuse its discretion in denying Appellants’ motion for JNOV on Sears’ claims

- 27 -
J-A11039-15

for constructive eviction. Thus, we affirm that ruling and proceed to the

next issue.

In Appellants’ next issue relating to constructive eviction, they contend

that the trial court erroneously instructed the jury, in effect providing a less

rigorous burden of proof than the law prescribes.

Under Pennsylvania law, our standard of review when
considering the adequacy of jury instructions in a civil case is to
determine whether the trial court committed a clear abuse of
discretion or error of law controlling the outcome of the case. It
is only when the charge as a whole is inadequate or not clear or
has a tendency to mislead or confuse rather than clarify a
material issue that error in a charge will be found to be a
sufficient basis for the award of a new trial.

Hatwood v. Hosp. of the Univ. of Penna., 55 A.3d 1229, 1235

(Pa. Super. 2012) (quoting Patton v. Worthington Assocs., Inc., 43 A.3d

479, 490 (Pa. Super. 2012)). “[A] trial judge has wide latitude in his or her

choice of language when charging a jury, provided always that the court

fully and adequately conveys the applicable law.” Id.

In relevant part, the trial court instructed the jury as follows:

A constructive eviction occurs when a tenant’s possession is
impaired by acts or omissions of the landlord or those acting
under the landlord. The impairment of the tenant’s possession
need not be total, but the utility of the premises must be
substantially decreased by the landlord’s interference with a
right or privilege which is necessary to the enjoyment of the
premises. A finding of . . . constructive eviction suspends the
tenant’s obligation to pay rent. In order for a tenant to rely
upon constructive eviction to avoid payment of the rent
contracted for he must abandon the premises within a
reasonable amount of time.

- 28 -
J-A11039-15

Notes of Testimony, 3/25/2014, at 97-98.

Appellants concede that the trial court’s instruction drew directly from

three of this Court’s opinions, Brief for Appellants at 54 (citing, inter alia,

Jonnet; Checker Oil, supra), but maintain that the trial court’s charge,

taken as a whole, had “a tendency to mislead or confuse rather than clarify a

material issue,” such that the jury’s verdict cannot be sustained. Id. at 55-

56 (citing Pringle v. Rapaport, 980 A.2d 159, 165 (Pa. Super. 2009))

(emphasis omitted). Their argument hinges upon the trial court’s use of the

phrase “the utility of the premises must be substantially decreased.”

Despite the fact that this language arises directly from well-settled case law,

the contextual confusion that Appellants contend this instruction created lay

in the trial court’s failure to add to this language “the equally important

context and limitations” reflected in the opinions from which it was drawn.

Id. at 54.

What Appellants do not do is propose an alternate instruction. In

suggesting that the trial court should have included “important context and

limitations,” Appellants rely upon the fact patterns at issue in the above-

cited cases. However, it would be odd indeed, and arguably confusing or

misleading, to instruct the jury specifically that, in Checker Oil Co., relief

was due because a barrier erected by the landlord “made it impossible for

automobiles to enter or exit the gas station from the main traffic route on

which the gas station had been located,” or that, in Jonnet, quoting

Pollock, this Court noted that in one prior case constructive eviction had

- 29 -
J-A11039-15

been found where the landlord denied the tenant access to the premises,

and, in another, the landlord substantially altered an essential feature of the

premises such that it became unsuitable for the purpose for which it was

leased. See Brief for Appellants at 54-55.

It is not a standard practice, in relating the governing law to a jury, for

a trial court to provide an exhaustive account of how the law has been

applied in an array of prior decisions. Furthermore, the trial court’s notation

that the landlord’s interference must impede “a right or privilege which is

necessary to the enjoyment of the premises” does not substantively

differ, by our reading, from Appellants’ stated desire that the trial court

emphasize that constructive eviction requires that the premises become

“unsuitable for the purpose for which it was leased.” We detect in the

challenged jury instruction no clear abuse of discretion or error of law

controlling the outcome of the case. Absent more compelling authority, or a

showing of what instruction might have satisfied Appellants’ concerns, and in

light of the latitude we afford trial courts in fashioning their statements of

the law, we must conclude that this issue is unavailing.

Next, we consider Appellants’ second issue, in which they contend that

the trial court erred in declining to enter JNOV as to Sears’ claim against

Ashkenazy for intentional interference with contractual relations. In support

of this claim, Sears pleaded that Ashkenazy “intentionally and purposefully

constrained Landlord from meeting its obligations, with the intent to allow

the [Premises] to fall into disrepair.” Amended Complaint at 12 ¶ 66. Sears

- 30 -
J-A11039-15

contended that Ashkenazy did so in an effort to drive Sears out of the space

so that Ashkenazy could redevelop the site to a more profitable use. It

averred that “Ashkenazy’s intent was to drive a wedge between the Landlord

and Sears and that they intentionally disrupted and interfered with the

contractual relationship.” Id. at 12 ¶ 70.

Pennsylvania law follows the Restatement (Second) of Torts § 766’s

standard for intentional interference with contractual relations:

One who intentionally and improperly interferes with the
performance of a contract . . . between another and a third
person by inducing or otherwise causing the third person not to
perform the contract is subject to liability to the other for the
pecuniary loss resulting to the other from the failure of the third
person to perform the contract.

Id.; see Daniel Adams Assocs., Inc., v. Rimbach Pub., Inc., 519 A.2d

997, 1000 (Pa. Super. 1987).

Essential to a right of recovery under this section is the
existence of a contractual relationship between the plaintiff and
a “third person” other than the defendant. By definition, this
tort necessarily involves three parties. The tortfeasor is one who
intentionally and improperly interferes with a contract between
the plaintiff and a third person.

Daniel Adams Assocs., 519 A.2d at 1000.

Appellants’ argument hinges upon their contention that Ashkenazy was

not a stranger to the contract between Sears and the Landlord, but rather

acted solely as the Landlord’s leasing and development agent, which

effectively made it a party to the Lease. Appellants correctly observe that,

under Pennsylvania law, an “agent, servant, or employee” of a contracting

- 31 -
J-A11039-15

party, acting within the scope of his employment or engagement with that

party, effectively stands in the shoes of the contracting party such that

he/she/it is not a third party for purposes of establishing an intentional

interference claim. Brief for Appellants at 49 (citing Daniel Adams

Assocs., 519 A.2d at 1000-01.

In relevant part, Appellants maintain as follows:

The undisputed evidence showed that the Landlord was a single-
purpose corporate entity which had no employees and acted
solely through its leasing and development agent[, Ashkenazy,]
and management agent[,] AAC . . . . Sears conceded that [AAC]
was the Landlord’s agent and dismissed Sears’ tortious
interference claim against [AAC].

Sears did not present any evidence to show that [Ashkenazy]
acted in any capacity other than as the Landlord’s leasing and
development agent or that [Ashkenazy] acted outside the scope
of its authority as an agent. Indeed, in closing argument,
counsel for Sears argued:

After all, the [L]andlord has no employees. The [L]andlord
has no existence other than what Ashkenazy created it
for—as an investment deal for itself and others . . . . The
[L]andlord was a shell. It had no employees, no one to
speak for it.

Thus, far from attempting to meet its burden to prove that
[Ashkenazy] acted in some capacity other than as the Landlord’s
agent, Sears affirmatively argued that [Ashkenazy] made all the
Landlord’s decisions, including the decisions that Sears claimed
constituted an interference with its contractual rights under the
Lease. Sears did not, and could not, prove that [Ashkenazy]
played a different role or that [Ashkenazy] in any way acted
outside the scope of the authority the Landlord granted.

****

Pennsylvania law clearly provides that an agent, officer or
employee of a corporation that is party to a contract cannot be
held liable for tortious interference with that contract because

- 32 -
J-A11039-15

the agent, officer or employee advised the corporation to breach
the contract.

Brief for Appellants at 50-51 (record citations omitted).

Interestingly, what Appellants cite as evidence that Ashkenazy was an

agent of the Landlord is precisely what Sears cites as evidence that

Ashkenazy was not the Landlord’s agent. While Appellants insist that the

Landlord’s apparent lack of employees militate in favor of an agency finding,

Sears notes, and Appellants concede by inference from the above assertion,

that all decisions regarding whether and when repairs would be addressed

were made by Ashkenazy in its own discretion. Sears notes that Ashkenazy,

not the Landlord, engaged in continuing negotiations with Walmart, and that

it was Ashkenazy, not the Landlord, that repeatedly offered to buy out the

Lease. Furthermore, Appellants’ assertions about the relationship between

the Landlord and Ashkenazy, specifically their claim that the Landlord

essentially had no independent volition at all, are problematic under the test

for agency, inasmuch as the party seeking to establish an agency

relationship must establish that the principal granted the agent “express

authority” to act on its behalf or “authority that the principal has by words or

conduct held the alleged agent out as having.” See Volunteer Fire Co. of

New Buffalo v. Hilltop Oil Co., 602 A.2d 1348, 1351 (Pa. Super. 1992). A

corporation such as the Landlord, described by Appellants as having no

employees, nor, evidently, any individual function, would be hard pressed to

grant express or apparent authority. Furthermore, there is no question that

- 33 -
J-A11039-15

the Landlord had at least one agent; the parties agreed that AAC was the

Landlord’s property management agent, and Sears voluntarily agreed to

AAC’s dismissal from its claim for intentional interference on that basis. The

record is less clear with regard to Ashkenazy.

In any event, the trial court’s explanation is based upon different

reasoning and evidence:

The burden of proving agency is on the party who seeks
to assert it. Volunteer Fire Co., 602 A.2d at 1351. “Under
Pennsylvania law, in seeking to establish that one has acted as
the agent of another, the burden of showing authority so to act
lies on the person who avails himself of such acts in order to
charge a third person as principal . . . .” James v. Duquesne
Univ., 936 F.Supp.2d 618 (W.D. Pa. 2013); Zukowski v.
Baltimore & O. R. Co., 315 A.2d 622 (3d Cir. 1962). In the
instant matter, [Ashkenazy] seeks to escape liability for
intentional interference by claiming that it was the [L]andlord’s
agent and that property management (the authorization of
maintenance and repairs) was within the scope of its authority.
[Appellants], however, did not present evidence that
[Ashkenazy] was the property management agent for the
[L]andlord, nor did they present any evidence that Ashkenazy
had the apparent authority of the [L]andlord to act as the
property manager and to control whether repairs were
completed [on the Premises] (Ashkenazy was the leasing agent
for the demised premises and an investor in the [L]andlord).
[Appellants] admitted in their Answer to the Amended Complaint
that AAC was the management company [for Landlord] and that
they provided certain property management. Answer to
Amended Complaint ¶ 7. They denied that Ashkenazy was the
corporate principal that controlled [Landlord] and further stated
that [Ashkenazy] was an “independent legal entity that directs
and exercises controls over its own activities.” Id. ¶ 8
(emphasis added). [Appellants] admitted that Ashkenazy was
not the parent company of AAC and that Ashkenazy was the
leasing agent for the [L]andlord. Id. ¶ 15.

[Appellants] have admitted that [Ashkenazy] was the
[L]andlord’s agent for leasing and development and that [AAC]

- 34 -
J-A11039-15

was the property manager and [Appellants] did not present any
testimony that Ashkenazy was the property manager for [the
Premises] or authorized to act as the property manager. See
Testimony of Barry Lustig and Daniel Iwanicki; Defendants and
Counterclaim Plaintiffs’ Response to Plaintiff’s Bench Brief
Regarding Punitive Damages for Claims of Intentional
Interference with Contractual Relations, 3/24/2014; Amended
Complaint ¶ 7; Answer to Amended Complaint ¶ 7. The question
for the jury then was whether the conduct of Ashkenazy was
outside of the scope of its agency, outside of its leasing and
development role.

T.C.O. at 31-32 (emphasis in original; citations modified; unclosed quotation

mark omitted). The trial court went on to observe that no one objected to

the trial court’s jury instruction regarding agency, and that it specifically

charged the jury that an agent cannot be held liable for intentional

interference with contractual relations when the principal is a party to the

contract in question. Per its verdict slip, the jury specifically held that

Ashkenazy was not acting as an agent for the Landlord, and awarded

damages for intentional interference.

Reviewing Appellants’ argument, it is clear that they misapprehend the

burden in this case, focusing upon evidence that Sears allegedly failed to

produce, including whether Ashkenazy “acted in any capacity other than its

role as the Landlord’s leasing and development agent.” Brief for Appellants

at 49. As the trial court correctly observed, however, the burden lay with

Appellants to establish Ashkenazy’s agency status vis-à-vis the Landlord.

See Volunteer Fire Co., 602 A.2d at 1351 (“The party asserting an agency

relationship has the burden of proving it by a fair preponderance of the

evidence.”). Furthermore, the evidence established that Ashkenazy’s

- 35 -
J-A11039-15

interests extended well beyond this project to others, and that it had an

ownership interest in the Landlord such that events redounding to the

Landlord’s benefit would, directly or indirectly, be beneficial to Ashkenazy as

well.

It appears to us that Ashkenazy and Appellants generally seek to be

shielded from the consequences of their own complex corporate structure.

Establishing separate corporate entities with separate agendas in connection

with the same individuals and the same deal may be legally expedient in

certain connections, but in others it may prove disadvantageous, as when

one is called upon to establish itself as exclusively a corporate agent of

another corporation. Nothing in Appellants’ argument establishes that it

satisfied its burden of establishing such agency, and we will not rely upon

conclusory assertions to countermand the jury’s findings, based upon

unchallenged jury instructions and extensive evidentiary showings, that

Ashkenazy was not acting as the Landlord’s agent when it interfered with the

Landlord’s satisfaction of its Lease-derived obligations to Sears. Accordingly,

the trial court did not err in denying Appellants’ motion for JNOV in

connection with this award.

Appellants’ secondary argument in support of JNOV arises from the

damages awarded by the jury for this intentional interference claim: The

jury awarded $66,119.30 in damages, which is precisely the amount Sears

alleged it had spent on self-help in connection with the neglect at issue in

this case. Appellants argue that “[n]o evidence existed that [Ashkenazy]

- 36 -
J-A11039-15

played any role in preventing Sears from collecting the $66,119.30 which

the Landlord acknowledged it owed.” Brief for Appellants at 51.

“Obviously,” Appellants argue, “the jury returned its verdict in favor of Sears

and against [Ashkenazy] on the tortious interference claim only to ensure

that Sears would recover the $66,119.30 in self-help expenses that the

Landlord admitted it owed to Sears.” Id. at 52. “As a matter of clear

Pennsylvania law,” Appellants continue, “[Ashkenazy] bore no responsibility

for that amount.” Id.

First, we note that, while the identity of the numbers is suggestive, we

cannot be certain that the jury arrived at these damages for the reason

posited, and we should not speculate. Second, while Appellants maintain

that “clear Pennsylvania law” precludes such an award, they cite no such

law, and we are aware of none. The jury found that Ashkenazy, acting

outside the scope of any agency for the Landlord, intentionally interfered

with Sears’ contractual relationship with the Landlord, a finding that entitled

Sears to damages. The jury imposed damages upon Ashkenazy based upon

this conclusion. Appellants identify no legal basis upon which to overturn

the jury’s determinations, and we will not do so.8

____________________________________________

8
Although this does not factor into our analysis, we note that it is not
clear that Sears ever received the reimbursement from the Landlord that
the Landlord allegedly was willing to provide. Thus, the record is devoid of
any indication that Sears had actually been made whole at the time the jury
reached its verdict. Furthermore, if the Landlord expected to remit a
(Footnote Continued Next Page)

- 37 -
J-A11039-15

We find no error in the fashion in which the trial court submitted the

question of agency and the claim of intentional interference with contractual

relations to the jury. We find no error in the jury’s finding of liability upon

this claim, nor in its award of damages. Accordingly, Appellants were not

entitled to JNOV on that claim.

This brings us to the final issue, Sears’ claim that the trial court erred

in refusing to instruct the jury on Sears’ claim for punitive damages. Sears

contends that “Ashkenazy, acting for its own interests and not as [an] agent

of [the] Landord, prevented [AAC from acting,] causing [Landlord] to breach

the Lease.” Brief for Sears at 32.

Sears correctly notes that Pennsylvania law allows punitive damages

to be assessed for intentional interference with contractual relations. See

Empire Trucking Co., Inc., v. Reading Anthracite Coal Co., 71 A.3d 923

(Pa. Super. 2013). In Pennsylvania, “punitive damages are awarded for

outrageous conduct, that is, for acts done with a bad motive or with a

reckless indifferent to the interests of others.” Judge Technical Servs.,

Inc., v. Clancy, 813 A.2d 879, 889 (Pa. 2002) (emphasis and internal

quotation marks omitted). “[P]unitive damages are penal in nature and are

proper only in cases where the defendant’s actions are so outrageous as to

demonstrate willful, wanton or reckless conduct.” Empire Trucking,

_______________________
(Footnote Continued)

payment in this amount regardless of the trial outcome, it presumably could
transfer that amount to Ashkenazy to balance the books as it prefers.

- 38 -
J-A11039-15

71 A.3d at 937 (quoting Hutchison v. Luddy, 870 A.2d 766, 770

(Pa. 2005)). “The state of mind of the actor is vital. The act, or the failure

to act, must be intentional, reckless or malicious.” Hutchison, 870 A.2d

at 770.

The trial court explained that it declined to instruct the jury regarding

punitive damages because, although Ashkenazy’s conduct could have been

construed by a jury as indicating that Ashkenazy caused the Landlord to

breach its duty to maintain and repair the premises, “the record was devoid

of evidence from which a jury could conclude that [Ashkenazy’s] conduct

rose to the level of outrageousness (close to criminal) allowing for the award

of punitive damages.” T.C.O. at 22. In the trial court’s view, because the

evidence was insufficient to establish the “willful, reckless and outrageous

conduct” necessary to sustain such damages, such an instruction was not

warranted. Id. at 21 (emphasis added).

Interestingly, the trial court misquotes our decision in Empire

Trucking to make the common standard for punitive damages conjunctive

rather than disjunctive, a misapprehension that appears to have tinged its

ruling. Compare T.C.O. at 21 (“willful, reckless and outrageous conduct”

(emphasis added) with Empire Trucking, 71 A.3d at 937 (“willful, wanton

or reckless conduct” (emphasis added)). To similar effect, the trial court,

- 39 -
J-A11039-15

without a citation to support it, interjected the “almost criminal”

qualification.9

Importantly, the trial court’s recitation of the inferences and

conclusions that the evidence did support painted a very negative picture of

Ashkenazy’s conduct:

[T]he testimony and both direct and circumstantial evidence
could reasonably be construed as revealing that Ashkenazy
caused the [L]andlord’s property managers [i.e., AAC] to stall
repairs to the [Premises], despite repeated assurances to Sears
that said maintenance and repairs would take place, to force
Sears to vacate the [Premises] so that it could be rented to an
alternate, more attractive tenant. Ashkenazy exceeded ‘the
rules of the game’ by causing the [L]andlord to fail to fulfill the
terms of [the Lease] . . . .

T.C.O. at 22.

By way of legal analysis, the trial court considered only Empire

Trucking, which it found to be distinguishable from the instant case. In

Empire Trucking, a jury found intentional interference with contractual

relations when the defendant, who had retained a trucking concern that

utilized subcontractors to fulfill its responsibilities under its contract with the

defendant, willfully sought to undermine the trucking company’s contracts

with its subcontractors in an effort to cut out the middleman, freeing itself to

enter into more favorable deals directly with the subcontractors. See

____________________________________________

9
Based upon our review of Pennsylvania law, the phrases “punitive
damages” and “almost criminal” have never appeared in the same appellate
decision.

- 40 -
J-A11039-15

71 A.3d at 926-30. In that case, the plaintiff presented evidence that the

defendant stopped paying the plaintiff, despite repeatedly and

disingenuously assuring the plaintiff that the check was coming. The

defendant’s non-payment created financial strain for both the plaintiff and its

subcontractors. The defendant then contacted the subcontractors and

offered to retain them directly, but on terms that were more favorable to the

defendant than those the defendant had agreed to with the plaintiff. The

defendant also assured the subcontractors that it had fully paid the plaintiff,

thus creating the impression that the plaintiff was wrongfully withholding

payment to the subcontractors. The financial duress imposed upon the

subcontractors by this course of conduct prompted them to accept the deal

proposed by the defendant. Id. at 935. This Court determined that this

evidence was sufficient to support the jury’s award of punitive damages.

See id. at 936-38.

The trial court distinguished Empire Trucking as follows:

In Empire Trucking, the defendant lied to a party to the
contract in question to induce the party to breach and stop
working for the plaintiff. In the instant matter, however,
Ashkenazy made no false representations to induce the
[L]andlord . . . to breach its duty to maintain and repair the
[P]remises.

T.C.O. at 22. However, we find no basis in the law upon which to conclude

that only an effort to induce a party to breach a contract will support

punitive damages in a case of intentional interference with contractual

relations. Indeed, we find more probative the language used to describe the

- 41 -
J-A11039-15

claim: “Interference,” as such, may arise under other circumstances

designed to have the same result, and there is nothing to suggest that other

such efforts, when undertaken with sufficiently outrageous intent, cannot as

a matter of law support an award of punitive damages.

The governing standard, disjunctive as stated in case after case,

provides that punitive damages may be awarded when an act, or a failure to

act, is intentional, reckless, or malicious. Hutchison, supra. In a similar

common formulation, malicious is replaced with “outrageous.” See Empire

Trucking, supra. In this case, the trial court underscored that the evidence

could sustain a jury verdict—and indeed did—that was based upon the jury’s

conclusion that Ashkenazy knowingly and intentionally interfered with the

Landlord’s fulfillment of its obligations under the Lease, and that it did so not

out of laziness or indifference, but specifically to drive Sears out of the

Premises so that Ashkenazy could reach a presumably more remunerative

deal with another tenant. This pattern emerged after Sears rejected

Ashkenazy’s first offer to buy out the balance of the Lease. That is to say,

Ashkenazy, a third-party to the Lease, sought a result beneficial to its own

interest first by fair means and then by foul.

Contrary to the trial court’s conclusions, we find Empire Trucking

very similar to the case sub judice. As in that case, Ashkenazy recognized

that, by undermining one contract, it could engender a more beneficial

business arrangement with another party. It then engaged in a course of

conduct, spanning years, that interfered with the Landlord’s fulfillment of its

- 42 -
J-A11039-15

own contractual responsibilities specifically to induce Sears to breach the

contract or to abandon it by accepting a buy-out, despite the fact that Sears’

patience in the face of the failures of maintenance and its rejection of

several buy-out offers signaled its desire to continue doing business on the

Premises, as it had contracted to do.

We agree with Sears that a jury reasonably could have concluded that

Ashkenazy’s interference with the Landlord’s performance of its obligations

under the Lease rose to the high standard that must be met to support an

award of punitive damages. Whether the jury would have so concluded in

this case is not for us to consider. However, the trial court’s failure to

instruct the jury on punitive damages denied Sears the opportunity to seek

such an award. Consequently, Sears is entitled to a new trial restricted to

its claim for punitive damages.

For the foregoing reasons, we must vacate the judgment and remand

for a new trial to determine whether Sears is entitled to punitive damages.

However, this ruling is not intended to, and shall not, disturb the other

aspects of the judgment entered by the trial court following the first trial.

Judgment vacated. Case remanded. Jurisdiction relinquished.

- 43 -
J-A11039-15

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/2/2015

- 44 -