Nicholas Malfitano Jul. 12, 2016, 3:56pm


PHILADELPHIA – According to the decision of a federal court here, Verizon Wireless successfully motioned to dismiss breach of contract claims from an investment firm who believed they violated the terms of a rental lease agreement.

Judge Gerald J. Pappert of the U.S. District Court for the Eastern District of Pennsylvania ruled Cellco Partnership (doing business as Verizon Wireless) did not fail to adhere to the terms of an oral modification to a lease between itself and CMW Investments Ltd., in connection with a Verizon Wireless store property located in King of Prussia.

Per the lawsuit, CMW and Cellco entered into a five-year lease agreement for the store space at Courtside Square Shopping Center in King of Prussia in April 2002, with the lease requiring Cellco to pay rent on or before the first day of each month.

The lease was modified on four subsequent occasions, with the fourth amendment extending the lease term through Sept. 30, 2015 and increasing the annual minimum rent amount from $124,000 to $155,250.

“The amended lease also required Cellco to surrender the property to CMW on the termination date, leave the premises in good condition and remove all other property. If Cellco failed to leave the premises, it would be designated a ‘holdover’ tenant and required to pay 1.4 times the minimum rent due for the last month of the term,” Pappert said.

“If Cellco did not pay on time and subsequently failed to cure within ten days after being notified by CMW, Cellco would be in default. Any sum not paid when due would bear interest at the rate of 11 percent per annum until paid,” Pappert added.

Before the lease expired, Cellco told CMW it found an alternate property to rent and would not be renewing its lease. But CMW alleges, however, that Cellco “orally requested a several month extension in order to have the continued right to post signs at the property advising returning or prospective customers of its new location.” CMW agreed to the oral modification, and Cellco posted the signs which were still in place at the time CMW filed its initial complaint.

“Cellco allegedly failed to pay any rent due under the extension and on or around March 10, 2016, CMW issued notice of default. Cellco failed to cure the default and CMW terminated the lease as of March 31, 2016; it demanded $129,266.31 in unpaid rent in addition to costs incurred to enforce its rights under the lease,” Pappert explained.

CMW then filed suit in the Montgomery County Court of Common Pleas, which Cellco removed to the District Court and motioned to dismiss on June 6.

“CMW contends that Cellco became a holdover tenant when CMW orally agreed to allow Cellco the ability to leave signs in the windows directing customers to the new location,” Pappert commented. “While CMW’s complaint does not provide any written evidence of this oral modification, it does contain the original lease agreement.”

From the original lease agreement, Pappert cited an integration clause at Section 25.02, which provided no modification to the lease would be made official and binding, unless it were put in writing and signed by each party.

“The complaint alleges the existence of an oral agreement but does not allege that it was reduced to writing and signed by each party as mandated by the lease. CMW’s contention that the purported oral agreement binds Cellco accordingly fails,” Pappert clarified.

Pappert also pointed to Section 20.02 defining the “Surrender of Premises”, which provides that Cellco had to surrender the property in good condition at the end of the lease, and also surrender all keys to CMW. A clause which survives the lease’s termination date, according to Pappert.

“CMW does not allege that Cellco failed to surrender the property. There is no allegation that Cellco failed to return the keys and/or left the premises in damaged condition. Rather, CMW alleges that Cellco left signs in the window directing customers to its new location,” Pappert said.

“The Court is unaware of, and CMW has not provided, any authority to support the contention that merely leaving posters in a window constitutes a ‘holdover’ tenancy under Pennsylvania law. Any further amendment to CMW’s holdover theory would be futile and the Court accordingly grants Cellco’s motion to dismiss,” Pappert stated.

Pappert also rejected an attached, out-of-context e-mail as proof of a fifth amendment to the lease, saying it wasn’t a “duly signed agreement.”

“Amendment would not be futile if CMW can procure this alleged fifth amendment, and the Court grants CMW leave to amend its complaint,” Pappert stated.

Pappert stipulated CMW was granted the ability to amend its complaint, consistent with his ruling.

The plaintiff is represented by Mark S. Haltzman of Silverang & Donohoe, in St. Davids.

The defendant is represented by Brian T. Feeney and Gregory T. Sturges of Greenberg Traurig, in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-02220

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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