Opinion
No. 1203 C.D. 2011
04-18-2012
John J. Grim and V. Paul Pisula III, t/d/b/a/ P&G Partners v. Reading Township and Reading Township Municipal Authority Appellants
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE PATRICIA McCULLOUGH, Judge HONORABLE ROCHELLE FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
I. Introduction
In this appeal, Reading Township and its Municipal Authority (collectively, Municipality) ask whether the Court of Common Pleas of Adams County (trial court) erred in granting summary judgment in favor of John J. Grim and V. Paul Pisula III, t/d/b/a, P&G Partners (collectively, P&G), on their breach of contract claim and denying summary judgment in favor of the Municipality on its counterclaims for breach of contract and unjust enrichment.
The Honorable Thomas R. Campbell presided.
This case involves the interpretation of a contract between the Municipality and a developer in which the developer agreed to post a letter of credit (LC) for a five-year period for the purpose of guaranteeing satisfactory completion of a sanitary sewer system. The trial court determined the Municipality prematurely called the LC in violation of the contract because, based on the trial court's interpretation of the relevant contract provisions, the developer was not "required" to install the sanitary sewer system until the Department of Environmental Protection (DEP) approved the Township's Special Study Amendment to its Official Act 537 Plan (Special Study Amendment). The Special Study Amendment provided for installation of a sanitary sewer system in an area encompassing the residential development at issue here (which is currently served by on-lot septic systems). DEP did not approve the Special Study Amendment until 29 days after the LC expired. The trial court determined the Municipality breached the contract by calling the LC prior to its expiration date because construction of the sewer system was not required until DEP approved the Special Study Amendment, an event which occurred after the LC expired.
The Pennsylvania Sewage Facilities Act, Act of January 24, 1966, (1965) P.L. 1535, as amended, 35 P.S. §§750.1-750.20a, was enacted to, among other things, "protect the public health, safety and welfare of [Pennsylvania's] citizens through the development and implementation of plans for the sanitary disposal of sewage waste." Section 3 of the Sewage Facilities Act, 35 P.S. §750.3. The Sewage Facilities Act, in part, requires every municipality to adopt an official plan subject to approval by the Department of Environmental Protection. Section 5 of the Sewage Facilities Act, 35 P.S. §750.5; McGrath Constr., Inc. v. U. Saucon Twp. Bd. of Supervisors, 952 A.2d 718 (Pa. Cmwlth. 2008). The Sewage Facilities Act is often referred to as Act 537.
The Municipality argues the trial court erred in: (1) adding terms to the parties' unambiguous contract that do not appear within the four corners of the document; (2) determining the Municipality lacked authority to require P&G to pay the costs of the sanitary sewer system where the Township's prior Act 537 Plan required sanitary sewer service to the area at issue; and, (3) denying summary judgment on the Municipality's counterclaim for unjust enrichment where doing so provided P&G with an undue windfall. Upon review, we affirm.
II. Factual and Procedural History
In June 2009, P&G filed suit for breach of contract against the Municipality, alleging the Municipality made an unauthorized withdrawal of $92,600 from the LC that P&G posted to secure the possible construction of a sewer line. P&G claimed the Municipality's withdrawal was unauthorized because the Municipality withdrew the funds before DEP approved the Special Study Amendment, which required construction of the sewer line.
The Municipality filed an answer with new matter raising counterclaims for breach of contract and unjust enrichment. Through its breach of contract counterclaim, the Municipality alleged that in the event P&G prevailed on its breach of contract claim, the Municipality would have to refund the $92,600 it received under the LC, and P&G would then be in breach of the contract for failing to pay the costs of construction for the sanitary sewer system. The Municipality's unjust enrichment counterclaim alleged that in the event P&G prevailed on its breach of contract claim, the Municipality would have to refund the funds drawn on the LC, and P&G would be unjustly enriched by provision of a sewer system to its development at no cost.
After the close of the pleadings, the parties conducted and completed discovery. A few months later, P&G filed its motion for summary judgment. The Municipality subsequently filed a cross-motion for summary judgment. The parties agreed there were no genuine issues of material fact, and the case was ripe for summary judgment determination.
After oral argument and the submission of briefs, the trial court authored an opinion in which it set forth the following facts. The Township's Official Act 537 Plan, dated September 1990, identified a public sewer service area that included a parcel known as the "Rhinehart Tract." The Act 537 Plan contemplated provision of public sewer service to the area including the Rhinehart Tract by July 2002. However, as of August 2003, when the Sewage Facilities Planning Module for development of the Rhinehart Tract was submitted to DEP, the Township had not yet implemented that portion of its Act 537 Plan. In its review of the Sewage Facilities Planning Module for the Rhinehart Tract, the Adams County Office of Planning and Development noted the subdivision proposal was not consistent with the Act 537 Plan, and it indicated there were needs in the area adjacent to the proposed subdivision that the Township should consider.
The Township was aware that the Act 537 Plan called for public sewer service in the area of the Rhinehart Tract by July 2002, and that it had not yet implemented that part of its Act 537 Plan. Nevertheless, in September 2003, the Township adopted Resolution No. 2003-10 calling for a plan revision to its existing Act 537 Plan for new land development. Through that resolution, the Township adopted and submitted to DEP for its approval a revision to its Act 537 Plan to allow for development of the Rhinehart Tract using individual, on-lot septic systems.
In January 2004, DEP approved the Act 537 Plan revision for the Rhinehart Tract to allow for the permitting of on-lot systems for that development. At that time, Triple Crown Corporation was the developer of the Rhinehart Tract.
In March 2004, Triple Crown entered into a Development Agreement (the contract at issue here) with the Board of Supervisors for construction of 16 single-family homes on the Rhinehart Tract. The Development Agreement is a one-and-a-half page document entered into approximately two months after approval of revisions to the Act 537 Plan. However, it made no reference to the on-lot septic systems or the eventual replacement of those systems by a sanitary sewer. Importantly, the express language of the Development Agreement only required the developer to post a LC for a limited period of five years; it did not require the developer to actually construct the sewer line or guarantee payment for construction of the sewer line indefinitely.
In 2005, P&G purchased the rights to the development of the Rhinehart Tract from Triple Crown. P&G then caused the LC to be issued, with the Township as the beneficiary, in the amount of $92,600. The LC had an expiration date of March 1, 2009.
Despite discussing and commencing the Special Study to Amend its Act 537 Plan in August 2003, the Township did not complete its Special Study until more than four years later in late 2007. The "Plan Implementation Schedule" set forth in the Special Study provided for Township adoption of the Act 537 Plan in April 2008, submission to DEP in May 2008, and DEP approval by September 2008. Reproduced Record (R.R.) at 120a.
By letter of August 6, 2008, the Municipal Authority's Solicitor informed P&G the Municipal Authority demanded payment of $92,600 to cover installation of the sewer line with payment to be made within 30 days from the date of the letter or the Authority would draw on the LC.
On September 29, 2008, the Municipal Authority's Solicitor called the LC in full, and the Municipal Authority received payment of $92,600. When the Municipal Authority called the LC, DEP had not approved or acted on the Special Study Amendment, which would have called for public sewer at the Rhinehart Tract.
As late as January 20, 2009, the Township responded to DEP's comments concerning the Special Study Amendment. Indeed, the Municipality acknowledged there was some "back and forth" between the Township and DEP during the months after the call of the LC. Tr. Ct., Slip Op. at 6.
On March 30, 2009, 29 days after the date of expiration of the LC, DEP approved the Special Study.
Based on these undisputed facts, the trial court granted P&G's motion for summary judgment on its breach of contract claim, and it denied the Municipality's motion for summary judgment on its counterclaims for breach of contract and unjust enrichment.
The trial court determined the Municipality breached the Development Agreement by prematurely calling on the LC because, based on the terms of the Agreement, construction of the sanitary sewer system to the Rhinehart Tract was not "required" until DEP approved the Special Study Amendment on March 30, 2009, 29 days after the LOC's expiration date. Thus, the trial court granted summary judgment in favor of P&G.
As to the Municipality's cross-motion for summary judgment, the trial court determined the Municipality did not prove P&G breached the agreement. To the contrary, the trial court stated, P&G satisfied its contractual obligation by posting security for five years. The trial court stated no evidence was presented to suggest the March 1, 2009 expiration date was less than five years after the date of the recording of the approved subdivision plan. Additionally, the trial court rejected the Municipality's attempts to read into the Development Agreement an obligation on the part of the developer to actually construct or pay for the construction of the sanitary sewer system "whenever the system was required even if the requirement for construction occurred after the five (5) year bonding period." Tr. Ct., Slip Op. at 16. Thus, the trial court denied summary judgment on the Municipality's breach of contract counterclaim.
In addition, the trial court denied summary judgment on the Municipality's counterclaim for unjust enrichment based on its determinations that the Municipality's right to relief was not, at that time, clear and free from doubt.
The parties subsequently entered into a stipulation for entry of judgment in favor of P&G and against the Municipality on all counts in P&G's complaint and on the Municipality's counterclaims so that the Municipality could appeal the order disposing of the parties' cross-motions for summary judgment. In turn, the trial court entered judgment in favor of P&G and against the Municipality on all counts in P&G's complaint and the Municipality's counterclaims. The Municipality appealed to this Court.
III. Issues
On appeal, the Municipality argues trial court erred in: (1) adding terms to the unambiguous Development Agreement that do not appear within the four corners of that document; (2) determining the Municipality lacked authority to require P&G to pay the costs of the sanitary sewer system where the Township's prior Act 537 Plan required sanitary sewer service to the area at issue; and, (3) denying summary judgment on the Municipality's unjust enrichment counterclaim where doing so resulted in an undue windfall to P&G.
Our scope of review of an order granting summary judgment is plenary. Stimmler v. Chestnut Hill Hosp., 602 Pa. 539, 981 A.2d 145 (2009). 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 clearly abused its discretion. Id. Summary judgment is appropriate only in those cases where the record clearly shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. The reviewing court must view the record in the light most favorable to the nonmoving party, resolving all doubts as to the existence of a genuine issue of material fact against the moving party. Id. When the facts are so clear that reasonable minds cannot differ, a trial court may properly enter summary judgment. Id.
In considering a motion for summary judgment, a trial court must examine the whole record, including the pleadings, any depositions, any answers to interrogatories, admissions of record, if any, and any affidavits filed by the parties. Id. From this thorough examination, the trial court will determine the question of whether there is a genuine issue as to any material fact. On this critical question, the party who brought the motion has the burden of proving no genuine issue of fact exists. Id. All doubts as to the existence of a genuine issue of a material fact are to be resolved against the granting of summary judgment. Id.
IV. Discussion
A. Interpretation of Development Agreement
The Municipality contends this case involves what should have been the application of straightforward contract interpretation principles. It asserts the Development Agreement obligated P&G to pay for sewer construction costs if, and when, the Township required sewer service to the development by adoption of its Act 537 Special Study Amendment. The Municipality argues the trial court erred in adding a prerequisite of "final DEP approval" to the terms of the Development Agreement where no such term exists on the face of the contract. Under the guise of contract interpretation, the Municipality maintains, the trial court rewrote the Development Agreement despite the fact that the contract is capable of reasonable construction by looking only to the language of the document.
The Municipality argues the trial court "zeroe[d] in" on the term "required" and incorrectly found a sewer system was not required until DEP issued its final approval of the Township's revised Act 537 Plan, which the Township itself approved months before calling the LC. Appellants' Br. at 16. In so doing, the trial court violated two fundamentals of contract interpretation.
First, by focusing on the word "required," the trial court wholly ignored the phrases that surround that term. Specifically, the word "required" is followed by the phrase "as part of the Act 537 Special Study currently being performed by the Township ...." R.R. at 9a. By ignoring the reference to the Special Study, the trial court erroneously placed the ability to "require" outside the hands of the Municipality, while the Development Agreement contemplates such power lying with the Municipality. Similarly, the trial court ignored the language in the Development Agreement that follows the term "required." By cutting off the words immediately preceding and following the word "required," the trial court ignored the fact that the sewer system was always required in the subject area.
Second, the trial court erred in examining extraneous factors without providing a basis for looking beyond the four corners of the Development Agreement. The trial court adopted the reasoning advanced by P&G in its summary judgment brief that the Development Agreement should include the additional term of final DEP approval because that is what P&G's principals ostensibly understood it to mean. The Municipality asserts the clear language of the Development Agreement imparts no such requirement. It further argues, even if interpretation of the term "required" involved looking to the parties' understanding of the term, the belief of P&G's principals is not relevant as Triple Crown, P&G's predecessor, was the entity involved in drafting the Development Agreement, and P&G did not offer evidence as to Triple Crown's intent.
The Municipality asserts P&G's duty to pay for the sewer system was triggered when the Township selected the alternative under the Special Study that required the Rhinehart Subdivision to have a sewer system. Even if this Court wishes to look one step further, the Municipality contends, the requirement of a sanitary sewer for the Rhinehart Subdivision under the Special Study was undoubtedly confirmed when the Township adopted the Special Study Amendment in April 2008, five months before it called the LC.
Also, in its reply brief the Municipality takes issue with P&G's assertions that the Municipality is the party who drafted the Development Agreement. It argues the record lacks evidence to support these assertions. Thus, the Municipality maintains P&G's contentions that the Development Agreement should be construed against the Municipality under the doctrine of contra proferentem are flawed. The Municipality also argues proper application of the parol evidence rule bars modification of the terms of the Development Agreement.
Additionally, the Municipality contends, even if the word "required" is ambiguous, the trial court erred in finding that term necessitated DEP approval because DEP's role in approving or disapproving Act 537 Plans is quite limited. See Cmty. Coll. of Delaware Cnty. v. Fox, 342 A.2d 468, 478 (Pa. Cmwlth. 1975); see also Oley Twp. v. Dep't of Envtl. Prot., 710 A.2d 1228 (Pa. Cmwlth. 1989). Contrary to the trial court's opinion, the Municipality argues, it is the Township that requires a developer to install sewer, not DEP. The Municipality contends DEP's limited role is reflected in the clear language of the Development Agreement, and the Municipality had authority to call the LC when it required sewer to the subject area under the Act 537 Special Study.
Moreover, the Municipality maintains, the trial court should not have looked to any supposed ambiguity in the word "required" because P&G did not advance such an argument. In so doing, the Municipality asserts, the trial court erred in creating the ultimate issue upon which it decided the case on its own motion. For the reasons that follow, we reject the Municipality's arguments.
With regard to applicable contract law principles, our Supreme Court explains:
When a written contract is clear and unequivocal, its meaning must be determined by its contents alone. It speaks for itself and a meaning cannot be given to it other than that expressed. Where the intention of the parties is clear, there is no need to resort to extrinsic aids or evidence. Hence, where language is clear and unambiguous, the focus of interpretation is upon the terms of the agreement as manifestly expressed, rather than as, perhaps, silently intended.Lesko v. Frankford Hosp.-Bucks Cnty., 609 Pa. 115, 123-24 15 A.3d 337, 342 (2011) (citations and quotations omitted) (emphasis in original).
The meaning of an unambiguous contract presents a question of law for which our review is de novo.
The fundamental rule in contract interpretation is to ascertain the intent of the contracting parties. In cases of a written contract, the intent of the parties is the writing itself. In determining the intent of the contracting parties, all provisions in the agreement will be construed together and each will be given effect.... An act or event designated in a contract will not be construed as a condition unless that clearly appears to be the intention of the parties.
Further, courts do not assume a contract's language was chosen carelessly, nor do they assume the parties were ignorant of the meaning of the language they employed. Murphy v. Duquesne Univ. of The Holy Ghost, 565 Pa. 571, 777 A.2d 418 (2001).
Only where a contract's language is ambiguous may extrinsic or parol evidence be considered to determine the intent of the parties. Id. A contract contains an ambiguity if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. Id. This question, however, is not resolved in a vacuum. Id. Instead, contractual terms are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts. Id. In the absence of an ambiguity, the plain meaning of the agreement will be enforced. Id. While unambiguous contracts are interpreted by the court as a matter of law, ambiguous writings are interpreted by the fact-finder. Kripp v. Kripp, 578 Pa. 82, 849 A.2d 1159 (2004).
Of further note, "[t]he laws that are in force at the time parties enter into a contract are merged with the other obligations that are specifically set forth in the agreement." Empire Sanitary Landfill, Inc. v. Dep't of Envtl. Res., 546 Pa. 315, 340, 684 A.2d 1047, 1059 (1996).
In order to prevail on its breach of contract claim, P&G had to prove: (1) the existence of a contract between it and the Municipality, including its essential terms; (2) a breach of a duty imposed by the contract; and, (3) damages resulting from that breach of duty. Boyd v. Rockwood Area Sch. Dist., 907 A.2d 1157 (Pa. Cmwlth. 2006).
Here, the Development Agreement states, in pertinent part:
WHEREAS, the area proposed to be developed by Triple Crown Corporation is depicted in Township's Act 537 Plan as a sewer service area; andR.R. at 9a-10a (emphasis added).
WHEREAS, the Township and the Developer have agreed that should construction of a sanitary sewer system be required as part of the Act 537 Special Study currently being performed by the Township, which may amend the Township's approved Act 537 Plan, the Developer shall provide an appropriate bond securing the sanitary sewer construction with a time limitation of five (5) years from the date of the recording of an approved plan; and
WHEREAS, the Township has determined that a new study shall be conducted under the provisions of its Act 537 Plan to determine whether the provisions set forth therein requiring the construction of a sanitary sewer system in the area to be developed are valid under present circumstances; and
* * * *
WHEREAS, the Developer has provided to the Township a five (5) year bond in the amount of $92,625.00 for construction of the sanitary sewer main as may remain required by the Township Act 537 Plan.
NOW THEREFORE, it is hereby acknowledged that Developer has met its obligations in regard to the aforesaid required financial contributions for the road improvement and the five (5) year bond for the potential construction of a sanitary sewer system, if required.
In determining the Municipality breached the Development Agreement by prematurely calling the LC, the trial court concluded the operative date for enforcement of an Act 537 Plan must be the date DEP approves the plan rather than the date a local governing body adopts the plan for submission to DEP for its review and approval. The trial court stated, until DEP gave final approval to the Special Study Amendment, the most that could be said about the Act 537 Plan is that it will likely require or that it is intended to require installation of public sewer service. However, the Municipality's ability to insist on the installation of public sewer service does not arise until DEP approves an Act 537 Plan (or, in this case, a Special Study Amendment).
By way of example, the trial court stated, if a developer sought to construct a sewer line when a municipality adopted an Act 537 Plan, but before DEP approved the Act 537 Plan, the developer would, unquestionably, be denied the right to begin construction until DEP approval occurred. DEP approval of a municipality's Act 537 Plan is required before any sewer connections or construction can be made. See generally Delaware Riverkeeper vs. Dep't of Envtl. Prot., 879 A.2d 351 (Pa. Cmwlth. 2005).
Further, the trial court rejected the Municipality's argument that DEP's role in considering and approving revisions to an Act 537 Plan is tantamount to "rubber-stamping" such revisions. The trial court supported this statement with a thorough analysis of DEP's role in the sewage facilities planning process. Specifically, DEP's statutorily assigned duties include, among other things: (1) the duty to approve or disapprove official plans or revisions to those plans; (2) to review and act upon a revision for new land development or to simply accept a municipality's review and approval thereof without further action; (3) to order the implementation of official plans and revisions thereto; and, (4) to order a local agency to undertake actions DEP deems necessary to effectively administer the Pennsylvania Sewage Facilities Act in conformance with DEP's rules and regulations. DEP has statutory discretion in the performance of these duties. See Sections 10(2)-(3), (7) of the Sewage Facilities Act, 35 P.S. §§750.10(2)-(3), (7).
The trial court explained if DEP's role was simply to rubber stamp anything a municipality proposed or adopted, it would render meaningless the statutory requirement that DEP either approve or disapprove all official plans, special studies and update revisions to official plans. If the Legislature did not intend for DEP to have a role greater than rubber stamping of plans adopted by a municipality it would not have expressly provided DEP the authority to approve or disapprove all such submissions. Section 5(e)(1) of the Sewage Facilities Act, 35 P.S. §750.5(e)(1) (authorizing DEP to approve or disapprove official plans, special studies and update revisions to official plans for sewage systems within one year of date of submission).
In addition, the trial court stated, nothing can be required of a developer until an Act 537 Plan, or in this case the Special Study Amendment, receives DEP approval. A municipality cannot permit sewage facility systems unless the proposed sewage facilities are consistent with an approved official plan. In general,
All plans, designs, and relevant data for the construction of any new sewer system, or for the extension of any existing sewer
system ... by a person or municipality, or for the erection, construction, and location of any treatment works or intercepting sewers by a person or municipality, shall be submitted to [DEP] for its approval before the same are constructed or erected or acquired. Any such construction or erection which has not been approved by [DEP] by written permit, or any treatment works not operated or maintained in accordance with the rules and regulations of [DEP], is hereby also declared to be a nuisance and abatable as herein provided.Section 207(a) of the Clean Streams Law, 35 P.S. §691.207(a) (emphasis added). Further, for sewer collection extensions serving less than 250 single family homes, a DEP permit is not required if, among other things, such sewer extension is consistent with the approved official plan, required by Section 5 of the Sewage Facilities Act. Section 207(b) of the Clean Streams Law, 35 P.S. §691.207(b). Even the installation of on-lot systems is not permitted unless the system is consistent with the method of sewage disposal contained in the approved official plan, special study, or update revision of the municipality in which the system is located. 25 Pa. Code §72.23(a)(1).
Act of June 22, 1937, P.L. 1987, as amended. Pursuant to DEP regulation: "Individual and community sewerage systems and their appurtenances shall meet applicable design and other standards established by [DEP] under sections 202 and 207 of The Clean Streams Law (35 P. S. §§691.202 and 691.207) and shall obtain a Clean Streams Law permit and if there is a discharge to surface water, a National Pollutant Discharge Elimination System permit, prior to construction and operation." 25 Pa. Code §71.65.
Subsection (b) was added by the Act of July 7, 1989, P.L. 237.
Based on the above authority, the trial court determined that installation of a public sewer is not permitted until an Act 537 Plan (or Special Study Amendment) is approved by DEP. Thus, installation of a sewer line is not "required" before DEP approves an Act 537 Plan (or Special Study).
Applying this authority to the facts presented, the trial court stated the Township's Official Act 537 Plan was revised as a result of Township Resolution 2003-10 to allow for development of the Rhinehart Tract using individual on-lot systems. DEP approved this revision to the Township's Act 537 Plan in January 2004. As such, until DEP approved further revision, the Township's Act 537 Plan only "required" individual on-lot systems for the Rhinehart Tract.
Further, although the Special Study called for sewer service to the Rhinehart Tract, even the Municipality admitted that communication between the Township and DEP concerning provisions of the Special Study occurred during the months after the Municipality called the LC. The trial court stated, until DEP approved the Special Study, all that was legally required (and the most that was permitted) was the installation of on-lot septic systems. Thus, P&G installed what was required.
The trial court also explained the plain meaning of the term "require" is "to claim or ask for by right and authority." Merriam-Webster's Collegiate Dictionary 992 (10th ed. 2001). Based on this definition, until DEP approved the Special Study, the Municipality had no right and authority to claim or ask P&G to construct the sanitary sewer system.
The trial court further explained the language of the Development Agreement only required P&G to provide financial security for the "potential construction" of a sanitary sewer system for a limited period of five years, "if required." R.R. at 10a. Thus, a fair reading of the Development Agreement revealed that if construction of a sanitary sewer system was not "required" within five years from the date of recording of the approved plan, P&G would be released from any obligation to financially secure construction of such a sewer line. The trial court stated construction of the sanitary sewer system here was not required, nor would it have been permitted, until March 30, 2009, when DEP approved the Special Study Amendment, 29 days after the expiration of the LC. The trial court pointed out the Municipality did not make any argument or present any evidence that the March 1, 2009 expiration date for the LC was in error or was less than five years after the date of filing of an approved plan.
Finally, through no apparent fault of P&G, it took the Municipality more than four years to complete the Special Study. From the record, the trial court stated, it appeared the Township realized it was running out of time to obtain approval of the Special Study Amendment and that the LC would expire. Nevertheless, the Municipality opted to call the LC even though at the time it did so the Municipality could not have permitted (much less required) construction of the sewer system. By drawing against the LC when it was not authorized to do so, the trial court ruled, the Municipality breached the Development Agreement.
We discern no error in the trial court's analysis. In interpreting the Development Agreement, the trial court correctly read the express language of the Agreement within the statutory framework that governs DEP's role in the sewage facilities approval process. In so doing, the trial court committed no error when it determined that installation of the sanitary sewer system was not required until DEP approved the Township's Special Study Amendment. The Municipality offers no persuasive reason to disturb the trial court's interpretation of the Development Agreement.
Further, contrary to the Municipality's assertions, the trial court did not decide this matter based on an issue it raised on its own motion. Rather, the issue of whether the Municipality prematurely called the LC prior to final approval of the Special Study Amendment by DEP was fairly comprised within P&G's complaint and motion for summary judgment. R.R. at 5a-6a; Certified Record, Item #19 at 6-7. Additionally, although the Municipality takes issue with P&G's reliance on the rule that an ambiguity in a contract is to be construed against the drafter, the trial court did not rely on this rule in its opinion.
Also, although the Municipality cites Fox and Oley Township for the proposition that DEP's role in approving or disapproving Act 537 Plans is limited, as the trial court indicated, DEP's role is not tantamount to a "rubber stamping" of plan or amendment submissions. In Fox, this Court stated:
[U]nder the Sewage Facilities Act, the DE[P] is entrusted with the responsibility to approve or disapprove official plans for sewage systems submitted by municipalities, but, while those plans must consider all aspects of planning, zoning and other factors of local, regional, and statewide concern, it is not a proper function of the DE[P] to second-guess the propriety of decisions properly made by individual local agencies in the areas of planning, zoning, and such other concerns of local agencies, even though they obviously may be related to the plans approved. Moreover, impropriety related to matters determined by those agencies is the proper subject for an appeal from or a direct challenge to the actions of those agencies as the law provides, not for an indirect challenge through the DE[P]. As we read the Sewage Facilities Act, the function of the DE[P] is merely to insure that proposed sewage systems are in
conformity with local planning and consistent with statewide supervision of water quality management; it is the local government agencies, who are responsible for planning, zoning and other such functions.Fox, 342 A.2d at 478; see also Oley Twp., 710 A.2d at 1230.
This case does not involve an attempt to second-guess the propriety of decisions made by a local agency in the context of planning or zoning through an action involving DEP, and the trial court did not hold otherwise. Rather, the trial court engaged in a thorough evaluation of DEP's statutory and regulatory duties in the sewage planning process, and it determined DEP possesses power regarding the approval or disapproval of sewage plans or amendments. As such, the Municipality's citations to Fox and Oley Township do not support its position here.
B. Purported Consequences of Trial Court's Opinion
The Municipality next asserts the trial court's opinion improperly pronounces a rule that a municipality may not require payment from a developer for sewer improvements until the municipality has the power to lawfully issue sewer permits. The Municipality contends such a rule unduly strips municipalities of their statutory authority to require payment for improvements, while also ignoring the realities of construction improvements.
The Municipality argues the trial court erroneously found it had no authority to call the LC before DEP issued its final approval by reasoning the Municipality could not require a landowner to hook into public sewer until DEP issued its approval. It contends the trial court erred in creating a rule that would require a municipality to front the costs associated with construction of improvements before it could require payment from a developer. Such a rule also ignores the practicalities of land development and strips municipalities of their statutory authority to require payment of improvement costs at the time they incur those costs.
To that end, the Municipality points out Section 509(a) of the Municipalities Planning Code (MPC) states, "[i]n lieu of the completion of any improvements required as a condition for the final approval of a plat, including improvements or fees required pursuant to section 509(i), the subdivision and land development ordinance shall provide for the deposit with the municipality of financial security in an amount sufficient to cover the costs of such improvements ...." Here, the parties agreed to the security posted by Triple Crown, and subsequently by P&G, to cover the costs associated with the sanitary sewer for the Rhinehart Tract.
Act of July 31, 1968, P.L. 805, as amended, 53 P.S. §10509(a).
Moreover, the Municipality maintains, the trial court's reasoning that final DEP approval of the revised Act 537 Plan was required in order to trigger the Municipality's authority to call the LC ignores the fact that the Township's prior Act 537 Plan required sewer to the subject area. The Municipality could have required the developer to install the necessary improvements - in this case a sanitary sewer system - as a condition for approval of the subdivision plan, so that the subdivision plan complied with the Township's 1990 Act 537 Plan. However, the Municipality worked with the developer so the developer could begin to sell lots by requesting DEP approval of on-lot septic systems pending the Township's approval and adoption of the Act 537 Special Study. The temporary nature of the on-lot permitting is reflected in the language of the approved subdivision plan which notes, "Lot owners should be aware that upon construction of a public sewer system, existing on-lot septic systems will have to be abandoned and the residence will then be required to connect to the new public sewer system." R.R. at 52a. Clearly, the developer and Township knew sewer was required and would continue to be required, unless the Township's Special Study found otherwise. This understanding is confirmed by the terms of the Development Agreement, which P&G and the trial court conveniently ignored.
The Municipality is correct that the subdivision plan for the Rhinehart Tract states: "[l]ot owners should be aware that upon construction of a public sewer system, existing on-lot sewer systems will have to be abandoned and the residence will then be required to connect to the new public sewer system." R.R. at 52a. However, as discussed throughout this opinion, P&G did not bargain to guarantee payment for the sewer system unless it was required within five years from the date of the recording of an approved plan, an event which did not occur within the prescribed time period here. --------
Upon review, we reject the Municipality's assertions because they construe the trial court's opinion too broadly. The trial court's opinion does not stand for the proposition that a municipality cannot require payment for construction of improvements from a developer until it may legally issue permits. Rather, the trial court simply determined, based on the specific language of the Development Agreement at issue here, that the Municipality could not require payment from P&G until installation of the sanitary sewer system was "required" when DEP issued its approval of the Special Study Amendment.
Moreover, the trial court's opinion included suggestions as to how the Municipality could have avoided the sequence of events that occurred here:
Interestingly had the parties planned or intended that the utilization of individual on-lot systems would be temporary until such time as a determination of whether or not public sewer would be required for that tract, Resolution 2003-10 could have provided for such a contingency by checking the block marked other and providing the requisite specificity in the Resolution. The Township did not do so. ...Tr. Ct., Slip Op. at 12, 18 nn.6, 7.
The installation of [the onsite septic systems] was done following [the] Township's approval of the subdivision plan and its submission of a Sewage Facilities Planning Module allowing for utilization of on lot systems within this development (as evidenced by Township Resolution 2003-10) and following DEP's approval of the revision to the Official Act 537 Plan to allow for installation of on lot septic systems in the Rhinehart Development. The Resolution and DEP's approval ... were silent with regard to any possible future requirement that the septic systems would be replaced with sewer.
In addition, the trial court explained:
Had [the Municipality] wished for [P&G] to be responsible for the construction of the sanitary sewer system for an indefinite period of time, even beyond the five (5) year security period, [it] should have negotiated such provision and written it into the Development Agreement. When it became evident that time was of the essence and perhaps running out, [the Municipality] could have sought an extension to the Development Agreement or a renegotiation thereof. [The Municipality] did not do either. Instead [the Municipality] prematurely called the LOC.Id. at 19.
In short, the Municipality mischaracterizes the trial court's opinion as broadly prohibiting municipalities from requiring developers to pay the costs of sewer improvements until such time as the municipality may lawfully issue sewer permits. Contrary to the Municipality's assertions, the trial court did not set forth such a rule. Rather, the trial court limited its analysis to an interpretation of the contract before it. Thus, no error is apparent in this regard.
C. Municipality's Unjust Enrichment Counterclaim
As a final issue, the Municipality argues, in the event this Court finds that it prematurely called the LC, we should, in turn, find P&G should not receive a free sewer system based simply on the timing of DEP's approval, which occurred 29 days after the LC expired. The Municipality contends if this Court upholds the trial court's decision, P&G will receive the benefit of a sanitary sewer system conferred on it by the Municipality without providing anything in return. The Municipality asserts P&G accepted this benefit and has not offered to otherwise compensate the Municipality in any way for construction of the sewer system. To allow P&G to retain the benefit of the sewer system without payment, the Municipality contends, would be to provide P&G an undue windfall. In support, the Municipality points to deposition testimony by one of P&G's principals, an experienced land developer, to the effect that he never had a municipality install a sewer system at no cost. R.R. at 177a-78a. Again, we reject the Municipality's assertions.
Procedurally, the trial court did not render an appealable order when it denied the Municipality's motion for summary judgment on its counterclaims. The trial court left open the opportunity for the Municipality to prove its counterclaims. Nevertheless, the Municipality stipulated to the judgment on its counterclaims. It is therefore doubtful whether it has standing to appeal a stipulated judgment on the counterclaims. 20 G. Ronald Darlington et al., Pennsylvania Appellate Practice §501:3 (2011-12 ed.) ("A party who does not prevail in the court below does not have standing if the party consents to or acquiesces in the order being appealed ...."). The parties did not address this issue.
In any event, as to the merits, we note, unjust enrichment is an equitable doctrine. Commonwealth v. TAP Pharm. Prods. Inc. (Bristol-Myers Squibb), 36 A.3d 1197 (Pa. Cmwlth. 2011). Under the doctrine, the law implies a contract exists when a party is found to have been unjustly enriched. Id. A plaintiff alleging a defendant was unjustly enriched must establish: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant appreciated the benefit; and (3) acceptance and retention by the defendant of the benefit, under the circumstances, would make it inequitable for the defendant to retain the benefit without paying for the value of the benefit. Id.
A defendant need not accept and appreciate the benefit intentionally; instead, the focus remains on the issue of whether the defendant was unjustly enriched. Id. Additionally, the plaintiff bears the burden of establishing either that the defendant wrongfully secured the benefit or passively received a benefit that it would be unconscionable to retain. Id.
However, courts may not make a finding of unjust enrichment where, as here, a written or express contract exists between the parties. Mitchell v. Moore, 729 A.2d 1200 (Pa. Super. 1999); First Wisconsin Trust Co. v. Strausser, 653 A.2d 688 (Pa. Super. 1995). Also, it is generally true that the law will not imply a different contract from that which the parties expressly adopted. Clearfield Volunteer Fire Dep't v. BP Oil, Inc., 602 A.2d 877 (Pa. Super. 1992).
In declining to grant summary judgment on the Municipality's unjust enrichment counterclaim, the trial court stated:
Instantly, the facts show that [P&G] developed a subdivision and installed [onsite] septic systems for each unit in the development. As required by the Development Agreement, [P&G] also secured, for a period of five (5) years, the potential construction of a sanitary sewer system in the event construction of the same would be required within the five (5) year bonding period. Importantly, [P&G] did not agree to secure the construction of the sewer system indefinitely. ... There is nothing in the record to suggest that [P&G] developed the Rhinehart Tract in derogation of any requirements imposed upon [it] by the Approved Final Subdivision Plan or in derogation of the requirements of the Sewage Facilities Planning Module calling for the development of the tract through the use of on lot septic systems. The fact that the Special Study, which was approved after the five (5) year security period expired, requires installation of a sanitary sewer system to the Rhinehart Tract does not necessarily mean that a benefit was conferred upon [P&G] by [the Municipality] or that [P&G] [was] unjustly enriched. To date, now almost seven (7) years after the Development Agreement was signed, the sewer line still has not been constructed. The sixteen (16) lots in the subdivision continue to be serviced by the approved on-site septic systems installed by Plaintiffs.
I also disagree with [the Municipality's] argument that a fair result would be for [P&G] to pay the actual cost of installing the sewer lines (even though the Development
Agreement does not impose such an obligation on [it]). It is evident to the Court that the difficult situation in which [the Municipality] find[s] [itself] results primarily from the fact that it took [the Municipality] more than four (4) years of the five (5) year security period to complete a Special Study for submission to DEP. It would be unfair to require a [d]eveloper to construct a sanitary sewer system whenever that system became necessary, even if the requirement did not occur for some indefinite period of time after the [d]eveloper finished construction of the homes in the development. ...Tr. Ct., Slip Op. at 18-19 (emphasis added). We discern no error in the trial court's denial of summary judgment on the Municipality's counterclaim for unjust enrichment. In short, given that the Municipality did not yet install the sewer system, at this time it is not clear and free from doubt that: (1) the Municipality conferred a benefit on P&G; (2) that P&G appreciated any benefit; or, (3) that P&G accepted and retained a benefit, which, under the circumstances, would make it inequitable for it to retain the benefit without paying for the value of the benefit.
Accordingly, this Court finds, based on the evidence of record before the Court at this time, that [the Municipality's] claim for unjust enrichment is not clear and free from doubt.
Further, because courts may not make a finding of unjust enrichment where a written contract exists between the parties, Mitchell; First Wisconsin Trust, and because the law generally will not imply a different contract from that which the parties expressly adopted, Clearfield Volunteer Fire Dep't, the Municipality's right to relief on its unjust enrichment counterclaim is, at best, unclear. As a result, we discern no error in the trial court's decision to deny summary judgment on the Municipality's counterclaim for unjust enrichment.
For all the foregoing reasons, we affirm.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 18th day of April, 2012, the order of the Court of Common Pleas of Adams County is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge