Appeal from the Order of the Board of Claims in case of County of Montgomery v. Commonwealth of Pennsylvania, Department of Commerce, No. 597.
Rudolph A. Chillemi, for petitioner.
John H. Cuthbertson, with him Julianne J. Zekan, Assistant Attorney General, for respondent.
Judges Rogers, Craig and Palladino, sitting as a panel of three. Opinion by Judge Palladino. Concurring Opinion by Judge Rogers. Dissenting Opinion by Judge Craig.
This is an appeal from a decision and order of the Board of Arbitration of Claims (Board) which awarded judgment against the plaintiff, Montgomery County, and in favor of the defendant, the Pennsylvania Department of Commerce (Department), in an action in assumpsit. We affirm.
In 1976, the Delaware Valley Regional Planning Commission (DVRPC), a bi-state planning agency, constructed an experimental radio broadcasting system known as the Bicentennial Highway Advisory Radio (BHAR) system to provide motorists traveling to and from Bicentennial activities in the Philadelphia metropolitan area with information about traffic and parking conditions, special activities, and other necessary emergency information.*fn1 Lacking the funds necessary to operate this system, the DVRPC's directors decided early in 1976 to seek an operating grant from the Department's Bicentennial Community Services Office (Office) pursuant to the provisions of Act 50-A,*fn2 an appropriations statute, in which the General Assembly appropriated $10,000,000 to the
Department "[f]or the payment to municipalities of matching grants for 50% of the costs and expenses incurred by municipalities for [ inter alia ] . . . traffic control, necessary to accommodate Bicentennial activities." Since this grant, if received, would only cover half the costs of operating the BHAR system, the DVRPC also sought out, and obtained, a letter of intent from the Atlantic Richfield Company (ARCO) in which ARCO agreed to contribute helicopter traffic surveillance services valued at $40,000 to the BHAR system project if the project received funding from the state.
In March of 1976, Ernest Brizell, the DVRPC's senior transportation engineer, contacted the Office to submit the DVRPC's grant application, and was informed that the DVRPC could not directly apply for a grant since such grants were only distributed to "municipalities"; a term which the applicable Department regulation defines as any "county, city, borough, township, or incorporated town located within the boundaries of the Commonwealth." 13 Pa. Code § 51.1. To "solve" this problem, the DVRPC subsequently persuaded Montgomery County to file its own grant application for funding for the BHAR system. This application was eventually approved by the Office, and on July 28, 1976, Montgomery County and the Department executed a Bicentennial Community Services Grant Agreement (Agreement) in which Montgomery County agreed to operate the BHAR system through June 30, 1977, in return for reimbursement of 50% of actual expenditures. The following day, Montgomery County and the DVRPC executed a subcontracting agreement in which the DVRPC agreed to (1) operate the BHAR system and (2) supply Montgomery County with "matching funds" in the form of donated helicopter traffic surveillance services in return for Montgomery County's promise to reimburse
invoiced expenses "within ten (10) days after receipt of funds covering the respective invoice from the DEPARTMENT."
In the coming months, the DVRPC operated the BHAR system and forwarded invoices to Montgomery County, including invoices for donated helicopter services, as expenses were incurred. In January of 1977, Montgomery County, in turn, began to forward DVRPC's invoices to the Department for partial reimbursement. Since the value of the invoices for donated helicopter services equaled or exceeded the value of invoices for actual cash expenditures, Montgomery County and the DVRPC expected to receive full reimbursement for actual cash expenditures. By a letter dated June 24, 1977, however, the Department informed Montgomery County that it did not consider any of the submitted invoices to be reimbursable under the terms of the Agreement since, inter alia, the invoiced expenses in question had been incurred by the DVRPC and not Montgomery County.*fn3 In response to the Department's refusal to reimburse the submitted invoices, Montgomery County subsequently filed a complaint in assumpsit with the Board alleging that it was entitled under the terms of the Agreement to reimbursements totaling $39,956. In its answer to this complaint, the Department noted that under Section 2 of the Agreement Montgomery County was ...