IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Allegheny Intermediate Unit :

:

v. : No. 484 C.D. 2018

: Argued: October 15, 2018

East Allegheny School District, :

Appellant :

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge

HONORABLE ELLEN CEISLER, Judge

OPINION

BY PRESIDENT JUDGE LEAVITT FILED: January 25, 2019

East Allegheny School District (School District) appeals an order of the 

Court of Common Pleas of Allegheny County (trial court) entering judgment in favor 

of the Allegheny Intermediate Unit (Intermediate Unit) on a breach of contract 

action. The trial court ordered the School District to pay $3,023,067, plus interest, 

to the Intermediate Unit for special education services it had provided to the School 

District’s students over the course of several years. On appeal, the School District 

argues that it did not have a contractual obligation to make these payments because 

the Intermediate Unit did not issue invoices for these services in a timely manner. 

The School District also argues that the Intermediate Unit was not entitled to invoke 

nullum tempus occurrit regi (“time does not run against the king”) to defeat the 

applicable statute of limitations that barred at least some of the Intermediate Unit’s 

breach of contract claims. Finally, the School District argues the trial court abused 

its discretion in awarding interest on the judgment. For the reasons to follow, we 

affirm.
2

Background

The Intermediate Unit provides special education services to students 

in 42 school districts and five vocational schools in Allegheny County, including 

those enrolled in the School District.1 Joint Stipulation of Facts, ¶2; Reproduced 

Record at 299a (R.R. __). The Intermediate Unit provides “District Based” services 

in the School District’s classrooms and “Center Based” services in schools operated 

by the Intermediate Unit. Joint Stipulation of Facts, ¶15; R.R. 301a. Beginning with 

the 2009-2010 school year, and for each of the school years between 2010-2011 and 

2014-2015, the Intermediate Unit and the School District entered into a separate

“Educational Services Agreement” (contract) with respect to these special education 

services. Under each contract, the Intermediate Unit agreed to provide special 

education services to the School District’s students, and the School District agreed 

to pay the Intermediate Unit for the services it provided. Each yearly contract 

imposed a payment schedule upon the School District. For example, for the 2011-

2012 school year, the contract provided that the School District was to remit its 

payment as follows:

Sept. 15, 2011 20% of total 10/11 bill as advance payment for the 

2011/2012 school year.

Nov. 15, 2011 25% of actual billing for 11/12 based on student information 

in the Special Education Database. Advance (20%) payment 

will be deducted from the total bill.

Feb. 15, 2012 25% of actual bill based on student information in the 

Special Education Database.

March 15, 2012 25% of actual bill based on student information in the 

Special Education Database.

 

1 The School District is comprised of the communities of North Versailles, East McKeesport, 

Wilmerding and Wall, along with students from Duquesne City (grades 7-12). Trial court 1925(a) 

opinion, 5/25/2018, at 3.
3

May 15, 2012 25% of actual bill based on student information in the 

Special Education Database.

R.R. 536a (emphasis in original). Each successive contract contained a substantially 

similar payment schedule.

Prior to the inception of the 2010-2011 school year, the School District 

requested a modification to the above-stated payment schedule because of its 

financial difficulties, and the Intermediate Unit agreed. Under the modification, the 

Intermediate Unit agreed to invoice the School District $75,000 a month for 10

months; at the end of the school year, the Intermediate Unit would issue an invoice 

that reconciled the School District’s accumulated payment to the actual cost of 

services provided. The modification, memorialized in an email dated August 26, 

2010, stated as follows:

We will invoice [the School District] mid September. The 

invoice will be $75,000 based on the estimate (that was mailed 

out prior to the new year starting) divided by 10 months. 

Obviously, the final invoice (June) will be reconciled based on 

the actual utilization of services.... 

R.R. 881a. The modification was agreed to by the parties in each successive

contract, with an increase in the monthly payment to $85,000 for the 2014-2015 

school year.

In the Spring of 2015, the Intermediate Unit discovered that it had not 

issued the above-described reconciliation invoice for several school years.2 On June 

2, 2015, the Intermediate Unit sent the School District the reconciliation invoice for 

the 2014-2015 school year. Joint Stipulation of Facts, ¶27; R.R. 303a (See Summary 

 

2 The Intermediate Unit did send the School District a reconciliation invoice for Center Based 

Services provided during the 2013-2014 school year, which the School District paid. Joint 

Stipulation of Facts, ¶22; R.R. 302a. The Intermediate Unit did not send a reconciliation invoice 

for the District Based Services provided during that year.
4

Spreadsheet at R.R. 503a-16a). Then, on June 16, 2015, the Intermediate Unit issued 

final reconciliation invoices for each contract year. Joint Stipulation of Facts, ¶28; 

R.R. 303a (See Summary Spreadsheet at R.R. 872a-75a). The School District 

informed the Intermediate Unit that it would not pay any of the invoices, including 

the invoice for the 2014-2015 school year. 

In March 2016, the Intermediate Unit filed the instant action against the 

School District for breach of contract and unjust enrichment. The Intermediate Unit 

asserted that the School District breached the parties’ contract by not paying in full 

for the special education services it had received for the school years 2010-2011 

through 2014-2015. The Intermediate Unit contended that the School District owed 

$3,300,250, plus interest, for services provided over the five school years.3 

Initially, the parties filed cross-motions for partial summary judgment 

on the question of whether the statute of limitations barred any part of the 

Intermediate Unit’s breach of contract action. By order of September 12, 2017, the 

trial court denied the School District’s motion, holding that the Intermediate Unit, 

as an agency of the Commonwealth, could invoke the doctrine of nullum tempus 

occurrit regi. The parties then addressed the issues of liability and damages. 

The parties filed a joint stipulation of facts and motions for partial 

summary judgment on the issue of liability. Following argument, the trial court 

granted the Intermediate Unit’s motion, holding the School District liable for breach 

of contract. The trial court denied the School District’s motion for partial summary 

judgment on liability. 

 

3 The complaint alleged that the School District owed $1,090,469 for the 2010-2011 school year; 

$658,390 for the 2011-2012 school year; $871,070 for the 2012-2013 school year; $122,358 for 

the 2013-2014 school year; and $557,963 for the 2014-2015 school year. Complaint, ¶¶16, 20 and 

24; R.R. 77a-78a. 
5

On December 13, 2017, the trial court conducted a trial on the issue of 

damages. At trial, the Intermediate Unit offered evidence that upon further 

reconciliation, the amount the School District owed was $3,023,067. Thereafter, the 

parties submitted proposed findings of fact and conclusions of law. On February 5, 

2018, the trial court entered judgment in favor of the Intermediate Unit in the amount 

of $3,023,067, and interest in the amount of $194,483.98, for a total judgment of 

$3,217,550.98. The trial court assessed 12% annual interest, to accrue from the date 

of the order until final payment on the judgment. On March 16, 2018, the trial court 

denied the School District’s motion for post-trial relief. 

On appeal,4the School District raises several assignments of error by 

the trial court. First, the School District argues that the trial court erred in holding 

that it breached its contract with the Intermediate Unit. Second, the School District 

argues that the trial court erred in holding that the statute of limitations did not bar 

the Intermediate Unit’s breach of contract claims that arose prior to March 4, 2012. 

Third, the School District argues that the trial court abused its discretion by awarding 

interest at the rate of 12% per annum. 

Breach of Contract

The School District argues that the trial court erred in holding that it 

breached its contract with the Intermediate Unit because the condition precedent to 

its duty to make payment did not occur. Specifically, it argues that each contract 

required the Intermediate Unit to issue a reconciliation invoice in June of each school 

 

4 When reviewing a non-jury verdict, this Court’s standard of review determines whether 

competent evidence supports the trial court’s findings or whether the trial court committed an error 

of law. John Spearly Construction, Inc. v. Penns Valley Area School District, 121 A.3d 593, 601 

(Pa. Cmwlth. 2015). This Court views the evidence in the light most favorable to the party that 

prevailed below. Id. “An appellate court will not disturb a trial court’s finding [of fact] absent an 

abuse of discretion or error of law.” Id.
6

year, and the Intermediate Unit did not satisfy this condition precedent. 

Accordingly, the School District did not have a duty to pay the untimely invoices. 

For a breach of contract claim, a party must show: “(1) the existence of 

a contract; (2) a breach of the duty imposed by the contract; and (3) damages 

resulting from the breach.” Sewer Authority of City of Scranton v. Pennsylvania 

Infrastructure Investment Authority, 81 A.3d 1031, 1041-42 (Pa. Cmwlth. 2013). A 

condition precedent “is an event, not certain to occur, which must occur, unless its 

non-occurrence is excused, before performance under a contract becomes due.” 

RESTATEMENT (SECOND) OF CONTRACTS §224 (1981). Stated otherwise, a duty to 

perform does not arise unless or until the condition occurs. Acme Markets, Inc. v. 

Federal Armored Express, Inc., 648 A.2d 1218, 1220 (Pa. Super. 1994). Parties do 

not have to use “any particular words to create a condition precedent[.]” Id.

(emphasis in original). But, “[g]enerally, an event mentioned in a contract will not 

be construed as a condition precedent unless expressly made such a condition.” West 

Development Group, Ltd. v. Horizon Financial, F.A., 592 A.2d 72, 76 (Pa. Super. 

1991). If a condition precedent does not occur, “the duty to perform under the 

contract lays dormant and no damages are due for non-performance.” Boro 

Construction, Inc. v. Ridley School District, 992 A.2d 208, 215 (Pa. Cmwlth. 2010). 

Notably, conditions precedent are highly disfavored and “will be strictly construed 

against the one seeking to avail himself of them.” Allentown Patriots, Inc. v. City of 

Allentown, 162 A.3d 1187, 1195 (Pa. Cmwlth. 2017) (citing 17A AM. JUR. 2d, 

Contracts, §452 at 440 (2016)). 

Here, each contract obligated the School District to pay the 

Intermediate Unit for the special education services provided to its students. Each 

contract states, in relevant part, as follows:
7

The [School] District agrees to pay the [Intermediate Unit] the

sum of the estimated cost of each program or service, such sum 

to be paid in installments in accordance with [the payment 

schedule.]

R.R. 84a. The modification states as follows:

The invoice will be $75,000 based on the estimate (that was 

mailed out prior to the new year starting) divided by 10 months. 

Obviously, the final invoice (June) will be reconciled based on 

the actual utilization of services.... 

R.R. 881a. The modification was limited to the payment schedule and did not have 

any impact upon the School District’s contractual duty to pay for the special 

education services it actually received. To the contrary, the modification made it 

clear that there would be a final reconciliation and that payment for “actual 

utilization of services” was required. The possibility that the 10 monthly payments 

would exactly equal the services rendered over 12 months was unlikely in the 

extreme. Simply, the language of the modification cannot be construed to state a 

condition precedent that may, or may not, take place. We reject the School District’s 

contention otherwise.

Alternatively, the School District argues that the trial court erred 

because the Intermediate Unit cannot recover for its unilateral mistake. The School 

District contends that the modification was specific as to when the Intermediate Unit 

was to send the reconciliation invoice, i.e., in June of each contract year. The failure 

of the Intermediate Unit to do so was a mistake, and this negligence bars the 

Intermediate Unit’s breach of contract action. 

The parties stipulated to the following facts: 

19. On August 26, 2010 [the] Assistant Director of Finance at 

the [Intermediate Unit] entered into an arrangement with [] the 

Business Manager for [the School District], to modify the 
8

parties’ [contract] so that [the School District] would be invoiced 

in [sic] a monthly basis starting in mid-September of 2010. 

Pursuant to the arrangement, the [Intermediate Unit] was 

expected to invoice [the School District] $75,000 per month for 

ten months with a reconciliation to be issued at the end of the 

school year.

20. Per the modified payment arrangement, [the School 

District] understood and agreed that at the end of the school year, 

the remaining balance owed by [the School District] to the 

[Intermediate Unit] for the special education services received 

was to be “reconciled” and invoiced to [the School District]. 

Joint Stipulation of Facts, ¶¶19-20; R.R. 302a. This stipulation established that at 

the end of the school year both parties “understood” that the “remaining balance”

would be “reconciled and invoiced.” Id. However, the stipulation did not identify 

the parties’ “understanding” as to the date for the issuance of the reconciliation

invoice. 

The modification stated that the “final invoice (June) will be reconciled 

based upon the actual utilization of services.” R.R. 881a. This language established

how the final invoice would be calculated, i.e., on the basis of actual services 

provided through the school year. However, the aside “(June)” does not state a 

specific deadline for the Intermediate Unit to issue the reconciliation invoice. Stated 

otherwise, there is no foundation to the School District’s “mistake” argument 

because there was never a definitive “understanding” about the date for the issuance 

of the reconciliation invoice. 

We reject the School District’s contention that the modification 

established a condition precedent to the School District’s obligation to pay the 

Intermediate Unit for services or that there was a “mistake” by the Intermediate Unit 

that barred its breach of contract action. Accordingly, we discern no error in the trial 
9

court’s holding the School District liable to pay the Intermediate Unit for the special 

education services it provided. 

Statute of Limitations

The School District next argues that the trial court erred by holding that 

the Intermediate Unit’s claims that arose prior to March 2012 were not barred by the 

statute of limitations. Specifically, it contends that the four-year statute of 

limitations for contract actions prevented the Intermediate Unit from asserting a 

claim for payment of services provided prior to March 4, 2012. The School District 

argues that the trial court erred in holding that the doctrine of nullum tempus occurrit 

regi excused the Intermediate Unit from the four-year statute of limitations. 

In Pennsylvania, a breach of contract action must be commenced within 

four years. The Judicial Code states as follows: 

General rule.--Except as provided for in subsection (b) [(an 

action relating to damages in actions for identity theft)], the 

following actions and proceedings must be commenced within 

four years:

***

(8) An action upon a contract, obligation or liability founded 

upon a writing not specified in paragraph (7) [relating to a 

bond], under seal or otherwise, except an action subject to 

another limitation specified in this subchapter.

42 Pa. C.S. §5525(a)(8). The statute begins to run on the date of the breach. GAI 

Consultants, Inc. v. Homestead Borough, 120 A.3d 417, 423-24 (Pa. Cmwlth. 

2015).5 

 

5 The School District argues that the Intermediate Unit’s breach of contract action had to be filed 

within four years of the end of the first school year, i.e., within four years of June of 2011. Instead, 

the Intermediate Unit filed its action on March 4, 2016. 
10

The doctrine of nullum tempus permits a government agency “to 

circumvent the applicable statute of limitations.” Duquesne Light Company v. 

Woodland Hills School District, 700 A.2d 1038, 1051 (Pa. Cmwlth. 1997). To 

invoke nullum tempus, the government must be enforcing a right that is strictly 

public and one imposed by law. Id. Where the government agency “seeks to enforce 

purely contractual rights where [it] was not required to enter into the contract[,]” 

nullum tempus cannot be invoked. Township of Salem v. Miller Penn Development, 

LLC, 142 A.3d 912, 918 (Pa. Cmwlth. 2016). This Court has explained as follows:

An action involving a local government contract or agreement is 

brought in the local government’s governmental capacity and 

seeks to enforce obligations imposed by law where the contract 

is one that the local government entity was required to enter into 

as part of its public duties. Duquesne Light Co., 700 A.2d at 

1052 (nullum tempus applied to school district construction 

contract for school facilities because school district was required 

by law to construct school facilities). The requirement that the 

action be brought in the local government’s governmental 

capacity and seek to enforce obligations imposed by law is 

likewise satisfied and nullum tempus applies where the parties’ 

rights are governed by statute, even though the local government 

was not required to enter into the contract. Delaware County [v. 

First Union Corp., 929 A.2d 1258, 1261 (Pa. Cmwlth. 2007)]

 

The Intermediate Unit sent the School District the final invoice for the 2010-2011 school 

year in June of 2015. The School District’s refusal to pay constituted the breach of contract that 

triggered the statute of limitations. The stipulation does not state when the School District refused 

to pay the invoices. Assuming the refusal took place in July of 2015, four years from the School 

District’s breach has not yet run.

The School District argues that the Intermediate Unit breached the contract by not sending 

the first reconciliation invoice in June of 2011. However, the School District did not counter-claim 

against the Intermediate Unit for breach of contract.

The trial court decided the case on nullum tempus, and we review that holding on its merits. 

It may be, however, that the four-year statute of limitations for the Intermediate Unit to initiate its 

breach of contract action, even for the reconciliation invoice for the 2010-2011 school year, will 

not run until 2019. This is because the School District’s refusal to pay took place in 2015. This 

argument has not been advanced by the Intermediate Unit before this Court.
11

(nullum tempus applied to action for unclaimed bond payments 

because while county had discretion to decide whether to issue 

bonds, once bonds were issued the parties’ rights were controlled 

by statute).

Id. (emphasis added). 

With these principles in mind, we turn to the School District’s 

arguments. Intermediate units were created by the Public School Code of 19496and 

are part of the public school system in Pennsylvania. Northeastern Educational 

Intermediate Unit No. 19 v. Office of Auditor General, 479 A.2d 1166 n.1 (Pa. 

Cmwlth. 1984). Intermediate units must provide special education services to 

students in the specified school districts. To that end, they enter into contracts with 

school districts. See Section 920-A(b)-(c) of the Public School Code of 1949, 24 

P.S. §9-920-A(b)-(c).

7

 

6 Sections 901-A to 924-A of the Public School Code of 1949, Act of March 10, 1949, P.L. 30, as 

amended, added by the Act of May 4, 1970 P.L. 311, 24 P.S. §§9-901-A - 9-924-A. Section 1 of 

the Act of May 4, 1970, P.L. 311, as amended, formerly 24 P.S. §§9-951 to 9-974, 24 P.S. §§9-

901-A to 901-924-A, created intermediate units.

7 This section states, in relevant part:

(b) Less than a majority of the school districts comprising an intermediate unit 

may contract with the intermediate unit for services to be provided for the 

contracting school districts by the intermediate unit, with the cost of such services 

to be paid by the contracting school districts in such manner as they may agree 

upon.

(c) If a school district desires to independently provide a service that is included 

in the approved program of services to be offered by an intermediate unit, and the 

service is to be financed solely by the school district, and if the intermediate unit 

board of directors determines that the quality of such service is adequate and that 

such independent action will not adversely affect the service to be offered to the 

remaining districts by the intermediate unit, the intermediate unit board of directors 

may relieve the school district of payment for such service.

24 P.S. §9-920-A(b)-(c).
12

The Intermediate Unit has a statutory duty to provide special 

educational services to the School District’s students, and its contract with the 

Intermediate Unit was necessary “to enforce obligations imposed by law[.]” 

Township of Salem, 142 A.3d at 918. Stated otherwise, the Intermediate Unit’s

contract was not “voluntary” and, thus, it was entitled to invoke the doctrine of 

nullum tempus in response to the School District’s assertion that the statute of 

limitations barred its breach of contract action. 

However, the School District argues, alternatively, that the 

Intermediate Unit has waived nullum tempus because it did not raise that defense in 

the pleading stage of litigation.

8

 In support, the School District directs this Court to 

Township of Indiana v. Acquisitions & Mergers, Inc., 770 A.2d 364 (Pa. Cmwlth. 

2001).

In Township of Indiana, the defendant to the township’s action argued 

that the statute of limitations barred the township’s claim. The township did not 

assert nullum tempus until it filed an application for reargument with this Court. This 

Court recognized that, although nullum tempus is “a sword to strike down the statute 

of limitations defense[,]” it is “subject to waiver when the sovereign plaintiff fails to 

assert its rights.” Id. at 372. We explained as follows:

The sword of nullum tempus, however, is not like Excalibur and 

capable of prevailing regardless of the hour it is treated. We are 

not persuaded that the moving party’s status as a governmental 

entity should exempt it from the established rules of civil and 

appellate procedure. In the area of procedure, “[n]o special 

dispensation from the rules of evidence is accorded to the 

Commonwealth. Like private parties, the Commonwealth ‘must 

meet the burden of proof, its evidence must be relevant, material, 

 

8

“New matter[] pleading is designed to compel a plaintiff to answer the defendant’s affirmative 

defenses during the pleading stage to avoid an unnecessary trial.” Chivers v. School District of 

Mt. Lebanon, 297 A.2d 187, 189 (Pa. Cmwlth. 1972) (quotation omitted).
13

the best attainable, and (the evidence) must be presented in due 

order under the regular rules of procedure.’”

770 A.2d at 372-73 (quoting Department of Transportation v. J.W. Bishop Company, 

Inc., 439 A.2d 101, 104 (Pa. 1981)). On this record, this Court held that the township 

had waived nullum tempus. 

Township of Indiana is distinguishable. The Intermediate Unit raised 

nullum tempus prior to trial in its pretrial statement and in its motion for partial 

summary judgment. See PA. R.C.P. No. 1035.2(1) (a party may move for partial 

summary judgment “whenever there is no genuine issue to any material fact as to a 

necessary element of the cause of action or defense....”). Unlike the Township of 

Indiana, the Intermediate Unit did not wait until the appellate stage of litigation to 

invoke nullum tempus.

As noted, the School District argues that the Intermediate Unit waived 

nullum tempus because it did not raise the doctrine in its answer to the School 

Disrict’s new matter. An affirmative defense “raises new facts and arguments that, 

if true, defeat the plaintiff’s claim, even if all the allegations contained in the 

complaint are true.” R.H.S. v. Allegheny County Department of Human Services, 

Office of Mental Health, 936 A.2d 1218, 1227 (Pa. Cmwlth. 2007). Pennsylvania 

Rule of Civil Procedure 1030(a) provides that “all affirmative defenses” must be 

pled in a responsive pleading and states as follows:

Except as provided by subdivision (b), all affirmative defenses 

including but not limited to the defenses of accord and 

satisfaction, arbitration and award, consent, discharge in 

bankruptcy, duress, estoppel, failure of consideration, fair 

comment, fraud, illegality, immunity from suit, impossibility of 

performance, justification, laches, license, payment, privilege, 

release, res judicata, statute of frauds, statute of limitations, truth 

and waiver shall be pleaded in a responsive pleading under the 

heading “New Matter.” 
14

PA.R.C.P. No. 1030(a) (emphasis added). Where a party fails to raise an affirmative 

defense, it is waived. PA. R.C.P. No. 1032(a).9

The School District argues that the doctrine of nullum tempus is an 

affirmative defense that must be raised in a pleading to be preserved. It contends 

that the Intermediate Unit had to raise nullum tempus in its answer to the School 

District’s new matter. We disagree. 

Rule 1030(a) does not specify that the doctrine of nullum tempus is an 

affirmative defense that must be raised in a pleading. In fact, the Pennsylvania Rules 

of Civil Procedure do not provide any specific direction with respect to raising 

nullum tempus. On the other hand, our Supreme Court has held that under nullum 

tempus, “statutes of limitations cannot be pleaded against ... political 

subdivisions[,]” City of Philadelphia v. Holmes Electric Protective Company of 

Philadelphia, 6 A.2d 884, 887 (Pa. 1939), where the government agency has 

initiated litigation to “protect public rights, revenues and property from injury and 

loss.” Delaware County, 929 A.2d at 1261. Precedent holds that to employ the 

doctrine of nullum tempus “merely requires that it be raised at the appropriate stage 

of litigation.” Township of Indiana, 770 A.2d at 373; City of Philadelphia, 6 A.2d 

at 887. The Intermediate Unit invoked nullum tempus in its pre-trial statement and 

in its motion for partial summary judgment, i.e., at the “appropriate stage” of 

 

9

 It states:

A party waives all defenses and objections which are not presented either by preliminary 

objection, answer or reply, except a defense which is not required to be pleaded under Rule 

1030(b), the defense of failure to state a claim upon which relief can be granted, the defense 

of failure to join an indispensable party, the objection of failure to state a legal defense to 

a claim, the defenses of failure to exercise or exhaust a statutory remedy and an adequate 

remedy at law and any other nonwaivable defense or objection.

PA. R.C.P. No. 1032(a). 
15

litigation. Thus, we reject the School District’s argument that the Intermediate Unit 

has waived nullum tempus by not raising it in its answer to the School District’s new 

matter. 

Interest Addition to Judgment

Finally, the School District argues that the trial court abused its 

discretion by awarding interest at a rate of 12% per annum. The Intermediate Unit 

responds that the School District agreed to this interest rate. 

Generally, if a contract expressly provides for the payment of interest, 

“the interest is said to become an integral part of the debt itself, and, therefore, is 

recoverable as of right under the terms of the contract.” TruServ Corp. v. Morgan’s 

Tool & Supply Company, Inc., 39 A.3d 253, 262 (Pa. 2012). Our Supreme Court 

has explained:

[I]t is a well-established principle of contract law that, where the 

language of a contract is clear and unambiguous, a trial court is 

required to give effect to that language. Indeed, this Court has 

cautioned that it is not the function of a court to rewrite 

agreements between parties, and a court must give effect to the 

clear terms to which the parties have agreed. Thus, we have no 

hesitation in concluding that, where the terms of a contract 

provide for the payment of interest, a court’s award of such 

interest in favor of the prevailing party is not discretionary. 

Id. at 261 (internal citations omitted) (a contractual obligation to pay interest 

deprived trial court of discretion not to include this interest in award).

Here, the parties agreed to the payment of interest on any unpaid 

balance. Specifically, the contract provides: 

c. Late Payment Charge
16

A late payment charge of 1% per month on any unpaid 

balance will be applied to any account that is over 60 days 

past due.

R.R. 84a. The School District argues that this charge was eliminated by the 

modification. We disagree. The modification related solely to the School District’s 

payment schedule and did not alter the above-quoted late payment charge provision. 

The School District contends that it was prejudiced because it did not 

receive the Intermediate Unit’s calculations of the interest owed on the outstanding 

balance prior to trial. First, the contract expressly provided for the payment of 

interest and the rate of interest. Second, in its pretrial statement, the Intermediate 

Unit stated that it requested interest at the rate of 1% per month on the outstanding 

balance, and the amount of interest accrued exceeded $700,000. R.R. 122a. Third, 

in awarding interest, the trial court decided that

interest should start to accrue on June 17, 2017, which was 60 

days from when [the Intermediate Unit] delivered the final 

reconciliation invoice to [the School District’s] counsel, and 

more than two years from the date that the last special education 

service was provided by [the Intermediate Unit].

Trial court 1925(a) opinion, 5/25/2018, at 8. In sum, the trial court’s award of

interest to the Intermediate Unit was fully consonant with the contract. The trial 

court did not have the discretion to award a different rate of interest, let alone abuse 

its discretion.

Conclusion

For all the above-stated reasons, we affirm the trial court’s judgment 

awarding the School District $3,023,067, plus interest, in contract damages.

 ______________________________________

 MARY HANNAH LEAVITT, President Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Allegheny Intermediate Unit :

:

v. : No. 484 C.D. 2018

: 

East Allegheny School District, :

Appellant :

O R D E R

AND NOW, this 25th day of January, 2019, the order of the Court of 

Common Pleas of Allegheny County dated March 16, 2018, in the above-captioned 

matter is AFFIRMED.

 _____________________________________

 MARY HANNAH LEAVITT, President Judge