Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


12-13-2005

27th & Girard Ltd v. McDonalds Corp
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-3839




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                                                               NOT PRECEDENTIAL

                         UNITED STATES COURT OF APPEALS
                              FOR THE THIRD CIRCUIT


                                  Nos. 04-3839/3840


                    27TH & GIRARD LIMITED PARTNERSHIP,

                                      Appellant,

                                          v.

                           MCDONALD’S CORPORATION,

                                      Appellee.




                    On Appeal from the United States District Court
                       for the Eastern District of Pennsylvania
                               (D.C. No. 2:03-CV-3878)
                     District Judge: Honorable Petrese B. Tucker




                              Argued November 14, 2005

               Before: ROTH, FUENTES, and BECKER, Circuit Judges.

                              (Filed: December 13, 2005)

Scott M. Waldman (Argued)
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103

Attorney for Appellant

                                          1
Craig D. Mills (Argued)
Thomas P. Manning
Buchanan Ingersoll PC
1835 Market Street, 14th Floor
Philadelphia, PA 19103

Attorneys for Appellee

                               ________________________

                                OPINION OF THE COURT
                               ________________________

FUENTES, Circuit Judge.

       Appellant, 27th & Girard Limited Partnership (“Girard”), appeals the decision of

the U.S. District Court for the Eastern District of Pennsylvania granting summary

judgment in favor of appellee McDonald’s Corporation (“McDonald’s”) on Girard’s

breach of contract claim. We exercise de novo review over this claim on appeal and

affirm the District Court’s decision.

                                        I. Background

       On May 15, 2002, Girard and McDonald’s entered into a lease agreement (the

“Lease”) for a property located at 2630 West Girard Avenue (the “Property”) in

Philadelphia. McDonald’s signed the 20-year lease with the intention of building and

operating a restaurant on the Property. The Lease obligated McDonald’s “[t]o comply

with all governmental laws, rules and regulations of any nature applicable to the Premises

or to [McDonald’s] occupancy, use, development or operation of the Premises.”

McDonald’s also agreed to “apply for Permits without unreasonable delay” after the

                                              2
execution of the Lease. The Lease further provided that if McDonald’s was unable to

obtain all necessary permits within 365 days of the execution of the Lease, McDonald’s

could terminate the Lease by delivering written notice to Girard.

       Within weeks of signing the Lease, McDonald’s applied to the Philadelphia

Bureau of Licenses and Inspections (“L&I”) for permits relating to the construction of the

restaurant. These applications—for the right to erect a large McDonald’s sign and to use

the property as an “Eat-In & Take-Out” restaurant—were denied on June 24, 2002, just

over two weeks after they were filed. McDonald’s immediately appealed this

determination to the Philadelphia Zoning Board of Adjustment (the “Zoning Board”),

which scheduled a hearing for July 31, 2002.

       Pursuant to Zoning Board rules, notice of an appeal to the Zoning Board “shall be

posted by the applicant on each street frontage of the premises with which the appeal is

concerned, for at least twelve (12) consecutive days immediately prior to and including

the day of the hearing before the Board.” The Property has three frontages: Girard

Avenue, Taney Street, and 27th Street. Thus, in order to be in compliance with the

Zoning Board’s rules, notice of the hearing should have been posted on all three frontages

every day from July 20 through July 31, the date of the hearing.

       The parties do not dispute that McDonald’s posted adequate notice as of July 19,

one day early, nor do they dispute that as of July 22, one of the three notices—the one on

27th Street—was no longer in place. At the hearing, after reviewing the evidence



                                             3
regarding the posting of notice and permitting the appeal to go forward, the Zoning Board

granted the requested variances. In its Notice of Decision, dated August 2, 2002, the

Zoning Board noted that McDonald’s posted public notice was “proper.” 1 Shortly

thereafter, on August 22, 2002, McDonald’s obtained a permit from L&I to construct its

restaurant on the Property. As of the L&I approval, slightly more than three months had

passed since the execution of the Lease.

       On September 3, 2002, the Fairmount Civic Association (“Fairmount”), a

neighborhood group opposed to development of the Property by McDonald’s, requested

that the Zoning Board reconsider its decision to grant the zoning variances, alleging

insufficient notice on the 27th Street frontage. The Zoning Board rejected Fairmount’s

request in a letter dated September 13, 2002.2

       Fairmount appealed the Zoning Board’s determination to the Court of Common

Pleas of Philadelphia County, relying on its inadequate posting argument. Both

McDonald’s and Girard were named as defendants, and the two parties defended the suit

       1
        The relevant text reads:
       The Zoning Board of Adjustment, having held a hearing in the above
       numbered appeal, after proper public notice thereof, has decided that the
       request for (a) USE VARIANCE(A) & ZONING VARIANCE(S) &
       CERTIFICATE(S) is:
              GRANTED.
       2
        The letter reads in relevant part:
       At the July 31, 2002 hearing, counsel for McDonald’s presented
       photographs indicating that the property was posted. Several neighbors also
       attended the hearing. Therefore, the Board denied the request for
       reconsideration and rehearing.

                                             4
together against Fairmount. Common Pleas Judge Matthew D. Carafiello initially stayed

construction on the Property, but he subsequently modified the stay at McDonald’s

request to permit limited construction not reliant upon the rights granted by the

challenged variances. On September 24, 2002, while the appeal before Judge Carafiello

was pending, McDonald’s and Girard amended the Lease so as to reaffirm McDonald’s

right to terminate the Lease and clarify McDonald’s responsibilities should it void the

agreement. Its rights and responsibilities thus clarified, McDonald’s began construction

on the Property in December of 2002.

       On May 8, 2003, without having conducted an evidentiary hearing, Judge

Carafiello ordered that the case be remanded to the Zoning Board for rehearing and that

the Property “shall be posted properly, and notice given to all interested parties of the new

date.” 3 On May 12, 2003, three days before the one-year anniversary of the signing of the

Lease, McDonald’s sent Girard a formal Notice of Termination based on the Lease

provision granting McDonald’s that right if it was unable to attain all necessary permits

within 365 days of the Lease execution date. On May 20, 2003, Girard rejected

McDonald’s Notice of Termination and issued a Default and Demand for Performance.

In response, McDonald’s reasserted its right to terminate the Lease and officially


       3
        Judge Carafiello’s order reads in its entirety:
       AND NOW, this 8th day of May, 2003, it is hereby ORDERED AND
       DECREED, that this case is remanded to the Philadelphia Zoning Board of
       Appeals for rehearing. The property shall be posted properly, and notice
       given to all interested parties of the new date.

                                             5
withdrew its application to the Zoning Board for variances. On June 4, 2003, Girard sent

McDonald’s a notice of monetary default.

       Girard filed a one-count complaint in the District Court alleging that McDonald’s

breached its duties under the Lease. Shortly after commencing this case, Girard moved

for partial summary judgment and McDonald’s cross-moved for summary judgment. In a

memorandum and order dated September 2, 2004, the District Court denied Girard’s

motion and granted McDonald’s cross-motion. This appeal followed.

                                      II. Discussion

       Girard argues that the District Court erred in denying its motion for summary

judgment and granting summary judgment for McDonald’s. For the reasons stated below,

we conclude that the District Court properly granted summary judgment for McDonald’s.

       Girard first contends that the failure of McDonald’s to obtain the necessary permits

within the 365-day period was the result of its breach of its obligation under the Lease to

comply with all governmental regulations, specifically Philadelphia regulations requiring

proper posting of Zoning Board hearing notices. The parties do not dispute that

McDonald’s posted notice at the Property according to Zoning Board guidelines on July

19, 2003, and that as of July 22 one of the notices was no longer in place.4 Girard further




       4
        The record reflects that “[t]he zoning notices were affixed to a plywood board and
attached to a 4x4 wooden post, which was placed inside a cement-filled five-gallon
bucket.” One of the signs was placed on each street frontage so that they could be read
from the street, and all three were protected by a locked fence surrounding the Property.

                                             6
argues that McDonald’s is collaterally estopped from claiming in this proceeding that it

complied with the posting requirement because a final order of the Philadelphia Court of

Common Pleas determined otherwise. For collateral estoppel to apply, Girard must show,

among other things, that Judge Carafiello’s May 8, 2003 order was a final judgment on

the merits—that is, a final determination of whether McDonald’s properly posted notice

at the Property. However, as the District Court explained, that order “states simply that

the case is remanded to the Zoning Board for rehearing without making a finding of fault

or reaching the merits of the case.” 5 Thus, McDonald’s is not collaterally estopped from

arguing that it complied with the Zoning Board’s posting requirement, and the District

Court properly found that McDonald’s did not breach its Lease obligation to comply with

all governmental regulations.

       Girard next argues that McDonald’s breached its obligation under the Lease to

apply for all permits and variances “without unreasonable delay.” According to Girard, it

was unreasonable for McDonald’s to litigate the posting issue; instead, once McDonald’s

knew that there was evidence of possibly inadequate notice as to the July posting, it

should have either produced evidence to the contrary or sought to reschedule the Zoning

Board hearing so that it could repost. The District Court summed up the flaws of this

argument as follows:




       5
      This conclusion is consistent with 2 Pa. C.S.A. § 754, which indicates that a
remand is appropriate where the record compiled before the local agency is incomplete.

                                             7
       The problem with [Girard’s] argument is that hindsight is 20/20. . . .
       [Girard] signed off on McDonald’s decision to litigate and was a named
       party in the litigation. If [Girard] thought that litigating before the Court of
       Common Pleas was unreasonable, the Lease Agreement provides that it did
       not have to join as a party to the litigation. Without [Girard] as a named
       party in the litigation, [McDonald’s] would have been unable to proceed
       and would have been forced to prepare for another hearing before the
       Zoning Board. To come before this Court after an unsatisfactory ruling in
       the Court of Common Pleas and argue that the litigation should have never
       taken place would be allowing [Girard] to have it both ways.

In addition, as the District Court noted, “All evidence submitted suggests that

McDonald’s did everything in its power to obtain the necessary permits to begin

construction on the restaurant.” Accordingly, for the reasons stated by the District Court,

we agree that McDonald’s did not violate the “unreasonable delay” clause of the Lease.

       Finally, Girard contends that at a minimum the District Court erred in granting

summary judgment in favor of McDonald’s because it failed to view the facts in the light

most favorable to Girard and to make all reasonable inferences in Girard’s favor. Put

simply, Girard states that further proceedings are necessary to determine whether

McDonald’s failed to abide by the Lease and the relevant zoning and notice requirements.

For the reasons stated above, we reject this argument and therefore affirm the District

Court’s dismissal of Girard’s claim against McDonald’s.

                                      III. Conclusion

       We have considered all of the arguments advanced by the parties and conclude that

no further discussion is necessary. Accordingly, the judgment of the District Court will

be affirmed.

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