          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Core Equity II, L.P., 114 Chestnut   :
Street, Philadelphia, Pennsylvania   :
19105 and Delaware Ave Outdoor,      :
LLC, 3400 West Chester Pike,         :
Suite 100 Newtown Square,            :
Pennsylvania 19073,                  :
                                     :
                         Petitioners :
                                     :
                   v.                : No. 257 M.D. 2017
                                     : Argued: March 6, 2018
Commonwealth of Pennsylvania,        :
Department of Transportation,        :
700 Geerdes Boulevard,               :
King of Prussia, Pennsylvania 19406, :
                                     :
                         Respondent :


BEFORE:        HONORABLE RENÉE COHN JUBELIRER, Judge
               HONORABLE P. KEVIN BROBSON, Judge
               HONORABLE MICHAEL H. WOJCIK, Judge


OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE WOJCIK                                        FILED: August 14, 2018



               Before the Court is the application for summary relief filed by the
Pennsylvania Department of Transportation (DOT) to the petition for review seeking
declaratory relief filed in our original jurisdiction by Core Equity II, L.P. (Core) and
Delaware Ave Outdoor, LLC (Delaware) (collectively, Petitioners). We deny the
application.
                The petition for review alleges the following, in relevant part. Pursuant
to Section 131 of the federal Highway Beautification Act,1 states are required to
maintain effective control of outdoor advertising devices (OADs) along federal
highways. On June 10, 1974, DOT’s Secretary certified to the Secretary of the
United States Department of Transportation that the City of Philadelphia (City) had
established sufficient and acceptable regulations concerning OADs, and that
certification was formalized in an agreement between DOT and the City on July 1,
1974. Based on the certification, the City’s regulations, together with the City’s

       1
           23 U.S.C. §131. As this Court has explained:

                When it enacted the Highway Beautification Act in 1965, Congress
                found and declared that

                        the erection and maintenance of outdoor advertising signs,
                        displays, and devices in areas adjacent to the Interstate
                        system and the primary system should be controlled in order
                        to protect the public investment in such highways, to
                        promote the safety and recreational value of public travel,
                        and to preserve natural beauty.

                Section 131(a) of the Highway Beautification Act[, 23 U.S.C.
                §131(a)]. States which failed to comply with the Highway
                Beautification Act faced a reduction in federal highway funding.
                [See Section 131(b) of the Highway Beautification Act, 23 U.S.C.
                §131(b).] The federal regulation provides states with discretion to
                permit pre-existing signs which do not comply with the provisions
                of state law and regulations to remain for the duration of their
                normal life. The federal regulation then requires the state to develop
                criteria to determine when the normal life has ended due to
                destruction, abandonment or discontinuance but gives the individual
                state discretion as to what criteria it uses to define destruction,
                abandonment or discontinuance.         See, generally, 23 C.F.R.
                §750.707 (1993). . . .

Martin Media v. Department of Transportation, 641 A.2d 630, 632, n.4 (Pa. Cmwlth. 1994).


                                                  2
operating procedures for issuing permits,2 supplanted DOT’s jurisdiction over OADs
in the City as conferred by the Pennsylvania Outdoor Advertising Control Act of


      2
          Section 9-602(3) and (4) of the Philadelphia Code states, in relevant part:

                 (3) No person shall erect or maintain any outdoor advertising sign
                unless he or she has obtained a license for such sign from the
                Department. Applications for such licenses shall be made on a form
                provided by the Department. Such licenses shall be issued and
                renewed for terms of five years. A single license shall be issued for
                multiple signs that share a common sign support structure.

                  (4) Licenses for Outdoor Advertising Signs. No license shall be
                issued or renewed unless:

                 (a) The Department finds that the outdoor advertising signs and
                their sign support structures, if any, which are proposed to be erected
                or which are erected or maintained are to be, or have been
                constructed in conformity with all codes and that all proper permits,
                including any required zoning permits, have been secured.

                 (b) To the extent that the applicant . . . proposes to erect or maintain
                a sign or sign structure which extends in any manner into or above
                a public street, highway or right-of-way, the applicant . . . agrees to
                comply with the terms of the license and to indemnify the City
                against any liability by reason of granting the license, and files a
                continuing bond for the sign satisfactory to the Law Department,
                and obtains any necessary approval from City Council for an
                encroachment into the public right-of-way.

                 (c) The applicant pays a license fee . . . .

                 (d) The applicant submits to the Department with its license
                application an inventory listing each outdoor advertising sign
                structure that the applicant owns or maintains in the City. . . .

                 (e) The applicant does not have any outstanding violations, for
                which all legal appeals have been exhausted, nor any outstanding
                court orders requiring the removal of any sign(s) for which all legal


                                                   3
1971 (Act).3 On April 13, 2015, DOT revoked the City’s certification transferring
jurisdiction under the Act to DOT.



               appeals have been exhausted, for erecting and/or maintaining
               outdoor advertising signs in violation of The Philadelphia Code.

                (f) The applicant . . . affixes on each sign and/or sign structure
               information indicating the owner of the sign and (if applicable) the
               individual or company responsible for erecting and/or maintaining
               the sign and/or sign structure.

                (g) The applicant, the owner of the sign, and the owner of the
               premises upon which the sign is placed or to be placed are current
               in the payment of all City and School District taxes or have entered
               into an agreement(s) to pay any delinquent taxes and are abiding by
               the terms of such agreement(s).

Phila., Pa. Code §9-602(3)-(4) (2005, 2015).

       3
         Act of December 15, 1971, P.L. 596, as amended, 36 P.S. §§2718.101-2718.115. Section
5(b) and (d) of the Act states, in relevant part:

               (b) In zoned commercial or industrial areas, the secretary may certify
               to the Secretary of Transportation of the United States as notice of
               effective control, that there has been established within such areas
               regulations which are enforced with respect to the size, lighting and
               spacing of outdoor advertising devices. In such areas, the size,
               lighting and spacing requirements set forth below shall not apply.

                                               ***

              (d) . . . At any time, that a political subdivision adopts regulations
              which include the size, spacing and lighting of outdoor advertising
              devices, the secretary may so certify to the Secretary of
              Transportation of the United States and control of outdoor
              advertising in commercial or industrial areas will transfer to
              subsection (b) under this section.
36 P.S. §2718.105(b), (d).



                                                4
                Core is a limited partnership that owns a building located at 1000
Frankford Avenue in the City. On March 17, 2015, prior to the revocation of the
certification, the City issued Permit No. 596034 (OAD Permit), approving Core’s
application to construct three 14’ by 48’ accessory digital rooftop OADs4 to display
advertising on its property along Interstate 95. On November 12, 2015, the City
issued Building Permit No. 645378 to construct two rooftop OADs on the property
and construction of the OADs was completed prior to February 22, 2016.
                On July 16, 2015, Core and Delaware entered into a Digital Display
Lease Agreement (Agreement) under which Core leased office space in the building
and a portion of the building rooftop for the construction, maintenance, operation,
and leasing of OADs to Delaware. Delaware spent $975,000.00 to design, plan, and
construct the OADs. Per the Agreement, Delaware subleased office space to third
parties in the building that also had the right to use the OADs to advertise their
businesses.      When in operation, the OADs display advertising relating to the
businesses of the sublessees.




       4
           Section 9-602(2)(a) of the Philadelphia Code defines “Accessory Sign” as follows:

                A sign which directs attention to information, identification, or
                advertisements strictly incidental to a lawful use of the premises on
                which it is located. This includes signs or devices indicating the
                business transacted, services rendered, goods sold, or produced on
                the premises; and, name or emblem of a person, firm, institution,
                organization or activity occupying the premises.

Phila., Pa. Code §9-602(2)(a) (2005). In turn, Section 9-602(2)(c) defines “Non-Accessory Sign”
as “[a] sign which directs attention to a business, industry, profession, commodity, service
organization, activity, institution, business, product or entertainment neither sold, located nor
offered upon the property where the sign is situated.” Phila., Pa. Code §9-602(2)(c) (2005).


                                                 5
              On December 3, 2015, the Federal Highway Administration approved
DOT’s transition plan to take control of the review, approval, and permitting of
OADs adjacent to state and federal highways in the City away from the City. As
part of the transition plan, DOT was required to create an inventory of existing signs
that are adjacent to state and federal highways in the City prior to July 1, 2016.
              On February 22, 2016, Core submitted an application to DOT for an
on-premise OAD5 with respect to the existing OADs as part of DOT’s duty to create

       5
          Section 6 of the Act states, in pertinent part, that “[t]he secretary is authorized to
promulgate rules and regulations governing [OADs] . . . .” 36 P.S. §2718.106. The regulations
promulgated under Section 6 of the Act are found at 67 Pa. Code §§445.1–445.9. Section 445.5(a)
of DOT’s regulations, relating to on-premise OADs, states that “[t]his section applies to signs
which: (1) Advertise the sale or lease of the premises on which they are located[; and] (2)
Advertise activities conducted on the premises on which they are located.” 67 Pa. Code §445.5(a).
In turn, Section 445.2 defines “premises,” in relevant part, as follows:

              The property upon which the activity is conducted as determined by
              physical facts rather than property lines. It is the land occupied by
              the buildings or other physical uses that are necessary or customarily
              incident to the activity. . . . The following are not considered to be
              a part of the premises on which the activity is conducted, and any
              signs located on the land are to be considered off-premise
              advertising:

               (i) Land which is not used as an integral part of the principal
              activity, including land which is separated from the activity by a
              roadway, highway or other obstruction, and not used by the activity
              ....

               (ii) Land which is used for, or devoted to, a separate purpose
              unrelated to the advertised activity.

               (iii) Land which is more than 100 feet from the principal activity,
              and in closer proximity to the highway than to the principal activity,
              and developed or used only in the area of the sign site or between
              the sign site and the principal activity and whose purpose is for
              advertising purposes only.


                                                6
a database of OADs in the City under the transition plan.6 On April 13, 2016, DOT
denied the application because the OAD did not qualify as an on-premise OAD under
DOT’s regulations because it displayed off-premise advertising.
               As a result, on April 12, 2017, Core appealed the denial of the on-
premise application to DOT’s Administrative Docket and a hearing was scheduled
for April 24, 2017. However, on April 21, 2017, Core withdrew the appeal and
requested that the matter be discontinued; DOT’s hearing officer issued an order
cancelling the hearing and marking the matter as discontinued and ended.
               On May 2, 2017, Core submitted an application for a nonconforming7
off-premise OAD. DOT denied the application on May 12, 2017, and directed that


67 Pa. Code §445.2.

       6
            See also Section 7 of the Act, 36 P.S. §2718.107 (“An annual permit shall be required for
each [OAD] regulated by this act and located outside the limits of those incorporated
municipalities that have legally established and operating procedures for issuing permits for such
[OADs] which have been certified by the secretary as conforming to the provisions of subsection
(d) of section 5 of this act.”); Section 445.6(a)(4) of DOT’s regulations, 67 Pa. Code §445.6(a)(4)
(“An annual permit shall be required for signs regulated under the act and this section, including .
. . [s]igns prohibited to be erected or maintained under section 4 of the act (36 P.S. §2718.104),
until such time as each sign has been removed; provided, however, that a permit may not be
required for signs in commercial or industrial zones, certified by the Secretary to the Secretary of
Transportation of the United States under section 5(b) and (d) of the act (36 P.S. §2718.105(b) and
(d)), if the local political subdivision has a legally established and operating procedure for issuing
the permits.”).
          7
            “Nonconforming signs” are those which were legal when erected but which do not now
conform to the requirements of the Act. Mike’s Sign Company v. Department of Transportation,
642 A.2d 634, 635 n.2 (Pa. Cmwlth. 1994). See also Section 445.2 of DOT’s regulations, 67 Pa.
Code §445.2 (defining “nonconforming sign” as “[a] sign which was legally erected but which
does not conform to the requirements of the act”); Section 750.707(b) of the federal regulations,
23 C.F.R. §750.707(b) (defining “nonconforming sign” as “a sign which was lawfully erected but
does not comply with the provisions of State law or State regulations passed at a later date or later
fails to comply with State law or State regulations due to changed conditions”).



                                                  7
the OADs be removed in 30 days. On June 12, 2017, Core appealed the denial of
the off-premise application to DOT’s Administrative Docket and the appeal is
pending.
               On June 9, 2017, Core then filed the instant petition for review8 seeking
an order declaring: (1) the OAD Permit was timely and lawfully obtained from a
certified and authorized City department; (2) the OAD Permit satisfies all applicable
statutory and regulatory requirements for the erection and operation of OADs in the
City; (3) Petitioners have legally vested rights to own, maintain, and operate the
accessory OADs consistent with the OAD Permit; (4) DOT must recognize
Petitioners’ vested rights with respect to the OADs; and (5) the continued use of the
OADs under the OAD Permit is a preexisting, lawful, nonconforming use to the
extent that they do not conform to DOT’s regulations.
               On July 20, 2017, DOT filed an Answer and New Matter arguing, inter
alia, that this Court was without jurisdiction to entertain Core’s declaratory
judgment action because Core failed to exhaust its available and adequate
administrative remedy with respect to the OADs. On October 10, 2017, DOT filed
the instant application for summary relief,9 again seeking dismissal of Core’s petition

       8
          The purpose of the Declaratory Judgments Act (DJA), 42 Pa. C.S. §§7531-7541, “is to
settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal
relations” between parties and, to that end, “is to be liberally construed and administered.” Section
7541(a) of the DJA, 42 Pa. C.S. §7541(a); Fidelity Bank v. Pennsylvania Turnpike Commission,
444 A.2d 1154, 1159 (Pa. 1982).
        9
          Pa. R.A.P. 1532(b) states, “At any time after the filing of a petition for review in an . . .
original jurisdiction matter the court may on application enter judgment if the right of the applicant
thereto is clear.” “An application for summary relief is to be granted only if there are no material
factual disputes and the movant’s entitlement to relief is clear. In the determination, the factual
averments and the existing record are assessed in the light most favorable to the nonmoving party.”
Northwestern Youth Services, Inc. v. Department of Public Welfare, 66 A.3d 301, 309 n.11 (Pa.
2013) (citations omitted).


                                                   8
for review based on Core’s failure to exhaust its available and adequate
administrative remedy with respect to DOT’s denial of its permit application and
asserting that Core has no claim for “vested rights” in a DOT permit that it has never
obtained.
               As the Supreme Court has explained:

                      The doctrine of exhaustion of administrative
               remedies requires a party to exhaust all adequate and
               available administrative remedies before the right of
               judicial review arises. The doctrine is a court-made rule
               intended to prevent premature judicial intervention into
               the administrative process. A court is “[t]o defer judicial
               review where the question presented is one within an
               agency specialization and where the administrative
               remedy is likely to produce the desired result.” The
               doctrine operates as a restraint on the exercise of a court’s
               equitable powers and a recognition of the legislature’s
               direction to comply with statutorily-prescribed remedies.
Empire Sanitary Landfill, Inc. v. Department of Environmental Resources, 684 A.2d
1047, 1053 (Pa. 1996) (citations omitted).10 “Moreover, as [the Supreme Court]
recognized in Borough of Green Tree [v. Board of Property Assessments, Appeals
and Review of Allegheny County, 328 A.2d 819, 824 (Pa. 1974)], the rule requiring
the exhaustion of statutory remedies need not apply where ‘the administrative


       10
          See also Gardner v. Department of Environmental Resources, 658 A.2d 440, 445 (Pa.
1995) (“Exhaustion, however, is more concerned with agency autonomy, requiring resort to
administrative processes so as to assure that agency decision making is not unduly disrupted. The
exhaustion doctrine is a rule of judicial administration created under the inherent powers of the
court which has since been incorporated in legislation requiring that statutorily prescribed
remedies be strictly pursued. The doctrine of exhaustion prohibits prospective parties to
administrative agency actions from bypassing that process and challenging the administrative
action directly in the courts. The reasons for requiring exhaustion are that it is more efficient to
allow an agency to proceed uninterrupted until its conclusion so that it can find facts, apply its
expertise and exercise its discretion. The doctrine also allows agencies the opportunity to correct
their own mistakes.”) (citations omitted).
                                                 9
process has nothing to contribute to the decision of the issue and there are no special
reasons for postponing its immediate decision.’” Office of the Governor v. Donohue,
98 A.3d 1223, 1235 (Pa. 2014).
             In this case, Core is seeking declaratory relief regarding the rights that
were obtained under the OAD Permit and the Building Permit that the City issued
pursuant to its prior authority to control the review, approval, and permitting of
OADs in the City, and the current status of the instant OADs constructed thereunder,
before the Federal Highway Administration approved the transfer of such authority
and regulation to DOT. With respect to the OAD Permit that the City validly issued
herein, pursuant to Section 9-602(3) of the Philadelphia Code, “[s]uch licenses shall
be issued and renewed for terms of five years,” Phila., Pa. Code §9-602(3) (2005),
so the OAD Permit at issue is initially valid until March 2020 and not due for renewal
until that time. Additionally, Section 9-602(4)(a) of the Philadelphia Code states, in
relevant part, “No license shall be issued or renewed unless . . . [t]he Department
finds that the Outdoor advertising signs and their sign support structures, if any,
which are proposed to be erected or which are erected or maintained are to be, or
have been constructed in conformity with all codes and that all proper permits,
including any required zoning permits, have been secured.” Phila., Pa. Code §9-
602(4)(a) (2015). Further, Section 9-602(9)(a) provides that “whenever any sign is
erected and/or maintained in violation of the provisions of this Chapter or of the
regulations promulgated under it, the Department of Licenses and Inspections shall
serve written notice of such violations upon the violator, directing compliance within
thirty (30) days of the receipt of the notice of violation.” Phila., Pa. Code §9-
602(9)(a) (2005).




                                          10
              Because DOT was not the entity empowered to determine whether the
City’s OAD Permit and Building Permit should have been issued in the first instance
under the Philadelphia Code, or whether the OADs constructed thereunder complied
with the relevant provisions of the Philadelphia Code, or what rights were conferred
thereby, “‘the administrative process has nothing to contribute to the decision of the
issue and there are no special reasons for postponing its immediate decision.’”
Donohue, 98 A.3d at 1235. In sum, DOT’s disposition of Core’s applications for
permits for either on-premise or off-premise OADs through its application of the
relevant provisions of the Act and its own regulations do not resolve the ultimate
questions at issue in the instant petition for declaratory relief relating to the
provisions and application of the Philadelphia Code, so the exhaustion doctrine does
not preclude the instant action in this Court.11
              Accordingly, the application for summary relief is denied.




                                            MICHAEL H. WOJCIK, Judge




       11
           DOT’s reliance on Philadelphia Outdoor Advertising v. Department of Transportation,
690 A.2d 789 (Pa. Cmwlth. 1997), Besko Outdoor Media v. Department of Transportation (Pa.
Cmwlth., No. 316 M.D. 2017, filed October 19, 2017), and Rusek v. Department of Transportation
(Pa. Cmwlth., No. 459 C.D. 2008, filed August 29, 2008), is misplaced. Unlike the instant matter,
none of those cases involved the issuance of an existing valid OAD Permit and a Building Permit
by a local political subdivision under its own ordinance to which DOT had ceded control of OADs
pursuant to Section 5 of the Act.
                                               11
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Core Equity II, L.P., 114 Chestnut   :
Street, Philadelphia, Pennsylvania   :
19105 and Delaware Ave Outdoor,      :
LLC, 3400 West Chester Pike,         :
Suite 100 Newtown Square,            :
Pennsylvania 19073,                  :
                                     :
                         Petitioners :
                                     :
                   v.                : No. 257 M.D. 2017
                                     :
Commonwealth of Pennsylvania,        :
Department of Transportation,        :
700 Geerdes Boulevard,               :
King of Prussia, Pennsylvania 19406, :
                                     :
                         Respondent :


                                     ORDER


            AND NOW, this 14th day of August, 2018, the Application for
Summary Relief of the Commonwealth of Pennsylvania, Department of
Transportation, is DENIED.




                                      __________________________________
                                      MICHAEL H. WOJCIK, Judge
