The opinion
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Watts Township Board of Auditors, :
Appellant :
:
v. : No. 1431 C.D. 2017
: Submitted: April 13, 2018
Patricia Gutheil, Watts Township :
Supervisor :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge1
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE BROBSON FILED: December 13, 2018
The Watts Township Board of Auditors (Board of Auditors) appeals
pro se from the September 18, 2017 order issued by the Court of Common Pleas of
the 41st Judicial District, Perry County Branch (trial court), which sustained the
appeal of Watts Township Supervisor Patricia Gutheil (Gutheil). In that appeal,
Gutheil challenged the Board of Auditors’ authority to impose a surcharge against
her pursuant to The Second Class Township Code (Code).2 For the reasons
discussed below, we affirm. 3
1
This opinion was reassigned to the authoring judge on July 17, 2018.
2
Act of May 1, 1933, P.L. 103, as amended, 53 P.S. §§ 65101-68701.
3
This matter is one of four related (but not consolidated) appeals brought before this Court
by the Board of Auditors, relating to the trial court’s dismissal of various surcharges that the Board
On May 6, 2016, the Board of Auditors filed in the trial court a “Report
of the Board of Auditors/Surcharge By Auditors” (Surcharge Report), seeking to
impose upon Gutheil a surcharge in the amount of $347.65. The Board of Auditors
averred in the Surcharge Report that, on January 5, 2016, the Township Supervisors
approved a check payable to Gutheil for $347.65 for her attendance at meetings of
the Township Supervisors in 2015 in violation of Section 606(a) of the Code,4
53 P.S. § 65606(a), which provides, in part, that “[s]upervisors may receive as
compensation an amount established by ordinance.” As no such ordinance existed
at the time Gutheil attended the meetings, the Board of Auditors asserted that Gutheil
could not receive compensation for her attendance.
The Board of Auditors further averred that the Township Supervisors
knew that such payment constituted illegal compensation. As detailed in the Board
of Auditors’ Surcharge Report:
[Gutheil] was also made aware of these payments being
illegal throughout the year of 2015 at both public meetings
and through written correspondence. On
February 11, 2015, Brian Reifsnyder submitted a letter to
the [Township Supervisors] requesting that an ordinance
be drafted to legalize their pay. On March 4, 2015,
Supervisor [Karl] Raudensky, at the monthly [Township]
Supervisors’ Meeting, stated that an ordinance is required
to be paid. At the end of the meeting, the Supervisors
(Karl Raudenksy, [Gutheil], Glenn Smithgall)
unanimously agreed to pay themselves, along with the rest
of Auditors attempted to impose on three Watts Township Supervisors. The other matters are
docketed as Watts Township Board of Auditors v. Karl Raudensky, 1429 C.D. 2017, Watts
Township Board of Auditors v. Glenn Smithgall, 1430 C.D. 2017, and Watts Township Board of
Auditors v. Patricia Gutheil, 1432 C.D. 2017. In each of these appeals, the Board of Auditors
raises the same issues. The Pennsylvania State Association of Township Supervisors filed amicus
curiae briefs in all four matters, supporting the positions of the Watts Township Supervisors
(Township Supervisors).
4
Section 606 of the Code was added by the Act of November 9, 1995, P.L. 350.
2
of the bills. On June 3rd, 2015, the Township Solicitor
was attending the monthly [Township] Supervisors’
Meeting. At that meeting, Brian Reifsnyder discussed the
requirement of an ordinance for the Supervisors[’]
payments with the Solicitor. The Supervisors agreed to
suspend their pay and have the Solicitor review the
situation. On August 5, 2015, the Township Solicitor
explained that the [Township] Supervisors could pass an
ordinance to be paid and that after the passage of such an
ordinance their pay can resume after the election cycle.
On September 2, 2015, and after disregarding the advice
of the Township Solicitor, the Township Supervisors (Karl
Raudensky and Glenn Smithgall) approved paying
themselves along with the rest of the bills.
(Reproduced Record (R.R.) at 1a-2a.)
Thereafter, on June 1, 2016, Gutheil filed a Motion to Strike and
Appeal, wherein she challenged the Board of Auditors’ authority to impose the
surcharge. Specifically, Gutheil asserted that because the Township Supervisors
chose to appoint an accounting firm to perform the audit for the 2015 fiscal year,
Section 917(c) of the Code,5 53 P.S. § 65917(c), divested the Board of Auditors of
its authority to impose a surcharge. (Motion to Strike and Appeal ¶¶ 8-10.)
Alternatively, Gutheil challenged the merits of the surcharge, alleging that the
payment did not violate any provisions of the Code. Accordingly, Gutheil sought
dismissal of the surcharge. (Id. ¶¶ 13-17.)
On June 7, 2016, the Board of Auditors filed an Opposition to Motion
to Strike and Appeal. In so doing, the Board of Auditors asserted that, pursuant to
Section 907 of the Code, 53 P.S. § 65907, it must impose a surcharge any time an
elected or appointed officer causes a loss to the Township through a violation of the
law. (Opposition to Motion to Strike and Appeal ¶¶ 1-3.) With respect to the
5
Section 917 of the Code was added by the Act of November 9, 1995, P.L. 350.
3
appointment of an accounting firm, the Board of Auditors noted that the Township
Supervisors appointed an accounting firm to audit the 2015 fiscal year, whereas the
surcharge stemmed from a payment made in the 2016 year. Accordingly, the Board
of Auditors argued that, because the Township Supervisors did not appoint an
accounting firm for the 2016 fiscal year, the Board of Auditors retained the authority
to impose the surcharge.6 (Id. ¶¶ 4-5.) Further, the Board of Auditors asserted that
it asked the accounting firm to investigate the payment, but the accounting firm
declined. The Board of Auditors viewed this as a violation of the accounting firm’s
duty. Specifically, the Board of Auditors averred:
On or about February 8th, 2016, the [Board of Auditors]
delivered a letter to [the accounting firm] to inform [the
accounting firm that] the [Township Supervisors] were
paying themselves in violation of Section 606 of the
[Code] and requested that a surcharge be issued. On or
about March 4th, 2016, [a representative of the accounting
firm] verbally informed [a Board of Auditors’ member]
that [the accounting firm] was not going to investigate the
allegations of the [Board of Auditors].
(Id. ¶ 7.) In light of this, the Board of Auditors apparently believed that Section 907
of the Code compelled it to impose the surcharge on its own accord.
After briefing and oral argument, the trial court sustained Gutheil’s
motion and dismissed the surcharge. In so doing, the trial court concluded that a
board of auditors may issue a surcharge “only in conjunction with an audit.” (R.R.
at 18a.) As the surcharge here did not stem from the findings within an audit, the
trial court concluded that the Board of Auditors lacked authority to impose the
6
We note that, at the time the Board of Auditors made this assertion, the
Township’s 2016 fiscal year had not yet been completed. See Section 3201 of the Code, added by
the Act of November 9, 1995, P.L. 350, 53 P.S. § 68201 (“The fiscal year in townships commences
on the first day of January in each year. All receipts, disbursements, contracts, and purchases shall
be entered as of record in the fiscal year in which made.”).
4
surcharge. (Id.) The trial court further held that a board of auditors is divested of
its surcharge authority when the township supervisors appoint an outside accountant
to perform the audit. (Id.) The Board of Auditors now appeals the trial court’s
decision.
On appeal,7 the Board of Auditors argues that the trial court erred in
concluding that the Board of Auditors lacked the authority to impose a surcharge
against Gutheil when the Township Supervisors appointed an independent
accountant to perform Watts Township’s annual audit.8 The Board of Auditors
further argues the merits of its surcharge, specifically that a surcharge is warranted
because: (1) the Township Supervisors violated the Code when they compensated
themselves for supervisory duties in the absence of an ordinance authorizing the
compensation; (2) the Township Supervisors cannot be compensated retroactively
for supervisory duties; and (3) the Township Supervisors must wait until the next
7
Because the issue on appeal is purely a question of law, our standard of review is de
novo and our scope of review is plenary. In re Appeal of 2012 Fin. Audit of Greene Twp.,
113 A.3d 372, 374 n.5 (Pa. Cmwlth. 2015).
8
As to the Board of Auditors’ authority, the Board of Auditors argues that
Section 907(a) of the Code authorizes a board of auditors to surcharge a township officer any time
the officer causes a loss to the township through violation of the law. Section 907(a) of the Code
provides, in pertinent part, that “[t]he board of auditors shall surcharge any elected or appointed
officer for the amount of any loss to the township caused in whole or in part by the officer’s act or
omission in violation of law or beyond the scope of the officer’s authority.” Conversely, Gutheil
maintains her position that a board of auditors may only surcharge an officer when that surcharge
flows from the findings of an audit performed either by a board of auditors or an appointed outside
accountant. Further, Gutheil asserts that, pursuant to Section 917(c) of the Code, the township
supervisors’ appointment of an outside accountant to conduct the audit divests a board of auditors
of its surcharge authority.
5
term of office to be compensated at the rate prescribed by an ordinance passed during
their current term of office.9
This Court adequately addressed all of the issues in this appeal in our
opinion in Watts Township Board of Auditors v. Karl Raudensky, ___ A.3d ___ (Pa.
Cmwlth., No. 1429 C.D. 2017, filed December 13, 2018). We incorporate that
opinion by reference and reach the same conclusions in this case.
Accordingly, we affirm the trial court’s dismissal of the surcharge.
P. KEVIN BROBSON, Judge
9
The Board of Auditors also argues that the trial court erred when it ruled in favor of
Raudensky without hearing oral argument from the Board of Auditors, but the Board of Auditors
waived that argument by failing to raise it in its statement of errors complained of on appeal filed
pursuant to Pa. R.A.P. 1925(b). See Pa. R.A.P. 1925(b)(4)(vii) (“Issues not included in the
[s]tatement . . . are waived.”).
6
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Watts Township Board of Auditors, :
Appellant :
:
v. : No. 1431 C.D. 2017
:
Patricia Gutheil, Watts Township :
Supervisor :
ORDER
AND NOW, this 13th day of December, 2018, the Order of the Court of
Common Pleas of the 41st Judicial District, Perry County Branch, is AFFIRMED.
P. KEVIN BROBSON, Judge