Appeal from the Order of the Commonwealth Court Entered November 24, 1993, at No. 579 C.D. 1993, Affirming the Order of the Court of Common Pleas of Philadelphia County, Civil Division, Entered February 2, 1993, at No. 467 November Term 1992
Before: Flaherty, C.j., And Zappala, Cappy, Castille, Nigro And Newman, JJ. Mr. Justice Zappala files a Concurring opinion in which Mr. Chief Justice Flaherty and Mr. Justice Cappy join. Mr. Justice Nigro concurs in the result.
The opinion of the court was delivered by: Castille
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
The issue in this matter is whether the trial court correctly granted the City of Philadelphia's preliminary objections thereby dismissing appellant's declaratory judgment action in which he sought to challenge the constitutionality of the City's imposition of certain business taxes and licensing requirements upon him for practicing law in the City. Appellant alleges that the imposition of the business taxes and licensing requirements impermissibly interferes with this Court's constitutional authority to regulate the practice of law; and, accordingly, the imposition of the taxes and licensing requirements is unconstitutional. In granting the City's preliminary objections, the trial court found that appellant was barred from bringing this civil action because he failed to exhaust available administrative remedies. The Commonwealth Court affirmed. Because we find that appellant prematurely filed this action without allowing the City an opportunity to commence the administrative process and therefore failed to exhaust the available administrative remedies, we need not reach the constitutional issue. Therefore, we affirm the Commonwealth Court.
I. FACTS AND PROCEDURAL HISTORY
Appellant is an attorney whose office is located in Wayne, Pennsylvania. In the course of representing his clients, he often appears in the Court of Common Pleas in Philadelphia. The Philadelphia Code, §§ 19-1502 (1)(d) *fn1 and 19-2603(1), *fn2 requires all non-residents of the City to pay an annual city tax on the profits they earned as a result of doing business in Philadelphia. The Code also mandates that all persons wishing to conduct business in Philadelphia obtain a business privilege license. *fn3 Notwithstanding these tax and license provisions, appellant failed to pay taxes on the legal work that he conducted in the City or to obtain a business privilege license.
The record reflects that in the summer of 1992, the City notified appellant by letter that he was in violation of the tax and license provisions of the Philadelphia Code. There is no indication in the record that the City took any further action to enforce the tax and license provisions such as issuing a notice of taxes due or a notice of delinquent taxes. Appellant filed a declaratory judgment action against the City seeking a ruling that the tax and license provisions as applied to him are unconstitutional. In his complaint, appellant argues that the City's requirement that non-resident attorneys obtain a business privilege license impermissibly encroaches upon this Court's regulation of the practice of law under the Pennsylvania Constitution. He also alleges that his appearances in Philadelphia courts do not rise to the level of minimum contacts required to give the City jurisdiction to require a non-resident to obtain a business privilege license. As a result, appellant sought an injunction to enjoin the city from imposing the taxes on him through civil or criminal procedures or from preventing him from appearing in the Philadelphia courts without a business privilege license. *fn4
The City filed preliminary objections claiming that the action should be dismissed because appellant had failed to exhaust the available administrative remedies and failed to state a claim upon which relief could be granted. The trial court sustained the preliminary objections and dismissed the complaint, without prejudice, finding that it lacked jurisdiction because appellant had failed to exhaust the administrative remedies. Appellant appealed the trial court's decision to the Commonwealth Court, and the Commonwealth Court affirmed in a published opinion. Cherry v. City of Philadelphia, 160 Pa. Commw. 179, 634 A.2d 754 (1993). This Court granted allocatur limited to the issue of whether appellant was required to exhaust administrative remedies prior to filing suit in the Court or Common Pleas. *fn5
II. ADMINISTRATIVE REMEDIES
Where the City's Department of Revenue issues a decision or determination of tax liability against a taxpayer, the taxpayer may appeal the decision or determination to the Philadelphia Tax Review Board. The appeal must be filed within sixty days after the mailing of the determination of liability to the taxpayer. Philadelphia Code § 19-1702(a). The Tax Review Board has exclusive jurisdiction over disputes concerning local tax liability in the City of Philadelphia. Philadelphia Code § 19-1702(1). A party may not bring an action challenging the determination by a taxing authority of tax liability in a court of equity where the question is within the exclusive jurisdiction of a non-judicial tribunal and administrative remedies have not been exhausted. 42 Pa.C.S. § 7541(c); *fn6 Penn Galvanizing Co. v. Philadelphia, 388 Pa. 370, 374, 130 A.2d 511, 514 (1957) (equitable relief cannot be granted to a party who has an adequate remedy at law and who has failed to exhaust that remedy).
In the instant case, there is no indication in the record that the City's Department of Revenue ever issued a determination of tax liability against appellant. Instead, it appears that he received only a letter from a law firm representing the City notifying him that he was in violation of the tax and license provisions. Thus, neither the Department of Revenue nor the Tax Review Board has ever had the opportunity to determine whether the City's tax and license provisions apply to appellant.
An exception to the general rule that a party must exhaust administrative remedies is where the party challenges the constitutionality of the enabling legislation of an administrative agency. In Lynch v. Owen J. Roberts School District, 430 Pa. 461, 244 A.2d 1 (1968), this Court held that "where a taxing statute is made the subject of a constitutional challenge," a party need not exhaust administrative remedies even where a statutory remedy exists. This Court narrowed the applicability of the Lynch decision in Rochester & Pittsburgh Coal Company v. Board of Assessment & Revision, 438 Pa. 506, 266 A.2d 78 (1970), holding that the mere allegation or characterization of one's claim as a constitutional claim does not automatically allow a party to bypass administrative remedies. In rejecting the plaintiff's claims that revised tax classifications and the rates violated the Equal Protection Clause and the Fourth to Eighth Class County Assessment Law, *fn7 the Rochester court held that:
What is required to confer jurisdiction on an equity court is the existence of a substantial question of constitutionality (and not a mere allegation) and the ...