No. 997 Pittsburgh, 1982, Appeal from the Order of the Court of Common Pleas, Civil Division, of Allegheny County, No. G.D. 82-06983
Thomas J. Dempsey, Pittsburgh, for appellants.
Benjamin B. Wechsler, Jr., Pittsburgh, for appellees.
Rowley, Tamilia and Hester, JJ.
[ 340 Pa. Super. Page 289]
This appeal stems from a long-standing challenge to the tax assessment of improved real estate in Scott Township, Allegheny County. Plaintiff-appellants, Chartiers Valley School District ("District") and the Township of Scott ("Township"), filed a Complaint in Equity against defendants-appellees, Virginia Mansions Apartments Inc., ("Corporation"), Elias and Janet Hakim, and Robert O. Lampl, as trustee of Sunland Properties Trust, at various times the record owners of the subject property. Appellants requested the imposition of a constructive trust on the property, the rescission of conveyances of portions of the property, and the issuance of an injunction enjoining further transfers. Before us, appellants question the trial court's order sustaining defendants-appellees' preliminary objections and dismissing the complaint with prejudice. The trial court's order also struck the lis pendens indexed against the property. Specifically, appellants contend, the court erred in dismissing the complaint which, they argue, alleged fraud by the appellees in their attempt to avoid the payment of real estate taxes. After affording careful consideration to appellants' arguments, we affirm.
[ 340 Pa. Super. Page 290]
In February of 1974, the parties agreed that the 1975 assessment of the property owned by the Corporation would be set at $1,500,000.00. This stipulation acknowledged by appellee Elias Hakim, Jr., president and controlling stockholder of Virginia Mansions Apartments, Inc., received judicial approval on February 22, 1974 and was filed. Nonetheless, the Corporation appealed the 1975 assessment to the Board of Property Assessment, Appeals and Review of Allegheny County ("the Board"). The Board reduced the assessment to $1,000,000.00. Seeking to enforce the settlement agreement as set forth in the stipulation, the District filed an appeal to the Court of Common Pleas of Allegheny County, at No. G.D. 75-17450. Declaring the Board's reduction of the 1975 assessment null and void, the Honorable Michael J. O'Malley reinstated the 1975 assessment of $1,500,000.00 as agreed to in the stipulation. Judge O'Malley's order, dated January 23, 1976, was affirmed on appeal to the Commonwealth Court. Scott Township Tax Assessment Case, 31 Pa. Commw. 505, 377 A.2d 826 (1977).
The Board also set the assessment for 1976 at $1,000,000.00. On April 4, 1978, Judge O'Malley remanded the case to the Board to determine the proper assessment for the triennial period beginning in 1976.*fn1 Holding that the District had abandoned its claim, the Board, on remand, refused to alter the assessment. Consequently, on July 21, 1978, the District appealed the Board's decision for 1976-1978
[ 340 Pa. Super. Page 291]
to the Court of Common Pleas.*fn2 Although the Corporation moved to quash the appeal, the Honorable Joseph Del Sole, by order dated September 14, 1979, directed that the question of the appropriate assessment for the years 1976, 1977 and 1978 be listed for trial. On June 20, 1980, the Commonwealth Court affirmed the trial court's order, on the basis of Judge Del Sole's unpublished opinion. Virginia Mansions Apartments, Inc., Appeal, 52 Pa. Commw. 262, 415 A.2d 963 (1980). After initially granting allocatur, the Supreme Court, on July 2, 1981, dismissed Virginia Mansions' appeal as improvidently granted. Chartiers Valley School District v. Board of Property Assessment, Appeals and Review, 494 Pa. 315, 431 A.2d 277 (1981).
Pending re-evaluation, at trial, of the assessment for the years 1976 through 1979, the Complaint in Equity around which this appeal revolves was filed.*fn3 Acknowledging that the Corporation had paid the real estate taxes due for these years, based on the Board's assessment of $1,000,000.00, the District and Township sought therein to protect their interest in any additional taxes that would be owed as a result of an increase in the assessed value of the property.*fn4
In support of the request for equitable relief, appellants averred that on August 1, 1979,*fn5 the Corporation conveyed
[ 340 Pa. Super. Page 292]
to appellees, Elias and Janet Hakim, husband and wife, that part of the subject property upon which a restaurant had been erected. Although the assessed value of that parcel of real estate exceeded $88,000.00, the stated consideration for the transaction was $5,000.00. In addition, by agreement dated September 1, 1979, the Sunland Properties Trust was created. Funded initially with $20,000.00 from the Hakims, the trust was established for the benefit of five-named children of the Hakims. Appellee Robert O. Lampl, counsel for the Hakims, was named as trustee.*fn6 On December 1, 1979, the Complaint alleged, the remainder of the subject property, assessed at $911,500.00, was conveyed to Lampl as trustee of the Sunland Properties Trust for $1.00, rendering the Corporation insolvent. That same day the Corporation was dissolved. The apartments held by the trust were subsequently converted into condominiums, and the leases and rents therefrom were assigned to Equibank, to secure payment of notes totaling $7,150,000.00 that had been issued to Lampl as trustee.
Maintaining that Elias Hakim, Jr., controls Lampl's actions with respect to the real property conveyed to him as trustee by the Corporation, and that the Hakim family continues to have the beneficial use and enjoyment of the subject properties, the District and Township averred that the conveyances of the property and the creation of the trust were fraudulent, in that they were designed to place the corporate assets beyond the reach of its creditors, including plaintiffs-appellants. Thus, the municipalities contended, equitable intervention was necessary to safeguard their potential interest in additional tax revenues. Accordingly, plaintiffs-appellants requested that the conveyances to the Hakims and to Lampl as trustee be set aside, that any further transfers of the property be enjoined, and that a constructive trust upon all properties previously
[ 340 Pa. Super. Page 293]
known as Virginia Mansions and now held by Hakim or Lampl as trustee be imposed.*fn7
On June 16, 1982, defendants-appellees filed preliminary objections in the nature of a demurrer. Alleging that the sole purpose of the plaintiffs' action was the collection of taxes that had not yet been assessed, defendants argued that plaintiffs should be denied the equitable relief sought, given that adequate legal remedies were available under the taxing statutes and the Pennsylvania Business Corporation Law. 15 P.S. § 1001 et seq. Concomitantly, defendants requested that the lis pendens indexed against the property be stricken. Plaintiffs responded with preliminary objections, contending that defendants' preliminary objections should be stricken for lack of conformity to law and rule of court. Following oral argument, the trial court, on August 27, 1982, sustained defendants' preliminary objections and dismissed the Complaint with prejudice. This appeal followed.
APPLICABLE PRINCIPLES OF LAW
A preliminary objection in the nature of a demurrer admits all well-pleaded facts, as well as all reasonable inferences therefrom, and may not be sustained unless it is clear on the face of the pleading that the law will not permit the recovery sought. Aiken v. Radnor Tp. Bd. of Sup'rs., 83 Pa. Commw. 190, 476 A.2d 1383 (1984). Thus, any doubt as to whether such an objection should be sustained must be resolved against the moving party. DeSantis v. Swigart, 296 Pa. Super. 283, 442 A.2d 770 (1982). In granting defendants' preliminary objections, the Honorable Emil Narick concluded that, in reality, this was a tax collection action. As such, plaintiffs were required to pursue the legal remedies available, absent a demonstration of their inadequacy, which was not made here. We agree.
Although the remedies requested by appellants are equitable in nature, the underlying action is a legal one. Plaintiffs-appellants ...