Automatic Renewal In PA Enforced - May 20, 2015
Interesting case was just decided in PA state court [REZRO, INC., d/b/a AMERICAN ATM v. MAXIMO LANFRANCO d/b/a MAXI GROCERY, ET AL] concerning an automatic renewal provision. The agreement was not for security; it was a lease of an ATM machine in a commercial premises. The lease was for 48 months and renewed for 48 months unless terminated. No termination notice was given, the lease renewed, and the subscriber breached by having another company install an ATM and demanding that the first company pick up its equipment.
The agreement was in English; the sale took place in Spanish and the customer could not read in English. The trial court found that the customer was nevertheless bound by the contract, that the contract by its terms renewed, that the customer breached, that the contract formula for damages would be enforced and granted judgment for that amount, approximately $50,000. The court noted that the plaintiff had legal fees of $18,000, but did not award any legal fees.
The customer [the defendant] appealed. On appeal the lower court decision was upheld. On appeal the legal fees were mentioned but not discussed and the appeals court did not overrule the lower court decision not to award legal fees. I suspect this is because the plaintiff did not appeal so the legal fees were not part of the appeal. The entire decision is below:
REZRO, INC., d/b/a AMERICAN ATM v. MAXIMO LANFRANCO d/b/a MAXI GROCERY, ET AL
COMMON PLEAS COURT OF PHILADELPHIA COUNTY, FIRST JUDICIAL
DISTRICT OF PENNSYLVANIA, CIVIL TRIAL DIVISION
2015 Phila. Ct. Com. Pl. LEXIS 108
April 14, 2015, Decided
FACTUAL and PROCEDURAL HISTORY
Plaintiff filed a Complaint against Defendant alleging breach of contract with regards to an agreement titled "ATM Floor Space Lease" ("Agreement") to place Plaintiff's ATM machine in Defendant's grocery store located at 6224 Lebanon Avenue in Philadelphia. Christopher Mirzai ("Mr. Mizrai") is Plaintiff's authorized representative and came to Defendant's store on January 2, 2009 to enter into the Agreement. The Agreement is written in English but the discussion between Mr. Mizrai and Defendant took place in Spanish. The Agreement is a one-page, one-sided document consisting of fourteen (14) numbered provisions, all written in the same sized font. The Agreement was signed by both parties and commenced on January 2, 2009 with an initial term of 48 months. Under Paragraph IV (A) and (B), a new lease term of 48 months would commence if no written notice or termination was provided 120 days prior to the termination of the initial term ("Renewal Provision"). Further, Paragraph XIII (C) required Defendant to pay Plaintiff attorneys' fees for seeking relief from any loss arising from a breach by Defendant ("Attorneys' Fee Provision"). The Agreement also contained a "No-Competition" provision wherein Defendant agreed not to place or operate another ATM or cash back device in the store throughout the term of the Agreement ("No-Competition Provision"). Defendant was paid fifty ($0.50) cents per valid chargeable transaction collected by Plaintiff.
Plaintiff did not receive written notice of termination during the initial term. The Agreement therefore automatically renewed for another 48 month period starting January 2, 2013. However, in July 2013, Defendant unplugged Plaintiff's ATM and placed another company's ATM in the store.
The matter proceeded to a Non-Jury Trial before Judge Di Vito on November 17, 2014. Defendant was provided with a Spanish-speaking interpreter. Following trial, Judge Di Vito entered Findings and Conclusions, explaining his reasonsfor finding in favor of Plaintiff and against Defendant and assessing damages of $50,148.50. Judge Di Vito found Plaintiff incurred attorneys' fees in the amount of $18,762.00 but did not award these fees. Judge Di Vito's Findings and Conclusions are attached hereto and incorporated herein. Defendant filed Post-Trial Motions, which were denied. This appeal followed. Defendant's 1925(b) Statement of Matters Complained of on Appeal raises eleven (11) issues, which this court will address below.
Each of Defendant's matters complained of on appeal must fail. In Adamski v. Miller, 434 Pa.Super. 355, 359-360, 643 A.2d 680, 682 (1994) the Court discussed the standard for reviewing the denial of a motion for J.N.O.V. as follows:
Our standard of review of an order denying j.n.o.v. is whether
there was sufficient competent evidence to sustain the verdict.
Wenrick v. Schfoemann-Siemag Aktiengesellscaft, et al., 523 Pa, 1, 4,
564 A.2d 1244, 1246 (1989). The standard of review for an appellate
court is the same as that for a trial court: j.n.ov. will be entered
only in a clear case where the facts are such that no two reasonable
minds could fail to agree that the verdict was improper. Pirozzi v.
Penske Olds-Cadillac-GMC, 413 Pa. Super. 308, 311, 605 A.2d 373, 375
(1992). An appellate court will reverse a trial court ruling only if
it finds an abuse of discretion or an error of law that controlled the
outcome of the case. Timbrook v. Foremost Ins., Co., 324 Pa. Super.
384, 387, 471 A.2d 891, 892 (1984).
Our standard of review of a trial court's grant or denial of a motion for a new trial is, generally, whether the trial court clearly and palpably abused its discretion or committed an error of law which controlled the outcome of the case. Stevenson v. General Motors Corp., 51e Pa. 411, 521 A.2d 413 (1987). If support for the court's decision is found in the record, the order must be affirmed. A new trial will only be awarded where the verdict is so contrary to the evidence as to shock one's sense of justice. Giovanetti v. Johns-Manville Corp., 372 Pa. Super. 431, 439, 539 A.2d 871, 875 (1988).
Applying the foregoing to this matter, Defendant is not entitled to relief.
Initially, Defendant's tenth and eleventh issues on appeal, namely, that Judge Di Vito erred by refusing to void the Agreement based on the doctrines of Fraud in the Factum and Fraudulent Inducement, were not raised in Defendant's post-trial motions. Accordingly, these issues are waived. See Pa.R.C.P., Rule 227.1(b), (grounds not specified in post-trial motions are deemed waived) and Pa.R.A.P., Rule 302(a), (issues not raised in the lower court are waived and
cannot be raised for the first time on appeal).
Defendant's first and second issues on appeal challenge two of Judge Di Vito's findings of fact. Specifically, Defendant argues Judge Di Vito erred in finding that Plaintiff explained the basic terms of the lease to Defendant. Finding of Fact ¶5. Defendant also argues Judge Di Vito erred in
finding Defendant claimed to neither speak nor understand English. Finding of Fact ¶8.
The record as a whole is sufficient to support Judge Di Vito's findings. It is well established that the credibility of witnesses is an issue to be determined by the trier of fact. See Krankowski v. O'Neil, 928 A.2d 284, 287 (Pa.Super.2007). The appellate court will respect a trial court's findings with regard to the credibility and weight of the evidence unless the appellant can show that the trial court's determination was manifestly erroneous, arbitrary and capricious or flagrantly contrary to the evidence. Ecksel v. Orleans Const. Co., 360 Pa.Super. 119, 519 A.2d 1021, 1028 (1987). Here, Plaintiff presented enough evidence to support Judge Di Vito's findings. It is clear from the record
Judge Di Vito made a determination as to credibility of the witnesses and found Mr. Mizrai credible. Conclusion of Law ¶4. Without offering an opinion on Judge Di Vito's findings, this court will not disturb them.
Defendant's remaining issues on appeal challenge Judge Di Vito's conclusion that the "lease between the parties is a valid contract." Conclusion of Law ¶1.
Initially, Defendant contends Judge Di Vito erred because the Agreement was a license, not a lease. This court does not agree. A license, unlike a lease, does not grant the licensee the right to exercise exclusive possession and enjoyment for a term specified. A Sparrow v. Airport Parking Co. of America, 221 Pa.Super. 32, 39 289 A.2d 87, 91 (1972) (citation omitted). Here, the Agreement provided Plaintiff with exclusive possession for a specified term. First, Plaintiff was granted possession of floor space for a definite period of 48 months. Second, the Renewal Provision provided for a definite period. Third, Plaintiff was given exclusive possession of the floor space in that the ATM hadto stay in the installed position for the entire term of the Agreement. Finally,
the No-Competition Provision gave Plaintiff exclusive possession during the term of the Agreement. Accordingly, Judge Di Vito did not err in ruling that the Agreement is a lease.
Alternatively, if the Court determines that the Agreement is a license and not a lease, the evidence supports a finding that the Agreement would be an irrevocable license. As set forth in LARA, Inc. v. Dorney Park Coaster Co., 116 Pa. Cmwlth. 548, 554, 542 A.2d 220, 223-24 (1988):
Ordinarily, a license is revocable at will. Kovach v. General Telephone Co. of Pennsylvania, 340 Pa. Superior Ct. 144, 489 A.2d 883 (1985); Thompson v. Department of Highways, 214 Pa. Superior Ct. 329, 257 A.2d 639 (1969). A license is usually no more than a personal privilege to perform an act or series of acts on the land of another, and it conveys no interest or estate. Thompson; Pennsylvania Game Commission v. Bowman, 81 Pa. Commonwealth Ct. 381, 474 A.2d 383 (1984). However, Pennsylvania has recognized an equitable theory of an irrevocable license when there has been substantial expenditure in reliance on the license. Kovach; Harkins v. Zamichieli, 266 Pa. Superior Ct. 401, 405 A.2d 495 (1979); Pennsylvania Game Commission. The expenditure necessary to establish an irrevocable license could be money or labor. Harkins; Pennsylvania Game Commission.
Here, sufficient evidence was produce to show Plaintiff expended money and labor by maintaining the ATM machine and continually ensuring it was properly operated and stocked with cash. Therefore, whether the Agreement is a lease or irrevocable license is of no consequence to Judge Di Vito's final ruling as to the enforceability of the Agreement.
Defendant's fourth issue on appeal claims Judge Di Vito erred because there was no meeting of the minds as to the Renewal Provision and the Attorneys' Fee Provision. This court does not agree. The evidence shows Defendant neither read the Agreement nor had the Agreement translated into Spanish before signing it. Judge Di Vito found Defendant did not request a translator or translation when signing and was not coerced to sign the Agreement. Findings of Fact ¶¶7, 8. These findings were not challenged on appeal and this court will not disturb them. The evidence also shows Defendant had access to English speaking people who could have reviewed the Agreement for Defendant before it was signed. Defendant did not avail himself of this opportunity.
In Pennsylvania, "ontracting parties are normally bound by their agreements, without regard to whether the terms thereof were read and fully understood and irrespective of whether the agreements embodied reasonable or good bargains. (citations omitted) Ignorantia non excusat." Simeone v. Simeone, 525 Pa. 392, 400, 581 A.2d 162, 165 (1990) (emphasis in original). Our supreme court has stated:
A person of age is presumed to know the meaning of words in a
contract, and if, relying upon his own ability, he enters into an
agreement not to his best interests he cannot later be heard to
complain that he was not acquainted with its contents and did not
understand the meaning of the words used in the instrument which he
signed, (citations omitted).
Schoble v. Schoble, 349 Pa. 408, 411-412, 37 A.2d 604, 605 (1944). Further, whether Defendant was unaware of the two provisions is unavailing because the failure to read contractual language is not a defense in a contract action. Pennsylvania Manufacturers' Ass'n Insurance Co. v. Aetna Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) (failure to read a contract is
neither a defense nor an excuse and will not provide grounds for avoiding the contract or any provision therein). See also, Martinez v. Skirmish, U.S.A., Inc., No. CIV.A. 07-5003, 2009 WL 1676144, at *5 (E.D. Pa. June 15, 2009) (citing Pennsylvania law, release written in English was enforceable against Spanish speaking signor where there was no evidence of fraud and failure to read contract did not constitute a defense to enforceability). Defendant therefore cannot contend there was no meeting of the minds with regards to the two provisions if Defendant chose not to read or have the Agreement translated before signing it. Notwithstanding, Judge Di Vito did not award Plaintiff attorneys' fees under the Attorneys' Fee Provision.
Defendant's fifth issue on appeal argues there was no consideration for the Renewal Provision or Attorneys' Fee Provision. This court does not agree. Both of these provisions were original terms of Agreement for which consideration was provided. Because the Agreement was never modified or amended, separate or new consideration was not needed for the Renewal Provision or Attorneys' Fee Provision to be valid. Notwithstanding, Judge Di Vito did not award attorneys' fees.
Defendant's sixth and seventh issues on appeal argue the Renewal Provision and Attorneys' Fee Provision were procedurally and substantively unconscionable. Initially, Defendant claims the Agreement was a contract of adhesion between parties of unequal bargaining power. This court does not agree. In general:
"n adhesion contract is a 'standardized contract form offered to
consumers of goods and services on essentially 'take it or leave
it' basis without affording consumer a realistic opportunity to
bargain and under such conditions that consumer cannot obtain
desired product or services except by acquiescing [to the] form
contract.'... The fundamental nature of this type of contract is such
that the consumer who is presented with it has no choice but to either
accept the terms of the document as they are written or reject the
Todd Heller Inc. v. United Parcel Service Inc., 754 A.2d 689, 700 (Pa. Super. Ct. 2000).
Here, Judge Di Vito found Defendant had operated his own store for ten (10) years before purchasing the current store. Findings of Fact ¶15. Further, the record shows the 48 month term was negotiated between the parties. Again, Judge Di Vito found Defendant was not coerced to sign the Agreement. Findings of Fact ¶8. Therefore, the evidence reveals Defendant was a sophisticated businessman and the Agreement was an arms-length contract. Accordingly, the Agreement was not a contract of adhesion.
However, even if the Court were to find the Agreement to be a contract of adhesion, such finding does not automatically render it or the two provisions substantively unconscionable, as argued by Defendant. Todd Heller, Inc. v. United Parcel Serv., Inc., 754 A.2d 689, 700 (Pa. Super. Ct. 2000). "or a Court to deem a contractual provision unconscionable it must determine both 'that the contractual terms are unreasonably favorable to the drafter and that there is no meaningful choice on the part of the other party regarding acceptance of the provisions'" Id. (citation omitted).
Here, a review of the record shows the Renewal Provision does not unreasonably favor Plaintiff. Further, as indicated above, Defendant chose not to read or have the Agreement translated prior to signing it. Again, Judge Di Vito found Defendant was not coerced into signing the Agreement. Therefore, the evidence shows Defendant had a meaningful choice with regards to accepting the Agreement or the Renewal Provision. The same analysis applies to the Attorneys' Fee Provision. Notwithstanding, Judge Di Vito did not award attorneys' fees.
Defendant's eighth issue on appeal claims Judge Di Vito erred because the Renewal Provision renewed the Agreement for 48, consecutive one-month periods, not a new 48 month term. Alternatively, Defendant claims the Renewal Provision is ambiguous and should be construed against Plaintiff as the drafter of the Agreement. This court does not agree. The Renewal Provision at Paragraph IV(A) states:
The length of this agreement shall be for forty eight (48) months from commencement date. Unless cancelled in accordance with section IV(B), a new lease term will commence at the end of the previous term.
See Lease at section IV. A contract is ambiguous when the contract language is reasonably susceptible to more than one meaning. Commonwealth of Pa. v. Brozzetti, 684 A.2d 658, 663 (Pa.Commw.Ct.1996). However, any ambiguity must appear on the face of the contract itself, and not be created by evidence offered by the parties. Id. A contract is not ambiguous simply because the parties offer different interpretations of the language. Riccio v. American Republic Ins. Co., 453 Pa.Super. 364, 377, 683 A.2d 1226 (1996). Instead, where the contract language is clear, the court is limited to a review of the expressed terms and may not consider extrinsic or parol evidence. Steuart v. McChesney, 498 Pa. 45, 49, 444 A.2d 659, 661 (1982). Under the "plain meaning"
rule, the court must interpret the terms as manifestly expressed in the contract, rather than as silently intended by a party. Id. at 49, 444 A.2d 659.
Here, the Renewal Provision clearly renews the Agreement for the original term period of 48 months. Nowhere does the Agreement mention any one-month period. Judge Di Vito found that the Agreement automatically renewed on January 2, 2013 for another term of 48 months and concluded that the Agreement renewed at the end of the initial 48 month term. Finding of Fact ¶13, Conclusion of Law ¶2. This court will not disturb Judge Di Vito's findings and conclusions.
Defendant's ninth issue on appeal contends Plaintiff did not suffer any losses and therefore Judge Di Vito erred by ruling Plaintiff was entitled to recover losses. However, Judge Di Vito made a credibility determination and found that Plaintiff suffered a loss of future income in the amount of
$50,148.50. Without offering an opinion on Judge Di Vito's findings, this court will not disturb them.
Based on the foregoing, each of the issues raised in Defendant's 1925(b) Statement are without merit Judge Di Vito's orders of November 20, 2014 and December 4, 2014 should be affirmed.
BY THE COURT:
/s/ Idee C. Fox
IDEE C. FOX, J.
COMMON PLEAS COURT OF PHILADELPHIA COUNTY, FIRST JUDICIAL DISTRICT OF PENNSYLVANIA, CIVIL TRIAL DIVISION
REZRO, INC., d/b/a AMERICAN ATM v. MAXIMO LANFRANCO d/b/a MAXI GROCERY
OCTOBER TERM, 2013
And now, this 20TH day of November, 2014, The Court makes the
FINDINGS OF FACT
1. Rezro, Inc. is a Pennsylvania corporation doing business as American ATM
("American") with a principle place of business located at 191 Presidential
Boulevard, Suite 104, Bala Cynwyd, Pennsylvania.
2. Maximo E. Lanfranco ("Lanfranco") is an adult individual doing business as
Maxi Grocery, with a place of business located at 6224 Lebanon Avenue,
Philadelphia PA 19151.
3. Chrisopher Mirzai ("Mirzai") is an authorized representative of American.
4. On or about January 2, 2009 Mirazi came to Lanfranco's premises to enter
into a new lease agreement with Lanfranco for the floor space on which
American's ATM machine (ATM) rested, as Lanfranco was the new owner of the
business at the premises.
5. Mirzai explained the basic terms of the lease to Lanfranco and at
Lanfranco's request reduced the lease term to forty eight (48) months.
6. The discussion between Mirzai and Lanfranco was conducted in Spanish.
7. Lanfranco reviewed the lease, and did not request a translator or
translation. 8. Lanfranco was not coerced in anyway to sign the lease agreement.
The lease provides for the lease of floor space to Plaintiff for the ATM machine
in consideration for payment of rent to Defendant Lanfranco for an
initial term of forty eight (48) months. The original term of the Lease
Agreement commenced on January 2, 2009.
9. American provided the ATM which was placed in Maxi Grocery and maintained
the machine and during the relevant period, American monitored the functioning
of the machine and continually ensured it was properly operating and stocked
10. American collected a surcharge on transactions conducted at the machine.
In addition to this surcharge, American received an interchange payment on the
transactions processed by the machine.
11. Under the Lease Agreement, rent was calculated and paid to Lanfranco at
the rate of fifty ($0.50) cents per surchargeable transaction conducted at the
ATM located within the store.
12. At no time during the initial term of the lease agreement did American
ATM receive any written notice of cancellation or termination of the Lease
Agreement from Lanfranco in accordance with as required under paragraph IV of
13. Under Paragraph IV (A) of the Lease Agreement, the contract was
automatically renewed on January 2, 2013 for another term of forty eight (48)
14. The Lease Agreement contains a "Non-Competition" provision which
states that Merchant/Lessor (Lanfranco) agrees not to possess, cause to be
placed or operate any other ATM or cash back device on the premises throughout
the term of the agreement.
15. In or about July, 2013, Lanfranco permitted another company's ATM to be
placed in the store and unplugged American's ATM.
16. On or about August 12, 2013, Lanfranco sent a letter to American
requesting that American's ATM be removed from his premises.
17. Lanfranco immigrated to the United States from Santo Dominigo and worked
in several bodegas before opening his own store in 1991, which he operated for
10 years. He purchased the current store in December, 1991, after operating it
for the previous year in which the ATM at issue had been in place.
18. Although Lanfranco claims to neither speak nor understand English, he
testified that he spoke English "in the store".
19. American incurred a loss of future income in the amount of $50,148.50.
20. American incurred attorneys' fees in the amount of $18,762.00.
CONCLUSIONS OF LAW
1. The lease between the parties is a valid contract.
2. The lease renewed at the end of the initial forty eight (48) month term
pursuant to Section IV (a) thereof.
3. Lanfranco is in breach of the terms and conditions of the lease.
4. The Court found Christopher Mirzai credible.
5. The Court found Maximo Lanfranco not credible.
6. American is entitled to recovery of its losses.
Therefore, the Court makes the Following:
And now, this 20 day of November, 2014, The Court finds in favor of Plaintiff
and against Defendant and enters a verdict in favor or Plaintiff in the amount
of Fifty thousand, one hundred forty eight dollars and fifty cents
BY THE COURT:
/s/ Gary F. Di Vito
Gary F. Di Vito J.
April 6, 2015