The opinion of the court was delivered by: GORBEY
The plaintiff is a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business at 351 California Street, San Francisco, California. The defendant, City of Philadelphia, is a chartered City duly organized under the laws of the Commonwealth of Pennsylvania, and located within the Commonwealth of Pennsylvania. Jurisdiction is based upon diversity of citizenship and amount in controversy in excess of $10,000 exclusive of interest and costs.
The complaint alleges a breach of contract which calls for services to be rendered to the defendant by the plaintiff within the City of Philadelphia. Suit was filed in the United States District Court for the Northern District of California on November 29, 1976, and plaintiff's summons and complaint were directed to the U.S. Marshal for service upon the chief executive officer of the City of Philadelphia, and the Marshal's return, on file with the court, indicates service was duly made at the defendant's law department on December 15, 1976.
On January 10, 1977, defendant filed a motion to dismiss the complaint for improper service and improper venue.
After a hearing on February 17, 1977, the United States District Court for the Northern District of California issued an order transferring the action to the United States District Court for the Eastern District of Pennsylvania.
The plaintiff has filed a motion for partial summary judgment on Count I of the complaint
in the amount of $22,353.06, the unpaid balance of a total contract price of $57,655. Although plaintiff contends that there has been full performance of the contract on its part, defendant's reason for refusing payment is found in a letter from Philip Carroll, Deputy Mayor of Philadelphia, dated July 21, 1976, to Mr. Edward Hamilton of Griffenhagen-Kroeger, Inc., Exhibit G of the complaint, in which the letter in relevant part states:
". . . DCA is especially concerned that the report does not include specific recommendations concerning the use of DCA funds provided to the City. Such recommendations were required as a part of the City's contract with DCA and were incorporated by reference (Paragraph 5) in the City's contract with Griffenhagen-Kroeger.
This requirement must be satisfied prior to the disbursement of any additional funds to G-K."
Plaintiff urges that defendant's contention is without merit since the contract between plaintiff and defendant was submitted to plaintiff for execution on May 9, 1975, and the recommendations requested by DCA are pursuant to an agreement between the defendant and the Commonwealth of Pennsylvania executed on or about August 6, 1975. Paragraph 5 of the contract provides:
"All services rendered and documents prepared by consultant shall strictly conform to all laws, statutes and ordinances and the applicable rules and regulations and the methods and procedures of all governmental boards, bureaus, officers and commissions and other agencies."
This paragraph is particularly significant when considered along with the last sentence of paragraph 2 which reads in part:
"It is also understood and agreed that this contract is funded pursuant to state and federal grants, and that if for any reason said grant funds become unavailable, all obligations under this agreement shall cease." (Emphasis added)
Furthermore, Exhibit A of the complaint, bearing date March 31, 1975, is entitled "Scope of Services for Griffenhagen-Kroeger Participation in the Philadelphia Policy Study." It includes three phases, the third of which is entitled "Formulation of Program Elements ...