Oral Civil Arguments

Lobolito is the owner and developer of a tract of land in Lehigh Township where it proposed to develop 205 residential lots.



The school district entered into a joint development agreement with Lobolito on May 15, 1991, providing that Lobolito would build a sewage treatment plant and the district would build a new elementary school, which would make use of the plant.



According to the agreement, either party could terminate the agreement at any time prior to the construction of the plant.



In December 1994, Lobolito and the school district entered into another agreement reflecting changes in the location of the proposed plant and financing arrangements. The district agreed to continue with construction of the school when Lobolito was able to offer the sewage disposal service.



The result of the agreement was that the school district was no longer responsible with Lobolito for the costs of planning and permitting.



Meanwhile, Lobolito had applied for and received a permit from the Department of Environmental Resources. The decision to grant the permit was appealed to the Environmental Hearing Board by Lehigh Township and Lackawanna County.



On Dec. 6, 1995, the district decided not to build the new school. The EHB remanded the issuance of the permit to the DER in light of the fact that the district had canceled the school building project.



Lobolito sued the district for breach of contract. The Wayne County Common Pleas Court dismissed the complaint. Lobolito appealed to the Superior Court, which ruled that proper jurisdiction was in the Commonwealth Court.

Governmental Capacity

Lobolito claimed the district was acting in its proprietary capacity because it contracted to utilize its sewage facility, rather than contracting to build a school.



But the Commonwealth Court ruled that the district was acting in a governmental capacity and could not be sued for breach of contract.



“Pursuant to the terms of the agreement itself, the district was bound to proceed with the construction of the new school. Moreover, the district’s use of sewage facilities was clearly ancillary to the use of the new school building, and these separate aspects of the contract could not under these circumstances be treated separately,” Commonwealth Court Judge Bonnie Brigance Leadbetter wrote in the opinion.



“Holding the new board to the sewage facility portion alone would impermissibly chill its exercise of discretion with regard to its governmental function. Thus the succeeding board was permitted by law to disavow the agreement. Since no breach of contract occurred, Lobolito was not entitled to consequential damages.”

Petition