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Fortune Development, L.P. v. Bern Township

March 13, 2013

FORTUNE DEVELOPMENT, L.P.
v.
BERN TOWNSHIP, ET AL.



The opinion of the court was delivered by: Juan R. Sanchez, J.

MEMORANDUM

Plaintiff Fortune Development, L.P. (Fortune) seeks to develop a "55 Age Rated residential development" on a 58-acre property it owns in Bern Township, Pennsylvania, but has been unable to secure the wastewater treatment service it needs to do so, allegedly due to wrongful and obstructive conduct by various local government entities. Fortune brings claims pursuant to 42 U.S.C. § 1983 against three such entities-Bern Township, the Bern Township Municipal Authority (BTMA), and the Leesport Borough Authority (LBA)-alleging violations of its procedural and substantive due process rights. Fortune also brings a state-law claim for intentional interference with contractual relations against five individually named Bern Township Supervisors, the Schuylkill River Greenway Association (the Greenway Association), and the Vice President of the Greenway Association's Board, and brings a civil conspiracy claim against all of the individual Defendants.

In four separate motions to dismiss, all Defendants ask this Court to dismiss the claims against them pursuant to Federal Rule of Civil Procedure 12(b)(6). Because Fortune has failed to state a procedural or substantive due process claim against any of the local government entities, Fortune's federal claims (Counts One and Three) will be dismissed. Fortune's remaining state- law claims (Counts Four and Five) will be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c).*fn1

FACTS*fn2

Fortune owns a 58-acre tract of land in Bern Township, Pennsylvania (the Property), adjacent to and immediately south of the Leesport Borough line and west of the Schuylkill River. The Property is separated from the River by a strip of land owned by the Greenway Association, a nonprofit organization.

In August 2005, Fortune submitted to Bern Township a plan to develop Water's Edge, a "55 Age Rated residential development," on the Property. Compl. ¶¶ 18-19. In May 2007, the Bern Township Board of Supervisors resolved to reject the plan; however, because the Township did not give the legally required notice of the prospective rejection, the preliminary plan was deemed approved. Nevertheless, development has been stalled because Fortune has been unable to secure wastewater treatment service for Water's Edge.*fn3

Neither Bern Township nor BTMA owns or operates a public wastewater treatment facility. Rather, the closest public facility to Water's Edge is owned by LBA. Beginning in 2006, Fortune contacted Bern Township and BTMA about obtaining sewer and wastewater treatment service for Water's Edge from the Township's reserved capacity at the LBA plant; however, these Defendants denied Fortune's request on the basis that the LBA plant did not have sufficient capacity to serve Water's Edge. Fortune then applied to Bern Township for a private, on-site wastewater treatment plant, but the Township denied the application, at least in part because Fortune did not have access to the Schuylkill River for discharge of treated wastewater.

Following these unsuccessful attempts to obtain sewer and wastewater treatment services, in 2008 or 2009, Fortune hired Dr. Hugh Archer, an expert on wastewater treatment plant capacity, to evaluate whether the LBA plant had the capacity to serve Water's Edge. In 2009, Dr. Archer determined the LBA plant could make an additional 50,000 gallons per day of treatment capacity available (an amount sufficient to serve Water's Edge) if LBA were to submit an application to the Pennsylvania Department of Environmental Protection (DEP) to "re-rate" the LBA plant's capacity. Later in 2009, LBA agreed to undertake a capacity analysis of its treatment plant and to submit a re-rating application if additional capacity was found.

On October 30, 2009, Fortune's lawyer offered to assume all of LBA's costs relating to any re-rating, and in December 2009, Michael Butto, one of the partners of Fortune, appeared at an LBA meeting with a $23,000 check to fund LBA's capacity analysis. During the meeting, however, LBA told Butto that, per the request of Bern Township and/or BTMA, any request for sewer and wastewater treatment capacity for Water's Edge would have to be made through BTMA.

Butto left the LBA meeting and went directly to a BTMA meeting the same night, at which BTMA advised Butto an extra 50,000 gallons per day was not sufficient for Water's Edge. BTMA also told Butto that another developer, Forino Co., L.P. (Forino), wanted the same additional capacity Fortune was seeking. (Forino was present at the BTMA meeting.) Fortune and Forino thereafter agreed to split the cost of the LBA capacity analysis, with each developer reserving its right to claim any found capacity for itself. Although LBA's engineer ultimately confirmed Dr. Archer's conclusion that the LBA plant had an excess capacity of 50,000 gallons per day, BTMA did not authorize either Fortune or Forino to use the excess capacity, asserting it needed another $20,000 from each developer for equipment and/or engineering work.*fn4

On November 15, 2011, Fortune's lawyer wrote to LBA's lawyer, seeking a determination as to whether LBA would allocate any of the excess capacity to Fortune without Fortune's payment of more money. LBA has never responded to the letter. Fortune believes unspecified Bern Township and BTMA officials who were opposed to Water's Edge persuaded LBA not to allow Fortune adequate wastewater treatment capacity.

As an alternative to obtaining wastewater treatment services from LBA, Fortune has also sought such services from the Reading Area Water Authority (RAWA), which is located on the opposite side of the Schuylkill River from Water's Edge. As noted, the Property is separated from the River by a strip of land owned by the Greenway Association. There is an existing 30-foot-wide easement over the Association's land, and a pipe running through the easement carries stormwater from a development adjacent to Water's Edge to the Schuylkill River.

In September 2008, Fortune entered into an agreement with RAWA (the Easement Agreement) under which RAWA agreed to exercise its eminent domain power to condemn an easement for water and utility purposes over the Greenway Association's land, which would enable RAWA to connect water and sewer services from Water's Edge to RAWA's facilities. In February 2009, RAWA's Board of Directors passed a resolution authorizing condemnation of the contemplated easement. On May 4, 2010, RAWA filed a Declaration of Taking Complaint in the Berks County Court of Common Pleas to condemn the easement.

Before the Complaint was filed, in response to questions from Bern Township regarding Fortune's proposed private, on-site wastewater treatment plant (which the Township had rejected), Fortune informed the Township it expected to have access to the Schuylkill River for post-treatment wastewater discharge through the easement contemplated by the Easement Agreement. Bern Township and the Greenway Association thereafter entered into an agreement of sale (the Future Sale Agreement) purporting to convey the Association's land to Bern Township for $1, allegedly in an effort to prevent the condemnation. The Bern Township Supervisors approved the Future ...


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