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LEO J. WILLMAN AND JADEN ELECTRIC DIVISION FARFIELD COMPANY v. CHILDREN'S HOSPITAL PITTSBURGH AND MELLON STUART COMPANY AND ALLEGHENY COUNTY HOSPITAL DEVELOPMENT AUTHORITY (05/03/83)

decided: May 3, 1983.

LEO J. WILLMAN AND JADEN ELECTRIC DIVISION OF THE FARFIELD COMPANY, APPELLANTS
v.
CHILDREN'S HOSPITAL OF PITTSBURGH AND MELLON STUART COMPANY AND ALLEGHENY COUNTY HOSPITAL DEVELOPMENT AUTHORITY, APPELLEES



Appeal from the Order of the Court of Common Pleas of Allegheny County in case of Leo J. Willman and Jaden Electric Division of the Farfield Company v. Children's Hospital of Pittsburgh, Mellon-Stuart Company and Allegheny County Hospital Development Authority, No. GD 82-20172.

COUNSEL

Kenneth M. Cushman, with him Barbara W. Mather, Eleanor N. Ewing, and Stephen E. Bozzo, Pepper, Hamilton & Scheetz, and David M. O'Boyle, Wick, Vuono & Lavelle, for appellants.

Daniel I. Booker, with him Beth A. Frailey, Reed, Smith, Shaw & McClay, for appellee, Children's Hospital of Pittsburgh.

Joseph W. Conway, Conway, Meyer & Cambest, for appellee, Allegheny County Hospital Development Authority.

John E. Beard, III, with him Walter A. Bunt, Jr., Kirkpatrick, Lockhart, Johnson & Hutchison, for appellee, Melon-Stuart Company.

Judges Rogers, Blatt and MacPhail, sitting as a panel of three. Opinion by Judge Blatt.

Author: Blatt

[ 74 Pa. Commw. Page 69]

The appellants, Leo J. Willman and the Jaden Electric Division of the Farfield Company (Jaden Electric) appeal an order of the Court of Common Pleas of Allegheny County which denied their request for a preliminary injunction. They had sought to enjoin the appellees, Children's Hospital of Pittsburgh (Children's), the Mellon-Stuart Company (Mellon-Stuart), and the Allegheny County Hospital Development Authority (Authority) from refusing to permit them to bid on electrical contracts involved in the construction of new hospital facilities.

The appellees were and are engaged in a project which will provide a new 13-story building and visitors' and service entrances to Children's. The trial court found that the total cost of the project, including construction and financing costs, would be about $74 million dollars and that approximately $54 million of this amount would be provided by the sale of tax-free revenue bonds by the Authority. The financial arrangement hinges upon two leasing agreements entered into and to be entered into between Children's and the Authority. First, Children's has leased its existing structures and the real property upon which the project is being constructed to the Authority and the rent will be the amount of the proceeds of the sale of the Authority's bonds. Second, the Authority will sublease these structures and this property to Children's which will operate the hospital and pay rents sufficient to meet the principal and interest payments of the bonds.

Pursuant to a construction management agreement entered into between Mellon-Stuart and Children's,

[ 74 Pa. Commw. Page 70]

    the project and all trade or construction contracts were to be managed and executed by Mellon-Stuart.*fn1

The trial court found that the bonds issued by the Authority for the project would create no debt or liability to the Commonwealth or any political subdivision thereof and that the sole security and recourse of the bondholders would be the rents to be paid by Children's under ...


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