Hatfield Township v. Lexon Insurance Co.
15 A.3d 547
| Pa. Commw. Ct. | 2011Background
- Hatfield Township seeks to enforce a performance bond (Bond No. 1018386) issued by Lexon to secure improvements for the Westport Farms development; Developer is the principal and has defaulted.
- Developer filed Chapter 11 bankruptcy in April 2009; bankruptcy stay limited claims against Developer for 60 days and later 45 days upon court orders.
- Township gave Default Notice to Developer on May 18, 2009; Township later indicated it would open a claim on the Bond after stay lifted.
- Lexon paid only a portion of the punch list items; Township pursued payment of the remaining Bond balance with costs, attorney’s fees, and damages under the Bond.
- Trial court granted partial preliminary injunction directing Lexon to pay $521,538 for specified public improvements due to health and safety concerns.
- Lexon appeals, arguing insufficient irreparable harm, lack of clear right to relief, and misapplication of statute-of-limitations and MPC remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Irreparable harm standard satisfied? | Township argues harm is irreparable due to public-safety risks and MPC §511 remedies. | Lexon contends harms are monetary and adequately remedied by bond payment and damages. | Irreparable harm established; equity may be exercised. |
| Clear right to relief and mandatory injunction? | Township asserts a clear right to relief under the Bond and MPC authority to enforce bond defenses. | Lexon argues unresolved factual issues and lack of clear entitlement to mandatory relief. | Township has a clear right to relief; injunction appropriate to address health/safety and bond enforcement. |
| Status quo requirement satisfied? | Township contends preserving status quo requires restoring improvements and security via bond proceeds. | Lexon asserts injunction disrupts status quo and effectively awards damages. | Remand to tailor relief to preserve status quo for each item; initial ruling overbroad. |
| Statute of limitations applicability (bond claims)near interaction with stays? | Township relies on § 5535(b) to toll during bankruptcy stays; § 5523(2)(3) not to bar relief. | Lexon argues limitations clock accrues when default occurs, stays toll not applicable. | § 5535(b) tolls during stays; limitations defenses rejected. |
Key Cases Cited
- Big Bass Lake Cmty. Ass'n v. Warren, 950 A.2d 1137 (Pa.Cmwlth. 2008) (standard for reviewing mandatory injunction grounds)
- Mazzie v. Commonwealth, 495 Pa. 128 (Pa. 1981) (strict requirements for mandatory injunctions; strong showing required)
- Jostan Aluminum Prod. v. Mount Carmel Dist. Indus. Fund, 389 A.2d 1160 (Pa. Super. 1978) (remedies at law may bar equity when damages suffice)
- Wayne Homeowners Ass'n v. Gambone Constr. Co., Inc., 893 A.2d 196 (Pa. Cmwlth. 2006) (status quo standard for equitable relief; level of scrutiny for mandatory injunctive relief)
- Commonwealth v. Coward, 489 Pa. 327 (Pa. 1980) (definition of status quo ante and restraint of injunctive relief)
- In re Briscoe, 448 F.3d 201 (3d Cir. 2006) (tolling and equitable relief considerations in bankruptcy contexts)