108 A.3d 132
Pa. Commw. Ct.2015Background
- Ohioville Borough Municipal Authority bought water from Midland since 1964; their written contract expired in 2004 but Midland continued service.
- Midland sent a notice dated April 14, 2009 increasing the monthly rate to $41.90 per 1,000 cu ft “effective with the July 1, 2009 billing.”
- Midland billed Ohioville on June 30, 2009 at the increased rate; Ohioville paid part of that bill ($16,074.52) but left a $14,050.81 balance unpaid and later paid subsequent bills at the higher rate.
- Midland sued in October 2011 seeking the unpaid $14,050.81 (breach of contract implied in fact and unjust enrichment); primary dispute was construction of the phrase “effective with the July 1, 2009 billing.”
- Trial court denied Ohioville’s motion for judgment on the pleadings, granted reconsideration, held a hearing on the ambiguous phrase, found Midland’s routine practice was to bill at month-end for that month’s usage (so the “July 1” billing referred to the June 30 bill), and entered judgment for Midland.
- Ohioville appealed, arguing (1) trial court improperly relied on hearing evidence when ruling on a motion for judgment on the pleadings, (2) the case should have gone to compulsory arbitration under local rules, and (3) any ambiguity should be construed against Midland (contra proferentem).
Issues
| Issue | Plaintiff's Argument (Midland) | Defendant's Argument (Ohioville) | Held |
|---|---|---|---|
| Whether the trial court erred by considering hearing evidence when deciding a motion for judgment on the pleadings | Court did not finally decide on pleadings; it held a hearing and entered judgment after full presentation | Court improperly relied on evidence outside pleadings to decide judgment on the pleadings | No error — trial court did not enter judgment on the pleadings; it held a hearing and entered judgment after both sides presented evidence |
| Whether the case had to be submitted first to compulsory arbitration under local rules | Court has discretion and jurisdiction to decide cases even if local rule arbitration was not followed; no prejudice shown | Failure to submit to compulsory arbitration deprived the court of authority to enter judgment | Arbitration omission does not divest court of jurisdiction; no prejudice shown so judgment valid |
| Proper interpretation of “effective with the July 1, 2009 billing” | Phrase refers to the bill issued on or about July 1 (i.e., Midland’s routine month-end bill for June usage) | Phrase means rate applies only to usage beginning July 1 (so June bill shouldn't have been increased) | Ambiguous phrase clarified by extrinsic evidence of Midland’s routine practice; it meant the June 30 bill (June usage) and judgment for Midland affirmed |
| Whether contra proferentem required construing ambiguity against Midland | Midland: extrinsic evidence resolved ambiguity, so construction rule unnecessary | Ohioville: ambiguous notice must be construed against drafter under contra proferentem | Because extrinsic evidence clarified parties’ intent, court need not apply contra proferentem; rule only when ambiguity remains after inquiry |
Key Cases Cited
- Pfister v. City of Philadelphia, 963 A.2d 593 (Pa. Cmwlth. 2009) (scope of consideration on motion for judgment on the pleadings)
- Parish v. Horn, 768 A.2d 1214 (Pa. Cmwlth. 2001) (judgment on the pleadings standard)
- Monahan v. McGrath, 636 A.2d 1197 (Pa. Super. 1994) (failure to follow arbitration rule does not deprive court of jurisdiction)
- McGaffic v. City of New Castle, 74 A.3d 306 (Pa. Cmwlth. 2013) (contract interpretation is a question of law reviewed plenarily)
- Sun Co. (R & M) v. Pennsylvania Turnpike Commission, 708 A.2d 875 (Pa. Cmwlth. 1998) (rules for ascertaining parties’ intent and ambiguity)
- Burns Mfg. Co. v. Boehm, 356 A.2d 763 (Pa. 1976) (construction rules aid but do not replace inquiry into surrounding circumstances)
- CoreStates Bank of Delaware v. Richter, 721 A.2d 805 (Pa. Super. 1998) (trial without prior arbitration is not null and void)