PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  ___________

                     No. 16-2516
                     ___________

        In re: THE TRUSTEES OF CONNEAUT
                  LAKE PARK, INC.,

                                   Debtor


             PARK RESTORATION, LLC

                          v.

             ERIE INSURANCE EXCHANGE;
    THE TRUSTEES OF CONNEAUT LAKE PARK, a
    charitable trust; CRAWFORD COUNTY, a political
subdivision; SUMMIT TOWNSHIP, a municipal corporation;
   TAX CLAIM BUREAU OF CRAWFORD COUNTY;
             CONNEAUT SCHOOL DISTRICT

    SUMMIT TOWNSHIP, a municipal corporation;
    CRAWFORD COUNTY, a political subdivision;
THE TAX CLAIM BUREAU OF CRAWFORD COUNTY;
      THE CONNEAUT SCHOOL DISTRICT,

                         Appellants
                       __________

     On Appeal from the United States District Court
          for the Western District of Pennsylvania
                  (D.C. No. 1-16-cv-00006)
    District Judge: Honorable Barbara Jacobs Rothstein
                        ___________

               Argued January 18, 2017
                 *
 Before: FISHER , HARDIMAN, and GREENAWAY, JR.,
                    Circuit Judges.

               (Opinion Filed: May 2, 2017)

John F. Mizner             [Argued]
Mizner Law Firm
311 West Sixth Street
Erie, PA 16507
       Counsel for Appellee

Lawrence C. Bolla
Michael P. Kruszewski
Arthur D. Martinucci       [Argued]
Quinn Buseck Leemhuis Toohey & Kroto
2222 West Grandview Boulevard
Erie, PA 16506
       Counsel for Appellants


      *
        Honorable D. Michael Fisher, United States Circuit
Judge for the Third Circuit, assumed senior status on
February 1, 2017.




                             2
                       ____________

                OPINION OF THE COURT
                     ____________

HARDIMAN, Circuit Judge.

       Pennsylvania law prohibits insurance companies from
paying fire insurance proceeds to a “named insured” unless
the local municipality certifies that no delinquent taxes are
owed on the property where the insured structure was located.
40 Pa. Stat. § 638. The District Court held that “named
insured” as used in Section 638 includes only those who own
the structure at issue and are responsible for the delinquent
taxes. Because the Bankruptcy Court rightly held that this
interpretation contravenes the text of the statute, we will
reverse.

                              I

       This appeal involves Conneaut Lake Park, which abuts
Conneaut Lake in Crawford County, Pennsylvania. The Park
included a historic venue known as the Beach Club, which
was owned by the Trustees of Conneaut Lake Park, Inc.
Appellant Park Restoration, LLC, operated the Beach Club
under a management agreement with the Trustees. Park
Restoration insured the Beach Club against fire loss for
$611,000 through Erie Insurance Exchange. When the Beach
Club was destroyed by fire in 2013, Park Restoration
submitted a claim to Erie. Erie did not dispute the claim, but
in accordance with 40 Pa. Stat § 638, it required Park
Restoration to obtain a certificate from the local municipal




                              3
treasurer stating whether back taxes were owed on the
property.

       Park Restoration received a certificate showing a total
of $478,260.75 in delinquent property taxes owed by the
Trustees to Summit Township, Crawford County, the Tax
Claim Bureau of Crawford County, and Conneaut School
District (collectively, Taxing Authorities). These delinquent
taxes dated back to 1996, well before Park Restoration signed
its management agreement with the Trustees, and the taxes
were owed on the entire 55.33 acre parcel on Conneaut Lake,
not just the single acre that included the Beach Club.
Nonetheless, because of the tax delinquency, Erie notified
Park Restoration that it would transfer to the Taxing
Authorities $478,260.75 of the $611,000 insurance proceeds.
Park Restoration objected, prompting Erie to interplead the
proceeds in the Court of Common Pleas of Crawford County.

       The interpleader action was transferred to the United
States Bankruptcy Court for the Western District of
Pennsylvania after the Trustees filed for bankruptcy. In the
Bankruptcy Court, Park Restoration argued that Section 638
“applies solely to those situations where the fee owner of the
property is insured and where the tax liabilities at issue are
the financial responsibility of the owner as well.” In re
Trustees of Conneaut Lake Park, Inc., 

, 198
(Bankr. W.D. Pa. 2015). Park Restoration argued that any
other construction would violate the Takings Clauses of the
United States Constitution and the Pennsylvania Constitution.
The Trustees responded that Park Restoration was not entitled
to any of the insurance proceeds because Park Restoration
insured the Trustees’ property. Therefore, the Trustees sought
the remaining insurance proceeds after the Taxing Authorities
were compensated.



                              4
        The Taxing Authorities and Park Restoration filed
cross motions for summary judgment. The Bankruptcy Court
granted partial summary judgment in favor of both parties. It
held that under Section 638 the Taxing Authorities were
entitled to full payment of the delinquent taxes ($478,260.75),
and that Park Restoration, as the named insured, was entitled
to the balance of the insurance proceeds.

       Park Restoration and the Trustees filed cross-appeals
to the United States District Court for the Western District of
Pennsylvania. Park Restoration argued, for the first time, that
because the insured property constituted only 9% of the tax
value of the parcel, Park Restoration’s insurance proceeds
should apply pro rata to the tax debt. It also argued that
anything more would be an unconstitutional taking.
Meanwhile, the Trustees claimed entitlement to the balance of
the insurance proceeds because they owned the Beach Club.

       The District Court affirmed the Bankruptcy Court’s
summary judgment for Park Restoration as against the
Trustees, but reversed the Bankruptcy Court’s summary
judgment for the Taxing Authorities as against Park
Restoration. The Court held that Section 638 is ambiguous
because it uses “named insured” and “insured property
owner” interchangeably. In re Trustees of Conneaut Lake
Park, Inc., 

, 584–85 (W.D. Pa. 2016). The
District Court then considered legislative intent and
concluded that the General Assembly intended Section 638 to
apply only to property owners. The Court reasoned that
because Park Restoration did not own the Beach Club or the
parcel upon which it was located, it was not responsible for
the Trustees’ delinquent taxes. The Taxing Authorities
appealed the District Court’s judgment.




                              5
                              II

       The Bankruptcy Court had jurisdiction under 28
U.S.C. §§ 157(b) and 1334(b). The District Court had
appellate jurisdiction under 28 U.S.C. § 158(a). Our
jurisdiction lies under 28 U.S.C. §§ 158(d) and 1291.
“Because the District Court sat as an appellate court,
reviewing an order of the Bankruptcy Court, our review of the
District Court’s determinations is plenary.” In re Wettach,

, 104 (3d Cir. 2016) (quoting In re Bocchino, 

, 379 (3d Cir. 2015)).

                             III

       The Taxing Authorities argue that the District Court
erred in reversing the Bankruptcy Court’s order granting them
summary judgment. We agree. Section 638 required Erie to
transfer funds from Park Restoration’s insurance claim to the
Taxing Authorities irrespective of Park Restoration’s property
interest in the Beach Club. Though Park Restoration’s public
policy and equitable arguments are not without force, they
cannot vitiate the statutory language. Additionally, we agree
with the Bankruptcy Court that Section 638 as applied in this
case does not violate the Takings Clauses of the United States
Constitution or the Pennsylvania Constitution.

                              A

       Although Pennsylvania courts have not addressed the
question presented in this appeal, we believe that the text of
Section 638 compels reversal. “When ascertaining
Pennsylvania law, the decisions of the Pennsylvania Supreme
Court are the authoritative source.” Spence v. ESAB Grp.,
Inc., 

, 216 (3d Cir. 2010). Because the




                              6
Pennsylvania Supreme Court has not ruled on this issue, “we
must predict how it would rule.” 

v.
Cont’l Gen. Tire, Inc., 

, 218 (3d Cir. 2004)).
When interpreting Pennsylvania law, we apply its rules of
statutory interpretation. See 1 Pa. Cons. Stat. § 1921
(providing guidance for courts interpreting Pennsylvania
statutes); see also United States v. Atiyeh, 

, 369–
71 (3d Cir. 2005) (applying Pennsylvania rules of statutory
interpretation to construe a statute). Pennsylvania’s General
Assembly also provided that Section 638 “shall be liberally
construed to accomplish its purpose.” 40 Pa. Stat. § 638(k).

       Section 638 is relatively straightforward and its
application here proceeds in three steps. First, the statute
prohibits insurance companies from “pay[ing] a claim of a
named insured for fire damage to a structure located within
the municipality,” unless the insurance company is furnished
with an appropriate certificate from the municipal treasurer.
40 Pa. Stat. § 638(a). Thus, Erie was prohibited from paying a
claim to Park Restoration (the named insured) for fire damage
to the Beach Club (the damaged structure) unless Erie was
furnished with the appropriate certificate.

       Second, there will be one of two types of certificates
issued depending on whether delinquent taxes are owed on
the property where the structure was located. When, as in this
case, there is a tax delinquency, the municipal treasurer is
required to issue “a certificate and bill showing the amount of
delinquent taxes, assessments, penalties and user charges
against the property as of the date specified in the request.”
40 Pa. Stat. § 638(b)(1)(ii) (emphasis added). Here, the 55.33
acre tax parcel on Conneaut Lake had a tax delinquency of
$478,260.75.




                              7
       Finally, upon receipt of the certificate, Erie was
required to “transfer to the treasurer an amount from the
insurance proceeds necessary to pay the taxes.” 40 Pa. Stat.
§ 638(b)(2)(ii).

        As the Bankruptcy Court observed, the statute does not
“qualify its terms by requiring that the named insured be the
‘owner’ of the structure destroyed by the fire. Nor does the
statute limit the imposition of the tax claim against insurance
proceeds payable to the entity primarily liable for the tax debt
in question.” Conneaut Lake Park, 

. The
tax claim is “levied against the insured property”—that is, it
is “in rem in nature and runs with the real property.” 

and quotation marks omitted). So the
Taxing Authorities’ claim “attache[d] to any fire insurance
proceeds payable to any named insured as opposed to being
limited solely to the beneficial interests (if any) of the
primarily liable taxpayer.” 

Bankruptcy Court, the District Court found
the statute ambiguous. In doing so, the District Court cited 40
Pa. Stat. § 638(b)(2)(i), which uses the terms “insured
property owner” and “named insured.” Perceiving that these
terms were used interchangeably, the District Court
concluded that “[a] straight-forward reading of the statute
demonstrates that it is referencing the same party when it
refers to the ‘named insured’ and the ‘insured property
owner.’” Conneaut Lake Park, 

.
According to the District Court, the only way to resolve the
inconsistency was to “assume that the General Assembly
meant that the ‘named insured’ and ‘the insured property
owner’ are synonymous” throughout the entire statute. 

then, that this inconsistency rendered Section 638
“reasonably susceptible [to] different interpretations.” 

Dobrek v. Phelan, 

, 264 (3d Cir.
2005)).

       We need not opine as to whether the District Court is
correct that the General Assembly used the terms “named
insured” and “insured property owner” interchangeably for
purposes of Section 638(b)(2)(i), which applies when a
property is free from tax delinquency. It suffices to say that
the subsection upon which the District Court relied has no
application here, where property taxes undoubtedly were in
arrears. And the subsection relevant to this case (Section
638(b)(1)(ii)) refers to “named insured” with nary a mention
of “insured property owner.”

        “When the words of a statute are clear and free from
all ambiguity, the letter of it is not to be disregarded under the
pretext of pursuing its spirit.” 1 Pa. Cons. Stat. § 1921(b). The
statute’s unambiguous words “are presumed to be the best
indication of legislative intent.” Reid v. City of Philadelphia,

, 235 (Pa. 2008) (quoting Chanceford Aviation
Props., L.L.P. v. Chanceford Twp. Bd. of Supervisors, 

, 1104 (Pa. 2007)). Because the Bankruptcy Court
correctly held that the applicable statutory provision is
unambiguous, we must reverse the District Court’s order in
that respect.

                                B

        Park Restoration raises two other arguments in support
of its position that Section 638 applies only to property
owners. These arguments—that public policy and equity
compel us to affirm the District Court—cannot vitiate the text
of the statute.




                                9
                               1

        Park Restoration argues that the public policy
underlying Section 638 was to prevent property owners from
“burn[ing] their buildings or structures to collect the
insurance proceeds” by requiring that money “be first used to
pay delinquent real estate taxes.” Park Rest. Br. 16. From this
premise, it concludes that this “rationale does not apply where
the insured does not have a responsibility to pay . . . real
estate taxes or to repair or secure a building or structure.” 

little doubt that the statute’s principal
purpose is to stop property owners from profiting from arson.
But that purpose does not compel the conclusion that “named
insured” does not also apply to insured occupants who have
no ownership interest. The public policy concern regarding
misfeasance by property owners applies nearly as forcefully
to lessees or others who have insured property they don’t
own. Moreover, Park Restoration’s interpretation could
incentivize an end run around Section 638 by permitting
unscrupulous owners to use the corporate form to collect
insurance proceeds without satisfying their delinquent taxes.

                               2

       At oral argument, counsel for Park Restoration insisted
that reinstatement of the Bankruptcy Court’s order would
bestow an inequitable windfall upon the Trustees. In
response, the Taxing Authorities explained that the Joint Plan
of Reorganization provides for payment on their first tax lien




                               10
as follows: (a) net proceeds of sale of six separate lots owned
by the Trustees; (b) payment of $478,260.75 due from Park
Restoration’s fire insurance proceeds; and (c) a “safeguard”
for the prevention of an overpayment to the Taxing
Authorities. Taxing Authorities Rule 28j Letter dated Jan. 23,
2017, at 3. In effect, this payment plan means that since the
Taxing Authorities have won this appeal, it is possible that
the net proceeds from the sale of these lots will be used to
satisfy delinquent taxes owed on other parcels or to satisfy
other claims from the Trustees’ creditors rather than to pay
the tax debt owed by the Trustees on the parcel where the
Beach Club was located. Park Restoration Rule 28j Letter
dated Jan. 23, 2017, at 2–3. While Park Restoration makes a
plausible case that it might be subject to an inequitable
distribution of proceeds at a later date, the record on appeal
neither compels that conclusion nor allows us to make a
definitive judgment in that regard. Thus, we will rely on the
Bankruptcy Court to consider those issues in due course and
we emphasize that nothing in this opinion should be
construed to preclude Park Restoration from seeking an
accounting or any other equitable relief in the future.

                              C

        Park Restoration argues here, as it did in the
Bankruptcy Court, that “allowing the Taxing Authorities to be
paid . . . from the Insurance Proceeds results in a ‘gratuitous
confiscation’ of [Park Restoration’s] property without just
compensation in violation of the Takings Clause(s) found in
both the U.S. Constitution and the Pennsylvania
Constitution.” Conneaut Lake Park, 

. We
find this argument tenuous at best.




                              11
       The Fifth Amendment provides that “private property
[shall not] be taken for public use, without just
compensation.” U.S. Const. amend. V. The Fifth Amendment
applies to the States through the Fourteenth Amendment.
Palazzolo v. Rhode Island, 

, 617 (2001). The
Pennsylvania Constitution also provides that “private
property [shall not] be taken or applied to public use, without
authority of law and without just compensation being first
made or secured.” Pa. Const. Art. I, § 10. The Pennsylvania
Supreme Court follows federal law in Takings Clause cases
so our analysis under the Fifth Amendment applies equally to
Pennsylvania’s Constitution. Corman v. NCAA, 

, 1167 (Pa. Commw. Ct. 2013).

       To determine whether an unconstitutional taking
occurred, we ask three questions: (1) was there a taking?; (2)
was that taking for public use?; and (3) did the claimant
receive just compensation? Takings may occur either by
physical appropriation of property or regulatory activity. See
Horne v. Dep’t of Agric., 

, 2427 (2015). On
the one hand, physical appropriation of property is “a per se
taking, without regard to other factors.” 

the
government physically takes possession of an interest in
property . . . it has a categorical duty to compensate the
former owner, regardless of whether the interest that is taken
constitutes an entire parcel or merely a part thereof.” Tahoe-
Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency,

, 321 (2002) (citations omitted). Regulatory
takings require a more detailed analysis, however. Although
“property may be regulated to a certain extent, if regulation
goes too far it will be recognized as a taking.” Pa. Coal Co. v.
Mahon, 

, 415 (1922). There are “at least two
discrete categories of regulatory action” that violate the Fifth




                              12
Amendment: “regulations that compel the property owner to
suffer a physical ‘invasion’ of his property” and “regulation
[that] denies all economically beneficial or productive use of
land.” Lucas v. S. Carolina Coastal Council, 

,
1015 (1992). When determining whether a regulatory taking
has occurred, the Court may consider the “economic impact
of the regulation on the claimant” and the “character of the
governmental action.” Penn Cent. Transp. Co. v. City of New
York, 

, 124 (1978).

       In this appeal, we need not determine whether there
was an actual or regulatory taking because the party asserting
the claim must have a “legally cognizable property interest.”
Prometheus Radio Project v. FCC, 

, 428–29 (3d
Cir. 2004). Here, it is clear that Park Restoration had no
legally cognizable property interest in the entirety of the
proceeds from its insurance policy because Section 638 made
receipt of such proceeds conditional on satisfying the
delinquent taxes owed on the insured property. The policy
states that “[Erie] will pay [Park Restoration] unless some
other person is named in the policy or is legally entitled to
receive payment,” Conneaut Lake Park, 

,
and that “[t]his policy conforms to the laws of the state in
which [Park Restoration’s] principal office is located.” 

Section 638 had been enacted by the General Assembly
and adopted by the required local ordinance long before Park
Restoration obtained its insurance policy from Erie. Thus, the
insurance policy incorporated the statute. See Coolspring
Stone Supply, Inc. v. Am. States Life Ins. Co., 

,
147–48 (3d Cir. 1993) (finding that “pertinent statutory
provisions of Pennsylvania insurance law are deemed
incorporated into insurance policies” (quoting Santos v. Ins.




                              13
Placement Facility, 

, 1179 (Pa. Super. Ct.
1993))).

       In sum, when Park Restoration insured the Beach
Club, its rights to any insurance proceeds were subject to the
claim of the Taxing Authorities. Without a legally cognizable
property interest, Park Restoration has no cognizable takings
claim. Prometheus Radio Project v. FCC, 

, 428–
29 (3d Cir. 2004). Park Restoration’s “failure to establish any
greater entitlement to the proceeds under its policy (and
Pennsylvania law) is fatal to its assertion that payment of
Insurance Proceeds to the Taxing Authorities would violate
the Takings Clause(s) of the U.S. Constitution and the
Pennsylvania Constitution.” Conneaut Lake Park, 

(citing 

).

                              IV

       For the reasons stated, we will reverse the judgment of
the District Court and remand for entry of judgment in favor
of the Taxing Authorities.




                              14