Redeveloper Flushes Sewer Authority Suit

     (CN) – A redeveloper need not defend the Pittsburgh Water & Sewer Authority against environmental claims over a $15 million project, a federal judge ruled.
     The lawsuit stems from the September 2004 decision of the Pennsylvania Department of Environmental Protection to issue a permit to Pittsburgh and its Water & Sewer Authority (PWSA). This move authorized the discharge of stormwater from small municipal separate storm sewer systems (MS4s) into the Monongahela, Allegheny and Ohio Rivers.
     But Citizens for Pennsylvania’s Future (PennFuture), a nonprofit environmental advocacy organization based in Harrisburg, Pa., said Pittsburgh was inconsistent with the ordinances it passed to comply with the permit.
     In 2007 and 2010, the laws ensured submission of a stormwater management site plan for any publicly funded development or redevelopment project.
     Pittsburgh allegedly failed to make the same plan for a Buncher Co. real estate development project near the Allegheny River, which received a $15 million assistance grant from Gov. Tom Corbett.
     PennFuture said Pittsburgh approved Buncher’s site plan as consistent with the city’s stormwater management regulations on May 3, 2012.
     The next month, PennFuture allegedly sent Pittsburgh an expert report of the site plan’s failure to comply with permit ordinances. It requested the withdrawal or suspension of the May 3 consistency letter, and asked for a meeting with the city and Buncher to resolve the issues.
     PennFuture then sued Pittsburgh for violating the Clean Water Act and Pennsylvania Clean Streams Law.
     After U.S. Magistrate Judge Robert Mitchell refused to dismiss the claims against the Water & Sewer Authority in December, the authority filed a third-party complaint against Buncher, alleging breach of contract for refusing to indemnify or defend PWSA in connection with PennFuture’s lawsuit.
     Mitchell dismissed that third-party action against Buncher on Monday.
     “The allegation that the city and PWSA violated a permit issued to them by the [Pennsylvania Department of Environmental Protection] PADEP to construct the municipal sewers is not the type of claim encompassed by the limited indemnification provision,” Mitchell wrote. “PennFuture’s complaint does not allege design defects or construction claims of the sewers or redevelopment project, it merely asserts that PWSA and the city violated the PADEP’s permit’s terms and conditions by either not submitting or submitting an improper storm water management site plan. The indemnification provision covers the construction and design of sewer and water lines, not litigation arising from the permits issued by the PADEP or the development agreement itself. Reading the indemnity provision in accordance with its plain meaning, Buncher does not have a duty to defend PWSA for the claims brought against it by PennFuture. Accordingly, Buncher has not breached the development agreement for refusing to defend PWSA in the underlying action, because it has no duty to defend PWSA. Therefore, PWSA’s claim for Buncher to provide a defense is dismissed with prejudice.”

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