Opinion
No. 205 C.D. 2010
06-15-2011
Rainmaker Capital of Chestnuthill, LLC, Appellant v. Chestnuthill Township
BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JOHNNY J. BUTLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
In this appeal, Rainmaker Capital of Chestnuthill, LLC (Developer), asks whether the Court of Common Pleas of Monroe County (trial court) erred in dismissing its complaint seeking declaratory judgment. Through its complaint, Developer requested that the trial court make certain declarations regarding its rights and obligations under a contract between it and Chestnuthill Township (Township), which concerned Developer's sewage systems. The trial court sustained the Township's preliminary objections and dismissed Developer's complaint, concluding it lacked subject matter jurisdiction over the suit where no actual controversy existed yet between the parties. Discerning no error in the trial court's decision, we affirm.
The facts averred in Developer's complaint may be summarized as follows. Developer owns a tract of land in the Township, which is improved with a small commercial shopping center known as Regency Plaza.
In June 2007, Developer submitted a preliminary land development plan in order to add a building to Regency Plaza that would be leased for a Dunkin' Donuts. The local governing body approved the preliminary plan in October 2007. At that time, Regency Plaza was served by two on-site sewage systems, which were sufficient to service the shopping center with the addition of the Dunkin' Donuts.
Shortly before the Township approved Developer's preliminary land development plan, one of the on-site sewage systems began malfunctioning. Helen Beers, the Township's Sewage Enforcement Officer (SEO) notified Developer regarding the malfunctioning sewage system. The SEO also informed Developer's representatives that she had authority to issue a permit to relocate the malfunctioning system to a previously approved off-site location. Developer agreed to attempt to relocate the system.
At the time of the SEO's representation to Developer, the SEO knew, but did not inform Developer, there was no planning module for one of the sewage systems and, therefore, she could not issue the relocation permit. Instead, Developer would have to obtain the approval for a new sewage planning module and permit from the Department of Environmental Protection (DEP).
After Developer learned it would have to obtain the planning module and permit for relocation of the sewage system, the parties, as part of the preliminary plan approval, entered into an agreement (Agreement) outlining their rights and obligations regarding the sewage systems to service the property and parking for the property. As part of the Agreement, the parties estimated the cost of the off-site sewage system at $40,000.00. Pursuant to the Agreement, and attached cost estimates, Developer posted a letter of credit in the amount of $174, 955.00, which represented 110% of the cost to secure completion of the work and improvements.
After DEP approved the planning module, Developer filed the necessary documentation with DEP to have a permit issued for relocation of the sewage system. The relocation site is zoned residential, and there is a well on the lot adjacent to the relocation site that provides water for a residential dwelling.
Because of the adjacent residential well and the data provided by the monitoring of the wells installed by Developer, DEP would not allow a normal on-site sewage system to be located on the property. Instead, it required an "Acqua Point Bio Clere de-nitrification system" that would treat the sewage to drinking water standards. The cost of the Acqua Point Bio Clere de-nitrification system is $213,000 to $238,000, plus approximately $22,460 per year in operation and maintenance costs.
Unaware of the high costs associated with the de-nitrification system, Developer's representatives mistakenly submitted a permit application for that system. When Developer became aware of the costs, it withdrew the treatment portion of its permit application. At the time the parties entered into the Agreement, they did not anticipate the Acqua Point Bio Clere de-nitrification system would be required. The cost of that system makes it impossible financially for Developer to install it.
After the parties entered into the Agreement, Developer performed testing on the two on-site sewage systems. Based on the testing, both systems were functioning properly.
Pursuant to the Agreement, Developer removed the bed of the malfunctioning sewage system. Developer now wishes to repair that system (if, in fact, such repairs are necessary) so that Regency Plaza will be serviced by the two on-site sewage systems.
Developer avers the Township's position is that Developer cannot repair the existing system because DEP did not deny its permit application to construct the new off-site sewage system. As a result, the Township, through its representatives, asserted Developer is in breach of the Agreement. Developer does not believe it is in breach of the Agreement.
In July 2009, Developer applied to the SEO for a permit to repair the malfunctioning on-site sewage system. Based on correspondence between Developer's engineer and the SEO, Developer believed the SEO would deny the permit.
Developer proceeded with the construction work required by the Agreement to the extent it could be performed, given the state of controversy between the parties. The Township's representatives asserted, based on Developer's alleged breach of the agreement, if construction work is not completed by the deadline set forth in the Agreement, the Township will call the letter of credit posted as security for completion of the improvements identified in the Agreement. Developer avers that if the Township calls the letter of credit, it will convert the funds to its own use, and it will not complete the improvements set forth in the Agreement, even though the Township is legally obligated to do so. Developer does not believe the Township should call the letter of credit.
Developer further avers that, based on the Agreement, upon completion of the Dunkin' Donuts, the Township was required to issue a certificate of occupancy, regardless of whether DEP issued a permit. However, upon completion of the Dunkin' Donuts, the Township did not do so. Instead, it issued a temporary certificate of occupancy that contained conditions not provided for in the Agreement.
Based on these averments, Developer sought declarations that: (1) it has the right to repair, if necessary, and use the two on-site sewage systems at Regency Plaza, and it is not obligated to construct a Acqua Point Bio Clere de-nitrification system on the off-site location; (2) it is entitled to a certificate of occupancy for the Dunkin' Donuts; (3) the Township has no right to call the letter of credit securing completion of the improvements described in the Agreement, or, alternatively, (4) if the Township calls the letter of credit, it is obligated to complete all the improvements described in the Agreement, including installation of the Acqua Point Bio Clere de-nitrification system at the relocation site.
In response, the Township filed preliminary objections, asserting: (1) the trial court lacked subject matter jurisdiction over Developer's complaint because it did not aver the existence of an actual controversy between the parties; (2) the relief sought by Developer exceeded that permissible under the Declaratory Judgments Act (DJA), 42 Pa. C.S. §§7531-7541, because Developer had an alternative remedy in the nature of an appeal from any agency action; (3) Developer's complaint was legally insufficient to state a claim for declaratory relief because the averments regarding the Township's actions were speculative; (4) the complaint did not name DEP or the Township's Zoning Hearing Board, who were necessary parties; and, (5) Developer did not exhaust statutory or administrative remedies in the nature of an appeal from any administrative agency decision.
Developer responded by filing preliminary objections to the Township's preliminary objections, asking the trial court to strike the Township's preliminary objections because they constituted a speaking demurrer.
Ultimately, the trial court issued an opinion in which it sustained, in part, Developer's motion to strike and sustained the Township's preliminary objections. Specifically, the trial court determined, to the extent the Township's preliminary objections referenced the Agreement attached to the complaint, the Township's preliminary objections did not constitute a speaking demurrer. However, the trial court determined that two paragraphs in the Township's preliminary objections referenced facts outside the complaint and the Agreement. The trial court declined to consider these paragraphs in ruling on the Township's preliminary objections.
More significantly, the trial court agreed with the Township that it lacked subject matter jurisdiction over Developer's complaint. In particular, the trial court declined to accept jurisdiction over the suit because the facts averred did not indicate the existence of an actual controversy between the parties. In so doing, the respected trial court stated:
Here, after a thorough review of the [c]omplaint, we find that [Developer] has filed this declaratory judgment action as a tactical maneuver essentially designed to test the validity of a defense to a future law suit. [Developer] anticipates the Township will not issue the repair permit and will call the letter of credit posted by it for the completion of the project. ...
The prime purpose of the [DJA] is to speedily determine issues that, "would ... be delayed to the possible injury of those interested if they were compelled to wait the ordinary course of judicial proceedings." [Osram-Sylvania Prods., Inc. v. Comsup Commodities, Inc., 845 A.2d 846, 848 (Pa. Super. 2004) (citation omitted)]. Whether a trial court should exercise jurisdiction over a declaratory judgment action is a matter of sound discretion. Id. at 848. (citation omitted). In reviewing the [c]omplaint as a whole, we find that [Developer] has filed the declaratory judgment action to force the Township to litigate this claim which is not yet an actual controversy between the parties. Many of the allegations made by [Developer] anticipate future Township action in relation to the [A]greement. We believe there is no actual controversy since many of the facts averred foresee Township action (or reaction) to [Developer's] failure to complete the project. [Developer] does not yet have a controversy with the Township and we find this action is a tactical maneuver to test the validity of a defense
to a future lawsuit. Hence, we decline to accept jurisdiction over this matter where no actual controversy exists.Tr. Ct., Slip Op., 1/29/10, at 6, 7-8. Developer now appeals to this Court.
On appeal, Developer argues the trial court erred in determining no actual controversy yet exists between the parties. Specifically, Developer asserts that at the time of its complaint: it applied for a sewage permit, but the permit was not issued; the Township declared Developer in breach of the Agreement; and, Developer sustained actual injury as it could not use certain leased portions of its shopping plaza because of insufficient sewage capacity. Developer further maintains litigation is imminent. As a result, it contends a declaratory judgment is appropriate to determine its rights under the Agreement. Also, Developer asserts, an actual controversy exists based on the Township's failure to issue a certificate of occupancy when it was required to do so.
When reviewing orders disposing of preliminary objections, our standard is clear: well-pled factual averments of the complaint are admitted; conclusions of law are not. Arbor Res. Ltd. Liab. Co. v. Nockamixon Twp., 973 A.2d 1036 (Pa. Cmwlth. 2009). When preliminary objections raise a question of subject matter jurisdiction the trial court's function is to determine whether the law will bar recovery due to a lack of subject matter jurisdiction. Id.
Petitions for declaratory judgments are governed by the provisions of the DJA, 42 Pa. C.S. §§7531-7551. The granting of a petition for declaratory judgment under the DJA is a matter lying within the sound discretion of the court of original jurisdiction. Gmerek v. State Ethics Comm'n, 751 A.2d 1241 (Pa. Cmwlth. 2000), aff'd, 569 Pa. 579, 807 A.2d 812 (2002). The DJA is remedial. 42 Pa. C.S. §7541(a). Further, as this Court recently explained:
It is well settled that declaratory judgments are not to be entered in anticipation of events that may never occur. A plaintiff seeking relief in anticipation of events that may never occur, based upon a hypothetical future occurrence, has not yet been adversely affected by the alleged violations and declaratory judgment is not an appropriate remedy to determine rights in anticipation of events that may never occur. ...Greater Phila. v. Brunwasser, ___ A.3d ___, ___ (Pa. Cmwlth., No. 1085 C.D. 2010, filed May 4, 2011); slip op. at 16 (citations and quotations omitted).
Here, Developer's complaint for declaratory relief essentially contained three requests:
• that it has the right to repair and use the two on-site sewage systems at Regency Plaza, and it is not obligated to construct a sewage system at the off-site location;
• that it is entitled to a certificate of occupancy for the Dunkin' Donuts;
• that the Township has no right to call the letter of credit securing completion of the improvements described in the Agreement, or, alternatively, if the Township calls the letter of credit, the Township is obligated to complete all improvements described in the Agreement.
As to the first declaration sought, that Developer has the right to repair the on-site septic system, the complaint avers Developer previously applied to the SEO for a permit to repair the on-site system. Reproduced Record (R.R.) at 12a. Developer further alleges, "because of correspondence between [its] engineer and the [SEO], [Developer] believes the permit will be denied by the [SEO]." Thus, at the time Developer filed its complaint, the SEO had not yet acted on Developer's repair permit application. Because Developer's permit application remained pending at the time Developer filed its complaint, we discern no error in the trial court's conclusion that Developer's request for relief regarding its right to repair the on-site sewage system was premature.
More importantly, the Pennsylvania Sewage Facilities Act and its attendant regulations, provide the framework by which to challenge the grant or denial of a sewage permit. At the time Developer filed its complaint, it had yet to exhaust this administrative remedy. See R.R. at 12a.
Act of January 24, 1966, P.L. (1965) §1535, as amended, 35 P.S. §750.1-750.20a.
See 25 Pa. Code §§72.21-72.22, 72.24-72.26, 72.29.
However, shortly after Developer filed its complaint, the SEO informed Developer of her refusal to issue the sewage permit. Developer appealed that decision to the Township's Board of Supervisors, which upheld the SEO's refusal to issue the permit. Developer appealed that decision to the trial court. About three months after its decision in the instant matter, the trial court reversed the Supervisors' decision and granted the sewage permit. The Supervisors appealed to this Court. Ultimately, we reinstated the Supervisors' decision. See In Re Rainmaker Capital of Chestnuthill, LLC, ___ A.3d ___ (Pa. Cmwlth., No. 886 C.D. 2010, filed June 15, 2011).
Because Developer's appeal of the Supervisors' denial of the sewage permit remained pending before the trial court when the trial court issued its decision here, we discern no error in the trial court's dismissal of Developer's claim for declaratory relief regarding its right to repair the on-site sewage system. The trial court properly abstained from considering this claim for declaratory relief where Developer had not exhausted its available administrative remedies. See Dep't of Gen. Servs. v. Frank Briscoe Co., Inc., 502 Pa. 449, 459, 466 A.2d 1336, 1341 (1983) ("declaratory judgment procedure may not be used to prejudge issues that are committed for initial resolution to an administrative forum, any more than it may be used as a substitute to establish in advance the merits of an appeal from that forum."); Holly v. Pa. Crime Victim's Comp. Bd., 460 A.2d 900 (Pa. Cmwlth. 1983) (court will not interfere with course of administrative proceedings through action for injunction, mandamus, or prohibition where there is an adequate remedy by means of an appeal from agency decision) Pye v. Commonwealth, Ins. Dep't, 372 A.2d 33 (Pa. Cmwlth. 1977), aff'd per curiam, 479 Pa. 146, 387 A.2d 877 (1978) (where party had not availed himself of available administrative remedies, including right to appeal any adverse agency decision, he could not bypass the administrative process and challenge prospective agency action directly in the courts); see also Petsinger v. Dep't of Labor & Indus., Office of Vocational Rehab., 988 A.2d 748 (Pa. Cmwlth. 2010) (where party had right to avail himself of appeal process from administrative agency decision, action for mandamus was unavailable); Birch Hills Residence v. Dep't of Pub. Welfare, 943 A.2d 357 (Pa. Cmwlth. 2008), appeal quashed, (Pa., No. 8 MAP 2008, filed March 19, 2008) (where party has an adequate administrative remedy, an action for declaratory relief will not lie in this Court's original jurisdiction).
We disagree with Developer that the Third Circuit's decision in Peachlum v. City of York, Pennsylvania, 333 F.3d 429 (3d. Cir. 2003) compels a different result. In Peachlum, the Third Circuit held that a party's First Amendment challenges to a municipal ordinance regulating lawn signs were ripe for review even though the zoning hearing board had not decided the party's appeal. Unlike Peachlum, this case does not involve a First Amendment challenge to an ordinance, which the Third Circuit held was subject to a "relaxed" ripeness standard. Id. at 434. Indeed, in a subsequent decision the Third Circuit stated the relaxed case-or-controversy requirements espoused in Peachlum and similar cases apply "solely in the First Amendment context ...." See Pa. Prison Soc'y v. Cortés, 508 F.3d 156, 169 (3d Cir. 2007) (emphasis in original). Also, unlike in Peachlum, where the zoning board refused to consider the party's appeal because she did not pay a required filing fee, here Developer was not precluded in any manner of availing itself of the administrative process.
Similarly, we agree with the trial court that, based on the facts alleged, Developer's second request for declaratory relief, that it is entitled to issuance of a certificate of occupancy, is also premature. In support of this request for relief, Developer avers the Agreement obligated the Township to issue a certificate of occupancy upon completion of the Dunkin' Donuts. R.R. at 13a. Developer further alleges that, upon completion of the Dunkin' Donuts, the Township did not issue a certificate of occupancy; instead, it issued a temporary certificate of occupancy that contained conditions not set forth in the Agreement. Id.
We discern no error in the trial court's conclusion that these averments did not set forth the existence of an actual controversy between the parties as Developer's claim was premature. To that end, Developer did not aver that it was adversely affected by the issuance of a temporary certificate of occupancy. Specifically, Developer did not allege the Township took any action to prevent the operation or full use of the Dunkin' Donuts. Based on the lack of averments regarding any adverse action by the Township, the trial court did not err in determining Developer's request was premature.
Further, in the event the Township takes any adverse action, such as issuance of an enforcement notice, Developer would have the right to challenge the action in a separate proceeding. See e.g., Section 616.1 of the Pennsylvania Municipalities Planning Code (regarding issuance of enforcement notice and right to appeal); Smithfield v. Kessler, 882 A.2d 17 (Pa. Cmwlth. 2005) (involving municipality's request for injunctive relief to prohibit operation of business that did not possess a certificate of occupancy).
Act of July 31, 1968, P.L. 805, as amended, 53 P.S. §10616.1. This Section was added by Section 60 of the Act of December 21, 1988, P.L. 1329.
Additionally, although Developer alleges the Township agreed to issue a certificate of occupancy upon completion of the Dunkin' Donuts, our review of the Agreement attached to the complaint belies this assertion. The Agreement provides: "[Developer] agrees to make application for final land development approval prior to the issuance of a certificate of occupancy for the Dunkin Donuts." R.R. at 21a. (Emphasis added). The complaint contains no averment that Developer, in fact, made an application for final land development approval. R.R. at 8a-14a. In the absence of such an averment, it does not appear the Township was, in fact, obligated to issue the certificate of occupancy. For this additional reason, we discern no error in the trial court's dismissal of this claim for declaratory relief.
A demurrer cannot be a "speaking demurrer" and cannot be used to supply a fact missing in the complaint. Martin v. Dep't of Transp., 556 A.2d 969 (Pa. Cmwlth. 1989). A limited exception to this general prohibition is recognized where a plaintiff avers the existence of a written agreement and relies on it to establish his cause of action. Id. In such a case, a defendant may properly annex that agreement without creating an impermissible speaking demurrer because the agreement is a factual matter arising out of the complaint itself. Id. Here, Developer attached a copy of the Agreement to its complaint.
As discussed in more detail in the companion case of In Re Rainmaker Capital of Chestnuthill, LLC, ___ A.3d ___ (Pa. Cmwlth., No. 886 C.D. 2010, filed June 15, 2011), ultimately Developer applied for final land development approval. But, it later revised its proposed final plan so that it was no longer consistent with its approved preliminary plan and no longer consistent with Township parking requirements. These after-occurring facts also obscure Developer's "right" to a final occupancy permit for the Dunkin' Donuts facility.
We further concur in the trial court's dismissal of Developer's final two interrelated claims for declaratory relief, which concern Developer's posting of a letter of credit for the improvements at Regency Plaza. With regard to the letter of credit, Developer avers the following (with emphasis added):
13. That pursuant to the [A]greement and cost estimates which formed a part thereof agreed to by the parties, as well as their respective engineers, [Developer] posted a letter of credit from Sussex Bank to secure the completion of the work and improvements described on Exhibit "A" of the [A]greement in the amount of $174,955.00, which was 110% of the estimate.R.R. at 10a, 12a-13a.
* * * *
29. That the representatives of the [Township] have asserted, based upon the alleged breach of the [A]greement that if construction work is not completed by the deadline set forth in the Agreement, the [Township] will call the letter of credit posted as security for the completion of the improvements identified in Exhibit "A" of the Agreement.
30. That [Developer] believes and, therefore, avers that if the [Township] calls the letter of credit, it will convert the funds to its own use and not complete the improvements which are the subject of Exhibit "A", even though the [Township] would be required to complete same, based upon the provisions of in [sic] the Municipalities Planning Code and the case law decided thereunder.
31. That [Developer] believes that the letter of credit should not be called by the [Township].
Based on the speculative nature in which Developer framed its averments, we discern no error in the trial court's conclusion that Developer's claims regarding the letter of credit are premature and, therefore, not sufficient to state an actual controversy. As explained in our recent decision in Brunwasser, "[a] plaintiff seeking relief in anticipation of events that may never occur, based upon a hypothetical future occurrence, has not yet been adversely affected by the alleged violations and declaratory judgment is not an appropriate remedy to determine rights in anticipation of events that may never occur." Id. at ___; slip op. at 16.
Here, Developer's letter-of-credit claims are clearly in anticipation of events that may never occur; thus, no error is apparent in the trial court's conclusion that these averments are insufficient to state a claim for declaratory relief at this time as no actual controversy yet exists.
We further reject Developer's reliance on our decision in Mid-Centre County Authority v. Township of Boggs, 384 A.2d 1008 (Pa. Cmwlth. 1978). There, a dispute arose over various agreements that were signed by three local agencies in connection with the planning and construction of a regional sewage system. One of the agencies filed a declaratory judgment action seeking to resolve the meaning of the various agreements because it could not proceed with securing construction bids for the proposed sewage system without an interpretation of the various agreements.
Unlike Mid-Centre County, in which we held that an actual controversy existed because construction of the sewage system could not occur absent an interpretation of the terms of the contracts at issue, here Developer's averments regarding the rights of the parties under their Agreement are based on events that are merely speculative.
In light of the foregoing, we affirm the trial court's decision. We do so without prejudice for the parties to engage in future litigation based on subsequent facts.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 15th day of June, 2011, the order of the Court of Common Pleas of Monroe County is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge