Appellate Court Affirms Dismissal of Suit Alleging Mismanagement in Pennsylvania Fire Department Funding

The Commonwealth Court of Pennsylvania has upheld the dismissal of a suit brought by a local government watchdog group seeking judicial intervention over allegations of mismanagement in the Borough of Hollidaysburg, including issues involving the Phoenix Volunteer Fire Department.

The case arose after Hollidaysburg Community Watchdog, a nonprofit entity claiming a mission to deter government misconduct, filed suit against the Borough and its Manager, James Gehret. HCW alleged a wide array of wrongdoing, including the destruction of public records, improper disbursement of funds to the PVFD, and ethical misconduct by a councilman who voted on matters affecting his brother-in-law—a PVFD officer.

At the heart of HCW’s complaint were concerns following the federal conviction of two PVFD officers for embezzlement. HCW alleged that the Borough failed to comply with statutory requirements under the Borough Code by continuing to fund the PVFD without first obtaining mandatory itemized expenditure reports. The organization also claimed that certain public records critical to its investigation were intentionally destroyed.

However, the trial court dismissed HCW’s amended complaint on standing grounds, holding that the organization did not meet the threshold requirement of having a direct, substantial, and immediate interest in the matter. The Commonwealth Court agreed.

Citing longstanding precedent, the appellate court noted that HCW’s general interest in good governance and statutory compliance did not rise above that of any other concerned citizen. While Pennsylvania law does provide limited taxpayer standing in certain situations, the court held that HCW failed to satisfy the five-part Biester test for such an exception—particularly the requirement that no other party is better situated to bring the claim.

Quoting from the decision:

• [The taxpayer exception to the substantial interest requirement] warrants the grant of standing to a taxpayer where his or her interest is not substantial, direct, and immediate, but the taxpayer can show that:
  • 1. the government action would otherwise go unchallenged;
  • 2. those directly and immediately affected by the complained use of expenditures are beneficially affected and not inclined to challenge the action;
  • 3. judicial relief is appropriate;
  • 4. redress through other channels is unavailable; and
  • 5. no other persons are better situated to assert the claim.
• In applying the Biester exception, it is clear that [the petitioner] has not satisfied the five requirements necessary for taxpayer standing.
• Certainly, the Auditor General, an elected official, is a far-better situated party to bring an action seeking a declaratory judgment that the Department of the Auditor General does, or does not, have the authority to audit the financial accounts of the General Assembly.

The court found that multiple governmental entities, including the Attorney General, District Attorney, State Police, and Office of Open Records, were all empowered to investigate or address the alleged misconduct. The fact that HCW had referred matters to law enforcement but received no response did not, in the court’s view, demonstrate that the organization was uniquely suited to bring the lawsuit.

Notably, the decision does not address the merits of HCW’s underlying allegations. The case was dismissed purely on procedural grounds for lack of standing. As such, the court declined to rule on the propriety of the Borough’s recordkeeping, funding practices, or the ethical issues involving the councilman’s vote.

Here is a copy of the decision: