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Charles Muscarella, Executor of the Estate of Josephine Carbo v. Commonwealth of Pennsylvania

January 11, 2012

CHARLES MUSCARELLA, EXECUTOR OF THE ESTATE OF JOSEPHINE CARBO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT :



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

AMENDING ORDER

AND NOW, this 18th day of January, 2012, the order filed with this Court's opinion dated January 11, 2012, is amended to reflect the caption as shown above. A corrected copy of the opinion and order is attached.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

No. 10 F.R. 2011

Charles Muscarella, Executor of : the Estate of Josephine Carbo, : individually and on behalf of all : others similarly situated, : Petitioner v. Commonwealth of Pennsylvania, : Respondent

ORDER

AND NOW, this 18th day of January, 2012, it is hereby ordered that the opinion filed on January 11, 2012, shall be designated OPINION rather than MEMORANDUM OPINION, and it shall be reported.

P. KEVIN BROBSON, Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Charles Muscarella, Executor of the Estate of Josephine Carbo, individually and on behalf of all others similarly situated, Petitioner v. Commonwealth of Pennsylvania, Respondent

OPINION BY JUDGE BROBSON

No. 10 F.R. 2011

Before us is a motion for class certification filed by Charles Muscarella (Petitioner), Executor of the Estate of Josephine Carbo. This motion is presented as an ancillary proceeding in an appeal from the Board of Finance and Revenue (F&R) under Section 763 of the Judicial Code, 42 Pa. C.S. § 763, and Pa. R.A.P. 1571. In the class action petition for review, Petitioner seeks to obtain, individually and on behalf of other similarly situated persons and estates, monetary damages from Respondent Commonwealth of Pennsylvania (Commonwealth) for the Commonwealth's failure to rebate property taxes under what is commonly referred to as the Senior Citizens Property Tax and Rebate Assistance Act, Act of June 27, 2006, P.L. 1873 (Spec. Sess. No. 1), 53 P.S. §§ 6926.1301-.1313 (2006 Rebate Act), which is a continuation of the former Act of March 11, 1971, P.L. 4, as amended, 72 P.S. §§ 4751-1 to -12, commonly referred to as the Senior Citizens Rebate and Assistance Act (Prior Rebate Act) (collectively referred to as the Rebate Acts).*fn1

According to the averments in the class action petition for review, Josephine Carbo (Decedent), before her death, owned property in Plymouth Township, Norristown, Pennsylvania. (Stipulation of Facts (S.F.) 2; Reproduced Record (R.R.) at 70a.) For 2008 and for some years prior to 2008, Decedent filed claims for rebates for property taxes paid on her property, and she obtained rebates for those years. (S.F. 3; R.R. at 70a.) Decedent died on November 13, 2009.

(S.F. 4; R.R. at 70a.)

On June 23, 2010, Petitioner filed with the Commonwealth of Pennsylvania, Department of Revenue (Department), a property tax claim form PA-1000, seeking a rebate for property taxes paid on Decedent's property for the year 2009. (S.F. 4-5; R.R. at 70a.) On July 30, 2010, the Department denied Petitioner's claim for the 2009 property tax rebate on the basis that Decedent died prior to January 1, 2010. Petitioner filed an appeal with the Department's Board of Appeals (Board of Appeals), and the Board of Appeals denied the appeal on September 1, 2010. (S.F. 6; R.R. at 70a-71a.) Petitioner petitioned F&R for review, and F&R denied Petitioner's appeal by decision and order dated December 14, 2010. (Id.) Thereafter, on January 6, 2011, Petitioner filed with the

Commonwealth Court the subject class action petition for review.*fn2 (S.F. 8; R.R. at 71a.)

In the class action petition for review, Petitioner asserts that the Rebate Acts provide for the rebate of a portion of property taxes to claimants who meet age and income qualifications. Petitioner also asserts that the provisions of the Rebate Acts do not provide that an estate cannot be a claimant or that a claimant who has paid a property tax due during a calendar year must survive the entire year in order to make a valid claim. The Rebate Acts invest a committee, consisting of the Secretaries of the Departments of Aging, Revenue, and Community Affairs (Committee), with the authority to prescribe necessary rules and regulations. Section 1309(a) of the 2006 Rebate Act, 53 P.S. §6926.1309(a), formerly Section 9(a) of the Prior Rebate Act, 72 P.S. § 4751-9(a). The Rebate Acts also provide for an apportionment of the rebate if the claimant occupied the property for only a portion of the year. Section 1304(c) of the 2006 Rebate Act, 53 P.S. §6926.1304(c), formerly Section 4(c) of the Prior Rebate Act, 72 P.S. § 4751- 4(c), as amended. The current regulation, which was slightly modified from those in force during the earlier years of the Prior Act, defines a "claimant" for purposes of property tax rebates, as follows: "The term claimant shall be defined in accordance with the following: . . . (iv) A claim for a property tax rebate . . . may be filed by the personal representative of a decedent's estate if, and only if, the decedent lived during some part of the year next succeeding the calendar year for which a rebate is claimed" (the Current Regulation). 51 Pa. Code § 401.1.

Petitioner asserts that the Current Regulation exceeds the mandate given the Committee in the Rebate Acts, because the Current Regulation is not a necessary regulation and because it bears no reasonable relation to the purposes or language of the Rebate Acts. Petitioner further asserts that the Current Regulation, as applied to decedents' estates, violates the Equal Protection and Due Process clauses of the United States and Pennsylvania Constitutions.

On March 29, 2011, Petitioner filed with this Court a motion for certification of class action, which is now before us. This Court conducted a hearing on September 26, 2011. During the hearing, the parties entered into the record stipulations of fact for class certification determination, which this Court adopts as our findings of fact. (R.R. at 70a-131a.)

Before the Court may consider whether Petitioner has demonstrated the prerequisites for class certification under Pa. R.C.P. Nos. 1702, 1708, and 1709, one threshold issue must be addressed--whether a class action may be utilized to obtain individual property tax rebates. Petitioner argues that a class action may be maintained in this instance based upon our Supreme Court's opinion in McConnell v. Department of Revenue, 503 Pa. 322, 469 A.2d 574 (1983) (McConnell II), which addresses the almost identical scenario and claims.*fn3 The Commonwealth contends that the Supreme Court's holding in McConnell II is more limited than suggested by Petitioner and that this matter may not be maintained as a class action because Pennsylvania law does not permit a class action to proceed where, as here, there are clearly defined rights of appeal. The Commonwealth contends that Petitioner and other persons and estates making up the purported class are required by statute to follow specific procedures for seeking redress and may not, therefore, pursue relief through a class action. In support of that position, the Commonwealth cites Lilian v. Commonwealth, 467 Pa. 15, 354 A.2d 250 (1976), a case decided prior to the Supreme Court's decision in McConnell II. The Commonwealth also cites Aronson v. City of Pittsburgh, 510 A.2d 871 (Pa. Cmwlth. 1986) (Aronson II), a case involving a class action complaint in assumsit filed in a court of common pleas to obtain individual tax refunds of business privilege taxes erroneously paid to the City of Pittsburgh.

In McConnell II, following the death of John McConnell, the appellants, William and Richard McConnell, in their capacity as Co-Executors of the Estate of John McConnell and on behalf of others similarly situated, filed with the Board of Appeals a class action, seeking property tax rebates under the Prior Rebate Act for the calendar year in which decedents died. The appellants sought to challenge the validity of the Department's then-current regulation (Prior Regulation), which provided:

A claim for a property tax rebate or rent rebate in lieu of property taxes may be filed by the personal representative of a decedent's estate if, and only if, the decedent were alive on or after January 1 of the year next succeeding the calendar year for which a rebate is claimed.

61 Pa. Code § 401.43(a).

The Board of Appeals determined that it did not have jurisdiction to consider a class action for rebates and denied the appellants' request for a rebate to 5 be paid to the Estate of John McConnell. The appellants appealed to F&R, which sustained the Board of Appeals' determination. Thereafter, the appellants appealed to this Court by way of a class action petition for review, seeking (1) certification of the matter as a class action, and (2) appellate review of the F&R's determination denying the refund and refusing to certify the matter as a class action. The Commonwealth Court then denied the motion to certify appellants' suit as a class action, noting that the appellants were engaged in the appellate process, not the Court's original jurisdiction. See McConnell v. Department of Revenue, 415 A.2d 1012 (Pa. Cmwlth. 1980) (McConnell I), rev'd, 503 Pa. 322, 469 A.2d 574 (1983).

On direct appeal, the Supreme Court considered whether the Commonwealth Court, in an action seeking review of a F&R decision, may entertain a request to certify an action as a class action. The Supreme Court concluded that "the Commonwealth Court should have considered the appellants' motion on the merits." McConnell II, 503 Pa. at 325, 469 A.2d at 576. The Supreme Court, despite noting that the statutory provisions and governing rules "specifically provide for the maintenance of rent rebate actions only by individual claimants," id. at 327, n.8, 469 A.2d at 577 n.8, further wrote:

[I]f appellants are to have any opportunity to obtain class certification in this case, that opportunity will have to come before the Commonwealth Court, since neither the statute nor the rules governing actions for rent rebates before the Department of Revenue and Board of Finance and Revenue authorizes the maintenance of a class action.

Id. at 327, 469 A.2d at 577. Recognizing the benefits of class actions, the Supreme Court wrote:

[I]n order to promote the interests of judicial administration and justice by eliminating the possibility of repetitious litigation and providing claimants with a method of obtaining redress for claims which would otherwise be too small to warrant individual litigation, we hold that the Commonwealth Court, in addition to try the merits of appellants' case, must also entertain appellants' request for class certification.

Id. at 327-28, 469 A.2d at 577-78.

On remand to this Court, Judge MacPhail, in a single-judge, unreported opinion, granted the appellants' motion for class certification. McConnell v. Commonwealth, No. 2508 C.D. 1980 (Pa. Cmwlth., filed December 7, 1984) (McConnell III). In so doing, Judge MacPhail wrote:

Concerning the criteria for certification, we are of the opinion that the common question of law predominates over questions affecting only individual members; the size of the class and difficulties pertinent to the management of the action are not overwhelming; it is doubtful that there would be separate answers if there were individual actions; there has been no other similar litigation commenced; the Supreme Court has designated this Court as an appropriate forum for the litigation of the claims; and, it is doubtful that undivided claims ...


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