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COMMONWEALTH PENNSYLVANIA v. UEC (06/04/75)

decided: June 4, 1975.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, PETITIONER,
v.
UEC, INC., RESPONDENT



Appeal from the Order of the Board of Arbitration of Claims in case of UEC, Inc. v. Commonwealth of Pennsylvania, Department of Public Welfare, No. 327.

COUNSEL

Lawrence Silver, Deputy Attorney General, with him Allen C. Warshaw, Deputy Attorney General, and Robert P. Kane, Attorney General, for petitioner.

A. Martin Herring, with him Ronald Wertheim, Meyer Feldman and, of counsel, Ginsberg, Feldman and Bress and Teitelman and Herring, for respondent.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Mencer. Dissenting Opinion by Judge Rogers. Judge Kramer joins in this dissent.

Author: Mencer

[ 19 Pa. Commw. Page 463]

This is an appeal by the Commonwealth of Pennsylvania, Department of Public Welfare (Commonwealth), from a decision of the Board of Arbitration and Claims (Board) dismissing the Commonwealth's preliminary objections to a complaint filed by UEC, Inc. (UEC).

Of course, in deciding the efficacy of the Commonwealth's preliminary objections, we must accept as true all facts in UEC's complaint which are well and clearly pleaded and all inferences reasonably deductible therefrom. Bruhin v. Commonwealth, 14 Pa. Commonwealth Ct. 300, 320 A.2d 907 (1974). Therefore, we will set forth the relevant facts of this case as revealed by our examination of UEC's complaint, which consists of two causes of action alleging breaches of both a written contract and an oral contract.

On June 15, 1970, the Commonwealth and UEC entered into a written contract whereby UEC was to receive compensation for providing program design and development, staff training, and management for a system of model day care centers. The term of the contract was to run from June 15, 1970 to June 14, 1971 and thereafter from year to year, subject to cancellation by either party on sixty days' written notice. On April 14,

[ 19 Pa. Commw. Page 4641971]

, the Commonwealth sent a telegram to UEC purporting to constitute written notice of the cancellation of the contract. Thereafter, the Commonwealth, through its agents, informed UEC that contract extension negotiations were reopened. There then followed negotiations and several meetings between the parties on the subject of extending the contract, until October 14, 1971, when the Commonwealth verbally informed UEC for the first time since its telegram of April 14, 1971 that it would not extend the contract. UEC then terminated all operations under the contract.*fn1

Subsequent to October 14, 1971, the Commonwealth, through its agents, continued to assure UEC that it intended to pay the balance due plaintiff under the contract. Because there was a disagreement as to the amount of the balance owing to UEC, the Commonwealth, acting through its agents, the Secretary of Public Welfare, Helene Wohlgemuth, and the General Counsel of the Department of Public Welfare, Marx S. Leopold, entered into an oral agreement with UEC on or about January 18, 1972, in which the Commonwealth promised to pay, and UEC promised to accept, in compromise and settlement of the disputed amount owing to UEC, an amount to be determined on a quantum meruit basis through an audit of UEC's performance to be conducted by the United States Department of Health, Education and Welfare (HEW) at the request of the Commonwealth.

Pursuant to this agreement, the Commonwealth, by letter dated March 21, 1972, requested HEW to establish a monetary value for the services furnished by UEC, specifying that HEW only consider the value of these services on a quantum meruit basis. HEW conducted an audit during the period of March ...


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