Court Opinion

ID: 9915998
Source: CourtListenerOpinion
Date Created: 2024-01-09 15:09:47.308177+00
Date Added: 2024-06-11T13:23:22.079746
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

DVR Philly, LLC,                     :
                   Petitioner        :
                                     :
       v.                            : No. 74 C.D. 2023
                                     :
Philadelphia Regional Port Authority :
a/k/a PhilaPort (Board of Claims),   :
                   Respondent        : Submitted: November 9, 2023

BEFORE:       HONORABLE CHRISTINE FIZZANO CANNON, Judge
              HONORABLE ELLEN CEISLER, Judge
              HONORABLE LORI A. DUMAS, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE CEISLER                               FILED: January 9, 2024

       Petitioner DVR Philly, LLC, (DVR) petitions for review of the Pennsylvania
Board of Claims’ (Board) December 29, 2022 opinion and order (Order), through
which the Board sustained Respondent Philadelphia Regional Port Authority a/k/a
PhilaPort’s (PhilaPort) preliminary objections and dismissed DVR’s Statement of
Claim (Statement) with prejudice. Upon review, we vacate the Board’s Order and
remand this matter to the Board for further proceedings.
                                       I. Background
       In 2016, DVR and PhilaPort entered into an agreement, whereby DVR leased
125 acres of property from PhilaPort known collectively as “Southport Site I, Site 2,
Pier 98 Annex, Whiskey and Savage Yard.” Statement ¶10.1 Thereafter, in 2020, the
parties amended the agreement, in response to unspecified issues that had arisen
under the original version. Id. ¶11. As amended, the lease agreement requires

       1
         DVR did not provide the precise location or locations of the leased property; rather, it
only identified the parcels by the names used in the lease.
PhilaPort to provide DVR with several different types of rent credits and rebates.
See id. ¶¶32-39.
       On March 21, 2023, DVR filed its Statement with the Board. Therein, DVR
alleged that, per the terms of the amended agreement, PhilaPort had been obligated
to provide DVR with the promised credits and rebates beginning in May and June
of 2020, but had failed to actually do so until September and October of that year.
Id. ¶¶32-39, 42, 45, 49, 53, 57.2 Consequently, DVR asserted that it was entitled to
compensation from PhilaPort, in the form of interest at the legal rate of 6%3 on the
amount of delayed credits and rebates, that totaled $27,212.50. Id. ¶¶40-41, 43-44,
47-48, 51-52, 55-56, 59-61. DVR also stated that it had already sought to directly
recoup this interest from PhilaPort by filing a claim for payment with Jeffrey
Theobald, PhilaPort’s Executive Director and Chief Executive Officer, on February

       2
         DVR stated that the due date and actual payment date differed for each credit or rebate;
depending on the type of credit or rebate, some were owed beginning on May 1, 2020, while others
were owed beginning on June 1, 2020, and payment was made on some starting on September 15,
2020, while for others DVR did not receive payment until October 15, 2020. Statement ¶¶32-39,
42, 45, 49, 53, 57; see id., Ex. 4 (Section 5 of the amended agreement, which articulates the
parameters of the rent credits and rebates).

       3
          Per Section 202 of the Act of January 30, 1974, P.L. 13, “[r]eference in any law or
document enacted or executed heretofore or hereafter to ‘legal rate of interest’ and reference in
any document to an obligation to pay a sum of money ‘with interest’ without specification of the
applicable rate shall be construed to refer to the rate of interest of six per cent per annum.” 41 P.S.
§ 202. DVR avers that this statutory interest rate applies here, because “[t]here is neither a contract
between PhilaPort and DVR nor an applicable statute providing a rate of interest other than the
legal rate.” See Statement, ¶¶40-41.

                                                  2
10, 2021,4 but that PhilaPort had denied this claim on March 8, 2021, compelling
DVR to seek relief through the Board instead. Id. ¶¶8-9.5
       PhilaPort responded to the Statement by filing preliminary objections in the
nature of a demurrer on May 21, 2023. Specifically, PhilaPort argued that DVR was
seeking what was, in essence, prejudgment interest. Prelim. Objs. ¶¶9-10. According
to PhilaPort, it is an instrumentality of the Commonwealth and, thus, is not obligated
to pay such interest unless required to do so by contract or statute. Id. ¶12. PhilaPort
asserted that there was no such agreement or law authorizing DVR to seek or secure
prejudgment interest in this instance, thereby rendering DVR’s demand legally

       4
           DVR was required to do this in order to comply with Section 1712.1(b) of the
Commonwealth Procurement Code (Procurement Code), which reads as follows: “A claim shall
be filed with the contracting officer within six months of the date it accrues. If a contractor fails to
file a claim or files an untimely claim, the contractor is deemed to have waived its right to assert a
claim in any forum. Untimely filed claims shall be disregarded by the contracting officer.” 62 Pa.
C.S. § 1712.1(b). “Contracting officer” is defined in the Procurement Code as “[a] person
authorized to enter into and administer contracts and make written determinations with respect to
contracts.” Id. § 103. In its Statement, DVR identified Theobald as PhilaPort’s contracting officer.
Statement, ¶7.

       5
           Per Section 1712.1(d) and (e) of the Procurement Code:
                (d) Determination.--The contracting officer shall review a claim and
                issue a final determination in writing regarding the claim within 120
                days of the receipt of the claim unless extended by consent of the
                contracting officer and the contractor. If the contracting officer fails
                to issue a final determination within the 120 days unless extended
                by consent of the parties, the claim shall be deemed denied. The
                determination of the contracting officer shall be the final order of
                the purchasing agency.
                (e) Statement of claim.--Within 15 days of the mailing date of a final
                determination denying a claim or within 135 days of filing a claim
                if no extension is agreed to by the parties, whichever occurs first,
                the contractor may file a statement of claim with the [B]oard.
62 Pa. C.S. § 1712.1(d)-(e).

                                                   3
unviable. Id. ¶¶14-17. As such, PhilaPort requested that the Board dismiss the
Statement with prejudice. Id., Wherefore Clause.
      The Board assented to PhilaPort’s request by sustaining the preliminary
objections on December 29, 2022. In doing so, the Board explained that its authority
to award interest was governed by Section 1751 of the Procurement Code. Board’s
Order at 6. This statute provides, in relevant part:
             Interest on amounts ultimately determined to be due shall
             be payable at the statutory rate applicable to judgments
             from the date the claim was filed with the contracting
             officer.
62 Pa. C.S. § 1751. The Board interpreted this language as allowing it to award
interest to a claimant, while also prohibiting such an award for any time period prior
to when the relevant claim had been filed with the designated contracting officer.
Board’s Order at 7. The Board then concluded that it had no authority to award DVR
the compensation it sought from PhilaPort, because DVR only sought interest that
had theoretically accumulated well before February 10, 2021, the date upon which
DVR had filed its claim with PhilaPort’s contracting officer. Id. at 7-8. Accordingly,
the Board dismissed DVR’s Statement with prejudice. Id. at 8. This appeal to our
Court followed shortly thereafter.
                                        II. Discussion
      DVR maintains that the Board improperly sustained PhilaPort’s preliminary
objections for several reasons, which we summarize as follows.6 First, the Board

      6
             We note . . . that the standard for review for preliminary objections
             is a limited one. . . . All material facts set forth in the complaint as
             well as all inferences reasonably deducible therefrom are admitted
             as true for the purpose of this review. The question presented by the
             demurrer is whether, on the facts averred, the law says with certainty
             that no recovery is possible. Where a doubt exists as to whether a
(Footnote continued on next page…)

                                                4
erred by sua sponte using Section 1751 of the Procurement Code as the basis for
dismissing the Statement, because PhilaPort did not predicate its argument upon this
law or even mention this statute in its preliminary objections. DVR’s Br. at 10-11.
Second, the Board’s interpretation of Section 1751 is erroneous on its merits, as
neither that statute nor any case law prevents the Board from awarding interest to a
claimant calculated from the date upon which a contractual breach occurred. Id. at
11-16. Finally, PhilaPort is not immune from liability for interest of the kind that
DVR seeks, because the General Assembly waived any such immunity by
establishing the Board, as well as because PhilaPort is a mere instrumentality of the
Commonwealth of Pennsylvania and is not imbued with the full panoply of
immunities held by its parent entity. Id. at 16-19.
       With regard to DVR’s first argument, it is beyond cavil that an adjudicatory
body must remain neutral when handling a legal dispute and “should not act as a
party’s advocate.” Battiste v. Borough of E. McKeesport, 94 A.3d 418, 423 n.7 (Pa.
Cmwlth. 2014). It follows from this that an administrative tribunal “may not, sua
sponte, augment the subject matter of a proceeding” by addressing issues that were
not raised by the parties thereto. Sunoco Pipeline, L.P v. Pub. Util. Comm’n, 295
A.3d 37, 52 (Pa. Cmwlth. 2023); see Follett v. Workers’ Comp. Appeal Bd.
(Massachusetts Mut. Life Ins. Co.), 551 A.2d 616, 621 (Pa. Cmwlth. 1988) (“Sua

               demurrer should be sustained, this doubt should be resolved in favor
               of overruling it.
Emps. Ins. of Wausau v. Dep't of Transp., 865 A.2d 825, 830 n.5 (Pa. 2005) (internal citations and
some punctuation omitted).
        “In reviewing a Board decision[,] this Court determines whether the Board committed an
error of law, whether the necessary findings were supported by substantial evidence, or whether
constitutional rights were violated. Our standard of review of [a Board] order sustaining
preliminary objections based on an issue of law is de novo, and our scope of review is plenary.”
Lobar Assocs., Inc v. Pa. Tpk. Comm’n, 216 A.3d 526, 533 n.7 (Pa. Cmwlth. 2019) (internal
citations omitted).

                                                5
sponte consideration of an issue deprives counsel of the opportunity to brief and
argue the issues and the [administrative tribunal] of the benefit of counsel’s
advocacy. Moreover, raising issues sua sponte after the record is closed and without
notice to the parties constitutes a due process violation.”). That said, “it [is] within
the power and authority of any tribunal performing quasi-judicial functions to
determine the nature and extent of its own jurisdiction.” Kim v. Est. of
Heinzenroether, 390 A.2d 874, 876 (Pa. Cmwlth. 1978).7 Furthermore,
              any issue going to the subject matter jurisdiction of a court
              or administrative tribunal to act in a matter . . . cannot be
              waived by the parties[,] nor can the parties confer subject
              matter on a court or tribunal by agreement or stipulation.
              Since an issue of subject matter jurisdiction is not
              waivable, it may be raised at any stage of a proceeding by
              a party, or sua sponte by the court or agency.
Blackwell v. State Ethics Comm’n, 567 A.2d 630, 636 (Pa. 1989) (internal citations
omitted).
       In this instance, PhilaPort did not cite to or discuss Section 1751 of the
Procurement Code in its preliminary objections, or assert therein that the Board had
no authority whatsoever to award prejudgment interest to a claimant. Rather, it
predicated its entire argument upon its position that DVR could not recoup
prejudgment interest because, first, PhilaPort is a component of the Commonwealth
and, second, because there were no relevant contractual or statutory provisions
allowing such relief. Prelim. Objs. ¶¶12-16. Despite this, the Board did not address
PhilaPort’s assertion of immunity, but instead relied exclusively upon Section 1751
when concluding that “pursuant to statute, [the Board] may only award interest upon

       7
         “Jurisdiction relates solely to the competency of the particular court or administrative
body to determine controversies of the general class to which the case then presented for its
consideration belongs.” Del. River Port Auth. v. Pa. Pub. Util. Comm’n, 182 A.2d 682, 686 (Pa.
1962).

                                               6
claims brought before it that accrue[] after the filing of the [an] administrative claim
with the agency[’]s contracting officer.” Decision at 7. The argument put forth by
PhilaPort in its preliminary objections and the one addressed by the Board in its
Decision are markedly different and, therefore, cannot be construed as addressing
the same issue.
      It appears that the Board treated Section 1751 of the Procurement Code as if
that statute deprived it of jurisdiction to award the relief sought by DVR. To reiterate,
Section 1751 reads, in relevant part:
             Interest on amounts ultimately determined to be due shall
             be payable at the statutory rate applicable to judgments
             from the date the claim was filed with the contracting
             officer.
62 Pa. C.S. § 1751. Determining the meaning of this language presents a question of
pure statutory interpretation.
             The object of statutory construction is to ascertain and
             effectuate legislative intent. 1 Pa. C.S. § 1921(a). In
             pursuing that end, we are mindful a statute’s plain
             language generally provides the best indication of
             legislative intent. See Com[.] v. McClintic, . . . 909 A.2d
             1241 ([Pa.] 2006). Thus, statutory construction begins
             with examination of the text itself. [Se.] Pa. Transp. Auth.
             v. Holmes, 835 A.2d 851 (Pa. Cmwlth. 2003).
             In reading the plain language of a statute, “[w]ords and
             phrases shall be construed according to rules of grammar
             and according to their common and approved usage.” 1 Pa.
             C.S. § 1903(a). Further, every statute shall be construed, if
             possible, to give effect to all its provisions so that no
             provision is “mere surplusage.” 1 Pa. C.S. § 1921(a).
             Moreover, although we must “listen attentively to what a
             statute says[;] [o]ne must also listen attentively to what it
             does not say.” Kmonk-Sullivan v. State Farm Mut. Auto.
             Ins. Co., . . . 788 A.2d 955, 962 ([Pa.] 2001). We may not
             insert a word the legislature failed to supply into a statute.

                                           7
             Girgis v. Bd. of Physical Therapy, 859 A.2d 852 (Pa.
             Cmwlth. 2004).
Malt Beverage Distribs. Ass’n v. Pa. Liquor Control Bd., 918 A.2d 171, 175-76 (Pa.
Cmwlth. 2007). “When the words of a statute are clear and free from all ambiguity,
the letter of it is not to be disregarded under the pretext of pursuing its spirit.” 1 Pa.
C.S. § 1921(b). “However, if we deem the statutory language ambiguous, we must
then ascertain the General Assembly’s intent by statutory analysis, wherein we may
consider numerous relevant factors.” Bowman v. Sunoco, Inc., 65 A.3d 901, 906 (Pa.
2013) (citing 1 Pa. C.S. § 1921(c)).
             A statute is ambiguous when there are at least two
             reasonable interpretations of the text. . . . In construing and
             giving effect to the text, “‘we should not interpret statutory
             words in isolation, but must read them with reference to
             the context in which they appear.’” Roethlein v. Portnoff
             Law Assoc., . . . 81 A.3d 816, 822 ([Pa.] 2013), citing
             Mishoe v. Erie Ins. Co., . . . 824 A.2d 1153, 1155 ([Pa.]
             2003)[; a]ccord [Pa. Gaming Control Board v. Off. of
             Open Recs.], . . . 103 A.3d 1276, 1285 ([Pa.] 2014) (party’s
             argument that statutory language is ambiguous “depends
             upon improperly viewing it in isolation;” when language
             is properly read together and in conjunction with rest of
             statute, legislative intent is plain).
A.S. v. Pa. State Police, 143 A.3d 896, 905-06 (Pa. 2016) (some citations omitted).
      Applying these precepts to Section 1751 of the Procurement Code, we observe
that this statute explicitly authorizes an award of interest calculated from when a
claim was filed with the appropriate contracting officer. By contrast, it is entirely
silent regarding whether interest may be awarded prior to the filing of such a claim.
We also note that there are no other applicable provisions, in the Procurement Code
or elsewhere, that expressly permit an award of pre-claim interest regarding this type
of contractual dispute. Therefore, we read Section 1751 as plainly vesting the Board

                                            8
with the ability to award interest to a claimant, but only that which accrued post-
claim.8
       However, this does not mean that Section 1751 is jurisdictional in nature.
Rather, it is an object example of a statute that limits a tribunal’s power, rather than
its jurisdictional authority.
               ‘Jurisdiction’ and ‘power’ are not interchangeable
               although judges and lawyers often confuse them.
               Jurisdiction relates solely to the competency of the
               particular court or administrative body to determine
               controversies of the general class to which the case then
               presented for its consideration belongs. Power, on the
               other hand, means the ability of a decision-making body
               to order or effect a certain result.
Del. River Port Auth., 182 A.2d at 686 (internal citation omitted). “The pertinent
consideration [regarding jurisdictional issues] is whether the court could ‘enter upon
the inquiry, not whether it might ultimately decide that it was unable to grant the
relief sought in the particular case.’” Domus, Inc. v. Signature Bldg. Sys. of Pa., LLC,
252 A.3d 628, 636 (Pa. 2021) (quoting Cnty. of Allegheny v. Workers’ Comp. Appeal
Bd. (Parker), 177 A.3d 864, 872 n.10 (Pa. 2018)).
               Even if a plaintiff ha[s] no standing to bring his action,
               even if his statement of claim or bill in equity be
               demurrable, even if he fail[s] to establish the allegations in
               his complaint, even if the court ultimately conclude[s] that
               the relief he seeks should not be granted in whole or in
               part, not any or all of these circumstances would enter into,
               much less determine, the question whether the court has
               jurisdiction of the litigation.
       8
         This represents a significant change from the Procurement Code’s predecessor, the former
Board of Claims Act (Claims Act). Act of May 20, 1937, P.L. 728, as amended, formerly 72 P.S.
§§ 4651-1-4651-10, repealed by the Act of December 3, 2002, P.L. 1147, No. 142. Under the
Claims Act, which did not impose similar limitations on the Board regarding awarding interest,
accrual of such interest began “run[ning] from the date on which the Commonwealth’s
[contractual] obligation . . . to the [claimant] arose.” Dep’t of Prop. & Supplies v. Berger, 312 A.2d
100, 107-08 (Pa. Cmwlth. 1973).

                                                  9
Sch. Dist. of Zerbe Twp. v. Thomas, 44 A.2d 566, 568 (Pa. 1945).
          No such jurisdictional concerns exist here. By law, our General Assembly
expressly established PhilaPort “as a public authority and instrumentality of the
Commonwealth[,]” and vested it with the ability to “exercise the powers of the
Commonwealth as an agency of the Commonwealth.” 55 P.S. § 697.4.9 Additionally,
Section 1724(a) of the Procurement Code states, in relevant part:
                    The [B]oard shall have exclusive jurisdiction to arbitrate
                    claims arising from all of the following:
                          (1) A contract entered into by a Commonwealth
                          agency in accordance with this part and filed with
                          the [B]oard in accordance with [S]ection 1712.1 [of
                          the Procurement Code] (relating to contract
                          controversies).
                          ....
                          (3) Unless otherwise provided by law, a contract
                          entered into by a Commonwealth agency involving
                          real property interests in which the Commonwealth
                          agency is the respondent.
62 Pa. C.S. § 1724(a)(1), (3). Given that the current dispute arose from PhilaPort’s
agreement to lease certain parcels of land to DVR, these two statutes collectively,
and indisputably, gave the Board jurisdiction over the current dispute. Furthermore,
while the Board’s ability to award interest is certainly circumscribed by Section 1751
of the Procurement Act, it remains that this limitation only affects the relief the
Board is able to provide to successful claimants, not its authority to adjudicate
disputes. It was therefore erroneous for the Board to raise Section 1751 in a sua
sponte fashion and rely upon that statutory language as the basis for sustaining
PhilaPort’s preliminary objections.

          9
              Section 4 of the Philadelphia Regional Port Authority Act, Act of July 10, 1989, P.L. 291,
No. 50.

                                                    10
                                     III. Conclusion
       In accordance with the foregoing analysis, we vacate the Board’s Order and
remand this matter to the Board, with instructions that it issue an amended opinion
and order within 30 days that adjudicates the specific argument made by PhilaPort
in its preliminary objections.10

                                          _____________________________
                                          ELLEN CEISLER, Judge

       10
          Due to our disposition of this appeal, we decline to reach DVR’s remaining argument
regarding whether PhilaPort is immune from liability for prejudgment interest.

                                             11
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

DVR Philly, LLC,                     :
                   Petitioner        :
                                     :
       v.                            : No. 74 C.D. 2023
                                     :
Philadelphia Regional Port Authority :
a/k/a PhilaPort (Board of Claims),   :
                   Respondent        :

                                     ORDER

      AND NOW, this 9th day of January, 2024, it is hereby ORDERED that
Pennsylvania Board of Claims’ (Board) December 29, 2022 opinion and order is
VACATED. It is FURTHER ORDERED that this matter is REMANDED to the
Board, with instructions that it issue an amended opinion and order within 30 days
that adjudicates the specific argument made by Respondent Philadelphia Regional
Port Authority a/k/a PhilaPort in its preliminary objections.
      Jurisdiction relinquished.

                                       __________________________________
                                       ELLEN CEISLER, Judge