Com., Dept. of Transp. v. E-Z Parks, Inc., E-Z

• Decision Date: 04 February 1993
• Docket Number: E-Z
• Citation: 153 Pa.Cmwlth. 258,620 A.2d 712
• Parties: COMMONWEALTH of Pennsylvania, DEPARTMENT OF TRANSPORTATION, Petitioner, v.PARKS, INC., Respondent.PARKS, INC., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 712

620 A.2d 712

153 Pa.Cmwlth. 258

COMMONWEALTH of Pennsylvania, DEPARTMENT OF TRANSPORTATION, Petitioner, v. E-Z PARKS, INC., Respondent.

E-Z PARKS, INC., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent.

Commonwealth Court of Pennsylvania.

Argued Nov. 20, 1992.

Decided Feb. 4, 1993.

[153 Pa.Cmwlth. 261] William J. Cressler, Asst. Chief Counsel, for petitioner/respondent, Dept. of Transp.

Bruce L. Thall, for respondent/petitioner, E-Z Parks, Inc.

Before DOYLE and SMITH, JJ., and NARICK, Senior Judge.

NARICK, Senior Judge.

The question before this Court is whether the Board of Claims erred as a matter of law in its interpretation of a contract between E-Z Parks, Inc., and the Department of Transportation (DOT). We hold that the Board of Claims so erred.

The prolonged history of this case began in 1972, when DOT condemned eighty-seven tracts of land located along Vine Street in Philadelphia for the purpose of constructing a limited access highway (Expressway). The Expressway project was delayed throughout the 1970s due to lack of funding and the need to comply with the National Environmental Policy Act of 1969. ¹ The buildings located on the right-of-way acquired were demolished, including the buildings located on Lot 7, the subject property of this litigation. DOT offered the right-of-ways for lease as surface parking lots to private parties because of the project's delay. E-Z Park leased nine separate properties from DOT, including Lot 7, beginning in 1973 pursuant to a written lease, renewable on a month-to-month basis. ²

In the spring of 1981, the Pennsylvania Auditor General's office issued a report that found the surface parking leases along Vine Street undervalued. In response, DOT implemented a competitive bidding process for the leases beginning in June, 1981. All surface parking operators, including E-Z Parks were notified that their leases would be terminated, if necessary, to grant a new lease to the highest bidder. E-Z Parks bid on Lot 7, as did the Philadelphia Parking Authority (PPA). The high bidder was J. Faunce Corporation, a company owned by Robert Spear, son of Leon Spear, one of the principals of E-Z Parks. ³

However, several of the parking operators, including E-Z Parks, filed an injunction to terminate the leases awarded by competitive bidding. On appeal, the Supreme Court affirmed in part and reversed in part the order granting the injunction. Ezy Parks, Inc. v. Larson, 499 Pa. 615, 454 A.2d 928 (1982). ⁴

In December 1982, a draft Environmental Impact Statement (EIS) was issued, addressing alternatives to the construction of the Expressway. The draft EIS addressed three main alternatives: no build, scaled-down Expressway and modified arterial. Following the January 31, 1983 public hearing On August 11, 1983, E-Z Parks wrote DOT expressing interest in developing Lot 7 into a multi-level parking garage. DOT responded on October 13, 1983, indicating that PPA was interested in the site and that public agencies had a right to lease the right-of-way following the interim lease.

concerning the EIS draft, DOT continued negotiations for the lease of Lot 7 with E-Z Parks. DOT made no representations during negotiations of PPA's desire to construct a public parking garage on Lot 7. On May 27, 1983, DOT and E-Z Parks entered into a five-year lease agreement that included a termination clause which permitted DOT to terminate if "any portion of the premises is required for construction of the highway or related transportation purposes." ⁵

On September 23, 1983, the final EIS was released, selecting the scaled-down Expressway alternative. A portion of Lot 7 was to be used as a ramp from the Expressway to 15th Street. The EIS also identified Lot 7 for construction of a public parking garage by PPA to mitigate the loss of surface parking that would occur due to the Expressway construction. (764b, 766-767b; 770b).

On January 24, 1984, DOT and PPA entered into the lease for the parking garage. The agreement included tentative time tables, stating that the garage would be constructed between March 1, 1985 and September 30, 1986. The agreement, however, did not state that time was of the essence.

In July and August, 1984, DOT condemned the fee title underlying its previously acquired right-of-ways for highway purposes. ⁶ DOT also began exploring use of these properties for staging purposes for the Expressway. DOT designated a portion of Lot 7 as a staging area. ⁷ By letter dated November 21, 1984, DOT notified E-Z Parks that the lease for Lot 7 was terminated, effective March 1, 1985. On September 1, 1985 E-Z Parks vacated Lot 7. ⁸ Soon thereafter, DOT began using Lot 7 as a staging area; however, construction of the parking garage was delayed. See note 5.

On February 19, 1985, E-Z Parks filed a petition for review to this Court, in our original jurisdiction, alleging several causes of action. ⁹ E-Z Parks' cause of Before the Board of Claims, E-Z Parks filed for damages, alleging breach of contract for violation of the duty of good faith negotiations and that the termination was done in bad faith. Fraud was not alleged. DOT filed an answer, denying liability and setting forth in new matter that DOT properly adhered to the termination clause because Lot 7 was needed for staging purposes.

action based on breach of lease was summarily transferred to the Board of Claims. ¹⁰

At the hearing held from October 31, 1989 to November 3, 1989, E-Z Parks offered testimony of Robert Spear on liability and Harvey Levin on damages, in addition to offering numerous depositions and documents. DOT introduced the testimony of Secretary Larson as well as various documents.

On April 13, 1992, the Board of Claims entered an award in favor of E-Z Parks and against DOT in the amount of $490,000 together with statutory interest at the legal rate of 6%, from August 1, 1988. The Board of Claims found that DOT had breached its contractual obligations to E-Z Parks by violating a duty of good faith and fair dealing because DOT had failed to inform E-Z Parks of DOT's negotiations with PPA for the parking garage. The Board also found DOT had not followed the express provisions of the termination clause. ¹¹

On May 12, 1992, DOT filed a petition for review with this Court. E-Z Parks filed a cross-petition for review, seeking greater damages. ¹²

Although there are many facets to DOT's arguments, DOT is essentially asserting that the Board of Claims erred as a matter of law in ignoring the express terms of the lease. ¹³ First, DOT argues that the Board erred in imposing a heightened duty of good faith upon DOT. Because the Board improperly imposed such duty upon DOT, DOT argues that the Board perpetuated its error considering evidence outside the unambiguous agreement.

Where the terms of a contract are clearly expressed, interpretation must be determined from the language itself. Z & L Lumber Co. of Atlasberg v. Nordquist, 348 Pa.Superior Ct. 580, 502 A.2d 697 (1985). Only where the language in a written contract is ambiguous may extrinsic or parol evidence be considered to determine the intent of the parties. Metzger v. Clifford Realty Corp., 327 Pa.Superior Ct. 377, 476 A.2d 1 (1984). A contract will be found ambiguous:

If, and only if, it is reasonably or fairly susceptible to different constructions and is capable of being understood in more senses than one and is obscure in meaning through indefiniteness of expression or has a double meaning. A contract is not ambiguous if the Court can determine its meaning without any guide other than a knowledge of the simple facts of which, from the nature of language in general, its meaning depends; and a contract is not rendered ambiguous by the mere fact that the parties do not agree upon the proper construction.

Id. at 386, 476 A.2d at 5. The ambiguity must appear on the face of the agreement, and not be created by the parol evidence which is offered. Merriam v. CedarBrook Realty, Inc., 266 Pa.Superior Ct. 252, 404 A.2d 398 (1979).

The purpose of excluding most parol evidence is to preserve the integrity of written agreements by refusing to permit the contracting parties' attempt to change the meaning of the contract through the use of extraneous information. Hamilton Bank v. Rulnick, 327 Pa.Superior Ct. 133, 475 A.2d 134 (1984). The exception, however, is when fraud has been pleaded. In Amoco Oil Co. v. Snyder, 505 Pa. 214, 478 A.2d 795 (1984), the Supreme Court held that while it may have been unwise for the parties to have entered into an agreement, it was not the court's function to rewrite agreements for the parties and to strike a better bargain than the parties themselves were able to accomplish. "Courts are not super-negotiators. Where the language of the instrument is clear, ..., [courts] are constrained in effect to what the parties have agreed to." Id. at 218, 478 A.2d at 799.

Whether a contract is ambiguous is a question of law susceptible to review by this court. Wright v. Bristol Patent Leather Co., 257 Pa. 552, 101 A. 844 (1917); Novak v. Department of Transportation, 133 Pa.Commonwealth Ct. 220, 575 A.2d 661 (1990). We have carefully read the agreement and reviewed the termination clause and hold that it is unambiguous. However, the Board of Claims, based upon its belief that DOT had breached a good faith duty to E-Z Parks concluded that the termination clause was susceptible to a different interpretation. Thus, before we can properly determine whether the Board of Claims could consider extraneous evidence outside the termination clause, we must examine the alleged duty DOT had to E-Z Parks.

DUTY OF GOOD FAITH

DOT argues that the Board erred in holding that DOT breached the termination clause because it had a duty of good faith toward E-Z Parks. However, Pennsylvania courts have recognized a separate duty of good faith performance of contracts only in limited circumstances. Creeger Brick v. Mid-State Bank, 385 Pa.Superior Ct. 30,...