Davis v. Borough of Montrose

194 A.3d 597

Alice DAVIS

v.BOROUGH OF MONTROSE, Appellant

Alice Davis, Appellant

v.Borough of Montrose

No. 1210 MDA 2017

No. 1250 MDA 2017

Superior Court of Pennsylvania.

Submitted May 8, 2018

Filed August 13, 2018

Andrew D. Bigda, Forty Fort, for Borough of Montrose.

Kevin J. Dempsey, Clarks Green, for Davis.

BEFORE: STABILE, J., NICHOLS, J., and PLATT J.^*

OPINION BY NICHOLS, J.:

Appellant/Cross-appellee Borough of Montrose (Borough) appeals from the judgment entered awarding $99,989.81 in damages for breach of contract in favor of Appellee/Cross-appellant Alice Davis (Landlord). Borough claims that the trial court erred in barring the testimony of three of Borough's witnesses, in failing to credit its defense of impossibility of performance, and in awarding Landlord damages when Landlord did not give Borough an opportunity to resume the lease. Landlord cross-appeals claiming that the trial court erred in its calculation of damages and in denying pre-judgment interest. We vacate the judgment, affirm in part and reverse in part the order denying Landlord's post-trial motion, affirm the order denying Borough's post-trial motion, and remand for further proceedings as set forth below.

The trial court set forth the following finding of facts:

1. On December 21, 2012, [Landlord] and [Borough] entered into a lease agreement for property located at 4 Mill Street in the Borough of Montrose, Susquehanna County, Pennsylvania [ (the property or the building) ].

2. The lease was for a five (5) year term and provided that [Borough] pay $59,940 annual rent, payable in monthly installments of $4,995. The lease also provided that, in addition to rent, [Borough] was responsible to pay all real estate taxes, all insurance on the premises, utilities, and any and all maintenance, upkeep, and repairs.

3. Other than several members of Borough Council doing a "walk through" prior to signing the lease, [Borough] did not conduct any inspections of the property.

4. [Borough] accepted the keys to the property on or about January 1, 2013 but never used the building for any purpose.

5. The building had been previously used as a gym/fitness center and contained a small swimming pool for water aerobics. The building also houses a small apartment, not included in the lease, which [Landlord] rents separately, and which was occupied during the term of the lease.

6. In March of 2013, [Borough] tested the building and found mold. In June, [Borough] drained the swimming pool. The property was retested in July and August of 2013 and mold was again found to be present.

7. [Borough] notified [Landlord] of the mold findings sometime in August of 2013.

8. Thomas Lamon[t], President of Borough Council, had a few casual discussions with [Landlord] about remediation of the mold between August and October of 2013.

9. In early November of 2013, [Borough] advised [Landlord] by mail that it was terminating the lease as of December 31, 2013 due to the presence of mold in the building.

10. After receiving [Borough]'s notice, [Landlord] hired Flood Pros of NY, LLC to conduct successful mold remediation in the building. [Landlord] did not advise [Borough] of this result. [Landlord] also did repairs and alterations to the building.

11. [Landlord] contacted a realtor in January, 2014 to place the building back on the rental market; however, remediation and renovations were not complete until September of 2014. [Landlord] then signed a listing agreement on September 23, 2014 with a rental price of $3,995 per month.

12. Meanwhile, on February 12, 2014, [Landlord] had filed the subject Complaint against [Borough] for breach of the lease agreement. [In Borough's answer, it included as new matter the defense of impossibility of performance and asserted that Landlord fraudulently represented there was no mold in the building prior to entering into the lease].

Trial Ct. Op. & Verdict, 4/28/17, at 1-2 (unpaginated).

Prior to trial, Landlord filed motions in limine seeking to exclude expert and fact witnesses from testifying for Borough. See generally Landlord's Mot. in Limine to Exclude Testimony of Tenant's Expert Witness, 6/27/16; Landlord's Mot. in Limine to exclude Testimony of Witnesses Identified Eight Days Prior to Trial, 9/29/16. Specifically, Landlord sought to exclude testimony of a recently disclosed expert, Gary Lyons,¹ who, according to Borough, would opine that the mold existed in the building before the lease was entered into by the parties. Landlord's Mot. in Limine to Exclude Testimony of Tenant's Expert Witness, 6/27/16, at ¶ 19. Additionally, Landlord sought to preclude four fact witnesses—Jason Beardsley, Jean Pierce, Bernard Bell, and Jeffrey Strohl from testifying.² See generally Landlord's Mot. in Limine to exclude Testimony of Witnesses Identified Eight Days Prior to Trial, 9/29/16. Landlord asserted that these fact witnesses should be precluded from testifying because Borough failed to identify the witnesses or the substance of their testimony in response to Landlord's interrogatories.³ Id. at ¶ 9-11, 16.

On October 4th and 5th, 2016, the trial court conducted a bench trial. At the outset of trial, the trial court denied Landlord's motions in limine, but explained that it would "sort things out as [they] come[ ] in." See N.T., 10/4/16, at 2.

Landlord testified at trial in support of her position that Borough breached the lease and presented evidence regarding her damages, including, the lease, the invoice from Flood Pros—the mold remediation company, utilities bills, etc. See generally N.T., 10/4/16, at 15-93; N.T., 10/5/16, at 15-19. Landlord also admitted the deposition testimony of Kevin Telfer, owner of Flood Pros, who was hired by Landlord to perform mold remediation. See Dep. of Kevin Telfer, 8/17/16, at 2. In his deposition, Telfer described the procedure employed in performing the mold remediation in the building. See generally id. Telfer also stated that the mold issue was remediated and the work completed by December of 2013. Id. at 10.

Borough, in relevant part, called Richard Tarnowski as an expert in mold testing. N.T., 10/4/16, at 117. Tarnowski testified that he was contacted by Borough to create a protocol for mold remediation. Id. at 122. Tarnowski stated that, on July of 2013, he conducted a visual inspection and identified areas in the building with elevated moisture levels. Id. at 128. He testified that he "found elevated moisture levels pretty much everywhere, which isn't unusual. They had an indoor swimming pool, so we kind of suspected that there could be some moisture issues." Id. at 130. He further noted that "the construction of the building was at a lower grade than the road level. So in our opinion, in looking at some of my photos, we had moss growth and mold growth and sediment placed at the front of the building, which is most likely from runoff of the road." Id. Tarnowski explained that "the building condition certainly could lead to continued mold problems if they weren't remediated." Id.

Tarnowski testified that every area of the carpeting that he checked had elevated mold levels, that dehumidifiers were not present on site the day he visited, and that there was standing water in the pool. Id. at 131. Further, there was moisture behind the metal panels where the insulation was located. Id. He continued that he could not recall if he saw visible signs of mold in the carpeting, but that he saw visible signs of mold in the HVAC⁴ ductwork, in the pool room, in the sauna room, and on wood door surfaces in the offices. Id. at 133.

Borough called Jean Pierce, who was one of the subjects of Landlord's motion in limine , to testify. Id. at 169. Landlord objected to Pierce's testimony regarding the condition of the building before the lease because she was not identified in a timely manner and Landlord did not know what Pierce was going to testify to or the basis for her conclusions. Id. at 169-170. The trial court deferred ruling on Landlord's objection and permitted her to testify. Id. at 170.

Pierce thereafter testified that she taught exercise and aerobic classes at the property prior to the lease. Id. at 172. She stated that there were "a great deal of problems" with the pool area, including too many chemicals in the pool and the smell being so strong because there was nothing to circulate the air. Id. at 172-74. She further made observations as to there being "black mold" on some of the steps leading to the second floor. Id. at 175. Pierce explained that she complained to Landlord about the chlorine smell in the pool area but not about the existence of mold. Id. at 175-76.

Upon cross-examination, Pierce acknowledged that she has never been employed in the field of mold remediation. Id. at 177-78. She also acknowledged that she never knew of any testing performed that revealed the presence of mold. Id. at 178.

Borough called Jason Beardsley, who was also one of the subjects of Landlord's motion in limine . N.T., 10/5/16, at 2. At the outset of Beardsley's testimony, Landlord similarly requested a continuing objection for the same reasons she had set forth during her objection to Pierce's testimony. Id. Beardsley then testified that during the period of 2002 and 2003, he worked at the gym located in the property. Id. at 3. He testified that his job was primarily as a "desk attendant" and that he would "also be responsible for making sure that any rubbish was cleaned up and -- you know -- cleaning down, you know, wiping down machines that had gotten sweat on them or any other substance." Id. at 4. He stated that he observed "mold everywhere," and that he would try to "scrub it off the walls." Id. at 5, 8.

On cross-examination, Beardsley acknowledged that he had no training on mold remediation or identification. Id. at 10. He stated that he was basing his conclusions on his "visual observations" and "experience in life," but that there was no testing performed to identify mold in the building. Id. at 11.

Borough also called Kenneth DiPhillips, who was...