U.S. Venture, Inc. v. Com. of PA, DCED

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
U.S. Venture, Inc., :
Petitioner :
:
v. :
:
Commonwealth of Pennsylvania, :
Department of Community and :
Economic Development; :
Commonwealth Financing Agency; and :
Scott D. Dunkelburger, Executive :
Director of the Commonwealth :
Financing Agency, : No. 78 C.D. 2019
Respondents : Argued: October 2, 2019
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION BY
JUDGE COVEY FILED: February 18, 2020
U.S. Venture, Inc. (Petitioner) petitions this Court for review of the
Pennsylvania Board of Claims’ (Board) December 28, 2018 order (Board’s Order)
sustaining the Commonwealth of Pennsylvania (Commonwealth), Department of
Community and Economic Development’s (Department), Commonwealth Financing
Authority’s (CFA), and CFA Executive Director Scott D. Dunkelburger’s
(Dunkelburger) (collectively, Respondents) preliminary objections to Petitioner’s
statement of claim (Claim), and dismissing the Claim for lack of subject matter
jurisdiction. Petitioner presents two issues for this Court’s review: (1) whether the
Board erred by ruling that it lacked subject matter jurisdiction over the Claim because
a compressed natural gas (CNG) fueling station construction is not the type of
construction contemplated by the Commonwealth Procurement Code (Procurement
Code);1 and (2) whether the Board erred by ruling that it lacked subject matter
jurisdiction over the Claim because its exclusive jurisdiction over contract claims is
the only exception to sovereign immunity and its public purpose is to prevent
Commonwealth agencies from reneging on contracts with impunity. After a thorough
review, this Court affirms.
By October 24, 2014 correspondence (October Correspondence), the
Department notified Petitioner that the CFA had approved Petitioner’s applications
for two grants (Grants) through “The Alternative and Clean Energy [(ACE)]
Program” (Program), which provides grants for the development and construction of
alternative energy projects in the Commonwealth pursuant to the Alternative Energy
Investment Act.2 The CFA awarded Petitioner a $643,389.00 Grant and a
$547,047.00 Grant to aid in the construction of two publicly accessible CNG fueling
stations – one to be located in Bethel Township, and the other in Falls Township.
The October Correspondence listed 10 conditions, including “comply with the
[Program] [g]uidelines; be responsible for seeking competitive bids for all work;
submit any substantial change to an approved [p]roject for consent of the [CFA];
[and] maintain full and accurate records for the project and make them available for
inspection by the [CFA] if requested.” Board Op. at 1-2, Finding of Fact (FOF) 6.
The parties executed written agreements pertaining to the Grants.
Respondents did not monitor the projects, and although the CFA’s grant documents
contained nondiscrimination policies and competitive bidding requirements, they did
not provide any construction guidelines, plan specifications or provisions permitting
Respondents to oversee the construction. It was Respondents’ expectation that
Petitioner would submit reimbursement claims upon project completion.
1
62 Pa. C.S. §§ 101–2311.
2
Act of July 9, 2008, P.L. 1873, 73 P.S. §§ 1649.101-1649.2901.
2
In early 2017, Petitioner completed construction on both CNG fueling
stations. Petitioner constructed the fueling stations on privately-owned land.
Respondents have no ownership interest in the dispensing equipment used at the
fueling stations and have no authority to participate in the CNG fueling stations’
management or maintenance. Petitioner sought payment from Respondents. By July
31, 2017 letter (July 2017 Letter), Dunkelburger refused payment on Respondents’
behalf, explaining, in relevant part:
ACE funds were specifically awarded to pay construction
costs incurred by [Petitioner]. Unfortunately, [Petitioner]
did not incur construction costs, instead electing to lease the
CNG equipment/station. Therefore, there are no eligible
costs for the [Grants] to reimburse. Grant funds cannot be
used to pay lease payments for the equipment, fund
operations, and make grant-sharing payments to the
landowner.
The CFA was unaware that [Petitioner] had decided to lease
the CNG equipment/station instead of owning it. The
funding commitment letter provided in the original
application stated that [Petitioner] would provide the
matching funds. The application stated that the [G]rant
funds would be used to purchase equipment and pay
construction costs, not to make lease payments.
In addition, the material provided by [Petitioner] does not
indicate that a competitive bidding process was utilized for
the selection of [one of the contractors] for each of the
projects as required in the [G]rant agreement.
Reproduced Record (R.R.) at 111a.
On January 23, 2018, Petitioner filed the Claim with the Board alleging
breach of contract and sought equitable relief, wherein Petitioner averred that it
justifiably relied on Respondents’ representations and promises and that Respondents
would be unjustly enriched if permitted to deny Petitioner payment. On February 15,
2018, Respondents filed preliminary objections in the nature of a demurrer alleging
3
that the Board lacked jurisdiction over Petitioner’s Claim and, thus, Respondents
were immune from suit pursuant to the doctrine of sovereign immunity. On
December 28, 2018, the Board’s Order sustained Respondents’ preliminary
objections and dismissed Petitioner’s Claim. Petitioner appealed to this Court.3
Initially,
[t]he Board was established in furtherance of a public
policy extending more than 200 years ago to allow
claimants who ordinarily would have been barred by
sovereign immunity to have a method of redress against the
Commonwealth. The [Pennsylvania] Supreme Court in
[Employers Insurance of Wausau v. Department of
Transportation, 865 A.2d 825 (Pa. 2005),] construed the
Board’s equity jurisdiction under the Procurement Code and
expounded on its legislative scheme as follows:
[The legislature] recognized that claims arising
from contracts involving the Commonwealth
could sound in both assumpsit and equity, and
expressly provided that, regardless of form,
these claims should be decided by the [Board].
It is thus readily apparent that Pennsylvania’s
legislative scheme intended to vest the [Board]
with expansive jurisdiction to decide disputes
concerning contracts involving the
Commonwealth . . . .
Wausau, . . . 865 A.2d at 832-833.
Pursuant to [Section 1928(b)(7) of the Statutory
Construction Act [of 1972 (Statutory Construction Act),] 1
Pa.C.S. § 1928(b)(7), statutory provisions that decrease the
jurisdiction of a court of record must be strictly construed.
3
In reviewing a Board decision[,] this Court [must] determine[]
whether the Board committed an error of law, whether the necessary
findings were supported by substantial evidence, or whether
constitutional rights were violated. Our standard of review of an
order sustaining preliminary objections based on an issue of law is de
novo, and our scope of review is plenary.
Lobar Assocs., Inc. v. Pa. Tpk. Comm’n, 216 A.3d 526, 532 n.7 (Pa. Cmwlth. 2019) (citation
omitted).
4
In Armstrong School District v. Armstrong Educ[ation]
Ass’n, . . . 595 A.2d 1139, 1144 ([Pa.] 1991), the Supreme
Court observed that ‘if the scope of equity’s common law
jurisdiction was to have been diminished [by a statute], the
language therein should have been . . . explicit. . . .’
Additionally, in Consumers Educ[ation] & Protective Ass’n
v. Schwartz, . . . 432 A.2d 173, 178 ([Pa.] 1981), the [C]ourt
noted a well settled principle that ‘when the Legislature
itself seeks to depart from salutary public policy principles,
it must express its intention to do so explicitly, and any
power so granted will be strictly construed.’ (Emphasis in
original.)
Dep’t of Health v. Data-Quest, Inc., 972 A.2d 74, 78-79 (Pa. Cmwlth. 2009) (citation
omitted).
Section 1724(a) of the Procurement Code, governing the Board’s
jurisdiction, provides in pertinent part:
Exclusive jurisdiction. — The [B]oard shall have exclusive
jurisdiction to arbitrate claims arising from all of the
following:
(1) A contract entered into by a
Commonwealth agency in accordance with this
part and filed with the [B]oard in accordance
with [S]ection 1712.1 [of the Procurement
Code, 62 Pa.C.S. § 1712.1] (relating to
contract controversies).
62 Pa.C.S. § 1724(a). Thus, the Board generally has jurisdiction over claims arising
from contracts entered into by a Commonwealth agency. “This Court has also
broadly construed the Board’s jurisdiction to include claims for damages on the
theories of promissory estoppel and quasi-contract.”4 Telwell, Inc. v. Pub. Sch.
4
Notwithstanding,
it has long been held in this Commonwealth that the doctrine of
unjust enrichment is inapplicable when the relationship between
parties is founded upon a written agreement or express contract,
regardless of how ‘harsh the provisions of such contracts may seem in
the light of subsequent happenings.’ Third Nat[’l] & Tr[.] Co[.] of
5
Emps.’ Ret. Sys., 88 A.3d 1079, 1086 (Pa. Cmwlth. 2014); see also Hanover Ins. Co.
v. State Workers’ Ins. Fund, 35 A.3d 849 (Pa. Cmwlth. 2012); Firetree, Ltd. v. Dep’t
of Gen. Servs., 978 A.2d 1067 (Pa. Cmwlth. 2009).
Section 102(a) of the Procurement Code provides, in relevant part, that
the Procurement Code “applies to every expenditure of funds, other than the
investment of funds, by Commonwealth agencies under any contract, irrespective of
their source[.]” 62 Pa.C.S. § 102(a). Importantly, Section 102(f) of the Procurement
Code specifies: “This part does not apply to grants. For the purpose of this part, a
grant is the furnishing of assistance by the Commonwealth or any person, whether
financial or otherwise, to any person to support a program.” 62 Pa.C.S. § 102(f)
(emphasis added). However, Section 102(f) of the Procurement Code provides an
exception to the aforementioned exclusion: “The term [‘grant’] does not include an
award whose primary purpose is to procure construction for the grantor. Any
contract resulting from such an award is not a grant but a procurement
contract.” Id. (emphasis added). Thus, if a grant’s “primary purpose is to procure
___________________________________________________________________
Scranton v. Lehigh Valley Coal Co[.], . . . 44 A.2d 571, 574 ([Pa.]
1945); see also Schott v. Westinghouse Elec[.] Corp[.], . . . 259 A.2d
443, 448 ([Pa.] 1969); Wingert [] v. T. W. Phillips Gas & Oil Co[.], . .
. 157 A.2d 92, 94 ([Pa.] 1959) (‘[The doctrine of unjust enrichment]
applies only to situations where there is no legal contract.’); Durham
Terrace, Inc. v. Hellertown Borough Auth[.], . . . 148 A.2d 899, 904
([Pa.] 1959).
Wilson Area Sch. Dist. v. Skepton, 895 A.2d 1250, 1254 (Pa. 2006) (emphasis added). Although
unjust enrichment may be invoked where a contract is unenforceable, see Wingert, in the instant
matter, Petitioner’s unjust enrichment claim arises from its performance pursuant to the award of
the Grants, and grants are explicitly excluded from the Board’s jurisdiction. See, e.g., Brimmeier v.
Pa. Tpk. Comm’n, 147 A.3d 954 (Pa. Cmwlth. 2016), aff’d, 161 A.3d 253 (Pa. 2017) (where Board
jurisdiction excluded claims arising from employment contracts, promissory estoppel claims based
on a purported employment agreement were barred by sovereign immunity); see also Dubaskas v.
Dep’t of Corr., 81 A.3d 167 (Pa. Cmwlth. 2013). Thus, Petitioner’s unjust enrichment claim is
similarly barred.
6
construction for the grantor[,]” it is considered a procurement contract, and falls
within the Board’s jurisdiction. Id. (Emphasis added).
The Procurement Code defines “construction” as “[t]he process of
building, altering, repairing, improving or demolishing any public structure or
building or other public improvements of any kind to any public real property.”
62 Pa.C.S. § 103 (emphasis added). Consulting both the dictionary and case law, the
Board in the instant case determined that Petitioner’s work under the Grants was not
construction because the subject structures were not public, i.e., “publicly owned or
controlled[.]” Board Op. at 23. Therefore, the Board dismissed Petitioner’s Claim
because the Grants were “not . . . award[s] whose primary purpose [was] to procure
construction for the grantor.” 62 Pa.C.S. § 102(f) (emphasis added).
Petitioner argues that the Board erred when it ruled that it lacked
jurisdiction over Petitioner’s Claim because the CNG fueling station construction was
not the type of construction contemplated by the Procurement Code’s definition.
According to Petitioner, Section 103 of the Procurement Code is ambiguous because
the term “public structure” is undefined in the Procurement Code and can mean both
a publicly-owned structure and/or a “publicly accessible” one. Petitioner Br. at 16.
With respect to statutory interpretation:
Pursuant to the Statutory Construction Act, the object of all
statutory construction is to ascertain and effectuate the
General Assembly’s intention. 1 Pa.C.S. § 1921(a). When
the words of a statute are clear and free from ambiguity, the
letter of the statute is not to be disregarded under the pretext
of pursuing its spirit. 1 Pa.C.S. § 1921(b).
Commonwealth v. $34,440.00 U.S. Currency, 174 A.3d 1031, 1038 (Pa. 2017). “The
polestar indication of the legislature’s intent is the plain language of the statute.
Accordingly, when interpreting statutory language, all ‘[w]ords and phrases shall be
construed according to rules of grammar and according to their common and
7
approved usage.’ 1 Pa.C.S. § 1903(a).” Sugarhouse HSP Gaming, L.P. v. Pa.
Gaming Control Bd., 162 A.3d 353, 375 (Pa. 2017) (citation omitted). “[Courts]
generally use dictionaries as source material for determining the common and
approved usage of a term.” Gmerek v. State Ethics Comm’n, 751 A.2d 1241, 1260
n.26 (Pa. Cmwlth. 2000), aff’d, 807 A.2d 812 (Pa. 2002).
The Pennsylvania Supreme Court “ha[s] recognized that a statute is
ambiguous where different interpretations of statutory language are plausible.”
Nardone v. Dep’t of Transp., Bureau of Driver Licensing, 130 A.3d 738, 743 (Pa.
2015) (emphasis added). The Supreme Court has further explained:
Whether a statute is ambiguous cannot be determined in a
vacuum.
A statute is ambiguous when there are at least
two reasonable interpretations of the text. In
construing and giving effect to the text, ‘we
should not interpret statutory words in
isolation, but must read them with reference to
the context in which they appear.’ Roethlein v.
Portnoff Law Assoc[s]., . . . 81 A.3d 816, 822
(Pa. 2013) . . . . The United States Supreme
Court also takes a contextual approach in
assessing statutes and in determining predicate
ambiguity. See generally King v. Burwell, __
U.S. __, 135 S.[ ]Ct. 2480, 2489, 192 L. Ed. 2d
483 ([] 2015) (‘If the statutory language is
plain, we must enforce it according to its
terms. But oftentimes the meaning - or
ambiguity - of certain words or phrases may
only become evident when placed in context.
So when deciding whether the language is
plain, we must read the words in their context
and with a view to their place in the overall
statutory scheme.’ (internal quotation marks
and citations omitted))[.]
A.S. v. Pa. State Police, . . . 143 A.3d 896, 905-906 ([Pa.]
2016) (some citations omitted, others modified).
8
In re: Tr. Under Deed of Kulig, 175 A.3d 222, 231-32 (Pa. 2017) (citations omitted).
“It is only when the plain language of a statute is ambiguous that courts may resort to
other tools of statutory construction in order to ascertain the General Assembly’s
intent.” Barnard v. Travelers Home & Marine Ins. Co., 216 A.3d 1045, 1051 (Pa.
2019); see also Nardone.
In support of its position that the Board erroneously interpreted the term
“construction” to exclude publicly accessible structures on privately owned land and
its argument that the term is ambiguous, Petitioner urges this Court to use the
dictionary definition of the term “public,” which means, inter alia, “[a] place open or
visible to the public.” Black’s Law Dictionary 1422 (10th ed. 2014).5 Petitioner
contends that Pennsylvania courts have routinely applied this interpretation and cites
to the following three cases in support thereof: Commonwealth v. Miles, 681 A.2d
1295 (Pa. 1996); Limley v. Zoning Hearing Board of Port Vue Borough, 625 A.2d 54
(Pa. 1993); and Carney v. Penn Oil Co., 140 A. 133 (Pa. 1928).
However, in Miles, the Pennsylvania Supreme Court affirmed a guilty
verdict and death sentence for a murder committed at a location that the Court simply
referenced as a “public shopping center.” Id. at 1305. The Miles Court made no
further reference in the opinion to a “public shopping center” and did not engage in
any analysis relevant to the instant matter.
In Limley, the Pennsylvania Supreme Court reversed this Court’s order
affirming a trial court decision that upheld a zoning hearing board (ZHB) decision
revoking an occupancy permit issued to appellant to open a public restaurant and bar
5
Notably, Black’s Law Dictionary also defines “public building” as “[a] building that is
accessible to the public; esp[ecially] one owned by the government.” Id. at 1423. Further, it
defines “public place” as “[a]ny location that the local, state, or national government maintains for
the use of the public, such as a highway, park, or public building.” Id. at 1426. Finally, it defines
“public property” as “[s]tate- or community-owned property not restricted to any one individual’s
use or possession.” Id. at 1412.
9
in a building that formerly housed a private club. Although the club’s operation was
a nonconforming use, the ZHB considered the premises’ proposed use as a public
restaurant and bar as a new, prohibited use rather than a continuing use. The Limley
Court held:
[T]he nature of a nonconforming use must be determined
from the actual use to which the property is being put rather
than from the identity of the users. Labeling the users as
members and guests of a private club or as members of the
general public is not determinative of the actual use of the
premises.
In short, although the proposed public use of the property
may not be identical in every respect to its use as a private
club, the public use is at least a very similar one.
Limley, 625 A.2d at 57. In Limley, the “public” reference was necessary to
distinguish between the operation of a private club, and that of a privately owned
restaurant serving food and drink to the public. Thus, although Limley demonstrates
that the word “public” can be used to modify the word “restaurant,” that case is not
instructive to inform this Court regarding the legislative intent behind Section 103 of
the Procurement Code.
Finally, Carney involved an appeal from a trial court’s order enjoining
as a nuisance the operation of a “public service gasoline and filling station” which the
Court described as “a plant or service station for storage of gasoline and oils for sale
to the public[.]” Carney, 140 A. at 134. The Carney Court affirmed the trial court’s
holding because evidence supported that the sale of gasoline to the public in the
residential neighborhood disturbed the neighborhood’s peace and quiet and
constituted a public nuisance. Like Limley, Carney is not instructive regarding the
General Assembly’s intent in drafting Section 103 of the Procurement Code. Rather,
Carney merely reflects that a “public service gasoline and filling station” that served
the public was referenced using the word “public.” Carney, 140 A. at 134.
10
Nonetheless, the aforementioned cases support Petitioner’s contention that its
“interpretation[] of statutory language [is] plausible.” Nardone, 130 A.3d at 743.
Accordingly, this Court concludes that the phrase “public structure or building” in
Section 103 of the Procurement Code is ambiguous.
When, as here, the plain language of a statute is ambiguous, the
Statutory Construction Act instructs:
[T]he intention of the General Assembly may be ascertained
by considering, among other matters:
(1) The occasion and necessity for the statute.
(2) The circumstances under which it was enacted.
(3) The mischief to be remedied.
(4) The object to be attained.
(5) The former law, if any, including other statutes upon
the same or similar subjects.
(6) The consequences of a particular interpretation.
(7) The contemporaneous legislative history.
(8) Legislative and administrative interpretations of such
statute.
1 Pa.C.S. § 1921(c) (emphasis added). Further,
[i]n ascertaining the intention of the General Assembly in
the enactment of a statute[,] the following presumptions,
among others, may be used:
(1) That the General Assembly does not intend a result that
is absurd, impossible of execution or unreasonable.
(2) That the General Assembly intends the entire statute to
be effective and certain.
(3) That the General Assembly does not intend to violate
the Constitution of the United States or of this
Commonwealth.
11
(4) That when a court of last resort has construed the
language used in a statute, the General Assembly in
subsequent statutes on the same subject matter intends
the same construction to be placed upon such language.
(5) That the General Assembly intends to favor the public
interest as against any private interest.
1 Pa.C.S. § 1922 (emphasis added).
Respondents assert that the Board properly concluded it lacked
jurisdiction because, similar to public structure, the term “‘public building’ has been
consistently defined in the construction procurement context for decades[]” to mean
government-owned. Respondents Br. at 12. In support, Respondents cite Tragesser
v. Cooper, 169 A. 376 (Pa. 1933), where the Pennsylvania Supreme Court considered
the phrase “any public building” in the context of Section 2511 of the General
Borough Act of May 4, 1927, P.L. 519, 634 (General Borough Act). Section 2511 of
the General Borough Act provided:
In the preparation of specifications for the erection or
alteration of any public building, when the entire cost of
said work shall exceed $1,000[.00], it shall be the duty of
the architect, engineer, or person preparing such
specifications, to prepare separate specifications for the
plumbing, heating, ventilating, and electrical work; and the
borough shall receive separate bids upon each of the said
branches of work and award the contract for the same to the
lowest responsible bidder.
Tragesser, 169 A. at 377 (emphasis added) (quoting Section 2511 of the General
Borough Act). The Tragesser Court held that “any public building” meant “any
building owned or to be owned by the borough and used or to be used for public
purposes.” Tragesser, 169 A. at 378.
Noting the similarity between the language in Section 2511 of the
General Borough Act, the almost identical statute commonly referred to as the
12
Separations Act,6 and other similar statutes addressing the expenditure of public
funds for construction projects,7 Respondents contend that the courts’ interpretation
6
Act of May 1, 1913, P.L. 155, as amended, 71 P.S. § 1618 (also classified as 53 P.S. §
1003).
In May of 1913, the General Assembly enacted a statute, commonly
referred to as the Separations Act, which governs the letting of certain
contracts for the erection, construction, and alteration of any public
building. Under the Separations Act, when the total cost of the
project exceeds $4,000[.00], those who secure the plumbing, heating,
ventilating, and electrical work are duty-bound to prepare separate
specifications, receive separate bids, and award separate contracts to
the lowest responsible bidder for each of these branches.
Pa. Associated Builders & Contractors, Inc. v. Dep’t of Gen. Servs., 932 A.2d 1271, 1273 (Pa.
2007) (citation omitted). “[N]othing in [the Procurement Code] repeals or modifies or supplants the
Separations Act, except as explicitly stated in one of the [Procurement] Code’s provisions[.]” Id. at
1274.
7
With respect to the Separations Act:
The legislature clearly intended to keep the
expenditure of public funds a process open and
clear of any possible manipulations. To remove that
process outside the hands of the appointed public
officials charged with the duty of expending such
funds, would be to infringe the rights of the public. . . .
[B]y implementing a procedure whereby the general
contractor decides which subcontractor is to receive
the work, denies the public their right to be assured
that the work is awarded free of personal interest, bias,
and prejudice. Furthermore, [t]he Separation[s] Act
was intended to protect the materialmen who . . .
would become subject to the whim of a dishonest or
incompetent general contractor; not only in the
procedures the general contractor adopted for the
award of work, but also for payment of work done.
Regardless of whatever bond would be supplied by a
general contractor under the proposed procedure,
materialmen and subcontractors need the protection
guaranteed by the involvement of responsible public
officials.
Mech. Contractors Ass’n of E. Pa., Inc. v. Se. Pa. Transp. Auth., 654 A.2d 119, 121-22 (Pa.
Cmwlth. 1995) (quoting Metz v. Hous. Auth. of the City of Pittsburgh, (C.C.P. Allegheny Cty., No.
13
of the term “public building” in those statutes should guide this Court to the
conclusion that the “public structure or building” referenced in Section 103 of the
Procurement Code means only a structure or building owned by the government.
Mech. Contractors Ass’n of Nw. Pa. v. Senior Citizen Health Care Council of Erie
Cty., Pa., Inc., 674 A.2d 752, 755 (Pa. Cmwlth. 1996).
In Mechanical Contractors, the Senior Citizen Health Care Council of
Erie County, Pennsylvania, Inc. (Council), a private, nonprofit corporation, sought
review of a trial court decision ordering the Council to comply with former Section
1909 of the Third Class City Code8 (Third Class City Separations Act), which
___________________________________________________________________
G.D. 88-01957, filed April 7, 1988), slip op. at 6, aff’d, 550 A.2d 599 (Pa. Cmwlth. 1988))
(emphasis added).
Similarly, regarding the Procurement Code, this Court has explained:
Article 3, Section 22 of the Pennsylvania Constitution requires that
the General Assembly shall maintain by law a system of competitive
bidding under which all purchases of materials, printing, supplies or
other personal property used by the government of this
Commonwealth shall so far as practicable be made. ‘[T]he
requirements for competitive bidding . . . , do not exist solely to
secure work or supplies at the lowest possible price, but also have the
‘purpose of inviting competition, to guard against favoritism,
improvidence, extravagance, fraud and corruption in the awarding of
municipal contracts . . . and are enacted . . . not for the benefits or
enrichment of bidders . . .’ Yohe v. [City of] Lower Burrell, . . . 208
A.2d 847, 850 ([Pa.] 1965), adopting 10 McQuillan, Municipal
Corporations § 29.29 (3d ed. 1950). The obvious intent of the
applicable statute is thus also to ‘close, as far as possible, every
avenue to favoritism and fraud in its varied forms.’ Louchheim v.
[City of] Phila[.], . . . 66 A. 1121 ([Pa.] 1907), quoting Mazet v. City
of Pittsburgh, . . . 20 A. 693, [697] ([Pa.] 1890).’ Conduit [&]
Found[.] Corp. v. City of Phila[.], . . . 401 A.2d 376, 379 ([Pa.
Cmwlth.] 1979).
Premier Comp Sols., LLC v. Dep’t of Gen. Servs., 949 A.2d 381, 382 n.1 (Pa. Cmwlth. 2008)
(emphasis added).
8
Act of June 23, 1931, P.L. 932, as amended, 53 P.S. § 36909. The nearly identical statute
at issue in Mechanical Contractors pertained to third class cities and was also commonly referenced
as the Separations Act. For clarity, the Court shall refer thereto as the Third Class City Separations
14
required separate specifications for projects altering public buildings. The Council
intended to pay for the project using both borrowed funds and a federal community
development block grant (Federal Grant). The City of Erie (City) was the Federal
Grant recipient and the Council was the sub-recipient. The trial court concluded that
the subject building was a “public building” under the Third Class City Separations
Act “because the building would be open to the public for public benefit and be paid
for with public funds.” Mech. Contractors, 674 A.2d at 754. On review, this Court
explained that “[w]hen applying the [Third Class City] Separations Act, the initial
inquiry is whether the erection, construction, or alteration is being done by, or on
behalf of, the third class city . . . . The second requirement . . . is that the construction
or alteration is to a public building.” Id.
With respect to the first requirement, this Court recognized that the
“City’s involvement in Council’s renovations was limited to its role as administrator
of the . . . grant . . . on behalf of the federal government[.]” Id. at 755. Thus, the
Court held that the Council’s use of the grant money did not change its status to a
government entity. Further, regarding the second requirement, this Court explained
that “a ‘public building’ for the purposes of the [Third Class City] Separations
Act is one owned or to be owned and used by a government entity (or its alter
ego) for a government-authorized public purpose.” Id. (emphasis added) (citing In
re: Pub. Parking Auth. of Pittsburgh, 76 A.2d 620 (Pa. 1950)9); see also Smiley v.
Lininger, 387 A.2d 1318 (Pa. Cmwlth. 1978).
___________________________________________________________________
Act. That statute was repealed by the Act of November 24, 2015, P.L. 242, and reenacted at 11
Pa.C.S. § 11909.
9
In Public Parking Authority, the Pittsburgh Public Parking Authority (Authority) requested
the trial court to declare that the Separations Act was inapplicable to the Authority arguing that the
Authority was a Commonwealth agency and statutes enacted by the General Assembly are not
applicable to the sovereign. On appeal, the Pennsylvania Supreme Court held that the Separations
Act applied to the Authority. The Court, inter alia, rejected the Authority’s contention that the
building’s construction would not be a public building since they would be financed by private
funds, stating:
15
Given the similarity of subject matter and statutory purpose, this Court
agrees with Respondents that the proper interpretation of the term public structure as
used in Section 103 of the Procurement Code should be consistent with Pennsylvania
courts’ interpretation of the term “public building” referenced in the aforementioned
Separations Act and related statutes. Therefore, this Court concludes that “public
building” and “public structure” refer to buildings and structures “owned or to be
owned and used by a government entity (or its alter ego) for a government-authorized
public purpose.” Mech. Contractors, 674 A.2d at 755. Because the CNG fueling
stations are not “owned or to be owned and used by a government entity (or its alter
ego) for a government-authorized public purpose[,]” id. at 755, this Court holds that
they are not public structures under the Procurement Code. Because the CNG fueling
stations are not public structures and, therefore, do not fall within the Procurement
Code’s definition of construction, the Grants do not constitute “an award whose
primary purpose is to procure construction for the grantor” under Section 102(f) of
___________________________________________________________________
[W]here, as here, the contemplated use of property is
in aid of, and ancillary to, the exercise of the police
power, the public nature of such use is conclusively
determined, and therefore the [s]tate may, where the
use of the highways is hampered by a local lack of
parking facilities, authorize the municipal acquisition
and operation of publicly owned and operated parking
facilities reasonably calculated to alleviate that
condition.
[McSorley v. Fitzgerald, 59 A.2d 142, 146 (Pa. 1948).]
This Court said in Tragesser . . . , 169 A. [at 378], that the words ‘any
public building’ ‘. . . must be construed, quoad the statute, to refer, as
their words in fact state, to ‘any public building,’ that is, any
building owned or to be owned by the borough and used or to be
used for public purposes.’
Pub. Parking Auth., 76 A.2d at 624 (emphasis added).
16
the Procurement Code, and sovereign immunity bars Petitioner’s action. 62 Pa.C.S. §
102(f).
This Court is cognizant that its decision leaves Petitioner without a
remedy. Nonetheless, as this Court acknowledged in Telwell:
[W]e agree with our Supreme Court’s statement that
some immunity applications may be distasteful
to those who may discern government
wrongdoing, or at least unremediated collateral
injury to private concerns resulting from
governmental changes. In light of the
constitutional basis for the General Assembly’s
allocation of immunity, however, the area
implicates the separation of powers among the
branches of government also crafted by the
framers. Thus, in the absence of constitutional
infirmity, courts are not free to circumvent the
Legislature’s statutory immunity directives
pertaining to the sovereign.
[Sci. Games Int’l, Inc. v. Dep’t of Revenue, 66 A.3d 740,]
755 [(Pa. 2013)] (footnote omitted).
Telwell, 88 A.3d at 1089.
For all of the above reasons, the Board’s Order is affirmed.
___________________________
ANNE E. COVEY, Judge
17
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
U.S. Venture, Inc., :
Petitioner :
:
v. :
:
Commonwealth of Pennsylvania, :
Department of Community and :
Economic Development; :
Commonwealth Financing Agency; and :
Scott D. Dunkelburger, Executive :
Director of the Commonwealth :
Financing Agency, : No. 78 C.D. 2019
Respondents :
ORDER
AND NOW, this 18th day of February, 2020, the Pennsylvania Board of
Claims’ December 28, 2018 order is affirmed.
___________________________
ANNE E. COVEY, Judge