Court: Landlord Only Entitled to Damages Up to the Date of Repossession

In a recent opinion, the Pennsylvania Superior Court in 1700 Market St. Associates v. Common Grounds 1700 Market St., 314 A.3d 855 (Pa. Super. Ct. 2024), held that a commercial tenant was evicted from the leased premises rather than abandoning it and that, accordingly, the landlord could only recover damages for unpaid rent through the date when the landlord recovered possession of the leased premises, denying the landlord’s claim for additional rent for the remainder of the lease term.

Background: The Lease and Alleged Default

In Common Grounds, the landlord and the tenant entered into a written lease for the leased premises to be used as a coworking space in July 2019, the opinion said.

According to the opinion, rent under the written lease was abated for the first 10 months of the lease term.

The written lease in Common Grounds stated that an event of default by the tenant would include, amongst other things, failure of the tenant to make timely rent payments to the landlord.

In Common Grounds, in the event that the tenant defaulted under the terms and conditions of the written lease, the landlord had several remedies, including: terminating the tenant’s right to possession by written notice; continuing the lease term and enforcing its rights under the written lease, including collecting rent so due; and curing the tenant’s event of default at its own expense.

Legal Action and Trial Court Ruling

In Common Grounds, the landlord sent the tenant a written notice of default for failure to pay rent in early 2021, the opinion said.

The tenant in Common Grounds was allowed time to cure the default and failed to do so.

After the tenant failed to cure the alleged defaults under the written lease based upon a second notice of default sent by the landlord, the landlord filed a complaint against the tenant in the Philadelphia Municipal Court, seeking a judgment for possession of the leased premises as well as a monetary judgment for accelerated rent due under the written lease.

The landlord in Common Grounds was awarded a monetary judgment against tenant in the amount of $3,065,058.72 as well as a judgment for possession of the leased premises.

Subsequently, the tenant filed an appeal of these judgments to the Philadelphia County Court of Common Pleas.

However, the tenant in Common Grounds allowed for the landlord to regain possession of the leased premises through the eviction process.

After a bench trial, the trial court entered a monetary judgment in the landlord’s favor but reduced the amount of the monetary judgment to $233,000, comprising the amount due to the landlord when it regained possession of the leased premises.

The Landlord’s Appeal: Seeking More Damages

The landlord in Common Grounds filed a post-trial motion with the trial court, arguing it was entitled to actual monetary damages of $2,149,435.75, or the amount of unpaid rent at the time the trial court entered the monetary judgment.

The trial court in Common Grounds denied the post-trial motion as well as a subsequent motion for reconsideration, finding that the landlord had ejected the tenant from the leased premises and was only entitled to recover unpaid rent up to the date it regained possession of the leased premises.

The landlord in Common Grounds then appealed to the trial court’s ruling to the Superior Court, asking it to consider whether the trial court erred in awarding monetary damages only up to the date it regained possession of the leased premises and, also, whether the trial court erred in finding that the tenant had been evicted rather than voluntarily vacating from the leased premises.

Superior Court: Eviction vs. Abandonment

Taking up its review of the questions presented, the Superior Court in Common Grounds observed that, for 100 years, it has held that a landlord cannot both evict a tenant and then recover both possession of the property and unpaid rent for the balance of the lease term.

By contrast, the Superior Court in Common Grounds noted that, where a tenant abandons the leased premises, a landlord is entitled to possession and accelerated rent.

The Superior Court in Common Grounds then turned to whether the tenant here was evicted from or abandoned the leased premises.

The landlord in Common Grounds argued that the tenant abandoned the leased premises and did not present any evidence that the tenant was evicted. In doing so, the landlord in Common Grounds contended that it was owed actual monetary damages comprised of rent and fees owed at least through the date of trial even though the landlord was dispossessed of the leased premises beforehand.

The Superior Court in Common Grounds reiterated its observation that a plaintiff in a landlord-tenant dispute like this may not be awarded a double-dip recovery for a single harm.

Legal Standards and Final Ruling

Next, the Superior Court in Common Grounds examined the legal distinctions between abandonment and eviction, as well as their relationship to Pennsylvania’s Landlord-Tenant Act of 1951.

To establish abandonment, a landlord must show an intent to abandon and the conduct by which such abandonment occurred, while an eviction is any possession of the leased premises by the landlord that would be adverse to the tenant’s occupation of the same.

The Superior Court in Common Grounds emphasized that the Landlord-Tenant Act of 1951 “is a comprehensive regulatory scheme” setting up the procedure for how a landlord may gain repossession where it has a right to do so and observed that it is “a complete and exclusive system” that repealed all inconsistent laws.

The Superior Court in Common Grounds held that the record demonstrates that the landlord followed the eviction procedures prescribed under the law.

After entry of the judgment for possession in connection with the judicial proceedings before the Philadelphia Municipal Court, the landlord in Common Grounds sought and obtained a writ of possession and an alias written of possession, as required under court rules, each of which were properly served upon the tenant.

A representative of the tenant in Common Grounds testified to the trial court that, once the alias writ of possession was posted, the landlord-tenant officer could have returned and padlocked the leased premises without further notice, thereby, for all intents and purposes, locking tenant out of the leased premises.

Accordingly, the tenant in Common Grounds returned its keys to the landlord, leaving all its personal property in the leased premises. In Common Grounds, the landlord sought to characterize this act as abandonment of the leased premises.

Affirming the trial court’s ruling, the Superior Court in Common Grounds held that, however the landlord may wish to characterize the tenant’s actions, the landlord followed the legal eviction procedures and that, accordingly, the trial court did not err in finding that the tenant was evicted from rather than abandoned the leased premises and that, as such, the landlord was only entitled to damages up to the date it regained possession.

Alan Nochumson is the principal of Nochumson P.C., a legal services firm with a focus on real estate, land use and zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-600-2851 or alan.nochumson@nochumson.com.