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Hydrojet Services, Inc. v. Reading Area Water Authority

Commonwealth Court of Pennsylvania

November 14, 2019

Hydrojet Services, Inc.
v.
Reading Area Water Authority, Appellant

          Argued: September 10, 2019

          BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge.

          OPINION

          PATRICIA A. McCULLOUGH, JUDGE.

         The Reading Area Water Authority (RAWA) appeals from the April 27, 2018 order of the Court of Common Pleas of Berks County (trial court) granting in part the petition of Hydrojet Services, Inc. (Hydrojet), seeking to enforce a settlement agreement reached with RAWA over unpaid water usage charges for a period of approximately eight years.[1]

         Facts and Procedural History

         The underlying facts of this case are not in dispute. In early 2009, Hydrojet began its business operations in a building located at 450 Gateway Drive, Reading, Pennsylvania (the property). For unknown reasons, Hydrojet first began receiving water bills for the property in May 2017. At that time, RAWA sent Hydrojet an invoice for its current water usage, without mention of any outstanding or unpaid charges. However, on November 2, 2017, Hydrojet received an invoice from RAWA detailing outstanding charges of $242, 043.14, representing charges for its water and sewer usage from 2009 until May 2017. On November 21, 2017, RAWA posted a shut-off notice at the property for nonpayment of the outstanding charges. This shut-off notice advised that water service would be discontinued by December 6, 2017, unless the outstanding charges were paid in full. (Petition for Enforcement of Settlement Agreement ¶¶3-13; Reproduced Record (R.R.) at 3a-4a.)

         Following a meeting of the respective parties on December 5, 2017, the parties agreed to settle the outstanding charges and for these charges to be paid in installments over time. On December 18, 2017, counsel for RAWA forwarded a draft settlement agreement to Hydrojet's counsel, who later advised counsel for RAWA that the agreement was acceptable. On December 27, 2017, counsel for RAWA forwarded a final version of the settlement agreement to counsel for Hydrojet for execution. Michael Rado, Hydrojet's President, signed the settlement agreement but struck out a paragraph stating the agreement was executed voluntarily and without any duress or undue influence. On January 24, 2018, RAWA posted a second shut-off notice at the property, with a service discontinuance date of February 8, 2018. Two days later, Hydrojet paid its January invoice and also made a lump sum payment in accordance with the terms of the settlement agreement. RAWA cashed the check from Hydrojet on January 29, 2018. (Petition for Enforcement of Settlement Agreement ¶¶14-22; R.R. at 4a-6a.)

         On January 30, 2018, counsel for Hydrojet contacted counsel for RAWA to confirm that RAWA had accepted the settlement agreement and would abide by the terms therein. However, counsel for RAWA advised that the settlement agreement was not accepted. That same day, counsel for Hydrojet forwarded an executed settlement agreement to counsel for RAWA that included the paragraph that was previously stricken by Rado. Approximately one week later, counsel for RAWA advised counsel for Hydrojet that RAWA declined to enter into a settlement agreement and that service would be discontinued the following day as set forth in the second shut-off notice. (Petition for Enforcement of Settlement Agreement ¶¶23-26; R.R. at 6a.)

         On February 8, 2018, the scheduled service disconnection date, Hydrojet filed the present petition for enforcement of the settlement agreement, along with a request for injunctive relief seeking to enjoin RAWA from discontinuing water service to the property. That same day, the trial court issued an order granting Hydrojet's request for injunctive relief and enjoining RAWA from discontinuing water service to the property.[2] On February 13, 2018, RAWA filed an answer to the petition denying the existence of any enforceable settlement agreement. Rather, RAWA described the settlement agreement provided to counsel for Hydrojet as an offer and the returned agreement executed by Hydrojet with paragraph 13 stricken as a counteroffer which RAWA never accepted. (R.R. at 3a-29a.)

         That same day, the trial court heard argument with respect to Hydrojet's petition. At this argument, counsel for RAWA introduced a motion requesting the presiding judge to recuse herself from the proceedings based upon the fact that the judge had previously represented a landlord in a lease transaction involving Hydrojet. However, after discussions between the judge and counsel for Hydrojet, counsel for RAWA stated that he no longer had any concerns regarding the recusal issue.

         Returning to the issue of the settlement agreement, counsel for RAWA noted that the parties met on December 5, 2017, at which time verbal understandings were reached, subject to the same being memorialized in writing. Counsel for RAWA stated that he sent a draft settlement agreement to counsel for Hydrojet, who approved the same, after which he sent a clean copy for execution.[3] After a nearly month-long period of inactivity, counsel for RAWA indicated RAWA sent the second shut-off notice to Hydrojet. Immediately thereafter, counsel for RAWA received the executed settlement agreement with paragraph 13 crossed out, after which he notified counsel for Hydrojet that the deal was off. On January 30, 2018, counsel for RAWA noted that he received an executed settlement agreement with paragraph 13 intact. Prior to the conclusion of the hearing, the trial court announced its ruling that the settlement agreement was enforceable. (R.R. at 30a-48a.)

         On March 21, 2018, RAWA filed a motion for reconsideration, reiterating its allegation that no valid enforceable settlement agreement existed between the parties and noting that the presiding judge had denied its request for recusal. Additionally, RAWA noted that the trial court had not entered a formal order granting Hydrojet's petition for enforcement. By order dated April 27, 2018, the trial court granted Hydrojet's petition in part, declaring RAWA to be bound by the settlement agreement which was attached and incorporated into its order; noting that it considered the request for recusal to be withdrawn based upon the statement of counsel for RAWA that he had no further concerns following a discussion at the February 13, 2018 argument; directing Hydrojet to file an answer to RAWA's motion for reconsideration; and scheduling additional argument relating to that motion on May 22, 2018. (R.R. at 54a-62a.)

         Hydrojet filed its answer to RAWA's motion on May 21, 2018, and the trial court heard argument the next day. At this argument, counsel for RAWA stated that he had concerns regarding the trial court judge's lack of recusal, especially after she ruled that the settlement agreement was enforceable. As to that agreement, the trial court noted that the parties had reached an agreement at a meeting in December, subject to its memorialization in writing, and that the settlement agreement forwarded by counsel for RAWA to counsel for Hydrojet accurately depicted the agreed-upon terms. The trial court indicated that the verbal agreement reached by the parties in December was a sufficient basis upon which to rely in granting Hydrojet's petition for enforcement of the settlement agreement, which merely reflected the terms of the verbal agreement. Counsel for RAWA responded that he disagreed with the trial court's conclusion in this regard. Counsel also explained that RAWA had concerns regarding Hydrojet's finances that had arisen subsequent to the December meeting and that is why it rejected the executed settlement agreement provided to it on January 30, 2018. Counsel for Hydrojet noted that Rado stated at the February 13, 2018 argument that Hydrojet's financial situation was improving with new government contracts and that Hydrojet intended to comply with the repayment terms of the settlement agreement. (R.R. at 67a-83a.)

         By decision and order dated May 23, 2018, the trial court denied RAWA's motion for reconsideration. With respect to the recusal issue, the trial court noted that the presiding judge's representation of the landlord in a lease transaction with Hydrojet occurred in 2009, that she drafted and negotiated a lease agreement on the landlord's behalf, and that the matter was not adversarial. The trial court reiterated that counsel for RAWA expressed no further concerns following a discussion at the February 13, 2018 argument and that it considered the matter resolved. Further, the trial court noted that RAWA's ...


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