Adams Parking Garage, Inc., et al. v. City of Scranton, et al.

In 1989, Scranton Life sold certain properties, including the Garage, to the City of

Scranton (the "City") in lieu of condemnation. The sales agreement included a lease

provision, whereby the City, upon purchasing the Garage from Scranton Life, would

lease the Garage back to Adams Parking, apparently so that Scranton Life could ensure

parking for its tenants. The lease provided an initial five-year term and gave Adams

Parking the right to renew for five additional five-year terms. The agreement contained a

provision allowing either party to terminate the lease should the Garage be condemned

by "any governmental authority." Adams Parking operated the Garage pursuant to the terms of the parties’

agreement for nine years. During that period, however, City officials were engaged with

developers and officials of the Scranton Redevelopment Authority (the "SRA")

regarding the development of a blighted area that included the Garage. On September 9,

1997, the SRA adopted a resolution approving a redevelopment proposal for the

"Lackawanna East Redevelopment Area," a section of the City encompassing the

Garage. Determining that the area was blighted, the SRA condemned the Garage and

took ownership from the City on October 2, 1998. On December 9, 1998, the City

terminated its lease with Adams Parking.

Adams Parking challenged the condemnation of the Garage in state court. On

June 29, 1999, the Court of Common Pleas of Lackawanna County, finding that the

Garage was "in a[n] extremely deteriorating condition," 2 app. at 243a, upheld the

condemnation. Furthermore, the court found that the SRA’s certification of blight was in

accordance with the law and not done arbitrarily, capriciously, or in bad faith. Id. at

248a. On appeal, the Commonwealth Court affirmed and the Supreme Court of

Pennsylvania denied allocatur.

On July 9, 1999, Rinaldi, Adams Parking and Scranton Life filed the instant suit

in the United States District Court for the Middle District of Pennsylvania, alleging that

the defendants conspired to deprive them of their constitutionally protected property

interests in the Garage for various personal, political and economic reasons. See 2 app.

at 38a. The second amended complaint, brought pursuant to 42 U.S.C.  1983, contains

substantive and procedural due process claims, an equal protection claim, and a claim for

breach of contract under Pennsylvania law. On April 26, 2001, the district court granted

defendants’ motions for summary judgment and entered judgment in their favor and

against plaintiffs. Rinaldi, Adams Parking and Scranton Life timely appealed.

As an initial matter, the issue as to whether the condemnation itself was lawful

and done for the legitimate purpose of eradicating blight has already been determined

and was upheld by the courts of the Commonwealth. Collateral estoppel, or issue

preclusion, "prevents re-litigation of an issue in a later action, despite the fact that it isbased on a cause of action different from the one previously litigated. The identical issue

must have been necessary to final judgment on the merits, and the party against whom

the plea is asserted must have been a party, or in privity with a party, to the prior action

and must have had a full and fair opportunity to litigate the issue in question." Balent v.

City of Wilkes-Barre, 669 A.2d 309, 313 (Pa. 1995) (citing Allen v. McCurry, 449 U.S.

90, 94-95, 101 S.Ct. 411, 414-15 (1980)). Collateral estoppel prevents a question of law

or an issue of fact that has once been litigated and adjudicated finally in a court of

competent jurisdiction from being relitigated in a subsequent suit. See Day v.

Volkswagenwerk Aktiengesellschaft, 464 A.2d 1313, 1318 (Pa. Super. Ct. 1983)

(citations omitted).

The propriety of the condemnation of the Garage was unsuccessfully challenged

by Adams Parking’s preliminary objections in the Court of Common Pleas and appeals to

the Commonwealth Court and the Pennsylvania Supreme Court. The issues asserted by

Adams Parking in the state action included whether the Garage was, in fact, blighted, and

whether the SRA acted arbitrarily, capriciously or in bad faith in determining that it was.

In both actions, Adams Parking claimed that the condemnation was a "sham" contrived

so that the City could break its lease and deny Adams Parking compensation. See 2 app.

at 253a. After nine days of trial, the Court of Common Pleas found that the Garage was

in an "extremely deteriorating condition" and that the SRA’s certification of blight was
legitimate and not arbitrary, capricious, or done in bad faith or for an improper motive.

Id. at 87a, 92a. The Commonwealth Court affirmed and the Pennsylvania Supreme

Court denied allocatur. Thus, the district court properly found that "[t]he condemnation

itself cannot be challenged" as "[i]t has already been fully litigated and conclusively

determined in the courts of the Commonwealth."

Upon the lawful condemnation of the Garage, the City invoked the condemnation

clause to terminate the parties’ lease. The lease itself states that it is terminable if the

Garage is condemned by a "public authority created under [the Commonwealth’s] laws."

2 App. at 53a. The SRA is such a public authority. See 35 Pa. Cons. Stat. Ann.  1704.

Further, despite appellants’ assertions to the contrary, the SRA is an authority completely

separate from the City. See Herriman v. Carducci, 380 A.2d 761, 763 (Pa. 1977) ("An

authority under the Urban Redevelopment Law is an agent of the Commonwealth and

not of the local government body. As can be seen, the legislature in no uncertain terms

has made it clear that a redevelopment authority is a completely separate entity from the

city.") (citations omitted).

The SRA’s condemnation triggered the clear and unambiguous lease provision

that allowed the City to terminate upon condemnation of the Garage by "any

governmental authority." 2 App. at 53a. Where the contractual language is clear and

unambiguous, the court "must construe the contract only as written and may not modify

the plain meaning under the guise of interpretation." App. at 11a (quoting Lobaugh v.

Lobaugh, 753 A.2d 834, 836 (Pa. Super. Ct. 2000)). Accordingly, there was no breach

when, pursuant to the condemnation provision, the City terminated its lease with

appellants.

* * *

Click the case caption above for the full text of the Court's opinion.

Accordingly, the order of April 26, 2001 granting the defendants’ motions for

summary judgment and entering judgment in their favor, will be affirmed.

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