O'HARE v. County of Northampton

• Decision Date: 30 July 2001
• Citation: 782 A.2d 7
• Parties: Bernard V. O'HARE, III, Joseph S. DeRaymond, William H. Hummel, Bernard J. Berg, and James E. Byrne, Appellants, v. COUNTY OF NORTHAMPTON.
• Court: Pennsylvania Commonwealth Court

782 A.2d 7

Bernard V. O'HARE, III, Joseph S. DeRaymond, William H. Hummel, Bernard J. Berg, and James E. Byrne, Appellants, v. COUNTY OF NORTHAMPTON.

Commonwealth Court of Pennsylvania.

Submitted on Briefs June 7, 2001.

Decided July 30, 2001.

Brian M. Monahan, Easton, for appellants.

William P. Leeson, Bethlehem, for appellee.

Before SMITH and KELLEY, Judges, and JIULIANTE, Senior Judge. JIULIANTE, Senior Judge.

Bernard V. O'Hare, III, Joseph S. DeRaymond, William H. Hummel, Bernard J. Berg and James E. Byrne (collectively, Appellants) appeal from the August 28, 2000 order of the Court of Common Pleas of Northampton County (trial court) that sustained the preliminary objections of the County of Northampton (County) and dismissed their complaint in declaratory judgment with prejudice. We are asked to consider whether the trial court properly dismissed Appellants' complaint for lack of subject matter jurisdiction. We affirm in part and reverse in part.

On July 13, 2000, Appellants filed a complaint in declaratory judgment against the County, alleging as follows: on June 1, 2000, two members of the Northampton County Council (Council) introduced proposed Ordinance Number 350 and Bill Number 371 (bond ordinance). The bond ordinance was passed on June 15, 2000, signed by the County Executive on June 16, 2000 and became effective on July 16, 2000.

The bond ordinance provided for up to $125,000,000.00 in capital improvements to be financed by 30-Year Series 2000 bonds issued by the Northampton County General Purpose Authority (Authority). The capital improvement projects included county general improvement projects and authority economic development projects. According to Appellants, the bonds resulted in a debt service of $254,360,000.00 to the county taxpayers.

In their complaint, Appellants alleged that the authority economic development projects were for the benefit of private enterprises and constituted the use of public resources for the benefit of private endeavors. They further alleged that Council failed to provide the public with any plans or realistic costs for the proposed projects and that the bond ordinance impermissibly provided that it could be used to authorize the expenditure of funds not identified by it and committed the county taxpayers to pay $254,360,000.00 over the next thirty years without obtaining realistic cost estimates. The eight-count complaint challenges the bond ordinance under the Pennsylvania Constitution, the Northampton County Home Rule Charter,¹ the Municipal Authorities Act (MAA),² the Sunshine Act,³ and the Local Government Unit Debt Act (Debt Act).⁴,⁵ On August 2, 2000, the County filed preliminary objections to Appellants' complaint, alleging that the trial court lacked subject matter jurisdiction because Section 8211(d) of the Debt Act, 53 Pa.C.S. § 8211(d), vests the Department of Community and Economic Development (Department) with jurisdiction over Appellants' claims. The trial court agreed, and this appeal followed.⁶

Section 8211(d) of the Debt Act, 53 Pa.C.S. § 8211(d), provides that

[t]he [D]epartment has exclusive jurisdiction to hear and determine all procedural and substantive matters arising from the proceedings of a local government unit taken under this subpart, including regularity of the proceedings, the validity of the bonds, notes, tax anticipation notes or other obligations of the local government unit and the legality of the purpose for which the obligations are to be issued.... A determination by the [D]epartment under this subpart shall, except as provided in this subsection, be conclusive and binding as to all procedural and substantive matters which were or could have been presented to the [D]epartment hereunder. All determinations by the [D]epartment under this subpart are reviewable as provided in 2 Pa.C.S. [Chapter 7] (relating to judicial review).

"The Debt Act provides a means by which taxpayers and other interested parties may challenge the validity of the proceedings in which a local government unit incurs bonded debt." Simonetti v. Department of Community Affairs, 651 A.2d 626 (Pa.Cmwlth.1994). Challenges are narrowly circumscribed, restricting inquiry into procedural and substantive matters arising from the proceedings of the local government unit taken pursuant to the Debt Act and involving only: (1) the regularity of the proceedings; (2) the validity of the bonds; and (3) the legality of the purpose for which such obligations are to be issued. 53 Pa.C.S. § 8211(d); Simonetti. The Debt Act is concerned exclusively with compliance by the local government unit with the steps taken to gain approval of a bond issue. Simonetti.

I.

In the case before us, the trial court determined that Counts I, II, III, V, VII, and VIII are within the Department's jurisdiction. We agree.

Specifically, Count I of Appellants' complaint alleged that the bond ordinance was in violation of Article 3, Section 32, and Article 9, Section 9, of the Pennsylvania Constitution because it appropriated public funds for private endeavors. PA. CONST. art. 3, § 32; art. 9, § 9.⁷ Count II alleged that the bond ordinance exceeded the powers vested in the County and that the County violated its fiduciary duty to its taxpayers. Both counts, in essence, challenged the legality of the bond ordinance. The clear language of Section 8211(d) of the Debt Act reserves jurisdiction over such claims with the Department.

In Count III of the complaint, Appellants averred that the County failed to comply with the notice requirements of its Home Rule Charter. Section 1.6-602(b) of the Home Rule Charter requires that the County distribute copies of proposed ordinances to libraries. 348 Pa.Code § 1.6-602(b). Section 1.6-602(d) requires that a proposed ordinance be published in two newspapers of general circulation. 348 Pa.Code § 1.6-602(d). Appellants complained that several libraries were not provided with copies of the bond ordinance and that the publicized summary of the ordinance did not include an essential provision of it.

Appellants complain that the Department does not have the expertise to interpret the County's Home Rule Charter. However, the Department's jurisdiction includes issues relating to the process necessary to gain approval of the bond ordinance. Simonetti. The issue of whether the County properly followed the procedures of its Home Rule Charter is directly related to the regularity of the proceedings giving rise to the bond ordinance.

Count V of Appellants' complaint alleged that the bond ordinance was vague and uncertain because it was impossible to ascertain Council's intent with any certainty. This claim, once again, challenged the validity of the bond ordinance, which is within the Department's jurisdiction.

In Lilian v. Commonwealth, 467 Pa. 15, 354 A.2d 250 (1976), our Supreme Court reiterated that where an administrative remedy is statutorily prescribed, the general rule is that a court, be it a court of equity or law, is without jurisdiction to entertain the action. See also In re Enactment of an Ordinance Increasing Indebtedness, 41 Pa.Cmwlth. 1, 398 A.2d 237 (1979). Section 8112(d) of the Debt Act reserves to the Department jurisdiction over challenges to the regularity of the proceedings, the validity of the bonds and legality of their purpose. As such, the trial court was correct in its determination that it lacked subject matter jurisdiction to entertain Counts I, II, III, and V of Appellants' complaint.

Counts VII and VIII of Appellants' complaint alleged that the bond ordinance violated Sections 8006 and 8005 of the Debt Act, 53 Pa.C.S. §§ 8006, 8005, respectively. Appellants now agree with the trial court that the Department has jurisdiction over these causes of action. They maintain, however, that it erred in dismissing the causes of action rather than transferring the complaint to the Department pursuant to Section 5103(a) of the Judicial Code, 42 Pa.C.S. § 5103(a).⁸ In its brief to this Court, the County has reported that the Department has exercised jurisdiction over Counts VII and VIII and that a decision is pending. Therefore, we conclude that the trial court's failure to transfer the causes of action to the Department did not prejudice Appellants. We now turn to Counts IV and VI of Appellants' complaint.

II.

Count IV of Appellants' complaint alleged that the bond ordinance violated the MAA and Count VI alleged that the bond ordinance was enacted in violation of the Sunshine Act. We disagree with the trial court that it lacked subject matter jurisdiction over these causes of action.⁹

In Count IV of their complaint, Appellants alleged that the bond ordinance is in violation of the MAA. Pursuant to the bond ordinance, the Authority was to issue the bonds to the County to assist in the financing and undertaking of the various improvement projects.

Section 2 of the MAA, 53 P.S. § 302, defines an "authority" as "a body politic and corporate, created pursuant to this act...." Municipal authorities are not creatures, agents or representatives of the municipalities that organize them but are independent agencies of the commonwealth. Commonwealth v. Erie Metro. Transit Auth., 444 Pa. 345, 281 A.2d 882 (1971). Thus, the Authority and the County are separate legal entities and derive their authority from different statutes.

Section 4B(i) of the MAA, 53 P.S. § 306B(i), grants an authority the power to issue negotiable notes, bonds, refunding bonds, and other evidence of indebtedness or obligations of the authority. The Authority, in issuing bonds, acts in accordance with its power under the MAA; the County incurs indebtedness in accordance with the Debt Act.

In order to challenge the bond ordinance under the MAA, Appellants must also challenge the actions of the Authority. The Debt Act, however, does not authorize the Department to review the actions of authorities, but only local government units.¹⁰ 53 Pa.C.S. § 8211(d). Therefore, ...