Hidden Creek, L.P. v. Lower Salford Twp. Authority ( 2015 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Hidden Creek, L.P. :
:
v. :
:
Lower Salford Township Authority, : No. 1839 C.D. 2014
Appellant : Argued: May 8, 2015
BEFORE: HONORABLE DAN PELLEGRINI, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION BY
JUDGE COVEY FILED: September 14, 2015
The Lower Salford Township Authority (Authority) presents this
interlocutory appeal from the Montgomery County Common Pleas Court’s (trial
court) September 15, 2014 order denying its summary judgment motion. The issues
before the Court as directed by this Court’s October 29, 2014 Order are as follows:
“[w]hen does the applicable two[-]year statute of limitations begin to run for Hidden
Creek, L.P.’s [(Developer)] claim of excessive tapping fees[; and,] [i]s the Authority
entitled to governmental immunity from [Developer’s] claim that tap[p]ing fees were
charged in violation of the Municipal[ity] Authorities Act [(MAA).1]” Id. After
review, we affirm.
Developer was the owner and developer of 90 single-family residential
lots in a community known as Hidden Creek in Lower Salford Township. On
February 17, 1998, the Authority approved Resolution 98-3-17 (1998 Resolution)
setting a $6,875.00 tapping fee, based upon a study performed by the Authority’s
engineer, Carroll Engineering Corporation (Engineer). On August 18, 1998, the
1
53 Pa.C.S. §§ 5601-5623.
Authority and Developer entered into an “Agreement for the Construction of Sewer
Lines” (Agreement). Pursuant to the Agreement, Developer would construct sewer
lines as part of the Hidden Creek development. The Agreement also required
Developer to purchase 90 equivalent dwelling units (EDU) of capacity in the
Authority’s wastewater collection and treatment system, and to pay $6,875.00 per
EDU as a tapping fee, but further provided that “[t]apping fees shall be offset by the
cost of certain off-site sewer improvements constructed by Developer.” Reproduced
Record (R.R.) at 170a. On December 21, 1999, the Authority approved Resolution
99-12-21 (1999 Resolution) which increased tapping fees to $7,000.00 per EDU,
effective January 1, 2000. Developer made its first tapping fee payment on January
29, 1999 and its last payment on January 21, 2000.2
On September 25, 2000, Developer filed a writ of summons to initiate
litigation to recover its alleged tapping fees’ overpayment. Developer initially filed
its complaint on July 31, 2002, but on November 17, 2006, filed a First Amended
Complaint (Complaint) alleging that the Authority improperly calculated the tapping
fees in violation of the MAA and overcharged Developer. Developer’s Complaint
sought damages representing excess tapping fees paid to the Authority, plus interest
and costs.
On February 21, 2014, the Authority filed its summary judgment motion
arguing, inter alia, that Developer’s claim was barred by the statute of limitations and
that the Authority was protected from liability by governmental immunity. By July
30, 2014 order, the trial court denied the Authority’s summary judgment motion. On
August 21, 2014, the Authority filed a Motion to Amend Order Entered July 30, 2014
to Permit Interlocutory Appeal Pursuant to 42 Pa.C.S. § 702(b) (Motion to Amend).
2
The Authority’s brief explains that of the 90 EDUs, Developer ultimately paid for 54
tapping fees totaling $372,125.00, and that Developer received a credit for 36 tapping fees totaling
$252,000.00 reflecting the Authority’s share of the cost of Developer’s off-site improvements.
Authority’s Br. at 8.
2
By September 15, 2014 order, the trial court amended its July 30, 2014 order. On
October 15, 2014, the Authority filed a Petition for Permission to Appeal with this
Court (Petition). On October 27, 2014, Developer filed an answer to the Petition. On
October 29, 2014, this Court granted the Petition.3
The Authority first contends that the trial court erred when it failed to
find that Developer’s claim was time-barred. Consistent with the case of Harleysville
Homestead, Inc. v. Lower Salford Township Authority, 980 A.2d 749 (Pa. Cmwlth.
2009), the parties agree that a two-year statute of limitations applies in the instant
matter, but disagree on when the statute began to run. The Authority argues that the
limitations period began to run (at the latest) when the contract was executed and
Developer was obviously aware of the amount of the tapping fee. In contrast,
Developer asserts that because it is seeking an overpayments’ refund, its cause of
action did not accrue until it paid the allegedly erroneous fees, and that it filed its
action within two years of its first payment.
In Harleysville, a developer sought damages representing overpayments
to the Authority in violation of the MAA. The Authority moved to dismiss the action
based, inter alia, on its assertion that the action was barred by the two-year statute of
limitations set forth in Section 5524 of the Judicial Code.4 The developer countered
that a four-year limitations period applied because it had entered into an agreement
3
Our scope of review of a trial court’s order granting or denying
summary judgment is plenary, and our standard of review is clear: the
trial court’s order will be reversed only where it is established that the
court committed an error of law or abused its discretion. Summary
judgment is proper only where there is no genuine issue as to any
material fact and it is clear that the moving party is entitled to a
judgment as a matter of law.
Kincel v. Dep’t of Transp., 867 A.2d 758, 761 n.7 (Pa. Cmwlth. 2005) (citation omitted).
4
42 Pa.C.S. § 5524.
3
with the Authority to pay the tapping fees. Relying on the Court’s decision in
Petticord v. Joyce, 578 A.2d 632 (Pa. Cmwlth. 1990), this Court agreed that a two-
year statute of limitations applied to the developer’s claim. The Court held that the
developer’s refund claim sounded in tort and that the developer’s agreement to pay
the tapping fees was merely “collateral to [the developer’s] cause of action.”
Harleysville, 980 A.2d at 753.
The Harleysville Court did not address the pertinent issue before us – the
date from which the statute runs - but did note that
[t]he trial court also relied upon two similar cases in which
it determined, based on Petticord, that the two[-]year statute
of limitations applied wherein the plaintiffs[] contended that
the . . . Authority violated a statutory duty to set reasonable
prices for the purchase of sewer capacity. Both of these
cases were affirmed by this Court in unpublished opinions.
See K. Hov[n]anian at Perkiomen I, Inc. v. Montgomery
C[nty.] Sewer Auth[.], (No. 95-21147, filed January 25,
1999) aff’d, (Pa. Cmwlth., No. 3433 C.D. 1998, filed July
14, 1999); and LHC Realty Corp[.] v. Montgomery C[nty.]
Sewer Auth[.], (No. 96-03457, filed June 29, 1998) aff’d,
(Pa. Cmwlth., No. 1514 C.D. 1998, filed May 7, 1999).
Harleysville, 980 A.2d at 751 n.5. Although unreported opinions are not binding
precedent, the cited LHC decision addresses a situation substantially similar to the
instant case, and thus, its reasoning provides insight and is persuasive authority. See
Commonwealth Court’s Internal Operating Procedures Section 414.
In LHC, a developer applied to the municipal authority to reserve 341
sewer connections for a proposed townhouse development. The municipal authority
charged a tapping fee of $4,500.00 per unit, for a total fee of $1,534,500.00. The
developer purchased the connections and executed a capacity rights agreement with
the municipal authority. Thereafter, by the Act of December 19, 1990, P.L. 1227,
No. 203 (Act 203), the General Assembly amended the then-applicable Municipal
4
Authorities Act of 1945 (1945 Act)5 which regulated the rates that municipal
authorities could charge. The amendment, effective June 1991, exempted from its
applicability all pre-existing agreements. On June 4, 1991, the municipal authority
adopted a resolution reducing its fee for sanitary sewer capacity, but exempted pre-
existing agreements.
The developer defaulted on its financial obligations and, in July 1991,
the municipal authority transferred the 341 sewer connections to the developer’s
successor-in-interest (Successor). In February 1994, the municipal authority
increased the rate for sanitary sewer capacity, but exempted pre-existing agreements.
Successor filed suit alleging that the capacity rights agreement was unlawful under
the 1945 Act and the municipal authority’s refusal to refund overpayments violated
the 1945 Act. The municipal authority moved for summary judgment, arguing, inter
alia, that the action was barred by a two-year statute of limitations. The trial court
granted summary judgment, finding that the 1945 Act, and the municipal authority’s
rate resolutions specifically exempted pre-existing agreements. Importantly, the trial
court also found the action was barred by the two-year statute of limitations. The trial
court stated:
[I]n the instant case, Plaintiff claims that it was caused to
incur unnecessary expense because [the municipal
authority] breached it [sic] statutory duty to set reasonable
prices for EDU sewer capacity, and thus, as in Petticord,
this case should be governed by a two-year statute of
limitations period. Statutes of limitation begin to run as
soon as the right to institute and maintain suit arises;
lack of knowledge, mistake or misunderstanding do not
toll the running of the limitation period. . . . Since the
Plaintiff alleges that the unreasonable charge for EDU’s
[sic] was incurred . . . when the Capacity Rights Agreement
5
Section 3 of the Act of June 19, 2001, P.L. 287, repealed the MAA of 1945, Act of May 2,
1945, P.L. 382, as amended, formerly 53 P.S. §§ 301-322.
5
was executed, any claim arising therefrom should have
been brought within two years[.]
LHC, slip op. at 6 (quoting Common Pleas Court Opinion, June 29, 1998 at 5-6)
(emphasis added). This Court agreed, stating: “[The developer] chose to reserve the
EDU’s [sic] by executing the capacity rights agreement and paying $4,500[.00] per
EDU in 1989, and the statute of limitations began to run at that time.” LHC, slip
op. at 7 (emphasis added).
In the instant action, Developer’s Complaint alleges, “the Authority
required [Developer] to enter into [the Agreement]” which mandated that Developer
pay the allegedly improper fee. R.R. at 132a (emphasis added). The Agreement
included Developer’s obligation to:
pay to the Authority a connection and/or tapping fee in the
amount of Six Thousand Eight Hundred Seventy-Five
Dollars ($6,875.00) for each of the forty-four (44) units to
be constructed, or a total sum of Three Hundred Two
Thousand Five Hundred Dollars ($302,500.00). Tapping
fees shall be offset by the cost of certain off-site sewer
improvements constructed by Developer. The remaining
tapping fees due shall be divided by the forty-four (44) units
and paid as a building permit for each unit at the time the
building permit is issued.
R.R. at 170a. Upon execution of the Agreement, Developer became legally obligated
to pay the Authority tapping fees in the allegedly erroneous amount dictated in the
Agreement. Although the Agreement provides that tapping fees were to be offset by
the cost of other improvements, it is the alleged miscalculation of the tapping fees
(and not the offsets) that is the subject of this litigation.
A “statute of limitations begins to run as soon as the right to institute and
maintain a suit arises.” Fine v. Checcio, 870 A.2d 850, 857 (Pa. 2005). Developer
was harmed upon the execution of the Agreement, the moment it was legally
obligated to pay an allegedly unlawful fee.
6
Developer argues that even if this Court determines that the statute of
limitations would normally start running before the date of payment, the trial court
properly denied the Authority’s summary judgment motion based upon the
“discovery rule.”
The ‘discovery rule,’ so-called, is an exception to the
requirement that a complaining party must file suit within
the statutory period. The discovery rule provides that where
the existence of the injury is not known to the complaining
party and such knowledge cannot reasonably be ascertained
within the prescribed statutory period, the limitations period
does not begin to run until the discovery of the injury is
reasonably possible.
....
[T]he rule is an equitable one, which excludes the period of
time during which the injured party is reasonably unaware
that an injury has been sustained so that people in that class
have essentially the same rights as those who suffer an
immediately ascertainable injury. Although the purpose of
this rule is to mitigate, in worthy cases, the harshness of an
absolute and rigid period of limitations, it is also true that
the rule cannot be applied so loosely as to nullify the
purpose for which a statute of limitations exists.
The party seeking to invoke the discovery rule bears the
burden of establishing the inability to know of the injury
despite the exercise of reasonable diligence. The standard
of reasonable diligence is objective, not subjective. It is not
a standard of reasonable diligence unique to a particular
plaintiff, but instead, a standard of reasonable diligence as
applied to a reasonable person.
Dalrymple v. Brown, 701 A.2d 164, 167 (Pa. 1997) (citations and quotation marks
omitted).
Developer contends “that it was not aware until after it had made the
payments, and . . . did not have any reason to know at the time it made such
7
payments, that [the Authority] had improperly calculated the base amount of the
tapping fee[.]” Developer Br. at 8.
Importantly, Section 5607(d)(24)(i)(C) of the MAA, entitled “Tapping
fee[,]” provides:
A tapping fee shall not exceed an amount based upon some
or all of the following parts [capacity part; distribution or
collection part; special purpose part; reimbursement part]
which shall be separately set forth in the resolution
adopted by the authority to establish these fees. In lieu
of payment of this fee, an authority may require the
construction and dedication of only such capacity,
distribution-collection or special purpose facilities
necessary to supply service to the property owner or
owners.
53 Pa.C.S. § 5607(d)(24)(i)(C) (emphasis added). Further, Section 5607(d)(24)(ii) of
the MAA states in relevant part:
Every authority charging a tapping, customer facilities or
connection fee shall do so only pursuant to a resolution
adopted at a public meeting of the authority. The authority
shall have available for public inspection a detailed
itemization of all calculations, clearly showing the
maximum fees allowable for each part of the tapping fee
and the manner in which the fees were determined,
which shall be made a part of any resolution imposing
such fees.
53 Pa.C.S. § 5607(d)(24)(ii) (bold and italic emphasis added). Finally, Section
5607(d)(24)(iii) provides: “No authority shall have the power to impose a connection
fee, customer facilities fee, tapping fee or similar fee except as provided specifically
under this section.” 53 Pa.C.S. § 5607(d)(24)(iii).
The Authority’s resolutions establishing the applicable tapping fees
state, in relevant part:
8
RESOLUTION ESTABLISHING TAPPING FEE
PURSUANT TO ACT 203
WHEREAS, [Engineer] has performed a study to
determine the appropriate amount that the [Authority] may
charge as a tapping fee; and
WHEREAS, the results of the Engineer’s study
indicated that the Authority could charge a tapping fee in
excess of Seven Thousand Dollars ($7,000.00); and
WHEREAS, the Authority is desirous of increasing
its tapping fee but does not desire to charge the maximum
fee permissible; and
WHEREAS, the Authority, upon the proper motion
and second, adopted an increase in tapping fees at its
December 11, 1997 meeting.
NOW, THEREFORE, be it resolved and it is hereby
resolved as follows:
1. Authority hereby adopts Engineer’s Act 203 study dated
November, 1997 as a basis for calculating its tapping fees.
2. Authority hereby establishes its tapping fee at Six
Thousand Eight Hundred and Seventy-five Dollars
($6,875,00), effective December 11, 1997.
3. All other resolutions inconsistent herewith are deemed
rescinded.
1998 Resolution, R.R. at 152a-153a.
RESOLUTION ESTABLISHING TAPPING FEE
PURSUANT TO ACT 203
WHEREAS, [Engineer] has performed a study to determine
the appropriate amount that the [Authority] may charge as a
tapping fee; and
WHEREAS, the results of the Engineer’s study indicated
that the Authority could charge a tapping fee in excess of
Seven Thousand Dollars ($7,000.00); and
9
WHEREAS, the Authority is desirous of increasing its
tapping fee but does not desire to charge the maximum fee
permissible; and
WHEREAS, the Authority, upon the proper motion and
second, adopted an increase in tapping fees at its December
21, 1999 meeting.
NOW, THEREFORE, be it resolved and it is hereby
resolves as follows:
1. Authority hereby adopts Engineer’s Act 203 study dated
December, 1999 as a basis for calculating its tapping fees.
2. Authority hereby establishes its tapping fee at Seven
Thousand Dollars ($7,000.00), effective January 1, 2000.
3. All other resolutions inconsistent herewith are deemed
rescinded.
1999 Resolution, R.R. at 196a-197a.
Although both Resolutions adopted the Engineer’s studies, the
components providing the basis for the tapping fees were not separately set forth in
the Resolutions as the MAA required. Nor do the Resolutions indicate that the
Engineer’s studies are attached thereto. Thus, the Resolutions do not provide any
basis to evaluate the accuracy of the tapping fees. The absence of these required
components in the Resolutions further supports Developer’s contention that it did not
have reason to know of the alleged calculation errors in the tapping fee at the time it
agreed to pay the fee or thereafter.6
6
Because the issue is not before us, we do not consider the impact of the apparent defects in
the Resolutions on the Authority’s ability to impose the tapping fees based thereon. See Norristown
Mun. Waste Auth. v. 200 E. Airy, LLC (Pa. Cmwlth. No. 1977 C.D. 2010, filed November 30,
2011). In Norristown, an unreported opinion, this Court held that a trial court properly struck off a
lien imposed by a municipal authority for failure to pay a tapping fee. Although the trial court
struck the lien because the resolution imposing the fee was adopted after the municipality sought
payment from the landowner, this Court also noted that the result would be the same had the
municipal authority relied upon an earlier resolution because:
10
Our Supreme Court has held:
The point at which the complaining party should be
reasonably aware that he or she has suffered an injury
and its cause is ordinarily an issue of fact to be
determined by the jury due to the fact[-]intensive nature
of the inquiry. Only where the facts are so clear that
reasonable minds could not differ may a court determine as
a matter of law at the summary judgment stage, the point at
which a party should have been reasonably aware of his or
her injury and its cause and thereby fix the commencement
date of the limitations period.
Gleason v. Borough of Moosic, 15 A.3d 479, 485 (Pa. 2011) (citations omitted;
emphasis added).
Here, legitimate factual questions remain as to whether Developer was
reasonably unaware that the tapping fee was allegedly erroneous, and the Authority’s
apparent failure to comply with the MAA in adopting its tapping Resolutions may
have deprived Developer of information necessary to evaluate the accuracy of the
tapping fee. Because “the facts are [not] so clear that reasonable minds could not
differ” as to when Developer should have been reasonably aware of the alleged error
The . . . [r]esolution purports to set tapping fees ‘as such term is
defined in the Sewer System Tapping Fee Report, and prepared by
Keystone Alliance Consulting and dated February 2008.’ R.R. 64a.
The . . . [r]esolution further provides that ‘[t]he tapping fee amount is
based on the calculations, prepared by Keystone Alliance Consulting
and presented in the aforementioned Report, and is allocated between
the collection and capacity components.’ Id. However, the
[r]esolution does not attach the report or have a separate resolution
setting forth the fees as required by the [sic] 53 Pa.C.S.
§5607(d)(24)(i). Id.
Norristown, slip op. at 9 n.9.
11
in tapping fees, we conclude that the trial court properly denied the Authority’s
summary judgment motion on the timeliness issue. Id. at 485.
The Authority next asserts that Developer’s action is barred by the act
commonly known as the Political Subdivision Tort Claims Act (Tort Claims Act), 42
Pa.C.S. §§ 8541-8542. Section 8541 of the Tort Claims Act provides that “[e]xcept
as otherwise provided in this subchapter, no local agency shall be liable for any
damages on account of any injury to a person or property caused by any act of the
local agency or an employee thereof or any other person.” 42 Pa.C.S. § 8541.
Section 8542 of the Tort Claims Act, 42 Pa.C.S. § 8542, provides exceptions to the
aforementioned immunity, none of which are applicable to the instant matter.
In Meyer v. Community College of Beaver County, 2 A.3d 499 (Pa.
2010) (Meyer I), our Supreme Court considered whether a community college was
immune from liability to its former students when it lost its certification. The Court
vacated the decision of the Commonwealth Court which had reversed the trial court’s
denial of the college’s partial summary judgment motion, and held that
“governmental immunity does not extend to all statutory causes of action, regardless
of whether they sound in tort or contract.” Id. at 503.7
Thereafter, in Dorsey v. Redman, 96 A.3d 332 (Pa. 2014), the Supreme
Court considered whether a register of wills was immune under the Tort Claims Act
from statutory liability permitted by Section 3172 of the Probate, Estates and
Fiduciaries Code (PEF Code).8 The Court first noted:
7
On remand, this Court, in an en banc decision, concluded that the college, a political
subdivision agency, was a person subject to suit under the Unfair Trade Practices and Consumer
Protection Law (CPL), Act of December 16, 1968, P.L. 1224, as amended, 73 P.S. §§ 201.1—201-
9.3. The Court further found that the students’ claims sounded in contract and thus the Tort Claims
Act did not bar the action. On appeal, the Supreme Court reversed, finding that the General
Assembly did not intend that the definition of ‘person’ include political subdivision agencies.
Meyer v. Cmty. College of Beaver County, 93 A.3d 806 (Pa. 2014).
8
20 Pa.C.S. §§ 3171-3172. Section 3172 of the PEF Code states:
12
As questions of governmental immunity are legislative in
nature, we begin by considering the dictates found in the
Statutory Construction Act (‘SCA’). 1 Pa.C.S.[] §§ 1501 et
seq. The objective of all interpretation and construction of
statutes is to ascertain and effectuate the intention of the
General Assembly. 1 Pa.C.S.[] § 1921(a). The best
indication of the legislature’s intent is the plain language of
the statute. When the words of a statute are clear and
unambiguous, we may not go beyond the plain meaning of
the language of the statute ‘under the pretext of pursuing its
spirit.’ Id. § 1921(b). Therefore, only when the words of a
statute are ambiguous, should a reviewing court seek to
ascertain the intent of the General Assembly through
considerations of the various factors found in Section
1921(c) [of the SCA]. Id. § 1921(c); see generally Bayada
Nurses Inc. v. . . . Dep[’]t [of] Labor [&] Indus., . . . 8 A.3d
866, 880-81 ([Pa.] 2010). Additionally, we are mindful
that, in interpreting the Tort Claims Act, exceptions to the
absolute rule of immunity expressed in the statute ‘must be
narrowly interpreted given the expressed legislative intent
to insulate political subdivisions from tort liability.’
Mascaro v. Youth Study Ctr., . . . 523 A.2d 1118, 1123
([Pa.] 1987).
Dorsey, 96 A.3d at 340-41. The Dorsey Court further explained that in Meyer I, it
had
eschewed a rote approach to determining immunity. While,
generally, the appropriate analysis to determine whether the
protections of the Tort Claims Act may cloak an employee
of a local government entity with immunity first looks to
whether the cause of action sounds in tort, or some other
cause of action, such as in contract, we do not find this
tort/contract construct to be necessarily appropriate in all
questions of immunity.
If any register shall grant letters without having taken such bond as is
required by law, he and his surety shall be liable to pay all damages
which shall accrue to any person by reason thereof. Nothing herein
stated shall be deemed to relieve the personal representative from
liability which would otherwise be imposed upon him by law.
20 Pa.C.S. § 3172.
13
Dorsey, 96 A.3d at 341.
Ultimately, the Dorsey Court held that governmental immunity did not
apply, finding that Section 3172 of the PEF Code “creates a targeted form of
accountability resting outside of the scope of governmental . . . immunity.” Dorsey,
96 A.3d at 341. Applying the canons of statutory construction, the Court found “that
the General Assembly . . . intended to maintain a protective scheme for preservation
of estate assets through the PEF Code, and that this scheme persists outside of the
scope of governmental . . . immunity under the Tort Claims Act.” Id. at 342.
Relying on Dorsey and Meyer I, and citing to various sections of the
MAA, Developer contends that its claim is not barred because the MAA expressly
permits it. Specifically, Developer points to Section 5607(d)(2) of the MAA which
allows municipal authorities to “sue and be sued.” 53 Pa.C.S. § 5607(d)(2).
Developer also references Section 5607(d)(9) of the MAA which authorizes “[a]ny
person questioning the reasonableness or uniformity of a rate fixed by an authority or
the adequacy, safety and reasonableness of the authority’s services, including
extensions thereof, [to] bring suit against the authority in the court of common pleas
of the county where the project is located . . . .” 53 Pa.C.S. § 5607(d)(9). Developer
further relies upon Section 5607(d)(24)(iii) of the MAA which prohibits an authority
from imposing a tapping fee in contravention of the MAA. Developer maintains that
it is not seeking an award of consequential damages or general damages, but rather
the return of its own funds that the Authority allegedly improperly charged and
collected, plus interest for the time it was deprived of those funds.
Developer contends that the adoption of the Authority’s position would
frustrate Section 5607 of the MAA’s purpose. Developer reasons:
To uphold [the Authority’s] position would mean that a
municipal authority can adopt a fee that is in violation of
the statute and can then use its power to withhold needed
permits, thereby placing a developer in a squeeze where the
14
developer has to choose between: [a] economic loss by
refusing to pay the excessive fees and not getting the
needed permit and, instead, spending years in litigation with
the municipal authority trying to get the permits without
paying the excessive fee, or [b] paying the fee and never be
able to secure a refund of its own funds that the legislature
decided could not be charged. It defies logic (and any sense
of justice) to hold that the legislature when it adopted the
limitation on tapping fees in the [MAA] and when it
allowed a municipal authority to be sued, including sued as
to its fees, made such prohibition to be so toothless and
ineffective that a party faced with a demand for an improper
fee was limited to the Hobson’s choice set forth above
between suffering damages of one type or the other. It
similarly would be improper and illogical to hold that the
legislature when it allowed municipal authorities to be sued
and for lawsuits to be filed over an authority’s fees did not
intend that the permitted lawsuits and challenges to fees
would include suits for a return of fees that the legislature
had declared that the authority could not charge but that
immunity would apply to bar the return of improperly
charged fees.
Developer’s Br. at 30-31. We agree.
The General Assembly, through its careful crafting of the MAA’s
extraordinarily detailed provisions for determining the component parts, limited the
amounts that municipal authorities could charge for tapping fees. See 53 Pa.C.S. §
5607(d)(24)(i)(C). The General Assembly also specifically permitted municipal
authorities to be sued, and for the reasonableness of their rates to be challenged.
Rates charged in excess of those permitted by statute are not reasonable rates.
Although Developer’s action is indeed a challenge to the Authority’s
fees, it is also an action to recover damages. However, those damages are simply the
funds the Authority collected, if any, exceeding the lawfully permitted rate. There is
no claim for consequential damages. Developer’s cause of action, if successful,
merely makes the Authority adhere to the MAA by returning monies it obtained in
violation thereof, along with accrued interest. It is illogical to presume that where the
15
General Assembly set forth stringent restrictions on tapping fees, providing extensive
guidance for the determination of those fees and permitting legal challenges thereto,
it intended that a municipal authority which violates the restrictions and collects
excessive fees, should be immune from an action to recover those unlawfully
assessed fees. “We cannot presume that the legislature intended such an absurd
result. 1 Pa.C.S. § 1922(1).” Todd v. Workmen’s Comp. Appeal Bd. (NCR Corp.),
692 A.2d 1086, 1087 (Pa. 1997). Accordingly, in the instant circumstances, we
conclude that Section 5607(d) of the MAA “creates a targeted form of accountability
resting outside of the scope of governmental . . . immunity.” Dorsey, 96 A.3d at 341.
For all of the above reasons, the trial court’s order is affirmed.
___________________________
ANNE E. COVEY, Judge
16
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Hidden Creek, L.P. :
:
v. :
:
Lower Salford Township Authority, : No. 1839 C.D. 2014
Appellant :
ORDER
AND NOW, this 14th day of September, 2015, the Montgomery County
Common Pleas Court’s September 15, 2014 order is affirmed.
___________________________
ANNE E. COVEY, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Hidden Creek, L.P. :
:
v. : No. 1839 C.D. 2014
: Argued: May 8, 2015
Lower Salford Township Authority, :
Appellant :
BEFORE: HONORABLE DAN PELLEGRINI, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
CONCURRING OPINION BY
PRESIDENT JUDGE PELLEGRINI FILED: September 14, 2015
I concur with the result reached by the majority because of the issues
that have been raised and the interlocutory nature of the appeal. I write separately
because I do not believe that the challenge regarding whether the tap-in fees are
excessive is maintainable under the facts of this case.
In February 1998, the Lower Salford Township Authority (Authority)
approved a resolution setting a $6,875.00 tapping fee. After the enactment of the
resolution, in August 1998, the Authority and Hidden Creek, L.P. (Developer)
entered into an “Agreement for the Construction of Sewer Lines” (Agreement) under
which the Developer would construct sewer lines and pay the Authority for the costs
incurred by inspecting and administering the project. The Agreement also provided
that the Developer was to pay $6,875.00 per each equivalent dwelling unit (EDU) as
a tapping fee,1 but that those tapping fees would be offset by the cost of certain off-
site sewer improvements made by the Developer.2 The Developer made its first
tapping fee payment on January 29, 1999, and its last payment on January 21, 2000.
On September 25, 2000, the Developer filed a writ of summons to
initiate litigation to recover its alleged overpayment of tapping fees that ultimately led
to the First Amended Complaint (Complaint) filed in November 2006, which alleged
that the Authority overcharged the Developer by improperly calculating the tapping
fees in violation of the Municipal Authorities Act (MAA)3 and sought damages
representing the excess tapping fees paid to the Authority, plus interest and costs.
The Authority claimed that the claim, among other things, was time barred.
The parties agree that a two-year statute of limitations applies, but
disagree on when the statute of limitations began to run. The Authority argues that
the limitations period began to run (at the latest) when the contract was executed and
that the Developer was obviously aware of the amount of the tapping fee. The
Developer asserts that because it is seeking a refund of overpayments, its cause of
action did not accrue until it paid the allegedly erroneous fees, and that it filed its
action within two years of its first payment.
1
The Developer ultimately paid for 54 tapping fees totaling $372,125.00, and received a
credit for 36 tapping fees totaling $252,000.00, reflecting the Authority’s share of the cost of the
Developer’s off-site improvements.
2
Later, on December 21, 1999, the Authority approved Resolution 99-12-21 (1999
Resolution) which increased the tapping fees to $7,000.00 per EDU, effective January 1, 2000.
3
53 Pa. C.S. §§5601-5623.
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While the majority finds that the Developer was harmed upon the
execution of the Agreement, the moment that it was legally obligated to pay an
allegedly unlawful fee, it remands to determine whether the Developer was aware
under the discovery rule that the tapping fee was excessive due to the Authority’s
apparent failure to comply with the MAA in adopting its tapping resolution which
may have deprived the Developer of information necessary to evaluate the accuracy
of the tapping fee.
In this case, the Agreement provided that the Developer would perform
some off-site sewer work and would pay the Authority for its costs and expenses in
inspecting the Developer’s work, as well as other administrative costs that it incurred.
If there is a dispute regarding those administrative costs, the property owner is
required to challenge them within 60 days of billing of those costs and the matter is
then submitted to arbitration on a strict schedule. Section 5607(30) of the MAA, 53
Pa. C.S. §5607(30).
Under this Agreement, there was also an additional provision that the
Developer was to pay the Authority an agreed-upon price of $6,875.00 per EDU, and
that there was no reservation of the right to challenge the tapping fee in the
Agreement. Notwithstanding that it agreed to pay a certain amount, the Developer is
attempting to challenge the underlying calculation of the tapping fees as if they were
not fixed by the Agreement. The question then is can property owners challenge the
amount of the tapping fee and when can they challenge it.
Without definitively deciding the issue, there seems to me to be only two
possible ways to challenge the fee. When a property owner desires to connect to a
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sewer system, there is no written agreement between the property owner and the local
authority or municipality. Normally, as a prerequisite to obtaining a building permit
from the local municipality, the property owner has to show proof that it can dispose
of solid waste whether by an approved septic system or a tap-in to an approved
sewage system. When the owner obtains the permission to tap-in, he or she pays the
required fee. If, at that time, the property owner believes that the amount is
excessive, he or she can pay the fee under protest and bring a challenge, like all
administrative determinations, under the Local Agency Law4 that the fee is not
properly calculated, with subsequent appeals to the common pleas court. In some
circumstances, though, before the permit process has even begun, a property owner
may be able to challenge the fee through an action under the Declaratory Judgments
Act.5
While I believe that a property owner can normally challenge the fee as
outlined above, I disagree that, in this case, the Developer can challenge the amount
here because it agreed to pay $6,875.00 per EDU under the Agreement and can pay
no more or no less. However, because this issue is not before us, I concur with the
majority’s result.
___________________________________
DAN PELLEGRINI, President Judge
4
2 Pa. C.S. §§551-555, 751-754.
5
42 Pa. C.S. §§7531-7541.
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