NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 16-3915
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LINDA LANDAN; HOLLY AND LINDSAY, L.L.C.; JEFFREY J. SIKIRICA;
TRUSTEE FOR B.L. MCCANDLESS, L.P.; B.L. MCCANDLESS, L.P.;
BROADLAND PA, L.L.C.; BLAZIER DRIVE, L.L.C,
Appellants
v.
WAL-MART REAL ESTATE BUSINESS TRUST; WAL-MART STORES
EAST, L.P.; WAL-MART STORES, INC; S. ROBSON WALTON, PRESIDENT;
BRIAN CORNELL, PRESIDENT WAL-MART REAL ESTATE; MICHAEL T.
DUKE EVP; CHARLES M. HOLLEY, JR. CFO WAL-MART REALTY
______________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 2-12-cv-00926)
District Judge: Honorable David S. Cercone
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Submitted under Third Circuit L.A.R. 34.1(a)
September 28, 2018
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Before: SMITH, Chief Judge, McKEE and RESTREPO, Circuit Judges.
(Filed: May 28, 2019)
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OPINION*
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*
This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
RESTREPO, Circuit Judge.
Before us is an appeal regarding a failed negotiation between landowner Lisa
Landan and Wal-Mart Stores. After years of attempts to agree on a ground lease—during
which Landan invested significant resources to bring the lease to fruition—Wal-Mart
withdrew from negotiations, only informing Landan of its withdrawal after months of
silence. Wal-Mart then purchased the land at issue when it was listed for sale as a result
of Landan’s bankruptcy. Landan now seeks to recover what she lost on the theory that
she and Wal-Mart had entered into an enforceable agreement. While Landan’s situation is
unfortunate, we cannot identify any agreement that would give her a remedy at law. We
will affirm.
I
We presume the parties’ familiarity with this case and set out only the facts needed
for the discussion below. Landan was in negotiations with Wal-Mart representatives to
enter into a twenty-year ground lease for a new Wal-Mart supercenter on Landan’s
property. On June 28, 2006, the parties executed a non-binding Letter of Intent (“LOI”)
containing proposed lease terms and the condition that neither party would have any
obligation to the other “unless and until a mutually acceptable lease agreement is fully
executed and delivered by both parties.” J.A. 115. They exchanged multiple revisions of
the lease throughout negotiations, but the deal ultimately fell through. While the parties
dispute the reason that negotiations failed, they agree that Wal-Mart closed the project in
2009. The final draft that circulated among the parties before negotiations ended
contained red-line and handwritten mark-ups, and it was not executed by either party.
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After the deal fell through, Landan filed for bankruptcy. She, along with the
entities involved in the proposed deal (collectively “Plaintiffs”), then filed suit against
various Wal-Mart entities and individual representatives seeking monetary damages on
the grounds of, inter alia, breach of contract, breach of the implied covenant of good faith
and fair dealing, and promissory estoppel.
The District Court initially dismissed pursuant to Fed. R. Civ. P. 12(b)(6)
Plaintiffs’ promissory estoppel claim without prejudice, as the claim could not coexist
with Plaintiffs’ breach of contract claim. It simultaneously incorporated Plaintiffs’ breach
of the implied covenant of good faith and fair dealing claim (“good faith claim”) into
their breach of contract claim. After the parties underwent discovery, the District Court
granted summary judgment in favor of Defendants on the breach of contract claim and
allowed Plaintiffs to reinstate their promissory estoppel claim. After additional discovery,
the District Court granted summary judgment in favor of Defendants on the promissory
estoppel claim as well. Plaintiffs now appeal the District Court’s rulings on all three
claims.
II
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have
jurisdiction pursuant to 28 U.S.C. § 1291.
We exercise plenary review over the District Court’s grant of a motion to dismiss
for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Pa. Psychiatric Soc’y v. Green
Spring Health Servs., Inc., 280 F.3d 276, 282 (3d Cir. 2002). In our review, we are
“required to accept as true all allegations in the complaint and all reasonable inferences
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that can be drawn from them after construing them in the light most favorable to the
nonmovant.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 154 n.1 (3d Cir.
2014). We consider only factual allegations and disregard any legal conclusions. Davis v.
Wells Fargo, 824 F.3d 333, 341 (3d Cir. 2016).
We also exercise plenary review over the District Court’s grant of summary
judgment. Burton v. Teleflex Inc., 707 F.3d 417, 424–25 (3d Cir. 2013). We affirm when,
drawing all inferences “in the light most favorable to the nonmoving party,” Am. Eagle
Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir. 2009), there is no genuine issue
as to any material fact and the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). If the moving party is a defendant, she has the burden to show that
the plaintiff has failed to establish one or more essential elements of her case. Hugh v.
Butler Cty. Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005).
III
Plaintiffs appeal the District Court’s dismissal of three claims against Defendants,
each of which has its own distinct procedural history. We review each claim in turn.
A. Breach of Covenant of Good Faith and Fair Dealing
The District Court in its August 5, 2013 Order dismissed Plaintiffs’ claim for
breach of the covenant of good faith and fair dealing as an independent cause of action. It
then deemed the good faith claim as incorporated into Plaintiffs’ breach of contract claim,
effectively rendering a final order on this claim at the motion to dismiss stage. We agree
with the District Court’s approach.
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The Pennsylvania courts have made clear—and our Court has recognized— that
Pennsylvania does not allow an action for breach of the covenant of good faith and fair
dealing separate from a breach of contract claim. See, e.g., Davis, 824 F.3d at 352
(affirming the dismissal of plaintiff’s good faith claim upon defendant’s Rule 12(b)(6)
motion to dismiss on the basis that Pennsylvania law does not allow an independent
action for breach of the covenant of good faith and fair dealing); Burton, 707 F.3d at 432
(“[U]nder Pennsylvania law, a ‘claim for breach of the implied covenant of good faith
and fair dealing is subsumed in a breach of contract claim.’” (quoting LSI Title Agency,
Inc. v. Evaluation Servs., Inc., 951 A.2d 384, 391–92 (Pa. Super. Ct. 2008))). Following
that precedent, the District Court properly dismissed Plaintiffs’ good faith claim insofar
as it was being propounded as an independent action. It then properly incorporated the
claim into Plaintiffs’ breach of contract claim.
Perplexingly, Plaintiffs now argue on appeal that the District Court misunderstood
the nature of their claim. According to Plaintiffs, their good faith claim “was one for a
breach of the duty to negotiate in good faith,” Appellants Br. 21, even though the Second
Amended Complaint—which they filed subsequent to the District Court’s ruling on their
good faith claim—contains a count for “BREACH OF IMPLIED COVENANT OF
GOOD FAITH AND FAIR DEALING” and makes no mention of an agreement to
negotiate in good faith. J.A. 219. A review of the record further reveals that Plaintiffs are
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presenting their good-faith-negotiation argument for the first time on appeal. The
argument is therefore waived.1
B. Breach of Contract
In its March 31, 2015 summary judgment order, the first of two, the District Court
granted Defendants’ motion for summary judgment on Plaintiffs’ breach of contract
claim on the basis that no reasonable jury could find the existence of a contract between
the parties. Plaintiffs now appeal, alleging the existence of two contracts: an oral
agreement to enter into a ground lease and the ground lease itself.
In Pennsylvania, as elsewhere, it is well-established that the first of three elements
needed to prevail on a breach of contract action is the existence of a contract. McShea v.
City of Phila., 995 A.2d 334, 340 (Pa. 2010). Here, Plaintiffs would have us hold that the
parties’ oral agreement to engage in lease negotiations, as memorialized by the LOI, was
a binding agreement to “negotiate a lease agreement in good faith.” Appellants Br. 37.
However, Pennsylvania law does not allow enforcement of an oral agreement in which
essential terms are not “sufficiently definite to be specifically enforced.” ATACS Corp. v.
1
As a general matter, failure to raise a legal argument in the District Court will
result in waiver of that argument on appeal. Webb v. City of Phila., 562 F.3d 256, 263 (3d
Cir. 2009). Further, even if the argument had not been waived, Plaintiffs’ reliance on the
lone Third Circuit case they cite for their proposition, Channel Home Ctrs., Div. of Grace
Retail Corp. v. Grossman, 795 F.2d 291 (3d Cir. 1986), is misplaced. The determinative
element of that case was the parties’ intent to be bound by the LOI that they signed as part
of negotiations for a commercial lease. See USA Machinery Corp. v. CSC, Ltd., 184 F.3d
257, 264 (3d Cir. 1999) (holding that an agreement to negotiate in good faith is only
enforceable where, as in Channel Home, the parties manifested an intent to be bound to
that agreement). Here, the LOI contained the opposite: it was “non-binding,” with neither
party having “any obligation to the other” until a “mutually acceptable lease agreement is
fully executed and delivered by both parties.” J.A. 115.
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Trans World Commc’n, Inc., 155 F.3d 659, 665 (3d Cir. 1998). This is particularly true
when the agreement takes the form of an “agreement to agree.” See, e.g., Jennison v.
Jennison, 499 A.2d 302, 306 (Pa. Super. Ct. 1985) (An agreement to agree on price of
stock at a later time was incapable of enforcement.).2 Therefore, Plaintiffs’ assertion that
there existed an enforceable oral agreement fails as a matter of law.
Plaintiffs’ ground lease claim is similarly defeated. Under the Pennsylvania
Statute of Frauds, a property lease for a term of more than three years “must be in writing
and signed by the parties” in order to be enforceable. 68 Pa. Stat. § 250.202. While this
defense is waivable should Defendants fail to raise it, Flight Sys., Inc. v. Elec. Data Sys.
Corp., 112 F.3d 124, 127 (3d Cir. 1997) (citing Blumer v. Dorfman, 289 A.2d 463, 468
(Pa. 1972)), no such waiver occurred here. We therefore agree with the District Court’s
dismissal of Plaintiff’s breach of contract claim, as there was no contract to enforce under
Pennsylvania law.
2
To the extent that Plaintiffs argue that the LOI creates a written, contractual duty
to negotiate towards the formation of a ground lease, their position also fails as a matter
of law. “Where an informal contract is in issue, parties should assent to all terms, and ‘if
anything is left open for future [negotiation], the informal paper cannot form the basis of
a binding contract.’” Garnet Mine, LLC v. Brandolini, 158 F. Supp. 2d 580, 584 (E.D. Pa.
2001) (quoting GMH Assocs., Inc. v. Prudential Realty Grp., 752 A.2d 889, 900 (Pa.
Super. Ct. 2000). The LOI clearly states that it is “intended only as an outline of the
major provisions of a proposed lease,”J.A. 115 (emphasis added), and does not impose
any duty to negotiate or finalize terms regarding the potential ground lease.
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C. Promissory Estoppel
In its second summary judgment order on September 22, 2016, the District Court
dismissed Plaintiffs’ reinstated promissory estoppel claim because Plaintiffs failed to
satisfy any of the elements of their claim. Once again, we agree.
The elements of promissory estoppel under Pennsylvania law are: “(1) the
promisor made a promise that he or she could have reasonably expected to induce action
or forbearance on the part of the promisee; (2) the promisee actually took action or
refrained from taking action in reliance on the promise; (3) injustice can be avoided only
by enforcing the promise.” Edwards v. Wyatt, 335 F.3d 261, 277 (3d Cir. 2003) (quoting
Crouse v. Cyclops Indus., 745 A.2d 606, 610 (Pa. 2000)). Further, in Pennsylvania, a
claim for promissory estoppel must be based on an express promise. C & K Petroleum
Prods., Inc. v. Equibank, 839 F.2d 188, 191 (3d Cir. 1988). Here, Plaintiffs’ allegation of
an express promise is simply too vague to be supported. See C & K Petroleum, 839 F.2d
at 192 (holding that promissory estoppel requires more than “broad and vague”
promises). To be sure, Wal-Mart informed Landan of certain conditions it deemed
essential to keeping open the possibility of entering into a ground lease. However, Wal-
Mart did not make, or at least Landan has not identified, any express promise to enter into
any specified contract if Landan satisfied those conditions. As noted above, negotiations
were still ongoing. Without an express promise, Plaintiffs cannot satisfy the other two
elements of their promissory estoppel claim. Therefore, we hold that the District Court
properly granted summary judgment in favor of Defendants on this claim.
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IV
For the foregoing reasons, the judgment of the District Court will be affirmed.
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