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Martel v. Allegheny County

Commonwealth Court of Pennsylvania

August 14, 2019

Joseph Nissim Martel and Ester Martel, husband and wife, on behalf of themselves and all others similarly situated, Appellants
v.
Allegheny County, City of Pittsburgh, Pittsburgh Public Schools, and Allegheny County Board of Assessment Appeals and Review

          Argued: October 15, 2018

          BEFORE: HONORABLE P. KEVIN BROBSON, Judge HONORABLE CHRISTINE FIZZANO CANNON, Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

          OPINION

          CHRISTINE FIZZANO CANNON, JUDGE

         Joseph Nissim Martel and Ester Martel, husband and wife, (the Martels) on behalf of themselves and all others similarly situated (Property Owners) appeal from the March 29, 2018 order of the Allegheny County Court of Common Pleas (trial court) dismissing their class action complaint in equity, seeking relief from property reassessments ordered by the Allegheny County Board of Assessment Appeals and Review (Board). The Board ordered the reassessments based on assessment appeals brought by the Pittsburgh Public Schools (School District), Allegheny County (County) and the City of Pittsburgh (City) (collectively, Taxing Authorities), where they introduced evidence of current market values to support their request for increased assessments. Property Owners contested the Taxing Authorities' power to bring the appeals and to rely on current market values, arguing that this conduct violated, in relevant part, laws enacted by Allegheny County pursuant to the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. § 2964, and the Uniformity Clause of the Pennsylvania Constitution, Pa. Const. art. VIII, § 1. The Taxing Authorities and the Board raised several preliminary objections to the complaint and the trial court dismissed it for lack of legal sufficiency.[1] Upon review, we agree that the trial court properly dismissed the complaint; however, we affirm on another basis, [2] concluding that the trial court should have instead sustained the preliminary objections that Property Owners failed to exhaust the remedies available to them pursuant to the law known as the Second Class County Assessment Law (Assessment Law).[3]

         On July 28, 2017, Property Owners filed a one-count class action complaint with the trial court alleging the following facts.[4] Property Owners are individuals who own real estate in the County and include the Martels. Complaint ¶ 5. The County, which is a home rule municipality, has been under a base year assessment system since 2002. Id. ¶¶ 7 & 9. The last countywide reassessment was in 2012, which is the current established base year for the County. Id. ¶ 8.

         On or about November 13, 2015, the Martels purchased their property located at 6340 Darlington Road, Pittsburgh, for the sum of $750, 000. Complaint ¶ 24. At the time, the Martels' property had a base year (2012) assessed value of $464, 700. Id. ¶ 26. On May 10, 2016, the School District initiated an appeal with the Board of the assessed value of the Martels' property for the 2016 tax year; though, at the time, "there had been no material additions or removal of improvements to the [Martels'] [p]roperty or physical changes in the land." Id. ¶¶ 25-26. At the hearing on the matter, the School District "stated that it was appealing the assessed value of the [Martels'] [p]roperty on the basis of current market value." Id. ¶ 28. After taking evidence, the hearing examiner recommended to the Board an order to change the assessed value of the Martels' property from $464, 700 to $690, 000, which the Board adopted. Id. ¶¶ 34 & 36. Property Owners contended that the Board erred by increasing the assessment on the Martels' property "based solely upon improperly submitted evidence of the sales price of the subject [p]roperty and other property sales that all took place after the base year." Id. ¶ 36. Property Owners appealed the Board's decision to the Allegheny County Court of Common Pleas Board of Viewers. Id. ¶ 37.

         Property Owners allege that this matter is appropriately brought as a class action[5] because the Taxing Authorities have initiated assessment appeals similar to the Martels' appeal on "approximately 200 or more" properties recently sold in Allegheny County, Complaint ¶ 44, and have accepted "the increased tax revenues associated with the same." Id. ¶ 17. Property Owners assert that the Taxing Authorities do not have the right to appeal the assessed values on the basis of current market value pursuant to Section 5-207.06(B)(7) of the Allegheny County Administrative Code (Administrative Code)[6] and Board Rule IV, Section 3A (Board Rule).[7] Complaint ¶¶ 13 & 15. In support, Property Owners explain that the Administrative Code provides that the Board is "precluded from increasing the base year assessment value of a property absent physical changes or improvements to the property," id. ¶ 14, and the Board Rule allows only the owners, not the Taxing Authorities, to "elect to use current fair market value in determining the assessed value of the subject property on appeal." Id. ¶ 16. Property Owners further allege that the County and the Board are outsourcing their duties to "conduct regular countywide reassessments to the . . . [T]axing [A]uthorities" resulting in "de facto spot reassessments" and illegal taxation by changing the assessments through the appeal process in violation of the Uniformity Clause of the United States and Pennsylvania Constitutions, the Administrative Code, Board Rule, and other pertinent laws. Id. ¶¶ 18 & 19-22.

         In their request for relief, Property Owners asked the trial court to: (1) enjoin the Taxing Authorities and the Board from appealing property tax assessments based on current fair market values and/or increasing the assessments where the appeal has not been initiated by taxpayers; (2) order the Board to "roll back" the assessed values of all affected properties to the 2012 base year valuation to provide prospective tax relief for "taxpayers" per the act known as the Refund Act, Act of May 21, 1943, P.L. 349, as amended, 72 P.S. §§ 5566b-5566c; (3) declare that the increased tax revenues collected have been "unlawfully obtained" and direct the Board to provide "written notice" to all affected taxpayers of their right to seek a refund within the applicable three-year period provided in 72 P.S. § 5566b, Section 1 of the Act of May 21, 1943, P.L. 349, as amended; (4) direct the Board to promulgate reasonable rules and regulations regarding the tax refund procedure; (5) declare that the Taxing Authorities and the Board's improper conduct violates the Uniformity Clause, Administrative Code, Board Rule, and other pertinent law; (6) award Property Owners attorneys' fees and costs; and (7) provide any further relief as is "just and proper" under the circumstances. Complaint Wherefore Clause ¶¶ (a)-(g).

         The Taxing Authorities and the Board responded to the Property Owners' complaint by each filing preliminary objections in the nature of a demurrer. The Board and the Taxing Authorities objected to the complaint arguing, inter alia, that Property Owners failed to exhaust their statutory remedies, as the Martels appealed the Board's reassessment to the Court of Common Pleas Board of Viewers and that case is ongoing. Board & School District's POs ¶¶ 5-6 & 53-54; County's POs ¶ 10 & City's POs ¶ 12. The Board and the School District also objected on the following grounds: (1) the Administrative Code and Board Rule relied upon by Property Owners violate the Consolidated County Assessment Law, 53 Pa.C.S. § 8855, [8] and, therefore, cannot support their claim; (2) Property Owners' assertion of a "class" is baseless as the class is comprised of zero members; (3) a class action is not available for seeking tax refunds as a matter of law; and (4) Property Owners failed to join indispensable parties, i.e., other school districts in the County, which could be affected by the decision in this matter. Board and School District's POs ¶¶ 15, 27, 46-47, 50, 62, 65 & 68. The County and City objected that Property Owners pled no specific facts showing that they commenced or participated in the assessment hearings. County's POs ¶ 7 & City's POs ¶ 8. The City made two additional objections: (1) the matter against it is not ripe as it "has done nothing" to Property Owners and (2) Property Owners fail to allege an actual harm as they still may succeed on their assessment appeal before the Court of Common Pleas Board of Viewers. City's POs ¶¶ 9 & 13.

         Following briefing and oral argument on the preliminary objections, the trial court sustained, in part, and overruled, in part, the objections and dismissed the complaint. Trial Court Order dated 3/29/18. The trial court dismissed the complaint by sustaining the Board and School District's objection that the Administrative Code and Board Rule relied upon by Property Owners, as written, violate state law and therefore their complaint is "legally insufficient." Id. at 5. In sustaining the Board and School District's objection, the trial court did not rely upon Section 8855 of the Consolidated County Assessment Law, as suggested by the Board and School District, to reach its conclusion. Instead, the trial court concluded that the Administrative Code and Board Rule violate Section 3107-C(h)(8) of the act known as the Second Class County Charter Law, [9] Act of July 28, 1953, P.L. 723, as amended, added by the Act of May 20, 1997, P.L. 149, 16 P.S. § 6107-C(h)(8). Trial Court Opinion at 17.

         The trial court explained that the Administrative Code and Board Rule allow only the taxpayer, not the Taxing Authorities, to elect to have the determination of value of a property during an assessment appeal based upon the current fair market value. Trial Court Opinion at 15. Because the Administrative Code and Board Rule restrict Taxing Authorities' rights during an assessment appeal to "something less than what taxpayers are entitled to," the trial court held that these laws are invalid as they conflict with the authority granted to Taxing Authorities in Section 520 of The General County Assessment Law, Act of May 22, 1933, P.L. 853, as amended, 72 P.S. § 5020-520.[10] Trial Court Opinion at 16.

         The trial court further concluded that the Administrative Code is invalid because it violates the Assessment Law and the trial court's prior holding in Daugherty v. County of Allegheny, (No. GD-06-013464, C.C.P. Allegheny Cty., filed September 6, 2006), affirmed, 920 A.2d 936 (Pa. Cmwlth. 2007), which requires the Board to determine the current market value of the property for the tax year in question during an assessment appeal regardless of whether taxpayer or taxing authority elects a current market value methodology on appeal. Trial Court Opinion at 17-18. The trial court further sustained the objections that a class action is not, as a matter of law, available for tax refunds and that Property Owners failed to join indispensable parties. Id. at 8-9 & 28-29. The trial court overruled the remaining objections, and Property Owners brought this appeal.[11]

         Before this Court, the parties present several arguments addressing the trial court's analysis, including the validity of the Administrative Code and Board Rule. However, we do not reach those arguments. Though we conclude that the trial court correctly dismissed Property Owners' Complaint, the trial court did not have the authority to address the legal issues raised therein because the appeals process provided in the Assessment Law enables Property Owners to obtain the relief they seek. Property Owners had to exhaust the appeals process provided by the Assessment Law before bringing their complaint to the trial court as reflected in basic legal principles.

         A party may not seek judicial resolution of a dispute until he or she has exhausted available statutory or administrative remedies. 1 Pa.C.S. § 1504; City of Philadelphia v. Lerner, 151 A.3d 1020, 1024 (Pa. 2016) (citing Canonsburg Gen. Hosp. v. Dep't of Health, 422 A.2d 141, 144 (Pa. 1980)). The doctrine "reflects a recognition of the general assembly's directive of strict compliance with statutorily prescribed remedies" and it also acknowledges that "an unjustified failure to follow the administrative scheme undercuts the foundation upon which the administrative process was founded." Jordan v. Fayette Cty. Bd. of Assessment Appeals, 782 A.2d 642, 646 (Pa. Cmwlth. 2001) (quoting Shenango Valley Osteopathic Hosp. v. Dep't of Health, 451 A.3d 434 (Pa. 1982)). If a party fails to pursue a statutory remedy, the court is without power to act until the statutory remedies have been exhausted, even in cases where a constitutional question is presented. Muir v. Alexander, 858 A.2d 653, 660 (Pa. Cmwlth. 2004).

         Here, the trial court overruled the Taxing Authorities' and Board's objections that Property Owners failed to exhaust their statutory remedies at law. Trial Court Order ¶ 2. In so doing, the trial court explained, relying on Beattie v. Allegheny County, 907 A.2d 519 (Pa. 2006), that it could exercise equitable jurisdiction to adjudicate Property Owners' complaint if two factors are met: (1) there is a lack of an adequate remedy and (2) a substantial constitutional question is raised. Trial Court Opinion at 3. The trial court reasoned that there is a lack of an adequate remedy because Property Owners seek a declaration to require the Taxing Authorities to follow the requirements of the Administrative Code and Board Rule but this relief is not available through the appeals process provided by the Assessment Law. Id. at 5. The trial court acknowledged that "[t]he heart of the argument between the parties as to [Property Owners'] obligation to exhaust administrative/statutory remedies is really with respect to . . .whether there is a lack of an adequate statutory remedy."[12] Id. at 4. The trial court also concluded that Property Owners raised a substantial constitutional question because they raised a uniformity challenge under both the Pennsylvania and United States Constitutions. Id. at 3-4. Though the trial court applied the proper two-prong test set forth in Beattie to ascertain whether it could exercise equity jurisdiction of the complaint, the trial court erred in its application of this test.

         First, the trial court erred in its application of the Beattie test when it concluded that Property Owners could not obtain the relief they seek in their complaint by following the appeals process provided in the Assessment Law. In their complaint, Property Owners seek the following: (1) injunctive and declaratory relief against the Taxing Authorities to prohibit them from appealing property assessments; (2) reassessments on their properties; (3) an opportunity to obtain tax refunds; and (4) attorneys' fees and costs. Complaint Wherefore Clause ¶¶ (a)-(e). Addressing first the relief in the form of reassessments and refunds, we conclude that Property Owners can obtain this relief through the process provided by the Assessment Law.

         The Assessment Law specifically grants the Board the "power" and "duty" "[t]o hear all cases of appeals from assessments, and all complaints as to assessments, errors, exonerations and refunds." Section 4 of the Assessment Law, 72 P.S. § 5452.4(c) (emphasis added). "[A]ny taxable person may apply to the board for the reassessment of any subject of taxation which he considers incorrectly assessed or as to which he considers himself entitled to a change in valuation. . . ." Section 14 of the Assessment Law, 72 P.S. § 5452.14. If a taxpayer prevails on his or her appeal and the Board or trial court lowers the assessed value of his or her real estate, the taxpayer will be entitled to a refund for the tax years at issue and interest. Section 17(a) of the Assessment Law, 72 P.S. § 5452.17(a). However, if the Board renders a decision regarding the reassessments and refunds that the taxpayer disagrees with, the aggrieved taxpayer may file an appeal to the trial court. Section 11 of the Assessment Law, 72 P.S. § 5452.11; Chartiers Valley Sch. Dist. v. Bd. of Prop. Assessment, Appeals & Review, 622 A.2d 420, 427 (Pa. Cmwlth. 1993) (explaining that the trial court conducts a de novo hearing on assessment appeals referenced in 72 P.S. § 5452.11).

         As for Property Owners' request for injunctive and declaratory relief and attorneys' fees and costs, if they are unsuccessful before the Board on their claims for reassessments and refunds, they can seek this additional relief from the trial court in their appeal as provided by 72 P.S. § 5452.11. Property Owners may seek an injunction pursuant to Pennsylvania Rule of Civil Procedure No. 1531[13] and may seek a declaration regarding the Administrative Code and Board Rule as provided in Section 7532 of the Declaratory Judgments Act, 42 Pa.C.S. § 7532.[14]Similarly, Property Owners may request attorneys' fees and costs from the trial court due to the Board's failure to provide them with the requested assessment and refund relief pursuant to Section 2503 of the Judicial Code, 42 Pa.C.S § 2503.[15]

         Property Owners, here, acknowledged that one of their complainants, the Martels, commenced the appeals process under the Assessment Law. The Martels filed an appeal with the Board with respect to their property assessment but the Board did not provide the relief they sought so they filed a timely appeal of the Board's decision with the "Court of Common Pleas Board of Viewers and docketed at No. BV-001316." Complaint ¶ 37. Because the Martels appealed the Board's decision to the trial court as provided by the Assessment Law, they may seek injunctive and declaratory relief, in addition to attorneys' fees, costs, and any other relief to which they contend they are entitled as a result of the Board's failure to properly grant them relief on the assessments and refunds. The legislature provided an appeals process per the Assessment Law to obtain the relief sought in the complaint, and the process must be followed exclusively. Lilian v. Commonwealth, 354 A.2d 250, 252-53 (Pa. 1976) (explaining that where the legislature provides a statutory form of relief, it must be followed exclusively).

         Although Property Owners brought their complaint in the form of a class action lawsuit to support their assertion that equity jurisdiction is appropriate, Complaint ¶ 42, it is well-settled that where the General Assembly has provided a specific statutory remedy, the asserted need for a class action will not justify a deviation from the statutory remedy. Zarwin v. Montgomery Cty., 842 ...


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