Manheim Twp. fights over Overlook Golf Course in court and investigates attorneys [Lancaster Watchdog] | Local News

A year after a Lancaster County judge ruled against Manheim Township in a $4.4 million class-action lawsuit for overcharging developers to connect new homes to the public water system, the township is tied up in more litigation related to the case.

In addition to appealing the county court ruling in Commonwealth Court, the township is suing its co-defendant, the Manheim Township General Municipal Authority. The township filed its suit against its sister municipal authority in November, claiming in filings that it is the rightful owner of Overlook Golf Course, not the authority, as it says on the property deed.

The authority’s ownership of the golf course, which the township valued at $8.3 million in recent financial documents, could expose the property to creditors in the class-action suit, according to Ed Robson, the lead attorney for the group of developers who are suing over water-tapping fees.

While the township and authority are on opposing sides in the new litigation, Robson said he believes the lawsuit is an attempt to get a valuable asset off the authority’s books.

Judge David Ashworth’s ruling at the county court level holds both the township and the authority responsible for the $4.4 million in damages, “but it’s possible that, on appeal, the township might get out on the appeal and the authority may not, at which point transferring the golf course to the township would put (that valuable asset) out of reach of creditors of the authority,” Robson said.

Manheim Township Solicitor J. Dwight Yoder, who filed the complaint on the golf course dispute, disagrees.

“This action was done simply to have the court confirm that the township is the owner of the golf course,” Yoder said in an email. “After reviewing the acquisition of the golf course and financing arrangements from 1989 related to the acquisition of the golf course by the township, it is clear to me that the Township is the proper owner of the golf course property.”

Manheim Township commissioners and Township Manager Rick Kane did not respond to questions regarding the litigation. Yoder said the township generally doesn’t comment on ongoing litigation.

Who owns the golf course?

Ownership of Overlook Golf Course, which the township has managed and operated over the last 23 years, became part of the water-tapping case after the municipal authority argued in court filings that it could not comply with the class-action ruling because it simply did not have the money.

The township in August notified the court that its municipal manager, Rick Kane, discovered documents that showed the authority actually owned the golf course, not the township.

More:

Manheim Twp. commissioners act establish ownership, protect Overlook Golf Course

Manheim Township’s financial documents for years had valued the golf course at more than $8 million, and counted it toward its own assets, not the authority’s.

The discovery means the municipal authority potentially has plenty of assets to pony up the money it was ordered to pay developers in the water-tapping fee lawsuit.

The township’s new lawsuit against the municipal authority argues it is the rightful owner of the golf course because it was the entity that executed the eminent domain action. Even if the authority did hold the title to the golf course, the township also claims, it was obligated to turn over the property in 2010 under a preexisting agreement between the two entities.

In a court filing, Robson argued that the township’s suit against its sister authority is a tactic to get the multimillion-dollar golf course off the authority’s books and out of reach of potential creditors.

Unlike the township, the authority is required by state law to pay damages or set money aside in an escrow account while their appeal works its way through Commonwealth Court, Robson said.

Typically, government entities like the township, which has the power to tax residents, do not have to put away money in an escrow account in such cases, Robson said. With a reliable tax base and nowhere to run, the courts don’t consider Manheim Township at risk of reneging on its bills.

But public authorities like the township municipal authority do not have that luxury, Ashworth said in his ruling, and he ordered the authority to put forward the money while the case is on appeal. The Commonwealth Court later agreed with Ashworth on that point.

Township claims

In a complaint filed in January, Manheim Township argued it is supposed to be, and effectively is, the owner of Overlook Golf Course.

In the court filing, township solicitor J. Dwight Yoder first argued the township became the effective owner of the golf course when it took the property through eminent domain, also called a declaration of taking.

“The title to the property automatically passed to the township on Dec. 21, 1989 by operation of law when the township filed a declaration of taking, condemning the property in order for the property to become part of the township’s park and recreational facilities,” Yoder’s complaint reads.

The township also argues that the deed was written out to the authority to act as collateral against the bond it issued on behalf of the township to pay for the property (eminent domain requires the governmental body to provide “just compensation” to the previous property owner).

“The 1990 deed was recorded in the name of the authority only as security for bonds the authority agreed to provide to finance the township’s acquisition of the property, and once the township paid off the bonds, the authority was legally required to promptly transfer and convey any right, title and interest it had in the property to the township, which it failed to do as required,” the complaint says.

The length of that agreement was 20 years. Once the township made its final payment to the authority in 2010, the authority was to hand over the property’s deed to the township.

While that didn’t happen, Yoder said, the township continued to manage and operate the golf course.

In a court response, the authority rejected many of the township’s claims, and indicated that the deed with the authority’s name on it is legitimate.

“Notwithstanding this denial, the authority welcomes the court’s determination regarding the rights and status of the ownership of the property in light of the township’s allegations,” the authority’s attorneys wrote.

The municipal authority’s chairperson, Benton Webber, did not respond to a request for comment.

What’s next

No hearing has been scheduled in Commonwealth Court for the township and authority’s appeal of the $4.4 million judgment, according to Robson, and the municipal authority has still not put up a required $5.2 million bond while that case remains ongoing. The bond amount is 20% more than the judgment in the class-action lawsuit while the case is on appeal.

Earlier this month, Manheim Township commissioners approved the hire of a special counsel, Media-based law firm Gibson & Perkins, to investigate its legal representation in the class-action lawsuit. The hourly rate is $375 an hour.

While it investigates its own legal defense in the case, the township and municipal authority also have a case open against the authority’s solicitor, William McCarty, for alleged misrepresentation.

That lawsuit was filed in 2018, but neither the authority nor the township has put forward any allegations in the case. It did ask the court in 2021 to not to close the case out of inactivity. It remains open.

Add to that a new court order in the class-action lawsuit on the county level: Last month, Judge David Ashworth restricted the authority’s ability to make payments or money transfers after the class-action attorneys objected to a series of transfers the authority made to the township. Ashworth also ordered the township to segregate the $150,000 it had received from the authority so far.

“These payments have been made to repay money that the township provided to the Authority for a booster pump station,” Yoder said. “These payments have been documented in the financial statements of the authority every year and any suggestion that they are fraudulent is simply wrong.”

In the class-action suit, Robson said, authority and township officials acknowledged that the pumping station, under state law, qualifies as a gift to the authority, meaning the authority can’t pay the township back for handing over the pumping station.

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