Cornell Narberth, LLC v. Borough of Narberth, Montgomery Cnty., Pa. & Yerkes Assocs., Inc.

167 A.3d 228

CORNELL NARBERTH, LLC, Appellant

v.BOROUGH OF NARBERTH, Montgomery County, Pennsylvania and Yerkes Associates, Inc., C. O'Brien Architects, Inc. and Cheryl A. O'Brien

No. 1577 C.D. 2016.

Commonwealth Court of Pennsylvania.

Argued: May 1, 2017

Decided: July 14, 2017

Sandhya S. Mathur, Blue Bell, for appellant.

Frederick M. Brehm, King of Prussia, for appellee Yerkes Associates, Inc.

Suzanne M. McDonough, Media, for appellee Borough of Narberth.

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE MICHAEL H. WOJCIK, Judge

OPINION BY PRESIDENT JUDGE LEAVITT

Cornell Narberth, LLC (Cornell) appeals an order of the Court of Common Pleas of Montgomery County (trial court) granting summary judgment to the Borough of Narberth (Borough) and its building inspector, Yerkes Associates, Inc. (Yerkes). Cornell argues that the trial court erred by finding that its breach of contract, promissory estoppel, and negligent misrepresentation claims were barred by the governmental immunity provisions under the act commonly known as the Political Subdivision Tort Claims Act (Tort Claims Act), 42 Pa. C.S. §§ 8541 – 8542, and the related official immunity provisions.¹ Cornell also argues that the trial court erred in holding that its evidence was insufficient to survive summary judgment on its equal protection claim. For the following reasons, we affirm.

Background

Cornell, a real estate developer, applied to the Borough for building permits to construct detached single-family homes on a four-lot subdivision known as Narberth Arbors. Before submitting the permit applications, Cornell's representatives met with William Martin, the Borough manager, and Robert Loeper, a representative of Yerkes, which does building inspections for the Borough, to discuss the construction of the residences. The Borough informed Cornell that the local ordinances did not require installation of an automatic sprinkler system in a detached single-family residence.

Thereafter, Cornell submitted construction drawings to Yerkes showing that the homes would be built with pre-engineered wood roof trusses and would not have automatic sprinklers. Third Amended Complaint ¶ 13; Reproduced Record at 1286a (R.R. ___). Yerkes reviewed and approved the drawings. The Borough then issued building permits for each residence. The permits, which did not mention sprinklers, were issued "subject to the provisions of the Borough Ordinances." Id. , Exhibit A; R.R. 1305a. Cornell paid the required fees associated with the permits and began construction.

A representative from Yerkes visited the site regularly and inspected each stage of the construction. Third Amended Complaint ¶ 20; R.R. 1287a. At no time during these inspections did anyone from Yerkes inform Cornell that it was required to install automatic sprinklers. Id. , ¶ 21; R.R. 1287a. After Cornell completed the Lot 1 residence, Yerkes did a final inspection and notified the Borough to issue a certificate of occupancy. Id. , ¶ 23; R.R. 1287a.

The Borough refused to issue the certificate of occupancy because Cornell had not installed automatic sprinklers, which are required for homes constructed with pre-engineered wood roof trusses. By letter dated September 15, 2010, Martin, the Borough manager, informed Cornell that the sprinkler systems were required under Ordinance No. 843, the Fire Prevention Code (Fire Code), which provides in pertinent part:

(1) All new construction except single family detached and single family semi-detached dwellings located within the Borough will be equipped with full sprinkler systems.

a. Exception: if a single family detached or single family semi-detached dwelling is constructed with wooden truss floors or roof supports the structure must be sprinklered.

Third Amended Complaint, Exhibit B, at 1; R.R. 1311a.

Martin's letter further explained that "[a]lthough the Borough has adopted the Uniform Construction Code ("UCC"),^{[2 ]} the provisions of the UCC do not supersede ordinances in effect on July 1, 1999 with provisions which equal or exceed the specific requirements of the UCC." Id. ; R.R. 1311a. The letter acknowledged that Cornell's building permits were issued in error and stated that "[i]f the violation [of the Fire Code] is not corrected immediately, the Borough will consider all appropriate remedies available, including revocation of the previously issued building permits." Id. at 2; R.R. 1312a.

Yerkes refused to inspect the remaining residences in the subdivision until Cornell installed automatic sprinkler systems. As a result, the construction on Lots 2, 3, and 4 was halted, which "jeopardiz[ed] closings on the Lot 3 and 4 [r]esidences." Third Amended Complaint ¶ 35; R.R. 1289a. One couple "sold their home in reliance on being able to move into their completed [r]esidence and was thereafter forced to lease-back their prior residence." Id. , ¶ 39; R.R. 1290a. Similarly, the Lot 1 purchaser had no place to live as a result of the Borough's refusal to issue a certificate of occupancy for that residence. Id. , ¶ 36; R.R. 1289a. Cornell alleges that as a result of the actions of the Borough and Yerkes, it "had no other option but to install the sprinkler systems in the [r]esidences, or face breach of its agreements with the [purchasers]." Id. , ¶ 45; R.R. 1291a. Cornell alleges its damages include, but are not limited to, the costs of installing the sprinklers and relocating the purchasers of the residences to other housing units. Id. , ¶ 48–50; R.R. 1291a.

Cornell's third amended complaint³ contained five counts: (1) breach of contract against the Borough and Yerkes; (2) promissory estoppel against the Borough and Yerkes; (3) negligent misrepresentation against Yerkes; (4) violation of the equal protection clause of the U.S. Constitution under 42 U.S.C. § 1983 against the Borough and Yerkes; and (5) violation of the equal protection clause of the Pennsylvania Constitution.⁴ Yerkes then filed a joinder complaint against C. O'Brien Architects, Inc., and its principal, Cheryl O'Brien, alleging negligent misrepresentation.

The parties engaged in discovery, which included depositions of Martin, Loeper, and Frederick Hansell, the Borough's Assistant Manager. At the conclusion of discovery, the Borough and Yerkes filed motions for summary judgment, on which the trial court heard oral argument.

In support of its motion for summary judgment, the Borough argued that "despite being couched as contractual or quasi-contractual claims," the allegations in Cornell's complaint were "clearly based upon negligence" and, thus, barred by the Tort Claims Act. Borough Motion for Summary Judgment ¶ 33; R.R. 2483a–84a. The Borough also argued that the complaint did not state an equal protection claim under 42 U.S.C. § 1983 because its assertion "is unproven at the end of discovery." Id. , ¶ 35; R.R. 2484a.

Yerkes argued that it acted as the Borough's employee in its capacity as the appointed building inspector; therefore, it was immune from liability under the Tort Claims Act. In support, Yerkes cited the deposition testimony of Martin, who testified:

[Question]: From the time that Yerkes was appointed as the Narberth Borough code official prior to 2010, until the present they have always been acting in the capacity as the appointed Narberth Borough code official?

[Martin]: Yes, they have.

[Question]: And with respect to all of the services that they have provided in connection with the Cornell project that is at issue in this case, all of those services were provided in their capacity as the Narberth Borough building code official?

[Martin]: Yes, they were.

Martin Deposition at 110; R.R. 6291a.

Cornell responded that the Tort Claims Act provides no immunity for non-tort claims such as breach of contract and promissory estoppel. Cornell argued that the building permits constituted contracts between the parties and made no mention of sprinklers. By failing to issue the certificate of occupancy in accordance with the permits, Cornell argued, the Borough and Yerkes breached the contract.

As to the promissory estoppel claim, Cornell explained that the Borough and Yerkes informed Cornell at the pre-construction meeting that automatic sprinklers were not required in the planned residences and affirmed that representation through their subsequent actions, i.e. , reviewing and approving the construction drawings, issuing the building permits, inspecting the construction site, and allowing the construction to continue. Cornell argued that the promise made by the Borough and Yerkes is enforceable because Cornell detrimentally relied on it.

Cornell further argued that its negligent misrepresentation claim against Yerkes was not shielded by the Tort Claims Act. Cornell asserted that our Supreme Court has "created a cause of action to a third party 'where information is negligently supplied by one in the business of supplying information, and where it is foreseeable that the information will be used and relied upon by third persons.' " Id. at 9; R.R. 3604a.

With respect to its equal protection claim under 42 U.S.C. § 1983, Cornell pointed to its letter of December 29, 2010, that it sent to the Borough and the Fire Marshal. The letter identified a number of residences and educational institutions within the Borough that should have been constructed with fire sprinklers but were not. The letter requested an investigation of each of those properties. However, the Borough chose not to require these properties to correct the violations with the installation of automatic sprinklers. In support, Cornell cited Martin's deposition testimony:

[Question]: We have marked a document ... on Cornell Homes letterhead dated December 29, 2010, Mr. William Henderson, Jr., Narberth Fire Company President, signed by Mark McSorley ... cc'd to the Narberth Borough Council Members and Thomas Grady, Mayor of Narberth. Have you seen this letter before?

* * *

[Martin]: It was in the file, yes. I can't recall when I saw

...