Court Opinion

ID: 4558496
Source: CourtListenerOpinion
Date Created: 2020-08-25 15:11:06.78242+00
Date Added: 2024-06-11T09:27:36.520171
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Somera Road – 835 West Hamilton          :
Street, LLC,                             :
                 Appellant               :
                                         :   No. 568 C.D. 2019
            v.                           :
                                         :   Argued: June 9, 2020
City of Allentown                        :

BEFORE:     HONORABLE P. KEVIN BROBSON, Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE J. ANDREW CROMPTON, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE McCULLOUGH                                      FILED: August 25, 2020

            Somera Road – 835 West Hamilton Street, LLC (Appellant) appeals
from the April 12, 2019 order of the Court of Common Pleas of Lehigh County (trial
court) granting summary judgment in favor of the City of Allentown (City) on a
claim for a de facto taking. The City has filed a motion to dismiss and/or quash the
appeal. For the reasons that follow, we dismiss the appeal.

                                    Background
            Plaza at 835 West Hamilton Street (Plaza) was the former owner of a
multi-story commercial Class A office space building in the downtown area of
Allentown, Lehigh County, Pennsylvania, commonly known as the “PPL Plaza”
(Property or Building).1 On October 27, 2017, Plaza commenced this action in the
trial court by filing a petition for the appointment of a board of viewers pursuant to
section 502(c) of the Eminent Domain Code (Code),2 26 Pa.C.S. §502(c). Plaza
alleged that the City effectuated a de facto taking because it engaged in a course of
conduct that caused Plaza to lose a major tenant and sustain a substantial impairment
to the value of the Property.
               In an apt and able manner, the trial court set forth the factual and
procedural history of this case as follows:

               The [B]uilding in question was originally constructed in
               2005. [Plaza] was not the original builder, but purchased
               the [Property and] structure in November 2006 for $92
               million. At the time of acquisition, [Plaza] paid $13 million
               in cash, and financed the remaining balance of the purchase
               price through two loans. One loan was for $75 million,
               while the second loan was in the amount of $7 million.
               There was a balloon payment provision for any outstanding
               balance to be paid in full by December 1, 2016.

               At the time of purchase, certain pre[]existing leases of
               office space within the building were already in place. The
               largest tenant in terms of square footage and total amount of
               rent paid was PPL Energy Plus Corporation (PPL), and its
               successor, Talen Energy Corporation (Talen). The original
               lease began on April 30, 2003, and ran until April 30, 2018.
               In December 2014, PPL unsuccessfully attempted to
               renegotiate the base rent with [Plaza]. PPL also offered to
               purchase the building outright from [Plaza] in January 2015
               for $41 million, but [Plaza] rejected the offer. In June 2015,
               PPL spun off [and formed into the corporate entity,] Talen.
               Talen subsequently assumed the lease rights from PPL for

      1
          As explained infra, Appellant later became the owner.

      2
          26 Pa.C.S. §§101-1106.

                                                 2
         the portion of [the] [P]roperty which PPL rented, with a
         unilateral right to extend the lease to 2038.

         In 2015, Talen and [Plaza] began discussions about an
         extension of Talen’s lease. As the negotiations proceeded,
         Talen was also being wooed to move out of [Plaza’s]
         property to another location. These alternate sites included
         office space in Bethlehem, Pennsylvania and Phillipsburg,
         New Jersey. However, there was significant pressure to
         retain Talen as a tenant in Class A office space in
         Allentown, and particularly within a 127.5[-]acre
         designated area within Allentown, referred to as the
         Neighborhood Improvement Zone [(NIZ) Zone].

         The NIZ [Zone] was created by legislation enacted in 2011
         for the purpose of energizing economic development in
         certain portions of downtown Allentown and along the
         riverfront abutting the Lehigh River. Although [the
         Allentown Neighborhood Improvement Zone Development
         Authority (ANIZDA)] was created by the enactment of a
         municipal ordinance, ANIZDA itself is deemed a “public
         instrumentality of the Commonwealth.” [Section 6(a) of
         Economic Development Financing Law (Economic
         Development Law),[3] 73 P.S. §376(a)].             As a
         Commonwealth instrumentality, ANIZDA is a separate and
         distinct agency from the [City].

         According to the authorizing statute and city ordinance,
         ANIZDA was empowered by law to undertake activities,
         including issuance of loans, in order to facilitate and
         advance the development of real estate parcels in [the NIZ
         Zone, which is] a strictly configured area within the [City].
         However, ANIZDA was not endowed with condemnation
         or eminent domain powers. [See 73 P.S. §376(b)
         (enumerated express grants of rights and powers); see also
         the Neighborhood Assistance Act, located in Article XIX-
         A, Sections 1901-A – 1909-A, of the Tax Reform Code of
         1971 (Tax Code), Act of March 4, 1971, P.L. 6, as
         amended, added by the Act of June 16, 1994, P.L. 279, 72
         P.S. §§8901-A – 8908-A, and the act commonly referred to
3
    Act of August 23, 1967, P.L. 251, as amended, 73 P.S. §§371-386.

                                          3
               as the NIZ Law, located in Article XIX-B, Sections 1901-B
               – 1909-B, of the Tax Code, added by the Act of July 9,
               2013, P.L. 270, 72 P.S. §§1901-B – 1909-B.] ANIZDA
               promulgated certain guidelines to establish the procedure
               and criteria by which the agency would evaluate loan
               applications for funds to support economic development
               projects within the confines of the NIZ [Law]. Among the
               criteria was a requirement that any project seeking
               ANIZDA-approved funds was limited to any new
               construction or renovation and improvements of existing
               structures within the NIZ. [Section 1904-B of the Tax
               Code, 72 P.S. §8904-B(a), (e)(1)4]. [Plaza’s] [P]roperty
               was constructed in 2005, well before enactment of the NIZ
               legislation, but the [P]roperty is set within the boundaries of
               the NIZ [Zone].

               The innovative concept behind the NIZ [Law] was a
               provision that allowed for the segregation of state revenue
               generated by existing businesses and their employees within
               the specific confines of the NIZ [Zone]. Those state
               revenues, drawn from state income, sales, cigarette taxes,
               etc., were used to support the issuance of bonds to pay for
               the construction of the centerpiece of the economic revival
               of downtown Allentown, a sports and entertainment venue
               known as the PPL Center. [See generally Allentown
               Neighborhood Improvement Zone Development Authority v.
               City of Allentown (C.C.P. Lehigh Nos. 2015-C-1488, 1489,
               1490, and 490, filed May 20, 2016); see also sections 1902-
               B, 1903-B of the Tax Code, 72 P.S. §§8902-B (defining
       4
          This provision states that following the designation of a NIZ Zone, an authority, such as
ANIZDA, shall notify the State Treasurer of the designation, and the State Treasurer shall establish
a special fund for the benefit of each authority to be known as the NIZ Fund. Section 1904-B of the
Tax Code, 72 P.S. §8904-B(a). The money may be used by the authority “[f]or payment of debt
service, directly or indirectly through a multitiered ownership structure or other structure authorized
by [an] authority to facilitate financing mechanisms, on bonds or on refinancing loans used to repay
bonds issued to finance or refinance . . . the improvement and development of all or any part of the
neighborhood improvement zone; and . . . the construction of all or part of a facility or facility
complex.” 72 P.S. §8904-B(e)(1)(i)(A)-(B). See also 73 P.S. §376(b)(14) (vesting an authority
with the power “[t]o do all acts and things necessary or convenient for the promotion of its business
and the general welfare of the authority, to carry out and exercise the purpose of and the powers
granted by this act or any other acts”).

                                                  4
“facility” and “facility complex,” in large part, as and/or
with reference to an “a stadium, arena[,] or other structure
owned or leased by a professional sports organization),
8903-B (“The [] authority may designate a [NIZ Zone] of
not greater than 130 acres in which a facility or facility
complex may be constructed and may borrow funds for the
purpose of improvement and development within the [NIZ
Zone] and construction of a facility or facility complex
within the zone.”)]

To manage this economic revitalization, the legislation
authorized the appointment of an oversight board known as
[ANIZDA (ANIZDA Board)]. As stated above, the
ANIZDA [B]oard was permitted by the NIZ [Law] to issue
bonds to fund the construction of the arena. The funding
needed to support the issuance of the bonds was predicated
upon a dedication of state tax revenue from existing
businesses within the NIZ [Zone], primarily from PPL
Energy Plus, and its successor, Talen Energy [(Talen)]. For
example, Talen alone contributed $13.7 million per year in
NIZ taxes, almost the entire amount necessary to pay the
$15.3 million annual debt for the arena.

Without the state revenue specifically drawn from Talen
and its employees, the funding necessary to support the
bonds issued by ANIZDA to pay for the construction of the
hockey arena could be endangered. As a result, Talen’s
consideration of whether [] to remain as a tenant of
[Plaza’s] [P]roperty took on an added significance to the
ANIZDA [B]oard and the Mayor of Allentown, Edward
Pawlowski [(Mayor)], to ensure the viability and continued
success of the economic revitalization of Allentown.

In addition, the [NIZ Law] authorized the use of any state
taxes generated from new businesses which came into the
NIZ [Zone] to finance the construction or renovation of
existing structures for those same new businesses, including
other Class A office space. These subsidized construction
loans enabled owners of newly built or renovated properties
within the NIZ [Zone] to offer square footage rental rates
below prevailing market rates, and thereby created a
competitive disadvantage for any existing Class A office
space within or outside of the boundaries of the NIZ [Zone].

                             5
As the negotiations continued between Talen and [Plaza],
the leadership of ANIZDA and [the] Mayor [] were in
frequent contact with Talen’s CEO, Paul Farr, about
retaining Talen as a tenant within the NIZ [Zone]. Talen’s
continue[d] presence in the NIZ [Zone] took on crucial
importance due to the reliance by the ANIZDA [B]oard
upon the state revenues generated by Talen’s employees.

Despite substantial efforts by [Plaza] to retain Talen as a
tenant, in August 2017, Talen gave notice in August 2017
that it was not going to extend its lease of [Plaza’s
Building] past the expiration date in April 2018. However,
even before Talen rejected an extension of its lease, [Plaza]
was unable to make its balloon mortgage payment in
December 2016. As a result, the mortgagee Wells Fargo
Bank, N.A. [(Lender)] initiated mortgage foreclosure
proceedings. While [Plaza] has conjoined the two events as
being factually intertwined, it is important to observe that
[Plaza] was not able to pay the balloon payment in
December 2016 even while Talen was a tenant of the
subject premises.

On December 6, 2017, the undersigned entered an order
granting [Lender’s] motion for judgment on the pleadings in
the mortgage foreclosure action, and set a date for a hearing
on damages.

[Plaza] has not proposed to construct a new facility, or
renovate or improve the current facility. As a result, [Plaza]
is statutorily precluded from applying for and obtaining any
of the taxpayer-subsidized loans from ANIZDA. Ironically,
[Plaza’s] [P]roperty was the beneficiary under previous
legislation as being located within a “Keystone Opportunity
Zone” that provided for an abatement of property taxes for a
limited time period as an inducement for real estate
development in certain urban areas.

[Plaza] contends the subsidized construction loans that are
available through the ANIZDA approval process have in
turn depressed competing square foot rental rates in those
newly constructed Class A office space facilities. Existing
commercial rental locations which predated the enactment

                              6
             of the NIZ, or which carry too high a debt load to enable the
             property owners to lower their rental rate, cannot compete
             against the subsidized square foot rental rates.

             [Plaza] argues the consequential erosion of its competitive
             position amounted to an unlawful de facto taking or
             condemnation by the City of Allentown . . . because of the
             participation by [it] in the authorization or implementation
             of the NIZ-related tax collection. [Plaza] alleges that the
             City [] engaged in a de facto taking of its property by the
             failure of [the] former Mayor [] and other city officials to
             take steps necessary to prevent Talen from vacating
             [Plaza’s] premises, and by encouraging Talen to relocate to
             another property in the NIZ [Zone] which was able to offer
             substantially less expensive rental rates due to NIZ [Law]
             subsidies.

             [Plaza] filed its Petition for the Appointment of a Board of
             View[ers] on October 17, 2017. [Plaza] claims a Board of
             View[ers] needs to be appointed to determine the financial
             value of [Plaza’s] property. This figure would then be used
             to calculate the amount of damages owed by [the City] to
             [Plaza]. [The City] filed Preliminary Objections on
             December 22, 2017. On March 22, 2018, the [trial court]
             filed an Order with an accompanying Memorandum
             Opinion overruling the [City’s] preliminary objections and
             directing the parties to engage in discovery. The [trial
             court] set a hearing date for September of 2018, but due to
             the filing of several discovery-related motions, the hearing
             date was postponed . . . .

             On January 31, 2019, [the City] filed the instant Motion for
             Summary Judgment. [Plaza] filed it response on February
             20, 2019, and the [trial court] heard oral argument on the
             motion on March 12, 2019, at which time [it] took the
             matter under advisement.
(Trial court op. at 3-8) (italicized emphasis in original, bold emphasis added)
(internal citations omitted).
             By opinion and order dated April 12, 2019, the trial court granted the
City’s motion for summary judgment and dismissed Plaza’s petition for the

                                          7
appointment of a board of viewers. In its opinion, the trial court emphasized that it
granted Plaza wide latitude to engage in discovery and required the City to produce
numerous documents and email correspondence between the Mayor, the Chairman of
the ANIZDA Board, the City’s Director of the Office of Community and Economic
Development (Director of Economic Development), and the Chief Executive Officer
of Talen. The trial court then surveyed the evidence and explained that Plaza failed
to establish that the City, or any of its employees, including the Mayor, or the
ANIZDA Board, took action that was intended to harm Plaza.5 In addition, the trial

       5
           For instance, the trial court noted that “[t]he emails and deposition testimony amply
illustrate the efforts undertaken” by the Mayor, the Director of Economic Development, and the
Chairman of the ANIZDA Board “to find an attractive enough incentive package to convince []
Talen to keep its corporate headquarters and the hundreds of employees who worked for Talen at
[Appellant’s] property, or alternatively, within the NIZ [Zone].” (Trial court op. at 10.) The trial
court further explained that

              [t]he predominant concern for [these] individuals was not so much the
              continued presence of Talen at [Appellant’s] property, but to retain
              Talen at any location in the NIZ [Zone]. This endeavor was the focus
              of these individuals not because they wished to harm [Appellant], but
              because it was critical to the financial success of the NIZ [Law and
              Zone] to retain Talen, its hundreds of employees, and the
              commensurate millions of dollars in state revenue flowing to the
              ANIZDA to support the bonds that financed the construction of the
              hockey arena . . . . To put it bluntly, ANIZDA could survive without
              [Appellant’s] property being rented, but it could not easily absorb the
              loss of Talen and its associated stream of tax dollars.

              Despite the fairly unbridled expanse of discovery permitted by the
              Court, [Appellant] has been unable to present any evidence that the
              Mayor intervened to persuade Talen to vacate [Appellant’s] premises.
              At most, the discovery materials reveal that the Mayor did not
              successfully cajole legislators to enact separate alternative funding so
              that [Appellant] could also [be] offer[ed] subsidized commercial
              rental rates, and the Mayor did not persuade the ANIZDA [B]oard to
              provide financial assistance to [Appellant].
(Footnote continued on next page…)

                                                 8
court noted that ANIZDA and its Board were separate and distinct governmental
entities from the City; the ANIZDA Board had control over the NIZ funds, but was
not named as a party in this suit; and, importantly, the ANIZDA Board does not have
eminent domain powers. The trial court found that Plaza failed to come forward with
sufficient evidence to establish that the City, the Mayor, or any of its employees
committed conduct that could be deemed as a causal or contributing factor in Plaza’s
loss of Talen as a tenant. Finally, the trial court pointed out that, before Talen
decided not to sign a lease extension, Plaza was not financially able to fulfill its
mortgage obligations and Lender instituted mortgage foreclosure proceedings.
Therefore, the trial court granted summary judgment in favor of the City and
dismissed Plaza’s petition with prejudice.
               Meanwhile, as noted above, while the eminent domain proceedings were
pending before the trial court, on August 7, 2018, the trial court entered an in rem
judgment in the foreclosure action against Plaza and in favor of Lender in the amount
of $69,485,302.36. Pursuant to the terms of the mortgage and security agreement
between Plaza and Lender, Plaza, as result of the judgment in foreclosure entered
against it, transferred and/or assigned to Lender all of the causes of action that Plaza
had with respect to the Property. Arguably, the transfer and/or assignment included
Plaza’s de facto claim in the eminent domain proceedings. Thereafter, on November
15, 2018, Lender assigned and/or transferred the mortgage judgment to Appellant,
along with all the corresponding rights in the mortgage and security agreement. After
the trial court entered summary judgment against Plaza on April 12, 2019, on April

(continued…)

(Trial court op. at 10-11.)

                                             9
26, 2019, a sheriff’s sale was held on the Property. At the sheriff’s sale, Appellant
purchased the Property for approximately $16 million, and the sheriff issued a new
deed within 60 days. (Reproduced Record (R.R.) at 2432a-2435a.)
             On May 8, 2018, Appellant filed a “Praecipe for Substitution of
Successor Petitioner” with the prothonotary of the trial court. Appellant asserted that
it was the present holder of the mortgage foreclosure judgment and mortgage and
security agreement and, also, the owner of the Property.          Therefore, Appellant
contended that it was “the successor party to Plaza,” “possesse[d] the right to pursue
Plaza’s claims in the instant action,” and was and is “the current party at interest in
this [e]minent [d]omain [a]ction.” (R.R. at 2434a.)
             On May 9, 2019, Appellant filed a notice of appeal to this Court. On
October 9, 2019, the City filed an application to quash and/or dismiss, contending
that Appellant failed to establish that it was a “successor” for purposes of Pa.R.C.P.
No. 2352(a), and that Appellant, as a purchaser of the Property after an alleged de
facto taking had occurred, does not have standing to appeal the order entering
summary judgment against Plaza. Appellant filed an answer on October 23, 2019,
emphasizing that under the law, it has special rights as an assignee of a cause of
action pursuant to the mortgage documents and mortgage judgment. By per curiam
order dated November 12, 2019, this Court deferred ruling on the City’s application
to quash and/or dismiss and ordered that it be listed with the merits of the appeal.

                                      Discussion
             On appeal, Appellant contends that the trial court erred in granting
summary judgment in favor of the City. However, before we can delve into the

                                           10
merits of this contention, we must initially address the City’s motion to dismiss for
lack of standing.
             Under Pa.R.C.P. No. 2352(a), titled “Substitution of Successor,” a
“successor may become a party to a pending action by filing of record a statement of
the material facts on which the right to substitution is based.” Id. In turn, Pa.R.C.P.
No. 2351 states that a “successor” is “anyone who by operation of law, election or
appointment has succeeded to the interest or office of a party to an action.” Id.
             However, under Pennsylvania law, Appellant “cannot claim damages for
a de facto taking which, if it happened at all, occurred prior to the time it became the
owner of the property.” Snap-Tite, Inc. v. Millcreek Township, 811 A.2d 1101, 1105
(Pa. Cmwlth. 2002); see also Fidelity-Philadelphia Trust Co. v. Kraus, 190 A. 874,
876 (Pa. 1937) (stating that “[t]he right to the damages resulting from the
[condemnation] did not pass to [the purchaser] by the sale; the right is personal and
does not run with the land”). Further, Appellant cannot claim any right to maintain
suit as a mortgagee or judgment creditor.           See 26 Pa.C.S. §103 (defining
“condemnee” as “[t]he owner of a property interest taken, injured or destroyed. The
term does not include a mortgagee, judgment creditor or other lienholder.”).
Relatedly, any assignment to Appellant of Lender’s purported right to recover
damages in the eminent domain proceedings, as part of the judgment in the mortgage
foreclosure action, was ineffectual as a matter of law, by virtue of the fact that the
Property had been purchased at a sheriff’s sale. See Warner’s Estate, 24 Pa. D. & C.
177, 182 (1935) (“[I]f a lienholder . . . is entitled to recover the damages paid by the
condemnor to the owner he must act while the relationship of lienholder and owner
still exists. If, without so acting, he forecloses his mortgage and takes title to the
land, he loses all right to damages because the mortgage is extinguished” (citing Irons

                                          11
v. Pittsburgh, 64 Pa. Super. 126, 130-31 (1916));6 cf. Mellon Bank, N.A. v. Crystian
(In re Crystian), 197 B.R. 803, 805 (Bankr. W.D. Pa. 1996) (concluding that where
“[t]he condemnation proceeds [were] the subject of a covenant and [were] assigned to
the [b]ank,” and “[i]n Pennsylvania, upon condemnation, a lien is divested from the
land but attaches by operation of law to the [proceeds],” “the assignment of the
proceeds in the mortgage covenant does not constitute additional security” to “the
lien of the mortgage”). Therefore, for purposes of the Rules of Civil Procedure,
Appellant, “by operation of law,” cannot be deemed a “successor” to Plaza, Pa.R.C.P.
No. 2351, and lacks standing to pursue this appeal.
              Accordingly, we grant the City’s motion to quash and dismiss the appeal
because Appellant does not possess standing to pursue it.
              Assuming, arguendo, that Appellant had standing to maintain this
appeal, we would conclude that its assertions of error lack merit. Appellant contends
that the trial court erred in granting summary judgment in favor of the City because
there are genuine issues of material fact regarding the role that the Mayor, the
Director of Economic Development, and the Chairman of the ANIZDA Board had
played with respect to Talen’s relocation.7 Appellant argues that the evidence it

       6
         In Irons, the Superior Court determined that while a mortgagee creditor has standing to
intervene and claim condemnation damages to the extent necessary to satisfy the lien, “[w]hen the
property was sold at judicial sale, the . . . mortgage was extinguished” and, therefore, “the land
pledged for the debt was reduced to possession by the creditor.” 64 Pa. Super. at 130.
Consequently, the former mortgagee “was no longer a lien creditor” and it could not recover
damages in the commendation proceedings because it could only do so “at a time when the relation
of owner and lien creditor exist[ed].” Id. at 130-31.

       7
         “Preliminary objections are the exclusive method under the Code of raising objections to a
petition for the appointment of a board of viewers alleging a de facto taking.” Genter v. Blair
County Convention and Sports Facilities Authority, 805 A.2d 51, 55 n.6 (Pa. Cmwlth. 2002).
Although the Code authorizes a court of common pleas to permit the parties to engage in discovery,
(Footnote continued on next page…)

                                                12
garnered from discovery is sufficient to establish that these individuals engaged in “a
concerted effort . . . to develop a special mechanism to enable [PPL] to vacate the
Property and relocate to a new, to-be-built property within the NIZ [Zone] and
receive NIZ benefits.” (Appellant’s Br. at 41.)
               We disagree. Viewing the record evidence in the light most favorable to
Appellant, and resolving all conflicts in the evidence in its favor, the evidence is
nonetheless insufficient to state a viable de facto taking claim as a matter of law. As
presented, Appellant’s claim does not fit within the basic rubric that is designed for a
de facto taking under the Code, and it is simply outside the legal scope of the
doctrine.
               In Pennsylvania, the theory of eminent domain has constitutional
underpinnings in the concept of just compensation for a governmental taking, and our
General Assembly has enacted the Code to provide a substantive right and procedure
to accomplish that end. See Pittsburgh Railways Co. v. Port of Allegheny County
Authority, 202 A.2d 816, 821 (Pa. 1964).                Section 502(c) of the Code vests a
landowner with a right to assert what is commonly known as a de facto claim or
taking. By its very nature, this type of claim involves specified property that has not
been formally taken by a governmental entity through the actual exercise of the

(continued…)

26 Pa.C.S. §306(f)(2), unlike civil actions governed by the Rules of Civil Procedure, the taking of
discovery does not convert the preliminary objections into a summary judgment motion. The end
result is that the standard of review for summary judgment motions, particularly the law pertaining
to the existence of a genuine issue of material fact, is inapplicable in this case. Unlike its role in
resolving summary judgment motions, a court of common pleas, in ruling on preliminary objections
in a case under the Code, is charged with resolving evidentiary conflicts. In re Condemnation by
Commonwealth, Department of Transportation, 827 A.2d 544, 547 n.4 (Pa. Cmwlth. 2003). In any
event, there has been no allegation that the trial court erred in utilizing the summary judgment
procedure to dispose of this case.

                                                 13
power of eminent domain, and it “is applicable only where a condemnor is found by
the court to have taken property without the filing of a declaration of taking.”
Department of Transportation v. Schodde, 512 A.2d 101, 102 n.1 (Pa. Cmwlth.
1986).
                Generally, the factual and legal matrix for a de facto claim takes one of
two forms. Where, as here, a governmental entity does not announce a plan or its
intention to institute formal condemnation proceedings to take a specified portion of
land or area, see, e.g., Lehigh-Northampton Airport Authority v. WBF Associates, LP,
728 A.2d 981, 985-89 (Pa. Cmwlth. 1999) (discussing cases),8 a landowner can assert
a de facto claim by establishing that the consequential or collateral effects from a
formal condemnation proceeding have resulted in a taking of his or her property. See,
e.g., Wolf v. Department of Highways, 220 A.2d 868, 871 (Pa. 1966).9

       8
           In Lehigh-Northampton Airport Authority, this Court described the test for such a claim a
follows:

                Where a property is designated for formal condemnation pursuant to a
                planned, prospective public improvement, adverse interim
                consequences caused to the property by the prospect of condemnation
                will not constitute a de facto taking unless those interim consequences
                are that the owner is deprived of the use and enjoyment of the
                property, or is subjected to the loss of the property before formal
                condemnation can provide compensation. If there has been such an
                interim deprivation of use, or exposure to loss, then the principle of de
                facto taking becomes applicable to accelerate the time when the
                governmental authority must make compensation.

728 A.2d at 988 (internal citation omitted). See also Visco v. Department of Transportation, 498
A.2d 984, 986-87 (Pa. Cmwlth. 1985) (discussing a case where “plans were recorded, with notices
of intention to condemn being sent to some property owners” and “the property involved was in the
line of taking”).

       9
         Wolf provides an example of this type of claim, namely where the Department of
Transportation condemns land to build roads or related infrastructure and a nearby landowner
(Footnote continued on next page…)

                                                  14
               In this context, a landowner such as Appellant must demonstrate, at a
minimum, three separate criteria. “[O]ne of the requisites of a de facto taking is that
the condemnor must be an entity clothed with the power of eminent domain.” In re
Condemnation by Commonwealth of Pennsylvania, Department of Environmental
Resources, 497 A.2d 284, 286 (Pa. Cmwlth. 1985). The second is that the “de facto
taking must result from a governmental body’s actual exercise of the power of
eminent domain.” Darlington v. County of Chester, 607 A.2d 315, 320 (Pa. Cmwlth.
1992). And the third is that “the damages sustained by the condemnee[—i.e., the
landowner—]must be an immediate, necessary[,] and unavoidable consequence of
such exercise.” Riedel v. County of Allegheny, 633 A.2d 1325, 1328 (Pa. Cmwlth.
1993). In other words, in its condensed formulation, “a de facto taking requires that
the injury complained of [be] a direct result of intentional action by an entity
incidental to its exercise of its eminent domain power.” In re Mountaintop Area Joint
Sanitary Authority, 166 A.3d 553, 562 (Pa. Cmwlth. 2017) (emphasis added).
               Here, the operative facts supporting Appellant’s claim that a de facto
taking had occurred stem from the ANIZDA Board’s conduct in issuing bonds to
fund a hockey facility in the NIZ Zone. However, as mentioned above, the ANIZDA
Board does not possess the statutory power to condemn. The ANIZDA Board is also
an instrumentality of the Commonwealth. As such, it is a governmental entity that is

(continued…)

sustains injury to his/her property interests: “Where land is taken or purchased for highways, the
abutting owner retains, as an incident to ownership of the remainder of his land, the right of access,
or of ingress and egress. This right cannot be taken from him unless compensation is made therefor
under the law.” Wolf, 220 A.2d at 871 (internal citation omitted). However, in Wolf, the alleged
harm to the landowner’s right of ingress was “too remote” and “entirely unrelated” to the “property
which was actually taken by the Commonwealth.” Id. at 873.

                                                 15
separate and distinct from the City. Therefore, because the General Assembly has not
granted the ANIZDA Board eminent domain authority, the activities of the ANIZDA
Board cannot serve as a basis for a de facto claim. See Rowland v. Department of
General Services, 820 A.2d 896, 899 (Pa. Cmwlth. 2003) (“[T]here is no dispute
between the parties that neither the State Armory Board nor [the Department of
Military and Veterans Affairs (DMVA)] is cloaked with the power of eminent
domain . . . . Consequently, any allegation by [the landowner] in his brief that either
the State Armory Board or DMVA effected a de facto taking of his property
necessarily fails.” (internal citations omitted)).
             Moreover, Appellant’s “de facto taking must result from [the] actual
exercise of the power of eminent domain.” Darlington, 607 A.2d at 320. Even if the
Mayor or the Director of Economic Development were clothed with the power to
condemn, which is highly questionable, that authority was not used in any manner. A
fortiori, to the extent Appellant had suffered harm to the Property, it was not related
to or incidental to an actual or formal condemnation by the Mayor or the Director of
Economic Development. Cf. In re Mountaintop Area Joint Sanitary Authority, 166
A.3d at 562 (explaining that a landowner did not state a claim for a de facto taking
where “the losses suffered by the [landowner] were merely the unintended
consequence” of the governmental authority’s condemnation activities and were “not
. . . related to or incidental to [the authority’s] condemnation powers”). Therefore,
Appellant cannot assert that the activities of Mayor or the Director of Economic
Development, in and of themselves, resulted in a de facto taking.
             To overcome these hurdles, Appellant seemingly attempts to
intermingle, both factually and legally, the conduct of the ANIZDA Board with the
agents of the City, the Mayor and the Director of Economic Development.

                                            16
Apparently, Appellant presupposes that the alleged condemnation power of the
Mayor and the Director of Economic Development can be imported, imputed, or
otherwise transferred to the ANIZDA Board. But only the General Assembly can
grant a governmental entity the authority to condemn, and it has not done so with the
ANIZDA Board. See Pittsburgh Railways Co., 202 A.2d at 821 (“The legislature can
grant the right to take private property for public use [and] may prescribe the kind
and character of the security to be given and the manner in which it shall be given.”).
             In short, Appellant’s claim is based on the implementation of legislation
that is economic in nature and alleges that the above-mentioned individuals and/or
entities conspired to place it at an economic disadvantage in the marketplace, which
ultimately resulted in the loss of a tenant. At its core, the gist of the action underlying
Appellant’s claim sounds as a “business tort” or a form of unfair competition rather
than a governmental taking. While Appellant argues that it has enough evidence to
prove arbitrary and calculated action on the part of the ANIZDA Board, the Mayor,
and the Director of Economic Development, and its theory may suffice for purposes
of some other cause of action, it is simply not one that fits within—or is cognizable
under—the Code.
             Perceiving no reason to gild the lily, we conclude that the trial court did
not err in granting summary judgment in favor of the City. Therefore, even if this
Court did not dismiss Appellant’s appeal for lack of standing, we would affirm the
trial court’s order on the merits.
             Accordingly, for the reasons stated above, we grant the City’s motion
and dismiss the appeal.

                                             ________________________________
                                             PATRICIA A. McCULLOUGH, Judge

                                            17
            IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Somera Road – 835 West Hamilton       :
Street, LLC,                          :
                 Appellant            :
                                      :    No. 568 C.D. 2019
            v.                        :
                                      :
City of Allentown                     :

                                   ORDER

            AND NOW, this 25th day of August, 2020, the motion to dismiss filed
by the City of Allentown is granted and the appeal filed by Somera Road – 835
West Hamilton Street, LLC, from the April 12, 2019 order of the Court of
Common Pleas of Lehigh County is hereby dismissed.

                                          ________________________________
                                          PATRICIA A. McCULLOUGH, Judge