author: MINORA, J.,

text:
    County of Lackawanna v. Verrastro

      Lawrence J. Moran, for plaintiff.

      Frank J. Ruggiero, for defendants HARIE and Fox-co.

      Robert Cecchini and Brian Cali, for defendant Verrastro.
    June 4, 2009
   MINORA, J.,

Before the court are two sets of preliminary objections filed by the plaintiff/counterclaim defendant County of Lackawanna, against the defendants/counterclaim plaintiffs Housing and Redevelopment Insurance Exchange (HARIE) and Foxco Insurance Management Services, Inc.’s counterclaims.

I. BACKGROUND

Lackawanna commenced this action by filing its complaint in the Court of Common Pleas of Lackawanna County on April 2, 2008. Lackawanna seeks insurance coverage for damages sustained as a result of the February 14, 2007 roof collapse at the Montage Mountain Amphitheater following a heavy snow storm.

Details on the relationship among the parties and events as alleged in Lackawanna’s complaint are as follows. Defendant HARIE issued commercial property insurance policies to Lackawanna. Defendant Foxco performs the active management of defendant HARIE’s insurance business pursuant to an attomey-in-fact agreement, through which Foxco is charged with handling the daily management of HARIE and providing insurance expertise and data processing facilities for the necessary record keeping and reporting required of HARIE. Defendant Verrastro was the agent, servant, representative and employee of defendants HARIE and Foxco, and used the Foxco address as his principal place of business. Defendant Verrastro entered a “coordinator agreement for independent insurance coordinator” with Lackawanna County on March 1,2004 with the knowledge, consent and approval of defendants HARIE and Foxco, and was designated by the county to be available for “independent consultant services.” Lackawanna’s complaint alleges that pursuant to the express terms of the coordinator agreement, Verrastro was not an employee of Lackawanna County.

Lackawanna states that HARIE, through Foxco, issued a commercial property insurance policy to Lackawanna covering an amphitheater owned by Lackawanna on Montage Mountain Road in Lackawanna County. The period of alleged coverage on the policy was July 15, 2006 through July 15, 2007. Lackawanna asserts they made timely premium payments and performed all obligations triggering coverage under the policy. According to Lackawanna, said policy covered other county property including but not limited to the Montage Ski Area, which is separate and distinct from the amphitheater but insured under the same policy.

According to Lackawanna’s complaint the Montage Ski Area was sold to Sno Mountain L.R at a real estate closing that occurred on November 6,2006. Lackawanna argues that it had not sold the amphitheater property covered under the policy at this closing or any other time during the time the subject policy was in effect. Lackawanna argues that at all times relevant, defendants knew, or should have known, that the Montage Ski Area was separate and distinct from the amphitheater. Lackawanna asserts defendant knew, or should have known, the properties were distinct, e.g., as was demonstrated through the following: (a) the line item schedule of insured properties in the policy, (b) the attorney-in-fact agreement between co-defendants HARIE and Foxco, (c) through various press coverages, and (d) through the personal knowledge of the defendants.

Lackawanna states that it had acquired a separate general liability policy for the properties at Montage Mountain from Nautilus Insurance Companies. Lackawanna further states that according to his coordinator agreement, Verrastro agreed to perform consultant services, and agreed to be the “point of origin” for all property and casualty policies required by Lackawanna County. Further pursuant to his agreement, Verrastro was held responsible for managing and monitoring the policies, which included monitoring dates and limiting duplication of coverage.

As an agent, servant, representative and employee of Foxco, Lackawanna holds defendant Verrastro responsible for the active management of FLARIE’s business and its daily management. As an element of his consultant services to the county, and while Verrastro was an agent, servant, representative, and employee of defendants HARIE and Foxco, he allegedly signed a premium financing agreement with Northeast Premium Financing Company Inc. (NEPCO) on August 9, 2006, binding Lackawanna County to adebtof$103,192.80 in connection with insuring Lackawanna’s property at Montage Mountain.

On or about February 14, 2007, during which time Lackawanna alleges the insurance policy was in effect, the amphitheater at Montage Mountain sustained damages amounting to $1,630,262.36.

Following the damage, a meeting was held on February 23, 2007 with attendees Verrastro, Charles Volpe, president and attorney-in-fact of Foxco, and then-majority Commissioner Robert Cordaro to discuss the damage. Verrastro allegedly told Cordaro that no insurance covered the loss because the insurance policy on the property was cancelled on January 15, 2007, purportedly effective December 1, 2006.

Lackawanna argues that at no time had it cancelled or authorized anyone to cancel insurance on the amphitheater. Lackawanna alleges it received the January 15,2007 notice of cancellation after the February 14,2007 loss at issue, which stated the reason for the cancellation as being “no longer owned by Lackawanna County.”

Lackawanna argues that the cancellation provisions governing the subject policy establish that coverage was never cancelled, in that: Nautilas nor defendants ever mailed a written cancellation and defendants never mailed out the notice of cancellation to the insured’s address. Lackawanna takes issue with the reason given for the notice of cancellation, i.e., Lackawanna no longer owning the property, when that was never the case.

Lackawanna further attempts to establish that the policy was not rightfully cancelled because Lackawanna had not received its premium refund, due within 30 days as required under the policy.

Lackawanna argues that Verrastro knew, or should have known, while in his position as provided for in his coordinator agreement, that the amphitheater was covered under the subject policy.

Details on the purported cancellation of the policy were provided as follows. Allegedly on January 15,2007, defendant Verrastro caused a notice of cancellation to be issued, at which time Verrastro was canceling the general liability policy with Nautilus. On December 1,2006, Verrastro wrote a letter to J.D. Insurance Consultants on Foxco letterhead requesting cancellation of the general liability policy “NC437249” effective December 1,2006. This request was made by Verrastro, as the Lackawanna County Insurance Coordinator. This letter allegedly contained three errors, (1) the policy number was misidentified, (2) the cancellation was addressed to the wrong party, and (3) he erroneously put the letter on Foxco letterhead.

Having been informed of the mistakes, Verrastro then writes the same letter on county letterhead, addressing it to “Insurance Markets Agency Inc.” in Clarks Summit, PA, but the same, incorrect policy number, “NC437249,” was placed in the letter.

On January 17, 2008, just after the new majority county commissioners took office, Lackawanna filed a claim seeking $1,630,262.36 for the storm damage to the amphitheater. The claim was denied through a letter from HARTE dated January 29,2008, citing the reason for the denial being due to the sale of the property that housed the pavilion. Lackawanna argues that even the most cursory of investigations by defendants would have found that the amphitheater property had not been sold in the real estate transaction.

The counts asserted in Lackawanna’s complaint are as follows:

Count I — breach of contract (Lackawanna v. defendant HARIE)
Count II — bad faith, 42 Pa.C.S. §8371 (Lackawanna v. defendant HARIE)
Count III — Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 PS §201-1 (Lackawanna v. defendant HARIE)
• Count IV — negligence and breach of fiduciary duty (Lackawanna v. defendant HARIE)
• Count V — respondeat superior (Lackawanna v. defendant HARIE)
Count VI — breach of contract (Lackawanna v. defendant Foxco)
• Count VII — bad faith, 42 Pa.C.S. §8371 (Lackawanna v. defendant Foxco)
• Count VIII — Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 PS §201-1 (Lackawanna v. defendant Foxco)
• Count IX— negligence and breach of fiduciary duty (Lackawanna v. defendant Foxco)
Count X — respondeat superior (Lackawanna v. defendant Foxco)
• Count XI — negligence and breach of fiduciary duty (Lackawanna v. defendant Verrastro)

In response to Lackawanna’s complaint, defendant HARIE and defendant Foxco each filed separate but identical preliminary objections on April 21,2008, with a joint brief in support filed May 27,2008. Lackawanna filed its answer and new matter to defendants’ preliminary objections on May 9, 2008. Lackawanna filed its brief in opposition to defendants’ preliminary objections on June 24, 2008. Defendant Verrastro filed preliminary objections on April 23,2008, with his supporting memorandum of law filed on May 1,2008. Lackawanna filed its answer and new matter to defendant Verrastro’s preliminary objections on May 9, 2008, and its brief in opposition to defendant Verrastro’s preliminary objections on June 24, 2008.

An oral argument was held before this court on July 14, 2008 on these matters as well as those concerning the companion action at 08 CV 961. On August 29,2008 this court issued an opinion resolving all of the defendants’ cumulative preliminary objections. Pursuant to said opinion Count II of Lackawanna’s complaint was modified, Count III was dismissed, Count VII was modified, and Count VIII was dismissed.

On October 20,2008 defendant Foxco filed an answer, with new matter and counterclaims to Lackawanna’s complaint. On the same day defendant HARIE also filed an answer, with new matter and counterclaims to Lackawanna’s complaint. The counts asserted in defendant Foxco’s counterclaim are as follows:

Count I — fraud (Foxco v. Lackawanna County)
Count II — civil conspiracy (Foxco v. Lackawanna County)
Count III — defamation (Foxco v. Lackawanna County)

The counts asserted in defendant HARJE’s counterclaim are as follows:

Count I — fraud (HARIE v. Lackawanna County)
Count II — civil conspiracy (HARIE v. Lackawanna County)
• Count III — tortious interference with existing contractual relations (HARIE v. Lackawanna County)
• Count IV — tortious interference with prospective contractual relations (HARIE v. Lackawanna County)
• Count V — defamation (HARIE v. Lackawanna County)

In response to defendants HARIE and Foxco’s counterclaims, Lackawanna filed preliminary objections to the counterclaims, in the nature of a demurrer, on November 10,2008. On January 5,2009, Lackawanna filed briefs in support of its preliminary objections. On February 9, 2009, defendants HARIE and Foxco filed briefs in opposition to Lackawanna’s preliminary objections. An oral argument was held before this court on March 5, 2009, on the matter of Lackawanna’s preliminary objections to the counterclaims. At said oral argument Foxco’s counsel withdrew Count III, defamation, of their counterclaim. Counsel for HARIE also withdrew Count III, tortious interference with existing contractual relations, and Count V, defamation of their counterclaim. Lackawanna’s preliminary objections to defendants HARIE and Foxco’s remaining counterclaims are now ripe for disposition.

II. DISCUSSION

A. Preliminary Objections Standard

Pa.R.C.P. 1028(a) provides the standard for preliminary objections. As stated by the Commonwealth Court in Richardson v. Beard, 942 A.2d 911, 913 (Pa. Commw. 2008):

“In considering preliminary objections, we must consider as true all well-pleaded material facts set forth in the petition and all reasonable inferences that may be drawn from those facts. Sheffield v. Department of Corrections, 894 A.2d 836 (Pa. Commw. 2006). Preliminary objections will be sustained only where it is clear and free from doubt that the facts pleaded are legally insufficient to establish a right to relief. Id. We need not accept as true conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinion. Myers v. Ridge, 712 A.2d 791 (Pa. Commw. 1998).”

“Preliminary objections in the nature of [a] demurrer test the legal sufficiency of the [Lackawanna’s] complaint.” Sexton v. PNC Bank, 792 A.2d 602, 604 (Pa. Super. 2002) (citation omitted), appeal denied, 572 Pa. 725, 814 A.2d 678 (2002). “The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible.” Mistick Inc. v. Northwestern National Casualty Company, 806 A.2d 39, 42 (Pa. Super. 2002). (citation omitted) Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the pleadings; no testimony or other evidence outside of the complaint may be considered to dispose of the legal issues presented by the demurrer. Cooper v. Frankford Health Care System Inc., 960 A.2d 134 (Pa. Super. 2008). Any doubt as to the legal sufficiency of the complaint should be resolved in favor of overruling the demurrer. Kane v. State Farm Fire & Casualty Company, 841 A.2d 1038, 1041 (Pa. Super. 2003).

1. Preliminary Objections of Lackawanna to Defendant Foxco’s Counterclaims

Lackawanna submitted the following preliminary objections to Foxco’s counterclaim:

a. Demurrer, Pa.R.C.P 1028(a)(4), to Foxco’s counterclaim Count I, fraud

The test for fraud is: (1) a misrepresentation; (2) a fraudulent utterance; (3) an intention by the maker that the recipient will thereby be induced to act; (4) justifiable reliance by the recipient upon the misrepresentation; and (5) damage to the recipient as a proximate result. B.K.B. v. J.G.K., 954 A.2d 630, 637 (Pa. Super. 2008). Fraud must be averred with particularity, Pa.R.C.P. 1019(b), and it must be proven by clear and convincing evidence. Ellison v. Lopez, 959 A.2d 395, 398 (Pa. Super. 2008). Each of the aforementioned elements must be proven by clear and convincing evidence. Blumenstock v. Gibson, 811 A.2d 1029, 1034 (Pa.Super. 2002).

A misrepresentation need not be an actual statement; it can be manifest in the form of silence or failure to disclose relevant information when good faith requires disclosure. Glover v. Severino, 946 A.2d 710, 713 (Pa. Super. 2008). The deliberate nondisclosure of a material fact amounts to culpable misrepresentation no less than does an intentional affirmation of a material falsity. Donahue v. W.C.A.B. (Philadelphia Gas Works), 856 A.2d 230, 236 n.14 (Pa. Commw. 2004), see also, Neuman v. Corn Exchange National Bank & Trust Company, 356 Pa. 442, 451-52, 51 A.2d 759, 764 (1947).

“Fraud comprises anything calculated to deceive, whether by single act or combination, or by suppression of truth, or suggestion of what is false, whether by direct falsehood or innuendo, by speech or silence, word of mouth, or look or gesture.” Glover, supra at 713. (emphasis in original)

A misrepresentation is material if the party would not have entered into the agreement but for the misrepresentation. “One deceived need not prove that fraudulent misrepresentation was the sole inducement to the investment of money, a material inducement is sufficient.” Eigen v. Textron Lycoming Reciprocating Engine Division, 874 A.2d 1179, 1186 (Pa. Super. 2005). (citations omitted)

“To be justifiable, reliance upon the representation of another must be reasonable____Whether the party claiming to have been defrauded relied upon the false representation is a question of fact.” Eigen, supra at 1189 (Pa. Super. 2005). (citations omitted) Furthermore, the issue of justifiable reliance cannot be resolved without considering the relationship of the parties involved and the nature of the transaction. Drelles v. Manufacturers Life Insurance Company, 881 A.2d 822, 841 (Pa. Super. 2005).

Under Pennsylvania law, in an action based on fraud, the measure of damages is “actual loss”, and not the benefit, or value, of that bargain. Delahanty v. First Pennsylvania Bank N.A., 318 Pa. Super. 90, 117, 464 A.2d 1243, 1257 (1983) (citation omitted), see also, Skurnowicz v. Lucci, 798 A.2d 788, 795 (Pa. Super. 2002). The victim is entitled to all pecuniary losses which result as a consequence of his reliance on the truth of the representations. Id.

Under Pennsylvania law, the right to punitive damages is a mere incident to a cause of action, and “[a] claim for punitive damages arises out of the underlying cause of action.” Dillow v. Myers, 916 A.2d 698, 702 (Pa. Super. 2007), see also, Hilbert v. Roth, 395 Pa. 270, 276, 149 A.2d 648, 652 (1959). Under Pennsylvania law, a request for punitive damages does not constitute a cause of action in and of itself. Christopher v. Hurwitz, 2006 WL 1791594 (Pa. Com. Pl. 2006) (Phila. Cty.). One cannot recover punitive damages independently from an underlying cause of action. DiGregorio v. Keystone Health Plan East, 840 A.2d 361, 370 (Pa. Super. 2003). If no cause of action exists, then no independent action exists for a claim of punitive damage since punitive damages are only an element of damages. Id. Punitive damages are penal in nature and are proper only in cases where the defendant’s actions are so outrageous as to demonstrate willful, wanton or reckless conduct. Snead v. Society for Prevention of Cruelty to Animals of Pennsylvania, 929 A.2d 1169 (Pa. Super. 2007).

“Generally, the plaintiff in an action for fraud may recover all actual losses caused by the defendant’s fraud. The plaintiff may also recover punitive damages where there are aggravated circumstances. . . . However, it is fraud which is the basis for the recovery of compensatory damages, and the same fraud is not alone a sufficient basis upon which to premise an award of punitive damages. ... If the rule were otherwise, punitive damages could be awarded in all fraud cases. This is not the law. The rule, rather, is that for punitive damages to be awarded there must be acts of malice, vindictiveness and a wholly wanton disregard of the rights of others.” Smith v. Renaut, 387 Pa. Super. 299, 309, 564 A.2d 188, 193 (Pa. Super. 1989). (citations omitted)

“Though this rule seems to require the plaintiff to meet an additional burden, it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of ‘outrageous conduct’ to support an award of punitive damages.” Delahanty, supra at 130, 464 A.2d at 1263.

“It is well established that a litigant is responsible for his own counsel fees absent an agreement by the parties or some other established exception.... Unfortunately . . . , there is no established exception which permits recovery of attorney fees in an action for fraud.” Pittsburgh Live Inc. v. Servov, 419 Pa. Super. 423, 429-30, 615 A.2d 438, 441-42 (1992). (citations omitted)

Foxco has failed to sufficiently plead two elements of the cause of action of fraud. These two elements are justifiable reliance and damages. Foxco asserts the element of justifiable reliance is met by their defending the Lackawanna’s lawsuit and the filing of the counterclaims. However, Foxco cannot cite governing law for this unique argument.

Defending a lawsuit does not make out the element of justifiable reliance for fraud. This element requires the party to have reasonably relied upon the false representation of the other party, thus giving rise to the cause of action. Here, Foxco asserts that the false or misrepresentation of Lackawanna is the claim that insurance coverage existed for the loss that occurred on February 14, 2007. Foxco however denied the claim, never paid out any insurance proceeds, and claims the coverage was not in existence at the time. Foxco never acted on the alleged false/misrepresentation of Lackawanna. And the question of whether or not insurance coverage was in existence for the damage caused on Februaiy 14,2007 is the entire basis of Lackawanna’s lawsuit. As such, we are compelled to conclude defendant Foxco has not properly pled the element of justifiable reliance.

Further, Foxco has not sufficiently pled the element of damages. Foxco asserts that they have suffered attorney’s fees and the cost of defending this lawsuit as damages. As stated above, there is no case law which supports a claim for attorney’s fees as damages for fraud. As Foxco has not made out a recoverable claim for fraud; Foxco could not sustain the ancillary claim for punitive damages, which derives from the fraud. Therefore, Foxco has not sufficiently/properly pled either the fraud or the element of damages.

Accordingly, Foxco’s counterclaim for fraud lacks two essential elements of the tortious cause of action, justifiable reliance and damages. Therefore, no recovery on their fraud claim is legally possible. Lackawanna’s preliminary objection to Foxco’s counterclaim Count I, fraud is hereby granted and the counterclaim is dismissed.

b. Demurrer, Pa.R.C.P 1028(a)(4), toFoxco’s counterclaim Count II, civil conspiracy

The elements of “a claim for civil conspiracy are as follows: (1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose, (2) an overt act done in pursuance of the common purpose, and (3) actual legal damage.” Phillips v. Selig, 959 A.2d 420, 437 (Pa. Super. 2008). Proof of a conspiracy must be made by full, clear and satisfactory evidence. Id. “Absent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act.” Id., quoting McKeeman v. Corestates Bank N.A., 751 A.2d 655, 660 (Pa. Super. 2000).

Foxco’s claim for civil conspiracy is based upon their claim for fraud. They assert that Lackawanna and their agents conspired to defraud Foxco. As we have already concluded that Foxco has not sufficiently pled their claim for fraud, we are once again compelled to conclude that their cause of action for civil conspiracy cannot stand. There can be no cause of action for civil conspiracy without an underlying object cause of action giving rise to the inchoate civil conspiracy. Lackawanna’s preliminary objection to Foxco’s counterclaim Count II, civil conspiracy is hereby granted and the counterclaim is dismissed.

c.Demurrer, Pa.RC.P 1028(a)(4), toFoxco’s counterclaim Count III, defamation

As counsel for Foxco withdrew this count of their counterclaim at the March 5,2009 oral argument, Lackawanna’s preliminary objection is deemed moot.

2. Preliminary Objections of Lackawanna to Defendant HARIE’s Counterclaim

Lackawanna submitted the following preliminary objections to HARIE’s counterclaim:

a .Demurrer, Pa.R.C.P. 1028(a)(4), to HARIE’s counterclaim Count I, fraud

Lackawanna’s demurrer to HARIE’s counterclaim Count I, fraud, is granted, consistent with this court’s ruling on Lackawanna’s demurrer to Foxco’s counterclaim of fraud.

b .Demurrer, Pa.R.C.P. 1028(a)(4), to HARIE’s counterclaim Count II, civil conspiracy

Lackawanna’s demurrer to HARIE’s counterclaim Count II, civil conspiracy, is granted, consistent with this court’s ruling on Lackawanna’s demurrer to Foxco’s counterclaim of civil conspiracy.

c. Demurrer, Pa.R.C.P. 1028(a)(4), to HARIE’s counterclaim Count III, tortious interference with existing contractual relations

As counsel for HARIE withdrew this count of their counterclaim at the March 5,2009 oral argument, Lackawanna’s preliminary objection is deemed moot.

d .Demurrer, Pa.R.C.P. 1028(a)(4), to HARIE’s counterclaim Count IV, tortious interference with prospective contractual relations

“The elements of a cause of action for intentional interference with a contractual relation, whether existing or prospective, are as follows: (1) the existence of a contractual, or prospective contractual relation between the complainant and a third party; (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of the defendant; and (4) the occasioning of actual legal damage as the result of the defendant’s conduct.” Blackwell v. Eskin, 916 A.2d 1123, 1127-28 (Pa. Super. 2007). (citation omitted)

Prospective contractual relationships can be difficult to define. To a certain extent, the term has an evasive quality, eluding precise definition. It is something less than a contractual right, something more than a mere hope. We are not dealing with certainties, but with reasonable likelihood or probability. There must be something more than a mere hope or the innate optimism of the salesman. Phillips, supra at 428.

To determine the reasonable likelihood or probability of a prospective contractual relationship, courts must apply an objective standard. Id. Pennsylvania courts have consistently required more evidence than the existence of a current business or contractual relationship. Id. at 429.

Defendant HARIE has identified no prospective contractual relationships which Lackawanna has interfered with. Defendant HARIE generally asserts that statements made by Lackawanna and their agents were harmful to their business. As the case law indicates more than generalities need to plead in order to succeed on a claim for tortious interference with prospective contractual relationships.

As no prospective contractual relationship has been identified by defendant HARIE their claim for tortious interference with prospective contractual relationships is legally insufficient. Therefore, Lackawanna’s preliminary objection to HARIE’s counterclaim Count IV, tortious interference with prospective contractual relationship is hereby granted and the counterclaim is dismissed.

e. Demurrer, Pa.R.C.P. 1028(a)(4), to HARIE’s counterclaim Count V, defamation

As counsel for HARIE withdrew this count of their counterclaim at the March 5,2009 oral argument, Lackawanna’s preliminary objection is deemed moot.

An appropriate order follows.

ORDER

And now, June 4, 2009, consistent with this court’s memorandum, we sustain all the objections of plaintiff, County of Lackawanna, to defendants Housing and Redevelopment Insurance Exchange (HARIE) and Foxco Insurance Management Services Inc’s counterclaims. The preliminary objections of Lackawanna are granted in their entirety, and all of defendants HARIE and Foxco’s counterclaims are dismissed, either due to their voluntary withdrawal by HARTE and Foxco’s counsel or by this court’s rulings herein.

      . The exact date on which the loss occurred is not clear, as the different parties refer to the loss as occurring on either February 14, 2007 or February 15, 2007. The damage has been attributed to snow accumulation from a storm that blanketed Northeastern Pennsylvania which came to be known as the “Valentine’s Day Storm” during its occurrence.

      . Neuman v. Corn Exchange National Bank & Trust Co., 356 Pa. 442, 455, 51 A.2d 759, 766 (1947); Lokay v. Lehigh Valley Cooperative Farmers Inc., 342 Pa. Super. 89, 99, 492 A.2d 405, 410 (1985); Delahanty v. First Pennsylvania Bank N.A., 318 Pa. Super. 90, 117, 464 A.2d 1243, 1257 (1983).


source: Caselaw Access Project

author: BLACK, S.J.,

license: Public Domain

text:
    Messina v. East Penn Township

      Marc Jonas and Julie L. Von Spreckelsen, for appellants.

      James R. Nanovic, for appellee.

      Joseph J. Matika, for intervenor.

      September 8, 2009
   BLACK, S.J.,

Appellants, Charles N. Messina, Agnes Messina, and Lehigh Asphalt Paving and Construction Co., have filed a procedural validity challenge to the East Penn Township Zoning Ordinance, Township Ordinance no. 1996-94, adopted July 22, 1996. Appellants aver that procedural errors occurred at the time the ordinance was adopted and that as a result the ordinance is void ab initio. However, the challenge was not filed until August 11,2008, more than 12 years after adoption of the ordinance, and in the meantime the township and its residents and landowners have substantially relied on the validity and effectiveness ofthe ordinance. Therefore, appellants’procedural validity challenge is time-barred.

I. FACTS AND PERTINENT HISTORY

A. Procedural History

On August 11,2008, appellants commenced this action by filing an appeal in the nature of a procedural validity challenge to the ordinance. The appeal was filed with this court pursuant to 42 Pa.C.S. §5571.1(a) ofthe Judicial Code and 53 P.S. § 11002-A(b) of the Municipalities Planning Code (MPC). On September 9, 2008, the Carbon County Prothonotary issued a writ of certiorari directing East Penn Township to file with the prothonotary a record of its proceedings regarding the adoption ofthe ordinance. Pursuant to this writ, the township filed its records regarding adoption of the ordinance on October 24, 2008.

On November 6, 2008, Nancy Blaha filed a notice of intervention with the prothonotary of Carbon County seeking to intervene in this matter for the purpose of opposing the appellants’ claim that the ordinance is invalid. Subsequently, on December 5,2008, Chris Pekumy also sought to intervene in the matter for the same purpose. Intervenor Blaha is a resident of East Penn Township, and Intervenor Pekumy owns property adjacent to the quarry at the center of this legal dispute. The intervenors originally sought to intervene as a matter of right, but later petitioned to intervene pursuant to Pa.R.C.P. 2327(4) on the ground that they have a legitimate legal interest in sustaining the ordinance, and that this interest may not be adequately represented by the township. We granted their petition to intervene, and they have participated in the briefing and argument through counsel.

Argument was held on the merits of the procedural validity challenge on July 27, 2009, following the submission of briefs. At the time of argument we offered to schedule a hearing for any party to submit relevant evidence. None of the parties expressed any interest in presenting evidence. Therefore, we have limited our review of evidence to those documents filed of record with the prothonotary in response to the writ of certiorari.

B. Relevant Facts

Charles N. Messina and Agnes Messina are the legal owners of a parcel of land located in East Penn Township, Carbon County, Pennsylvania, identified as Carbon County tax map parcel no. 99-8-1 IB and presently used as a quarry. Lehigh Asphalt Paving and Construction Company is the equitable owner of the quarry pursuant to an option contract to purchase the property. The record is unclear as to when Lehigh Asphalt was granted the option or whether the option has been exercised.

The quarry is comprised of 114.4 acres and is located in the rural (R) and rural residential (RR) zoning districts established pursuant to the ordinance. Appellants’ use of the quarry is for mining and excavation. They aver that the ordinance prevents them from expanding their mining and excavation operations.

Prior to July 22, 1996, the township did not have a zoning ordinance. The ordinance adopted by the township on that date established a comprehensive zoning ordinance effective July 27, 1996. The effect of the ordinance was “to place restrictions on the use and development of land in the [T]ownship.” Subsequent to its initial adoption, the ordinance has been amended three times, in 2000, 2001 and 2005, all prior to the instant procedural challenge.

The record filed in this case contains documents relating to the enactment of the ordinance by the Township Planning Commission, including minutes of the Planning Commission dating from 1994 through 1996. Additionally, proofs of publication dated April 15, May 15, and July 16, 1996, are part of the record; as well as minutes of the Township Board of Supervisors meetings in 1996. Finally, various letters from concerned township residents regarding the proposed ordinance, including a letter from Greg Solt suggesting a change, are also part of the record.

The record indicates that on July 22, 1996, the night the ordinance was adopted, the township supervisors took an initial vote on the ordinance as advertised. That vote failed to produce the necessary votes for adoption. Amendments proposed by Greg Solt were then made to the proposed zoning map. A second vote was taken, this time on the ordinance as amended. On this second vote the ordinance as amended was adopted. The minutes of the July 22, 1996 meeting state in relevant part:

“Joe Ehritz made a motion to adopt the zoning ordinance with the Greg Solt’s changes on the zoning map. Motion was then changed to ‘as proposed’, [sic] There being no second, motion did not pass. Joe Ehritz made a motion seconded by Steve Fatzinger to adopt a pending ordinance doctrine. AIF.
“Executive session was called at 8:10 p.m. and ended at 8:40 p.m. (litigation).
“After further discussion on the zoning map, Joe Ehritz made a motion, seconded by Ted Smith to adopt the zoning ordinance with the Greg Solt’s changes on the zoning map. AIF. Changes were made on the map.”

It is apparent that changes were made to the zoning ordinance on the night of its adoption. This means that the ordinance actually adopted differed to some extent from the ordinance proposed and advertised prior to the meeting. There is no evidence that the Planning Commission reviewed the changes or that township residents were on notice of the changes prior to the meeting of July 22, 1996.

Nor can we discern from the record with certainty the precise change or changes made. It is possible that the changes made were those requested in the June 22,1996 letter of Greg Solt. Those changes were limited to movement of the boundary line between the “business commercial zone” and “village commercial zone” from the east to the west side of the Repscher subdivision. Because the quarry does not abut the Repscher subdivision and is not located in either the business commercial zone or village commercial zone, the movement of this line may not have had any impact on the quarry or its proposed expansion.

II. ANALYSIS

A. Procedural Defects in the Adoption of the Ordinance

The process for enacting a zoning ordinance under the MPC is complex with specific rules concerning notice and procedure. Our appellate courts have stated that strict adherence to these rules is mandatory to protect the public interest. See e.g., Glen-Gery Corporation v. Zoning Hearing Board of Dover Township, 589 Pa. 135, 907 A.2d 1033 (2006); and Lower Gwynedd Township v. Gwynedd Properties Inc., 527 Pa. 324, 591 A.2d 285 (1991). In Cranberry Park Associates v. Cranberry Township Zoning Hearing Board, 561 Pa. 456, 751 A.2d 165 (2000), the zoning ordinance was invalidated because of a failure to properly number, sign, date, and record the proposed ordinance. In Kohr v. Lower Windsor Township Board of Supervisors, 867 A.2d 755 (Pa. Commw. 2005), the zoning ordinance was invalidated for failure to re-advertise or give notice to the municipal planning commission after amendments had been made to the ordinance during the initial adoption process.

In the present case, appellants contend that East Penn Township did not adhere strictly to the procedural requirements for adoption of a zoning ordinance in four respects. The ordinance is presumed to be valid, and the burden of proving facts sufficient to establish a procedural defect falls on appellants as the parties objecting to the ordinance. Cranberry Park Associates v. Cranberry Township Zoning Hearing Board, supra at 459, 751 A.2d at 167.

1. First, appellants contend that the public notice of the proposed amendment published in the Times Leader, a newspaper of general circulation in the county, did not include either the full text of the proposed ordinance or a “brief summary” setting forth the provisions of the ordinance “in reasonable detail,” as required by section 610(a) of the MPC, 53 P.S. §10610(a). Obviously, publication of the entire 91-page ordinance would have been ridiculous. We believe that the summary published was sufficient and did meet the requirements of the MPC.

2. Second, appellants contend that an attested copy of the. proposed ordinance was not filed with the Carbon County Law Library, as required by section 610(a)(2) of the MPC, 53 P.S. §10610(a)(2). However, appellants have not submitted any evidence to support this contention. Moreover, the record contains a copy of the legal notice published in the Times News on July 5 and July 12,1996, stating that “copies of the proposed ordinance may be reviewed in the East Penn Township Municipal Building... or the Carbon County Law Library.” This legal notice supports the township’s position on this issue.

3. Third, appellants contend that the ordinance was not re-advertised before adoption after substantial amendments were made to it. Section 610(b) of the MPC is specific that when

“substantial amendments are made in the proposed ordinance or amendment, before voting upon enactment, the governing body shall, at least 10 days prior to enactment, re-advertise, in one newspaper of general circulation in the municipality, a brief summary setting forth all the provisions in reasonable detail together with a summary of the amendments.” 53 P.S. §10610(b).

It appears from the record that the proposed ordinance was amended on the night of its enactment, July 22,1996, without re-advertisement before it was voted on and adopted. However, not every amendment requires re-advertisement. Under section 610(b), re-advertisement is necessary only if the amendment was “substantial.” In Schultz v. City of Philadelphia, 385 Pa. 79, 82, 122 A.2d 279, 281 (1956), in discussing the issue of substantiality our Supreme Court stated:

“While it is obvious that an insignificant amendment made to a proposed ordinance after advertisement and a public hearing does not require a re-advertisement and public hearing, the case is clearly otherwise if the amendment is substantial in relation to the legislation as a whole.”

The Supreme Court expounded on this principle in Willey Appeal, 399 Pa. 84, 87, 160 A.2d 240, 242 (1960), holding that for substantiality to exist “there must be a significant disruption in the continuity of the proposed legislation or some appreciable change in the overall policy of the bill.” In Willey, the court found that the amendment “did not add or delete any permitted use; it did not change a district boundary or classification, nor did it vary any regulation.” Id. Therefore, the court found that the amendment was insubstantial, and refused to invalidate the zoning ordinance at issue, even though it had not been re-advertised following the amendment. The Commonwealth Court reached a different conclusion on substantiality in Save Our Local Environment II v. Foster Township Board of Supervisors, 137 Pa. Commw. 505, 508-509, 587 A.2d 30, 31-32 (1991), holding that modification of a zoning district from agricultural to industrial amounts to a substantial change when applied to 3,300 acres.

In the instant case it is not clear from the record before us exactly what the amendment was. Therefore, we are unable to find that it was substantial. Appellants, who had the burden of proof on this issue, failed to prove facts sufficient to establish its claim of a substantial amendment. The amendment may have consisted of the change suggested by Greg Solt in his letter of June 22, 1996, i.e., the movement of the dividing line between the business commercial and village commercial districts on the property known as the Repscher subdivision. If so, this may have been a substantial change under the test established by our Supreme Court in Willey. However, the change adopted at the July 22,1996 meeting might have been something else. We cannot decide an important case such as this — or any case for that matter — on the basis of guesswork. In the absence of any evidence as to the specific content of the amendment, we are unable to find that it was “substantial”. Hence, we cannot find that the failure to re-advertise was a fatal flaw in the enactment process.

4. Appellants also assert a fourth defect in the enactment process in that the township failed to submit the final version of the ordinance, including all amendments, to the County Planning Commission at least 45 days prior to the enactment of the ordinance. The MPC requires in section 607(e) that “at least 45 days prior to the public hearing by the local governing body as provided in section 608, the municipality shall submit the proposed ordinance to said county planning agency for recommendations.” 53 P.S. § 10607(e). This requirement has been interpreted strictly. It applies whether or not the proposed amendment is substantial. Kohr v. Lower Windsor Township Board of Supervisors, 867 A.2d 755, 758 (Pa. Commw. 2005) (holding that “each amendment (must) be submitted to the planning agency whether substantial changes have occurred to it or not”). Since an amendment was accepted on the very night the ordinance was adopted, it is obvious that the ordinance as amended was not submitted to the County Planning Commission at least 45 days before its adoption. Accordingly, based on the holding in Kohr and the plain meaning of section 607(c), we must conclude that there was a violation of the strict requirement to inform the County Planning Commission of the content of the proposed ordinance, including all amendments, at least 45 days prior to its adoption.

B. Glen-Gery and the Doctrine of Void ab Initio

The Pennsylvania Supreme Court has taken up the issue of procedural irregularities in the adoption of municipal ordinances with some frequency. In a line of cases including Glen-Gery Corporation v. Zoning Board of Dover Township, 589 Pa. 135, 907 A.2d 1033 (2006), the court has held that procedural defects in the enactment of a municipal ordinance render the ordinance void ab initio, and that a void abinitio ordinance is to be treated as though it never had existed, so that the limitations period for challenging the ordinance never began to run.

In Lower Gwynedd Township v. Gwynedd Properties Inc., 527 Pa. 324, 591 A.2d 285 (1991), the township had enacted an ordinance authorizing the condemnation of a developer’s property for use as a conservation area. The township had published a summary of the ordinance in the local newspaper but had failed to file a copy of the ordinance with the county law library or another county office. Upon a procedural challenge by the landowner, our Supreme Court held:

“[T]he procedures established by the legislature for the enactment of ordinances must be followed strictly in order for an ordinance to be valid.... The precedents of this court have been consistent in holding that statutory publication requirements are mandatory and that ordinances adopted without strict compliance are void. The public’s interest in the legislative process demands no less.” Id. at 327-29, 591 A.2d at 287-88.

The precedent set by the Supreme Court in Lower Gwynedd was followed in Schadler v. Zoning Hearing Board of Wiesenberg Township, 578 Pa. 177, 850 A.2d 619 (2004), where the court also held a municipal ordinance void ab initio because of the municipality’s failure to comply with statutory notice requirements prior to enactment. Schadler involved a landowner’s procedural challenge to the enactment of an ordinance regulating mobile homes. The challenge was filed 200 days after the ordinance had been enacted. The Supreme Court determined that because of procedural defects in enactment of the ordinance, it was void ab initio. Hence the 30-day limitation period set forth in 53 Pa.C.S. §10909.1(a)(2) never began to run and did not bar the procedural challenge. The court stressed the importance of requiring compliance with procedural requirements:

“The purpose of requiring compliance with the procedural requirements for enacting township ordinances is premised on the importance of notifying the public of impending changes in the law so that members of the public may comment on those changes and intervene when necessary.” Id. at 189, 850 A.2d at 627.

The Supreme Court re-affirmed this principle in Glen-Gery Corporation v. Zoning Board of Dover Township, 589 Pa. at 135, 907 A.2d at 1033. The court explained that the effect of determining an ordinance to be void ab initio because of procedural defects is that the ordinance never became law. Therefore, the limitations period never commenced, and a procedural challenge to the zoning ordinance at issue could be filed at any time in the future. See also, Luke v. Cataldi, 593 Pa. 461, 932 A.2d 45 (2007), holding that a municipality’s failure to give public notice or hold a hearing before granting conditional use permits caused the permits to be void ab initio.

In Glen-Gery the court appeared to recognize the potential danger in eliminating all cut-off dates for challenging the validity of ordinances. Thus, in a footnote to its opinion the court stated that the void ab initio doctrine applies only to procedural defects implicating “notice, due process, or other constitutional rights.” Glen-Gery, 589 Pa. at 143 n.5, 907 A.2d at 1037 n.5. The court also referred to its earlier statement in Schadler v. Zoning Hearing Board of Wiesenberg Township, 578 Pa. at 189, 850 A.2d at 627, that “we may someday be presented with a case in which a procedurally defective ordinance has been ‘on the books’ and obeyed in practice for such a long time that public notice and acquiescence can be presumed____” Glen-Gery, 589 Pa. at 145 n.6, 907 A.2d at 1039 n.6.

C. Legislative Modification of the Void ab Initio Doctrine

In July of2008, following the decision of the Supreme Court in Glen-Gery, the Pennsylvania Legislature took action to limit application of the void ab initio doctrine. Recognizing the need for a measure of certainty and stability in land use planning and development, the legislature enacted an amendment to the Judicial Code at 42 Pa.C.S. §5571.1 placing time limits on procedural challenges to an ordinance even where the procedural defects raise constitutional issues. The amendment continues the intent of the void ab initio doctrine to some extent by allowing procedural challenges to an ordinance after expiration of the 30-day appeal period to avoid “an impermissible deprivation of constitutional rights.” However, the legislature balanced this provision with a temporal limit on such challenges unless certain conditions are met. The statute accomplishes this by establishing certain presumptions and certain burdens that the challenging party must meet to invoke the void ab initio doctrine. The relevant portions of section 5571.1 are set forth below:

“(c) Exemption from limitation. — An appeal shall be exempt from the time limitation in subsection (b) [30 days] if the party bringing the appeal establishes that, because of the particular nature of the alleged defect in statutory procedure, the application of the time limitation under subsection (b) would result in an impermissible deprivation of constitutional rights.
“(d) Presumptions. — Notwithstanding any other provision of law, appeals pursuant to this section shall be subject to and in accordance with the following:
“(1) An ordinance shall be presumed to be valid and to have been enacted or adopted in strict compliance with statutory procedure.
“(2) In all cases in which an appeal filed in court more than two years after the intended effective date of the ordinance is allowed to proceed in accordance with subsection (c) the political subdivision involved and residents and landowners within the political subdivision shall be presumed to have substantially relied upon the validity and effectiveness of the ordinance.
“(3) An ordinance shall not be found void from inception unless the party alleging the defect in statutory procedure meets the burden of proving the elements set forth in subsection (c).
“(e) Burden of proof — Notwithstanding any other provision of law, an ordinance shall not be found void from inception except as follows:
“(1) In the case of an appeal brought within the 30-day time limitation of subsection (b), the party alleging the defect must meet the burden of proving that there was a failure to strictly comply with statutory procedure.
“(2) In the case of an appeal which is exempt from the 30-day time limitation in accordance with subsection (c), the party alleging the defect must meet the burden of proving each of the following:
“(i) That there was a failure to strictly comply with statutory procedure.
“(fi) That there was a failure to substantially comply with statutory procedure which resulted in insufficient notification to the public of impending changes in, or the existence of, the ordinance, so that the public would be prevented from commenting on those changes and intervening, if necessary, or from having knowledge of the existence of the ordinance.
“(iii) That there exist facts sufficient to rebut any presumption that may exist pursuant to subsection (d)(2) that would, unless rebutted, result in a determination that the ordinance is not void from inception.”

In the present case, the appeal was filed on August 11, 2008, more than 12 years after the enactment of the ordinance and more than 30 days after the effective date of section 5571.1 of the Judicial Code. Thus, appellants must meet the burden of proving those propositions set forth in subsection (e)(2) above in order to be exempt from the 30-day appeal deadline.

We previously concluded that the township had failed to strictly comply with the relevant statutory procedures for notifying the Carbon County Planning Commission of the amendment to the ordinance at least 45 days prior to its enactment. However, this procedural violation affected only possible input from the Planning Commission. It did not cause “insufficient notification to the public of impending changes in, or the existence of, the ordinance, so that the public would be prevented from commenting on those changes and intervening, if necessary, or from having knowledge of the existence of the ordinance.” 42 Pa.C.S. §5571.1(e)(2)(h). (emphasis added) Consequently, appellants have failed to meet the condition in section 5571.1(e)(2)(h) for excusing compliance with the 30-day appeal deadline.

Also fatal to appellants’ appeal, in view of the 12-year delay, is appellants’ total failure to prove any facts to rebut the presumption in section 5571.1(d)(2) that the township and its residents and landowners have substantially relied upon the validity and effectiveness of the ordinance. Evidence of such facts is required by the third prong of section 5571.1(e)(2). In the absence of such evidence, we must presume that the township and its residents and landowners did in fact substantially rely on the ordinance. In view of this substantial reliance, appellants’ appeal is untimely. Any other conclusion would be manifestly unfair to the township and its residents and landowners. See Geryville Materials Inc. v. Lower Milford Township Zoning Hearing Board, 972 A.2d 136, 144 (Pa. Commw. 2009) (zoning and subdivision ordinances held valid despite procedural defects in order to avoid “potential chaos” in the community).

It should be noted that the presumption of substantial reliance under section 5571.1 (d)(2), and the requirement in section 5571.1 (e)(2)(iii) that appellants offer sufficient evidence to rebut it, apply to all procedural defects, even those that may have resulted in insufficient notice to the public and the deprivation of constitutional rights. Thus, even if the amendment at the meeting of July 22, 1996, had been a substantial amendment and the ordinance was not thereafter re-advertised, the presumption of substantial reliance in section 5571.1(d)(2) is still applicable.

The statutory presumption of substantial reliance is very appropriate under the circumstances here. The ordinance has been on the township books for over 12 years. Since its adoption the township has amended the ordinance on three occasions. Presumably, people have purchased property in the township and have made improvements to their properties in reliance on the existence of the ordinance. Appellants themselves acknowledge at paragraph 11 of their appeal that “[t]he ordinance affected the substantive property rights of all property owners in the township at the time it was enacted and continues to affect the rights of all current owners of real property in the township. . . .” Significantly, one of the appellants, Lehigh Asphalt Paving and Construction Company, has itself relied very substantially on the validity and effectiveness of the ordinance. Lehigh Asphalt submitted an application to the township on May 20, 2000, for a special exception under the ordinance to expand its quarry operations. In June 11, 2001, it commenced a mandamus action against the Township Board of Supervisors alleging a deemed approval of a land development plan it had submitted in July 1999. The mandamus action was successful following an appeal to the Commonwealth Court. See Lehigh Asphalt Paving and Construction Company v. Board of Supervisors of East Penn Township, 830 A.2d 1063 (Pa. Commw. 2003).

The case of Geryville Materials Inc. v. Lower Milford Township Zoning Hearing Board, cited above, is instructive. Geryville involved a procedural challenge to 10 zoning and subdivision ordinances of the township. These ordinances had been on the township’s books for periods ranging from three to 39 years. The challenges were filed prior to the amendment to the Judicial Code referred to above. Nevertheless, despite procedural defects in the enactment process, the Commonwealth Court upheld the ordinances, refusing to apply the void ab initio doctrine. The court noted that the Supreme Court in Glen-Gery had stated in dicta that a municipality’s reliance on, or acquiescence in, an ordinance over a period of time could support a refusal to apply the void ab initio doctrine despite evidence of defects in the enactment process. The Commonwealth Court then stated in Geryville, “The simple fact that no party has sought before to challenge the procedural process involved with these ordinances is a plain indication that interested parties have obeyed the ordinances.” Geryville, 972 A.2d at 143. The court further observed that “from a reliance perspective, it takes little imagination to envision the sort of inequities/unfaimess that would be imposed upon the township’s residents” if ordinances that have been applied and accepted for a long period of time are suddenly declared void. Id. at 144 n.9. Referring to the “potential chaos” that would result, the court concluded:

“If we were to reach the result urged by Geryville, we believe that the turmoil that might ensue would cause greater harm to all of those who have an interest in land use in the township, and who have innocently relied on the challenged ordinances, than would result by electing not to apply the void ab initio doctrine.” Id. at 144.

In the instant case, as in Geryville, it takes little imagination to envision the chaos and unfairness that is likely to ensue if the township were to be suddenly without a zoning ordinance. That would be an unreasonable and unnecessary burden to place on the township residents and landowners, who for more than 12 years have relied on the validity and effectiveness of the ordinance.

As noted above, appellants did not produce any evidence to sustain their burden of proof that there was no substantial reliance on the ordinance. At oral argument, appellants’ counsel stated that East Penn Township is a quiet little township where people really are unaware of such matters as zoning. This statement is a rather condescending observation without any foundation in the record of the case. The residents and landowners of East Penn Township are entitled to the same statutory presumptions as any other persons, including the presumption under section 5571.1(d)(2) that they “substantially relied upon the validity and effectiveness of the ordinance.”

It was incumbent upon the appellants to affirmatively prove that there was no substantial reliance on the ordinance. Without such proof, we are bound to accept the statutory presumption that there was substantial reliance. In view of this substantial reliance, it would be improper to set aside the ordinance. As a result, appellants’ procedural validity challenge, filed more than 12 years after enactment of the ordinance and more than 30 days after the enactment of section 5571.1 of the Judicial Code, 42 Pa.C.S. §5571.1, is time-barred.

D. Due Process of Law

The Fourteenth Amendment to the United States Constitution prohibits a state or local government from depriving a person of a property interest without due process of law. A similar requirement exists under the Pennsylvania Constitution. See Palmer v. Bartosh, 959 A.2d 508 (Pa. Commw. 2008), analyzing Article I Section 1 of the Pennsylvania Constitution. Due process includes advance notice and an opportunity to be heard in legal proceedings that may adversely affect one’s property.

Appellants have not challenged the constitutionality of section 5571.1 of the Judicial Code continuing the 30-day limitations period for challenges to municipal ordinances, absent evidence that there was a deprivation of constitutional rights. Indeed, appellants have quoted section 5571.1 in their brief as the applicable law. Appellants contend, however, that they are exempt from any time limitation because they have been denied due process of law.

We find their argument unconvincing. Statutes of repose are a legitimate and important part of our jurisprudence. They provide needed stability and predictability. They apply even where constitutional due process claims are asserted. The only exception is when the lack of due process notice has prevented the property owner from taking timely action to protect his property interest. That is not the case here for two reasons.

First, it is undisputed that a legal notice was timely published advertising the original proposed ordinance back in 1996, prior to the amendment. Although the ordinance as amended was not re-advertised, appellants have been aware of the passage of the amended ordinance since at least the year 2000, when appellant submitted an application for a special exception under the ordinance, and probably earlier in 1999, when it submitted a land development plan to the Township Board of Supervisors. Yet appellants took no action to challenge the validity of the ordinance until 2008. In the meantime the township and its residents and landowners have substantially relied on the validity and effectiveness of the ordinance. Under these circumstances it would be inequitable to permit appellants to succeed on their validity challenge. Principles of estoppel preclude their assertion of a due process claim at this late date.

Second, there is the issue of standing. It is black-letter law that “one cannot question the constitutionality of a statute — and this includes municipal ordinances — unless injuriously affected by the particular matter alleged to be unconstitutional.” Commonwealth v. Kennedy, 129 Pa. Super. 149, 154, 195 A. 770, 773 (1937). Our courts have held that for “a party to be aggrieved, it must have a substantial, direct, immediate, and not remote interest in the subject-matter of the litigation.” Commonwealth v. Finley, 860 A.2d 132, 136 (Pa. Super. 2004). This same standard applies to determine standing for land use issues. See Mosside Associates Ltd. v. Zoning Hearing Board of Municipality of Monroeville, 70 Pa. Commw. 555, 562, 454 A.2d 199, 203 (1982), where the court stated: “In order to have standing as a ‘person aggrieved’ the person must have a direct interest that is adversely affected by the action which he seeks to challenge. The interest must also be substantial, immediate, and not a remote consequence of the challenged action.” “For a party to be ‘aggrieved,’ the interest of the party who will be affected by the alleged illegal law must be distinguishable from the interests shared by all citizens.” See Office of Attorney General ex rel. Corbett v. Richmond Township, 917 A.2d 397, 401 n.9 (Pa. Commw. 2007).

This principle was applied in Laughman v. Zoning Hearing Board of Newberry Township, 964 A.2d 19 (Pa. Commw. 2009), to reject a township resident’s challenge to a rezoning ordinance and amendment. In that case, the Commonwealth Court held the appellant, though a township resident, lacked standing to challenge the ordinance and amendment. The court found that his properties in the township were not in close proximity to a Rural Commercial Overlay (RCO) created by the ordinance and amendment. The resident’s commercial properties were located two miles from the RCO district, his rental residential properties were located 0.8 miles from the district, and the resident did not show that the RCO district would have a detrimental effect on any of his properties.

A similar result was reached in Society Created to Reduce Urban Blight (SCRUB) v. Zoning Hearing Board of Adjustment of City of Philadelphia, 951 A.2d 398, 402-403 (Pa. Commw. 2008). SCRUB, a civic organization, opposed an advertiser’s application for a variance to erect a billboard in a commercial district, but failed to show any specific interest in the decision beyond that of the common citizen. Thus, the Commonwealth Court found that the organization lacked standing to appeal the grant of a variance by the zoning board of appeals. The court noted that the organization had articulated only a general purpose to keep signs out of areas where they are prohibited, and neither the organization nor its members had property interests in the immediate neighborhood of the proposed sign.

In the present case, the only proven procedural defect was the township’s failure to notify the Carbon County Planning Commission of the proposed amendment 45 days prior to the vote on the ordinance. As we noted above though, we do not know what the content or subject of this amendment was. We are unable to discern this information from the record submitted, and appellants have not submitted any evidence despite our stated willingness to hold a hearing if they had wished to do so. It is quite possible that the amendment incorporated the changes proposed by Greg Solt in his letter of June 22, 1996. If so, these changes affected only the location of the boundary line between the village commercial and business commercial zoning districts on the property known as the Repscher subdivision. The quarry is not located in or adjacent to the Repscher subdivision. Nor is it located in either the business commercial or the village commercial zones in the township. In fact, the quarry is situated a substantial distance away in the rural and rural residential districts on the west side of the township. Appellants have submitted no evidence from which we could conclude that their property is affected in any way by the amendment or that they have any interest in the amendment beyond a general interest attributable to any citizen in the township. Thus, appellants are without standing to challenge the amendment procedure on due process grounds.

IV. CONCLUSION

For the reasons stated, we conclude that appellants’ procedural challenge to the East Penn Township Zoning Ordinance must be denied. More than 12 years have elapsed since passage of the amended ordinance, and appellants have failed to produce any evidence to overcome the presumption under 42 Pa.C.S. §5571.1(d)(2) that the township and its residents and landowners have substantially relied on the validity and effectiveness of the ordinance since its adoption. Thus, appellants’ procedural challenge filed more than 30 days after enactment of the ordinance is untimely. In addition, appellants have not established any basis for challenging the amendment to the ordinance at the meeting of July 22,1996 on constitutional grounds.

      . Township ordinance no. 96-94, Introduction, p. 1.

      . AIF: “All in favor.”

      . Record (R) at 58.

      . We recognize that the record could be more complete. There are certainly omissions, gaps, and ambiguities probably arising from the lapse of 12 years between the adoption of the ordinance in 1996 and the commencement of the present action in 2008. That is why we proposed during argument that an evidentiary hearing might be advisable. However, none of the parties desired to present evidence. Therefore, in deciding this appeal, we are limited to the record as transmitted to the prothonotary by the township.

      . R. at 92.

      . R. at 60.

      .53 P.S. §10608.

      . The legislative history of Public Law 328, 2008 (which would become, in part, 42 Pa.C.S. §5571.1) indicates that the bill was first sent to the House Local Government Committee on May 24, 2007, nine months after the decision in Glen-Gery was handed down on September 28, 2006.

      . The effective date of the amendment to the Judicial Code was July 4, 2008.

      . See pp. 64-66 supra.

      . 42 Pa.C.S. §5571.1.

      . Appellants’ brief in support of procedural validity challenge, p. 9.

      . See p. 60 supra.


author: GEORGE, J,

text:
    AC&T v. Plummer

      Clinton T. Barkdoll, for plaintiff.

      Betty Ora Grace Mesler, for defendant.
    October 2, 2009
   GEORGE, J,

This action was commenced by AC&T Coiporation seeking to collect upon credit provided to Plummer Brothers Construction Company in an amount of $11,371.68. The complaint was initiated against Joseph D. Plummer t/d/b/a Plummer Brothers Construction Company. AC&T currently moves for summary judgment alleging there is no issue of material fact. Although Joseph D. Plummer does not take issue with the existence or amount of the credit provided by AC&T, he suggests there is an issue of material fact as to the entity responsible for the debt. Specifically, Plummer claims that Company is a limited liability corporation which shields him from personal liability.

Plummer is correct that officers and members of a limited liability corporation cannot be held personally liable for the debt of the limited liability corporation solely by reason of being a member of that corporation. 15 Pa.C.S. §8922. In an affidavit submitted to the court, there appears to be factual support for his claim that Company is indeed a limited liability corporation. AC&T’s complaint, however, seeks personal liability on behalf of Plummer operating under a fictitious name. As there is clearly an issue of disputed material fact, a cursory review of this litigation would seem to support a finding that summary judgment is inappropriate.

A more careful reading of the complaint, however, reveals that AC&T is seeking to impose liability against Plummer under a theory that he personally guaranteed payment of the account. AC&T suggests that there is no factual dispute under this theory as Plummer has admitted the guarantee as well as the existence and nonpayment of debt by the business entity. Plummer opposes summary judgment under this theory arguing that a factual issue remains as to whether AC&T exercised due diligence in enforcing payment of the debt from the principal debtor, Company, before seeking redress from Plummer as the guarantor.

AC&T relies on National Loan & Building Association v. Lichtenwalner, 100 Pa. 100, 103 (1882) for the proposition that the exercise of due diligence to enforce payment from the principal debtor is required before collection may be pursued against a guarantor. While National Loan is properly cited for that principle, the opinion was authored at a time when common law distinguished between a surety, who became immediately liable upon default, and a guarantor, who did not become liable until efforts to collect from the defaulting principal proved unavailing. That distinction has subsequently been modified by the legislature’s adoption of 8 P.S. § 1. See Leedom v. Spano, 436 Pa. Super. 18, 647 A.2d 221, 225 (1994). 8 P.S. §1 provides that all agreements to answer for the debt of another will be regarded as a suretyship unless the agreement shall specifically contain words which, in substance, state that the guarantee is not intended to be a contract of suretyship. 8 P.S. §1. This modification is significant because, as mentioned, a creditor may look to the surety for immediate payment upon the debtor’s default without first attempting to collect a debt from the debtor. McIntyre Square Associates v. Evans, 827 A.2d 446, 451 n.7 (Pa. Super. 2003); Plummer v. Wilson, 322 Pa. 118, 122, 185 A. 311, 313 (1936).

Instantly, the written personal guarantee relied upon by AC&T does not contain any language intended to except the agreement from being one interpreted as a contract of suretyship. Rather, the guarantee, by its terms, unconditionally binds Plummer for payment and performance recognizing that credit to the business entity would not have been extended absent the personal guarantee. Although the agreement is styled as one of guarantee, this designation is not dispositive. Rather, appellate authority instructs that the intent of the parties is gathered from the language of the contract. In Re F.B.F. Indus. Inc., 165 B.R. 544, 548 (Bankr. E.D. Pa. 1994). In reading the written contract in its entirety, I conclude, as a matter of law, that the contract is one of surety. See 8 PS. §1.

Having interpreted the contract as one of suretyship, the propriety of entering summary judgment is clear. As previously mentioned, Plummer admits that AC&T extended credit to the business entity in the amount of $11,371.68. Plummer further admits that the account remains outstanding as the business entity has not made payment on the same. As there is no factual dispute that Plummer executed a personal guarantee in the form of a surety which secured the credit to the business entity, summary judgment is granted.

For the foregoing reasons, the attached order is entered.

ORDER

And now, October 2, 2009, summary judgment is entered in favor of the plaintiff, AC&T, and against the defendant, Joseph D. Plummer, in the amount of $11,371.68 plus costs and interest at the legal from the date of judgment.


author: CARPENTER, J,

text:
    Hankin v. Graphic Technology Inc.

      John Fiorillo, for plaintiff.

      Daniel R. Utain and David L. Black, for defendant.
    September 9, 2009
   CARPENTER, J,

FACTUAL AND PROCEDURAL HISTORY

Appellant/defendant, Graphic Technology Inc. (GTI), filed a motion to compel arbitration. Oral argument was conducted on June 24,2009, and after careful consideration of the motion, the response thereto and arguments of both parties we denied the motion on June 30, 2009.

On December 13,2006 appellee/plaintiff, Mark Han-kin, commenced the underlying action by filing a confession of judgment against GTI in the amount of $184,433.88 for GTI’s alleged breach of a commercial lease agreement. The lease agreement, dated August 20, 1998, was amended by “addendum no. 1” dated November 9, 2001 and “addendum no. 2” dated May 28, 2002.

The lease agreement contains the following arbitration provision, which reads in relevant part:

“(38) Miscellaneous.
“(A) Lessor and lessee agree, at the request of either party, that any controversy or claim arising out of or relating to this agreement, or the breach thereof, may be submitted to final and binding arbitration by the American Arbitration Association, as modified herein, and judgment upon the award rendered by the arbitrator shall be entered in any court having jurisdiction thereof. The following standards shall supplement the regulations of the American Arbitration Association and shall control in the event of conflict:
“(i) The aggrieved party shall request arbitration after the dispute arises and promptly serve notice of submission to the other party;
“(a) The above notwithstanding, the lessee shall be required to request such arbitration no later than 30 days after the dispute arises and failure by lessee to make such timely request shall be deemed to be a waiver of lessee’s rights, hereunder and full award shall be granted to lessor.
“(ii) Within 20 days of submission, each party shall submit a proposed award to the American Arbitration Association . . . .” See complaint, exhibit “A,” lease, paragraph 38. (emphasis added)

ISSUES

I. Whether this court properly denied GTI’s motion to compel arbitration.

II. Whether this court did not determine that the issue in dispute is not within the scope of the arbitration provision.

III. Whether this court is not bound by the order entered against GTI’s assignee in Hankin v. Vestcom International Inc., C.C.P. Montgomery County, Pennsylvania, no. 2006-30536.

DISCUSSION

I. This Court Properly Denied GTI’s Motion To Compel Arbitration

First, GTI claims that this court erred as a matter of law or abused its discretion by refusing to enforce the arbitration provision set forth in the lease agreement.

The standard of review of a denial of a petition to compel arbitration “is limited to determining whether the trial court’s findings are supported by substantial evidence and whether the trial court abused its discretion in denying the petition.” Midomo Co. Inc. v. Presbyte rian Housing Development Co., 739 A.2d 180, 186 (Pa. Super. 1999).

This judge acknowledges that Pennsylvania courts strongly favor the resolution of legal disputes by arbitration. Ross Development Co. v. Advanced Building Development Inc., 803 A.2d 194, 196 (Pa. Super. 2002). Where a party to a civil action seeks to compel arbitration, judicial inquiry is limited to the questions of (1) whether an agreement to arbitrate was entered into by the parties and (2) if such an agreement exists, whether the dispute falls within the scope of the arbitration provision. Callan v. Oxford Land Development Inc., 858 A.2d 1229, 1233 (Pa. Super. 2004). If a valid agreement exists between the parties and the plaintiff’s claim is within the scope of the agreement, the controversy must be submitted to arbitration. Highmark Inc. v. Hospital Service Association of Northeastern Pennsylvania, 785 A.2d 93, 98 (Pa. Super. 2001).

Our Superior Court has explained the interpretation of arbitration agreements as follows:

“(1) arbitration agreements are to be strictly construed and not extended by implication; and (2) when parties have agreed to arbitrate in a clear and unmistakable manner, every reasonable effort should be made to favor the agreement unless it may be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute.” Callan, 858 A.2d at 1233 (quoting Highmark, 785 A.2d at 98).

In interpreting an agreement to arbitrate, courts should apply the rules of contractual construction, adopting an interpretation that gives paramount importance to the intent of the parties and ascribes the most reasonable, probable and natural conduct to the parties. Callan, supra. In interpreting a contract, the ultimate goal is to ascertain and give effect to the intent of the parties as reasonably manifested by the language of their written agreement. Id.

In this case, the agreement to arbitrate is voluntary and not mandatory as evidenced by the use of the term “may” rather than “shall.” Specifically the language in paragraph 38 of the lease agreement states that “lessor and lessee agree, at the request of either party, that any controversy or claim arising out of or relating to this agreement, or the breach thereof, may be submitted to final and binding arbitration by the American Arbitration Association____” See complaint, exhibit “A,” lease, paragraph 38. (emphasis added) Strictly construing the arbitration provision, the parties did not clearly and unmistakably agree to arbitrate this matter. Rather, the language demonstrates that the decision to arbitrate is voluntary and not mandatory.

Additionally, in order to invoke the voluntary arbitration provision, GTI should have complied with the prerequisites set forth in subsections (i) and (ii). However, GTI clearly did not. Under paragraph 38, GTI was required to:

“(i) The aggrieved party shall request arbitration after the dispute arises and promptly serve notice of submission to the other party;
“(a) The above notwithstanding, the lessee shall be required to request such arbitration no later than 30 days after the dispute arises and failure by lessee to make such timely request shall be deemed to be a waiver of lessee’s rights, hereunder and full award shall be granted to lessor.
“(ii) Within 20 days of submission, each party shall submit a proposed award to the American Arbitration Association . . . .” See complaint, exhibit “A,” lease, paragraph 38(i)-(ii).

Accordingly, GTI should have requested arbitration no later than 30 days after the dispute arose, and promptly served notice of submission upon Hankin. Here, GTI never made a submission to the American Arbitration Association, and therefore never served notice of submission upon Hankin. At most, GTI expressed an interest in arbitration by way of a letter dated January 18,2007. See motion to compel arbitration, exhibit “1,” letter from Danial Utain, Esquire to John Fiorillo, Esquire dated January 18, 2007. Additionally, GTI failed to fulfill the requirement set forth in subsection (ii) which required GTI to submit a proposed award to the American Arbitration Association. Finally, GTI did not file this motion to compel arbitration until March 24,2008, more than two years after it had notice of the confessed judgment and after a considerable amount of litigation had already taken place in two states.

II. This Court Did Not Determine That the Issue in Dispute Is Not Within the Scope of the Arbitraltion Provision

Next, GTI contends that this court erred as a matter of law or abused its discretion in determining that the dispute at issue is not within the scope of the arbitration provision. Because we determined that arbitration was voluntary and the requirements to invoke the arbitration provision were unfulfilled, we did not reach the question as to whether the dispute fell within the scope of the arbitration provision.

III. This Court Is Not Bound by the Order Entered Against GTI’s Assignee in Hankin v. Vestcom International Inc., C.C.P. Montgomery County, Pennsylvania, No. 2006-30536

Finally, GTI argues that this court erred as a matter of law or abused its discretion in failing to enter an order consistent with the final order entered in the companion case against GTI’s assignee, Hankin v. Vestcom International Inc., C.C.P. Montgomery County, Pennsylvania, no. 2006-30536, wherein a court of coordinate jurisdiction determined that the underlying dispute was within the scope of the arbitration provision, and, as a matter of law, should be dismissed in favor of arbitration. We disagree.

Generally, the coordinate jurisdiction rule commands that upon transfer of a matter between trial judges of coordinate jurisdiction, a transferee trial judge may not alter resolution of a legal question previously decided by a transferor trial judge. Zane v. Friends Hospital, 575 Pa. 236, 243, 836 A.2d 25, 29 (2003). Judges of coordinate jurisdiction should not overrule each other’s decisions. Id.

In this case, the coordinate jurisdiction rule does not apply; therefore, the rule does not bar this judge from entering an order denying GTI’s motion to compel arbitration, despite what another judge of this court determined in the separate and distinct case of Hankin v. Vestcom International Inc., C.C.P. Montgomery County, Pennsylvania, no. 2006-30536. Although Hankin v. Vestcom International Inc. involves the same plaintiff, Han-kin, it involves a different defendant, Vestcom International Inc., and not GTI. Each case involves different issues to be resolved on their own merits.

CONCLUSION

Based on the forgoing analysis, our June 30, 2009 order denying GTI’s motion to compel arbitration should be affirmed.

APPELLANT’S CONCISE STATEMENT OF MATTERS COMPLAINED OF ON APPEAL PURSUANT TO PA. R.A.P. 1925(b)

Pursuant to order of this court dated July 28, 2009, and pursuant to Pennsylvania Rule of Appellate Procedure 1925(b), appellant, Graphic Technology Inc. (GTI), provides the following concise statement of matters complained of with regard to the matter appealed to the Superior Court of Pennsylvania:

(1) Whether the court erred as a matter of law or abused its discretion by refusing to enforce the arbitration provision set forth in the “lease agreement” requiring “[a]ny controversy or claim arising out of or relating to this agreement, or the breach thereof may be submitted to final and binding arbitration by the American Arbitration Association [.]” See 42 Pa.C.S. §7304(a); see also, Bor ough of Ambridge Water Authority v. Columbia, 458 Pa. 546, 551-52, 328 A.2d 498, 501 (1974).

(2) Whether the court erred as a matter of law or abused its discretion in determining that the dispute at issue is not within the scope of the arbitration provision.

(3) Whether the court erred as a matter of law or abused its discretion in failing to enter an order consistent with the final order entered in the companion case against GTFs assignee, Hankin v. Vestcom International Inc., C.C.P. Montgomery County, Pennsylvania, no. 06-30536, wherein a court of coordinate jurisdiction determined that the underlying dispute was within the scope of the arbitration provision, and, as a matter of law, should be dismissed in favor of arbitration. See Parker v. Freilich, 803 A.2d 738 (Pa. Super. 2002) (pursuant to the doctrine of coordinate jurisdiction, a judge should not “alter the resolution of a legal question previously decided” by another judge.).

Wherefore, appellant respectfully requests that this court issue an opinion addressing the issues raised herein for the purposes of facilitating appellate review.

      . Neither party submitted briefs in support of their respective positions.

      . This action has a rather lengthy and involved factual and procedural history which has not been set forth in this opinion. However, it is of note that the litigation in this case spans courts in two states, this court and the District Court of Johnson County, Kansas.