Technical Assistance - Pennsylvania Land Use Law : PA Land Use

Key Topic: Miscellaneous

There was no fraud involved in a transaction whereby the Township conveyed property to the Sewer Authority, without public advertisement and bidding, and the Sewer Authority subsequently sold to a third party because there is no requirement of public bidding when Township conveys property to a municipal authority and the Sewer Authority was not acting as a straw party to the transaction.

Carbo v. Redstone Township, 960 A.2d 899 (2008).

The Township sold land to the Sewer Authority for $3000, and the Sewer Authority subsequently sold to a third party, the Wrights, for $1.00. Carbo challenged the conveyances arguing that the Township violated Section 1503 of the Second Class Township Code which requires that real property valued in excess of $1500 must be publicly advertised and sold by the township to the highest bidder. Those requirements are not applicable to the sale of real estate from a township to a municipal authority.

Carbo alleged that the Wrights had a potential cause of action against the Township or the Sewer Authority for damage caused to their land when sewer improvements were installed. Carbo alleged that to resolve any potential claims, the Township and the Sewer Authority conspired to avoid the requirement that the property be publicly bid. The trial court found for the Township, Sewer Authority and Wrights.

Carbo appealed to the Commonwealth Court arguing that the conveyances viewed as a whole prove that the Township violated the Code. Carbo relied on a previous case, Greater Fourth Street Associates, Inc. v. Smithfield Township, where the court found that the transaction as a whole proved that the Township conspired to avoid the requirement of publication and competitive bidding. The Commonwealth Court found this situation distinguishable and found that the Sewer Authority did not act as a straw party to the transaction. First, the Wrights had a potential cause of action directly against the Sewer Authority, not the Township, so the Sewer Authority was not acting as an agent of the Township when it sold property to the Wrights. Further, the Township did not create the Sewer Authority for the sole purpose of disposing of real estate. The Commonwealth Court found there was no fraud involved in the transaction and that the Township Code authorized the conveyance to the Sewer Authority, and the MPC authorized the conveyance from the Sewer Authority to the Wrights.

Opinion Date: November 20, 2008

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