text:
    Bucks v. Pennfield Corp.

      Kenneth C. Sandoe, for plaintiff.

      Lawrence F. Stengel, for defendant.
    June 30, 1989
   GATES, P.J.,

On September 4, 1985 plaintiff, Melissa M. Bucks, was injured at her place of employment, Grimes Poultry Processing Corporation in Fredericksburg, Pennsylvania. Her hand was drawn into the chicken breast skinning machine that she was operating resulting in the injuries claimed by plaintiff. The machine in question was designed and built by Grimes.

Plaintiff initially brought suit against Grimes, but Grimes enjoys immunity under the Workmen’s Compensation Act. On August 20, 1987, after determining the corporate structure involved, plaintiff filed a complaint naming only defendant, Pennfield Corporation, located in Lancaster, Pa. The complaint alleges various independent acts of negligence relating to Pennfield’s duty to oversee safety matters at Grimes. At the time of the accident Grimes was a wholly owned subsidiary of defendant.

Defendant filed a motion for summary judgment, claiming that Pennfield was under no duty to supervise the safety of the workplace at its subsidiaries, that no such duty had been undertaken by defendant, and that the subsidiaries performed their own safety operations. Defendant’s motion goes on to argue that plaintiff is unable to establish the elements of a cause of action.

Defendant also filed a motion for protective order, claiming that plaintiffs interrogatories requesting financial information would subject defendant to unreasonable annoyance and oppression and constitute an invasion of privacy in violation of Pennsylvania Rule of Civil Procedure 4011. Defendant argues that such information should only be discoverable after plaintiff shows justification for claiming punitive damages.

A motion for summary judgment must be considered in light of Pennsylvania Rule of Civil Procedure 1035. That rule is as follows:

“The judgment sought shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Pa.R.C.P. 1035(b), 42 Pa.C.S. In considering a motion for summary judgment the following standard is applicable:
“Summary judgment should not be entered unless a case is free from doubt. The moving party must prove that there is no genuine issue of material fact to be tried and that it is entitled to judgment as a matter of law. Moreover, the record must be viewed in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.” Richland Mall Corporation v. Kasco Construction Co. Inc., 337 Pa. Super. 204, 210, 486 A.2d 978, 981 (1984).
“The function of summary judgment proceedings is to avoid a useless trial but is not, and cannot, be used to provide for trial by affidavits or trial by depositions.” Penn Center House Inc. v. Hoffman, 520 Pa. 171, 553 A.2d 900 (1989); Goodrich-Amram 2d §1035:1.

The Pennsylvania Workmen’s Compensation Act provides that the remedy of an injured employee against his or her employer is exclusively the remedy provided by the act. An exception to the exclusivity bar has been recognized in the parent-subsidiary situation. Kiehl v. Action Manufacturing Company, 517 Pa. 183, 535 A.2d 571 (1987). In Kiehl the court stated that “Mohan makes it clear that in Pennsylvania a parent corporation and its subsidiary must be regarded as separate entities in regards to the Workmen’s Compensation Act.” Kiehl at 190, 535 A.2d at 574. The parties agree that Pennfield and Grimes are separate entities. The parent corporation may be held liable for its independent acts of negligence even though the employee is barred from suing the subsidiary/employer and has been compensated under the Workmen’s Compensation Act. Kiehl, supra.

Plaintiffs complaint alleges the following independent acts of negligence of defendant:

“(31)(a) Establishing a safety committee to oversee safety factors of the corporation and its wholly owned subsidiaries, which said safety committee was and is totally inept and failed to know, investigate or oversee the activities of the corporation or its wholly owned subsidiaries, which said investigation would have revealed the unsafe design, manufacture and dangerous condition of the breast skinning machine in question;
“(b) In establishing a safety committee where the members thereof are not knowledgeable in or are inadequately trained to oversee safety factors of the design and manufacture of machinery, as the breast skinning machine used in this case, whereby any such trained safety personnel would not have permitted an unguarded roller machine device at the point of operation without a safety switch within access of the operator to be used;
“(c) In allowing its subsidiary corporations, including Grimes Poultry Processing Corporation, t/a/ d/b/a Pennfield Farms and/or Pennfield Farms-Chicken, to design, manufacture, fabricate and use as part of its business, dangerous machinery, without an inspection by qualified safety engineers and personnel;
“(d) In permitting carte blanche financial contribution to the development, design, fabrication and use of said machinery, including the breast skinning machine in question, without adequately insuring the incorporation of safety factors into said development, design, fabrication and use;
“(e) In establishing a policy of financial contribution to the development, design, fabrication and use of complex and dangerous machinery without any review in regard to safety, or establishing any policies in regard to safety of the workers and users, including plaintiff, of said machinery, including the breast skinning machine in question;
“(f) In specifically approving the design, manufacture, fabrication and use of complex and dangerous machinery without approving or implementing any guidelines for the safety of users of said machinery;
“(g) In specifically approving the design, manufacture, fabrication and use of complex and dangerous machinery without approving or implementing any guidelines for the inspection by qualified safety engineers and personnel for the safety of use of said equipment.
“(h) In failing to hire or train competent personnel to insure that adequate and appropriate safety factors were to be considered and incorporated in the design, manufacture, fabrication and use of the said products, including the breast skinning machine in question;
“(i) In failing to supervise and be aware of what machinery was being manufactured and developed by various subsidiaries, including Grimes Poultry Processing Corporation, t/a/d/b/a Pennfield Farms and/or Pennfield Farms-Chicken, to insure sufficient and appropriate safety factors would be implemented in the planning, manufacture and use of said machinery;
“(j) In failing to set a policy or requirement that safety considerations must be considered in the design, manufacture, fabrication and use of said products;
“(k) In knowing, or in the exercise of reasonable care, should have known, that the subsidiary was using dangerous and defective machinery in its day to day operations, which were approved by defendant, Pennfield Corporation;
“(1) In knowing, or in the exercise of reasonable care, should have known, that personnel hired to design, manufacture and fabricate said machinery, and approved ultimately by defendant, Pennfield Corporation, were not qualified and were inadequately trained to consider safety factors in the design, manufacture and fabrication of such machinery;
“(m) In knowing, and approving, or in the exercise of reasonable care, should have known, of the use of an unsafe and dangerous machine, without a safety switch and unguarded at thé point of operation, known as a breast skinning machine, by its subsidiary, Grimes Poultry Processing Corporation, t/a/d/b/a Pennfield Farms and/or Pennfield Farms-Chicken;
“(n) In failing to comply with and in fact to violate applicable federal, state, local, industrial, trade and/or commercial regulations concerning said machine and safety design;
“(o) Such other acts or omissions constituting negligence and/or gross negligence, or wanton conduct, as shall become evident during pretrial discovery and/or at the trial of this case.”

Defendant argues, however, that it had no duty to oversee safety measures at the subsidiary plants. In support of this contention defendant asserts that the depositions and documents produced show the responsibility for all safety measures was with Grimes and that defendant had neither a legal duty to undertake, nor did it otherwise undertake, responsibility for safety at Grimes.

The deposition testimony of various individuals is cited in support of defendant’s contention that Pennfield was not involved with the design or manufacture of the machine in question. The decision to build the machine was that of the Grimes plant manager, Jerry Weaver. The machine was assembled by the maintenance supervisor, Kenny Mc-Quate, and the maintenance crew of Grimes.

Defendant argues that under the circumstances no duty was created for Pennfield to ensure safe working conditions at Grimes.. Defendant had a corporate safety committee in place at the time of the accident. Defendant argues that this committee was only advisory so that defendant had not specifically undertaken the responsibility of overseeing safety matters at the subsidiary plants. Each of the subsidiaries, including Grimes, had its own active safety committee and the corporate committee merely functioned as a coordinating body for those committees. The corporate safety committee did not concern themselves with the subsidiaries’ manufacture of machinery, nor did it inspect the subsidiary plants.

The deposition of defendant’s former employer relations manager indicates, however, that the ultimate responsibility for safety at the subsidiaries rested with the division manager who was an employee of defendant. Furthermore, the corporate safety committee was to oversee the activities of the subsidiary safety committees.

Both parties ask that the so-called Good Samaritan Rule be considered. That rule is stated as follows in section 324A of the Restatement (Second) of Torts:

“§324A. Liability to Third Person for Negligent Performance of Undertaking — One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if
“(a) his failure to exercise reasonable care increases the risk of such harm, or
“(b) he has undertaken to perform a duty owed by the other to the third person, or
“(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.”

Defendant argues that the deposition testimony cited above shows that there was no specific undertaking so that defendant may not be held liable for failure to take safety measures at Grimes. See Blessing v. United States, 447 F.Supp. 1160 (E.D. Pa. 1978). Plaintiff argues that there is evidence on the record that defendant did undertake responsibility for safety at the subsidiaries.

Defendant’s motion must be denied, because to grant it would result in a trial by depositions. Viewing the record in the light most favorable to plaintiff, the non-moving party, it is also evident that there is a genuine issue of material fact to be tried. It will be for the jury to ele termine where ultimate responsibility for safety rested and whether the duty of the corporate safety committee to oversee was a specific undertaking.

In light of this conclusion we need not address defendant’s argument that there was no legal duty to provide safety measures at Grimes simply because of the parent-subsidiary relationship. Likewise, we need not address plaintiff’s arguments based on various sections of the Restatement of Agency.

Defendant seeks a protective order so that it need not provide the financial information plaintiff seeks to support her claim for punitive damages. The four interrogatories in question ask for defendant’s state and federal tax returns for the last five years, the corporate minutes of the last five years, any disclosure statements filed with the Securities and Exchange Commission within the last five years, and any financial statements prepared within the last five years.

Under Pennsylvania Rule of Civil Procedure 4003.1, a party may obtain discovery regarding any matter not privileged, which is relevant to the subject matter involved in the action, subject to the limitations of rule 4011. The net worth of a defendant is admissible to aid the jury in determining the amount of punitive damages that will act as a deterrent to the defendant. Thomas v. E.J. Korvette Inc., 329 F.Supp. 1163 (E.D. Pa. 1971), rev’d. on other grounds 476 F.2d 471 (3d Cir. 1973).

The issue of discoverability of financial information to support a claim for punitive damages is unsettled because there are no appellate court opinions on this issue. Defendant cites several cases holding that discovery of a defendant’s financial situation may not be permitted until the plaintiff has shown prima facie proof of the right to recover punitive damages. See King v. Logue, 9 D.&C. 3d 137 (1978); Baldwin v. McGrath, 8 D.&C. 3d 341 (1978); Harvey v. Brobeck, 73 D.&C. 2d 483 (1975); Pater v. Tomsic, 57 D.&C. 2d 340 (1972). Defendant acknowledges, however, that in Sprague v. Walter, 23 D.&C. 3d 638 (1982), discovery of financial information of the defendant was permitted.

In Sprague the court stated that the burden should be on the defendant to show why discovery should not be permitted, unless plaintiff relies only on the pleadings. There it was stated that the court need not evaluate the evidence and make a determination that the claim for punitive damages is supported on the record. Rather, the pleadings, any discovery, and any future proceedings are merely to be considered. Sprague, supra.

Defendant seeks to distinguish Sprague and argues that the record fails to support a claim for punitive damages, so that it is unlikely that punitive damages will be an issue at trial. Pennsylvania law recognizes the following principles of the Restatement of Torts regarding punitive damages:

“Punitive damages may be awarded for conduct that is outrageous, because the defendant’s evil motive or his reckless indifference to the rights of others. In assessing punitive damages, the trier of fact can properly consider the character of the defendant’s act, the nature arid extent of the harm to the plaintiff that the defendant caused or intended to cause and the wealth of the defendant.” Restatement (Second) of Torts §908(2). See Martin v. Johns-Manville Corporation, 508 Pa. 154, 494 A.2d 1088 (1985).

The act or failure to act must be intentional, reckless, or malicious. Feld v. Merriam, 506 Pa, 383, 485 A.2d 742 (1984). But “punitive damages may not be awarded for misconduct which constitutes ordinary negligence such as inadvertence, mistake and errors of judgment.” Martin at 170, 494 A.2d at 1097.

Based upon the pleadings and certain items of discovery plaintiff is entitled to discovery of the financial material. The record includes more than mere averments in plaintiffs complaint.

Plaintiff has appended to her brief a letter received in discovery. The letter was written by Jerry Weaver, Manager of the Grimes plant. The letter includes the following:

“The machine in question was not designed with a point-of-operation guard. Therefore, the charge that we removed the guard because it slowed the process is false.
“When we first began to experiment with manufacturing a breast skinning machine, the original model did have a polnt-of-operation guard. However, due to unsatisfactory machine performance and operational problems with the original model, we removed the original machine and redesigned a completely new machine.”

This letter shows certain individuals at Grimes were aware of the dangers involved with this type of machinery because the first machine was designed with a guard device. From this evidence it may possibly be found that defendant willfully and recklessly disregarded the safety of the employees who used the machine.

As previously stated, the deposition of Nancy Cunningham, the former employer relations manager at the Grimes plant, testified that defendant’s district manager was ultimately in charge of safety at the subsidiaries such as Grimes. Defendant must have known of the dangerous condition of the machine but nothing was done to correct the problem. Furthermore, defendant granted its subsidiaries authority to develop and build machinery up to a specified cost without taking measures to ensure that the authority delegated was being exercised correctly.

Plaintiff also presents the affidavit of Robert C. Reed and the deposition testimony of Mary Fry in support of her claim for punitive damages. Both of these individuals attest to the known dangers of the machine prior to the accident. Finally, plaintiff presents the report of an expert who examined the machine in question and opined that the machine was in a highly dangerous condition and that it was almost a certainty that someone would be injured sooner or later.

It should be noted that the items requested are items that have already been prepared and their production would not cause unreasonable annoyanee to defendant. Defendant is a corporation and production of its financial records would not be an invasion of privacy as it might be if a private individual defendant were involved.

Defendant argues that if the issue of punitive damages does go to the jury plaintiff could then be provided with the financial material requested. Plaintiff argues, on the other hand, that defendant’s business structure is so complex that an accountant will be employed as an expert witness. To avoid delay or prejudice plaintiff requests that the documents be produced before trial. That would allow plaintiffs case to be adequately prepared before trial. As in Sprague plaintiff will be afforded pretrial discovery rather than in-trial discovery.

ORDER

And now, June 30, 1989, for the reasons set forth in the accompanying opinion defendant’s motion for summary judgment and motion for protective order are denied. Defendant is directed to comply with plaintiffs interrogatories requesting tax returns, corporate minutes, Securities and Exchange Commission disclosure statements, and financial statements.

       In Mohan v. Publicker Industries, 422 Pa. 588, 222 A.2d 876 (1966), the court looked at the function performed by the employee as it related to the operations of the parent and subsidiary to determine that the subsidiary was the employer so that the injured employee could bring a suit against the parent corporation.


source: Caselaw Access Project

author: WETTICK, A.].,

license: Public Domain

text:
    Olczak v. Miller

      Brian Michael Martin, for plaintiff.

      Lori Ann Miller, in propria persona.
    November 27, 1989
   WETTICK, A.].,

On May 25, 1989, plaintiff, James P. Olczak, filed a complaint with District Justice Donald H. Presutti at TA 247-89 to recover the value of a ring which he allegedly gave to defendant, Lori Ann Miller, in contemplation of a marriage that never took place. On June 9, 1989, Miller filed a complaint with the same district justice at the same number to recover the value of various items of personal property in Olczak’s possession that allegedly belong to Miller.

On June 16, 1989, the district justice entered a judgment for Miller on Olczak’s claim against Miller and a judgment for Olczak on Miller’s claim against Olczak. He mailed two notices of judgment to the parties. The first notice, which identified Olczak as plaintiff and Miller as defendant, stated that the judgment had been entered for the defendant on June 16, 1989 at TA 247-89. The second notice, which identified Miller as plaintiff and Olczak as defendant, stated that a judgment had been entered for defendant on June 16, 1989 at TA 247-89.

On July 11, 1989, Olczak filed a notice of appeal which stated that an appeal had been taken from the June 16, 1989 judgment at TA 247-89 entered by District Justice Presutti. This notice of appeal identified Olczak as plaintiff and Miller as defendant. This was the only notice of appeal filed by either party from the district justice proceedings.

On July 12, 1989, Olczak filed his complaint in which he sought to recover damages for- the value of the ring. Miller filed an answer and counterclaim. In her counterclaim, she sought to recover the value of the items that were the subject of the complaint that she had filed in the district justice proceedings.

Olczak has filed preliminary objections to Miller’s counterclaim which are the subject of this opinion and order of court. These preliminary objections seek to strike the counterclaim because of Miller’s failure to file a notice of appeal from the judgment entered against her by the district justice on her complaint against Olczak.

The law is clear that the defense of res judicata may be based upon a final judgment entered by a district justice. Burr v. Callwood, 374 Pa. Super. 502, 543 A. 2d 583 (1988); Penn Plaza Shopping Center Inc. v. Castellano, 134 Pitts. Leg. J. 74 (1985). Consequently, Miller is barred from relitigating her claim in these proceedings unless the appeal filed by Olczak operated as an appeal from both judgments entered by the district justice at TA 247-89.

Pa.R.C.P.D.J. 1004(C) sets forth the procedure to be followed for appeals from district justice proceedings involving cross-complaints:

“When judgments have been rendered on complaints of both the appellant and the appellee and the appellant appeals from the judgment on his complaint or on both complaints, the appellee may assert his claim in the court of common pleas by pleading it as a counterclaim if it can properly be so pleaded in that court. If the appellant appeals only from the judgment on his complaint, the appellee may appeal from the judgment on his complaint at any time within 30 days after the date on which the appellant served a copy of his notice of appeal upon the appellee.”

This rule permits a party to appeal only from the judgment on that party’s complaint. If a party does so, this rule permits the other party , to appeal from the judgment on that party’s complaint within 30 days after service of the copy of the notice of appeal.

In the present case, Olczak’s notice of appeal makes it clear that he appealed only from the judgment on his complaint. Thus, Miller was required to file an appeal from the judgment on her complaint if she was dissatisfied with this judgment.

Her filing of the counterclaim (even if it occurred within 30 days from the date upon which Olczak served a copy of his notice of appeal upon her) does not serve as an appeal from the judgment entered against her on her complaint. In Burr v. Callwood, supra, the Pennsylvania Superior Court held that a separate notice of appeal was required.

“The rule [rule 1004(C)] clearly treats the judgments entered on the two cross-complaints as separate judgments; the rule requires any party who wishes to challenge an adverse judgment to appeal that judgment. The rule makes no mention of any circumstances where a separate notice of appeal is not required. A party who wishes to challenge the finding made in reaching the adverse judgment must file a notice of appeal from that judgment.” Burr, supra, (footnote omitted)

This court’s holding that Olczak’s notice of appeal did not serve as an appeal from the judgment entered in Olczak’s favor in the district justice proceeding on Miller’s claim against Olczak is not inconsistent with this court’s recent opinion in Mead v. Conti, Arbitration no. 10141 of 1988 (C.P. of Allegheny County, June 26, 1989). In that case, the appellant was the losing party in both complaints. The district justice ruled against the appellant in the complaint that the appellant filed against the appellee and entered a money judgment in favor of the appellee in the complaint that the appellee filed against the appellant. We held that where two unfavorable judgments against the same party were entered at the same docket number, a single notice of appeal filed by that party served as an appeal from both judgments. We ruled in this fashion because the notice of appeal form did not give the appellant the option of identifying himself or herself as both the plaintiff and the defendant and rule 1002 does not provide for the filing of multiple notices of appeal by the same party.

At the time we rendered our opinion, we did not consider the Superior Court’s opinion on this issue in Burr v. Callwood, supra. In that case, it appears that the appellants argued that they preserved all issues raised in the district justice proceedings by filing an appeal from the judgment entered on the appellee’s complaint against the appellants. But they never claimed that this notice of appeal was also intended to serve as a notice of appeal from the judgment entered on their complaint against the appellees. In fact, they never even raised this claim as a counterclaim. Consequently, the Pennsylvania Superior Court in Burr v. Callwood decided the issues in the context of a notice of appeal which the appellants characterized as an appeal from only the adverse judgment rendered against the appellants on the complaint filed by the appellee.

While we believe that our ruling in Mead v. Conti is consistent with Burr v. Callwood, a party who is dissatisfied with a district justice’s rulings on his or her complaint and on the other party’s complaint would be well advised to file two notices of appeal to avoid litigating in the appellate courts the issué of whether or not Mead v. Conti. is consistent with Burr v. Callwood.

ORDER OF COURT

On this November 27, 1989, it is hereby ordered that plaintiffs preliminary objections to defendant’s counterclaim are sustained and this counterclaim is dismissed.

      . It would appear that the issue of whether Miller is barred from raising her claim in these proceedings as a result of her failure to file a separate notice of appeal should have been raised through an answer to the counterclaim raising the defense of res judicata. However, Miller has not objected to this issue being addressed through these preliminary objections. Consequently, we will address the merits of Olczak’s claim that Miller is barred from raising a claim for the value of these items in these proceedings because of her failure to file a notice of appeal from the district justice’s judgment that decided this claim against her.

      . Rule 1004(C) does not address the situation in which a party wishes to appeal from more than one unfavorable judgment entered by a district justice at the same docket number. While it recognizes that a party may appeal from the judgment on both complaints, it does not set forth the procedure for doing so.


author: GAFNI, J.,

text:
    Grant Drugs Inc. v. Williams

      Robert D. Segal, for plaintiff.

      Jeffrey S. Saltz, for defendant.
    December 1, 1989
   GAFNI, J.,

This case involves the granting of a preliminary injunction to prevent defendants, Thomas and Mary Williams and Lansford Corporation, from leasing premises in Grant Shopping Center to Rite-Aid or any other drugstore or patent medicine store. Plaintiff, Grant Drugs Inc., a current tenant, bases its claim on the restrictive clause in its lease with Thomas and Mary Williams.

The center was constructed in 1964 and consisted of a supermarket and eight smaller retail stores. At the center’s inception there was a drugstore owned by Gerson Stein with a lease provision which stated that the store “shall be the only such drugstore and/or patent medicine store in this center.” As originally planned, in 1968, eight stores were added to the center. In 1969, Fairway Pharmacy of Andalusia Inc., assumed ownership of Stein’s drugstore with a new lease retaining the above restrictive covenant. In early 1978, Grant became assignee of the Fairway lease before entering into a new lease in July of the same year. Presently, plaintiff is operating under the July 1978 lease. The current lease of plaintiff retains the same restrictive clause as the Stein and Fairway leases.

The occurrences which gave rise to this suit began in 1987. At that time, the owners of the center, defendants Thomas and Mary Williams, began to develop a 12-store addition to the center on a vacant parcel next to the supermarket. The construction of the addition was completed in early 1989. Defendants began to negotiate with Rite-Aid as a prospective tenant for one of the new stores. Signs announcing that Rite-Aid was “coming soon” were placed in the store’s window. Grant, in an effort to prevent the execution of a lease between defendants and Rite-Aid, any drugstore or patent mediciiffe store, brought the within action.

The issue before this court is whether, based on the restrictive clause in Grant’s lease, defendants should be enjoined from displaying any sign regarding the arrival of any drug or patent medicine store, as well as from entering into a lease with Rite-Aid or any other drug or patent medicine. store. For the reasons set forth below, this court granted plaintiff’s petition for a preliminary injunction prohibiting the above actions of defendant.

DISCUSSION

A preliminary injunction may be granted only if certain standards are met: (1) the rights of plaintiff are clear; (2) there is an urgent necessity to avoid injury which cannot be compensated for by damages; (3) greater injury will be done by refusing the preliminary injunction than by granting it. Independent State Store Union v. Pennsylvania Liquor Control Board, 495 Pa. 145, 157, 432 A.2d 1375, 1381 (1981).

The Rights of the Plaintiff Are Clear

To assess plaintiffs right to a preliminary injunction, the law on restrictive covenants in a lease must be examined. Restrictive covenants are valid and enforceable in Pennsylvania so long as they do not result in an unreasonable restraint of trade. Hoffman v. Rittenhouse, 413 Pa. 587, 198 A.2d 543 (1984). However, they are not favored and are strictly construed against the party seeking to enforce them.

“It is a general rule of contract interpretation that the intention of the parties at the time the contract is entered into governs: Heidt v. Aughenbaugh Coal Co., 406 Pa. 188, 176 A.2d 400 (1962). This same rule also holds true in the interpretation of restrictive covenants: Baederwood Inc. v. Moyer, 370 Pa. 35, 87 A.2d 246 (1952) and McCandless v. Burns, 377 Pa. 18, 104 A.2d 123 (1954). However, in Pennsylvania, . . . [l]and use restrictions are not favored in the law, are strictly construed, and nothing will be deemed a violation of such a restriction that is not in plain disregard of its express words: ...” Great Atlantic and Pacific Tea Company v. Bailey, 421 Pa. 540, 544, 220 A.2d 1, 2-3 (1966). (citations omitted; emphasis supplied)

Defendants argue that based on Pennsylvania’s strict construction of restrictive covenants on land, plaintiffs petition must be denied. In support of this argument, defendant submits that the restrictive covenant does not expressly apply to the additional 12 stores which became part of the center in early 1989, but is limited to the center as it existed on the date of the signing of the lease.

While it is true that the lease did not specifically refer to the 12 new stores, this court found that the covenant was not ambiguous when applied to these stores. The covenant specifically states that Grant Drugs shall be the only drugstore and/or patent medicine store in the Grant and Academy Shopping Center. Lease at paragraph 3. (emphasis supplied) The name of the center is being retained and applies to all of the stores in the expanded center. Moreover, the additional stores share the same parking lot and entranceways from the street, and were built on a continuous line from the previously existing supermarket’s wall. Further, due to the short length of the center, none of the new storefronts is more than a very short walk to plaintiffs store.

Finally, and no less persuasive, is defendants’ reference to the extension as part of the original center. In a letter dated June 14, 1988, referring to the work as renovation and expansion to the center, defendants characterized the renovation and expansion program as “designed to create an updated, visually appealing shopping center which will contain approximately 10 additional retail tenants....” This acknowledgment of defendant, referring to the addition as part of the center, reaffirms that references in plaintiffs lease to the “Grant and Academy Shopping Center” were, even in the minds of the defendant-landlords, applicable to all of the stores.

Defendant relies on Great Atlantic and Pacific Tea Co. v. Bailey, supra, (in which the restrictive covenant prohibiting any lease for a supermarket or grocery store on adjacent property was not violated when land adjacent to the center, not owned by the lessors at the time of the lease, was leased to another supermarket). The court (in a four-three decision) determined the issue to be whether “the restrictive covenant involved. . . indicate [s] that the parties intended it to extend to and include after-acquired land.” The court found that the language in the lease, referring to “adjacent property owned by the lessor during the time of the lease” either referred to other land owned by the landlord, or was, at best, ambiguous and should be construed against the tenant party seeking to enforce the covenant. It is apparent, however, that the covenant would have been enforced as to the property already owned by the lessors. The instant case, however, does not deal with after-acquired property. It concerns an extension to an already existing center built on a vacant, undeveloped lot owned by defendants at the time of the original lease.

Defendant further argues that since the addition to the center has a separate mortgage and is taxed separately by the City of Philadelphia, it should be deemed unrelated to the pre-existing center. This court finds this argument to be unpersuasive. How the city assesses taxes or how a mortgage is drawn cannot alter the rights of a tenant under its lease.

The intent of the parties is well expressed in the covenant. Grant Drugs, when entering into the lease, intended to safeguard its life savings and business by assuring that it would not be subject to competition of other drug or patent medicine stores within the same center. Although it was not possible to protect itself from competition down the street or around the comer, it was possible to protect itself from competition but a few storefronts away, which would share the same parking, entranceway, and presumably, benefits, which are attendant upon being a participant in a single shopping center.

Although there are no. Pennsylvania cases factually similar to the instant case, courts in other jurisdictions have decided cases, with essentially the same facts, in conformity with the decision of this court. Liza Danielle Inc. v. Jamko Inc., 408 So.2d 735 (Fla. 3d Dist. Ct. App. 1982), involved a covenant restricting retail shoe stores from “any other space in the warehouse ...” The court found the intent of the lease to apply to Warehouse West and to the newly constructed Warehouse East. In affirming the lower court decision, the Court of Appeals considered the strict construction of covenants approach and found that even though it was not clear which standard the lower court applied, the construction reached was supported by the lease terms and competent testimony. Id. at 738. See also, Slice v. Carozza Properties, 215 Md. 357, 137 A.2d 687 (1958); Belvedere Hotel Co. v. Williams, 137 Md. 665, 113 Atl. 335 (1921); Carter v. Adler, 138 Cal. App. 2d 63, 291 P.2d 111 (1955).

For this court to áccept defendant’s contention that the parties intended to limit the covenant to the stores in existence and not to the Grant-Academy center as a whole, would be to change the words of the covenant, and supersede the expressed intent of the parties. Although defendants countered that the additional stores may not have been contemplated at the. inception of the lease, this does not alter the intent of the parties to the covenant to keep plaintiffs investment protected and free from competition within the Grant and Academy Shopping Center. It is uncontested that Rite-Aid would be selling many of the same products as Grant, and it can be assumed that Rite-Aid would attract some of Grant’s customers simply by its close proximity. It is exactly this foreseeable event which the parties considered when they contractually bargained for the covenant.

For the foregoing reasons, this court entered the preliminary injunction enjoining defendants from entering into a lease with Rite-Aid or any other drugstore or patent medicine store.

      . At trial there was a discrepancy as to whether the lease had been renewed; however, it was agreed that the 1978 lease included an option for plaintiff to renew for two consecutive five year terms.

      . The court focuses on this issue because defendants, in their brief and at trial, argue primarily against the contention that the rights of plaintiff are clear, and do not put forth any additional defenses.

      . In addition to the words in paragraph 3 of the lease, paragraph 46 states, “[e]xcept so long as Grant Drugs Inc., operates a pharmacy in the shopping center located at Grant and Academy Avenues, Philadelphia, Pennsylvania, we agree not to dispense any drugs requiring the presence of a registered pharmacist.”

      . It should further be noted that in Great Atlantic and Pacific Tea Co. the addition was not even on the existing center, but on a separate and differendy housed center.


author: SURRICK, J.,

text:
    Maxwell v. Enterprise Leasing Company

      John D’Angelo, for plaintiff.

      Christopher B. Sessa, for defendant.
    August 22, 1989
   SURRICK, J.,

On March 28, 1989, an order was entered by this court, granting the motion of defendant, Enterprise Leasing Company, for summary judgment and dismissing plaintiffs complaint. Plaintiff has filed an appeal from that order, thus necessitating this opinion.

Pennsylvania Rule of Civil Procedure 1035 provides in pertinent part as follows:

“(a) After the pleadings are closed, but within such time as not to delay trial, any party may move for summary judgment on the pleadings and any deposition, answers to interrogatories, admissions on file and supporting affidavits.”
“(b) . . . The judgment sought shall be rendered if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. ...”

Summary judgment should not be granted unless the case is free from doubt. Hoover v. Whitmak Associates, 371 Pa. Super. 443, 538 A.2d 524 (1988). Moreover, the moving party has the burden of establishing a genuine factual issue exists. Weiss v. Keystone Mach. Sales Inc., 310 Pa. Super. 425, 456 A.2d 1009 (1983). In determining whether an issue of material fact exists, the record, including all well pleaded facts, must be examined in the light most favorable to the non-moving party, with all facts and the reasonable inferences to be drawn therefrom being taken in the light most favorable to the non-moving party. Spain v. Vicente, 315 Pa. Super. 135, 461 A.2d 833 (1983).

In the instant case, plaintiffs complaint seeks money damages from defendant for injuries sustained by plaintiff in an automobile accident. The entire record consists of plaintiff’s complaint; the answer with new matter of defendant, Enterprise Leasing Company, to plaintiffs complaint; plaintiff’s reply to defendant’s new matter; plaintiff’s answers to defendant’s interrogatories; the motion of defendant, Enterprise Leasing Company, for summary judgment, attached to which is a copy of a lease agreement between defendant and Kenneth R. Hodges; and plaintiff’s answer to defendant’s motion for summary judgment, attached to which is a copy of a police report and a copy of the aforementioned lease agreement.

This record, viewed in a light most favorable to plaintiff, establishes that on August 1, 1986, defendant, an automobile leasing company, leased a 1986 Chevrolet automobile to an individual by the name of Kenneth B. Hodges. When leasing the vehicle to Hodges, defendant failed to determine whether Hodges had complied with the Pennsylvania Financial Responsibility Law, requiring liability insurance. In addition, defendant failed to determine whether Hodges had a valid Pennsylvania driver’s license. On August 3, 1986, Kenneth B. Hodges, while operating the leased vehicle in a negligent manner, caused the vehicle to collide with the rear end of plaintiffs 1978 Dodge automobile, causing injury to plaintiff, who was then operating his vehicle.

Defendant’s motion for summary judgment asserts that plaintiff has failed to establish a cause of action against defendant upon which relief can be granted. Defendant argues that, even assuming that defendant leased the subject vehicle to Hodges, that Hodges negligently caused the accident, that defendant failed to ensure that Hodges had complied with the Pennsylvania Financial Responsibility Law, related to liability insurance, and that defendant failed to determine whether Hodges had a valid Pennsylvania driver’s license, defendant cannot be held responsible for the injuries sustained by plaintiff in the accident.

Plaintiff responds that defendant was guilty of negligent entrustment. Plaintiff contends that defendant engaged in negligent leasing practices when it leased the subject vehicle to Hodges. Plaintiff argues that defendant had a duty under the Pennsylvania Financial Responsibility Act to see that Hodges was insured, that defendant breached that duty, and that defendant is, therefore, responsible for the injuries sustained by plaintiff in the accident. Plaintiff also points to the lease agreement between Hodges and defendant and suggests that the agreement itself raises questions about the residence of Hodges, the term of the lease and the insurance coverage on the vehicle which would permit the fact-finder to conclude that defendant was guilty of negligent entrustment. In addition, plaintiff argues that the fact that Hodges fled the scene of the accident and subsequently abandoned the leased vehicle, a fact contained in the police report, is another indication that defendant was guilty of negligent entrustment.

After a thorough review of the applicable law, we are compelled to conclude that defendant is correct.

In the case Jahn v. O'Neil and VIP Car Rental Inc., 227 Pa. Super. 357, 475 A.2d 837 (1984), our Superior Court made the following observation concerning the imposition of liability on one who owns a motor vehicle:

“To impose liability on a person for an injury resulting from the operation of a motor vehicle, ‘he must, except where liability is otherwise imposed by statute, either be in actual operation thereof or in control thereof or stand in the relation of a master or principal to the person whose act occasions the injury.’ . . . Thus, the lessor of a motor vehicle is generally not liable for the negligence of a lessee while operating the vehicle. ... A lessor may be held liable, however, for the lessor’s own negligence in leasing the vehicle for use by a person whom the lessor has reason to know is incompetent.”

Plaintiffs theory of liability in this matter is that of negligent entrustment. Section 390 of the Restatement (Second) of Torts deals with negligent entrustment and provides as follows:

“One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely, because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others, whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them.”

Comment C to section 390 provides, in part, as follows concerning the application of the rule:

“The rule stated in this section sets out the conditions under which the supplier of a chattel is subject to liability. As always, this phase denotes that a supplier is liable if, but only if, his conduct is the legal cause of the bodily harm complained of, and if the person suffering the harm is not subject to any defense such as contributory negligence, which will prevent him from recovering damages therefor.” (emphasis supplied)

It is obvious that before liability can attach under section 390, defendant must either know or have reason to know that the person to whom the chattel is being entrusted will, for whatever reason, be incompetent or incapable of properly handling the chattel and, because of this, will be likely to hurt someone with the chattel. In addition, the incompetence which defendant is negligent in failing to discover must be a substantial factor in causing plaintiff’s harm. A number of Pennsylvania cases have dealt with the theory of negligent entrustment as related to the entrustment of motor vehicles. These cases have generally followed the Restatement and required that a defendant who is entrusting the vehicle have knowledge or reason to know at the time that the vehicle is turned over that the person to whom the vehicle is being entrusted is incompetent to drive properly or likely to drive improperly. See Wertz v. Kephart, 374 Pa. Super. 274, 542 A.2d 1019 (1988) (evidence of entrustee’s intoxication at time of entrustment and evidence of drinking between time of entrustment and accident admissible to prove negligent entrustment); Robare v. Pekarcik, 109 Pa. Commw. 87, 530 A. 2d 534 (1987) (actual knowledge on part of entrustor of automobile regarding intoxication of entrustee required to establish negligent entrustment, knowledge not imputed); Gibson v. Bruner, 406 Pa. 315, 178 A.2d 145 (1961) (liability of entrustor is based solely upon knowledge at the time of the entrustment); Littles v. Avis Rent-A-Car, 433 Pa. 72, 248 A.2d 837 (1969) (proof that lessor knew at time of entrustment that lessee was inexperienced in driving large truck necessary to show negligent entrustment). The cases have also required that there be some evidence to establish that the injury-producing accident was caused by the incompetence which defendant was negligent in failing to protect against. Littles v. Avis Rent-A-Car, supra.

In the instant case, plaintiffs complaint specifically alleges the two things that defendant idled to do which plaintiff contends establish that defendant was guilty of negligent entrustment. First, defendant failed to determine that the lessee had a valid Pennsylvania driver’s license. Second, defendant failed to ensure that the lessee complied with the Pennsylvania Financial Responsibility Law. Plaintiff also alleges that the lessee’s negligence must be imputed to defendant, because defendant allowed the lessee tó come into possession of the subject motor vehicle.

Addressing first the effect of defendant’s failure to determine whether the lessee had a valid Pennsylvania driver’s license, there is no indication in this record that lessee had a valid Pennsylvania driver’s license. However, lessee did have a valid Maryland driver’s license. The lease agreement, which is not in dispute, indicates that on August 1, 1986, at the time that defendant entrusted the automobile to the lessee Hodges, Hodges produced his Maryland driver’s license, license no. H-322-465-734-202, for defendant’s representative. The record further indicates that his license was valid until March 18, 1987. We are aware of no requirement that all persons leasing motor vehicles in Pennsylvania must have a valid Pennsylvania driver’s license. Moreover, we are satisfied that the existence of a valid Maryland driver’s license is sufficient, as a matter of law, to foreclose any suggestion that defendant was guilty of negligent entrustment for leasing a vehicle to an unlicensed driver.

Turning next to plaintiff’s assertion that defendant was guilty of negligent entrustment for failing to ensure that the lessee had complied with the Pennsylvania Financial Responsibility Law, we see nothing in this record from which we can conclude that the lessee’s failure to have insurance had anything to do with the happening of this accident. Moreover, plaintiff has pointed to nothing which would compel us to reach such a conclusion. Plaintiff simply argues that the law requires that owners of motor vehicles must see that those vehicles are covered by insurance under penalty of revocation or suspension of registration. Although plaintiff may be correct that the failure to have insurance coverage is a violation of the law, it does not follow that all people who operate motor vehicles without insuranee are incompetent drivers. We can see no relationship in this case between the existence or non-existence of insurance coverage and the ability to properly operate the subject automobile. Therefore, even assuming that defendant was negligent in failing to determine that the lessee had the requisite insurance coverage, we are compelled to conclude, based upon this record, that such negligence was not the factual cause or the legal cause of the accident and injuries sustained by plaintiff.

Next, plaintiff argues that, under all of the circumstances of this case, the careless and negligent driving of the lessee must be imputed to defendant because defendant allowed the lessee to come into possession of its motor vehicle. Plaintiff has offered no authority for this proposition, and we are aware of none. As the above-recited portion of Jahn v. O’Neil and VIP Car Rental, supra, indicates, the general rule is that a lessor is not liable for the negligence of a lessee while operating the leased vehicle. We can see nothing in the record of this case, and plaintiff has pointed to nothing, which would justify the conclusion that the lessor/lessee relationship between Hodges and defendant required the application of a different rule.

Finally, plaintiff argues that the lease agreement itself raises factual issues which preclude the granting of a motion for summary judgment. Plaintiff argues that the entries on the lease agreement raise questions about the term of the lease, the address of the lessee and the identity of the insurance company and that these, in turn, raise questions regarding the circumstances under which defendant leased the subject vehicle. Plaintiff contends that because of these questions, the case should be submitted to a jury. Again, we disagree.

Even assuming that plaintiff is correct, that the lease agreement itself raises certain questions concerning the term of the lease, the address of the lessee and the insurance coverage of lessee, plaintiff has failed to enlighten us on how any of these things, either individually or collectively, could reasonably lead to the conclusion that defendant knew or should have known that it was leasing an automobile to ah incompetent driver.

For all of these reasons we granted defendant’s motion for summary judgment.

      . Plaintiff has not suggested that the motion for summary judgment is premature or that additional pretrial discovery is contemplated.

      . The specific allegations of negligence against defendant are found in paragraphs 4,5, and 6 of plaintiff’s complaint, which provide as follows: “(4) On or about August 1, 1986, the defendant, through its duly authorized agent, negligently and carelessly leased said Chevrolet automobile to an individual known as Kenneth R. Hodges without first making a determination as to whether or not said individual had complied with the Pennsylvania Financial Responsibility Laws pertaining to maintaining motor vehicle liability insurance and without determining whether or not said individual maintained a valid Pennsylvania driver’s license; (5) As a result of said negligent leasing practices, the defendant’s agent turned over possession of the 1986 Chevrolet in question to Kenneth R. Hodges and as a result thereof, Hodges was operating said vehicle on Sunday, August 3, 1986, northbound on Broad Street when it contacted a motor vehicle owned and operated by the plaintiff in the rear, causing plaintiff to be injured and his vehicle to be damaged; and (6) The aforesaid motor vehicle accident was the result of the negligence of Kenneth R. Hodges, which negligence must be impuded [sic] to the defendant for having allowed him to come into possession of its motor vehicle under the circumstances described above.”

      . It is interesting to note that the argument contained in plaintiff’s memorandum of law does not really address the question of defendant’s failure to determine whether Hodges had a valid Pennsylvania driver’s license. Perhaps, this is because the lease agreement indicates that Hodges had a valid Maryland license.

      . Even entrusting a motor vehicle to an unlicensed driver is not in and of itself negligent entrustment. In the case of Chamberlain v. Riddle, 155 Pa. Super. 507, 38 A.2d 521 (1944), our Superior Court held that mere proof that a vehicle is given to an unlicensed driver does not establish negligent entrustment. Additional circumstances indicating that the driver is incompetent to drive are necessary in order to submit the issue to the jury.

      . After reviewing the lease agreement, we .have difficulty agreeing with plaintiff that significant questions are raised concerning the address of the lessee, the term of the lease and the identity of the insurance company.


author: CASCIO, J.,

text:
    Garretson v. Stonycreek Township

      Thomas M. Kalinyak, for petitioners.

      William R. Carroll, for respondent.
    August 17, 1989
   CASCIO, J.,

This matter is before the court on a local agency appeal filed pursuant to the provisions of 2 Pa.C.S. §751 et seq. Petitioners, Dennis Garretson and Kathleen Garret-son, husband and wife, have appealed a decision rendered by the solicitor of the township of Stony-creek, respondent, acting as a hearing officer, upholding the actions of the township sewage enforcement officer who denied a sewage permit for which petitioners had applied.

We heard this matter de novo, because a full record of the proceedings before the hearing officer was not made available. See 2 Pa.C.S. §754(a). Accordingly, we have made our own findings of fact and conclusions of law. See Board of Pensions and Retirement of the City of Philadelphia v. Einhorn, 65 Pa. Commw. 144, 442 A.2d 21 (1982) and Tieger v. Philadelphia Fair Housing Commission, 90 Pa. Commw. 470, 496 A.2d 76 (1985).

We took testimony from Dennis Beal, sewage enforcement officer of the Township of Stonycreek, Bruce A. Diehl, predecessor in title to petitioners, and Dennis R. Garretson, one of the petitioners. Various exhibits including petitioners’ exhibits A through F, consisting of photographs of the premises, and exhibit I, a copy of the deed by which petitioners acquired title to the premises, were admitted by stipulation. The same is true of respondent’s exhibits 1 through 7, additional photographs of the subject premises; Mr. Garretson’s application for a sewage disposal system, identified as exhibit 8; Mr. Diehl’s application for a sewage disposal system, identified as exhibit 9; and a certified copy of the Stonycreek Township Building and Sewage Permit Ordinance, identified as exhibit 10. In addition, two drawings identified as petitioners’ exhibits G and H were offered and admitted as evidence.

FINDINGS OF FACT

(1) Petitioners are the owners of a parcel of land consisting of approximately 0.9 acres, situate in Stonycreek Township, Somerset County, Pennsylvania, which they acquired from Bruce A. Diehl and Marjorie R. Diehl, husband and wife, parents of petitioner Kathleen A. Garretson, by deed dated August 13, 1987 and recorded in Somerset County Deed Book Volume 1004, at page 472.

(2) The Diehls purchased this property in 1971 with the intention of building a cottage on the lot.

(3) In May 1972, Mr. Diehl submitted an application for sewage disposal system to Clifford Mostoller, then the township sewage enforcement officer, which indicated that the Diehls intended to construct a two-bedroom non-residential structure on the lot. Mr. Diehl also paid Mr. Mostoller a $25 permit application fee.

(4) Mr. Mostoller visited the property and instructed Mr. Diehl to dig three test holes on the lot for the percolation test procedure. Following the testing, Mr. Diehl excavated an area on the lot and installed a gasoline tank with a siphon system and a five-foot-six-inch-wide drain field to serve as an on-lot septic system. After another inspection by Mr. Mostoller, Mr. Diehl installed a five-foot-six-inch-wide “T” across the end of the drain field. Both the drain field and the “T” were filled with a total of 20 tons of stone.

(5) When Mr. Mostoller returned to inspect the “T” area, the remaining drain field had been covered with fill. Based upon Mr. Mostoller’s examination of the “T” and his comments, Mr. Diehl back-filled the “T” and commenced use of the system.

(6) There are presently two structures on the property. One is a two-story boathouse with no plumbing. The other is a shed containing a toilet and sink which is located on top of the septic system. Mr. Diehl had originally intended to build a two-bedroom summer cottage on the premises where the shed is currently located but because of his illness was unable to proceed with this construction.

(7) The Garretsons intend to build a two-bedroom summer cottage with indoor plumbing on the lot near the septic system. The shed would be destroyed but the boathouse would remain. The proposed cost of this construction is approximately $10,000.

(8) The present boathouse and the proposed summer home both lack heating systems and other winterization and are intended only for occasional use and occupancy, including some overnight occupancy, during the summer months.

(9) When Mr. Garretson approached the township supervisors in May 1988 for a building permit, he was advised that he would have to apply for a sewage disposal system permit pursuant to the provisions of a Township Ordinance adopted December 31, 1975 despite the fact that there is currently a septic system in place on the premises.

(10) Mr. Garretson filed an application for sewage disposal system no. E 31186 on May 14, 1988. Dennis Beal, who has been the sewage enforcement officer for the township for approximately one year, attempted to locate a copy of the sewage permit for which Mr. Diehl had applied in 1972. His search of the state and township records revealed that no application was filed there and no permit was issued. He was able to acquire from Mr. Mostoller, the former sewage enforcement officer, a copy of the application filed by Mr. Diehl which contains no record of any soil tests, no record of any action approving or denying a permit,’ nor record of issuance of any permit.

(11) Mr. Beal proceeded to test the lot for suitability for an on-lot sewage system and determined that, although there was no evidence that the existing system was malfunctioning, the site is unsuitable for on-lot sewage disposal because of a limiting zone of excessive rock found within 20 inches of the soil surface, in violation of Title 25, Pennsylvania Code, Chapter 73.14 (b). Based upon this finding, he rejected the application and denied the permit on June 16, 1988.

(12) Mr.. Beal testified that all of the lots in this area of the subdivision have sod conditions simdar to that found on the Garretsons’ lot. At least one permanent residence, located approximately 110 to 150 feet from the site of Mr. Garretson’s proposed construction, utilizes an on-lot disposal system which appears to have been instaded in the late 1960’s. Another permanent residence, approximately four to six years old, is situated on a lot adjacent to the Garretsons’ lot, apparently also served by an on-lot disposal system.

DISCUSSION

Petitioners argue that, but for the formality of the possession of a sewage permit, they and their predecessors in title have done everything necessary to comply with the terms of the Sewage Facilities Act and the Township Ordinance adopted December 31, 1975. In addition, they point to the fact that Mr. Mostoder, as an agent of the township, performed the tests required by the act and the regulations promulgated by the Department of Environmental Resources and indicated to Mr. Diehl in the presence of Mr. Garretson that the system was acceptable as installed. Based upon these facts, petitioners claim that they are entitled to equitable relief in the nature of an order directing the issuance of a building permit.

The township argues that the record clearly demonstrates that no sewage permit was issued to the Diehls by Mr. MoStoller and that Mr. Beal acted properly in denying the Garretsons’ permit and adequately explained his reasons in compliance with the act and the regulations. On the issue of equitable estoppel, the township argues that this would cover only what improvements existed on the land at the time a permit was issued if one had been issued, and that ány further or expanded improvements would not be covered.

Equitable Relief

We must first determine whether petitioners may claim equitable relief in a local agency appeal. Our scope of review is described in 2 Pa.C.S. §753 which provides:

“(a) General rule — A party who proceeded before a local agency under the terms of a particular statute, home rule charter, or local ordinance or resolution shall not be precluded from questioning the validity of the statute, home rule charter or local ordinance or resolution in the appeal, but if a full and complete record of the proceedings before the agency was made such party may not raise upon appeal any other question not raised before the agency (notwithstanding the fact that the agency may not be competent to resolve such question) unless allowed by the court upon due cause shown.
“(b) Equitable relief— The remedy at law provided by subsection (a) shall not in any manner impair the right to equitable relief heretofore existing, and such right to equitable relief is hereby continued, notwithstanding the provisions of subsection (a).”

Petitioners have not raised any issues which would come under the purview of subsection (a). It is clear that the petitioner’s appeal has been timely filed and that our court has jurisdiction. See D’Amico v. Board of Supervisors, Township of Alsace, 106 Pa. Commw. 411, 526 A.2d 479 (1987); Consumer Investment Fund v. Supervisors of Smithfield Township, 110 Pa. Commw. 413, 532 A. 2d 543 (1987). However, we do not read subsection (b) as conferring equitable powers on our court in deciding local agency appeals.

Petitioners, under subsection (b), could have sought separate equitable relief even at the same time they pursued their agency appeal. Lundy v. City of Williamsport, 120 Pa. Commw. 520, 548 A.2d 1339 (1988). See also, Arsenal Coal Co. v. Department of Environmental Resources, 505 Pa. 198, 477 A.2d 1333 (1984), which discusses the use of 2 Pa.C.S. § 703(b) in appeals from state agencies, the language of which is identical to and upon which is patterned. section 753(b). See 2 Pa.C.S. §753, Official Source Note. We assume that petitioners chose not to do this because the Local Agency Act provides an adequate statutory remedy. Thus, it appears to us that the only “equitable” argument available to petitioners in this proceeding concerns the issue of equitable estoppel.

Equitable Estoppel

In a local agency appeal which is heard de novo, the governmental body has the burden “ ‘to prove all of the elements, both procedural and substantive, necessary to support its adjudication.’ ” Lawrence. Township Appeal, 117 Pa. Commw. 508, 513, 544 A.2d 1070, 1074 (1988), quoting Allegheny County Health Department v. Ligans, 16 Pa. Commw. 74, 78, 329 A.2d 878, 879 (1974). We find that respondent has sustained its burden of proof by establishing that: (1) no sewage permit was issued to Mr. Diehl (finding of fact no. 7); (2) Mr. Beal’s testing of the site revealed that it was unsuitable for an on-lot sewage disposal system (finding of fact no. 11); and (3) Mr. Garretson’s permit application was denied based upon these findings (finding of fact no. 11).

It is also clear tó us that despite the fact that Mr. Diehl applied for a permit and paid the application fee (finding of fact no. 3), and that the site testing procedure was undertaken and completed (finding of fact nos. 4 and 5), there is no way that petitioners can establish, by virtue of these facts standing alone, that a permit must be issued. While it is true that 35 Pa.C.S. 750.7(b)(2) provides that “[p]ermits shall be issued or denied within seven days after receiving an application for permit... ,” Mr. Mostoller’s failure to act within that time period cannot be deemed approval of the application because the Sewage Facilities Act does not contain any deemed approval language.

“We have previously recognized, however, that in order for a deemed approval to occur ‘there must be an express legislative declaration of deemed approval in the statutory . . . provision in order to have such a substantive result produced by procedural tardiness.’ Since the [Sewage Facilities] Act does not include a deemed approval provision, this court cannot supply such a provision through statutory construction.” D’Amico v. Board of Supervisors, Township of Alsace, supra, 106 Pa. Commw. at 414, 526 A. 2d at 480. (citations omitted)

In addition, even if a. permit had been issued based upon Mr. Diehl’s application, there is some question as to whether it would have expired after two years because the construction of the structure described in the application submitted by Mr. Diehl (finding of fact no. 3) had not been commenced within that time period. See 35 Pa.C.S. 750.7(b)(7). Furthermore, had the permit been issued, based upon the testimony of Mr. Beal regarding the unsuitability of the lot for on-lot sewage disposal, the permit may have been subject to revocation under the terms of 35 Pa.C.S. 750.7(b)(6).

Having eliminated all of these possibilities, we conclude that the only way petitioners may prevail in this case is by establishing that they are otherwise entitled to have a permit issued based upon the concept of equitable estoppel which, in municipal permit cases, is applicable in the nature of a variance and/or a vested right. East Ridge Mining Inc. v. Township of Conemaugh, 48 Somerset Leg. J. 154 (1989). Because we are dealing here with a sewage permit, only the vested right principle is applicable.

The general rule is that:

“[A] municipal permit issued illegally or in violation of the law, or under a mistake of fact confers no vested right or privilege, on the person to whom the permit has been issued and may be revoked notwithstanding that he may have acted upon the permit; any expenditures made in reliance upon such permit are made at his peril. ...” Vogt v. Port Vue Borough, 170 Pa. Super. 526, 528, 85 A.2d 688, 690 (1952).

An exception to this general rule was established by the Commonwealth Court in Commonwealth of Pennsylvania, Department of Environmental Re sources v. Flynn, 21 Pa. Commw. 264, 344 A.2d 720 (1975) in which the court held that when a sewage permit was issued illegally or in error, an owner’s good-faith reliance upon it should grant him a vested right to complete his work in certain limited circumstances. In Petrosky v. Zoning Hearing Board of Upper Chichester Township, 485 Pa. 501, 402 A.2d 1385 (1979) the Pennsylvania Supreme Court outlined a five-pronged test to be applied in interpreting Flynn.

“The Commonwealth Court in Flynn, supra, outlined five factors that must be weighed in determining whether one has acquired vested rights as the result of permits issued by government. These factors are:

“(1) his due diligence in attempting to comply with the law;
“(2) his good faith throughout the proceedings;
“(3) the expenditure of substantial unrecoverable funds;
“(4) the expiration without appeal of the period during which an appeal could have been taken from the issuance of the permit;
“(5) the insufficiency of the evidence to prove that individual property rights or the public health, safety or welfare would be adversely affected by the use of the permit.” Petrosky, supra, 485 Pa. at 507, 402 A.2d at 1388.

We recently had occasion to apply this test in a building permit/sewer permit case. In Black Township v. Sanner, 48 Somerset Leg. J. 175 (1989) we dealt with a budding permit which had been erroneously issued by the township in the absence of an issued sewage permit. There, a home had been constructed at substantial expense, and was to be connected to an unpermitted septic tank system which had been installed on the lot approximately 10 years before construction began on the house. The lot was tested after this error was discovered and it was determined that the only on-lot system which could be installed and permitted was an elevated sand mound system that would cost between $4,000 and $8,000.

We applied the Flynn test and determined that the property owner had clearly demonstrated that she had acquired a vested right in the budding permit but not in the sewage permit. In rejecting the claim for the sewage permit, we found that the cases we had examined, which upheld the property owner’s claim to a vested right in a municipal permit, involved situations where a permit had been issued. Flynn, supra (sewer permit); Turner v. Martz, 42 Pa. Commw. 328, 401 A.2d 585 (1979) (sewer permit); Petrosky, supra (zoning, budding and use permits); Nowak v. Bridgeville Borough Zoning Board, 111 Pa. Commw. 470, 534 A.2d 165 (1987) (budding permit). See generally, East Ridge Mining Inc., supra, 48 Somerset Leg. J. at 166-7 and the cases cited therein. Based on that analysis, we find no support for the contention that a vested right could be established where a permit had not been issued.

In Banner, supra, we also analyzed the argument, implicit in the facts in the case at bar, that the fadure of the township to enforce its ordinance or the Sewage Facilities Act in some way establishes a vested right even though a permit has not been, issued. Our research led us to one case, Appeal of Crawford, 110 Pa. Commw. 51, 531 A.2d 865 (1987) in which municipal fadure to enforce the law was analyzed. In Crawford, the Commonwealth Court held that, in addition to the criteria set forth in Flynn, supra, the property owner must establish “a long period of municipal fadure to enforce the law, when the municipality knew or should have known of the violation, in conjunction with some form of active acquiescence in the illegal use.” Crawford, supra, 110 Pa. Commw. at 55, 531 A.2d at 867. (emphasis in original) The court also held that mere knowledge of violation of the law was not enough to amount to active acquiescence.

“We can find no case decided by our Supreme Court or this court where pure municipal failure to take action, even coupled with some knowledge of the violation by municipal officials, was held sufficient to grant a variance by estoppel. Indeed, in several cases we have held to the contrary. In the case presently before this court, there was no erroneously issued permit upon which the appellants relied as in [Township of Haverford v.] Spica [16 Pa. Commw. 326, 328 A.2d 878 (1974),] nor any other municipal action upon which appellants could reasonably rely.” Crawford, supra, 110 Pa. Commw. at 57-8, 531 A.2d at 869. (emphasis in original; footnote omitted)

There is no evidence in this record that the township or any of its agents, except for Mr. Mostoller, knew that Mr. Diehl had installed and was using this system. Even if Mr. Mostoller’s knowledge could be imputed to the township, the mere failure to take action is not sufficient to grant a vested right under the reasoning in Crawford, supra, and the cases cited therein. In addition, because no sewage or building permit had ever been issued here, we need not consider the Flynn criteria with respect to either permit.

CONCLUSIONS OF LAW

(1) This court has jurisdiction to hear this appeal under the provisions of 2 Pa.C.S. §751, et seq.

(2) Because a complete record of the proceedings before the local agency was not made, this court could hear the appeal de novo, pursuant to 2 Pa.C.S. § 754(a). '

(3) Under the facts as presented, petitioners have failed to establish that they are entitled to the issuance of a sewage permit.

ADJUDICATION

And now, August 17, 1989, consistent with the foregoing opinion, peitioners’ local agency appeal is dismissed. Costs on petitioners.


author: KUHN, J.,

text:
    Stevens v. Huntington Township

      Clayton R. Wilcox, for plaintiffs.

      Robert E. Campbell, for defendant.
    November 30, 1989
   KUHN, J.,

Plaintiffs filed a complaint in mandamus against Huntington Township seeking a “deemed approval” of a proposed plan and for variance requests.

FINDINGS OF FACT

(1) Plaintiffs are John L. and Charlotte M. Stevens, husband and wife, who reside at 936 Five Points Road, New Oxford, Pennsylvania.

(2) Defendant is Huntington Township, a second class township, in Adams County, Pa.

(3) Plaintiffs are the owners of a tract of real estate containing 0.7 acres, acquired January 1985, and located at the comer of Pennsylvania Route 234 and Wireman’s Mill Road in Huntington Township. The parcel is triangular in shape.

(4) The real estate is improved with a two-story frame and log dwelling and outhouse.

(5) The dwelling has no electrical, heat, water or sewer services.

(6) On August 24, 1987, Mr. Stevens attended a regular meeting of the Huntington Township Planning Commission and presented a plan showing the property and proposing placement of a mobile home and separate workshop at the western and widest portion of the property.

(7) Mr. Stevens was advised by the commission to approach the township supervisors for a variance regarding lot size, budding set-back lines and the number of principal buildings.

(8) On September 10,1987, Mr. Stevens attended a regular meeting of the Huntington Township supervisors and presented his plan and a letter seeking variance of the minimum lot size from 40,000 square feet to approximately 30,500 square feet (0.7 acres); of the 50-foot budding set-back line and for the log dwelling not be considered a principal budding because it would be only used for storage.

(9) The supervisors voted to reject the variance request, however, no written notice of this action was sént to plaintiffs.

(10) On February 11, 1988, Mr. Stevens attended a regular meeting of the supervisors and requested a reconsideration of his variance request.

(11) The supervisors agreed to meet at the site to study the situation.

(12) Approximately two weeks later Mr. Stevens and the supervisors met at the site.

(13) On April 14, 1988, Mr. Stevens attended a regular meeting of the supervisors, presented his plan and requested a reconsideration of his variance request.

(14) On April 14, 1988, the supervisors granted a variance for minimum lot size on the condition that plaintiff center the mobile home and remove the log dwelling within six months. The variance request for budding set-back and number of principal dwedings was rejected.

(15) No written notice of the April 14, 1988, action by the supervisors was forwarded to plaintiffs.

(16) The minutes of the August 24, 1987, planning commission meeting state that plaintiffs submitted a. “sketch” plan.

(17) Article VI of the Huntington Township Subdivision and Land Development Ordinance allows for submission of a “sketch” plan for consultation with the planning commission before submission of a preliminary plan.

(18) Article VII of the aforesaid ordinance sets forth the requirements for a preliminary plan.

(19) Plaintiffs’ plan did not meet the requirements for a preliminary plan in the fodowing respects: number of copies to be submitted; size of the plan; indication of north; date; topographical contour lines; name and address of developer; identity of adjoining owners; indication of engineer or surveyor; and no place for planning commission and supervisor signatures for approval or rejection.

(20) The supervisors believed plaintiffs were submitting a “sketch” plan for review.

DISCUSSION

Plaintiffs allege that they are entitled to a deemed approval of their proposal pursuant to section 508 of the Pennsylvania Municipalities Planning Code, 53 P.S. §10508, which provides, in pertinent part:

“§10508. Approval of Plats
“All applications for approval of a plat. . . whether preliminary or final, shall be acted upon by the governing body or the planning agency within such time limits as may be fixed in the subdivision and land development ordinance but the governing body or the planning agency shall render its decision and communicate it to the applicant not later than 90 days following the date of the regular meeting . . . next following the date the application is filed . . .
“(1) The decision . . . shall be in writing . . .
“(3) Failure ... to render a decision and communicate it to the applicant within the time and in the manner required herein shall be deemed an approval of the application in terms as presented . . . ”

The code defines a. “plat” as “the map or plan of a subdivision or land development, whether preliminary or final.” 53 P.S. § 10107. Plaintiffs clearly were not seeking subdivision, however, “land development”, is defined as “(1) The improvement of one lot ... for any purpose involving: (1) a group of two or more residential or non-residential buildings ...” 53 P.S. §10107.

The Huntington Township Subdivision and Land Development Ordinance of 1979 similarly defines “land development” as:

“[The] improvement of one lot ... for any purpose involving (a) a group of two or more buddings ...” Article III, section 300(16).

Plaintiffs presented a map or plan of land development, as set forth in these definitions.

The principal issue is whether the plan submitted was a voluntary sketch plan not subject to the provisions of section 5Ó8 of the code, as the township contends, or whether it was a formal preliminary plan triggering the provisions of section 508, as plaintiffs contend.

The ordinance sub judice allows, but does not mandate, a three-step submission procedure for land development requests. The land developer is encouraged to prepare a sketch plan for purposes of generally illustrating and discussing the proposed project with the planning commission before incurring the time and expense of preparing a more formal preliminary plan. Section 601. An optional sketch plan submission would not trigger the provisions of section 508 of the code, Raccoon Mountain Inc. v. Perry County Planning Commission, 50 Pa. Commw. 613, 413 A.2d 1170 (1980), whereas a mandatory sketch plan requirement would trigger a deemed approval, Croft v. Board of Supervisors of Middletown Township, 76 Pa. Commw. 488, 464 A. 2d 625 (1980).

Plaintiffs suggest this case is controlled by Township of O’Hara v. DiSilvio, 51 Pa. Commw. 50, 413 A.2d 1174 (1980). There the landowners prepared tentative informal subdivision plans which were submitted to the planning commission for review. Having been advised that a variance would be necessary for the proposed right-of-way width they submitted two more tentative plans and then finally filed a “preliminary plan of lots” which noted thereon the need for a variance. The landowners did not follow all the subdivision application or formal variance filing requirements. No action was taken by the township. In a mandamus action the court granted approval of the plan pursuant to code section 508. The court concluded that the failure of the landowner to meet certain technical filing formalities would not outweigh the failure of the township to either object to the application deficiencies, as required by the local ordinance, or render a decision on the preliminary plan and the variance, as required by section 508.

Unfortunately for plaintiffs we do not find DiSilvio to be dispositive. There, the landowners clearly filed a “preliminary plan.” If the township believed the plan was deficient it was required to so notify the landowner. In the case sub judice the issue is whether the plan submitted was a sketch plan or a preliminary plan. Disposition of that issue requires different considerations than faced the DiSilvio court. The township woulfl have no reason to call to the landowner’s attention deficiencies in a sketch plan because there are no technical filing or other requirements for such a plan. On the contrary, the township ordinance has very specific requirements for a preliminary plan. Therefore, if we conclude that the plan was a sketch plan, Raccoon Mountain Inc., supra, applies. If we conclude that the plan was a preliminary plan, only then does DiSilvio apply.

We have found no case delineating the difference between a sketch plan and a preliminary plan. Our findings set forth, however, the extent to which plaintiffs’ plan did not comply with ordinance requirements for a preliminary plan. Furthermore, plaintiffs did not label their plan a preliminary plan. Whatever may have been plaintiffs’ intention we believe it is incumbent upon them to clearly identify for the township whether their plan is sketch or preliminary, especially where, as here, the plan was significantly deficient in meeting the basic requirements for a preliminary plan. Municipal officials are faced with ever-increasing and perplexing problems and concerns. Therefore, they should not be required to guess which procedure a land developer is pursuing. The planning commission minutes of August 24, 1987, show that those members believed plaintiffs submitted a sketch plan and testimony from the supervisors demonstrated that they also believed plaintiffs were submitting a sketch plan.

CONCLUSION

Under these circumstances we decline plaintiffs’ request for a deemed approval.

Accordingly, we enter the attached

ORDER OF COURT

And now, November 30, 1989, plaintiffs’ complaint in mandamus is hereby dismissed. Costs to be paid by plaintiffs.