Reager & Adler Attorneys Prevail for the Public School Employees’ Retirement System

On April 1, 2014, the Commonwealth Court of Pennsylvania in the case of Telwell, Inc. v. Public School Employees’ Retirement System (“PSERS”), after considering the legal briefs submitted by the parties and oral argument, dismissed the claims of Telwell against PSERS.  The case involved a lawsuit brought by Telwell, Inc., which had entered into a loan agreement whereby it obtained a loan from PSERS in exchange for giving PSERS a mortgage on its commercial property located in Philadelphia. The Complaint filed by Telwell alleged that PSERS had breached the loan agreement by allegedly charging Telwell an incorrect interest rate on the loan. 

The case came before the Commonwealth Court by virtue of an appeal of a previous decision by the Pennsylvania Board of Claims, which had earlier agreed with the arguments asserted by Reager & Adler that PSERS was entitled to sovereign immunity and therefore could  not be liable to Telwell for any alleged damages arising out of the loan agreement.  Telwell had brought the action against PSERS under the provisions of the Commonwealth Procurement Code and argued that the Board had jurisdiction over the subject matter of the claim and jurisdiction over PSERS.  The Board agreed with Telwell that under the Procurement Code, which included a limited waiver of the Commonwealth’s sovereign immunity, it generally had exclusive jurisdiction over contract claims brought against the Commonwealth and its agencies.  However, the Board also agreed with the arguments made on behalf of PSERS that the Board could only exercise jurisdiction over claims against the Commonwealth or its agencies to the extent that the sovereign immunity of the Commonwealth had been waived.  A waiver of sovereign immunity may only be found, the Board agreed, where and to the extent that the legislature has specifically set forth such a waiver by legislative act.  In following the arguments made on behalf of PSERS, the Board determined that it was without jurisdiction over PSERS and dismissed Telwell’s claim against PSERS.  The Board reached its conclusion based on a specific provision in the Commonwealth Procurement Code cited by PSERS, specifically Section 102(f.1), which states clearly that the Commonwealth Procurement Code did not apply to loans.  Because there was no dispute that Telwell’s claim arose from a loan agreement the Board concluded that PSERS had not waived its immunity.

In the Commonwealth Court’s 20 plus page opinion, the Court agreed with the arguments made on behalf of PSERS. The Court affirmed the Board’s decision and dismissed the claim against PSERS. 

Reager & Adler is pleased that we could achieve this result for our client, PSERS. 

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