Allegheny Intermediate Unit v. East Allegheny School District

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Allegheny Intermediate Unit :
:
v. : No. 484 C.D. 2018
: Argued: October 15, 2018
East Allegheny School District, :
Appellant :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION
BY PRESIDENT JUDGE LEAVITT FILED: January 25, 2019
East Allegheny School District (School District) appeals an order of the
Court of Common Pleas of Allegheny County (trial court) entering judgment in favor
of the Allegheny Intermediate Unit (Intermediate Unit) on a breach of contract
action. The trial court ordered the School District to pay $3,023,067, plus interest,
to the Intermediate Unit for special education services it had provided to the School
District’s students over the course of several years. On appeal, the School District
argues that it did not have a contractual obligation to make these payments because
the Intermediate Unit did not issue invoices for these services in a timely manner.
The School District also argues that the Intermediate Unit was not entitled to invoke
nullum tempus occurrit regi (“time does not run against the king”) to defeat the
applicable statute of limitations that barred at least some of the Intermediate Unit’s
breach of contract claims. Finally, the School District argues the trial court abused
its discretion in awarding interest on the judgment. For the reasons to follow, we
affirm.
Background
The Intermediate Unit provides special education services to students
in 42 school districts and five vocational schools in Allegheny County, including
those enrolled in the School District.1 Joint Stipulation of Facts, ¶2; Reproduced
Record at 299a (R.R. __). The Intermediate Unit provides “District Based” services
in the School District’s classrooms and “Center Based” services in schools operated
by the Intermediate Unit. Joint Stipulation of Facts, ¶15; R.R. 301a. Beginning with
the 2009-2010 school year, and for each of the school years between 2010-2011 and
2014-2015, the Intermediate Unit and the School District entered into a separate
“Educational Services Agreement” (contract) with respect to these special education
services. Under each contract, the Intermediate Unit agreed to provide special
education services to the School District’s students, and the School District agreed
to pay the Intermediate Unit for the services it provided. Each yearly contract
imposed a payment schedule upon the School District. For example, for the 2011-
2012 school year, the contract provided that the School District was to remit its
payment as follows:
Sept. 15, 2011 20% of total 10/11 bill as advance payment for the
2011/2012 school year.
Nov. 15, 2011 25% of actual billing for 11/12 based on student information
in the Special Education Database. Advance (20%) payment
will be deducted from the total bill.
Feb. 15, 2012 25% of actual bill based on student information in the
Special Education Database.
March 15, 2012 25% of actual bill based on student information in the
Special Education Database.
1
The School District is comprised of the communities of North Versailles, East McKeesport,
Wilmerding and Wall, along with students from Duquesne City (grades 7-12). Trial court 1925(a)
opinion, 5/25/2018, at 3.
2
May 15, 2012 25% of actual bill based on student information in the
Special Education Database.
R.R. 536a (emphasis in original). Each successive contract contained a substantially
similar payment schedule.
Prior to the inception of the 2010-2011 school year, the School District
requested a modification to the above-stated payment schedule because of its
financial difficulties, and the Intermediate Unit agreed. Under the modification, the
Intermediate Unit agreed to invoice the School District $75,000 a month for 10
months; at the end of the school year, the Intermediate Unit would issue an invoice
that reconciled the School District’s accumulated payment to the actual cost of
services provided. The modification, memorialized in an email dated August 26,
2010, stated as follows:
We will invoice [the School District] mid September. The
invoice will be $75,000 based on the estimate (that was mailed
out prior to the new year starting) divided by 10 months.
Obviously, the final invoice (June) will be reconciled based on
the actual utilization of services….
R.R. 881a. The modification was agreed to by the parties in each successive
contract, with an increase in the monthly payment to $85,000 for the 2014-2015
school year.
In the Spring of 2015, the Intermediate Unit discovered that it had not
issued the above-described reconciliation invoice for several school years.2 On June
2, 2015, the Intermediate Unit sent the School District the reconciliation invoice for
the 2014-2015 school year. Joint Stipulation of Facts, ¶27; R.R. 303a (See Summary
2
The Intermediate Unit did send the School District a reconciliation invoice for Center Based
Services provided during the 2013-2014 school year, which the School District paid. Joint
Stipulation of Facts, ¶22; R.R. 302a. The Intermediate Unit did not send a reconciliation invoice
for the District Based Services provided during that year.
3
Spreadsheet at R.R. 503a-16a). Then, on June 16, 2015, the Intermediate Unit issued
final reconciliation invoices for each contract year. Joint Stipulation of Facts, ¶28;
R.R. 303a (See Summary Spreadsheet at R.R. 872a-75a). The School District
informed the Intermediate Unit that it would not pay any of the invoices, including
the invoice for the 2014-2015 school year.
In March 2016, the Intermediate Unit filed the instant action against the
School District for breach of contract and unjust enrichment. The Intermediate Unit
asserted that the School District breached the parties’ contract by not paying in full
for the special education services it had received for the school years 2010-2011
through 2014-2015. The Intermediate Unit contended that the School District owed
$3,300,250, plus interest, for services provided over the five school years.3
Initially, the parties filed cross-motions for partial summary judgment
on the question of whether the statute of limitations barred any part of the
Intermediate Unit’s breach of contract action. By order of September 12, 2017, the
trial court denied the School District’s motion, holding that the Intermediate Unit,
as an agency of the Commonwealth, could invoke the doctrine of nullum tempus
occurrit regi. The parties then addressed the issues of liability and damages.
The parties filed a joint stipulation of facts and motions for partial
summary judgment on the issue of liability. Following argument, the trial court
granted the Intermediate Unit’s motion, holding the School District liable for breach
of contract. The trial court denied the School District’s motion for partial summary
judgment on liability.
3
The complaint alleged that the School District owed $1,090,469 for the 2010-2011 school year;
$658,390 for the 2011-2012 school year; $871,070 for the 2012-2013 school year; $122,358 for
the 2013-2014 school year; and $557,963 for the 2014-2015 school year. Complaint, ¶¶16, 20 and
24; R.R. 77a-78a.
4
On December 13, 2017, the trial court conducted a trial on the issue of
damages. At trial, the Intermediate Unit offered evidence that upon further
reconciliation, the amount the School District owed was $3,023,067. Thereafter, the
parties submitted proposed findings of fact and conclusions of law. On February 5,
2018, the trial court entered judgment in favor of the Intermediate Unit in the amount
of $3,023,067, and interest in the amount of $194,483.98, for a total judgment of
$3,217,550.98. The trial court assessed 12% annual interest, to accrue from the date
of the order until final payment on the judgment. On March 16, 2018, the trial court
denied the School District’s motion for post-trial relief.
On appeal,4 the School District raises several assignments of error by
the trial court. First, the School District argues that the trial court erred in holding
that it breached its contract with the Intermediate Unit. Second, the School District
argues that the trial court erred in holding that the statute of limitations did not bar
the Intermediate Unit’s breach of contract claims that arose prior to March 4, 2012.
Third, the School District argues that the trial court abused its discretion by awarding
interest at the rate of 12% per annum.
Breach of Contract
The School District argues that the trial court erred in holding that it
breached its contract with the Intermediate Unit because the condition precedent to
its duty to make payment did not occur. Specifically, it argues that each contract
required the Intermediate Unit to issue a reconciliation invoice in June of each school
4
When reviewing a non-jury verdict, this Court’s standard of review determines whether
competent evidence supports the trial court’s findings or whether the trial court committed an error
of law. John Spearly Construction, Inc. v. Penns Valley Area School District, 121 A.3d 593, 601
(Pa. Cmwlth. 2015). This Court views the evidence in the light most favorable to the party that
prevailed below. Id. “An appellate court will not disturb a trial court’s finding [of fact] absent an
abuse of discretion or error of law.” Id.
5
year, and the Intermediate Unit did not satisfy this condition precedent.
Accordingly, the School District did not have a duty to pay the untimely invoices.
For a breach of contract claim, a party must show: “(1) the existence of
a contract; (2) a breach of the duty imposed by the contract; and (3) damages
resulting from the breach.” Sewer Authority of City of Scranton v. Pennsylvania
Infrastructure Investment Authority, 81 A.3d 1031, 1041-42 (Pa. Cmwlth. 2013). A
condition precedent “is an event, not certain to occur, which must occur, unless its
non-occurrence is excused, before performance under a contract becomes due.”
RESTATEMENT (SECOND) OF CONTRACTS §224 (1981). Stated otherwise, a duty to
perform does not arise unless or until the condition occurs. Acme Markets, Inc. v.
Federal Armored Express, Inc., 648 A.2d 1218, 1220 (Pa. Super. 1994). Parties do
not have to use “any particular words to create a condition precedent[.]” Id.
(emphasis in original). But, “[g]enerally, an event mentioned in a contract will not
be construed as a condition precedent unless expressly made such a condition.” West
Development Group, Ltd. v. Horizon Financial, F.A., 592 A.2d 72, 76 (Pa. Super.
1991). If a condition precedent does not occur, “the duty to perform under the
contract lays dormant and no damages are due for non-performance.” Boro
Construction, Inc. v. Ridley School District, 992 A.2d 208, 215 (Pa. Cmwlth. 2010).
Notably, conditions precedent are highly disfavored and “will be strictly construed
against the one seeking to avail himself of them.” Allentown Patriots, Inc. v. City of
Allentown, 162 A.3d 1187, 1195 (Pa. Cmwlth. 2017) (citing 17A AM. JUR. 2d,
Contracts, §452 at 440 (2016)).
Here, each contract obligated the School District to pay the
Intermediate Unit for the special education services provided to its students. Each
contract states, in relevant part, as follows:
6
The [School] District agrees to pay the [Intermediate Unit] the
sum of the estimated cost of each program or service, such sum
to be paid in installments in accordance with [the payment
schedule.]
R.R. 84a. The modification states as follows:
The invoice will be $75,000 based on the estimate (that was
mailed out prior to the new year starting) divided by 10 months.
Obviously, the final invoice (June) will be reconciled based on
the actual utilization of services….
R.R. 881a. The modification was limited to the payment schedule and did not have
any impact upon the School District’s contractual duty to pay for the special
education services it actually received. To the contrary, the modification made it
clear that there would be a final reconciliation and that payment for “actual
utilization of services” was required. The possibility that the 10 monthly payments
would exactly equal the services rendered over 12 months was unlikely in the
extreme. Simply, the language of the modification cannot be construed to state a
condition precedent that may, or may not, take place. We reject the School District’s
contention otherwise.
Alternatively, the School District argues that the trial court erred
because the Intermediate Unit cannot recover for its unilateral mistake. The School
District contends that the modification was specific as to when the Intermediate Unit
was to send the reconciliation invoice, i.e., in June of each contract year. The failure
of the Intermediate Unit to do so was a mistake, and this negligence bars the
Intermediate Unit’s breach of contract action.
The parties stipulated to the following facts:
19. On August 26, 2010 [the] Assistant Director of Finance at
the [Intermediate Unit] entered into an arrangement with [] the
Business Manager for [the School District], to modify the
7
parties’ [contract] so that [the School District] would be invoiced
in [sic] a monthly basis starting in mid-September of 2010.
Pursuant to the arrangement, the [Intermediate Unit] was
expected to invoice [the School District] $75,000 per month for
ten months with a reconciliation to be issued at the end of the
school year.
20. Per the modified payment arrangement, [the School
District] understood and agreed that at the end of the school year,
the remaining balance owed by [the School District] to the
[Intermediate Unit] for the special education services received
was to be “reconciled” and invoiced to [the School District].
Joint Stipulation of Facts, ¶¶19-20; R.R. 302a. This stipulation established that at
the end of the school year both parties “understood” that the “remaining balance”
would be “reconciled and invoiced.” Id. However, the stipulation did not identify
the parties’ “understanding” as to the date for the issuance of the reconciliation
invoice.
The modification stated that the “final invoice (June) will be reconciled
based upon the actual utilization of services.” R.R. 881a. This language established
how the final invoice would be calculated, i.e., on the basis of actual services
provided through the school year. However, the aside “(June)” does not state a
specific deadline for the Intermediate Unit to issue the reconciliation invoice. Stated
otherwise, there is no foundation to the School District’s “mistake” argument
because there was never a definitive “understanding” about the date for the issuance
of the reconciliation invoice.
We reject the School District’s contention that the modification
established a condition precedent to the School District’s obligation to pay the
Intermediate Unit for services or that there was a “mistake” by the Intermediate Unit
that barred its breach of contract action. Accordingly, we discern no error in the trial
8
court’s holding the School District liable to pay the Intermediate Unit for the special
education services it provided.
Statute of Limitations
The School District next argues that the trial court erred by holding that
the Intermediate Unit’s claims that arose prior to March 2012 were not barred by the
statute of limitations. Specifically, it contends that the four-year statute of
limitations for contract actions prevented the Intermediate Unit from asserting a
claim for payment of services provided prior to March 4, 2012. The School District
argues that the trial court erred in holding that the doctrine of nullum tempus occurrit
regi excused the Intermediate Unit from the four-year statute of limitations.
In Pennsylvania, a breach of contract action must be commenced within
four years. The Judicial Code states as follows:
General rule.--Except as provided for in subsection (b) [(an
action relating to damages in actions for identity theft)], the
following actions and proceedings must be commenced within
four years:
***
(8) An action upon a contract, obligation or liability founded
upon a writing not specified in paragraph (7) [relating to a
bond], under seal or otherwise, except an action subject to
another limitation specified in this subchapter.
42 Pa. C.S. §5525(a)(8). The statute begins to run on the date of the breach. GAI
Consultants, Inc. v. Homestead Borough, 120 A.3d 417, 423-24 (Pa. Cmwlth.
2015).5
5
The School District argues that the Intermediate Unit’s breach of contract action had to be filed
within four years of the end of the first school year, i.e., within four years of June of 2011. Instead,
the Intermediate Unit filed its action on March 4, 2016.
9
The doctrine of nullum tempus permits a government agency “to
circumvent the applicable statute of limitations.” Duquesne Light Company v.
Woodland Hills School District, 700 A.2d 1038, 1051 (Pa. Cmwlth. 1997). To
invoke nullum tempus, the government must be enforcing a right that is strictly
public and one imposed by law. Id. Where the government agency “seeks to enforce
purely contractual rights where [it] was not required to enter into the contract[,]”
nullum tempus cannot be invoked. Township of Salem v. Miller Penn Development,
LLC, 142 A.3d 912, 918 (Pa. Cmwlth. 2016). This Court has explained as follows:
An action involving a local government contract or agreement is
brought in the local government’s governmental capacity and
seeks to enforce obligations imposed by law where the contract
is one that the local government entity was required to enter into
as part of its public duties. Duquesne Light Co., 700 A.2d at
1052 (nullum tempus applied to school district construction
contract for school facilities because school district was required
by law to construct school facilities). The requirement that the
action be brought in the local government’s governmental
capacity and seek to enforce obligations imposed by law is
likewise satisfied and nullum tempus applies where the parties’
rights are governed by statute, even though the local government
was not required to enter into the contract. Delaware County [v.
First Union Corp., 929 A.2d 1258, 1261 (Pa. Cmwlth. 2007)]
The Intermediate Unit sent the School District the final invoice for the 2010-2011 school
year in June of 2015. The School District’s refusal to pay constituted the breach of contract that
triggered the statute of limitations. The stipulation does not state when the School District refused
to pay the invoices. Assuming the refusal took place in July of 2015, four years from the School
District’s breach has not yet run.
The School District argues that the Intermediate Unit breached the contract by not sending
the first reconciliation invoice in June of 2011. However, the School District did not counter-claim
against the Intermediate Unit for breach of contract.
The trial court decided the case on nullum tempus, and we review that holding on its merits.
It may be, however, that the four-year statute of limitations for the Intermediate Unit to initiate its
breach of contract action, even for the reconciliation invoice for the 2010-2011 school year, will
not run until 2019. This is because the School District’s refusal to pay took place in 2015. This
argument has not been advanced by the Intermediate Unit before this Court.
10
(nullum tempus applied to action for unclaimed bond payments
because while county had discretion to decide whether to issue
bonds, once bonds were issued the parties’ rights were controlled
by statute).
Id. (emphasis added).
With these principles in mind, we turn to the School District’s
arguments. Intermediate units were created by the Public School Code of 19496 and
are part of the public school system in Pennsylvania. Northeastern Educational
Intermediate Unit No. 19 v. Office of Auditor General, 479 A.2d 1166 n.1 (Pa.
Cmwlth. 1984). Intermediate units must provide special education services to
students in the specified school districts. To that end, they enter into contracts with
school districts. See Section 920-A(b)-(c) of the Public School Code of 1949, 24
P.S. §9-920-A(b)-(c).7
6
Sections 901-A to 924-A of the Public School Code of 1949, Act of March 10, 1949, P.L. 30, as
amended, added by the Act of May 4, 1970 P.L. 311, 24 P.S. §§9-901-A - 9-924-A. Section 1 of
the Act of May 4, 1970, P.L. 311, as amended, formerly 24 P.S. §§9-951 to 9-974, 24 P.S. §§9-
901-A to 901-924-A, created intermediate units.
7
This section states, in relevant part:
(b) Less than a majority of the school districts comprising an intermediate unit
may contract with the intermediate unit for services to be provided for the
contracting school districts by the intermediate unit, with the cost of such services
to be paid by the contracting school districts in such manner as they may agree
upon.
(c) If a school district desires to independently provide a service that is included
in the approved program of services to be offered by an intermediate unit, and the
service is to be financed solely by the school district, and if the intermediate unit
board of directors determines that the quality of such service is adequate and that
such independent action will not adversely affect the service to be offered to the
remaining districts by the intermediate unit, the intermediate unit board of directors
may relieve the school district of payment for such service.
24 P.S. §9-920-A(b)-(c).
11
The Intermediate Unit has a statutory duty to provide special
educational services to the School District’s students, and its contract with the
Intermediate Unit was necessary “to enforce obligations imposed by law[.]”
Township of Salem, 142 A.3d at 918. Stated otherwise, the Intermediate Unit’s
contract was not “voluntary” and, thus, it was entitled to invoke the doctrine of
nullum tempus in response to the School District’s assertion that the statute of
limitations barred its breach of contract action.
However, the School District argues, alternatively, that the
Intermediate Unit has waived nullum tempus because it did not raise that defense in
the pleading stage of litigation.8 In support, the School District directs this Court to
Township of Indiana v. Acquisitions & Mergers, Inc., 770 A.2d 364 (Pa. Cmwlth.
2001).
In Township of Indiana, the defendant to the township’s action argued
that the statute of limitations barred the township’s claim. The township did not
assert nullum tempus until it filed an application for reargument with this Court. This
Court recognized that, although nullum tempus is “a sword to strike down the statute
of limitations defense[,]” it is “subject to waiver when the sovereign plaintiff fails to
assert its rights.” Id. at 372. We explained as follows:
The sword of nullum tempus, however, is not like Excalibur and
capable of prevailing regardless of the hour it is treated. We are
not persuaded that the moving party’s status as a governmental
entity should exempt it from the established rules of civil and
appellate procedure. In the area of procedure, “[n]o special
dispensation from the rules of evidence is accorded to the
Commonwealth. Like private parties, the Commonwealth ‘must
meet the burden of proof, its evidence must be relevant, material,
8
“New matter[] pleading is designed to compel a plaintiff to answer the defendant’s affirmative
defenses during the pleading stage to avoid an unnecessary trial.” Chivers v. School District of
Mt. Lebanon, 297 A.2d 187, 189 (Pa. Cmwlth. 1972) (quotation omitted).
12
the best attainable, and (the evidence) must be presented in due
order under the regular rules of procedure.’”
770 A.2d at 372-73 (quoting Department of Transportation v. J.W. Bishop Company,
Inc., 439 A.2d 101, 104 (Pa. 1981)). On this record, this Court held that the township
had waived nullum tempus.
Township of Indiana is distinguishable. The Intermediate Unit raised
nullum tempus prior to trial in its pretrial statement and in its motion for partial
summary judgment. See PA. R.C.P. No. 1035.2(1) (a party may move for partial
summary judgment “whenever there is no genuine issue to any material fact as to a
necessary element of the cause of action or defense….”). Unlike the Township of
Indiana, the Intermediate Unit did not wait until the appellate stage of litigation to
invoke nullum tempus.
As noted, the School District argues that the Intermediate Unit waived
nullum tempus because it did not raise the doctrine in its answer to the School
Disrict’s new matter. An affirmative defense “raises new facts and arguments that,
if true, defeat the plaintiff’s claim, even if all the allegations contained in the
complaint are true.” R.H.S. v. Allegheny County Department of Human Services,
Office of Mental Health, 936 A.2d 1218, 1227 (Pa. Cmwlth. 2007). Pennsylvania
Rule of Civil Procedure 1030(a) provides that “all affirmative defenses” must be
pled in a responsive pleading and states as follows:
Except as provided by subdivision (b), all affirmative defenses
including but not limited to the defenses of accord and
satisfaction, arbitration and award, consent, discharge in
bankruptcy, duress, estoppel, failure of consideration, fair
comment, fraud, illegality, immunity from suit, impossibility of
performance, justification, laches, license, payment, privilege,
release, res judicata, statute of frauds, statute of limitations, truth
and waiver shall be pleaded in a responsive pleading under the
heading “New Matter.”
13
PA. R.C.P. No. 1030(a) (emphasis added). Where a party fails to raise an affirmative
defense, it is waived. PA. R.C.P. No. 1032(a).9
The School District argues that the doctrine of nullum tempus is an
affirmative defense that must be raised in a pleading to be preserved. It contends
that the Intermediate Unit had to raise nullum tempus in its answer to the School
District’s new matter. We disagree.
Rule 1030(a) does not specify that the doctrine of nullum tempus is an
affirmative defense that must be raised in a pleading. In fact, the Pennsylvania Rules
of Civil Procedure do not provide any specific direction with respect to raising
nullum tempus. On the other hand, our Supreme Court has held that under nullum
tempus, “statutes of limitations cannot be pleaded against … political
subdivisions[,]” City of Philadelphia v. Holmes Electric Protective Company of
Philadelphia, 6 A.2d 884, 887 (Pa. 1939), where the government agency has
initiated litigation to “protect public rights, revenues and property from injury and
loss.” Delaware County, 929 A.2d at 1261. Precedent holds that to employ the
doctrine of nullum tempus “merely requires that it be raised at the appropriate stage
of litigation.” Township of Indiana, 770 A.2d at 373; City of Philadelphia, 6 A.2d
at 887. The Intermediate Unit invoked nullum tempus in its pre-trial statement and
in its motion for partial summary judgment, i.e., at the “appropriate stage” of
9
It states:
A party waives all defenses and objections which are not presented either by preliminary
objection, answer or reply, except a defense which is not required to be pleaded under Rule
1030(b), the defense of failure to state a claim upon which relief can be granted, the defense
of failure to join an indispensable party, the objection of failure to state a legal defense to
a claim, the defenses of failure to exercise or exhaust a statutory remedy and an adequate
remedy at law and any other nonwaivable defense or objection.
PA. R.C.P. No. 1032(a).
14
litigation. Thus, we reject the School District’s argument that the Intermediate Unit
has waived nullum tempus by not raising it in its answer to the School District’s new
matter.
Interest Addition to Judgment
Finally, the School District argues that the trial court abused its
discretion by awarding interest at a rate of 12% per annum. The Intermediate Unit
responds that the School District agreed to this interest rate.
Generally, if a contract expressly provides for the payment of interest,
“the interest is said to become an integral part of the debt itself, and, therefore, is
recoverable as of right under the terms of the contract.” TruServ Corp. v. Morgan’s
Tool & Supply Company, Inc., 39 A.3d 253, 262 (Pa. 2012). Our Supreme Court
has explained:
[I]t is a well-established principle of contract law that, where the
language of a contract is clear and unambiguous, a trial court is
required to give effect to that language. Indeed, this Court has
cautioned that it is not the function of a court to rewrite
agreements between parties, and a court must give effect to the
clear terms to which the parties have agreed. Thus, we have no
hesitation in concluding that, where the terms of a contract
provide for the payment of interest, a court’s award of such
interest in favor of the prevailing party is not discretionary.
Id. at 261 (internal citations omitted) (a contractual obligation to pay interest
deprived trial court of discretion not to include this interest in award).
Here, the parties agreed to the payment of interest on any unpaid
balance. Specifically, the contract provides:
c. Late Payment Charge
15
A late payment charge of 1% per month on any unpaid
balance will be applied to any account that is over 60 days
past due.
R.R. 84a. The School District argues that this charge was eliminated by the
modification. We disagree. The modification related solely to the School District’s
payment schedule and did not alter the above-quoted late payment charge provision.
The School District contends that it was prejudiced because it did not
receive the Intermediate Unit’s calculations of the interest owed on the outstanding
balance prior to trial. First, the contract expressly provided for the payment of
interest and the rate of interest. Second, in its pretrial statement, the Intermediate
Unit stated that it requested interest at the rate of 1% per month on the outstanding
balance, and the amount of interest accrued exceeded $700,000. R.R. 122a. Third,
in awarding interest, the trial court decided that
interest should start to accrue on June 17, 2017, which was 60
days from when [the Intermediate Unit] delivered the final
reconciliation invoice to [the School District’s] counsel, and
more than two years from the date that the last special education
service was provided by [the Intermediate Unit].
Trial court 1925(a) opinion, 5/25/2018, at 8. In sum, the trial court’s award of
interest to the Intermediate Unit was fully consonant with the contract. The trial
court did not have the discretion to award a different rate of interest, let alone abuse
its discretion.
Conclusion
For all the above-stated reasons, we affirm the trial court’s judgment
awarding the School District $3,023,067, plus interest, in contract damages.
______________________________________
MARY HANNAH LEAVITT, President Judge
16
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Allegheny Intermediate Unit :
:
v. : No. 484 C.D. 2018
:
East Allegheny School District, :
Appellant :
ORDER
AND NOW, this 25th day of January, 2019, the order of the Court of
Common Pleas of Allegheny County dated March 16, 2018, in the above-captioned
matter is AFFIRMED.
_____________________________________
MARY HANNAH LEAVITT, President Judge