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Harleysville Homestead, Inc. v. Lower Salford Township Authority

IN THE COMMONWEALTH COURT OF PENNSYLVANIA


August 28, 2009

HARLEYSVILLE HOMESTEAD, INC., APPELLANT
v.
LOWER SALFORD TOWNSHIP AUTHORITY

The opinion of the court was delivered by: Senior Judge Kelley

Argued: June 8, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE JAMES R. KELLEY, Senior Judge.

OPINION

Harleysville Homestead, Inc. (Harleysville) appeals the order of the Court of Common Pleas of Montgomery County (trial court) that granted the motion for judgment on the pleadings of Lower Salford Township Authority (Authority) and entered judgment in favor of the Authority and against Harleysville on all claims and counterclaims. We affirm.

The sole issue presented for review is whether the trial court erred when it granted the motion for judgment on the pleadings on the basis that Harleysville's amended complaint was barred by the two year statute of limitations set forth in Section 5524 of the Judicial Code, 42 Pa. C.S. §5524. In pertinent part, Section 5524 provides:

The following actions and proceedings must be commenced within two years:

....

(3) An action for taking, detaining or injuring personal property, including actions for specific recovery thereof.

....

(7) Any other action or proceeding to recover damages for injury to person or property which is founded on negligent, intentional, or otherwise tortious conduct or any other action or proceeding sounding in trespass, including deceit or fraud, except an action or proceeding subject to another limitation specified in this subchapter.

The facts in this matter are as follows. The Authority is a municipal authority governed by the Municipality Authorities Act (Act).*fn1 In 1996, Harleysville was a developer of a single family residential community of one hundred four homes in a community known as Harleysville Homestead in Lower Salford Township, Montgomery County. Harleysville applied to the Authority to secure public sanitary sewer service.

In order to provide the sanitary sewer service for Harleysville Homestead, the Authority and Harleysville entered into an Agreement for the Construction of Sewer Lines ("Agreement") on or about October 15, 1996. Under the Agreement, Harleysville agreed to pay tapping fees in the amount of $6,545.00 per dwelling unit to be constructed, plus a one-time connection fee of $500.00, for a total sum of $681,180.00. Since the development of Harleysville Homestead was to be completed in three phases, Harleysville paid the tapping fees in three installments: $248,710.00 on or about October 30, 1996, for thirty-eight dwelling units; $274,890.00 on or about April 21, 1997, for forty-two dwelling units; and $157,080.00 on or about October 7, 1997, for twenty-four dwelling units.*fn2

Harleysville also paid the one time connection fee of $500.00 on October 30, 1996.

On September 25, 2000, Harleysville initiated a lawsuit against the Authority by writ of summons. Thereafter, Harleysville filed a one count complaint on July 31, 2002. The Authority preliminarily objected and Harleysville filed an amended complaint on November 17, 2006. In the amended complaint, Harleysville alleges that the Authority's charges calculated under the Agreement for the tapping fees were in error and that the Authority had violated the requirements of Section 4 of the 1945 Act by overcharging for Harleysville's purchase of sanitary sewer capacity from the Authority. Harleysville sought damages representing the excess tapping fees allegedly charged in violation of the Act in an amount not less than $680,680.00 plus interest and costs.*fn3

On December 26, 2006, the Authority filed an answer with new matter. As new matter, the Authority raised a number of affirmative defenses including, inter alia, that the claims were barred by the two year statute of limitations pursuant to Section 5524 of the Judicial Code, the failure to give timely notice pursuant to Section 5522 of the Judicial Code,*fn4 the voluntary payment rule, and governmental immunity.

On August 28, 2007, the Authority moved for judgment on the pleadings on the basis that Harleysville's claims were barred by the two year statute of limitations contained in Section 5524, barred by the failure to provide notice as set forth in Section 5522 of the Judicial Code, barred under governmental immunity set forth in Section 8541 of the Judicial Code, 42 Pa.C.S. §8541, and barred by the voluntary payment rule because Harleysville voluntarily paid the amount called for in the Agreement.

On January 22, 2008, Harleysville filed its reply to the Authority's new matter. The trial court heard argument on the Authority's motion for judgment on the pleadings on March 11, 2008. On March 28, 2008, the trial court granted the Authority's motion and entered judgment in its favor and against Harleysville. The trial court determined that the cause of action fit squarely within the two year statute of limitations set forth in Section 5524 of the Judicial Code based, in part, on this Court's decision in Petticord v. Joyce, 578 A.2d 632 (Pa. Cmwlth. 1990), which involved the breach of a statutory duty as Harleysville has alleged in the instant action.*fn5 The appeal by Harleysville followed.

A motion for judgment on the pleadings in is the nature of a demurrer; all of the opposing party's allegations are viewed as true and only those facts which have been specifically admitted by him may be considered against him. Department of Public Welfare v. Joyce, 571 A.2d 536 (Pa. Cmwlth. 1990). In reviewing a motion for judgment on the pleadings, the trial court may only consider the pleadings themselves and any documents properly attached thereto. Id.

The scope of review on a grant or denial of a motion for judgment on the pleadings is plenary. Phillips v. A-Best Products Co., 542 Pa. 124, 665 A.2d 1167 (1995); Newberry Township v. Stambaugh, 848 A.2d 173 (Pa. Cmwlth.), petition for allowance of appeal denied, 580 Pa. 708, 860 A.2d 491 (2004). The appellate court must decide whether the trial court committed an error of law or whether the pleadings disclosed facts that should have gone to the jury. Newberry.

In support of its appeal, Harleysville contends that the grant of the motion for judgment on the pleadings was in error because there were facts in dispute as to whether the Authority erroneously calculated its tapping fees. Harleysville contends further that its claims were not time-barred because the claim was based on a contract claim under the "gist of the action" doctrine. Because all of the rights and obligations of the parties arose from the Agreement, Harleysville argues that its claim arises under a contract action which has a four year statute of limitations. See Section 5525(8) of the Judicial Code, 42 Pa.C.S. §5525(8).*fn6 Harleysville points out that it filed the writ well within four years of the execution of the Agreement and certainly within four years of the actual payment of each installment of the tapping fees. Harleysville also contends that in the absence of a contract, a six year statute of limitations applies. See Section 5527 of the Judicial Code, 42 Pa.C.S. §5527.*fn7

Harleysville argues further that this matter is not controlled by this Court's decision in Petticord as that case is factually different. Harleysville contends that the only similarity between this matter and Petticord is that the defendants are both government entities charged with statutory duties.

Contrary to Harleysville's assertions, this Court's decision in Petticord does control. Therefore, Harleysville allegation that the Authority overcharged it for tapping fees in violation of Section 4 of the Act sounds in tort.

In Petticord, a purchaser of property requested the prothonotary to conduct a search of the docket for any judgment liens indexed against the property. The prothonotary issued a certificate stating that there were no liens. Petticord thereafter paid $13,415.00 to satisfy a lien which was undetected and thereafter filed suit against the prothonotary for damages he sustained in satisfying the lien. Petticord claimed that he had a contract with the prothonotary as he paid $20.00 for the prothonotary to search the records. This Court determined however that there was no bargained for exchange and thus no contract as the prothonotary was obligated by statute to perform a search of the docket and issue a lien certificate to anyone who paid the fee.

Because Petticord alleged that the prothonotary's negligent performance of a statutory duty caused injury to Petticord, this Court determined that Petticord's claim was governed by the two year statute of limitations. Similarly, in this case, Harleysville alleges in its amended complaint that the Authority violated Section 4 of the 1945 Act by charging Harleysville tapping fees in excess of that permitted by the Act. Harleysville alleges further that the Authority's violation of the Act and failure to properly calculate the tapping fees in accordance therewith caused injury to Harleysville.

Accordingly, the Harleysville claim, like that of Petticord's, is also governed by the two year statute of limitations. As such, we discern no error by the trial court in granting the Authority's motion for judgment on the pleadings based on this Court's decision in Petticord.

As stated previously herein, Harleysville argues that its claim falls within the provisions of Sections 5525 of the Judicial Code based on the "gist of the action" doctrine; therefore, a four year statute of limitations is applicable. We disagree.

This Court recently explained the "gist of the action" doctrine.

[I]n Yocca [v. Pittsburgh Steelers Sports, Inc.], 806 A.2d 936 (Pa. Cmwlth. 2002), rev'd on other grounds, 578 Pa. 479, 854 A.2d 425 (2004),... we recognized this Court employs a "misfeasance/nonfeasance" test for determining whether an action sounds in tort or in contract. "If there is 'misfeasance,' there is an improper performance of the contract in the course of which breaches a duty imposed by law as a matter of social policy. In such instances, the 'gist' of the plaintiff's action sounds in tort and the contract itself is collateral to the cause of action." Id. at 944. "On the other hand, if there is 'nonfeasance,' the wrong attributed to the defendant is solely a breach of the defendant's duty to perform under the terms of the contract. In such instances, the 'gist' of the plaintiff's action sounds in contract, and the plaintiff would not have a cause of action but for the contract." Id.

Meyer v. Community College of Beaver County, 965 A.2d 406 (Pa. Cmwlth. 2009).

A review of Harleysville's amended complaint reveals that it does not allege that the wrong attributed to the Authority is solely a breach of the Authority's duty to perform under the terms of the contract. In other words, Harleysville does not allege that the Authority failed to provide the purchased for sewer capacity or that the Authority failed to perform as set forth in the Agreement. See Reproduced Record (R.R.) at 001a-006a. As pointed out by the trial court, the Agreement has already been performed according to its terms. The amended complaint only alleges that Harleysville overpaid for sewer service because the calculation of the tapping fees was in error and said error was a violation of the 1945 Act.*fn8 Id.

Accordingly, Harleysville claim sounds in tort and the Agreement itself is collateral to Harleysville's cause of action. Therefore, the four year statute of limitations is inapplicable.

Harleysville also argues that its claim falls within the provision of Section 5527 of the Judicial Code, which provides a six year statute of limitations for all actions which are not subject to another limitation. However, as we have already determined that Harleysville action is governed by the two year statute of limitations set forth in Section 5524, Section 5527 is inapplicable.

The trial court's order is affirmed.

JAMES R. KELLEY, Senior Judge

ORDER

AND NOW, this 28th day of August, 2009, the March 28, 2008, order of the Court of Common Pleas of Montgomery County entered in the above-captioned matter is affirmed.


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