HomeMy WebLinkAbout2009-500 Civil
ZUR, LTD., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. : CIVIL ACTION – LAW
:
ALPHA OMEGA :
UNLIMITED, LLC., :
Defendant : NO. 09-500 CIVIL TERM
IN RE: PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
BEFORE OLER, J.
OPINION and ORDER OF COURT
OLER, J., August 12, 2009.
In this civil action arising out of an alleged overcharge by a landlord of a tenant,
Plaintiff tenant has sued Defendant landlord seeking a declaratory judgment as to the
extent of its obligation to pay certain “Additional Rent” expenses related to the leased
premises. For disposition at this time is Plaintiff’s motion for a preliminary injunction to
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prevent its eviction pending disposition of the suit.
A hearing was held on the motion on March 23, 2009, and June 8, 2009. For the
reasons stated in this opinion, a preliminary injunction will not be issued.
STATEMENT OF FACTS
The facts in this case are, to some extent, not in dispute. Plaintiff is Zur, Ltd.
(hereinafter Zur), a limited liability company in the business of distributing religious
publications, and having its principal office at 2020 State Road, Camp Hill, Cumberland
County, Pennsylvania, and leasing warehouse space at 3825 Hartzdale Drive, Camp Hill,
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Cumberland County, Pennsylvania. Zur is co-owned by Kenneth Baton and Doug
Waardenburg. Defendant is Alpha Omega Unlimited, LLC (hereinafter Alpha Omega), a
limited liability company and owner and landlord of the premises at 3825 Hartzdale
1
Plaintiff’s Motion for Preliminary Injunction, filed January 30, 2009 (hereinafter Plaintiff’s Motion for
Preliminary Injunction).
2
Plaintiff’s Complaint para. 1.
Drive, Camp Hill, Cumberland County, Pennsylvania. Alpha Omega is co-owned by
Charles Finchtner and his spouse. Zur’s complaint alleges that in February of 2006 the
parties entered into a commercial lease agreement whereby Zur leased warehouse space
in the building located at the Hartzdale Drive address from Alpha Omega, for a period of
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ten years, said space consisting of 69% of the building, and that the parties also entered
into a commercial lease agreement to lease office space to Zur, at the same location, for a
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period of three years, said space consisting of 10.5% of the building.
Paragraph 5(b) of both lease agreements (“the Leases”) is entitled “Common Area
Charge” and provides in pertinent part as follows:
Tenant shall pay as Additional Rent its pro-rata share of the cost
of operating, replacing improving, maintaining, repairing, and
refurbishing the Common Areas (‘Common Area Charge’), which
for purposes of this Section only, shall include all roofs of the
Building. Such costs shall include, without limitation, materials
supplies, equipment, and services purchased or hired; equipment
used for the maintenance of the Common Areas; landscaping,
gardening, planting, cleaning, painting, striping parking areas,
repaving, lighting, and sanitation; removing snow, ice, and
garbage; heating, ventilating, and air-conditioning the enclosed
areas other than the Leased Premises; fire protection and on-site
security [sic] if provided by the Landlord in its sole discretion),
water and sewage charges, storm water maintenance fees,
electricity and other utility services, costs of personnel, payments
to governmental authorities, costs of complying with rules and
regulations of governmental authorities, Fire Insurance Rating
Organizations, Board of Fire Underwriters, insurance carriers, and
other organizations having jurisdiction over the Building; and
Landlord’s administrative costs (including any management fee
payable by Landlord) in connection with the operation of the
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Building (“Common Area Costs”) . . . .
3
Plaintiff’s Complaint, para. 4.
4
Plaintiff’s Complaint para. 5, 25.
5
Plaintiff’s Ex. 1, Hearing, March 23, 2009.
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Paragraph 5(c) of the Leases is entitled “Capital Improvements Fund” and
provides in pertinent part as follows:
The Common Area Charge, subsection (b) above, includes the
costs of repairs to the roof and/or installation of a new roof,
resurfacing of parking lots, along with repairs and/or replacement
of the air conditioning unit(s) and heating system. These four (4)
items could result in a substantial “Common Area Charge” for the
year in which any of these items would need to be replaced.
Therefore, a Capital Improvements Fund, (hereinafter the
“Fund”), limited in purpose to the roof, parking lot [sic] air
conditioning unit(s) and heating system shall be established.
Tenant shall pay as Additional Rent its pro-rata share of the
Capital Improvements Fund on a monthly basis. The Fund is
hereby capped at $120,000.00, which amount is to be
accumulated over a ten (10) year period. The determination of the
need for Capital Improvements to the four (4) items listed above
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shall be at the sole discretion of the Landlord . . . .
Zur’s complaint consists of one count for a declaratory judgment, and alleges that
Alpha Omega, as landlord, has improperly failed to deduct costs of HVAC repair from
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the Capital Improvements Fund; that it has improperly failed to debit the Capital
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Improvements Fund to cover certain HVAC expenses; that it has erroneously charged
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Zur, as tenant, 79.5% of all HVAC and other varying costs as Common Area Charges;
and that it has improperly included costs of building improvements for the benefit of the
landlord, and a gas utility deposit related to natural gas utility service turn-on for the
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entire building, as Common Area Charge expenses.
Zur has also filed a motion for a preliminary injunction, which is the subject of
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this opinion. In this motion, Zur seeks to preliminarily enjoin Alpha Omega from doing
6
Plaintiff’s Ex. 1, Hearing, March 23, 2009.
7
Plaintiff’s Complaint para. 18.
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Plaintiff’s Complaint para. 22.
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Plaintiff’s Complaint para. 20.
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Plaintiff’s Complaint para. 25.
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Plaintiff’s Motion for Preliminary Injunction.
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any of the following: taking possession of the premises and/or any or all goods,
inventory, equipment, fixtures or any other personal property belonging to Zur, within the
leased premises; conducting any public or private sale of Zur’s goods, inventory,
equipment, fixtures or any other personal property of Zur; and from exercising any other
remedies for default under Paragraph 23.2 of the Leases. Paragraph 23(a) provides in
pertinent part:
With or without judicial process, [in the event of Default,
Landlord may] enter the Premises and take possession of any and
all goods, inventory, equipment and all other personal property of
Tenant, which is or may be put into the Premises during the Term,
whether exempt or not from sale under execution or attachment (it
being agreed that said property shall at all times be bound with a
lien in favor of Landlord, provided however that any such lien
shall be subordinate to any and all secured creditors of Tenant
. . . ) and Landlord may sell all or any part thereof at public or
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private sale . . . .
The evidence at the hearing on Zur’s motion for a preliminary injunction may be
summarized as follows. The witnesses called on behalf of Zur were Kenneth Baton, co-
owner of Zur, and William Waardenburg; the witness called on behalf of Alpha Omega
was Charles Finchtner, co-owner of Alpha Omega. Testimony of these witnesses reveals
that much of the contractual dispute between the parties centers on the interpretation of
paragraphs 5(b) and 5(c). A large portion of Zur’s concern with the allocation and
disbursement of funds stems from HVAC charges imposed upon Zur in the form of
Common Area Charges. Zur contends that air conditioning service repairs should have
been charged to the Capital Improvement Fund, in accordance with its interpretation of
paragraphs 5(b) and 5(c) of the Leases. It is Alpha Omega’s contention that such repairs
to the HVAC system are to come out of the Common Area Charges, in accordance with
its interpretation of paragraphs 5(b) and 5(c) of the Leases. Zur also challenges the
12
Plaintiff’s Ex. 1, Hearing, March 23, 2009.
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purchase of other items billed as Common Area Charges, which it feels were improperly
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billed to it pursuant to a pro-rata share of 79.5%.
Zur’s witness testified that, in August of 2006, Zur
became concerned about some building that was being done in the
building, renovations. They were going to be charged to the
Common Area Maintenance, and so over time -- we did pay
those, but over time we noticed that this was escalating very
quickly and it involved -- in 2007 we realized it was almost like
having a blank check in our bank account as these things were
escalating quickly, and we thought that some of the things in the
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Common Area Maintenance did not belong there.
Zur’s witness further testified that Zur attempted to come up with a calculation,
based on copies of receipts and invoices paid by the landlord, that it believed was a “fair”
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Common Area Maintenance charge. Zur’s witness testified that Zur continued to pay
the monthly rent to Alpha Omega, continued to pay into the Capital Improvements Fund,
and continued to pay Common Area Charges to Alpha Omega that it did not disagree
with, but eventually began to put the “disputed-upon” Common Area Charges into
escrow.
On cross-examination, Zur’s witness testified as to Zur’s contention that
paragraphs 5(b) and 5(c) of the Leases require Zur to pay 69% (its current pro-rata share,
as the office space Lease has ended) of only 4% of the total building fees with respect to
certain items, such as “heating and air conditioning and roof repairs, which would be in
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the Capital Improvement Fund” and not attributable to the Common Area Charges.
Zur’s witness conceded that “that is not what it (the Lease) says,” but expressed Zur’s
13
N.T. 12, Hearing, March 23, 2009, (hereinafter N.T. (March 23, 2009) __). Among the other items
billed as Common Area Charges, Zur challenges the purchase of “Duty’s Locks,” “Interior building
renovations,” “a tractor to mow grass,” and “the prepayment of a UGI utility bill.” N.T. (March 23, 2009)
12.
14
N.T. (March 23, 2009) 10.
15
N.T. (March 23, 2009) 10-11.
16
N.T. (March 23, 2009) 26.
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belief that “there should be a common area . . . .” Zur’s witness testified that in 2006,
2007, and most of 2008 Zur continued to pay these disputed Common Area Maintenance
charges, believing that “it is sometimes just not worth having a battle, and so as we
looked at the cost, it was beginning to escalate, and there were replacement items being
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done, and it came to our attention.” Zur’s witness also acknowledged that the repairs
done to the air conditioning system were legitimate; however, it is Zur’s position that the
payment should have been deducted from the Capital Improvement Fund, and not
charged to Zur as a Common Area Maintenance fee included in the Additional Rent.
Alpha Omega’s witness, Charles Finchtner, testified as to the dollar amounts of
the rent and Additional Rent Expenses, as well as to Alpha Omega’s belief regarding the
purpose and uses of both the Common Area Maintenance charges and the Capital
Improvement Fund. With respect to the rent, in regard to the warehouse space currently
being rented by Zur, the basic monthly rent for said space is specified to be $10,000.00
per month. In addition to this basic monthly figure, there are Additional Rent Expenses,
authorized by paragraph 5(b) of the Leases, for Common Area Charges. Alpha Omega’s
witness testified as to how these Common Area Charges were calculated. The initial
amount for the Common Area Charges was estimated at $12,000.00 for the first year. It
was from this figure that Zur was to pay its estimated pro-rata share of 69% for the
warehouse space, and 10.5% for the office space. The Common Area Charges were first
adjusted five months after the lease commenced, and Alpha Omega’s witness testified
that “by the last day of July we were in the red by $29,545,” largely due to the costs of
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repairs to the air conditioning unit. Alpha Omega’s witness further testified that this
shortfall was spread over the next 17 months, and the next calculation of Common Area
Charges was in January of 2008. With respect to the Capital Improvement Fund, also
charged as Additional Rent Expenses, Alpha Omega’s witness testified “the intent of the
fund was to build up a fund with the maximum of $120,000 at $1,000 a month. A
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N.T. (March 23, 2009) 27.
18
N.T. (March 23, 2009) 33.
19
N.T. (March 23, 2009) 58-59.
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thousand dollars a month being charges to each of the tenants at 69 percent, 10 ½, and 20
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½.”
Alpha Omega’s witness also testified as to Alpha Omega’s belief regarding the
purpose and uses of both the Common Area Maintenance charges and the Capital
Improvement Fund. “The discussions were for the purpose of the fund, and it was
discussed that the fund would be there for major expenses, such as the replacement of the
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roof, the replacement of the HVAC system.” Alpha Omega’s witness testified that there
was no discussion, during the creation of the Leases, related to use of the Fund for
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repairs. “The Fund was limited to replacement.” He also stated that Zur had not
previously complained about paying for the air conditioning repair bills, and that even
into 2008 it paid them according to the new adjusted Common Area Maintenance
charges. It was in November of 2008 that, according to Mr. Finchtner, Zur began to
withhold $3,536.46 per month, and he testified that since that time he has been forced to
personally pay the bills for the heating and air conditioning repairs.
DISCUSSION
Statement of law. With respect to preliminary injunctions, the Pennsylvania
Supreme Court has stated as follows:
First, a party seeking a preliminary injunction must show
that an injunction is necessary to prevent immediate and
irreparable harm that cannot be adequately compensated by
damages. Second, the party must show that greater injury would
result from refusing an injunction than from granting it, and,
concomitantly, that issuance of an injunction will not substantially
harm other interested parties in the proceedings. Third, the party
must show that a preliminary injunction will properly restore the
parties to their status as it existed immediately prior to the alleged
wrongful conduct. Fourth, the party seeking an injunction must
show that the activity it seeks to restrain is actionable, that its
right to relief is clear, and that the wrong is manifest, or, in other
words, must show that it is likely to prevail on the merits. Fifth,
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N.T. (March 23, 2009) 57.
21
N.T. (March 23, 2009) 57.
22
N.T. (March 23, 2009) 57.
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the party must show that the injunction it seeks is reasonably
suited to abate the offending activity. Sixth and finally, the party
seeking an injunction must show that a preliminary injunction will
not adversely affect the public interest.
Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 573 Pa. 637, 647, 828
A.2d 995, 1001 (2003) (citations omitted).
Although parties seeking a preliminary injunction are not required to produce
absolute proof of their claims in order to demonstrate a right to injunctive relief, parties
must, at a minimum, offer sufficient evidence to show a “strong likelihood of success on
the merits.” Temple Univ. v. Allegheny Health Educ. & Research Found., 456 Pa. Super.
314, 327, 690 A.2d 712, 718 (1997).
“In order to obtain a preliminary injunction, the movant must . . . ‘make a strong
showing that it is likely to prevail on the merits’. . . .” Enterra Corporation v. SGS
Associates, 600 F. Supp. 678, 683 (E.D. Pa. 1985), quoting Klitzman, Klitzman &
Gallagher v. Krut, 744 F.2d 955, 958-59 (3d Cir. 1984).
“For a right to be ‘clear,’ it must be more than merely ‘viable’ or ‘plausible.’”
Ambrogi v. Reber, 2007 Pa. Super. 278, ¶ 30, 932 A.2d 969, 980, quoting Anglo-
American Insurance Company v. Molin, 547 Pa. 504, 691 A.2d 929, 933-34 (1997).
“However, this requirement is not the equivalent of stating that no factual disputes exist
between the parties.” Ambrogi v. Reber, 2007 Pa. Super. 278, ¶ 30, 932 A.2d 969, 980,
citing All-Pak, Inc. v. Johnston, 694 A.2d 347, 350 (Pa.Super. 1997).
APPLICATION OF LAW TO FACTS
With respect to Plaintiff’s Motion for a Preliminary Injunction to preclude
Defendant (a) from taking possession of the premises and/or any or all goods, inventory,
equipment, fixtures or any other personal property belonging to Plaintiff, and located
within the leased premises, (b) from conducting any public or private sale of Plaintiff’s
goods, inventory, equipment, fixtures or any other personal property of Plaintiff, and (c)
from exercising any other remedies for default under Paragraph 23.2 of the Leases, the
Court is unable to accept Plaintiff’s contention that its right to relief is clear. Although the
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parties both have expectations and intentions from the Leases, and although Plaintiff may
ultimately be able to make a showing of the propriety of a Declaratory Judgment in its
favor by the court, and although the evidence from the hearing shows a disagreement as
to the intention of paragraphs 5(b) and 5(c) of the Leases, the evidence set forth, at this
point, cannot be said to constitute a strong showing that Plaintiff will prevail on the
merits. The court finds it difficult, based on the wording of paragraph 5(c), to conclude as
Plaintiff would have it conclude, that the repairs to the HVAC system are not to be
withdrawn from the Common Area Charge. Paragraph 5(c) on its face indicates that “the
Common Area Charge, subsection (b) above, includes the costs of repairs to the roof
and/or installation of a new roof, resurfacing of parking lots, along with repairs and/or
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replacement of the air conditioning unit(s) and heating system,” and at least on the
surface is inconsistent with Plaintiff’s interpretation of the Leases as requiring repairs to
be charged to the Capital Improvements Fund. Accordingly, the following order of court
will be entered.
ORDER OF COURT
th
AND NOW, this 12 day of August, 2009, upon consideration of Plaintiff’s
Motion for Preliminary Injunction, following a hearing, and for the reasons given in the
accompanying opinion, the Motion is denied.
BY THE COURT,
s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr., J.
Rees Griffiths, Esquire
Marisa G. Button, Esquire
135 North George Street
York, PA 17401
Attorneys for Plaintiff
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Plaintiff’s Ex. 1, Hearing, March 23, 2009.
9
R. Mark Thomas, Esquire
101 South Market Street
Mechanicsburg, PA 17055-3851
Attorney for Defendant
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ZUR, LTD., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. : CIVIL ACTION – LAW
:
ALPHA OMEGA :
UNLIMITED, LLC., :
Defendant : NO. 09-500 CIVIL TERM
IN RE: PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
BEFORE OLER, J.
ORDER OF COURT
th
AND NOW, this 12 day of August, 2009, upon consideration of Plaintiff’s
Motion for Preliminary Injunction, following a hearing, and for the reasons given in the
accompanying opinion, the Motion is denied.
BY THE COURT,
_________________
J. Wesley Oler, Jr., J.
Rees Griffiths, Esquire
Marisa G. Button, Esquire
135 North George Street
York, PA 17401
Attorneys for Plaintiff
R. Mark Thomas, Esquire
101 South Market Street
Mechanicsburg, PA 17055-3851
Attorney for Defendant