Court Opinion

ID: 4189578
Source: CourtListenerOpinion
Date Created: 2017-07-26 17:14:08.249674+00
Date Added: 2024-06-11T14:40:33.835228
License: Public Domain

J-A01013-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

PENN-AIRE AVIATION, INC.                         IN THE SUPERIOR COURT OF
                                                       PENNSYLVANIA
                        v.

ADAPT APPALACHIA, LLC.
                                                     No. 565 WDA 2016
                        Appellant

              Appeal from the Judgment Entered April 12, 2016
              In the Court of Common Pleas of Venango County
                     Civil Division at No(s): 2012 - 01252

BEFORE: BOWES, OLSON AND STRASSBURGER,* JJ.

MEMORANDUM BY BOWES, J.:                               FILED JULY 26, 2017

      Adapt Appalachia, LLC (“Adapt”) appeals from the April 12, 2016

judgment entered in favor of Penn-Aire Aviation, Inc. (“Penn-Aire”).     After

careful review, we affirm in part, reverse in part, and remand for a new trial

limited to damages.

      In early April 2012, Adapt’s managing member, Lorenzo Cola,

contacted Bruce Taylor, the President of Penn-Aire, about leasing space in

the Hi-Tone Building located at the intersection of Otter and 12 th Streets in

Franklin, Venango County, Pennsylvania.         The parties met, and shortly

thereafter, Mr. Taylor hired Ron Matthews of Matthews Construction and

Painting to clean and renovate the building as Mr. Taylor had a “prospective

tenant.” N.T. Non-Jury Trial, 8/11/15, at 73.

      The record reflects that the premises had been occupied by a dry

cleaner until November 2011.     The space had no heat or air conditioning.

* Retired Senior Judge assigned to the Superior Court.
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According to Mr. Matthews, the existing walls would have to be demolished

and replaced to accommodate any tenant. In addition, although there was a

bathroom on the premises, new plumbing and fixtures were required. Thus,

a build out of the space was contemplated for any tenant.

       After four or five meetings with Mr. Cola, Mr. Taylor sent him a letter

dated April 30, 2012, proposing a three-year, triple net lease,1 starting July

1, 2012, with an option to renew for two years, and a monthly rent of

$3,000. Exhibit 10. Mr. Matthews met with Mr. Cola prior to applying for a

building permit on May 1, 2012. He subsequently met with Mr. Cola and/or

Mr. Ream, another member of Adapt, eight or ten times over the next few

weeks to discuss Adapt’s requirements for electrical, computer, and air

conditioning.     The contractor relayed that Mr. Cola requested soundproof

windows, a level interior cement floor, and a new walk and ramp, all of

which were installed after Mr. Taylor approved the expenditures. Id. at 78.

Mr. Matthews’ work was directed by Mr. Taylor. Id.

       On or about May 10, 2012, Mr. Taylor asked his attorney, Henry W.

Gent, III, Esquire, to prepare the lease. A draft lease was sent to Sterling

Ream     on   May    15,   2012.       The     lease   provided   that   “Prior   to   the

Commencement Date, Lessor shall, at Lessor’s sole cost and expense,
____________________________________________

1
 A triple net lease required lessee to pay one-third of taxes and insurance.
Herein, taxes would amount to $282.88 and insurance would cost $703.66
per year.

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renovate the Premises for use as business offices.” That first draft, as well

as successive drafts, also contained a provision that both parties were

required to sign the lease in order for it to be effective. See Exhibit 2. Mr.

Ream marked up the draft lease with suggested additions and changes and

returned it.

      Attorney Gent testified that when he first prepared the lease, he was

unaware that Adapt expected a June 1, 2012 effective date, but a

commencement date for payment of rent of August 1, 2012. In a June 5,

2012 email, Mr. Ream asked Attorney Gent when they should expect to

receive the revised lease, and requested that, since they were past June 1,

“which we thought would be the effective date,” that he make the rent

commencement date sixty days after the new effective date. Exhibit 3. A

June 5 draft lease contained a floor plan for the interior space, but did not

reflect a new commencement date.      It was represented that the premises

would not be ready for occupancy until August 1, 2012.

      After Adapt offered additional comment on the proposed lease,

another draft was prepared and forwarded to Adapt with correspondence

dated June 12, 2012. On July 2, 2012, Mr. Cola advised Mr. Taylor that he

was having trouble with the company and Adapt was not going to sign the

lease. In response, Mr. Taylor did not suspend the renovations because Mr.

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Ream’s recent purchase of chairs and cubicles from him led him to believe

that Adapt still intended to lease the premises.2       After July 2, the parties’

discussions resumed regarding the lease, and Adapt made some additional

requests.

       On July 10, Attorney Gent’s paralegal forwarded a revised lease to

Adapt, and noted in the cover email that the lease was modified to reflect

that August and September would be rent-free and that the lease would

begin on October 1, 2012. The email also related that Mr. Taylor had not

reviewed the changes yet and that the revised lease was being sent to him

at the same time. The correspondence concluded that, if Mr. Cola had any

comments with regard to the revisions, he should let them know.

Otherwise, he was asked to execute two originals and return them with a

check for the security deposit.

       Mr. Cola emailed additional suggested changes on July 17, 2012, one

of which was a request for exclusive parking. After reviewing the suggested

revisions with Mr. Taylor, Attorney Gent conveyed that parking would be on

a non-exclusive basis, but assured Mr. Cola that there would be adequate

parking to meet Adapt’s needs.            The attorney forwarded a revised lease
____________________________________________

2
  By certified mail dated July 6, Attorney Gent advised Adapt that the lease
was agreed to and that Mr. Taylor had made significant improvements to the
property requested by Adapt in reliance upon that representation. Adapt
was unaware of the contents of that correspondence as it did not retrieve
the certified mail, and the letter was returned to Attorney Gent.

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consistent with that representation, and asked Mr. Cola to arrange for

execution of the lease. Mr. Cola responded via email, “Okay thank you.”

     One week later, on July 25, Attorney Gent’s office asked Mr. Cola and

Mr. Ream to “advise when the attached Lease will be signed on behalf of

Adapt. Subsequently, we will arrange for execution on behalf of Penn-Aire

and return one original to you.” See Exhibit 6 (Email 7/25/12, at 3). When

Attorney Gent did not receive a response, he advised Mr. Cola and Mr. Ream

via an August 1, 2012 email that “the leased premises are ready for

occupancy and the renovations requested by Adapt have been completed.”

Exhibit 6.   He recited therein that, since Penn-Aire had not received a

security deposit from Adapt, Penn-Aire assumed that Adapt did not intend to

lease the premises. Adapt did not respond.

     Penn-Aire commenced this action by praecipe for writ of summons on

September 26, 2012. In its January 16, 2013 complaint, Penn-Aire alleged

that the correspondence between the parties, together with the unexecuted

lease, formed the final lease agreement. It averred that Adapt breached the

lease agreement by failing to pay rent due and owed and sought damages

representing the rental payments.      Penn-Aire also pled that, based on

Adapt’s express commitment to lease the premises, it was entitled to

recover costs and expenses totaling more than $75,000 that it expended to

renovate the premises to Adapt’s specifications, together with attorney fees.

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     Adapt filed an Answer specifically denying that any agreements,

written or otherwise, were reached. Answer, 2/15/13, at ¶8. Furthermore,

Adapt denied that it demanded improvements and maintained that all

negotiations regarding improvements to the premises were contingent upon

a lease.   It denied that it promised to lease the premises, that a final

agreement was reached, or that a lease was ever entered into. Id. at ¶¶8,

9. Adapt maintained that unresolved issues led to the failure to finalize the

lease, among them: the duration of the lease, the amount of the rent, and

the availability of exclusive parking. In New Matter, Adapt pled, inter alia,

that Penn-Aire had already commenced renovating the space at issue before

Adapt inquired about leasing the space.      It averred that there was no

agreement as to the final terms of any lease, and any alleged oral

agreement was barred by the Statute of Frauds.

     Penn-Aire countered that the aforementioned issues were pretexts that

were asserted only after the lawsuit was filed and never raised during the

negotiations or communicated to Penn-Aire.          Furthermore, Penn-Aire

maintained that Adapt made very specific requests for the build out, which

Mr. Taylor undertook in reliance upon Adapt’s representations that it would

lease the property.

     At the non-jury trial, Mr. Taylor acknowledged that the premises

required renovation in order to be suitable for any tenant, but maintained

that the renovations were more elaborate than necessary.      N.T. Non-Jury

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Trial, 8/12/15, at 11. He testified that he would not have made these same

improvements if he did not have an agreement for rent at $3000 per month

for at least three years. Id. at 27. He also stated that he agreed to a later

commencement date on the lease because Mr. Ream bought twenty-six call

center cubicles that Mr. Taylor possessed in Oil City, which Mr. Taylor

assumed would be used in the leased space, and which contributed to his

“impression there would not be any problem on the lease.” Id. at 22.3

       At the close of Penn-Aire’s case, Adapt moved for a non-suit “based on

the fact that [Penn-Aire] has acknowledged and admitted that the situation

was controlled by a written lease,” that there were ongoing negotiations

regarding the lease, that the lease provided that it was not effective unless

executed by both parties, and it was not so executed. N.T., 8/12/15, at 35.

In opposition, Penn-Aire argued that the parties had reached an agreement

on the essential terms, as evinced in the emails and correspondence, and

Adapt breached it. Penn-Aire argued further that Adapt’s participation in the

build out reflected an understanding and agreement that it was going to

lease the premises.       Id. at 36. Adapt countered that Penn-Aire could not

use the build out as a rationale for why there was a lease.     Furthermore,

since Penn-Aire relied upon the lease as the essential agreement, and that
____________________________________________

3
   Mr. Taylor assumed that the furniture was intended for the Venango
County space, but the cubicles were actually purchased and installed in
Adapt’s Mercer County office. N.T. Non-Jury Trial, 8/12/15, at 23.

                                           -7-
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agreement required an executed lease in order to be effective, Adapt

contended that Penn-Aire should not have commenced the build out without

a signed lease.   The court deferred its decision on the motion.       The court

similarly deferred its ruling when Adapt moved for a directed verdict on the

same basis at the close of the evidence.

      The trial court issued its findings on October 28, 2015. It found that

there was no legally enforceable contract “as the negotiations were ongoing

and . . . there were still significant issues that had not been agreed upon and

terms would be changed.”       Findings, 10/28/15, at 1. The court looked at

the language of the proposed lease, strictly construed the language against

the drafter, Penn-Aire, and concluded “it was the intent of all parties

throughout this process that until a full and final agreement had been

reached and signed by all parties[,] that it was simply an offer and

negotiations and the contract was not executed and created.”           Id. at 2.

Nonetheless, the court found that Adapt’s members “directed and requested

significant alterations to the building to fit their needs[,] . . . that they were

actively involved in the design and request for said alterations[,]” and that

Penn-Aire relied on the indications that Adapt was going to lease the

property. Id. at 2. The court found Adapt liable for all costs associated with

the “build out” of the premises to suit Adapt’s specifications and awarded

$75,456.23 in damages, representing the entire cost of the build out,

together with attorney fees.

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      Adapt filed a motion for post-trial relief seeking judgment n.o.v.

(JNOV), a new trial, or a remittitur, which the court denied. Adapt appealed

on April 18, 2016, timely filed its Pa.R.A.P. 1925(b) concise statement of

errors complained of on appeal, and the trial court issued its Rule 1925(a)

opinion. Adapt presents two questions for our review:

      1.    Whether the trial court erred in entering judgment in favor
            of Appellee/Plaintiff and against Appellant/Defendant,
            Adapt Appalachia, LLC in the amount of $75,456.23 based
            on a theory that the Appellee/Plaintiff, in making
            alterations to a commercial property, relied on
            Appellant/Defendant’s indications that it was going to lease
            the property.

      2.    Whether the trial court erred in entering judgment in favor
            of Appellee/Plaintiff for renovation costs where there was
            no evidence entered that allowed for separation of any
            renovation costs unique to the alleged requests made by
            Appellant/Defendant,      from    the    renovation    costs
            Appellee/Plaintiff would have incurred for any other tenant.

Appellant’s brief at 4.

      Adapt’s first issue is a challenge to the trial court’s refusal to grant

JNOV on Penn-Aire’s promissory estoppel claim.        In reviewing the trial

court’s denial of JNOV,

      we must consider the evidence, together with all favorable
      inferences drawn therefrom, in a light most favorable to the
      verdict winner.      Our standard of review when considering
      motions for a directed verdict and judgment notwithstanding the
      verdict are identical. We will reverse a trial court’s grant or
      denial of a judgment notwithstanding the verdict only when we
      find an abuse of discretion or an error of law that controlled the
      outcome of the case. Further, the standard of review for an
      appellate court is the same as that for a trial court.

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      Polett v. Public Communications, Inc., 83 A.3d 205, 211
      (Pa.Super. 2013) [(en banc)].

Drake Mfg. Co., Inc. v. Polyflow, Inc., 109 A.3d 250, 258-59 (Pa.Super.

2015).

      When reviewing a case tried by a judge sitting without a jury, we are

limited to determining whether the trial court's factual findings are

supported by competent evidence, and whether the court properly applied

the pertinent law.   See Prestige Bank v. Inv. Properties Group, Inc.,

825 A.2d 698, 700 (Pa.Super. 2003). Those findings must be afforded the

same weight and effect as a jury verdict, and will not be disturbed on appeal

absent an error of law or an abuse of discretion. Id. Furthermore, absent

error or abuse of discretion, we are bound by the trial court's credibility

determinations. See Viener v. Jacobs, 834 A.2d 546, 554 (Pa.Super.

2003).

      After concluding that there was no enforceable contract between the

parties, the trial court found that “Adapt essentially promised to enter into

the lease, through its communications and assistance in the pre-execution

build out of the office.”   Trial Court Opinion, 6/3/16, at 5.     The court

reasoned that Adapt’s “[a]ssisting in the build out would reasonably lead a

party, such as Penn-Aire, to believe that Adapt intended on entering the

lease.” Id. The only way to avoid injustice, according to the trial court, was

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to enforce the promise to the extent of the renovations.       Thus, liability

rested on a promissory estoppel theory.

     Promissory estoppel is a doctrine invoked when there is no enforceable

agreement between the parties due to lack of consideration.         To avoid

injustice, the doctrine renders “enforceable a promise made by one party to

the other when the promisee relies on the promise and therefor changes his

position to his own detriment.” Restatement (Second) Contracts § 90; see,

e.g., Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa.

1997).

     In order to maintain an action for promissory estoppel, “the aggrieved

party must show that 1) the promisor made a promise that he should have

reasonably expected to induce action or forbearance on the part of the

promisee; 2) the promisee actually took action or refrained from taking

action in reliance on the promise; and 3) injustice can be avoided only by

enforcing the promise.” Crouse v. Cyclops Indus., 745 A.2d 606, 610 (Pa.

2000) (quoting Shoemaker, supra at 1006).

     In Pennsylvania, promissory "statements" must objectively evidence a

sufficient commitment or assurance on which a reasonable person would

rely. "The promisor is affected only by reliance which [the promisor] does or

should foresee, and enforcement must be necessary to avoid injustice."

Paul v. Lankenau Hosp., 543 A.2d 1148 (Pa.Super. 1988) (reversed on

other grounds 569 A.2d 346 (Pa. 1990)). “[M]isleading words, conduct or

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silence by the party against whom the estoppel is asserted" constitute a

sufficient "promise" to invoke the doctrine. Novelty Knitting Mills, Inc. v.

Siskind, 457 A.2d 502, 503 (Pa. 1983).

      Preliminarily, Adapt contends that Penn-Aire did not plead or argue

promissory estoppel in response to Adapt’s motion for nonsuit or motion for

directed verdict. Penn-Aire counters first that Adapt failed to preserve this

claim in its motion for post-trial relief.    Second, since Adapt’s motions for

nonsuit and directed verdict were directed solely to the issue of whether

there was an enforceable lease agreement, Penn-Aire maintains that Adapt

did not preserve entitlement to JNOV on the promissory estoppel claim.

      The threshold issue before us is whether sufficient facts were pled and

proved to apprise Adapt that promissory estoppel was at issue. See Fudula

v. Keystone Wire & Iron Works, Inc., 464 A.2d 446, 448 (Pa.Super.

1983) (noting facts, not theories, are to be pleaded, and finding sufficient

facts pled to support court’s application of promissory estoppel). A plaintiff

is not obligated under the Pennsylvania Rules of Civil Procedure to state the

legal theory or theories underlying his complaint. Del Conte v. Stefonick,

408 A.2d 1151, 1153 (Pa.Super. 1979).             Pa.R.C.P. 1019(a) requires a

plaintiff to plead only allegations of the "material facts on which a cause of

action . . . is based."

      The record reveals the following.          Penn-Aire alleged that, after

exchanging drafts of a proposed lease, “[e]ventually, the parties reached an

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agreement” of terms acceptable to both parties, as evidenced in the email

correspondence between the parties and the draft lease.           Complaint,

1/16/13, at ¶¶ 11, 12.    Penn-Aire also pled, however, that “it agreed to

make and pay for the improvements requested by Defendants but only so

long as Defendants committed to entering into a lease agreement for the

Subject Premises.”    Id. at ¶9.     It further averred that, “Due to the

Defendants’ express commitment to lease the Subject Premises, Plaintiff

incurred costs and expenses to renovate the Subject Premises.” Id. at ¶13.

It alleged that Adapt was obligated to pay as reliance damages the amounts

expended to renovate the property. Id. at ¶17. The trial court found that

the Complaint alleged an “express commitment to lease the Subject

Premises[,]” which, together with Penn-Aire’s allegations that it relied upon

that promise in undertaking the renovation, was sufficient to support a cause

of action sounding in promissory estoppel. Trial Court Opinion, 6/3/16, at 8.

     We agree. Furthermore, the record contains additional indications that

Penn-Aire was proceeding under that theory.        Adapt filed a motion for

summary judgment based on the statute of frauds.        In opposition to the

motion, Penn-Aire argued that the statute of frauds would not affect its

“cause of action for reliance damages.”     Plaintiff’s Supplemental Brief in

Opposition to Summary Judgment, 9/30/13, at 2. Penn-Aire also supplied

Mr. Taylor’s affidavit to the effect that he agreed to pay for the requested

renovations based on Adapt’s express commitment to rent the premises.

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Thus, we find no merit in Adapt’s position that promissory estoppel was not

sufficiently pled or argued to support relief.

      Having concluded that facts supporting promissory estoppel were pled,

thus placing Adapt on notice that Penn-Aire was seeking reliance damages

based on that theory, we turn to Penn-Aire’s contention that, since Adapt did

not move for a nonsuit or directed verdict on the promissory estoppel claim,

it is not entitled to JNOV on that claim. The law is well settled that a trial

court may only grant post-trial relief if the “grounds therefor . . . were raised

in pre-trial proceedings or by motion, objection, point for charge, request for

findings of fact or conclusions or law, offer of proof or other appropriate

method at trial.”    Pa.R.C.P. 227.1(b)(1).      An oral or written motion for

nonsuit at the close of the plaintiff’s case, Pa.R.C.P. 230.1(c), or a Rule

226(b) motion for directed verdict at the close of all the evidence, will also

suffice to preserve issues.    See Haan v. Wells, 103 A.3d 60 (Pa.Super.

2014).   However, in order “to preserve the right to request a JNOV post-

trial, a litigant must first request a binding charge to the jury or move for a

directed verdict or a compulsory non-suit at trial.” Youst v. Keck's Food

Serv., 94 A.3d 1057, 1071 (Pa.Super. 2014).

      Adapt moved for a non-suit and directed verdict.            However, the

motions implicated only the breach of contract claim based on the lease

agreement and did not challenge the promissory estoppel claim.             Thus,

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Adapt waived any sufficiency challenge to that claim, and we affirm the trial

court’s refusal to grant JNOV on that alternative basis.

      Moreover, even if we did not find Adapt’s claim waived, it would not

entitle Adapt to relief.   Adapt contends that the language in the proposed

lease to the effect that “there are no representations, inducements,

promises or agreements, oral or otherwise between the parties[,]”precludes

any finding of a promise and Penn-Aire’s “supposed reliance could not have

been reasonable as a matter of law.”       Appellant’s brief at 10.    Penn-Aire

relies upon Shoemaker, supra, in support of its contention that the

reasonableness of reliance is a question of fact for the factfinder.

      This Court reaffirmed in Eigen v. Textron Lycoming Reciprocating

Engine Div., 874 A.2d 1179 (Pa.Super. 2005), a fraud in the inducement

case, that justifiable reliance upon the representation of another must be

reasonable, and that such reliance is a question of fact. In an action on an

insurance policy based on an oral representation that differed from

provisions in the written policy, we held that an insured was not barred from

asserting that he justifiably relied upon the oral representations.      Toy v.

Metro. Life Ins. Co., 863 A.2d 1 (Pa.Super. 2004).

      Next, Adapt alleges that there was no proof that Penn-Aire actually

relied upon Adapt’s representations that it was going to lease the premises.

It points to Mr. Taylor’s admission that, even before a draft lease was

tendered, he engaged Mr. Matthews to build out the space.

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          The trial court, sitting as the fact-finder, found that “[Penn-Aire] relied

on the indications that [Adapt was], in fact, going to lease said properties in

making the alterations specific to their needs.”         Findings, 10/26/15, at 2.

We must give the trial judge’s findings in this non-jury case the same

deference we would accord to a jury verdict. Olmo v. Matos, 653 A.2d 1,

5-6 (Pa.Super. 1994). Since the renovations had to be completed prior to

Adapt’s occupancy of the leased premises, and Adapt initially desired a June

1, 2012 effective date, it was not unreasonable for Penn-Aire to rely upon

Adapt’s promise to enter the lease and commence the build out while the

lease terms were being finalized. The trial court concluded just that: “Adapt

essentially promised to enter into the lease, through its communications and

assistance in the pre-execution build out of the office[,]” which “induc[ed]

Penn-Aire to undertake some of its obligations of the lease prior to

execution.” Trial Court Opinion, 6/3/16, at 5.

          Finally, Adapt contends that Penn-Aire failed to prove that Adapt

should have expected that its words or actions would induce Penn-Aire to

incur the costs of renovation, an unlikely scenario given the terms of the

lease.      This position is untenable where Adapt’s members met with Penn-

Aire’s contractor, advised him of their needs, and observed the build out of

the premises. For all of the foregoing reasons, we find no merit in Adapt’s

challenge to the court’s application of promissory estoppel as the basis for

relief.

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     Adapt’s second issue is a challenge to the trial court’s award of

damages and to the amount of those damages. It contends that Penn-Aire

was only entitled to compensation for the costs of the “elaborate”

renovations it undertook in reliance upon Adapt’s promise to lease the

premises.   Although Penn-Aire had the burden of proving those damages

with reasonable certainty, Adapt maintains that it neglected to parse out the

expenses associated with Adapt’s unique renovations and those that were

required for any tenant. Adapt contends that the trial court’s award of all

the damages of the renovation was improper and requires a new trial.

     With respect to a request for a new trial, our standard and scope of

review follows:

            To review the two-step process of the trial court for
     granting or denying a new trial, the appellate court must also
     undertake a dual-pronged analysis. A review of a denial of a new
     trial requires the same analysis as a review of a grant. First, the
     appellate court must examine the decision of the trial court that
     a mistake occurred.

            At this first stage, the appellate court must apply the
     correct scope of review, based on the rationale given by the trial
     court. There are two possible scopes of review to apply when
     appellate courts are determining the propriety of an order
     granting or denying a new trial. There is a narrow scope of
     review: where the trial court articulates a single mistake (or a
     finite set of mistakes), the appellate court's review is limited in
     scope to the stated reason, and the appellate court must review
     that reason under the appropriate standard.
            Conversely, if the trial court leaves open the possibility
     that reasons additional to those specifically mentioned might
     warrant a new trial, or orders a new trial in the interests of
     justice, the appellate court applies a broad scope of review,
     examining the entire record for any reason sufficient to justify a

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      new trial. Even under a narrow scope of review, the appellate
      court might still need to examine the entire record to determine
      if there is support for any of the reasons provided by the trial
      court.

              The appropriate standard of review also controls this
      initial layer of analysis. If the mistake involved a discretionary
      act, the appellate court will review for an abuse of discretion. If
      the mistake concerned an error of law, the court will scrutinize
      for legal error. If there were no mistakes at trial, the appellate
      court must reverse a decision by the trial court to grant a new
      trial because the trial court cannot order a new trial where no
      error of law or abuse of discretion occurred.

Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 891 (Pa.Super. 2011).

      The trial court found, as a matter of law, that Penn-Aire was entitled to

recover reliance damages, i.e., the amount it spent improving the property

to meet Adapt’s specifications. It specifically rejected Adapt’s position that

Penn-Aire was not entitled to recover all of the costs of the renovations it

undertook. The court reasoned: “Even assuming it was true that the build

out would be necessary regardless of the prospective tenant, Penn-Aire

undertook specific renovations at the specific time due to Adapt’s promises

to enter into the contract.”   Trial Court Opinion, 6/3/16, at 5.    The court

added that reliance damages included the expenses incurred by the

promisee in reliance upon the promise, and since Penn-Aire undertook the

build out in reliance upon Adapt’s promise, it was “immaterial if any of the

costs of the build out would have been required for another tenant.” Id. at

6.

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       We disagree. The reliance interest is an attempt to place the promisee

back in the position in which he would have been had the promise not been

breached and should be only the amount necessary to prevent injustice.

The damage award herein was a windfall for Penn-Aire. Penn-Aire retained

the benefit of a fully renovated and ready-to-lease space, which was

undoubtedly of greater value than the unimproved space. In addition, it was

awarded damages of $75,000, the entire cost of making the renovations.

       Mr. Taylor and his contractor acknowledged that many of the

renovation expenses would have been incurred to remediate the property

just to make it habitable for any tenant. The rental space had no heat or air

conditioning, old windows, an uneven concrete floor, walls that required

demolition and replacement, and the existing bathroom needed new

plumbing and fixtures. Mr. Taylor maintained, however, that he would not

have spent as much on the build out without the assurance of the multi-year

$3,000 per month lease. In other words, the promise of a multi-year $3,000

lease induced him to spend more than he normally would have spent. 4 The

difference between what Mr. Taylor would have spent and the amount

____________________________________________

4
  We note that Penn-Aire pled that it relied on indications that Adapt was
going to lease the property when it made alterations specific to Adapt’s
needs. See Reply to New Matter, 2/27/13, at ¶¶ 7, 8.

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actually spent in reliance upon Adapt’s promise is the proper starting point

for calculating reliance damages.

      Additionally, evidence was adduced that Penn-Aire was able to re-lease

the property to another tenant without substantial modification and was

receiving rental income. In short, by awarding damages in the full amount

of the improvements, and refusing to acknowledge and offset Penn-Aire’s

retention of the benefit of those improvements, the trial court placed Penn-

Aire in a far better position than it would have been in had the promise not

been breached.     For these reasons, we remand for a new trial limited to

damages.

      Judgment affirmed in part and reversed in part, and case remanded

for   further   proceedings   consistent   with   this   decision.   Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/26/2017

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