County of Northumberland v. Twp. of Coal

Citation: Not availableDocket: 982 C.D. 2021

Court: Commonwealth Court of Pennsylvania; October 19, 2022; Pennsylvania; State Appellate Court

Original Court Document: View Document

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The Township of Coal appeals a Northumberland County Common Pleas Court order requiring it to refund $267,320.98 to the County, following the County's Summary Judgment Motion. The appeal presents two key issues: 1) whether the County properly submitted a verified claim to the Township as required by the Refund Act prior to filing its assumpsit action, and 2) whether the trial court correctly determined that the Township's Permit Fee Ordinance was unreasonable. 

The context involves the County's building applications submitted to the Township on August 9, 2017, for converting a juvenile detention facility into a County prison after a fire. The Township issued an invoice on August 11, 2017, demanding $161,724.00 for state inspections and an additional $220,801.00 for a Coal Township Permit based on Township Ordinance 408. The County paid the initial amount on August 18, 2017, but later contested the legitimacy of both fees, leading to a payment made under protest on September 12, 2017, which included a request for proof of incurred costs for both fees.

Ordinance 408 stipulated that building fees should be 1% of the total construction estimate, with no maximum fee, resulting in the $220,801.00 fee being 1% of the estimated $22,080,100.00 project cost. Citing several Pennsylvania Commonwealth Court cases, the document emphasizes that municipalities cannot impose fees for revenue generation and must ensure that fees reflect actual costs incurred. Excess fees are considered unauthorized taxes, allowing the County to recover such amounts with interest. The court ultimately affirmed the trial court's decision.

Comments made by a member of the Township Board of Commissioners suggest that the fees charged by the Township are not reflective of its actual costs. The County has requested documentation regarding these fees and warned that if not received by September 20, 2017, it would seek reimbursement for fees exceeding actual costs. On January 15, 2018, the County filed a lawsuit for a declaratory judgment, claiming the Township's building fees were unreasonable, unconstitutional, and sought a refund of excess fees plus interest. The Township responded with preliminary objections, arguing the County failed to submit a required written claim before initiating the lawsuit. The trial court overruled these objections, stating the County met the claim requirement. 

Subsequent legal actions included the Township’s answer and counterclaim, a motion for summary judgment asserting that the County had not filed a written claim, and the County's response. The trial court denied the Township's motion on December 17, 2018. In 2021, the County filed a motion claiming no material facts were in dispute regarding its right to a refund. The trial court granted this motion on August 23, 2021, ordering the Township to refund $267,320.98 plus interest and costs, stating building permit fees must be commensurate with the costs of administering the permit process. Evidence showed that the Township’s expenses for inspections were significantly lower than charged fees. The Township argued the fees covered general administrative costs but failed to provide supporting documentation. The trial court acknowledged typical office expenses and adjusted the refund by $2,000. The Township subsequently appealed the ruling on September 1, 2021.

The Township argues that the County did not meet the Refund Act's requirement to submit a "written and verified claim" prior to initiating a lawsuit. The Township contends that the trial court incorrectly determined that the September 12, 2017 Letter fulfilled these requirements, as it did not explicitly request a refund and lacked verification. Citing Stranahan v. County of Mercer, the Township emphasizes a strict interpretation of the Refund Act's procedures, asserting that a refund claim must precede any legal action for recovery.

The Refund Act specifies that individuals or corporations must file a written and verified claim for refunds within three years of payment to the political subdivision. Section 2 allows for a lawsuit if authorities fail to refund amounts not legally owed. The case of FP Willow Ridge Associates, L.P. v. Allen Township illustrates that a complaint alone does not constitute a "written and verified claim" under the Refund Act, as demonstrated when Willow Ridge sought a refund without filing the required claim within the stipulated time. This case highlights that the Refund Act serves as a notification statute rather than a statute of limitations, meaning that a failure to provide timely notice does not bar a claim unless the municipality can show prejudice. Despite Willow Ridge's dispute over fees being known to the township, it did not file the required claim until after the three-year period had lapsed.

Willow Ridge's failure to submit a written and verified claim for a refund within the three-year notification period does not bar its Refund Act claim. The trial court dismissed the Township's arguments regarding the County's noncompliance with Refund Act procedures, noting that the County had paid the Township's permit fee under protest on September 12, 2017, while contesting the legality of the fees and demanding repayment for excess amounts charged. The Township's claims of surprise or prejudice are unfounded since it was aware of the County’s position on the fee reduction shortly after the initial payment. The Township contends that the trial court misinterpreted FP Willow Ridge by suggesting that the awareness of a claim could substitute for the requirement of a written and verified claim. However, the court emphasized that the purpose of the written and verified claim is to notify municipalities of potential claims against them. The Pennsylvania Superior Court has indicated that barring an action for failure to comply with notice statutes requires considering any prejudice to the defendant. Even if the County’s September 12, 2017 Letter was deemed non-compliant due to lack of verification, the Township still had knowledge of the claim, making it difficult for the Township to prove prejudice. The trial court referenced a precedent where lack of verification did not prevent recovery, supporting the conclusion that the County is not barred from filing a written and verified claim and pursuing an assumpsit action. The September 12, 2017 Letter clearly indicated the County's belief that the fees were unlawful and threatened legal action for reimbursement, thus notifying the Township of a potential claim.

The trial court upheld the plaintiff's right to recover in an assumpsit action despite the absence of an oath or affidavit attesting to the accuracy of the claim, stating that such a technical error did not prejudice the District. The appellate court affirmed this decision, agreeing that the County's failure to affirm the truth of its claims in a prior letter did not hinder the Township or the objectives of the Refund Act, especially as the Township was aware of the County's claims. 

The Township argued that the County failed to prove the unreasonableness of fees and anticipated enforcement expenses. It was noted that ordinances are presumed valid, placing a heavy burden on challengers to prove otherwise. The court referenced a Pennsylvania Supreme Court ruling defining a license fee as a charge for granting a privilege, which should reflect the city's expenses related to granting and supervising licenses. The burden is on the party contesting the fee to show its unreasonableness, with doubts resolved in favor of the municipality's discretion.

The Township invoiced the County $161,724.00 for permit fees associated with the Northumberland County Prison Project, which included state inspections and plan reviews. However, evidence showed that the inspections conducted by B.I.U. only cost the Township $113,204.02, indicating an overcharge of $48,519.98 to the County. Additionally, the Township charged a $220,801.00 Coal Township Permit fee, which represented 1% of the project cost, despite no formal inspection process beyond those for state inspections and reviews.

License fees serve to cover costs associated with registration and inspections, as established in Mastrangelo. B.I.U. charged the Township $113,204.02, while the Township billed the County $161,724.00 for State Inspections and Plan Reviews. Although the Township argued that part of the $48,519.98 difference justified administrative costs, no evidence supported this claim beyond general assertions. The trial court noted that the Township's administrative costs, including office maintenance and staff time, were reasonably allocated. The County contended that B.I.U.'s supposed 30% discount was actually a method to offset the Township's administrative expenses, and the Township's cost allocation methodology had been in place for about 15 years. The County asserted that it lacked undisputed facts to challenge the legality of the Township's fee structure, and it did not establish the total costs related to prison construction administration. The County had requested proof of incurred costs but the Township failed to provide relevant documentation. The burden lies with the challenger to demonstrate that a license fee exceeds administrative costs. The County filed a complaint seeking a declaratory judgment that the Township's fees were unreasonable and unconstitutional, along with an assumpsit count for a refund of overpayments. The trial court granted the County's motion for summary judgment, ordering a refund of $267,320.98, concluding that the County had met its burden based on evidence of inflated fees and lack of formal inspection processes. The order of the Northumberland County Common Pleas Court was affirmed.