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Kraftdev Assocs., LLC v. East Cocalico Twp. Auth.

Commonwealth Court of Pennsylvania

April 8, 2014

Kraftdev Associates, LLC
East Cocalico Township Authority, Appellant

Argued March 10, 2014

Appealed from No. 12-12960. Common Pleas Court of the County of Lancaster. Knisely, J.

Lucy F. Dowd, Lititz, for appellant.

Brandon S. Harter, Lancaster, for appellee.



Page 729


The East Cocalico Township Authority (Authority) appeals from the June 5, 2013, order of the Court of Common Pleas of Lancaster County (trial court), which granted the summary judgment motion filed by Kraftdev Associates, LLC (Kraftdev) and denied the Authority's summary judgment motion. We affirm.

In 2007, Kraftdev planned a 57.05-acre commercial real estate development in East Cocalico Township (Township) known as Cocalico Commons. Before obtaining the Township's final approval, Kraftdev was required to obtain capacity letters from the Authority for both sewer and water services.

The Authority began designing a new water supply system to meet the water capacity needs of proposed real estate developments within its service area. The Authority notified Kraftdev and the public that the water supply project would require funding from the property owners in the form of capital contributions. The Authority asked all property owners interested in purchasing water under the new system, including Kraftdev, to execute an Agreement for Contribution to Capital Water Projects (Agreement).

On February 29, 2008, Kraftdev entered into the Agreement with the Authority and agreed to pay a total water contribution of $423,940. (Agmt. ¶ 2.) Kraftdev made an initial deposit in the form of a letter of credit in the amount of $105,985 (First Letter). The Agreement required Kraftdev to provide a second letter of credit in the amount of $317,955 (Second Letter) within 15 days of the Authority's written demand. (Agmt. ¶ 2.b.) The Agreement further provided that in the event of Kraftdev's default, Kraftdev would forfeit the First Letter as liquidated damages. (Agmt. ¶ 5.)

Subsequently, as a result of the economic downturn, several of Kraftdev's key commercial tenants withdrew from Cocalico Commons. Kraftdev was then unable to obtain financing, making it economically unfeasible for Kraftdev to proceed with the development. Thus, Kraftdev postponed the development of Cocalico Commons.

On August 21, 2012, the Authority sent Kraftdev a written demand for the Second Letter, which Kraftdev refused to provide. On September 10, 2012, Kraftdev filed a complaint seeking a declaration that the Development Permit Extension Act (Act), Act of July 9, 2013, P.L. 362, 53 P.S. § § 11703.1-11703.8,[1] applied to the Agreement and that, under the Act, Kraftdev had until July 2016 to provide the Authority with the Second Letter. Kraftdev also filed a motion for preliminary and permanent injunctive relief.

On September 12, 2012, the trial court granted Kraftdev's motion for preliminary injunctive relief, enjoining the Authority from finding Kraftdev in default for 45 days from the date of the order. On October 1, 2012, the Authority filed an answer

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and counterclaim for breach of contract, to which Kraftdev filed a reply. Thereafter, both parties filed motions for summary judgment.

On June 5, 2013, the trial court granted Kraftdev's summary judgment motion, denied the Authority's summary judgment motion, dismissed the Authority's counterclaim, and dissolved the preliminary injunction. The trial court also suspended Kraftdev's deadline for supplying the Second Letter until July 2016 pursuant to the Act.[2]

On appeal,[3] the Authority asserts that the trial court erred in concluding that the Act applies to the Agreement. Specifically, the Authority disputes the trial court's finding that the Agreement controls whether Kraftdev's development project can " proceed" under section 2 of the Act. According to the Authority, the Agreement does not allow Kraftdev's project to proceed; that authority lies exclusively with the Township's Board of Supervisors, which must issue final plan approval. We reject these claims.

Section 2 of the Act broadly defines " approval" as " any government agency . . . agreement . . . allowing a development or construction project to proceed." 53 P.S. § 11703.2. The Authority claims that the Agreement in this case is merely a funding agreement and not the type of " approval" contemplated by the Act. We disagree. The Agreement provides that, in exchange for Kraftdev's capital contribution, the Authority will provide Kraftdev with the water and sewer capacity letters necessary for its construction project to proceed to final Township approval. The Agreement expressly states, " Upon payment of the balance of the Water Contribution as provided in Paragraph 2.c. herein . . . [the] Authority shall provide Property Owner with the required capacity documents for the Property for water to enable the Property Owner to secure final plan approval from [the] Township ." (Agmt. ¶ 3 (emphasis added).) Thus, contrary to the Authority's assertion, the Agreement in this case does not " indirectly affect[]" Kraftdev's development project (Authority's Br. at 14); rather, it is directly linked to a vital component of the approval process. Applying the Act's plain language, we conclude that the Agreement satisfies the definition of " approval."

Accordingly, we affirm.


AND NOW, this 9th day of April, 2014, we hereby affirm the June 5, 2013, order

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of the Court of Common Pleas of Lancaster County.

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