Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 85-7452).
Higginbotham, Mansmann, and Rosenn, Circuit Judges.
This class action under 42 U.S.C. § 1983 against the City of Philadelphia was instituted by residents of Philadelphia who are consumers of gas purchased from the Philadelphia Gas Works ("PGW"). The plaintiffs alleged that the transfer of $6.5 million from the PGW's sinking fund reserve to the General Fund of the City of Philadelphia constituted a special assessment against them and was violative of their rights under the equal protection clause of the 14th Amendment, a taking of property without just compensation in violation of the 5th Amendment and was violative of Pennsylvania's law of municipal utilities. The district court entered summary judgment for the defendant City of Philadelphia, finding that the plaintiffs had failed to state a cause of action under § 1983 in that the transfer of funds does not constitute a special assessment. After de novo review, we find no evidentiary materials of record to support the assertion that the appellants have a protectible property interest in the funds at issue here. Therefore, we will affirm the grant of summary judgment for the defendants.
The Philadelphia Gas Works is a facility for the manufacture and distribution of gas owned by the City of Philadelphia and managed by the Philadelphia Facilities Management Corporation. The Gas Works is regulated by the Philadelphia Gas Commission, a five member body including the City Controller, two members appointed by the City Council, and two members appointed by the Mayor.
The First Class City Revenue Bond Act of 1972 authorizes cites to incur increased debt for the purpose of financing or refunding the cost of their ordinary revenue producing enterprises or "projects" without pledging the general credit or the taxing power of the city itself. 53 Pa.C.S. § 15901 et. seq. This may be accomplished by issuing bonds secured only by project revenues. 53 Pa.C.S. § 15902. Project revenues which may be used to secure the bonds are defined generally as receipts from charges to the general public, payments under bulk contracts, and government subsidies. 53 Pa.C.S. § 15902. Project revenues may also include estimated interest and profits from investment of the foregoing. Id.
The statute requires the establishment and maintenance of a sinking fund for payment of principal and interest on the bonds. 53 Pa.C.S. § 15909. Interest and profit from investment of the sinking fund may be added to the fund as required to service the debt, and any excess "shall be repaid to the city for its general purposes or applied as may be provided in the bond ordinance." Id.
In 1975, the City of Philadelphia, pursuant to 53 Pa. C.S. § 15901, enacted the General Gas Works Revenue Bond Ordinance, which authorized the issuance of gas works revenue bonds of the city, to be secured by a pledge of revenues of the Gas Works. City Council Bill 1872. The city ordinance established a sinking fund from pledged revenues of the Gas Works. Id., Section 6.01. The ordinance also established a sinking fund reserve from proceeds of the bond sales. Id., Section 6.04. Deficiencies in the sinking fund were to be restored from the sinking fund reserve. Id. Deficiencies in the sinking fund reserve were to be restored by deposits from the pledged revenues of the Gas Works. Id., Sections 6.04 and 7.02. Any excess income generated by either fund was to be "repaid" to the city.*fn1 Id., Section 6.03.
On November 12, 1985 the Gas Commission approved the transfer of $6.5 million from the Gas Works' sinking fund reserve to the General Fund of the separate lawsuits were filed: a state court appeal by a group representing all gas rate payers*fn2 and this suit filed by Appelmans and Broderick, the appelants, in the United States District Court for the Easter District of Pennsylvania. The relief sought by the appellants included an order enjoining the transfer of funds or restraining the use of the funds as part of the City's General Fund.
The defendants moved to dismiss plaintiffs' complaint, and the plaintiffs moved for summary judgment. The district court then treated the defendants' motion to dismiss as one for summary judgment in accordance with Fed. R. Civ. P. 12(c) and granted the defendants' motion.
The district court considered the proffered evidentiary materials and found that the plaintiff consumers had no cause of action based on the facts alleged and offered to be proved. The court found nothing of record to support the assertion that the transferred funds were "revenues" of a municipal corporation. Therefore no cause of action could be supported on the asserted legal theory that revenues of a municipal corporation are for the benefit of its consumers and may not be taken for the general municipal fund. The court also found that the plaintiffs had introduced nothing to support the allegation that the transfer of funds created a deficiency in Gas Works revenues necessitating an increase in gas prices operating as an indirect assessment against the property of the gas consumers. Finally, the court found the transfer to be plainly authorized under state law. The district court denied the plaintiffs' motion for summary judgment and granted summary judgment for the defendant. This appeal followed.
Our review of a motion for summary judgment is plenary. An appellate court is required to apply the same test the district court should have utilized initially. Inferences to be drawn from the underlying facts contained in the evidence submitted to the district court must be viewed in the light most favorable to the non-moving party. See Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 ...