Grace Building Co., Inc. v. Richland Township Board of Supervisors, No. 1111 C.D. 2009 (Pa. Commw. Ct. 4/15/2010), 1111 C.D. 2009.

Page 1

Grace Building Co., Inc., Appellant, v. Richland Township Board of Supervisors.

No. 1111 C.D. 2009.

Commonwealth Court of Pennsylvania.

Argued: February 8, 2010.

Filed: April 15, 2010.

BEFORE: LEADBETTER, President Judge; McCULLOUGH, Judge; KELLEY, Senior Judge.

OPINION NOT REPORTED

MEMORANDUM OPINION BY PRESIDENT JUDGE LEADBETTER

Grace Building Co., Inc. (Grace Building) appeals from an order of the Court of Common Pleas of Bucks County that sustained preliminary objections of the Richland Township Board of Supervisors (Board) and dismissed Grace Building's mandamus action seeking a deemed approval of its preliminary land development plan. Grace Building argues that the allegations in its complaint are sufficient to state a cause of action for deemed approval under Section 508(3) of the Pennsylvania Municipalities Planning Code (MPC), Act of July 31, 1968, P.L. 805, as amended, 53 P.S. § 10508(3).

Grace Building is the equitable owner of parcels consisting of 24.05 acres located within the SRM Suburban Residential Medium zoning district of Richland Township (Township), Bucks County. On January 8, 2008, Grace Building filed an application for preliminary plan approval, proposing to subdivide its parcels into 185 single-family dwelling lots. The proposed development would be known as "Bungalow Park." On November 6, 2008, Grace Building commenced a mandamus action against the Board seeking a deemed approval of the preliminary plan. Grace Building alleged that the Board failed to act upon its application within the required 90-day period set forth in Section 508(3) of the MPC and Section 22-401.2 of the Quakertown Area Subdivision and Land Development Ordinance (Ordinance), adopted by the Board in 1980. To support its action, Grace Building relied on the following allegations and the exhibits attached to the complaint.

The application packet provided by the Township and completed by Grace Building included a preliminary subdivision and land development application, a preliminary plan checklist, a plan submission checklist and a standard "professional escrow agreement" (escrow agreement). The plan submission checklist included "escrow fees" and an "escrow agreement." Reproduced Record (R.R.) at 28a. Grace Building agreed to deposit initial review fees of $15,000 into a non-interest bearing escrow account to be maintained by the Township as the escrow agent. Paragraph 4 of the Standard Escrow Agreement; R.R. 36a.¹ Grace Building, however, made numerous revisions to other terms of the standard escrow agreement. R.R. at 35a-41a.

In a letter dated January 9, 2008, the Township notified Grace Building that the application was incomplete because the Township solicitor disapproved the escrow agreement as submitted. Exhibit B to the Complaint; R.R. at 43a. The Township enclosed another standard escrow agreement for Grace Building. On January 15, 2008, Grace Building submitted a newly executed escrow agreement. This time, Grace Building made no change to the standard escrow agreement but added one paragraph, Paragraph 19, which stated: "It is agreed that any fees, terms and/or conditions contained in any of the foregoing paragraphs, which are not specifically authorized by the [MPC], shall be void and unenforceable." Exhibit C to the Complaint; R.R. at 50a.

On February 14, 2008, the Township solicitor sent Grace Building a letter by certified mail, stating:

By letter dated January 17, 2008, you were informed by letter from this office containing some suggested language that would be acceptable with regard to your proposed revisions. On February 5, 2008, the Township exchanged email with you regarding the status of the Escrow Agreement. On February 9, 2008, you sent a facsimile transmission to the Township and the law office indicating that the modification suggested by the law office is not acceptable. Accordingly, your submission remains incomplete. ... [T]here does not appear to be any immediate resolution of the open issues.

Exhibit D to the Complaint; R.R. at 52a. The solicitor returned to Grace Building two checks in the amount of $6350 and $15,000, which had been submitted with the application. He also asked Grace Building to retrieve several boxes of other application materials at the Township building and faxed a copy of the letter to Grace Building's counsel.

Almost nine months later, Grace Building filed a complaint in mandamus and a motion for peremptory judgment seeking a deemed approval of the preliminary development plan. Grace Building alleged that the Ordinance does not require an applicant for preliminary plan approval to submit an escrow agreement and that it is entitled to a deemed approval of the preliminary plan because the Board failed to render a decision on the application within the mandatory 90-day period in Section 508(3) of the MPC. Section 508(3) provides in relevant part:

All applications for approval of a plat ..., whether preliminary or final, shall be acted upon by the governing body or the planning agency within such time limits as may be fixed in the subdivision and land development ordinance but the governing body or the planning agency shall render its decision and communicate it to the applicant not later than 90 days following the date of the regular meeting of the governing body or the planning agency (whichever first reviews the application) next following the date the application is filed ..., provided that should the said next regular meeting occur more than 30 days following the filing of the application ... the said 90-day period shall be measured from the 30th day following the day the application has been filed.²

....

(3) Failure of the governing body or agency to render a decision and communicate it to the applicant within the time and in the manner required herein shall be deemed an approval of the application in terms as presented unless the applicant had agreed in writing to an extension of time or change in the prescribed manner of presentation of communication of the decision, in which case, failure to meet the extended time or change in manner of presentation of communication shall have like effect. [Emphasis and footnote added.]

Grace Building alleged that the Township received the application for preliminary plan approval on January 8, 2008, as indicated on the application, that the Township planning commission thereafter held a regular meeting on January 15, 2008 and that the mandatory 90-day period in Section 508 of the MPC expired on April 15, 2008. The Board filed preliminary objections in the nature of a demurrer, arguing that the deemed approval provision does not apply because the Township rejected the application as incomplete and that Grace Building waived its right to challenge the rejection due to its failure to timely appeal the rejection.

The trial court sustained the Board's demurrer and dismissed the complaint. The court concluded that the 90-day period in Section 508 of the MPC was never triggered because the application was rejected as incomplete. The court rejected Grace Building's argument that the Township improperly concluded that the application was incomplete because the Ordinance does not explicitly require an escrow agreement. Citing Section 22-105 of the Ordinance, providing that the Ordinance "shall be held to be minimum requirements," the court concluded:

Grace Building is correct that Section 22-105 ... does not address escrow agreements. However, Section 503(1) of the MPC [53 P.S. § 10503(1)] does permit charging of review fees. Section 22-401 of [the Ordinance] requires that all applications ... be accompanied by a complete application form, all required information and appropriate fees. Requiring all applicants to execute an escrow agreement is a reasonable and legitimate mechanism designed to ensure the Township is reimbursed for the professional and administrative costs it incurs in reviewing applications and is therefore, an appropriate and permissible requirement of the application process.

Trial Court's Opinion at 5. Grace Building's appeal to this Court followed.

A demurrer tests the legal sufficiency of a complaint. Office of Attorney Gen. v. E. Brunswick Twp., 980 A.2d 720 (Pa. Cmwlth. 2009). In deciding preliminary objections in the nature of a demurrer, all well-pleaded material facts as well as all inferences reasonably deducible from those facts are accepted as true; conclusions of law, unwarranted inferences, argumentative allegations or expressions of opinion, however, are not accepted as true. Id. In order to sustain a demurrer, it must appear with certainty that the law will not permit recovery. Keith v. Dep't of Corr., 695 A.2d 938 (Pa. Cmwlth. 1997), aff'd, 554 Pa. 245, 720 A.2d 1050 (1998).

Grace Building argues that its allegations are sufficient to state a cause of action for deemed approval. Grace Building maintains that in sustaining the demurrer, the trial court failed to accept as true its allegations that "[t]he Application and Preliminary Plans were submitted in compliance with Part 4 [procedure for subdivision and land development] and Part 7 [plan requirements] of the ... Ordinance." Complaint, ¶ 8; R.R. at 6a. Grace Building asserts that the trial court disregarded those alleged facts and instead improperly made its own factual determination that Grace Building failed to submit a complete application. The Board counters that an escrow agreement was listed in the application packet as one of the items required to be submitted and that Grace Building was advised that "[f]ailure to follow the enclosed guidelines will result in the application being rejected." Exhibit A to the Complaint; R.R. at 11a. The Board argues that the 90-day period in Section 508 of the MPC was never triggered because the Township rejected the application as incomplete and that Grace Building failed to contest or appeal the rejection of the application.

The purpose of Section 508(3) of the MPC providing for...