City of Scranton v. Heffler, Radetich & Saitta

In City of Scranton v. Heffler, Radetich & Saitta, LLP, 871 A.2d 875 (Pa. Cmwlth. 2005), petition for allowance of appeal denied, 587 Pa. 708, 897 A.2d 1184 (2006), the former mayor signed an agreement with a corporation for professional services in the nature of analysis and auditing of insurance claims, which also contained a provision requiring the parties to attend binding arbitration in lieu of any other legal remedy. Within one year, the former-mayor's administration was replaced by that of the newly-elected mayor. Representatives from the company eventually filed a demand for arbitration after the administration of the newly-elected mayor allegedly failed to return phone calls and maintain correspondence. The city filed a petition for rule to show cause alleging that the agreement signed by the former mayor was invalid and unenforceable for failure to be approved in accordance with provisions of the city's administrative code which required that all professional service contracts be approved by city council, reviewed and approved by the city solicitor and signed by the mayor, controller and attested to by the city clerk. The city also alleged that with the exception of the mayor's signature, no other procedural requirements were met, which made the agreement invalid and unenforceable. The corporation alleged that the agreement was subsequently approved, ratified and endorsed by all required city officials, agents and representatives. Citing to Eckert, the Court noted in that decision that this Court addressed ratification, stating that a municipal corporation could ratify contracts within its corporate powers and made by its officers without its authority or in excess of their authority, and "this ratification may be made by the affirmative action of the proper officials or by any action or inaction which, under the circumstances, amounts to an approval of the contract." Id. at 881. Based on these principles, we found that the evidence of record failed to reveal that the city council was "even aware of the agreement, let alone that they had approved of and enacted appropriate legislation relative to this agreement." Id. at 881. The Court also held that there was no post-contract ratification as the evidence of record failed to reveal the knowledge of the city controller whose signature was required along with the mayor under the provision of the city's administrative code. In sum, The Court found that every official or entity that was required to sign the contract was required to have ratified the contract by taking actions that evidence their implicit assent.