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HomeMy WebLinkAbout2007-164 KEVIN W. HOKE, : IN THE COURT OF COMMON PLEAS OF YOUNG MI HOKE, : CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFF : : V. : : KENNY G. HONG, : JAE NYO HONG, HIS WIFE : DEFENDANTS : : V. : : EDWARD G. STANCE AND : STEPHANIE L. STANCE, HIS WIFE : ADDITIONAL DEFENDANTS : 07-0164 CIVIL IN RE: NON-JURY TRIAL ORDER OF COURT nd AND NOW , this 22 day of August, 2011, after a non-jury trial in the above- captioned matter, the verdict of the Court is as follows: 1. On Plaintiffs’ Amended Complaint, Count I, Hokes’ claim against Hongs for Misrepresentation, the Court finds for the Plaintiff Hokes, however, given the Court’s finding in regard to the Breach of Contract claim, separate damages will not be awarded. 2. On Plaintiffs’ Amended Complaint, Count II, Hokes’ claim against Hongs for Negligent Misrepresentation, the Court finds for the Plaintiff Hokes, however, given the Court’s finding in regard to the Breach of Contract claim, separate damages will not be awarded. 3. On Plaintiffs’ Amendment to Complaint, Count III, Hokes’ claim against Hongs for Breach of Contract, the Court finds for Plaintiff Hokes, and awards damages to the Plaintiffs in the amount of $135,000. 4. On Defendant Hongs’ Counterclaim against Hokes, Count I, Breach of Contract, the Court finds for Plaintiff Hokes. 5. On Defendant Hongs’ Counterclaim against Hokes, Count II, Unjust Enrichment, the Court finds for Plaintiff Hokes. 6. Additional Defendant Stences’ Counterclaim against Hongs for Breach of Contract, the Court finds for Additional Defendant Stences and awards $22,347.53 in attorney’s fees. 1 7. Defendant Hongs’ First Amended Additional Defendants Complaint against Stences, Count I, Tortious Interference with Contract, the Court finds in favor of Stences and against Hongs. 8. Defendant Hongs’ First Amended Additional Defendants Complaint against Stences, Count II, Breach of Contract, the Court finds in favor of Stences and against Hongs. 9. Defendant Hongs’ first Amended Additional Defendants Complaint against Stences, Count III, Indemnification and Contribution, claim is dismissed. By the Court, M. L. Ebert, Jr., J. David E. Lehman, Esquire Attorney for Plaintiffs Luther E. Milspaw, Jr., Esquire Attorney for Defendants Kimberly A. Bonner, Esquire Attorney for Additional Defendants 2 KEVIN W. HOKE, : IN THE COURT OF COMMON PLEAS OF YOUNG MI HOKE, : CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFF : : V. : : KENNY G. HONG, : JAE NYO HONG, HIS WIFE : DEFENDANTS : : V. : : EDWARD G. STANCE AND : STEPHANIE L. STANCE, HIS WIFE : ADDITIONAL DEFENDANTS : 07-0164 CIVIL IN RE: NON-JURY TRIAL OPINION AND ORDER OF COURT Ebert, Jr., J., August 22, 2011 - Background In this civil case, Plaintiffs, the Hokes, brought an action for misrepresentation or, in the alternative, breach of contract. The Defendants, the Hongs, are the tenants and the Additional Defendants, the Stences, were the landlords in a commercial lease agreement. The Hongs operated a Korean market on the leased premises. The Hokes had arranged to purchase the business from the Hongs. The lease required written consent from landlords prior to any assignment of the lease. The Hongs failed to obtain written consent from the Stences prior to the Hokes taking over the business. The Stences ultimately withheld consent for a variety of reasons and all parties were required to vacate the premises. The Hokes claim that the Hongs misrepresented material facts to them, specifically that there would be no problem in getting the lease assigned, that induced them to enter an agreement to buy the business which they were never allowed to fully 1 operate because the assignment of the lease was never permitted. Alternatively, the Hokes claim that the Hongs breached the contract for sale of the business because they failed to obtain prior consent to assign the lease which prevented the Hokes from taking control of the business and remaining on the premises. The Hongs counterclaim that the Hokes still owe them payment of money pursuant to the terms of the sales agreement. Additionally, they filed a claim against the Stences claiming that the Stences, as landlords, unreasonably withheld consent to an assignment of the lease, and therefore breached their lease contract. The Hongs also claim that the Stences tortiously interfered with Hongs’ contract for sale of the business to the Hokes because they did not consent to an assignment and because they held meetings privately with the Hokes to discuss a new lease, which they claim disrupted the pending sales agreement. Procedural History Plaintiffs filed a Complaint on February 22, 2007, and filed Amended Complaints on April 30, 2007, and May 21, 2007. On June 11, 2007, Defendants filed an Answer with New Matter and Counterclaim and filed an Additional Defendants’ Complaint. On July 16, 2007, Plaintiffs filed a reply to Defendants’ New Matter and Counterclaim. On November 6, 2007, Additional Defendants filed an Answer with New Matter and Counterclaim. On February 3, 2009, Plaintiff filed an Amendment of the Complaint to include a claim for Breach of Contract. On May 12, 2009, Additional Defendants filed a Motion for Summary Judgment, which was denied on June 12, 2009. On September 24, 2009, Additional Defendants filed a Motion for Continuance. On March 11, 2010, the 2 trial scheduled for March 17-18, 2010, was continued until August. A non-jury trial was held on August 30-31, 2010. Statement of Facts Plaintiffs, Kevin W. Hoke and his wife, Young Mi Hoke (“Hokes”), reside at 530 Lake View Drive, Spring Grove, York, Pennsylvania. Defendants, Kenny G. Hong and his wife, Jae Nyo Hong (“Hongs”), reside at 2503 Warren Way, Mechanicsburg, Pennsylvania. Additional Defendants, Edward G. Stence and his wife, Stephanie L. Stence (“Stences”), reside at 39 Sage Crest Circle, Enola, Pennsylvania. At issue in this case is the Min Sok Oriental Food Market (“the Market”), which at the time relevant to the dispute was located at 3817 Market Street, Camp Hill, Pennsylvania. The Hongs purchased the Market in 1993 and moved from a Trindle Road location to the Market 1 Street location in 1997. The Hongs entered into a lease to operate the Market in a building owned by 2 Peggy Grove. The Hongs also opened a restaurant in the same building approximately 3 seven or eight months after opening the Market. The Hongs were both involved in an automobile accident in 2003 and sustained injuries which affected their abilities to run 4 the Market and the restaurant. In 2004, the Hongs sold the restaurant and received 5 approval from Peggy Grove to assign the lease. The Hongs maintained ownership of the Market. 1 Notes of Testimony, Non-Jury Trial, Aug. 31, p. 265 (hereinafter N.T. Day 2 at ___). 2 N.T. Day 2 at 265-66. 3 N.T. Day 2 at 266. 4 N.T. Day 2 at 267-68. 5 N.T. Day 2 at 247, 268. 3 The Hongs first met the Hokes when the Hokes came into the market and were 6 customers of the Hongs in July 2005. In July 2005, The Hokes and Mrs. Hong had 7 discussions about the Hokes purchasing the Market from the Hongs. In November 2005, the Hongs discussed a purchase price of $159,000 which included all operations of the business, all current stock and merchandise, the leased business premises and 8 all owned furniture, fixtures, equipment, and a van. On January 9, 2006, the parties entered into a contract reflecting the terms of the 910 sale. The Hongs never requested assignment of the lease from the landlord. On January 26, 2006, the Hokes and Hongs executed the discussed agreement to sell the Market for $159,000, making a partial payment of $129,000 and agreeing to pay the 11 remaining $30,000 through a payment plan of $3,000 per month for 10 months. Previously, on November 11, 2005, the Stences purchased the Market Street 12 property from Peggy Grove. They visited the property and met the Hongs in mid- 13 November 2005. Between November 2005 and January 2006, the Hongs were aware that the Stences were the new owners of the building and contacted them for building 14 services such as resetting breakers in the basement. Edward and Stephanie Stence were listed as the building owners on the liability insurance renewal obtained by the 15 Hongs in December 2005. 6 N.T. Day 2 at 234. 7 N.T. Day 2 at 235-36. 8 Defendants’ Answer to Amended Complaint with New Matter and Counterclaim, filed June 11, 2007, ¶ 12. 9 N.T. Day 2 at 240-41; Exhibit 4. 10 N.T. Day 2 at 251-52. 11 Notes of Testimony, Non-Jury Trial, Aug. 30, p. 34 (hereinafter N.T. Day 1 at ___); Exhibit 6. 12 N.T. Day 2 at 358. 13 N.T. Day 2 at 358. 14 N.T. Day 2 at 360. 15 Exhibit 13. 4 The Hongs had entered into a five-year lease on the property beginning in 16 1997. In 2002, the Hongs entered into an addendum to the lease which extended the 17 lease for another five years, through 2007. The extension provided that if the Hongs wanted to extend the lease beyond June 30, 2007, they were required to renegotiate a new rental rate six months before the expiration of the second term. The lease required written permission of the landlord prior to assignment of the 18 lease. The relevant portion reads: Tenant shall not, during the term of this Lease or any extension hereof, assign, mortgage or pledge this Lease or underlet, sublease, or assign the Demised Premises, or any part thereof, to any other person, firm, or corporation to occupy the Demised Premises or any part thereof without the express written consent of Landlord first being obtained, which consent will not be unreasonably withheld. The Hokes thought that there were six and one-half years remaining on the 1920 lease. The Hongs assured the Hokes that there was no problem with the lease and that the Hongs would take care of talking to the landlord about them taking over the 21 lease. The Hongs did not provide, and the Hokes did not request, a copy of the 22 existing lease. The Hongs completed the sale to the Hokes before obtaining written 23 consent to assign the lease. The Hongs spoke to Peggy Grove about the possibility of 24 selling the Market. The Hongs did not receive written consent from Peggy Grove to assign the lease. 16 N.T. Day 2 at 283. 17 N.T. Day 2 at 284. 18 Exhibit 32, Article 17. 19 N.T. Day 1 at 27. 20 N.T. Day 1 at 37. 21 N.T. Day 1 at 28. 22 N.T. Day 1 at 132. 23 N.T. Day 2 at 288. 24 N.T. Day 2 at 259. 5 Mr. Hong testified that he knew the building was sold, but said that he did not 25 know who the new owner was prior to January 30. However, we find that because Stephanie Stence provided services to the Hongs between November 2005 and January 2006 such as providing access to the basement, the Hongs were aware that the Stences were the new owners. The Hongs gave the Hokes all the keys to the building and turned over all 26 operations of the Market to the Hokes on January 31, 2006. The Hokes took over 27 operation of the Market the next day, February 1, 2006. The Stences were not aware that the Hongs had sold the Market to the Hokes until Stephanie Stence observed the 28 Hokes operating the Market in February 2006. The Hokes made two of the agreed 29 upon installment payments of $3,000 in February and March 2006. Rent for the months of February, March, April, and May was paid by the Hokes to the Hongs; the 30 Hongs then wrote checks to Stephanie Stence. The Court finds this procedure to be an attempt by the Hongs to keep the fact that they had sublet the property to the Hokes from the Stences. From the Stences point of view, it would appear that the Hongs were still paying the rent. The Hokes later became aware that consent from the landlord was required to assign the lease, and learned that the Hongs had not gotten consent from the real 31 landlord. When it appeared that Stences would not consent to an assignment of the 25 N.T. Day 2 at 321-22. 26 N.T. Day 2 at 326. 27 N.T. Day 1 at 35. 28 N.T. Day 2 at 360. 29 Plaintiffs’ Amended Complaint, filed May 21, 2007, ¶ 26; Defendants’ Answer, ¶ 26. 30 N.T. Day 1 at 38; Exhibit 7. 31 N.T. Day 1 at 40. 6 32 lease, the Hokes attempted to negotiate a new lease. After much confusion and difficulty dealing with both parties, the Stences terminated the lease and the Hongs and 33 Hokes were required to leave the premises by June 30, 2006. On July 3, 2006, the Hokes arrived at the store and found that the locks had been changed and “no 34 trespassing” signs had been posted. The Stences claim that they refused consent to assignment in part because the Hongs failed to properly maintain the property as required by the lease. David Stakem 35 testified as an expert in the field of engineering. Stakem conducted an inspection of 36 the Market on November 2, 2005 for Stephanie Stence. Stakem noted in his report no 37 problems with the floor, that the structural system was in good condition, that the 38 building was in average condition as compared to other of similar age and type, that all visible floor joists, girders, columns, ceiling joists, rafters, and wall framing were in 39 good condition. Stakem noted that most of the work needed was maintenance- 4041 related, such as broken windows, and was common for a building of that age. We find that the building was in reasonably good condition and that the evidence did not support the contention that the Hongs failed to maintain the building as required by the lease. 32 N.T. Day 1 at 43; Exhibits 13, 14, 15, 16, 21. 33 N.T. Day 1 at 52; Exhibit 22. 34 N.T. Day 1 at 62. 35 N.T. Day 2 at 215. 36 N.T. Day 2 at 216. 37 N.T. Day 2 at 218. 38 N.T. Day 2 at 220. 39 N.T. Day 2 at 220. 40 N.T. Day 2 at 221. 41 N.T. Day 2 at 221. 7 Discussion I. Hokes v. Hongs: Breach of Contract A party claiming breach of contract must establish “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Ruthrauff, Inc. v. Ravin, Inc. 914 A.2d 880, 888 (Pa.Super. 2006) (citing Williams v. Nationwide Mut. Ins. Co., 750 A.2d 881, 884 (Pa.Super. 2000)). The Hokes and Hongs did enter into a contract for the sale of the Min Sok Oriental Food Market. To complete the sale of the Market and allow the Hokes to completely take control of the business, the lease would have to be properly transferred from the Hongs to the Hokes. The contract could not be completed unless the lease was assigned to the Hokes. Assignment of the lease required written consent of the Stences. The Hongs were unable to obtain consent for assignment of the lease as required, and therefore they were unable to deliver control of the business to the Hokes. This constituted a fundamental breach of their sales contract with the Hokes because they could not obtain a lease for the property on which the business was conducted. Moreover, the Hokes were required to vacate the premises because the Stences did not consent to lease the property to them. The Hokes also attempted to negotiate a new lease but were unable to come to an agreement with the Stences. According to Hongs’ own pleadings, they allowed the Hokes to assume ownership and operation of the Market, “including all rights and responsibilities under the Commercial Lease Agreement” on January 31, 2006, and did not request the written consent of Additional Defendants until February 10, 2006. (First Amended Additional Defendants Complaint, ¶ 8,9). We find that the Hongs did breach their contract to sell 8 the business to the Hokes because the Hongs were unable to obtain the consent required for assignment of the lease, and therefore were unable to complete the sale. The purpose of a damage award is to place the non-breaching party “as nearly as possible in the same position [it] would have occupied had there been no breach.” Helpin v. Trustees of University of Pennsylvania, 10 A.3d 267, 270 (Pa. 2010) (citing Lambert v. Durallium Products Corporation, 72 A.2d 66, 67 (Pa. 1950)). The measure of damages for breach of contract is compensation for the loss sustained. The aggrieved party can recover nothing more than will compensate him. Id. (emphasis in original). The Hokes paid $129,000 down payment and made two of the installment payments of $3,000 each. Accordingly, the Hokes are entitled to damages from the Hongs in the amount of $135,000. Next, we must address whether the Stences are in any way responsible for the breach by unreasonably withholding consent. The Hongs claim that the only reason they were unable to obtain consent is because the Stences unreasonably withheld consent. We disagree because the Hongs did not even attempt to obtain consent until after they had contracted with the Hokes for the sale of the Market and had $129,000.00 of the Hokes’ money in their hands. The lease clearly states that consent must be obtained in writing prior to any assignment or sublease. Although the lease was never actually assigned, the Hongs contracted with the Hokes and effectively promised the Hokes that the lease would be assigned before they ever requested consent for assignment. The Stences were not obligated to consent to assignment as long as their denial was reasonable. As discussed below, the Stences’ refusal to consent to assignment of the lease was reasonable given the somewhat deceptive and untimely actions of the Hongs. 9 II. Hongs v. Stences: Breach of Contract As noted above, a party claiming breach of contract must establish “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Ruthrauff, Inc. v. Ravin, Inc., supra. A lease is a contract and is to be interpreted according to contract principles. Kmart of Pennsylvania v. MD Mall Associates, 959 A.2d 939, 943-44 (Pa. Super. 2008) (citing Mace v. Atlantic Refining & Marketing Corp., 785 A.2d 491, 496 (2001). The Hongs had entered into a lease agreement with Peggy Grove, which transferred to the Stences when they purchased the property from Grove. The lease agreement created a contract between the Hongs and the Stences. The lease required that the Hongs request written permission from the Stences before assigning the lease, and the lease also required that the Stences would not unreasonably withhold consent. The Hongs claim that the Stences breached the contract because their refusal to grant consent was unreasonable. There is no question that the Hongs did not request any permission, and certainly not written permission, before transferring ownership and operation of the business to the Hokes. This is clearly prohibited by the lease, and the contract was breached by the Hongs when they completed the agreement of sale and transfer of the business operation to the Hokes, prior to obtaining consent from the Stences, on January 9, 2006. The Pennsylvania Supreme Court has stated that “[t]he general rule is that a party who has materially breached a contract may not complain if the other party refuses to perform his obligations under the contract. . . . A party also may not insist 10 upon performance of the contract when he himself is guilty of a material breach of the contract.” Ott v. Buehler Lumber, 541 A.2d 1143, 1145 (Pa. 1988). In this case, the Hongs materially breached the contract when they attempted to transfer their lease interest in the Market before obtaining written consent as required by the contract. The Hongs cannot now complain that the Stences breached the same provision by failing to grant consent. The Hongs did try to remedy their breach by requesting consent, but the Stences’ refusal was not unreasonable. The Hongs argue in part that the Stences’ withholding of consent was unreasonable. They maintain that the Stences’ position that the Hongs did not properly maintain the physical condition of the store had nothing to do with the new proposed assignees, the Hokes. We disagree with this argument. An assignment of this lease still leaves the Hongs responsible for the lease. The Stences were completely within their rights to refuse consent to assignment if they had reservations about either the Hongs’ or the Hokes’ abilities to comply with the lease. The Stences did have concerns about the condition of the building and the ability of the tenants to maintain the premises in an acceptable manner. Furthermore, as new owners of the building, if the Stences wanted to raise the rent and the Hokes or Hongs would not agree to the new rent, the Stences were reasonable in withholding consent to assignment for failure to reach an agreement on the price of the rent. We find the reasoning of the Philadelphia Court of Common Pleas persuasive in this case. In 421 Willow Corp. v. Callowhill Center Associates, the court found that a landlord’s desire to increase rent was reasonable grounds for withholding consent to assignment of a lease. In that case, the court noted that the landlord was not required to 11 be reasonable because there was no such provision in the lease, and the Pennsylvania appellate courts have not adopted the Restatement view requiring reasonableness for assignment of leases in the absence of a specific provision. However, the court still provided the following analysis: Even if this Court were to adopt the reasoning of the Restatement and impose a duty of reasonableness on Callowhill, Callowhill's refusal to consent to the assignment of the Lease to SFX was reasonable. “A reason for refusing consent, in order for it to be reasonable, must be objectively sensible and of some significance and not be based on mere caprice or whim or personal prejudice.” Restatement (Second) Property, Landlord & Tenant § 15.2, Comment 4 (1977). Willow has offered evidence that Callowhill refused its consent to the assignment of the Lease because Callowhill wanted to charge a market rent to SFX, which would be greater than the rent charged under the Lease. Willow cannot seriously contend that such a motive is capricious, whimsical, or prejudiced. In fact, from a business perspective, it is obviously economically significant and objectively sensible, especially where, as here, a landlord is faced with a different tenant and different market conditions than when it originally entered into the Lease. Therefore, Callowhill's refusal to consent to the assignment of the Lease from Willow to SFX was not unreasonable. 421 Willow Corp. v. Callowhill Center Associates, WL 21361362, 5-6 (Pa.Com.Pl. Philadelphia 2003). The Stences were the new owners of the building and bought the premises with the Hongs as long-standing existing tenants. If the lease were to be assigned to the Hokes, the Stences were completely reasonable in wanting to reassess the use, character, and rent charged for the premises. We find that the Stences’ refusal to consent to assignment of the lease to the Hokes was not unreasonable and therefore was not a breach of contract by the Stences. Equally important to this Court’s decision is the fact that the Hongs actions in transferring ownership of the market to the Hokes without ever discussing this 12 change in ownership with the Stences appears somewhat unscrupulous. This Court finds that the Hongs in fact wanted to confront the Stences with what in actuality was a fait accompli. This Court finds that the Hongs wanted the Hokes’ money and were worried that if they told the new owner of their plans to sell the market that the owner would not agree to lease the property pursuant to the lease agreement and therefore the Hongs’ desire to obtain $159,000.00 cash for the business would be thwarted. Given the Hongs somewhat deceptive action, and from the Stences point of view, the Hokes involvement in the whole plan, the Stences’ certainly were justified in deciding that they wanted no further business dealings with either party. Accordingly, their actions in refusing to lease the property to the Hokes, after never being consulted about the sale of the business or new leases, is not unreasonable. III. Hokes v. Hongs: Fraudulent (Intentional) or Negligent Misrepresentation Pennsylvania courts have recognized tort claims for fraudulent and negligent misrepresentation. A fraudulent misrepresentation requires proof of: (1) a representation (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Ira G. Steffy, Inc. v. Citizens Bank of Pennsylvania, 7 A.3d 278, 290 (Pa.Super. 2010). Within the realm of fraudulent misrepresentation, the Superior Court has drawn a distinction between fraud in the inducement of a contract and fraud in the performance of a contract. ETOLL, INC. v. ELIAS/SAVION ADVERTISING, INC., 811 A.2d 10, 17 (Pa. Super. 2002). For example, as noted by the United States District Court, Eastern 13 District of Pennsylvania interpreting Pennsylvania law, in a case where Defendant claimed to have ASME (American Society of Mechanical Engineers) certification in producing pressure vessels before entering into a contract for the sale of said vessels to Plaintiff, the court distinguished between fraudulent inducement and performance. Air Prods. and Chems., Inc. v. Eaton Metal Prods. Co., 256 F. Supp. 2d 329, 342 (E.D. Pa. 2003). The Court separated inducement and performance stating, “[h]ere, it is not that [Defendant]’s alleged failure to perform under the contract was fraudulent (because it had promised to perform) but rather that [Defendant]’s alleged misrepresentation about its objective qualifications to adequately perform was fraudulent.” Id. Similarly, the Superior Court has found fraudulent inducement when a party “fraudulently and/or negligently agreed to perform obligations that it never intended to perform in order to induce” a contract. Mirizio v. Joseph, 4 A.3d 1073, 1086 (Pa. Super. 2010) (citing Sullivan v. Chartwell Inv. Partners, L.P., 873 A.2d 710, 719 (Pa. Super. 2005)). In the present case, the analysis of negligent misrepresentation is unnecessary because this Court finds that the Hongs fraudulently misrepresented material information to induce the Hokes into the purchase of the Market. The Hongs made a material representation when they assured the Hokes that there were no problems with the transfer of the lease and arrangements with the landlord would be made. Contrary to the Hongs’ statements and in violation of the lease, the Hongs completed the sale to the Hokes before obtaining written consent to assign the lease. The Hongs suggest the statements regarding the lease were not with knowledge of its falsity or recklessness because Mr. Hong did not know who was the proper landlord and owner from whom to gain permission. However, the record reflects 14 that the Hongs’ actions demonstrated no intention to ever obtain permission for the assignment of the lease prior to selling the Market to Hokes and getting the initial $129,000.00 payment. This Court finds Mr. Hong’s claims unpersuasive because knowledge of who the proper owner and landlord were was explicit. The Hongs were on notice of the new owners and landlords of the building in December 2005 when Edward and Stephanie Stences’ names appeared on the liability insurance renewal obtained by the Hongs. Additionally, between November 2005 and January 2006 the Hongs contacted the Stences for building services. The Hongs had ample knowledge of who their new owners and landlords were and to gain permission for the transfer of the lease from them prior to the sale of the Market, on January 31, 2006, to the Hokes. Due to the fraudulent statements of the Hongs about the transfer of the lease, the burden and risk of obtaining and maintaining a valid lease was improperly passed onto the Hokes. The Hokes reasonably believed that there were no problems with the lease transfer and agreed to the sale of the Market based on this belief. The eventual eviction of the Hokes from the Market was a proximate result of the Hongs’ statements. A tort claim involving a contract must survive both the “gist of the action” and “economic loss” doctrines. The gist of the action doctrine broadly prevents “recasting of ordinary breach of contract claims into tort claims.” Air Prods., 256 F. Supp. 2d at 342. The Superior Court has stated, “when a plaintiff alleges that the defendant committed a tort in the course of carrying out a contractual agreement, Pennsylvania courts examine the claim and determine whether the ‘gist’ or gravamen of it sounds in contract or tort” and bar claims in contract. Pennsylvania Mfr.’s Ass’n Ins. Co. v. L.B. Smith, Inc., 831 15 A.2d 1178, 1182 (Pa.Super. 2003). Specifically in determining the basis of the claim the distinction between fraud in the inducement and fraud in the performance of a contract helps determine whether the claim is barred. ETOLL, INC. v. ELIAS/SAVION ADVERTISING, INC., 811 A.2d 10, 19-20 (Pa.Super. 2002). Cases with claims of fraud in the performance of a contract are generally considered intertwined with the breach of duties and barred under the gist of the action doctrine, whereas claims of fraud in the inducement may generally proceed because the “fraud is generally held to be merely collateral to a contract claim for breach of those duties.” Id. Thus, when the fraud separately is the actual gist of the action the claim is not barred. Similarly, the economic loss doctrine attempts to prevent tort claims from “compensat[ing] parties for losses suffered as a result of a breach of duties assumed only by agreement.” Bilt-Rite Contractors, Inc. v. Architectural Studio, 866 A.2d 270, 283 (Pa. 2005). The issue of whether the economic loss doctrine applies to fraudulent or intentional misrepresentation claims has not been analyzed by the appellate courts of Pennsylvania. Air Prods., 256 F. Supp. 2d at 336. But, “[t]he lower Pennsylvania courts, as far as [the Eastern District Court of Pennsylvania] can tell, unanimously ruled that such claims are not barred by the economic loss doctrine. Id. Additionally, the Eastern District suggests, “if the Pennsylvania Supreme Court would apply the economic loss doctrine to claims of intentional fraud, they would not do so when the fraud alleged is in the inducement and does not relate to the quality or characteristics of the goods sold.” Id. at 337. In the present case, this Court recognizes the intentional misrepresentation of the Hongs as fraud in the inducement, but does not find it necessary to determine if the 16 damages claimed would be barred under either doctrine. This Court has already awarded to the Hokes on an alternative breach of contract theory damages in the amount of $135,000.00 which was the same amount prayed for under the claims of intentional or negligent misrepresentation. Therefore, this Court awards no additional damages beyond the requested breach of contract amount on the alternative pleading. IV. Hongs v. Hokes Counterclaim: Breach of Contract As noted above, a party claiming breach of contract must establish “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Ruthrauff, Inc. v. Ravin, Inc., supra. The Hongs claim that the Hokes breached the contract by failing to make the installment payments as required by the contract for sale of the Market. The Hongs had already breached the agreement with the Hokes by failing to obtain the necessary consent to assign the lease which would allow the Hongs to complete the contract and sale of the Market to the Hokes. The Hokes became aware through conversations with the Stences that assignment was unlikely to be approved, and negotiations for a new lease were unsuccessful. At that point, the Hongs had breached the contract because they were unable to deliver possession of the Market. As discussed above, a party may not insist upon performance of the contract when he himself is guilty of a material breach of the contract. Ott v. Buehler Lumber, supra. The Hokes were under no further obligation to make payments for a purchase that could not be completed. Accordingly, we find that the Hokes did not breach their contract with the Hongs. 17 V. Hongs v. Hokes Counterclaim: Unjust Enrichment The Hongs claim that the Hokes have been unjustly enriched by time and effort put into the Market by the Hongs without compensation, from income generated by the assets and operation of the Market before its closing, and by the liquidation and sale of the Market after its closing. The elements of unjust enrichment are: (1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Whether the doctrine applies depends on the unique factual circumstances of each case. In determining if the doctrine applies, we focus not on the intention of the parties, but rather on whether the defendant has been unjustly enriched. Moreover, the most significant element of the doctrine is whether the enrichment of the defendant is unjust. The doctrine does not apply simply because the defendant may have benefited as a result of the actions of the plaintiff. Stoeckinger v. Presidential Financial Corp. of Delaware Valley, 948 A.2d 828, 833 (Pa. Super. 2008). Stated another way, “[t]o sustain a claim of unjust enrichment, a claimant must show that the party against whom recovery is sought either ‘wrongfully secured or passively received a benefit that it would be unconscionable for her to retain.’” Roman Mosaic & Tile Co., Inc., v. Vollrath, 313 A.2d 305, 307 (Pa.Super. 1973). “In order to recover, there must be both (1) enrichment, and (2) an injustice resulting if recovery for the enrichment is denied.” Torchia On Behalf of Torchia v. Torchia, 499 A.2d 581, 582- 83 (Pa. Super. 1985).” The Hokes and the Hongs entered into an agreement for the sale of the market. The “Market” consisted of many separate components to include the stock inventory, the equipment, an established clientele, and perhaps most importantly in this case the 18 physical location from which this business would be operated. Because the Hongs failed to get the required consent from the Stences to assign the lease, the Hokes were never able to realize their desire to run a successful market. Even though they operated the market for a brief period of time, because of their ultimate eviction, the market ceased to exist. This was entirely the fault of the Hongs. Accordingly, this Court does not find that the Hokes received any benefit from the Hongs that would be inequitable for them to retain. The Hongs agreed to sell the Hokes a market, and in the end the Hokes did not have a market. What they did get was several years of civil litigation along with the accompanying attorney fees. Unjust enrichment is an equitable remedy which under the facts presented in this case has no application. In reality, as the Hokes stand before this Court, they have retained no benefit. VI. Hongs v. Stences: Tortious Interference with Contract The Hongs claim that the Stences tortiously interfered with their contract with the Hokes for the sale of the market. The elements for tortious interference with contract are: (1) the existence of a contractual relationship between the plaintiff and a third party; (2) purposeful action on the part of the defendant intended to harm the relationship; (3) the absence of privilege or justification on the part of the defendant; and (4) actual damages resulting from the defendant’s conduct. Stoeckinger, supra at 834. In the present case, there was an existing contract between the Hongs and a third party, the Hokes. To prevail on this claim, however, the Hongs must show that there was a purposeful action on the part of the Stences intended to harm the relationship between the Hongs and the Hokes which caused actual damage to the Hongs. We find no evidence in this case that supports this claim. 19 The Hongs claim that the Stences interfered with their contract with the Hokes because they unreasonably refused to consent to assignment of the lease and because they discussed the possibility of a new lease with the Hokes. We have already determined that the Stences’ refusal to consent to assignment of the lease was reasonable. The Stences did have the right to refuse assignment of the lease and their exercise of that right was not done with the purpose to harm the relationship between the Hongs and the Hokes. Any conversations between the Stences and Hokes about the possibility of a new lease were simply to try to re-lease the premises after the breach by the Hongs. The Hongs breached the contract by failing to obtain the proper consent for assignment. The Stences were reasonable in denying consent for various reasons, but they were still willing to consider the Hokes as new tenants with a new lease. This was not done in any way to harm the Hongs, but instead to maintain paying tenants in their building. We find that the Stences did not intentionally interfere with contractual relations between the Hokes and the Hongs. VII. Hongs v. Stences: Indemnification and Contribution The Hongs argue that if they breached the contract with the Hokes, it was a result of the Stences’ interference with the contract by refusing to consent to assignment of the lease, and that the Stences are therefore liable to the Hongs for any damages awarded to the Hokes. Because we did not find that the Stences were in any way responsible for the Hongs’ breach of their contract or that the Stences interfered with the contract between the Hokes and Hongs, the claims for indemnification and contribution must be denied. 20 VIII. Stences v. Hongs Counterclaim: Breach of Contract The Stences filed a counterclaim against the Hongs for Breach of Contract claiming that the Hongs transferred the lease without consent as required by the lease and also that the Hongs failed to maintain the premises as required by the lease. The Stences claim $35,000 for costs to repair damages they claim the Hongs caused to the property. The Stences further claim attorneys’ fees in excess of $10,000.00 and claim that under the provisions of the lease agreement they are entitled to recover these fees because the Hongs defaulted on the lease. This Court does not find that the Stences presented sufficient evidence to support their claim that the Hongs caused damage to the property. The engineer inspecting the property said that most of the work that needed to be done was general maintenance work, and the condition of the building was typical for a building of that age. He noted that there were no structural problems with the building and he noted no problems with the floor. Accordingly, we deny the Stences’ request for damages in the amount of $35,000 for repairs to the building. The Stences claim attorneys’ fees in excess of $10,000 related to the expenditures they made because of the Hongs’ breach of the lease agreement. The lease provides in Article 26 , Paragraph b. Landlord’s Remedies: (8) In case suit shall be brought or Landlord confesses judgment for recovery of possession of the Demised Premises, for the recovery of rent, additional rent or any other amount due under the provisions of this lease, or because of any default by Tenant, Tenant shall pay to Landlord all expenses incurred therefor, including reasonable attorney’s fees. (emphasis added) Lease agreement, Article 26 (b)(8). 21 The Hongs breached the lease by failing to obtain consent to assign the lease. But for this breach, there is little question that the entire controversy which led to trial in this case could have been avoided. Again, the Court has found that the Hongs wanted the Hokes money for the market and chose to complete their deal with the Hokes prior to obtaining permission to assign the lease. They gambled on the fact that the Stences would simply acquiesce to the Hokes new ownership of the market. How simple it would have been had the Hongs approached the Stences, discussed their proposed deal with the Hokes and gotten permission to make the sale. They did not do this. Accordingly, the Stences were within their rights to file a claim for Breach of Contract which they did in this case. We recognize that because of the Hongs’ breach, the Stences pursued legal action. As such, according to the lease they are entitled to attorneys’ fees. Accordingly, as established in Exhibit No. 74 of the Record, the Court will award attorneys’ fees in the amount of $22,347.53. Accordingly, the following Order is entered: nd AND NOW , this 22day of August, 2011, after a nonjury trial in the above- captioned matter, the verdict of the Court is as follows: 1. On Plaintiffs’ Amended Complaint, Count I, Hokes’ claim against Hongs for Misrepresentation, the Court finds for the Plaintiff Hokes, however, given the Court’s finding in regard to the Breach of Contract claim, separate damages will not be awarded. 2. On Plaintiffs’ Amended Complaint, Count II, Hokes’ claim against Hongs for Negligent Misrepresentation, the Court finds for the Plaintiff Hokes, however, given the Court’s finding in regard to the Breach of Contract claim, separate damages will not be awarded. 22 3. On Plaintiffs’ Amendment to Complaint, Count III, Hokes’ claim against Hongs for Breach of Contract, the Court finds for Plaintiff Hokes, and awards damages to the Plaintiffs in the amount of $135,000. 4. On Defendant Hongs’ Counterclaim against Hokes, Count I, Breach of Contract, the Court finds for Plaintiff Hokes. 5. On Defendant Hongs’ Counterclaim against Hokes, Count II, Unjust Enrichment, the Court finds for Plaintiff Hokes. 6. Additional Defendant Stences’ Counterclaim against Hongs for Breach of Contract, the Court finds for Additional Defendant Stences and awards $22,347.53 in attorney’s fees. 7. Defendant Hongs’ First Amended Additional Defendants Complaint against Stences, Count I, Tortious Interference with Contract, the Court finds in favor of Stences and against Hongs. 8. Defendant Hongs’ First Amended Additional Defendants Complaint against Stences, Count II, Breach of Contract, the Court finds in favor of Stences and against Hongs. 9. Defendant Hongs’ first Amended Additional Defendants Complaint against Stences, Count III, Indemnification and Contribution, claim is dismissed. By the Court, M. L. Ebert, Jr., J. David E. Lehman, Esquire Attorney for Plaintiffs Luther E. Milspaw, Jr., Esquire Attorney for Defendants Kimberly A. Bonner, Esquire Attorney for Additional Defendants 23