Kohl v. PNC Bank National Ass'n

863 A.2d 23, 2004 Pa. Super. 414, 2004 Pa. Super. LEXIS 3905
CourtSuperior Court of Pennsylvania
DecidedOctober 28, 2004
StatusPublished
Cited by5 cases

This text of 863 A.2d 23 (Kohl v. PNC Bank National Ass'n) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kohl v. PNC Bank National Ass'n, 863 A.2d 23, 2004 Pa. Super. 414, 2004 Pa. Super. LEXIS 3905 (Pa. Ct. App. 2004).

Opinions

TODD, J.

¶ 1 J. Carl Kohl appeals the order entering judgment on the verdict following a nonjury trial in this ejectment and breach of lease action. In this case, we are asked to determine whether litigation which impairs a tenant’s possessory interests in a leasehold, brought in bad faith by a landlord, constitutes a breach of the implied covenant of quiet enjoyment in the lease. While we conclude that such litigation may constitute a breach of this covenant, we find there was insufficient evidence to support a finding of bad faith in this case. We affirm in part, reverse in part, and remand.

[25]*25¶ 2 Kohl is the fee simple owner of a 2.3-acre property in Monroe County, Pennsylvania. The land is improved by a building, originally constructed as a racquetball court. In 1979, Kohl entered into a “Ground Lease Agreement” for that property with Burke and Kohl, Inc., a Pennsylvania corporation. Following a series of intervening assignments, the lease was assigned to nominal Appellees William C. Schmidt and Marilyn F. Schmidt. In order to make commercial building improvements, in September 1990, the Schmidts obtained a loan for $800,000 from First Eastern Bank, now Appellee PNC Bank National Association1 (the “Bank”), secured by a mortgage on the leasehold interest. In addition, Kohl, the Schmidts, and the Bank all signed a “Nondisturbance and Attornment Agreement,” which further secured the Bank’s rights.

¶ 3 Following the Schmidts’ default on the loan, on October 8, 1992, the Bank confessed judgment in ejectment against the Schmidts and took possession of the leasehold premises on that date. The Bank then filed a mortgage foreclosure action against the Schmidts, and, on January 15, 1993, a default judgment was entered in favor of the Bank and against the Schmidts. In addition to defaulting on the loan, the Schmidts were delinquent on property tax payments required under the lease. Around the time of the Bank’s foreclosure and ejectment actions, Kohl filed his own complaint against the Schmidts, citing their failure to pay real estate taxes and seeking termination of the lease, damages for the unpaid taxes, and possession. Default judgment was entered in favor of Kohl and against the Schmidts in that action on January 8,1993.

¶ 4 Later that year, on October 27, 1993, Kohl filed a declaratory judgment action seeking a determination that the Bank had no interest in the leasehold, asserting that Kohl had successfully terminated the lease prior to the Bank’s succession to the interests of the Schmidts. The basis for this suit was Kohl’s contention that the Schmidts’ failure to pay taxes on the premises automatically terminated the lease prior to the Bank’s succession. The trial court disagreed, however, and ultimately this Court held that the lease did not provide for automatic termination for a failure to pay taxes, and that the Bank’s rights nonetheless were protected under the Nondisturbance and Attornment Agreement. See Kohl v. First Eastern Bank, No. 1127 Philadelphia 1996, unpublished memorandum (Pa.Super. filed Dec. 30, 1996) (hereinafter “Kohl I”). Kohl’s appeals were exhausted on July 11, 1997.

¶ 5 On September 25, 1998, Kohl commenced the present action in ejectment for the Bank’s failure to pay property taxes and for its abandonment of the property (Count I), and breach of contract for the Bank’s failure to pay property taxes (Count II). In conjunction with this action, Kohl filed a lis pendens against the Bank’s interest in the 2.3-acre parcel of land and the improvements thereon. The Bank counterclaimed for, inter alia, Kohl’s breach of the lease’s implied covenant of quiet enjoyment, citing Kohl’s ongoing litigation concerning the leasehold, including an assertion that it was relieved of any obligation under the lease due to Kohl’s breach of the covenant. On these points, the trial court noted:

The [Bank], after succeeding to the interest of its predecessor, has been unable to market the leasehold premises as a result of the litigation commenced by [Kohl], including the filing of the lis pendens.... The improvement on the [26]*26leasehold premises has deteriorated: been subject to vandalism, and is no longer secure from entry of vandals or other persons. The premises has not been utilized in any way for approximately seven years. The leased premises as presently constituted has no rental value. The real estate taxes on the leasehold premises, identified as Tax No. 17/112536, have not been paid for the years 1993 to date. The tax delinquency through the end of 2001 amounts to $262,011.78. The leasehold premises was scheduled for a tax sale. Although this Court denied landowner’s Motion to preclude the sale (6308 Civil 1998), no bid was received for the property at the time of the sale. Therefore, a judicial sale of the premises has been scheduled for April 16, 2003.

(Trial Court Opinion, 4/16/03, at 4-5 (citations omitted).)

¶ 6 Following a bench trial, the court issued a verdict dated December 4, 2002 finding: (1) in favor of Kohl with respect to his ejectment claim; (2) in favor of the Bank with respect to Kohl’s breach of contract claim; and (3) in favor of Kohl with respect to the Bank’s counterclaim for breach of the implied covenant of quiet enjoyment.2 These findings flowed from the trial court’s determination that the Bank had abandoned the property, and therefore Kohl was entitled to judgment in his ejectment action; however, the court further determined that, as Kohl had breached the covenant of quiet enjoyment through “incessant” bad faith litigation concerning rights to the leasehold, no award of damages was due on Kohl’s breach of contract claim.3 Kohl’s post-trial motions were denied, and this timely appeal followed.

¶ 7 Kohl now presents the following questions for our review:

1) Did the court below err in failing to award damages to [Kohl] in the amount of unpaid real estate taxes based upon [the Bank’s] breach of contract where the uncontroverted evidence and the law of the case demonstrates that the bank was a successor in interest to the prior tenant under the lease and the case requires the tenant to pay real estate taxes?
2) Whether the trial court’s finding that [Kohl] breached the covenant of [quiet enjoyment] was legally proper and supported by competent evidence?
3) Whether the alleged breach of the covenant of quiet enjoyment on the part of [Kohl] justified [the Bank’s] failure to pay the real estate taxes on the subject property for all of the years that it was a tenant in possession?
4) Whether the trial court erred in failing to award damages for the neglect and waste committed on the property since the bank became tenant?
5) Whether the trial court improperly excluded evidence regarding [Kohl’s] damages, specifically evidence regarding the harm to his fee interest [27]*27in the entire parcel, not just the parcel subject to the Ground Lease?

(Appellant’s Brief at 5.)

¶ 8 Our standard of review in nonjury cases is well-established and is limited to:

a determination of whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in the application of law.

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Cite This Page — Counsel Stack

Bluebook (online)
863 A.2d 23, 2004 Pa. Super. 414, 2004 Pa. Super. LEXIS 3905, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kohl-v-pnc-bank-national-assn-pasuperct-2004.