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FIVE STAR PARKING v. PHILADELPHIA PARKING AUTH.

October 14, 1986

FIVE STAR PARKING, ALLIED AUTO PARKS, INC., CHARTER AUTO PARKS, INC., GRANT PARKING, INC., L&R AUTO PARKS, INC., and VALET PARKING SERVICE, INC.
v.
PHILADELPHIA PARKING AUTHORITY



The opinion of the court was delivered by: POLLAK

 For upwards of three years -- from September of 1982 to February of 1986 -- plaintiff Five Star Parking, a joint venture of five California corporations, operated a parking facility at the Philadelphia International Airport for defendant Philadelphia Parking Authority. Under the license agreement governing the relationship between Five Star and the Authority, Five Star was required to post an irrevocable letter of credit in the sum of $500,000 to insure the integrity of its operations. A dispute arose in the closing weeks of 1985 and the first weeks of 1986 about whether Five Star's employees were accurately receiving, recording, and remitting to the Authority the revenues accruing from the parking facility. In December of 1985, the Authority, without notice to Five Star, drew down the irrevocable letter of credit. In January of 1986, news stories appeared in which officials of the Authority were reported concerned about shortages in parking revenues, possibly because receipts were being siphoned off by Five Star personnel. In February, the Authority, assisted by Philadelphia police officers, entered on the premises of the parking facility, taking custody of books and records. Five Star responded by initiating this diversity action. Five Star sought an injunction granting access to its books and records. *fn1" Five Star charged that the Authority's action in drawing down the letter of credit breached the license agreement, wherefore it sought the return of the $500,000. Five Star further alleged that the news stories were attributable to the Authority and were defamatory of and consequentially injurious to Five Star, wherefore it sought damages. An amended complaint expanded to three counts the allegations of injury flowing from the allegedly defamatory news stories.

 The Authority moved to dismiss the entire complaint on Eleventh Amendment grounds. In the alternative, defendant moved to dismiss (1) the count alleging breach of the license agreement, for failure to state a claim on which relief could be granted, and (2) the tort counts, as barred by Pennsylvania's Political Subdivision Tort Claims Act, 42 Pa. C.S.A. § 8541 et seq.

 At a hearing on March 7, 1986, this court denied defendant's motion to dismiss insofar as it was predicated on the Eleventh Amendment. The rationale was that under the criteria announced and applied by the Court of Appeals in Urbano v. Board of Managers of New Jersey State Prison, 415 F.2d 247 (3d Cir. 1969), cert. denied 397 U.S. 948, 25 L. Ed. 2d 128, 90 S. Ct. 967 (1970); and Blake v. Kline, 612 F.2d 718 (3d Cir. 1979), cert. denied 447 U.S. 921, 65 L. Ed. 2d 1112, 100 S. Ct. 3011 (1980), the structure and functions of the Authority could not properly be characterized as partaking of the sovereignty of the Commonwealth. *fn2"

 Treating the Authority's motion to dismiss the contract claim as a motion for summary judgment (because defendant and plaintiff both buttressed their arguments with documents dehors the complaint), this court denied the motion. *fn3"

 Following the March 7 hearing, some time went by in which the parties sought to achieve a resolution of their dispute without further litigation. When these negotiations broke down, this court granted Five Star additional time for discovery prior to ruling on the Authority's outstanding motion to dismiss the tort counts.

 The Authority once again moves to dismiss the contract count as failing to state a viable claim and the tort counts as barred by Pennsylvania's Political Subdivision Tort Claims Act.

 I.

 Count one -- the claim that the Authority breached the license agreement by drawing down the letter of credit -- seems to present the following questions: (1) Did the license agreement contemplate that the Authority could, simply by advising the Bank of America on December 18, 1985, "that Five-Star Parking did not perform according to contractual agreement dated September 1, 1982," draw down the letter of credit, without any regard for whether Five Star had in fact breached the agreement? (2) If the answer to the first question is "no," did the Authority, on December 18, 1985, have some reasonable ground for supposing that Five Star had breached the license agreement?

 These questions arise from a matrix of facts and cannot be determined on summary judgment if material issues of fact remain. Such issues were plainly identifiable in March, when I denied summary judgment on count one. *fn4" They remain today, and I shall therefore follow my previous ruling.

 II.

 The Philadelphia Parking Authority is a "local agency" within the meaning of the Political Subdivision Tort Claims Act, 42 Pa. C.S.A. § 8541 (and see id. at § 8501), and hence enjoys the "governmental immunity" conferred by the Act. E-Z Parks, Inc. v. Larson, 91 Pa. Commw. 600, 498 A.2d 1364 (1985) aff'd, 509 Pa. 496, 503 A.2d 931 (1986). By way of exceptions to the broad principle of "governmental immunity," the Act expressly provides for "local agency" liability for several listed kinds of "injury to a person or property." 42 Pa. C.S.A. § 8542. Not to be found among the listed exceptions *fn5" are causes of action sounding in defamation, or in interference with business relationships -- claims of the sort described by counts two, three, and four of Five Star's second amended complaint.

 Five Star undertakes to meet this difficulty by contending that the Philadelphia Parking Authority's parking operations are conducted in a fashion not authorized by the Authority's governing statute and hence that the parking operations are not entitled to the immunity conferred by the Political Subdivision Tort Claims Act. The allegedly unauthorized aspect of the Authority's operations is that the Authority returns a profit to the City of Philadelphia instead of merely covering the various costs of its operations, as -- Five Star insists -- the Pennsylvania Legislature intended. The Authority acknowledges that it "is a source ...


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