HARRISBURG – On Thursday, the Commonwealth Court of Pennsylvania overturned a prior decision of the Chester County Court of Common Pleas, which first granted $1.7 million to the Borough of West Chester plus interest, in a breach of contract action’s counter-claim against Wyeth Pharmaceuticals.
Judges Bernard L. McGinley, Mary Hannah Leavitt and Rochelle S. Friedman decided this case, with Leavitt writing the Court’s opinion to reverse the verdict of the trial court and remand the construction contract litigation.
This case concerns a contract between Wyeth and the Borough of West Chester, relating to the reconstruction of the Goose Creek Wastewater Treatment Plant.
In 1984, the Borough executed an agreement between Wyeth and two other industrial dischargers to share in the fixed costs of the upgrade to the Goose Creek Plant. Under the contract, Wyeth promised to contribute both to the capital costs of upgrading the Goose Creek Plant and to its operational and maintenance expenses.
In 2004, Wyeth ceased all operations at its West Chester pharmaceutical facility and by February 2005 had completely decommissioned the site. In 2006, Wyeth razed all structures at its West Chester facility, abandoned its sewer connection and has not used the property since.
Although Wyeth has not used the Goose Creek Plant since 2005, the Borough’s invoices to Wyeth for the contract’s fixed costs portion in the six figures steadily increased, and Wyeth paid these invoices through 2011. On Dec. 8, 2011, Wyeth informed the Borough it would stop paying these costs and terminate the agreement – and did not pay the Borough’s invoices for 2012 and 2013.
On April 11, 2012, Wyeth filed a lawsuit against the Borough of West Chester. It sought a declaratory judgment that the contract terminated in 2006 when it severed the sewage connection or alternatively, 2011, when it formally notified the Borough of the termination. The complaint also sought a refund of all fixed costs Wyeth paid since 2006.
The Borough counter-claimed, seeking a declaratory judgment that the agreement remained in effect, that its charges for fixed costs were properly calculated and that Wyeth was liable for the unpaid 2012 and 2013 invoices. The Borough sought monthly interest of 1.5 percent on the unpaid invoices under authority of its local sewer ordinance.
On July 14, 2014, the trial court found against Wyeth on all claims, and in the Borough’s favor on its counter-claim for damages. The trial court awarded the Borough in excess of $1.7 million in damages plus interest.
Wyeth immediately appealed, seeking a reversal of the trial court’s order and entry of judgment in Wyeth’s favor, and raised three issues.
First, Wyeth contended that the trial court erred because the Background Clause of the Agreement supports a termination in 2006, when Wyeth abandoned its sewer connection to the Goose Creek Plant. The Commonwealth Court disagreed on this point.
“We conclude that the agreement had a reasonable, not infinite, duration. Wyeth’s notice to the Borough effected a termination of the agreement on December 31, 2011,” Leavitt wrote.
Second, Wyeth believed the trial court erred because the Borough breached the Agreement, and was unjustly enriched when it collected hundreds of thousands of dollars in charges from Wyeth that were not authorized by the agreement or required to operate and maintain the Goose Creek Plant. On this point, the Commonwealth Court decided to remand.
“The trial court erred in its disposition of Wyeth’s challenge to the fixed cost invoices sent after 2006," Leavitt wrote.
"Accordingly, we will remand the matter to the trial court for specific findings of fact and conclusions of law on Wyeth’s allegations that part of the Borough’s fixed cost invoices sent to Wyeth were extra-contractual because they exceeded what was required to operate the Goose Creek Plant."
The Commonwealth Court Of Pennsylvania case 2116 C.D. 2014
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com