Luria Brothers & Company, Inc., a Corporation v. Thomas R. Allen, Jr. And Morton J. Greene, Trading as Economy Industrial Properties, a Partnership

672 F.2d 347, 1982 U.S. App. LEXIS 20998
CourtCourt of Appeals for the Third Circuit
DecidedMarch 15, 1982
Docket81-1685
StatusPublished
Cited by41 cases

This text of 672 F.2d 347 (Luria Brothers & Company, Inc., a Corporation v. Thomas R. Allen, Jr. And Morton J. Greene, Trading as Economy Industrial Properties, a Partnership) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Luria Brothers & Company, Inc., a Corporation v. Thomas R. Allen, Jr. And Morton J. Greene, Trading as Economy Industrial Properties, a Partnership, 672 F.2d 347, 1982 U.S. App. LEXIS 20998 (3d Cir. 1982).

Opinion

OPINION OF THE COURT

ALDISERT, Circuit Judge.

Two major federal questions are presented in this appeal from the judgment of a district court in a diversity case: (1) under the teachings of Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978), and Parks v. "Mr. Ford”, 556 F.2d 132 (3d Cir. 1977) (in banc), does a private landlord’s posting of a notice of distraint under the Pennsylvania Landlord and Tenant Act constitute state action? and (2) may the losing party in an action brought under 42 U.S.C. § 1983 recover attorney’s fees under 42 U.S.C. § 1988 if it prevails on a related state claim? A landlord appeals from a judgment entered on a jury verdict awarding compensatory and punitive damages, and the district court’s subsequent award of attorney’s fees, to a former subtenant who brought an action to recover possession of personal property and damages for the landlord’s refusal to release that property. The plaintiff succeeded under the theories that defendants violated both federal constitutional law and the distraint provisions of the Pennsylvania Landlord and Tenant Act of 1951. We reverse as to the constitutional claim, affirm the judgment on the state claim, and reverse the award of attorney’s fees.

I.

Economy Industrial Properties, a partnership of appellants Thomas R. Allen, Jr. and Morton J. Greene, owned two parcels of industrial property in Ambridge, Pennsylvania. On June 13, 1975, Economy leased the parcels to Bollinger Corporation for a term of 10 years. At the time of the lease Allen was president of Bollinger and a member of its board of directors; Greene was chairman of the board of directors. Allen and his wife owned three per cent of the stock in Bollinger; Greene owned no Bollinger stock, but he was trustee of a pension trust owning 31% of Bollinger’s shares and he was custodian of another 23% of the stock on behalf of his children. On July 7,' 1975, Bollinger sublet a portion of this property to Luria Brothers & Co., an Ohio-based scrap metal company having no corporate ties to either Economy or Bollinger. 1 Luria used the subleased premises as a warehouse and fabricating plant.

On March 31, 1976, Bollinger filed a petition for an arrangement under Chapter XI of the Bankruptcy Act, and on the same day Carl L. Bigler was appointed receiver. Bollinger continued operations in the portion of the leased premises not sublet to Luria. The receiver initially continued the employment of Greene and Allen, but released both of them by mid-October 1976. Thus, the two principals of the landlord actively participated in the business of the tenant both before and after the tenant went into receivership. In late October 1976, the receiver terminated Bollinger’s operations at the leased premises, and by November 5, 1976, he had removed Bollinger’s inventory and equipment.

There is no suggestion that Luria failed to pay rent to Bollinger under the sublease; indeed, it paid the entire amount in advance. Bollinger was delinquent in its rent payments to Economy, however, and after the Chapter XI petition was filed, the receiver also failed to submit to Economy the full amount of the use and occupancy rent *350 he was required to pay for the months of April through October, 1976. On November 16, 1976, ihe receiver and his counsel, Robert Sable, met with Greene and Allen to discuss certain unresolved matters incident to the cessation of operations on the leased premises, including the payment of use and occupancy rent. In a letter dated November 23, 1976, Sable summarized what he believed the parties had agreed upon at the meeting. According to this letter, drafted for the signatures of the receiver, Allen, and Greene, the receiver was to pay use and occupancy rent of $7,945.70 for the period through October 31, 1976, and $500.00 for the period from November 1 through November 5, 1976.

Greene responded on November 26, enclosing a revised draft of Sable’s letter. Among the changes which appeared in this draft was a reference to November 5, 1976, as the “date Receiver surrendered the premises to Economy.” App. at 889. Allen also responded and in his suggested changes, he too noted: “Receiver will formally terminate [and] abandon lease on Nov. 5.” App. at 892. 2

On December 6, 1976, pursuant to the Pennsylvania Landlord and Tenant Act, Allen posted a notice of distraint, signed “Economy Industrial Properties By Thomas R. Allen, Jr., Partner,” on the office door of the subleased premises. Economy claimed that as of that date there was $293,145.70 rent due. 3 At the time of distraint, Luria had stored approximately 300 tons of steel plate on the premises; Greene padlocked the gates, preventing Luria from removing it. When Economy refused to allow Luria to remove the steel plate from the premises, Luria was forced to post a $90,000 bond to release it. Luria subsequently sued Economy on two theories: (1) that Economy’s use of the distraint procedure offended the due process clause of the fourteenth amendment and therefore gave rise to a claim under 42 U.S.C. § 1983, and (2) that it violated Pennsylvania law because the distraint had occurred at a time when the lease between Economy and Bollinger was no longer in effect. Economy counterclaimed for a decree that the distraint was proper and that the steel plate properly belonged to it.

Trial in the district court was bifurcated: Economy was found liable in a non-jury trial, see Luria Brothers & Co. v. Allen, 452 F.Supp. 732 (W.D.Pa.1978), and a jury subsequently fixed the amount of damages. In the verdict, Luria was awarded compensatory damages of $26,858.52, and punitive damages of $15,000 on the § 1983 claim and $15,000 on the state claim. 4 The court subsequently awarded Luria $52,660 attorney’s fees pursuant to 42 U.S.C. § 1988. 512 F.Supp. 596. The district court rejected Economy’s counterclaim and denied its motions for judgment n.o.v. and new trial.

On appeal, Economy argues that the § 1983 claim must fail because there was no state action; that the lease between Economy and Bollinger was still intact on the day of the distraint, and therefore that the procedure conformed to state law; and that because the federal action under § 1983 falls, the right to attorney’s fees under § 1988 falls with it.

II.

In attacking the § 1983 judgment, Economy relies on Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 *351 (1978), and Parks v. “Mr. Ford”, 556 F.2d 132 (3d Cir.

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672 F.2d 347, 1982 U.S. App. LEXIS 20998, Counsel Stack Legal Research, https://law.counselstack.com/opinion/luria-brothers-company-inc-a-corporation-v-thomas-r-allen-jr-and-ca3-1982.