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David Keller v. Scranton City Treasurer

September 30, 2011


The opinion of the court was delivered by: P. Kevin Brobson, Judge

Submitted: August 12, 2011



Appellant David Keller (Keller), pro se, initiated an action for declaratory judgment in the Court of Common Pleas of Lackawanna County (trial court) on April 7, 2009. In his complaint, Keller challenges efforts by the City of Scranton (City), its treasurer, and/or various third-parties to collect from him allegedly unpaid fees and taxes relating to fourteen (14) parcels of real estate in the City, which Keller purchased at Lackawanna County tax upset sales. By Order dated October 15, 2010, the trial court entered judgment in favor of the named defendant, Appellee Scranton City Treasurer Ryan McGowan (Treasurer), and dismissed Keller's action with prejudice. For the reasons set forth below, we reverse the trial court's Order and remand for further proceedings.

According to the complaint, Keller purchased the properties at issue between 2006 and 2008. Sometime after he purchased the properties, Keller received notices from the City, the Treasurer, and/or its third-party collection agency-NCC, a division of Commonwealth Financial Systems, Inc.-that there were delinquent City taxes and fees attributed to the properties, some of which dated as far back as 1993. Keller avers that the Treasurer is attempting to collect these amounts, inclusive of interest and attorneys' fees, against him, as the current owner of the properties.*fn1 Though Keller confesses in his complaint that he does not know, in every instance, the amount the Treasurer is seeking as to each property, he avers that the amount which the Treasurer seeks to recover from him with respect to all fourteen (14) properties exceeds $87,000.00.

In support of his challenge to the collection efforts, Keller cites to a portion of Section 9 of the Act of May 16, 1923, P.L. 207, as amended, 53 P.S. § 7143, commonly known as the Municipal Claims and Tax Liens Act (Tax Liens Act), which provides:

Claims for taxes, water rents or rates, lighting rates, power rates and sewer rates must be filed in the court of common pleas of the county in which the property is situated . . . . All such claims shall be filed on or before the last day of the third calendar year after that in which the taxes or rates are first payable . . . . (Emphasis added.) With respect to each of the fourteen (14) properties, and in the corresponding counts addressed to each property, Keller avers that "[a]t this time there are no such claims filed for the subject property." In other words, Keller alleges that at the time of the filing of his complaint with the trial court in April 2009, the City had not filed any tax claims against Keller or any prior owners of the properties with respect to the alleged unpaid taxes and fees. Keller also cites to a portion of Section 1 of the Act of September 23, 1959 ("1959 Act"), as amended, 53 P.S. § 7432. Though lengthy, the relevant portion of the statute provides:

Whenever . . . any . . . city . . . has failed to file in the office of the prothonotary of the county, any tax claim or municipal claim assessed against any property within the time limit required by law for such filing, whereby the lien of such tax or municipal claim is lost; . . . then, in any such case heretofore or hereafter occurring, any such . . . city may, at any time after the effective date of this act, file such tax or municipal claim . . . and such claim . . . shall be a valid claim . . . and be a lien upon the real estate upon which it was a lien at the time the claim was filed . . . : Provided, That the lien of any such claim . . . shall not reattach against any real estate transferred to any purchaser before such claim is filed or during the time when the lien of any such tax or municipal claim was lost, nor shall the lien of any such claim . . . impair or affect the priority of the lien of any mortgage or other lien which gained priority because of the failure of the . . . city . . . to file such claim . . . or was entered of record during the time the lien of such tax or municipal claim . . . was lost . . . . (Emphasis added.)

In Sanft v. Borough of West Grove, 437 A.2d 1332 (Pa. Cmwlth. 1981), this Court opined on the meaning and interrelation of Section 9 of the Tax Liens Act and Section 1 of the 1959 Act:

The purpose and effect of the two statutes is to establish a three year limitation period for the filing of municipal claims, while allowing a municipality which has failed to file within the three year period to file later-but with protection for interests which attached while the lien of the municipal claim was lost by reason of the municipality's failure to file timely. The [1959 Act] serves the public interest in the municipality's receiving payment of its claims while protecting the rights of intervening purchasers and lienors.

Sanft, 437 A.2d at 1334 (emphasis added). The property owners in Sanft sought to strike liens on their property for municipal water rate claims. They argued that because the municipality filed the claims beyond the three (3) year period provided in Section 9 of the Tax Liens Act, the liens must be stricken. The trial court, relying on Section 1 of the 1959 Act, disagreed, and this Court affirmed, noting that municipal claims can be filed at any time.

Based on our decision in Sanft and the statutory language, it is clear that there is no limitations period for a municipality to file a claim to recover unpaid taxes or fees. A delayed claim (i.e., one filed beyond the statutory three (3) year period), however, does have consequences. If the claim is for taxes or fees owed by the current owner of the property, a delayed claim will cause the lien to reattach to the property, but the lien may lose priority to any intervening mortgages or liens.*fn2 If the delayed claim is for taxes or fees owed by a former owner of the property and there is an intervening purchaser, the lien cannot reattach to the property-i.e., it is lost.*fn3

Keller also includes in his complaint a citation to Section 1 of the Act of August 24, 1951 ("1951 Act"), P.L. 1409, 53 P.S. § 7197, which provides, in relevant part:

Whenever any real property has been or is hereafter sold at a sheriff's sale by virtue of any writ of execution issued from any court in this Commonwealth, or at a public sale for taxes held by a county tax claim bureau, at which sale sufficient proceeds have been or are realized*fn4 to pay all tax liens and municipal claims presented against the property, and a political subdivision has lost or hereafter loses its lien or liens for taxes and municipal claims, or either, on such property by virtue of not having filed or not filing same in the manner prescribed or within the time limited by law to participate in the distribution of the proceeds of such sale, and whenever the purchaser at such sale or any subsequent purchaser furnishes ...

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