Hidden Creek, L.P. v. Lower Salford Township Authority

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Hidden Creek, L.P. :

:

v. :

:

Lower Salford Township Authority, :

Appellant : No. 1839 C.D. 2014

ORDER

NOW, November 6, 2015, upon consideration of appellant’s petition

for reargument en banc and appellee’s response in opposition thereto, the petition

is denied to the extent it seeks reargument, but reconsideration is granted. The

opinion filed September 14, 2015 is withdrawn. The attached opinion is entered.

BY THE COURT:

DAN PELLEGRINI,

President Judge

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: November 6, 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 485.7

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

7

The Authority contends in its reply brief that Developer waived the discovery rule since it

did not raise the issue in its reply to the Authority’s summary judgment motion. We disagree. The

Pennsylvania Superior Court has held:

A plaintiff who wishes to assert the discovery rule may do so in one

of two ways: 1) by pleading in the complaint sufficient facts to

sustain application of the rule; or 2) by waiting until the defendant

asserts a statute of limitations defense in new matter and then raising

the discovery rule in a responsive pleading.

Prevish v. Nw. Med. Ctr., 692 A.2d 192, 197 (Pa. Super. 1997) (emphasis added), aff’d, 717 A.2d

1023 (Pa. 1998); see also Fox v. Byrne, 525 A.2d 428, 431 (Pa. Super 1987) (noting that in an

earlier case of Stein v. Richardson, 448 A.2d 558 (Pa. Super. 1982), “[t]he court was willing to

search the pleadings to determine whether the [plaintiffs] had at any time asserted that they were

unable to discover the injury or could not have been able to discover the injury until such time as

would prevent the statute from acting as a bar.”).

Developer’s Complaint states in relevant part: “The Tapping Fees of between Six Thousand

Eight Hundred Seventy-Five Dollars ($6,875.00) and Seven Thousand Dollars ($7,000.00) per EDU

were established by the Authority, but despite repeated requests, the Authority has yet to furnish

[Developer] with the basis for its calculation.” Complaint at ¶ 7. The Authority’s refusal to provide

the information, along with its failure to comply with the MAA by attaching the basis for the fee to

its Resolutions possibly prevented Developer from learning that the fee was incorrectly calculated.

Accordingly, Developer pled sufficient facts alleged to conclude that Developer did not waive the

discovery rule.

12

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 503.8

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).9 The Court first noted:

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

8

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).

9

20 Pa.C.S. §§ 3171-3172. Section 3172 of the PEF Code states:

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

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.

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

14

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

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

15

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

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.

16

For all of the above reasons, the trial court’s order is affirmed.

___________________________

ANNE E. COVEY, Judge

17

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: November 6, 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.

DRP - 2

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

DRP - 3

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.

DRP - 4