85 Pa. Commw. 377 | Pa. Commw. Ct. | 1984
Lead Opinion
Opinion by
The Lackawaxen Water & Sewer Company (Laekawaxen) appeals here from two orders of the Pennsylvania Public. Utility Commission (Commission) directing it, inter alia, to “return” sewer and water line connection fees paid by property owners in two developments. known as Masthope Rapids and Falling Waters at Masthope. We reverse.
Masthope Rapids and Falling Waters at Masthope are resort communities which were developed on two contiguous parcels of land by Masthope Rapids, Inc. and Falling Waters at Masthope, Inc. respectively. As these communities were built a common water and sewer system was installed by the developers. Individual lots were then sold subject to a restrictive covenant which required the purchaser or his or her successor in title to pay a $250 sewer line- and a $250 water line
At some point thereafter which is not disclosed in the record before us the water and sewer systems within the communities were transferred to Lackawaxen. Lackawaxen then sought and obtained a certificate of public convenience and commenced monthly charges for water and sewer service in April of 1981 pursuant to a duly filed tariff. Thereafter, on March 9, 1981, the Masthope Property Owners Council (¡Council), purporting to represent all Masthope Rapids property owners, filed a formal complaint with the Commission alleging therein, inter alia, that “Lackawaxen ... is attempting to charge the individual property owners a hook-up fee of $250.00, which we believe to be contrary to law.” Twelve other Masthope Rapids property owners apparently filed similar complaints, although these do not appear in the record before us, and these thirteen complaints were consolidated for disposition. In addition, a separate complaint was filed on August 21,1981, by Charles Fingerle, a resident of Masthope Rapids, which also raised the question of the legality of the $250 water and sewer line connection fees.
Following a hearing on the Council’s complaint, the issuance of an initial decision, the filing of exceptions, the disposition of these exceptions, an appeal by the complainants to the Commission, and the issuance of a remand order by the Commission, the administrative law judge (ALJ), without taking any additional evidence, issued an Initial Decision On Remand in which he concluded, inter alia, (1) that the sewer and water line connection fees which had been
Before this Court Lackawaxen maintains that the Commission erred as a matter of law by directing it to “return” water and sewer line connection fees which had not been paid to it. We agree.
The Commission notes in its brief to 'this Court that “ [t]he general rule is that when one company sells or transfers all of its assets to a successor company, the successor does not acquire the liabilities of the transferor corporation merely because of its succession to the transferor’s assets.” Dawejho v. Jorgensen Steel Co., 290 Pa. Superior Ct. 15, 18, 434 A.2d 106, 107 (1981). The Commission, citing several product liability cases, however, notes that there is a recognized exception to this general rule where the purchasing corporation is merely a continuation of the selling corporation, see Husak v. Berkel, Inc., 234 Pa. Superior Ct. 452, 341 A.2d 174 (1975), and asserts that Lackawaxen should therefore be liable for the refund
The cases relied upon by the Commission all involve instances where a transferor corporation transfers all of its assets to a new corporation which continues the transferor’s business, and where the transferor corporation, after the transfer of assets, ceases operations or no longer has substantial assets with which to meet its contractual or tort obligations. Under such circumstances a successor corporation may be held liable for the obligations of its predecessor in instances where a contrary conclusion would sanction fraud or would prevent individuals injured by defective products from obtaining recovery from those best able to bear the cost of injuries sustained from these products. Daivajko; Husak. Here, however, the record shows that the contractual right to receive the connection fees was never transferred to Lackawaxen, that Lackawaxen has not received any economic benefit from the fees that have so far been collected, and in fact would have difficulty paying back these fees under its current rate structure, and that the development companies that received the economic benefit from the collection of these fees are still in existence and have substantial assets. Under such circumstances we do not believe that the Commission could properly order Lackawaxen to “return” the connection, fees paid to third parties.
Finally we note, despite Lackawaxen’s assertions to the contrary in its brief to this Court, that the Commission would not be precluded from examining the reasonableness of the connection fees contractually imposed by the development companies in a proceeding instituted against those companies. A public utility cannot divest the Commission of its plenary power
Order in 29 C.D. 1983
Now, October 2, 1984, the order of the Pennsylvania Public Utility Commission adopted November 19, 1982 and entered December 7, 1982 is hereby reversed insofar as it orders the Lackawaxen Water & Sewer Company to reimburse $500 to Charles Fingerle, for water and sewer line connection fees paid by him to a third party.
Order in 114 C.D. 1983
Now, October 2, 1984, the order of the Pennsylvania Public Utility Commission adopted November 19, 1982 and entered December 29,1982 is hereby reversed insofar as it orders the Lackawaxen Water & Sewer Company to return water and sewer line connection fees.
Dissenting Opinion
Dissenting Opinion by
I respectfully dissent. One entity, a decedent’s estate, owns all of the capital stock of Masthope Rapids, Inc., Falling Waters at Masthope, Inc., and Lackawaxen. Water & Sewer Company. The two corporations. first named created two residential developments. Lackawaxen Water & Sewer Company was created by the owner of the development corporations as a vehicle for serving the residential lots with water and sewer. The hook-up charges in question were improperly imposed by and paid to the development cor
I believe that the Public Utility Commission properly disregarded the several corporate identities in ordering Laekawaxen to pay the lot owners the unlawfully exacted hook-up charges. The separate existence of corporate entities controlled by the same person may be disregarded whenever justice and public policy demand. Surely justice and public policy demand such in this case. Ashley v. Ashley, 482 Pa. 228, 393 A.2d 637 (1938). I would affirm the Public Utility Commission’s order and would not, as the majority does, suggest that the respondent property owners should commence new proceedings against the developer corporations.
