2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 12-13-2005 

# 27th & G irard Ltd v

. M cD on ald s C orp P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 04-3839

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2005

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2005 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion "27th & G ir ar d Lt d v

. M cD on ald s C orp " (2005). 2005 D e cisio n s . P ape r 123. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2005/1231 NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N os . 04- 3839/ 3840 27 TH & G I RA RD LI M I TED PA RT N ER SH I P,

A p p e llan t, v. M CD ONAL D’ S CO RP OR AT I ON,

A ppel l ee.
O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 2: 03- C V - 3878) D i s tr i ctJ udge: H onor abl e Petr es e B . T ucker

A r gued N ovember14, 2005 B efore: R O T H , F U E N T E S , and B E C K E R , C i rcui tJudg es.

( Fi l ed: D ece m ber13, 2005) Scot tM . W al dm an ( A r gued) W o l f , Bl o c k , Sc h o r ra n d So l i s - Coh e n LLP 1650 A r ch Str eet , 22nd Fl oor Phi l adel phi a, PA 19103 A t t orneyforA ppel l ant2

C r ai g D . M i l l s ( A r gued) T hom as P. M anni ng Buch a na n I ng e r s ol l PC 1835 M arketSt r eet , 14th Fl oor Phi l adel phi a, PA 19103 A t t orney s forA ppel l ee

________________________ OPI NI ON O F THE COURT

________________________ FU E N T E S, C i r cui tJ udge. A ppel l ant , 27th & G i r ar d L i m i t ed Partner s hi p ( “G i r ar d”) , appea l s the dec i s i on of the U . S . D istri ct C o u rtfo r th e E astern D istri ct of P en n sy lvan ia gra n ti n g su m m ary jud g m en t i n fa v o r of

ap p ell ee M cD o n ald’s C o rpo rati o n (“M cD o n ald’s” ) on G ir ard ’s br eac h of contr actcl ai m . W e exe r ci s e de novo r evi ew overthi s cl ai m on appea l and a f f ir m th e D is tr ic t C o u rt ’s d e c is io n . I . Backg r ound O n M ay15, 2002, G i r ar d and M cD onal d’ s ent er ed i nt o a l eas e agr eement( the

“ L e a se ” ) f

o r a p ro p e rtylo c a ted a t 2 6 3 0 W e st G ira rd A v e n u e (th e “ P ro p e rty ” ) in Phi l adel phi a. M cD onal d’ s s i gned the 20- y earl eas e w i th the i nt ent i on of bui l di ng and o p e ra tin g a re sta u ra n t o n th e P ro p e rty . T h e L e a se o b lig a ted M c D o n a ld ’s “ [ t]o c o m p ly w i th al l governm ent al l aw s , rul es and r egul at i ons of anynatur e appl i cabl e t o the Pr emi s es ort o [M cD onal d’ s ] occupa ncy , us e, devel opm entoroper at i on of the Pr emi s es . ” M cD onal d’ s al s o agr eed t o “appl yforPer m i t s w i thoutunr eas onabl e del ay ” af t erthe3

e x e c u tio n o f

th e L e a se . T h e L e a se f u rth e r p ro v id e d th a t if M c D o n a ld ’s w a s u n a b le to o b tai n all n ec essa ryp erm it s w ith in 3 6 5 d ay s o f th e e x ec u ti o n o f th e L ea se, M cD o n ald’s coul d t erm i nat e the Leas e bydel i ver i ng w r i tt en not i ce t o G i r ar d. W ith in w e e k s o f

sig n in g th e L e a se , M c D o n a ld ’s a p p lied to th e P h ilad e lp h ia B ur eau of

L i cens es and I ns pect i ons ( “L& I ”) forperm i t s r el at i ng t o the cons truct i on of the res t aurant . T hese ap pli cat i on s— for the ri gh tt o erecta l arge M cD on al d’s s i gn and t o u se the p ropertyas an “E at -I n & T ake-O ut” r est aurant

— w ere denied on Ju ne 2 4, 20 02 , j ust o v e r tw o w e e k s a f

terth e yw e re f

iled . M c D o n a ld ’s im m e d iate lya p p e a led th is d eterm ination to the P h il ad elph ia Z o n ing B o ard o f A d justm en t ( the “ Z o n ing B o ard ”), w hi ch s chedul ed a he ar i ng forJ ul y31, 2002. Pur s uantt o Z oni ng B oar d rul es , not i ce of an appe al t o the Zoni ng B oar d “s hal l be p o ste d b yth e a p p lica n t o n e a c h stre e t f ro n tag e o f

th e p re m ise s w ith w h ich th e a p p e a l is conce rned, foratl eas ttw el ve ( 12) cons ecut i ve day s i m m edi at el ypr i ort o and i ncl udi ng the d ayo f th e h ea ri n g b ef o re the B o ard . ” T h e P rop ertyh as th ree fro n tage s: G ir ard A venue, T aneySt r eet , and 27th St r eet . T hus , i n or dert o be i n compl i ance w i th the Z oni ng B oar d’ s rul es , not i ce of the hea r i ng s houl d have be en pos t ed on al l thr ee f r ont ages e v e ry d a yf

ro m J u ly 2 0 th ro u g h J u ly 3 1 , th e d a te o f th e h e a ri n g . T he part i es do notdi s put e thatM cD onal d’ s pos t ed ade quat e not i ce a s of J ul y19, one dayear l y , nordo t heydi s put e thatas of J ul y22, one of the thr ee not i ces — the one on 27th St r eet

— w as no l ongeri n pl ace . A tthe hea r i ng, aft err evi ew i ng the evi denceT h e re lev a n t tex t re a d s: 1 T he Zoni ng B oar d of A dj us t m ent , havi ng hel d a hea r i ng i n the above num ber ed appe al , aft erpr operpubl i c not i ce ther eof, has deci ded thatthe req u est fo r (a) U S E V A R IA N C E (A ) & Z O N IN G V A R IA N C E (S ) & C E R T IFIC A T E (S) i s: GR ANT E D. T h e lette r re a d s in re lev a n t p a rt: 2 A tthe J ul y31, 2002 hear i ng, couns el forM cD onal d’ s pr es ent ed ph otographs i nd i cat i ng that the p ropertyw as post ed. S everal neighbo rs al so att ended the hea r i ng. T her efor e, the B oar d deni ed the r eques tfor r econs i der at i on and r ehea r i ng. 4 reg ard ing the p o sti n g o f n o ti ce an d p erm itti n g the a p p ea l t o g o fo rw ard , the Z o n ing B o ard gr ant ed the r eques t ed var i ance s . I n i t s N ot i ce of D eci s i on, dat ed A ugus t2, 2002, the Z o n in g B o a rd n o ted th a t M c D o n a ld ’s p o ste d p u b lic n o tice w a s “ p ro p e r.” S h o rtly 1 th e re a f ter , o n A u g u st 2 2 , 2 0 0 2 , M c D o n a ld ’s o b tain e d a p e rm it fro m L & I to c o n stru c t it s r es t aur anton t he Pr operty . A s of the L& I appr oval , s l i ght l ym or e than thr ee mont hs had pas s ed s i nce the exe cut i on of the Leas e. O n S e p te m b e r 3 , 2 0 0 2 , th e F a ir m o u n t C iv ic A s s o c ia tio n (“ F a ir m o u n t” ), a nei ghborhood gr oup oppos ed t o devel opm entof the Pr opertybyM cD onal d’ s , r eques t ed thatthe Zoni ng B oar d r econs i deri t s deci s i on t o gr antthe zoni ng var i ance s , al l egi ng insu ff ici en t no ti ce o n the 2 7 th S tr ee t fron tage . T h e Z o n ing B o ard rejected F airm o u n t’ s r eques ti n a l ett erdat ed Sept ember13, 2002. 2 Fai r m ountappea l ed the Zoni ng B oar d’ s det erm i nat i on t o the C our tof C om m on P lea s o f P h ilad e lp h ia C o u n ty , rely in g o n its in a d e q u a te p o stin g a rg u m e n t. B o th M c D o n a ld ’s a n d G ira rd w e re n a m e d a s d e f e n d a n ts, a n d th e tw o p a rties d e f e n d e d th e su itJ u d g e C a r a f i e l l o ’ s o r d e rr e a d s i n i t s e n t i r e ty: 3 AND NO W, th i s 8 th d a yo f M a y , 2 0 0 3 , i ti s h e r e b yOR DE RE D AND D E C R E E D , thatthi s cas e i s r emanded t o the Phi l adel phi a Zoni ng B oar d of A ppeal s forr ehea r i ng. T he pr opertys hal l be pos t ed pr oper l y , and not i ce gi ven t o al l i nt er es t ed part i es of the new dat e. 5 t ogetheragai ns tFai r m ount . C om m on Pl eas J udge M atthew D . C ar afi el l o i ni t i al l ys t ay ed co n stru cti o n o n the P rop erty , b u t he s u b seq u en tl ym o d ifi ed the s tayat M cD o n ald’s r eques tt o perm i tl i m i t ed cons truct i on notr el i antupon the r i ght s gr ant ed bythe c h a llen g e d v a ria n c e s. O n S e p tem b e r 2 4 , 2 0 0 2 , w h ile th e a p p e a l b e f o re Ju d g e C a ra f

iello w as p en d ing , M cD o n ald’s a n d G ir ard am en d ed the L ea se so as to rea ff irm M cD o n ald’s r i ghtt o t erm i nat e the Leas e and c l ar i fyM cD onal d’ s r es pons i bi l i t i es s houl d i tvoi d the agr eement . I t s r i ght s and r es pons i bi l i t i es thus cl ar i fi ed, M cD onal d’ s began c ons truct i on on the Pr opertyi n D ece m berof 2002. O n M ay8, 2003, w i thouthavi ng conduct ed an e vi dent i aryhear i ng, J udge C ar afi el l o or der ed thatthe ca s e be r emanded t o the Zoni ng B oar d forr ehea r i ng and that the Pr operty“s hal l be pos t ed pr oper l y , and not i ce gi ven t o al l i nt er es t ed part i es of the new dat e. ” O n M ay12, 2003, thr ee da y s befor e the one- y earanni ver s aryof the s i gni ng of the

3 L ease, M cD on al d’s s ent G i rar d a fo rm al N oti ce of T erm i nati on based o n the L ease p ro v isio n g ra n tin g M c D o n a ld ’s th a t rig h t if it w a s u n a b le to a ttain a ll n e c e ss a ryp e rm its w i thi n 365 day s of the Leas e exe cut i on dat e. O n M ay20, 2003, G i r ar d r ej ect ed M c D o n a ld ’s N o tic e o f

T e rm in a tio n a n d is s u e d a D e f a u lt a n d D e m a n d f

o r P e rf o rm a n c e . In re sp o n se , M c D o n a ld ’s r e a ss e rte d its rig h t to ter m in a te th e L e a se a n d o f f icia llyT he r ecor d r efl ect s that“[t ] he zoni ng not i ces w er e af fi xed t o a pl yw ood boar d and 4 att ache d t o a 4x4 w ooden pos t , w hi ch w as pl ace d i ns i de a c ement - fi l l ed fi ve- gal l on bucket . ” O ne of the s i gns w as pl ace d on eac h s tr eetfr ont age s o thattheycoul d be r ead f r o m th e s t r e e t , a n d a l l th r e e w e r e p r o t e c t e d b y a l o c k e d f e n c e s u rr o u n d i n g th e P r o p e r ty. 6 w i thdr ew i t s appl i cat i on t o t he Zoni ng B oar d forvar i ance s . O n J une 4, 2003, G i r ar d s ent M c D o n a ld ’s a n o tic e o f m o n e ta ry d e f

a u lt. G ir ard fil ed a o n e-c o u n t com p lai n t i n the D istri ct C o u rtall eg ing that M cD o n ald’s br eac hed i t s dut i es underthe Leas e. Shor t l yaft ercomm enci ng thi s cas e, G i r ar d m oved forpart i al s um m aryj udgm entand M cD onal d’ s cr os s - m oved fors um m aryj udgm ent . I n a m em o ran d u m an d o rde r da ted S ep tem b er 2 , 2 0 0 4 , the D istri ct C o u rtd en ied G ir ard ’s m ot i on and gr ant ed M cD onal d’ s cr os s - m ot i on. T hi s appea l fol l ow ed. I I . D i s cus s i on G ir ard arg u es th at th e D istri ct C o u rterred in d en y ing it s m o ti o n fo r sum m ary j u d g me n ta n d g r a n t i n g s u mm a r yj u d g me n tf o rM c Do n a l d ’ s . F o rth e r e a s o n s s t a t e d b e l o w, w e c o n c lu d e th a t th e D is tr ic t C o u rt p ro p e rl yg ra n te d s u m m a ry ju d g m e n t f o r M c D o n a ld ’s . G ira rd f irst c o n ten d s th a t th e f

a ilu re o f M c D o n a ld ’s to o b tain th e n e c e ss a ryp e rm its w ith in th e 3 6 5 -d a yp e rio d w a s th e re su lt o f its b re a c h o f

its o b lig a tio n u n d e r th e L e a se to compl yw i th al l governm ent al r egul at i ons , s peci fi cal l yPhi l adel phi a r egul at i ons r equi r i ng pr operpos t i ng of Zoni ng B oar d hear i ng not i ces . T he part i es do notdi s put e that M c D o n a ld ’s p o ste d n o tice a t th e P ro p e rtya c c o rd in g to Z o n in g B o a rd g u id e lin e s o n Ju ly 19, 2003, and thatas of J ul y22 one of the not i ces w as no l ongeri n pl ace . G i r ar d fur ther 4T h is c o n c lu sio n is c o n sis ten t w ith 2 P a . C .S .A . § 7 5 4 , w h ich in d ica tes th a t a 5 re m a n d is a p p ro p ri a te w h e re th e re c o rd c o m p ile d b e f o re th e lo c a l a g e n c yis in c o m p le te . 7 a rg u e s th a t M c D o n a ld ’s is c o llate ra llye sto p p e d f ro m c laim in g in th is p ro c e e d in g th a t it compl i ed w i th t he pos t i ng r equi r ementbeca us e a f i nal or derof the Phi l adel phi a C our tof Co mm o n P l e a s d e t e r mi n e d o th e r wi s e . F o rc o l l a t e r a l e s t o p p e l t o a p p l y , Gi r a r d mu s ts h o w, among ot herthi ngs , thatJ udge C ar afi el l o’ s M ay8, 2003 or derw as a fi nal j udgm enton the mer i t s — thati s , a fi nal det erm i nat i on of w hetherM cD onal d’ s pr oper l ypos t ed not i ce atthe Pr operty . H ow ever , as the D i s tr i ctC our texpl ai ned, thator der“s t at es s i m pl ythat th e c a se is re m a n d e d to th e Z o n in g B o a rd f o r re h e a rin g w ith o u t m a k in g a f in d in g o f f a u lt orr eac hi ng the mer i t s of the ca s e. ” T hus , M cD onal d’ s i s notcol l at er al l yes t opped fr om 5
ar gui ng thati tcompl i ed w i th t he Zoni ng B oar d’ s pos t i ng r equi r ement , and the D i s tr i ct C o u rt p ro p e rlyf

o u n d th a t M c D o n a ld ’s d id n o t b re a c h its L e a se o b lig a tio n to c o m p lyw ith al l go vernm ental regul at i on s. G ira rd n e x t ar g u e s th a t M c D o n a ld ’s b re a c h e d its o b lig a tio n u n d e r th e L e a se to a p p lyf o r a ll p e rm its a n d v a ria n c e s “ w ith o u t u n re a so n a b le d e lay. ” A c c o rd in g to G ira rd , it w as u n rea so n ab le fo r M cD o n ald’s to lit igate the p o sti n g issue ; i n stead , o n ce M cD o n ald’s k n e w th a t th e re w a s e v id e n c e o f p o ss ib lyin a d e q u a te n o tice a s to th e Ju lyp o stin g , it s houl d have e i therpr oduced e vi dence t o the contr aryors oughtt o r es chedul e the Zoni ng B o a rd h e a rin g so th a t itc o u ld re p o st. T h e D istric t C o u rt su m m e d u p th e f law s o f th is argum ent as foll ow s:8

T h e p ro b le m w ith [ G ir a rd ’s ] a rg u m e n t is th a t h in d s ig h t is 2 0 /2 0 . . . . [G i r ar d] s i gned off

on M cD onal d’ s deci s i on t o l i t i gat e and w as a named part yi n t he l i t i gat i on. I f [G i r ar d] thoughtthatl i t i gat i ng befor e the C our tof C o m m o n P lea s w a s u n re a so n a b le, th e L e a se A g re e m e n t p ro v id e s th a t itd id nothave t o j oi n as a partyt o the l i t i gat i on. W i thout[G i r ar d] as a named part yi n t he l i t i gat i on, [M cD onal d’ s ] w oul d have be en unabl e t o pr ocee d and w oul d have be en for ced t o pr epar e foranotherhear i ng befor e the Z o n in g B o a rd . T o c o m e b e f o re th is C o u rt a f

ter a n u n sa tisf

a c to ryru lin g in the C our tof C om m on Pl eas and ar gue thatthe l i t i gat i on s houl d have ne ver t aken place w ou l d b e al l ow i ng [G i rar d] t o h ave itbo th w ay s. I n addi t i on, as the D i s tr i ctC our tnot ed, “A l l evi dence s ubm i t t ed s ugges t s that M c D o n a ld ’s d id e v e ry th in g in its p o w e r to o b tain th e n e c e ss a ryp e rm its to b e g in c o n stru c tio n o n th e re sta u ra n t.” A c c o rd in g ly , fo r th e re a so n s s tate d b yth e D istric t C o u rt, w e agr ee thatM cD onal d’ s di d notvi ol at e the “unr eas onabl e del ay ” cl aus e of the Leas e. Fi nal l y , G i r ar d cont ends thatata mi ni m um the D i s tr i ctC our terr ed i n gr ant i ng s um m aryj udgm enti n favorof M cD onal d’ s beca us e i tfai l ed t o vi ew the fa ct s i n the l i ght m os tfavor abl e t o G i r ar d and t o m ake a l l r eas onabl e i nfer ence s i n G i r ar d’ s favor . Put s i m pl y , G i r ar d s t at es thatfur therpr ocee di ngs ar e nec es s aryt o det erm i ne w hether M c D o n a ld ’s f

a ile d to a b id e b yth e L e a s e a n d th e re le v a n t z o n in g a n d n o tic e re q u ir e m e n ts . Forthe r eas ons s t at ed above , w e r ej ectthi s ar gum entand ther efor e af fi r m the D i s tr i ct C ou rt ’s dis m i ssal of G i rar d’s cl ai m againstM cD on al d’s. I I I . C oncl usi on W e have cons i der ed al l of the ar gum ent s advanc ed bythe part i es and conc l ude that n o f u rth e r d isc u ss io n is n e c e ss a ry . A c c o rd in g ly , the ju d g m e n t o f th e D istric t C o u rt w ill be af fi r m ed.