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Davis-Haas v. Exeter Township Zoning Hearing Board & MetroDev V, LP

Commonwealth Court of Pennsylvania

July 12, 2017

Sue Davis-Haas, Richard H. Haas, Ida C. Smith, Zildia Perez, Leon Perez, Donna Galczynski, Kevin Galczynski, Alan Ganas, Renee Froelich, Scott Matthews, Patricia J. Miravich, John J. Miravich and William Ryan, Appellants
v.
Exeter Township Zoning Hearing Board and MetroDev V, LP and Exeter Township

          Argued: June 5, 2017

          BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE ANNE E. COVEY, Judge (P.) HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge.

          OPINION

          ROBERT SIMPSON, Judge.

         In this, the most recent of several related appeals in this land use case, Objectors[1] ask whether the Court of Common Pleas of Berks County[2] (trial court) erred in affirming a decision of the Exeter Township Zoning Hearing Board (ZHB) that sustained MetroDev V, LP's (Landowner) procedural validity challenge. Objectors argue the trial court erred in failing to: (1) enforce a settlement agreement reached by the parties; (2) find that Landowner's 2005 procedural challenge to and the process Landowner followed was defective and Objectors' rights were violated; and (3) determine Landowner lacked standing to prosecute its procedural validity challenge. Upon review, we affirm.

         I. Background

         This case has an extensive procedural history, most of which was set forth in this Court's decision in Metro Dev V, LP v. Exeter Township Zoning Hearing Board (Pa. Cmwlth., No. 1367 C.D. 2013, filed July 24, 2014), 2014 WL 3697529 (unreported). There, we explained that Objectors own properties adjacent to Landowner's proposed residential development. Landowner's property (subject property) consists of approximately 46.36 acres[3] in an area where the boundary lines of the Township of Exeter (Township), and two surrounding municipalities, Lower Alsace Township and Alsace Township, meet.

         Prior to July 25, 2005, the Township's Zoning Ordinance No. 500 (old ordinance) was in effect. Under the old ordinance, the subject property was zoned low density residential. On July 25, 2005, the Township enacted Zoning

         Ordinance No. 596 (new ordinance), which changed the zoning classification of the property from low density residential to suburban residential. The changed classification had the practical effect of reducing the number of residential lots permitted on the subject property from 30 to 7.

         In August 2005, Landowner filed a challenge to the validity of the new ordinance with the ZHB pursuant to former Section 10909.1(a)(2) of the Pennsylvania Municipalities Planning Code (MPC)[4] alleging procedural irregularities in its adoption.

         In September 2005, a preliminary subdivision plan was submitted for a residential development on the subject property called "Windy Willows, " comprising 34 residential lots, 26 of which were located within the Township. The plan was based on a sketch plan that was previously submitted while the old ordinance was still in effect. Waivers were sought from the Township's Subdivision and Land Development Ordinance (SALDO).

         On September 26, 2005, the Township and Landowner entered into a settlement agreement in which Landowner agreed to withdraw its procedural validity challenge to the new ordinance in exchange for the Township's agreement to review and potentially approve the plan under the terms of the old ordinance. Shortly thereafter, Landowner withdrew its validity challenge.

         In July 2008, the Township approved Landowner's plan, subject to certain conditions. The Township also granted waivers from certain SALDO sections but it reserved its determination of other waiver requests until the final plan approval stage. Pursuant to the terms of the settlement agreement, the Township reviewed the plan under the old ordinance.

         Objectors subsequently filed a land use appeal with the trial court. Landowner intervened. The Township filed a motion to dismiss the appeal, arguing Objectors lacked standing to appeal because they did not appear in the proceedings below. The trial court granted the Township's motion and dismissed Objectors' appeal. On appeal, this Court held Objectors, as adjacent landowners, had substantive standing to object to subdivision plans both before the Township and in land use appeals, even though they did not appear before the Township or its Planning Commission. Miravich v. Twp. of Exeter 6 A.3d 1076 (Pa. Cmwlth. 2010) (Miravich I). We reversed and remanded.

         On remand, the trial court denied Objectors' land use appeal. The trial court determined the Township did not err by reviewing the plan under the old ordinance based on the terms of the settlement agreement because municipalities are legally authorized to settle challenges to zoning ordinances. The trial court also upheld the Township's grant of waivers to Landowner, and it held Landowner had standing to submit the plan.

         Objectors filed another appeal to this Court, asserting: (1) the proper procedure to challenge the new ordinance was to have a hearing before the ZHB; (2) the settlement agreement was an invalid exercise of the Township's authority to settle the challenge to the new ordinance; (3) the Township erred by applying the old ordinance instead of the new ordinance to the plan; (4) the Township's approval of the plan was defective; and, (5) Landowner lacked standing to seek preliminary plan approval. Miravich v. Twp. of Exeter 54 A.3d 106 (Pa. Cmwlth. 2012) (Miravich II).

         Ultimately, this Court held the Township lacked authority to determine which zoning ordinance would be applied to the plan for three reasons. First, Landowner's procedural challenge fell within the exclusive jurisdiction of the ZHB, not the Township. Additionally, Landowner filed its challenge with the ZHB and did not bring the matter before the Township as a substantive validity challenge. Finally, even if Landowner filed its challenge with the Township, the Township was required to hold a hearing within 60 days of the request and provide notice of the hearing, events which did not occur. This Court concluded that, by entering into the settlement agreement with Landowner and agreeing the old ordinance would apply to the plan, the Township usurped the ZHB's role and violated the MPC's notice and hearing provisions. Citing the trial court's opinion, this Court also noted that the parties did not dispute that the enactment process for the new ordinance was procedurally defective.

         This Court also held that the settlement agreement was an invalid exercise of the Township's authority to settle the procedural validity challenge to the new ordinance. We determined the settlement agreement was akin to contract zoning, which the Pennsylvania Supreme Court expressly disapproved in Carlino v. Whitpain Investors, 453 A.2d 1385 (Pa. 1982).

         Further, this Court held the Township erred when it considered the plan under the old ordinance rather than the new ordinance. We concluded Landowner submitted its plan after passage of the new ordinance; therefore, under Section 508(4)(i) of the MPC, 53 P.S. §10508(4)(i), which provides that an application for subdivision approval is governed by the ordinance in effect at the time the application is filed, the new ordinance applied. Additionally, as to Objectors' arguments that the Township's approval of the plan was defective, this Court rejected some arguments and accepted others.[5]

         Thereafter, both parties filed petitions for allowance of appeal to the Supreme Court, which were ultimately denied. The plan approval appeal proceeded on remand. Meanwhile, however, while the petitions for allowance of appeal were pending, Landowner sent a letter to the ZHB requesting that it conduct a hearing on the procedural validity challenge Landowner filed in 2005 and subsequently withdrew pursuant to the settlement agreement.[6]

         The ZHB held a hearing on the validity challenge at which it heard testimony and received exhibits regarding the legal status of the 2005 challenge and the relevancy of this Court's decision in Miravich II declaring the settlement agreement invalid. The ZHB concluded there was nothing before it to consider because Landowner unconditionally withdrew its challenge in October 2005. The ZHB also held it could not exercise equity powers to conclude Landowner's withdrawal of the challenge was nullified by this Court's determination that the settlement agreement was invalid because zoning boards lack equity powers.

         Landowner appealed to the trial court, challenging both the ZHB's denial based on jurisdictional grounds and the validity of the new ordinance. The trial court determined Landowner properly filed an appeal within 30 days after the adoption of the new ordinance, which was only withdrawn after the parties reached a settlement agreement. Thus, the trial court remanded to the ZHB for a determination on the merits. The trial court explained the settlement agreement was a contract between Landowner and the Township, and when this Court held it was invalid in Miravich II, Landowner did not receive the benefit of its contractual bargain. As such, the trial court determined Landowner should be placed back to its original position, and the ZHB had jurisdiction to hear the 2005 procedural validity challenge. The trial court also determined that in Miravich II this Court intended the matter to be remanded to the ZHB because only the ZHB had jurisdiction over a procedural validity challenge filed in 2005.[7]

         On further appeal by Objectors, this Court affirmed, holding, "[b]ecause the settlement agreement has been invalidated, unmaking the contract between [Landowner] and the Township by judicial order, equity requires that [Landowner] must be returned to its position prior to execution of the settlement agreement. Therefore, the ZHB is required to decide the merits of the procedural validity challenge under the statutory procedure in effect in 2005." Metro Dev V, Slip Op. at 11, 2014 WL 3697529 at *5.[8]

         Thereafter, the ZHB held hearings on Landowner's procedural validity challenge to the new ordinance. Ultimately, the ZHB sustained Landowner's procedural validity challenge, and it declared the new ordinance void ab initio. In so doing, the ZHB made the following relevant determinations.

         In 2005, the Township undertook a project to amend its zoning ordinance. After various meetings, the Township decided to advertise for public hearing and enact a proposed ordinance to amend and restate the Township zoning ordinance and the zoning map in their entirety (collectively, the draft ordinance).

         The Township advertised a notice in the Reading Eagle, a newspaper of general circulation in the area, on June 29 and July 6, 2005, which stated:

The Exeter Township Board of Supervisors [(Supervisors)] will hold a public hearing at 7:00 P.M. on July 18, 2005 to hear [p]ublic [c]omment on the [draft ordinance]. The [Supervisors] will consider adoption of the [draft ordinance] at their July 25, 2005 meeting. Full text of the [draft ordinance] is available for public inspection at the Township Office, 4974 DeMoss Road, Reading, PA 19606. If you require special accommodations in order to attend Township meetings, please call the Township office at 610-779-5660. The Township will make every reasonable attempt to accommodate you.
Troy S. Bingaman, Manager/Secretary.

ZHB Op., 9/24/15, Finding of Fact (F.F.) No. 28 (Reading Eagle Notice).

         The Reading Eagle Notice did not provide "the time and place" of the meeting on July 25, 2005 in which the Supervisors would consider enactment of the draft ordinance. F.F. No. 29. Also, the Reading Eagle Notice did not provide either "the full text" of the draft ordinance or "a brief summary which lists provisions [of the draft ordinance] in reasonable detail[.]" F.F. No. 30. Although the Reading Eagle Notice did indicate that copies of the Draft Ordinance could be obtained at the Township Building, the Notice did not state "copies of the proposed ordinance or amendment may be examined without charge or obtained for a charge not greater than the cost hereof." F.F. No. 31. Further, the Reading Eagle Notice was prepared by the Township Manager, not the Township Solicitor. The draft ordinance provided for changes to the zoning map that did not constitute comprehensive rezoning as only a few areas of the Township were rezoned.

         The ZHB further determined a notice of the public hearing on July 18, 2005 and proposed enactment at the July 25, 2005 meeting were not conspicuously posted along tracts of land that were the subject of zoning map changes under the draft ordinance. Also, a notice of the public hearing on July 18, 2005 and proposed enactment at the July 25, 2005 meeting was not mailed to the owners of the tracts of land within the Township that were the subject of zoning map changes under the draft ordinance. An attested copy of the draft ordinance or any revised version was not filed in the County Law Library at any time prior to July 25, 2005. Additionally, a copy of the full text of the draft ordinance or any revised version was not filed with the Reading Eagle at any time prior to July 25, 2005.

         On July 18, 2005, the Supervisors held a public hearing at which time the draft ordinance was reviewed. At the hearing, the Supervisors made several substantial changes to the draft ordinance including changes to uses within zoning districts, changes to definitions and changes to objective criteria for uses. The Township Planning Commission reviewed the draft ordinance with the changes recommended at the July 18 hearing at a workshop meeting on July 20, 2005. At that time the Township Planning Commission recommended additional changes to Sections 400 and 500 of the draft ordinance.

         On July 25, 2005, the Supervisors held a public meeting at which time the draft ordinance (with the changes recommended at the July 18 hearing and the July 20 Planning Commission workshop meeting) was considered for adoption. As a result of public comment at the July 25 Supervisors' meeting, the draft ordinance was revised again. F.F. No. 42.

         On July 25, 2005, the Supervisors adopted the new ordinance, which was in the form and content of the draft ordinance with the changes recommended at the July 18 public hearing, the July 20 Planning Commission workshop meeting, as well as the July 25 Supervisors' meeting, and served to amend and restate the zoning ordinance in its entirety.

         Between July 18 and prior to the adoption of the new ordinance on July 25, neither any of the revised versions of the draft ordinance nor the final version of the new ordinance were: (a) submitted to the County Planning Commission for review; (b) submitted to the Township Planning Commission for review of the changes made at the July 25 meeting; (c) submitted to the County Law Library to be available for public inspection; (d) submitted to the Reading Eagle to be available for public inspection; (e) re-advertised in the Reading Eagle for a public hearing or enactment at a public meeting; (f) posted conspicuously along tracts in the Township that were the subject of zoning map changes; or, (g) mailed to the owners of the tracts of land within the Township that were the subject of zoning map changes. F.F. No. 44.

         The new ordinance became effective on August 5, 2005, 10 days after its passage by the Supervisors. On August 24, 2005, Landowner filed its procedural validity challenge with the Township, which was within 30 days of the new ordinance's effective date.

         The ZHB explained that a procedural challenge must be brought within 30 days of an ordinance's effective date. 42 Pa. C.S. §5571(c)(5). Where a challenge is filed within 30 days of the ordinance's effective date, the party alleging a defect must prove there was a failure to strictly comply with statutory procedure. However, where a challenge is filed outside the 30-day period, a party must prove its right to an exemption from the deadline. This is accomplished by evidence showing the municipality's "failure to substantially comply" with applicable procedures prevented the public from commenting on the ordinance. Hawk v. Eldred Twp. Bd. of Supervisors, 983 A.2d 216 (Pa. Cmwlth. 2009). If the challenging party meets its burden of proof, the challenged ordinance is void ab initio. Id.

         Section 609 of the MPC, 53 P.S. §10609, establishes the procedures to be followed in the enactment process of zoning ordinance amendments. Additionally, Section 610 of the MPC, 53 P.S. §10610, establishes the requirements for publication, advertisement and availability of proposed zoning ordinances.

         Here, the ZHB found Landowner submitted credible evidence to meet its burden of establishing that its application was filed within 30 days of the effective date of the new ordinance, and that the Township did not strictly comply with the required statutory procedure. Specifically, the ZHB determined the Township did not strictly comply with the required statutory procedure in the enactment process of the new ordinance based on 11 defects, detailed more fully below. In light of these determinations, the ZHB sustained Landowner's procedural validity challenge, and it declared the new ordinance void ab initio. Objectors appealed to the trial court raising numerous issues.

         Before the trial court, the parties engaged in settlement discussions and reached a tentative agreement; however, a final settlement agreement was not reached.

         Ultimately, without taking additional evidence on Objectors' land use appeal, the trial court affirmed. Additionally, the trial court denied Objectors' motion to enforce the purported settlement agreement reached before the trial court. This appeal followed.

         II. Issues

         On appeal, [9] Objectors assert the trial court erred in failing to: (1) enforce a settlement agreement reached by the parties after the trial court determined Landowner was unable to comply with one of the terms of the agreement; and, (2) find Landowner's 2005 procedural challenge to the new ordinance and the process Landowner followed was defective and Objectors' rights were violated where (a) substantial and actual notice of the new ordinance was provided to all Township residents; (b) substantial reliance was shown by Objectors that the new ordinance was properly enacted; and, (c) the defective process undertaken by Landowner denied Objectors due process. Objectors also argue the trial court erred in failing to conclude Landowner lacked standing to prosecute its 2005 procedural validity challenge where it sold the subject property.

         III. Discussion

         A. Purported 2016 Settlement Agreement

         1. Contentions

         Objectors first argue the trial court erred or abused its discretion when it failed to enforce a 2016 settlement agreement reached by the parties following Objectors' appeal of the ZHB's 2015 decision declaring the new ordinance procedurally invalid. Objectors assert Pennsylvania has a strong judicial policy in favor of voluntarily settling lawsuits. Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510 (Pa. Super. 2009). Objectors contend settlement agreements are enforced according to principles of contract law. McDonald v. Ford Motor Co., 643 A.2d 1102 (Pa. Super. 1994). Under Pennsylvania law, a contract exists when parties exhibit mutual assent to the terms of an agreement. Shovel Transfer & Storage, Inc. v. Pa. Liquor Control Bd., 739 A.2d 133 (Pa. 1999).

         If a settlement contains all of the requisites for a valid contract, a court must enforce the terms of the agreement, even if the terms are not yet formalized in writing. Mastroni-Mucker. The intent of the parties to a written contract is contained in the writing itself. Mace v. Atl. Refining & Mktg. Corp., 785 A.2d 491 (Pa. 2001). Moreover, after the parties reach a meeting of the minds as to the essential terms of their agreement, the existence of gaps in the contract will not vitiate it. See Commerce Bank/Pa. v. First Union Nat'l Bank, 911 A.2d 133 (Pa. Super. 2006). Thus, "[t]he law in this Commonwealth makes clear that … [i]f parties agree upon essential terms and intend them to be binding, a contract is formed even though they intend to adopt a formal document with additional terms at a later date." Shovel Transfer & Storage, 739 A.2d at 136 (internal quotations omitted); see also Commerce Bank.

         Here, Objectors maintain, the parties agreed to the essential terms of a settlement. The parties did not contemplate any additional terms that needed to be agreed on as a condition precedent to enforceability. Objectors argue that before the trial court, the parties made no effort to clarify or object to any of the terms of the proposal upon accepting it.

         Objectors contend that, as admitted by Landowner, the parties entered into a settlement agreement. Reproduced Record (R.R.) at 25a-33a, 1123a-24a. The terms of that agreement were simple: (1) an entrance road would be moved; (2) Landowner would receive certifications from the three township engineers that the township boundary lines depicted on the plan were accurate; (3) Landowner would pay the immediately adjacent neighbors $60, 000; and, (4) the parties would release each other, thus requiring Objectors not to further challenge Landowner's development. R.R. at 70a-77a. Objectors maintain Landowner itself sought enforcement of the settlement agreement, and it admitted in its motion that there was a "meeting of the minds." R.R. at 32a. Therefore, no basis exists to not enforce the essential terms of the settlement agreement.

         Objectors contend Pennsylvania courts frequently enforce agreements that contemplate the execution of a formal contract with additional terms in the future. See, e.g., Shovel Transfer & Storage. Indeed, Objectors argue, when compared to other settlement agreements enforced under Pennsylvania law, the agreement here is much more definitive and clearly enforceable. See e.g., Hatalowich v. Redev. Auth. of Monessen, 312 A.2d 22, 24-25 (Pa. 1973) (acceptance of proposal created a contract despite the fact that parties intended to later execute formal document); Compu Forms Control, Inc. v. Altus Grp., 574 A.2d 618 (Pa. Super. 1990) (oral settlement agreement was enforceable even though the parties were unable to agree on, and execute, formal agreement). Here, Objectors argue there can be no dispute that the parties entered into an agreement that was simply not yet reduced to a writing signed by the parties, but the parties agreed on all essential terms. See Commerce Bank, 911 A.2d at 147 (enforcing terms of draft settlement agreement where parties reached "meeting of the minds" regarding essential terms of the agreement).

         Objectors further contend the term of the agreement relating to certification of municipal boundary lines was important to Objectors because they believed Landowner intentionally misrepresented the boundaries between the municipalities to allow more development in the Township given that it allows for smaller lots. Although this was not a specific legal issue before the trial court, Objectors maintain, the trial court agreed this term would be included so Objectors would provide Landowner a general release not to challenge Landowner's development again. Objectors argue Landowner's failure to comply with this term constituted a breach of the agreement; therefore, this case should be remanded to enforce the settlement agreement.

         Landowner[10] responds that the trial court correctly held that a settlement agreement that cannot be performed is not enforceable as a matter of law. As detailed by the trial court, Landowner and the Township could not perform a material term of the proposed settlement agreement; as such, the contract could not be enforced. Landowner contends the trial court laid out the term that Landowner and the Township could not perform and the reasons the parties rejected the settlement proposal. As such, no meeting of the minds ever occurred; thus, nothing suggests the ability to enforce a settlement proposal.

         Landowner argues it is critical to note that the settlement agreement Landowner sought to enforce through its motion was substantially different than the purported agreement Objectors now seek to enforce. In fact, Objectors never responded to the settlement's writing and the parties relied on a spoken agreement. Despite this discussion, Landowner asserts, throughout the entire summer of 2016-again to the delay of Landowner's development-the terms of the agreement continually changed. From the loss of lots in April, to the payment of funds in May, to boundary certifications in June and then to loss of lots again in July, Objectors repeatedly changed the terms of any agreement.

         Moreover, Landowner maintains, as the draft agreements indicate, the Township always proposed a full release. R.R. at 72a-77a. However, at no time from April through June did Objectors respond to that requirement, until the motion to enforce settlement was filed. Essentially, Landowner argues Objectors want it both ways. They refused to settle in the midst of litigation, R.R. at 2a, and then they demanded enforcement of a purported settlement agreement after losing before the trial court.

         As noted by the trial court, Landowner contends, the final version of the settlement agreement could not be satisfied by Landowner and the Township. As such, the agreement failed as a matter of law. See, e.g., West v. Peoples First Nat'l Bank & Trust Co., 106 A.2d 427 (Pa. 1954). Importantly, Landowner argues, the cases Objectors cite in support of their position include scenarios involving a clear meeting of the minds where the only outstanding issue was a finalized writing. No meeting of the minds occurred here.

         Landowner maintains that, as to the purported agreement, the trial court specifically referenced the boundary issue and made a finding that the parties could not survey the boundary in the manner demanded by Objectors. Thus, not all terms were satisfied. Landowner asserts our Supreme Court holds: "As with any contract, it is essential to the enforceability of a settlement agreement that 'the minds of the parties should meet upon all the terms, as well as the subject-matter, of the [agreement].'" Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999) (citing Onyx Oils & Resins, Inc. v. Moss, 80 A.2d 815, 817 (Pa. 1951)). Moreover, Landowner argues, the boundary issue was only one of several items upon which the parties could not agree, thus showing the settlement agreement was not enforceable as a matter of law.

         For its part, the ZHB notes, although present and a party to the matter, it was not directly involved in negotiations and attempts to resolve the matter through the proposed settlement agreement before the trial court. Nevertheless, the ZHB opposes Objectors' argument that the trial court should have enforced the proposed settlement agreement. The ZHB joins Landowner's argument on this issue in support of the trial court's finding that the proposed settlement agreement was not enforceable based on the impossibility of performance of a material term.

         2. Analysis

         In resolving this issue, the trial court here explained (with emphasis added):

[Objectors] requested that this court enforce a settlement agreement reached amongst the parties in court in April, 2016, and reduced to writing, but never finalized. The agreement discussed in court contained financial terms and several other provisions, but it was never finalized, and no party performed any of the obligations contained in the agreement. A material term of that agreement required [Landowner] and [the Township] to obtain certification from the engineers of the three municipalities of each of the municipal boundaries as depicted on [Landowner's] preliminarily approved land development plans. [The Township] and [Landowner] were unable to obtain the certifications, but proposed in the alternative, in accordance with the recommendations of their relative engineers, that determination of the municipalities' boundaries be obtained in accordance with the procedures [set forth in] [S]ection 302 of the [Second Class Township Code[11]. This proposal was rejected by [Objectors] who insisted that they would not entertain any agreement absent certification from the engineers.
[The] Township and [Landowner] could not perform a material term of the settlement agreement. 'If performance on one side or another of a contract becomes excusably impossible while the transaction is wholly executory on both sides, not only is the contract discharged, but neither party is subject to obligation of any kind.' [West, 106 A.2d at 433] citing Williston on Contracts, vol. 6 (Rev. Ed.). See also, Ellwood City Forge Corp. v. Fort Worth Heat Treating Co., Inc., [636 A.2d 219 (Pa. Super. 1994)]. Accordingly, impossibility of performance of the material term rendered the agreement, if indeed any was reached, terminated.

Tr. Ct., Slip Op., 9/15/16, at 9.

         Despite Objectors' claims that the parties reached a settlement agreement after Objectors' appeal of the ZHB's decision invalidating the new ordinance, Objectors point to no record evidence to support their claim that an enforceable agreement actually existed. Objectors note that, in June 2016, Landowner filed a motion to enforce the purported settlement agreement between the parties in which Landowner indicated there was a "meeting of the minds." See R.R. at 32a. Shortly ...


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