J-A03022-23

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

FEDERAL REALTY INVESTMENT 

TRUST, F/K/A FEDERAL REALTY OP, 

L.P.

v.

RAO 8, INC., RADHA M. RAO AND 

MITAL RAO 

Appellants

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 IN THE SUPERIOR COURT OF

 PENNSYLVANIA

 No. 2156 EDA 2022

Appeal from the Order Entered July 25, 2022

In the Court of Common Pleas of Philadelphia County 

Civil Division at No(s): 220302719

BEFORE: KING, J., SULLIVAN, J., and STEVENS, P.J.E.*

MEMORANDUM BY SULLIVAN, J.: FILED JULY 19, 2023

Rao 8, Inc., Radha M. Rao, and Mital Rao (collectively “Appellants”) 

appeal from the denial of their petition to open a confessed judgment obtained 

by Federal Realty Investment Trust, f/k/a Federal Realty OP, L.P. (hereinafter 

“Landlord”). We affirm. 

The relevant factual and procedural history underlying this matter is not 

in dispute. In 2010, Rao 8, Inc. (hereinafter “Tenant”) assumed a commercial 

lease agreement (“Lease”) for premises located in a shopping center in 

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* Former Justice specially assigned to the Superior Court.
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Northeast Philadelphia.1 See Lease, 1/27/10; see also Lease Assignment 

and Assumption Agreement, 9/23/10. The Lease permitted Tenant to operate 

a Dunkin Donuts on the premises for a term of ten years, ending on September 

30, 2020. The Lease provided Tenant with an option to extend the Lease term 

for an additional five years if Tenant provided Landlord with “Notice” of its

intent to exercise the option “at least twelve (12) months prior to the 

expiration of the original Term” (i.e., not later than September 30, 2019). 

See Lease, 1/27/10, at Addendum V. The Lease further specified that any 

“Notice” was required to be “in writing . . . and served by (i) nationally 

recognized overnight courier or (ii) registered or certified mail return receipt 

requested.” See id. at § 17.01. The Lease additionally provided that, if 

Tenant exercised the option to extend the Lease until 2025, the monthly rent 

for the premises would increase incrementally over the five-year option period

according to a specified fee schedule. See id. at Addendum V. However, if 

Tenant did not timely exercise the option to extend, Tenant’s right to exercise 

the option would expire and the Lease would terminate at the end of the 

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1 The original Lease was entered on January 27, 2010, between Landlord and 

Sai Sidhdhy Corp. However, on September 23, 2010, the Lease was assigned 

to Rao 8, Inc., which assumed all responsibilities under the Lease. In 

connection with the assignment, Radha M. Rao and Mital Rao (“Guarantors “) 

agreed to assume the guaranty agreement (“Guaranty”) executed in 

connection with the Lease. See Guaranty, 1/27/10; see also Lease 

Assignment and Assumption Agreement, 9/23/10. 
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original term. See id. (providing that “[i]f any such option is not timely 

exercised, Tenant’s right to extend shall expire and the Lease shall terminate 

at the end of the original Term”). The Lease further provided that Tenant

must vacate the premises upon the expiration of the Lease term (i.e., by

September 30, 2020), and that any holdover occupancy of the premises would 

become a tenancy at will subject to a rental rate of one and one-half times 

the daily rent in the last year of the Lease term. Id. at §§ 3.01 (providing

that the “Lease shall terminate on the Termination Date without the necessity

of Notice from either Landlord or tenant. Upon the Termination Date, Tenant 

shall quit and surrender to Landlord . . . the Leased Premises . . ..”); 3.02

(providing that “[i]f Tenant fails to vacate the Leased Premises on the 

Termination Date, . . . [o]ccupancy after the Termination Date (“Holdover 

Occupancy”) shall be a tenancy at will, and shall be subject to . . . (“Holdover 

Minimum Rent”) [which, for each day that Tenant holds over,] shall equal one 

and one-half (1-1/2 times the daily Minimum Rent payable in the last Lease 

Year”).

2

 

On September 13, 2019, Tenant sent Landlord, via regular mail, a letter 

indicating Tenant’s intent to exercise the option to extend the Lease. Tenant 

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2 Pursuant to the Lease, the monthly rent due by Tenant in the last year of 

the Lease term was a base cost of $9,300, plus additional associated costs, 

for a total of $10,016.65. See Lease, 1/27/10, at § 1.01(F), (G), (H), (I).
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also indicated in the letter that it wished to enter negotiations with Landlord 

to extend the Lease term beyond the five-year option period (i.e., for the 

period after the extension ended in 2025) because it wanted to undertake 

renovations on the premises. Neither Tenant nor Landlord mentioned the 

September 2019 letter in subsequent communications, nor did they discuss 

any extension of the Lease.3 

In January 2020, Landlord sent Tenant a proposal for a lease renewal 

commencing on October 1, 2020. The proposal required the acceptance and 

signature of Tenant, and expressly stated that the proposal was only valid for 

ten business days. Tenant did not accept the proposal for a lease renewal. 

On September 30, 2020, the Lease term expired. Although Landlord and 

Tenant continued to negotiate in the hopes of entering a lease renewal, no 

agreement was ever reached, and no lease renewal was ever executed by the 

parties. Tenant did not vacate the premises.

4

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3

In their brief, Appellants conflate a lease “extension” with a lease “renewal.” 

Whereas the Lease provided Tenant with an option to unilaterally “extend” the 

Lease for an additional five-year term subject to a rent schedule specified in 

the Lease (provided that the option was exercised by Tenant in the manner 

and time-period set forth in the Lease, and that Tenant was not in default), a 

Lease “renewal” would require the parties to negotiate and execute an entirely 

new lease renewal agreement.

4 Over the course of the ten-year Lease term, Tenant paid its monthly rent 

obligations using an automatic payment system whereby Landlord 

electronically deducted payments each month from Tenant’s bank account. 

(Footnote Continued Next Page)
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In November 2021, Landlord sent Tenant a notice of termination, 

indicating that Tenant was in default under the Lease for failure to vacate the 

premises, and demanded that Tenant surrender the premises by December 

31, 2021. Landlord also requested payment of past due rent and utility costs

and reserved its right to collect holdover rent pursuant to the terms of the 

Lease. In December 2021, Landlord sent a second notice of termination and 

third notice of termination to Tenant. In response, Tenant paid Landlord past 

due rent and utility costs, but failed to pay holdover rent amounts or vacate 

the premises. 

In March 2022, pursuant to the terms of the Lease and Guaranty, 

Landlord filed a complaint in confession of judgment against Tenant and 

Guarantors seeking recovery of the premises as well as unpaid holdover rent, 

interest, and attorney’s fees in the amount of $101,553.27. See Lease, 

1/27/10, at § 16.02(D)(iii); Guaranty, 1/27/10, at W. The Lease and 

Guaranty also provided authorization for an attorney to appear in the action 

on behalf of Tenant and Guarantors and to confess judgment in favor of 

Landlord for these amounts. Id. In accordance with such terms, Tenant and 

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After the Lease term expired, Landlord continued to electronically deduct 

monthly payments from Tenant’s bank account in the same amount as was 

due in the final year of the Lease term. 
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Guarantors confessed judgment in ejectment and for damages in the amount 

of $101,553.27. 

In April 2022, Tenant and Guarantors filed a petition to open the 

judgment. Landlord opposed the petition. On July 25, 2022, the trial court 

entered an order denying the petition to open and ordering Tenant to vacate 

the premises. Tenant and Guarantors filed a motion for reconsideration which 

the trial court denied on August 15, 2022. Tenant and Guarantors filed a 

timely notice of appeal.5 

Appellants raise the following issue for our review: “Whether the trial 

court erred in failing to apply the directed verdict standard to Appellants’

petition to open confessed judgment by failing to view all evidence in the light 

most favorable to Appellants and reject all adverse inferences of [Landlord]?” 

Appellants’ Brief at 6 (unnecessary capitalization omitted).

In reviewing a trial court’s order denying a petition to open a confessed 

judgment, we employ the following standard of review: “[a] petition to open 

judgment is an appeal to the equitable powers of the court. As such[,] it is 

committed to the sound discretion of the hearing court and will not be 

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5 The trial court did not order Appellants to file a Pa.R.A.P. 1925(b) concise 

statement of errors complained of on appeal. In lieu of authoring a Rule 

1925(a) opinion, the trial court indicated that the reasons for its order denying 

Appellants’ petition to open can be found in the trial court’s July 25, 2022 

opinion. See Pa.R.A.P. 1925(a)(1).
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disturbed absent a manifest abuse of discretion.” PNC Bank v. Kerr, 802 

A.2d 634, 638 (Pa. Super. 2002) (citation omitted). 

A court should open a confessed judgment if:

the petitioner promptly presents evidence on a petition to open

which in a jury trial would require that the issues be submitted to

the jury. A petitioner must offer clear, direct, precise and

believable evidence of a meritorious defense, sufficient to raise a

jury question. In determining whether sufficient evidence has

been presented, [courts should] employ the same standard as in

a directed verdict: [the trial court must] view all the evidence in

the light most favorable to the petitioner and accept as true all

evidence and proper inferences therefrom supporting the defense

while . . . reject[ing] adverse allegations of the party obtaining

the judgment.

Stahl Oil Co., Inc. v. Helsel, 860 A.2d 508, 512 (Pa. Super. 2004) (internal

citations omitted).

A lease is a contract and is to be interpreted according to contract 

principles. See Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 389 (Pa.

1986). The intent of the parties is to be ascertained from the document itself 

when the terms are clear and unambiguous. Id. at 390. The law will not 

imply a different contract than that which the parties have expressly adopted. 

Id. at 388. 

Appellants contend that the trial court abused its discretion by finding 

in favor of Landlord on the questions of whether it received the September 

2019 letter, and whether that letter sufficiently provided notice to Landlord 

that Tenant intended to exercise its option to extend the Lease. Appellants 
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argue that, in resolving these questions, the trial court failed to view the 

evidence in the light most favorable to Tenant. Specifically, Appellants 

contend that, although the trial court acknowledged that Tenant sent Landlord 

the September 2019 letter, the court credited Landlord’s claim that it did not 

receive the letter. Appellants claim that Landlord’s conduct in negotiating 

issues raised in the September 2019 letter indicate that Landlord actually 

received the letter. Appellants maintain that, if the trial court had made 

reasonable inferences in favor of Tenant, the court would have inferred from 

the ongoing discussions regarding a Lease renewal that a lease extension was 

already agreed upon by the parties. 

Appellants additionally maintain that, although the September 2019 

letter was sent by regular mail and not by a recognized overnight courier, the 

manner of service mandated by the Lease “constituted nothing more than a 

technical obligation on Tenant, which is insufficient to be considered a material 

breach of the [L]ease. . ..” Appellants’ Brief at 16 (unnecessary capitalization 

omitted). 

Finally, Appellants contend that the trial court should have inferred that 

“Tenant was merely a tenant in its extended lease period, and not a ‘holdover 

tenant’ that was required to pay holdover tenant rent.” Appellants’ Brief at 

13. Appellants point to the fact that, after the Lease term expired in 

September 2020, Landlord continued to deduct from Tenant’s bank account
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the amount of monthly rent under the expired Lease, rather than the amount 

of holdover rent provided by the Lease. Appellants argue that the trial court 

should have inferred from these withdrawals that Landlord did not deem 

Tenant to be a holdover tenant. Appellants further claim that, based on 

Landlord’s failure to send any default notice to Tenant for more than one year 

after the Lease term expired, the trial court should have inferred that Landlord 

accepted Tenant’s exercise of its Lease renewal option.

The trial court explained the basis for its denial of the petition to open

the confessed judgment, as follows:

Tenant argues that the confessed judgment should be 

opened because it exercised the option to extend the [L]ease term 

by letter dated September 13, 2019. While Tenant did send a 

letter notifying Landlord of its intent to exercise the option in the 

Lease, the notice was not sent as required by the Lease 

agreement, that is by nationally recognized overnight courier, or 

registered or certified mail return receipt requested. . . . [T]he 

evidence demonstrates that the option to extend was never 

exercised. Landlord sent Tenant a Lease renewal proposal in 

January 2020, which required Tenant’s acceptance. If the option 

to [extend] was [properly exercised] . . ., there would have been 

no need for Landlord to send Tenant a proposal for a Lease 

renewal for the premises with an acceptance requirement. 

Similarly, if the option to extend the Lease was properly exercised 

. . ., there would have been no need to engage in negotiations for 

a new lease. Unfortunately, while the parties tried to reach an 

agreement, there were too many challenges[,] as acknowledged 

by Tenant on September 24, 2020: 

. . . we also appreciate your help in trying to see if a 

deal can be made, but we also realize that this is not 

an easy task. If you feel that this is a difficult request

to accomplish, please let us know as currently, we 

have marked this location for closing by the end of the 
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current term. We don’t want to change all our 

subsequent plans for closure, as there are many steps 

that have to be accomplished and require a great deal 

of planning. . . ..

The fact that Tenant continued to pay rent and Landlord 

continued to accept rental payments from Tenant after the Lease 

agreement terminated does not evidence an extension of the 

existing [L]ease or the creation of a new lease. After the Lease 

for the premises terminated, Tenant became a holdover tenant by 

operation of § 3.02 of the Lease agreement and Landlord was 

entitled to collect [holdover] rent. 

. . . Tenant, per the Lease agreement, was required to pay 

Landlord “daily minimum rent for each day that Tenant holds over 

(‘Holdover Minimum Rent’)” in an amount equal to one and onehalf (1-1/2) times the daily Minimum Rent payable in the last 

Lease year. Tenant only paid sums equivalent to minimum rent it 

paid to Landlord during the Lease term. Tenant did not pay any 

Holdover Minimum Rent and therefore is in default.

Trial Court Opinion, 7/25/22, at 6-8 (footnotes and unnecessary capitalization 

omitted).

Based on our review, we discern no manifest abuse of discretion by the 

trial court in denying the petition to open. Although Appellants petition was 

promptly filed, they failed to present the trial court with sufficient evidence to 

raise a jury question as to whether Tenant properly exercised its option to 

extend the Lease. Appellants conceded that Tenant never sent any notice 

purporting to exercise the option to extend which complied with the strict 

notice requirements specified in the Lease. Thus, even if the trial court had 

inferred that Landlord received the September 2019 letter, the letter was 

undisputedly non-compliant with the express notice provisions of the Lease 
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and, therefore, insufficient to invoke the option to extend.6 See Hutchison, 

519 A.2d at 388 (holding that, where the parties have expressly adopted a

contract, the law will not imply a different one). Accordingly, having failed to 

properly exercise the option to extend the Lease, Tenant’s right to exercise its

option to extend expired on October 1, 2019. See Lease, 1/27/10, at 

Addendum V. 

Moreover, the fact that the trial court credited Tenant’s assertion that it 

sent the September 2019 letter does not warrant a corresponding inference 

that Landlord received the letter. Indeed, the trial court determined that 

Appellants failed to proffer any evidence that the September 2019 letter was 

received by Landlord. As aptly noted by the trial court, if Tenant had properly 

exercised its option to extend the Lease for a five-year term ending in 

September 2025, there would have been no need for Landlord to send Tenant 

a proposal in January 2020 for a lease renewal commencing on October 1, 

2020. Nor would there have been any reason for Tenant to have engaged in 

any negotiations for a proposed lease renewal commencing on October 1, 

2020 if, in fact, Tenant had properly exercised its option to extend the Lease 

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6 Landlord also maintains that, because Tenant was in default at the time it 

purportedly sent the September 13, 2019 letter, Tenant was unable to 

exercise its option to extend. See Landlord’s Brief at 3-4. However, Landlord 

has failed to develop this argument or explain how Tenant was in default in 

September 2019. 
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to 2025. Nor does the fact that the September 2019 letter expressed Tenant’s

interest in discussing a lease renewal beyond the option period (i.e., after 

2025) warrant an inference that the parties’ discussions regarding a lease 

renewal commencing on October 1, 2020, indicate that Landlord received the 

September 2019 letter.

Further, the fact that Landlord did not immediately issue a default or 

termination notice and continued to collect rent from Tenant’s bank account 

after the Lease term expired, does not, without more, constitute a renewal of 

the Lease. See Clairton Corp. v. Geo-Con, Inc., 635 A.2d 1058, 1060 (Pa. 

Super. 1993) (holding that “mere continuance in possession and payment of 

rent does not of itself constitute a renewal of the lease with all its provisions”) 

(emphasis in original). Indeed, where a tenant remains in possession of realty 

after the expiration of the lease term, and during a period in which the tenant

and the landlord are negotiating for a new lease, it is uniformly held that the 

landlord’s acceptance of rent for this period is not a manifestation of the 

landlord’s consent to an extension or renewal of the lease. See id. (citing 45 

A.L.R.2d 841, § 6). Thus, the fact that Landlord did not immediately issue a 

default or termination notice7 and continued to collect rent from Tenant after 

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7 Moreover, the Lease specifically provided that the Lease term would expire

on the termination date without notice to Tenant. See Lease, 1/27/10, at 

§ 3.01 (providing that “[t]his lease shall terminate on the Termination Date 

without the necessity of Notice from either Landlord or Tenant”).
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the lease term expired does not evidence either that the Lease was extended 

or that the Lease was renewed.

Finally, Appellants concede that no lease renewal was ever executed by 

the parties. Therefore, the clear and unambiguous terms of the Lease, which 

Tenant assumed, and the Guaranty, which Guarantors assumed, control the 

rights and obligations of the respective parties and require that Tenant and 

Guarantors pay holdover rent and related costs as set forth in the confessed 

judgment. See Hutchison, 519 A.2d at 390. As we discern no manifest 

abuse of discretion by the trial court in determining that Appellants failed to 

present evidence sufficient to create a jury question on any issue, we affirm 

the trial court’s order denying Appellants’ petition to open the confessed 

judgment.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 7/19/2023