In re Joshua Hill, Inc.

Decision Date11 July 1996
Docket NumberMisc. Action No. 96-0092. Bankruptcy No. 95-17523DAS. Adversary No. 95-0856DAS.
Citation199 BR 298
PartiesIn re JOSHUA HILL, INC., Debtor. JOSHUA HILL, INC. and Marc A. Zaid, Plaintiffs, v. WHITEMARSH TOWNSHIP AUTHORITY; William J. Carmint, George K. Palmer, Richard M. Lam, and Christian K. Wagner, as members of the Whitemarsh Township Authority Board; Whitemarsh Township; R. Bruce Ferguson, Maryellen Antal, John S. Gabel, Robert Wiser, and Chuck Pellegrini, in their capacity as current members of the Whitemarsh Township Board of Supervisors, Defendants.
CourtU.S. District Court — Eastern District of Pennsylvania

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John Adam Kerns, Jr., Philadelphia, PA (Court-appointed Mediator).

Richard D. Orlow, Paoli, PA, Marc A. Zaid, Bala Cynwyd, PA, for Plaintiff.

Anthony R. Sherr, West Conshohocken, PA, A. Victor Meitner, Jr., Broad Axe, PA, for Defendants.

Frederic Baker, Ass't. U.S. Trustee, Philadelphia, for United States Trustee.

ORDER

McGLYNN, Senior District Judge.

AND NOW, this 11th day of July, 1996, it is hereby ORDERED AND DECREED as follows:

1. The Report and Recommendation of Chief Bankruptcy Judge David A. Scholl, dated April 23, 1996, relating to Defendants' Motion for Summary Judgment, and supplemented by Judge Scholl's Memorandum of May 22, 1996 (collectively, "the Report"), is APPROVED and ADOPTED.

2. The Motion of the Defendants for Summary Judgment is GRANTED in part.

3. Counts I, II, III, VI, VIII, X, and XI of the Complaint filed in the Proceeding and certain aspects of Counts IV, V, and XII of the Complaint, as described in the Report, are DISMISSED.

4. Litigation of all of the remaining Counts and claims shall continue to be administered by the Bankruptcy Court pending trial.

REPORT AND RECOMMENDATIONS OF BANKRUPTCY JUDGE SUR DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

DAVID A. SCHOLL, Chief Bankruptcy Judge.

A. INTRODUCTION

Presently before this court in the above-captioned proceeding ("the Proceeding") is a Motion ("the Motion") of WHITEMARSH TOWNSHIP AUTHORITY ("the Authority"), WHITEMARSH TOWNSHIP ("the Township"), and their individual members, all of the parties named as defendants in the Proceeding (collectively, "the Defendants"), for summary judgment in their favor as to all of the many claims of JOSHUA HILL, INC. ("the Debtor") and MARC A. ZAID, ESQUIRE ("Zaid," with the Debtor, "the Plaintiffs"), in the Proceeding. The Proceeding arises out of the Debtor's inability to utilize its sole asset, certain real estate situated on Joshua Road in the Township ("the Property"), for Zaid's intended purpose of constructing high-density residential units on the Property. The Plaintiffs attribute their inability to utilize the Property to (1) environmental problems on the Property which they claim were not disclosed to them in violation of warranties provided by the Authority, the seller, in an Agreement of Sale of June 3, 1987 ("the A/S"); and (2) the Township's refusal to allow rezoning for the intended purpose.

The Motion is based on three general types of contentions: (1) the majority of the Plaintiffs' claims are time-barred under the relevant respective statutes of limitations; (2) the Plaintiffs' claims under the Pennsylvania Hazardous Sites Clean-Up Act, 35 P.S. §§ 6020.101, et seq. ("the HSCA"), and the Pennsylvania Clean Streams Law, 35 P.S. §§ 691.1, et seq. ("the CSL"), must be dismissed for lack of requisite preliminary notice of the claims; and (3) various other theories allegedly rendering specific claims invalid, including governmental immunity.

For the reasons set forth below, we recommend that the district court order that limitations does bar most of the breach of contract claims, specifically Counts III, VI, VIII of the Amended Complaint ("the Complaint"), and certain portions of the tort claims set forth in Counts IV and V of the Complaint. We also submit that the HSCA and CSL claims are barred by the lack of requisite prior notice. Similarly, we believe that the claim in Count X (inverse condemnation) is barred because of the Plaintiffs' failure to follow the procedures set forth in the state Eminent Domain Code. Finally, we also conclude that the claims set forth in Count XI (Civil Rights Act) ("the CRA") lack merit as a matter of law. We do allow a portion of the Count IV nuisance and Count V trespass claims, certain claims against the Township in its capacity as the alleged tenant of the Property (Counts VII and IX), and Count XII (negligent or fraudulent concealment) to survive. Also unaffected by this Report are two Counts added to the Complaint by amendment, Count XIII (an objection to a proof of claim of the Authority filed on its behalf by the Debtor) and Count XIV (seeking to invalidate an alleged lien placed against the Property by the Township), which are not referenced in the Motion. A status conference is scheduled on May 1, 1996, to discuss potential means of resolving the Proceeding before it is referred to the district court for any necessary jury trial.

B. FACTUAL AND PROCEDURAL HISTORY

The Debtor filed the underlying Chapter 11 bankruptcy case on September 26, 1995. The Debtor's sole asset is the Property. Although the Plaintiffs filed a praecipe for a writ of summons in a suit initiated against the Defendants in the Court of Common Please of Montgomery County, Pennsylvania ("the C.C.P.;" the suit is referenced as "the C.C.P. Suit"), on October 1, 1993, their admitted reason for the filing of this bankruptcy case was to litigate these issues in a forum other than the C.C.P., which they perceived as hostile to their interests.

No creditors of the Debtor or other interested parties have filed any pleadings in the case, except for the actions of the Township and the Authority in defending this Proceeding. A plan of reorganization ("the Plan") and accompanying disclosure statement ("the D/S") were filed by the Debtor on February 20, 1996. The D/S was approved without objection from any creditors on March 20, 1996, and a confirmation hearing on the Plan is scheduled on May 1, 1996.

The Plan is very simple. It contemplates payment of certain compromise sums, the amount being conditional on the date of payment, to the mortgagee of the Property, and full payment to unsecured creditors. These payments are to be funded by the litigation of the Proceeding. The success of the case, as well as the goal to obtain a federal forum to hear it, is therefore driven by the Proceeding.

The Proceeding was filed on November 7, 1995. The original Complaint set forth 12 separate civil claims, all related to the sale of, and post-sale dealings of the parties pertaining to, the Property, and, except where indicated, against all Defendants. Count I, under the HSCA, seeks recovery of the Plaintiffs' costs of responding to the presence of hazardous substances allegedly located on the Property, including their clearing and remediation. Count II, based on the CSL, seeks an abatement of industrial wastes from the Property's waters. Count III is a claim against the Authority for rescission of the A/S and restitution of other cash expenses relating to the sale of the Property. The Plaintiffs assert claims for nuisance and trespass, respectively, in Counts IV and V, arising out of the alleged presence of waste materials on the Property. Count VI is a claim for breach of provisions in the A/S which required the Authority to provide the buyer with all reports relating to the Premises. In Count VII, the Plaintiffs seek ground rents allegedly due to them under an alleged "Incinerator Lease" of the Property to the Township, dated December 1, 1964, and extending through April 1, 1994 ("the 1964 Lease"). In Count XI, the Plaintiffs set forth a claim under 42 U.S.C. § 1983 of the CRA, alleging that the Defendants have deprived them of the lawful use and peaceful enjoyment of the Property in violation of the fourteenth amendment. Finally, Count XII is a claim against the Township for fraudulent and/or recklessly negligent concealment of information about the Property from the Plaintiffs.

On December 8, 1995, the Defendants responded to the Complaint by filing a Motion to Dismiss all of its Counts under Federal Rule of Bankruptcy Procedure ("F.R.B.P.") 7012(b) and Federal Rule of Civil Procedure ("F.R.Civ.P.") 12(b)(6) ("the MTD"), raising many of the same issues reiterated in the instant Motion. After a brief argument on the MTD at a hearing of December 20, 1995, we indicated that we did not believe that any of the issues presented should be resolved on such a motion, although they might be subject to disposition on a motion for summary judgment. We then indicated that we would, and we did, enter an Order of December 21, 1995, denying the MTD without prejudice; allowing either party until February 29, 1996, to file a summary judgment motion; and allowing any opposition to any such motions to be filed by March 22, 1996.1

On December 26, 1995, the Plaintiffs filed a Notice of Removal of the C.C.P. Suit to this court, which was docketed at Adversary No. 95-0955 ("Adv. 955"). They also simultaneously filed, for the first time in that action, a complaint in Adv. 955, identical to the Complaint in this Proceeding, except that it already included the amendments described below. This filing was followed by a motion of January 3, 1996, by the Plaintiffs to voluntarily dismiss the Proceeding and transfer the scheduling Order of December 21, 1995, in the Proceeding to Adv. 955. On January 19, 1996, the Defendants filed a motion to remand Adv. 955 to the C.C.P. in accordance with a procedural order of January 2, 1996, requiring any such filing by that date. After a hearing on the motion to voluntarily dismiss the Proceeding on January 31, 1996, that motion was withdrawn and further actions in Adv. 955, including ruling on the motion for remand, were held under advisement pending...

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