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DIXON CONTRACTING COMPANY v. COMMONWEALTH PENNSYLVANIA (04/09/84)

decided: April 9, 1984.

DIXON CONTRACTING COMPANY, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL RESOURCES, RESPONDENT. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL RESOURCES, PETITIONER V. DIXON CONTRACTING COMPANY, INC., RESPONDENT



Appeals from the Order of Board of Claims in case of Dixon Contracting Company, Inc. v. Commonwealth of Pennsylvania, Department of Environmental Resources, Docket No. 266, dated August 24, 1982.

COUNSEL

Richard C. Fox, with him Robert E. Chernicoff, Fox, Farr, Goldstein & Cunningham, for petitioner/respondent, Dixon Contracting Company, Inc.

Michael L. Harvey, Deputy Attorney General, with him, Allen C. Warshaw, Deputy Attorney General, Chief, Special Litigation, and LeRoy S. Zimmerman, Attorney General, for respondent/petitioner, Department of Environmental Resources.

Judges Rogers, Williams, Jr., and Craig, sitting as a panel of three. Opinion by Judge Williams, Jr.

Author: Williams

[ 80 Pa. Commw. Page 447]

The Commonwealth of Pennsylvania, Department of Environmental Resources (Commonwealth) and Dixon Contracting Company, Inc. (Dixon) each petition for review of a Board of Claims (Board) order which awarded Dixon the sum of $466,805.49 (with interest) for work performed under a contract between the parties to eliminate air pollution from an abandoned, burning culm bank.

In January 1971, after competitive bidding, the Commonwealth awarded Dixon a $4,500,000.00 contract (entitled "The Land and Water Conservation Reclamation Act, Air Pollution Project No. SL-210") for the control and elimination of air pollution resulting from an abandoned, burning coal refuse bank situate on private property in Schuylkill County. Mid-course in performance, the Commonwealth terminated the contract in September 1971, in order to have the job finished by another contractor at significantly lower cost. For the work it performed Dixon submitted invoices totaling $466,805.49 which the Commonwealth refused to pay.

On October 12, 1971, Dixon filed a Complaint with the Board alleging improper termination of the contract and requesting, inter alia, damages for work performed yet unpaid, a declaration that the termination was invalid and vague, nonspecified damages flowing from equipment rental expenses. Contending that the contract was illegal, hence void and unenforceable, the Commonwealth asserted a counterclaim of $203,175.00 seeking reimbursement of monies paid to Dixon under the contract.*fn1 After discovery and much procedural wrangling Board hearings finally commenced on February

[ 80 Pa. Commw. Page 44825]

, 1981. And, on that date, more than nine years after the filing of its original Complaint, Dixon sought leave to amend its pleading by requesting additional damages which included lost profits and consequential damages exceeding $2,500,000.00. Citing untimeliness and resultant prejudice to the Commonwealth, the Board refused Dixon permission to amend. By its opinion and order dated August 24, 1982, the Board awarded Dixon damages limited to monies due for work performed and, further, concluded that (1) the contract's award, issuance and execution were valid as a matter of law; (2) the Commonwealth capriciously and in bad faith terminated the contract; and (3) the Commonwealth was estopped from asserting the contract's purported illegality. Both the Commonwealth and Dixon appealed.*fn2

Contract SL-210 provided for the extinguishing of a culm bank refuse fire on privately owned land. Monies for the project were appropriated under Section 20(a) of The Land and Water Conversation Act (Act)*fn3 for the purposes specified in clause (1) of Section 16 of the "Act." 32 P.S. ยง 5116(a)(1). Section 16(a)(1), however, allocates funds "for the prevention, control and elimination of air pollution from abandoned burning coal refuse banks provided such land and bank material is [sic] publicly owned. . . ." (Emphasis added.) The Commonwealth argues that funds specifically appropriated for one purpose (i.e., the extinguishment of culm bank fires on public property) cannot constitutionally be used for another purpose (i.e., the extinguishment of culm bank fires on private property), and that contract SL-210, is therefore illegal,

[ 80 Pa. Commw. Page 449]

    void and unenforceable.*fn4 See Article III, Section 24 of the Pennsylvania Constitution (prohibits payment of money out of the treasury except on appropriations made by law); see also, Department of Public Welfare v. ...


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