Hankin, M v. Kion Defense Technologies

• Court: Superior Court of Pennsylvania
• Decided: March 7, 2017
• Docket: Hankin, M v. Kion Defense Technologies No. 359 EDA 2016
• Status: Unpublished

Opinion

J-A28013-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MARK HANKIN AND INDUSTRIAL REAL IN THE SUPERIOR COURT OF ESTATE MANAGEMENT, INC., D/B/A PENNSYLVANIA HANMAR ASSOCIATES, MLP

v.

CLARIANT CORPORATION AND KION DEFENSE TECHNOLOGIES, INC.

APPEAL OF: CLARIANT CORPORATION No. 359 EDA 2016

Appeal from the Order December 28, 2015 In the Court of Common Pleas of Montgomery County Civil Division at No(s): No. 2015-16284

BEFORE: PANELLA, J., SHOGAN, J., and PLATT, J.*

MEMORANDUM BY PANELLA, J. FILED MARCH 07, 2017

Appellant, Clariant Corporation, appeals from the order granting a

preliminary injunction to Appellees, Mark Hankin and Industrial Real Estate

Management, Inc. In granting the injunction, the trial court required Clariant

to actively maintain a commercial property that Appellees had leased to Kion

Defense Technologies, Inc., who is not a party to this appeal. Clariant had

agreed to be a guarantor for Kion’s performance under the lease. On appeal,

Clariant argues that the trial court applied the incorrect standards in

granting the preliminary injunction. After careful review, we affirm.

____________________________________________

* Retired Senior Judge assigned to the Superior Court. J-A28013-16

The essential facts of this case are undisputed, as the central

argument involves the interpretation of a commercial lease and a

subsequent assignment of the lease. Kion’s corporate predecessor leased the

relevant property (“the Property”) from Appellees in 2002. The lease had a

ten year term, which expired on July 31, 2012.

It provided for two mechanisms to extend the term. First, the lease

would extend for one year automatically if neither party timely notified the

other of its intent to terminate the lease. This one-year term was classified

as an “Extension Term,” and continued with the terms and conditions

currently applicable under the lease.

The second option was classified as a “Renewal Term.” Under this

option, the lessee could elect to renew the lease for five years pursuant to a

timely notice. In order to exercise this option, the lessee could not have

previously defaulted under the lease.

Clariant purchased and merged with Kion’s predecessor in 2006.

Clariant therefore assumed Kion’s predecessor’s obligations under the lease.

In 2008, in a tripartite agreement, Clariant assigned the lease to Kion with

Appellees’ approval. Under the assignment, Clariant agreed to act as a

surety for Kion under the lease, guaranteeing not only rent payments, but

also “performance … of all other terms and conditions and covenants of the

Lease and all amendments or renewals thereof …”

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In February 2011, Kion defaulted on the lease, allegedly by failing to

make timely rent payments. Kion apparently never provided notice of its

intent to terminate the lease, as four separate Extension Terms followed the

end of the initial term in July 2012.

In January 2015, Appellees notified Clariant that Kion’s arrears totaled

approximately $1,500,000. Appellees requested that Clariant honor its

obligations under the assignment by paying off the arrears. Clariant

objected, arguing that it was not liable under the assignment for any

Extension Terms, only the initial term and any Renewal Terms.

It is apparent that, at some point, Kion abandoned the Property, as in

October 2015, Appellees reminded Kion of its obligation to maintain the

Property during the coming winter months. Specifically, Appellees called on

Kion to heat the Property. It is also apparent that Appellees were not

pleased with Kion’s response, if there was any.

On December 22, 2015, appellees filed the instant petition for

emergency injunction. Appellees asserted that Clariant, as guarantor of

Kion’s performance under the lease, was required to maintain and heat the

Property throughout the winter. After hearing oral argument from the

parties, the trial court, without a hearing, signed Appellees’ proposed order

and granted the preliminary injunction. This timely appeal followed.

Our scope of review of preliminary injunction matters is plenary. See

Warehime v. Warehime, 860 A.2d 41, 46, n. 7 (Pa. 2004). Our standard

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of review of a trial court’s order granting or denying a preliminary injunction

is “highly deferential”. Id. (citation omitted). This “highly deferential”

standard of review states that in reviewing the grant or denial of a

preliminary injunction, an appellate court is directed to “examine the record

to determine if there were any apparently reasonable grounds for the action

of the court below.” Id. (citation omitted).

A petitioner seeking a preliminary injunction must establish every one

of the following prerequisites:

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, 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 Mt., Inc., 828 A.2d

995, 1001 (Pa. 2003) (citations omitted).

Clariant’s first argument on appeal is that the trial court applied the

incorrect standard in evaluating the petition for preliminary injunction.

Clariant does not challenge the above stated Summit Towne standards.

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Rather, it asserts that the preliminary injunction in this case is mandatory,

as it requires the opposing party to take affirmative action. Clariant

distinguishes mandatory injunctions from prohibitory injunctions, which

prohibit the other party from acting. Clariant contends that a more stringent

standard is applied to mandatory injunctions.

Appellees, while arguing that the instant injunction was prohibitory in

nature, concede that a higher burden is placed on petitioners seeking a

mandatory injunction. See Appellees’ Brief, at 12. However, they contend

that the higher burden only applies to the fourth Summit Towne factor, a

showing of a clear right to relief.

We agree with Clariant that the injunction sought in this case was

mandatory in nature. However, we agree with appellees that the heightened

standard applicable to mandatory injunctions applies only to the fourth

Summit Towne factor. See, e.g., Greenmoor, Inc. v. Burchick Const.

Co., Inc., 908 A.2d 310, 313 (Pa. Super. 2006). We therefore proceed to

review the trial court’s order under the heightened standard applicable to

mandatory injunctions.

Clariant contends that the trial court failed to apply the “enhanced

evidentiary standard applicable to mandatory injunctions.” However, as

noted above, there was no hearing. Thus, there was no evidence to which to

apply the enhanced standard.

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A thorough review of the briefs of the parties and the record reveals

that there are no material factual disputes between the parties. The only

issue involved is the interpretation and construction of the two relevant

agreements. Thus, the only issue before the trial court was a pure issue of

law. See Humberston v. Chevron, U.S.A., Inc., 75 A.3d 504, 509 (Pa.

Super. 2013). The trial court’s decision to rule on the petition without a

hearing was reasonable - evidentiary burdens were not at issue.

Next, Clariant argues that the trial court erred in concluding that

Appellees had established a clear right to relief under the relevant

agreements. Clariant contends that under Paragraph 10 of the assignment

agreement, its obligations as surety only extended to obligations of “the

Lease and all amendments or renewals thereof …”. Clariant asserts that the

term “renewal” used in Paragraph 10 is to be given the particular meaning

that the original lease gave to the term “Renewal Term.”

We, much like the trial court before us, are therefore tasked with

interpreting the assignment agreement. Interpretation of a contract poses a

question of law and our review is plenary. See Charles D. Stein Revocable

Trust v. General Felt Industries, Inc., 749 A.2d 978, 980 (Pa. Super.

2000). “In construing a contract, the intention of the parties is paramount

and the court will adopt an interpretation which under all circumstances

ascribes the most reasonable, probable, and natural conduct of the parties,

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bearing in mind the objects manifestly to be accomplished.” Id. (citation

omitted).

To give effect to the intent of the parties, we must start with the

language used by the parties in the written contract. See Szymanski v.

Brace, 987 A.2d 717, 722 (Pa. Super. 2009). Generally, courts will not

imply a contract that differs from the one to which the parties explicitly

consented. See Kmart of Pennsylvania, L.P. v. M.D. Mall Associates,

LLC, 959 A.2d 939, 944 (Pa. Super. 2008). We are not to assume that the

language of the contract was chosen carelessly or in ignorance of its

meaning. See id.

Where the language of the contract is clear and unambiguous, a court

is required to give effect to that language. See Prudential Property and

Casualty Ins. Co. v. Sartno, 903 A.2d 1170, 1174 (2006). Contractual

language is ambiguous “if it is reasonably susceptible of different

constructions and capable of being understood in more than one sense.”

Hutchison v. Sunbeam Coal Co., 519 A.2d 385, 390 (Pa. 1986) (citation

omitted). “This is not a question to be resolved in a vacuum. Rather,

contractual terms are ambiguous if they are subject to more than one

reasonable interpretation when applied to a particular set of facts.” Madison

Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999)

(citations omitted).

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We conclude that Clariant’s attempt to conflate the term “renewal” in

the assignment agreement with the term “Renewal Term” in the original

lease is unavailing. While we endeavor to construe the two contracts in a

manner that recognizes that they are part of the course of dealing between

the two parties, we recognize that they are two separate agreements,

executed approximately five years apart in time. We therefore do not

assume that terms used in one must necessarily be given the same

construction in the other.

Furthermore, the term “renewal” in Paragraph 10 of the assignment

agreement is not capitalized in the manner that “Renewal Term” is

capitalized in the original lease. Just as importantly, “renewal” in the

assignment agreement does not include the word “term.” We therefore see

no reason that they must be construed identically. Rather, the natural and

reasonable construction of the term “renewal” in the assignment includes

both forms of extensions set forth in the original lease.

This conclusion is bolstered by the nature of Clariant’s suretyship in

the assignment agreement. It is “absolute[] and unconditional[].”

Assignment Agreement, at ¶ 10. Clariant waived any right to the benefit of

any law that required prior or timely enforcement of the terms of the lease.

See id. Clariant also waived “all notices whatsoever with respect to this

guaranty and with respect to the liabilities of [Kion] to Lessor under the

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Lease, including but not being limited to, notice of any default by [Kion]

under the Lease.” Id.

We therefore conclude that the trial court did not err in determining

that Appellees had established a clear right to mandatory injunctive relief.

The assignment agreement provides that Clariant is Kion’s guarantor for all

covenants under the lease, including the obligation to maintain the premises

properly pursuant to any extension of the lease.

Next, Clariant argues that the trial court erred in finding that the

injunction was necessary to prevent immediate and irreparable harm.

Clariant argues that Appellees had the right, under the lease, to enter the

Property to ensure it was properly maintained and heated through the

winter. Clariant thus argues that an injunction was unnecessary.

However, Clariant’s argument ignores the distinction between

Appellees undertaking this responsibility and Clariant undertaking this

responsibility. Certainly, Appellees had this right. But clearly they preferred

that Clariant honor its obligation to perform these acts under the assignment

agreement. While there is arguable merit to the contention that had they

exercised their right to enter the Property to ensure proper maintenance, the

only damages that Appellees would have suffered would have been

monetary damages, we refuse to conclude that the trial court erred in

determining that the primary responsibility for maintenance of the Property

rested squarely with Clariant.

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Similarly, Clariant contends that the injunction did not preserve the

status quo, but rather altered it. We disagree. As noted above, the

assignment agreement establishes that the primary responsibility for

maintaining the Property rests with Clariant. If the trial court had concluded

that Appellees were required to exercise their right to enter the Property to

maintain it despite Clariant’s primary responsibility, that would have altered

the status quo. However, the trial court enforced Clariant’s primary

responsibility to maintain the Property. It did not alter the status quo and

therefore did not err.

Clariant also argues that the injunction imposes a greater harm than

would have occurred in its absence. Once again, we conclude that Clariant’s

argument falls away given the most appropriate construction of the

assignment agreement. Under the agreement, Clariant was responsible for

maintaining the Property. Thus, the injunction, which requires Clariant to

maintain the Property, does not impose any harm. In contrast, failing to

issue the injunction would have subjected Appellees to the possible risk that

Clariant would later be found to be insolvent and thus unable to reimburse

them for the expense of maintaining the Property. This reasoning also

disposes of Clariant’s arguments that the injunction was not narrowly

tailored or in the public interest.

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As we conclude that the trial court did not err in construing the

assignment agreement, we affirm the order granting the preliminary

injunction.

Order affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 3/7/2017

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