Limbach Co., LLC v. City of Philadelphia

905 A.2d 567, 2006 Pa. Commw. LEXIS 399, 2006 WL 2041748
CourtCommonwealth Court of Pennsylvania
DecidedJuly 24, 2006
Docket1575 C.D. 2005
StatusPublished
Cited by51 cases

This text of 905 A.2d 567 (Limbach Co., LLC v. City of Philadelphia) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Limbach Co., LLC v. City of Philadelphia, 905 A.2d 567, 2006 Pa. Commw. LEXIS 399, 2006 WL 2041748 (Pa. Ct. App. 2006).

Opinion

OPINION BY

Judge LEAVITT.

Limbach Company, LLC and Limbach Company, LLC/Parker Associates, a Joint Venture (collectively Limbach) appeal the decision of the Court of Common Pleas of Philadelphia County (trial court) dismissing Limbach’s complaint for damages for work it performed, but was not paid for, at two new terminals at the Philadelphia International Airport. Limbach did this work under contract with U.S. Airways, which is beyond suit because of its bankruptcy. However, funding for Limbach’s work came not from U.S. Airways but from the City of Philadelphia and the Philadelphia Authority for Industrial Development (Industrial Authority), 1 which issued bonds to cover the cost of the construction on the new terminals. Limbach filed a complaint to hold the City and the Industrial Authority liable for Limbach’s unpaid invoices because they own the new improved terminals; Limbach’s work on the terminals was done under their direction and with their approval; and they provided the funds used to pay Limbach and other construction contractors. Indeed, Limbach argues that since U.S. Airways had no obligation to repay the City and the Industrial Authority for the financing, U.S. Airways acted as a “straw man” for the City and the Industrial Authority in the new terminal project.

The trial court, in several orders, disposed of Limbach’s complaint. It concluded that the evidence did not demonstrate that the City and the Industrial Authority had been unjustly enriched and that the facts, as pled in Limbach’s complaint, were inadequate to support Limbach’s alternative theory that it was a third party beneficiary of certain contractual arrangements between the City and Industrial Authority that established the funding for construction of the terminals. In this appeal, we consider whether the trial court erred.

BACKGROUND

The City owns the land on which the Philadelphia International Airport is located, and it administers the operation of the airport through the Division of Aviation of the City’s Department of Commerce. Increased domestic and international air traffic led to a plan for a new regional terminal (Terminal F) and a new international terminal (Terminal One). Pursuant to a Ground and Improvement Lease (Ground Lease), the City leased the land on which the two new terminals were to be built to the Industrial Authority; the City also granted the Industrial Authority the right to undertake the construction of the two new terminals (Project). In turn, the Industrial Authority entered into a Development Lease with U.S. Airways. Reproduced Record at 32a-202a (R.R. —). Pursuant to the terms of the Development *570 Lease, the Industrial Authority is the owner of the Project, while under the Ground Lease the City retains a right of reversion in and to the physical structures. Once the Project was completed, the Industrial Authority held title and leased the new terminals back to the City, which the City in turn subleased to U.S. Airways and other airlines.

Under the Development Lease, U.S. Airways was authorized to “design and construct, or cause to be designed and constructed, each and every of the Project Elements.” Development Lease, Article 4.2; R.R. 60a. However, the Industrial Authority and the City retained the right to control the design of the Project and its construction. For example, the Industrial Authority had a right to review and approve all schematic designs, design-development and construction-bid documents, as well as any other design or construction change orders, before any construction could be implemented by U.S. Airways. Development Lease, Article 4.21(C)(1); R.R. 67a. Similarly, the Development Lease provided that the “City, in its sole discretion, may reject any designs so submitted and require U.S. Airways to resubmit designs and layout proposals until they meet City’s requirements and are approved by City.” Development Lease, Article 4.22(B)(1); R.R. 69a-70a.

In addition, the City and the Industrial Authority entered into an Inter-governmental Agreement by which the City provided “administrative support” to the Industrial Authority on the Project; assumed certain of the Industrial Authority’s “administrative responsibilities;” and assumed “certain risks and responsibilities” associated with the Industrial Authority’s performance under the Development Lease. R.R.1950a-1951a.

The Industrial Authority financed the construction of the new terminals with two bond issuances: the first bond was in the amount of $443,700,000 and the second in the amount of $187,680,000. The City issued the Industrial Authority a General Airport Revenue Bond (GARB) in an amount equal to the bonds issued by the Industrial Authority. The City used the fees it received under its subleases with the airlines to make its GARB payments to the Industrial Authority; in turn, the Industrial Authority used the City’s GARB payments to finance the debt service on its bonds. The Industrial Authority bond funds (Bond Funds) were held by a trustee 2 and used to compensate the construction contractors for their work on the new terminals.

On October 26, 1999, U.S. Airways contracted with Williard, Inc. to do the electrical work at the new terminals and with Williard, Inc./Parker Associates, a joint venture, to do the HVAC/mechanical work. The two contracts are identical in all material aspects, except for the description of the work to be done. Relevant here is the contract term stating that U.S. Airways “shall pay or cause the [trustee of the Bonds Funds] to fay the amount otherwise due on any payment application.” Williard Contract, Article 15.2.1; R.R. 1030a (emphasis added). Subsequently, Limbach replaced Williard, Inc. as successor corporation. 3

From 1999 to 2002, the contracts between Limbach and U.S. Airways operated as contemplated. As Limbach completed work, it invoiced U.S. Airways. Where *571 invoices were approved by the Industrial Authority, U.S. Airways directed the trustee to pay the Limbaeh invoices, and the trustee did so by tapping the Bond Funds. 4 However, on May 29, 2002, U.S. Airways notified Limbaeh that it was terminating the contracts for convenience. 5 In response, on July 10, 2002, Limbaeh filed an assumpsit action in the Court of Common Pleas of Allegheny County against U.S. Airways, seeking $8,865,747 for electrical work and $5,915,912 for HVAC work done before the contracts were terminated. On August 11, 2002, U.S. Airways filed for protection under Chapter 11 of the United States Bankruptcy Code. Limbaeh then filed proofs of claim in the bankruptcy action to recover the amounts owing under the contracts. On June 7, 2004, Limbaeh received $1,543,468 for electrical work and Limbach/Parker received $999,375 for the HVAC work on the claims it filed in the bankruptcy proceeding.

On March 19, 2003, Limbaeh filed the action we consider here against the City, the Industrial Authority, and U.S. Airways, seeking damages for the work that was done, but not paid for, under two alternative legal theories in eight separate counts.

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905 A.2d 567, 2006 Pa. Commw. LEXIS 399, 2006 WL 2041748, Counsel Stack Legal Research, https://law.counselstack.com/opinion/limbach-co-llc-v-city-of-philadelphia-pacommwct-2006.