Henrietta BEATTIE, Gertrude Ellis, Karen Rummel, Sandra Walls, Kenneth Pierce, and Mon Valley Unemployed Committee, on their own Behalf and on Behalf of all others Similarly Situated, Appellants v. ALLEGHENY COUNTY, Pennsylvania, Daniel Onorato, Its Chief Executive and Manatron, Inc., Appellees
Supreme Court of Pennsylvania
Decided Oct. 11, 2006
907 A.2d 519
Justice SAYLOR
Argued Sept. 12, 2005.
Michael Henry Wojcik, George M. Janocsko, Pittsburgh, for Allegheny County, et al.
OPINION
Justice SAYLOR.
This appeal raises the question of whether taxpayers may bypass administrative remedies and maintain an equitable class action in the trial court to assert a Uniformity Clause-based challenge to the real estate assessment system used by Allegheny County.
I.
Appellants filed a class-action equitable complaint in the Court of Common Pleas of Allegheny County, alleging that their properties had been over-assessed by the County, and stating more generally that the County‘s assessment system caused approximately 80,000 lower-valued homes to be over-assessed and resulted in an under-assessment of a significant number of higher-valued homes. In challenging the constitutionality of the assessment under the Uniformity Clause, see
According to the Complaint, the County carried out consecutive county-wide property reassessments for tax years 2001 and 2002, employing a Computer Assisted Mass Appraisal (“CAMA“) system to produce the assessments.1 However, the
The County filed preliminary objections, arguing that Appellants could challenge their assessments initially through a statutory appeal to the Board of Property Assessment Appeals and Review (the “Appeals Board“), and appeal any adverse decision to the common pleas court for a de novo hearing. In the County‘s view, this would constitute an adequate remedy at law so as to preclude injunctive and declaratory relief on the Complaint. The County also included an objection to all counts, alleging that the specificity of the allegations in the Complaint was insufficient to allow the County to determine accurately the particular bases or theories on which Appellants were seeking recovery. See RR. 42a;
By opinion and order dated March 27, 2003, the trial court dismissed the complaint, finding initially that Appellants could not pursue their Section 1983 claim because there was an adequate remedy under state law, namely, the administrative process referenced by the County for challenging tax assessments under the General County Assessment Law and the Second Class County Assessment Law. See Jordan v. Fayette County Bd. of Assessment Appeals, 782 A.2d 642 (Pa.Cmwlth. 2001); Murtagh v. County of Berks, 715 A.2d 548 (Pa.Cmwlth. 1998). For similar reasons, the trial court found that Appellants could not circumvent this process to present their uniformity challenge in the court‘s equitable jurisdiction. In reaching this conclusion, the trial court initially noted that Appellants had failed to allege that the assessment system was deliberately operated to produce inequities or that any sub-class of properties was consciously singled out for disparate treatment; to the contrary, the Complaint acknowledged that the system was designed to treat all properties in a similar
While the prayer for relief seeks an order which requires Allegheny County to “utilize that data which it has properly collected,” the complaint does not describe the manner in which the County failed to utilize the data which it properly collected. While the prayer for relief seeks an order directing the County to “supplement this data as necessary,” the complaint does not describe the manner in which this should occur. While the prayer for relief seeks an order requiring the County to “reassess their properties as required for purposes of tax rate co[rr]ection,” there is no specific correction that plaintiffs propose. What plaintiffs appear to be seeking is a court order directing the County to modify its system of assessing property until the alleged pattern of overassessment of properties under $50,000 is corrected.
Trial Court op. at 26 (alteration added). The court concluded by noting:
The relief plaintiffs seek—an order requiring Allegheny County to utilize that data which it has collected, supplement this data as necessary, and reassess plaintiffs’ properties as required for the purpose of tax collection—asks this court to assume responsibility for the operation of the assessment system until the deviations between assessed values and fair market values for all groups of property are similar.
This is not an appropriate role for the court. Case law holds that the appeals process must be pursued where the county is operating a viable assessment system; courts should become involved in the county‘s operation of its assessment system only as a last resort.
Id. at 28-29.
A divided, en banc panel of the Commonwealth Court affirmed in a published decision. See Beattie v. Allegheny County, 847 A.2d 185 (Pa.Cmwlth. 2004). Initially, the majority recited the general rule requiring aggrieved parties to exhaust administrative remedies before seeking judicial
In this regard, the Commonwealth Court majority indicated that, for example, where a county singles out a certain geographical subset of its territory for mass reassessment at present values, leaving the remainder of the county assessed at values from prior years, a trial court may declare that the county has begun a de facto county-wide reassessment and enjoin collection of taxes at the new levels until the entire county is reassessed.3 The majority disagreed, however, with
the trial court‘s suggestion that the present case is distinguishable from cases such as City of Lancaster and City of Harrisburg on the basis that, here, the County did not consciously target a specific set of properties (i.e., lower valued homes) for discriminatory treatment. The majority pointed out that, under Fisher Controls Co. v. Commonwealth, 476 Pa. 119, 127, 381 A.2d 1253, 1257 (1977), improper discrimination can be shown even absent purposeful misconduct by demonstrating that the challenged system adversely affects a sub-classification of properties as part of a systematic method of enforcement of the tax laws, as opposed to mere errors or oversights. See Beattie, 847 A.2d at 190, 191. Thus, the Commonwealth Court majority stated that, if such a discriminatory effect exists from the systematic application of the County‘s mass appraisal system, the adequacy of the statutory remedy provided to taxpayers must be evaluated, for if it is inadequate the trial court may be permitted to exercise its equity jurisdiction.
In undertaking such inquiry, the court initially recognized that Appellants’ complaint was not centered on a contention that there were inequities in the assessment-to-value ratios applied to the lower value homes as compared to the higher-value properties (indeed, all were assessed at 100% of value per the County‘s yearly mass reassessments), but that the less expensive homes’ values were more likely to have been overstated in the first instance due to alleged deficiencies in the CAMA system‘s operation. The court noted in particular Appellants’ allegation, recited above, concerning the need for a reduction of the millage applicable to their homes premised upon a wide-ranging increase in the valuations of properties at
while a taxpayer may not challenge the taxing authority‘s assessment of another property owner‘s under-assessment, [Appellants] have not asserted that they may not request the [Appeals Board] to recalculate the millage for the purpose of applying an accurate millage solely to their appeals. This brings us back to the point of Borough of Green Tree—that those agencies that have expertise in a particular area should be left to exercise that expertise in evaluating claims of this kind.... [A]ccordingly, we are not persuaded that the statutory appeal process is inadequate.
Id. Thus, the majority concluded that the administrative appeals process was adequate to address Appellants’ contentions.4
Judge Pellegrini concurred in the result. Judge Friedman issued a concurring and dissenting opinion, agreeing with the dismissal of Appellants’ Section 1983 cause of action, but disagreeing with the determination that Appellants have an adequate remedy through the statutory appeals process. On this latter point, Judge Friedman cited to her dissenting opinion in Kowenhoven v. County of Allegheny, 847 A.2d 172, 176 (Pa.Cmwlth. 2004) (Friedman, J., concurring and dissenting), rev‘d, 587 Pa. 545, 901 A.2d 1003 (2006).
II.
In tax assessment appeals, this Court considers whether the trial court abused its discretion, committed an error of law, or reached a decision not supported by substantial evidence. Lincoln Phila. Realty Assocs. I v. Board of Revision of Taxes of City and County of Phila., 563 Pa. 189, 205 n. 11, 758 A.2d 1178, 1187 n. 11 (2000); Wilson Area Sch. Dist. v. Easton Hosp., 561 Pa. 1, 5 n. 5, 747 A.2d 877, 879 n. 5 (2000).
First, they maintain that their allegation concerning lower value properties having been systematically over-assessed in 2001 and 2002 raises a substantial constitutional issue under the Uniformity Clause and the Equal Protection Clause of the United States Constitution. See
The County responds by denying that either prong of the Borough of Green Tree / Rochester Coal test is met. It contends that this Court has only recognized the existence of a substantial constitutional issue where the taxpayers challenge the taxing statute on its face; it argues, more specifically, that this Court, unlike the Commonwealth Court, has never extended the exception to the exhaustion requirement beyond such a scenario to include claims based upon discriminatory effects occasioned by the application of the tax statute. The County also points to at least two Commonwealth Court decisions that adhere to this understanding of the term “substantial constitutional issue” in this context. See Jordan, 782 A.2d at 646 (interpreting Borough of Green Tree and Rochester Coal as holding that, absent “a substantial ‘frontal attack’ on the constitutionality of the tax statute,” no substantial constitutional issue exists for purposes of the first prong of the test); Consolidated Gas Supply v. County of Clinton, 80 Pa.Cmwlth. 10, 13, 470 A.2d 1113, 1114-15 (1984) (finding no substantial constitution issue where the taxpayer did not challenge the tax statute on its face, but rather, challenged its application). Accordingly, the County urges this Court not to expand the exception beyond facial inquiries, so that an “as-applied” challenge will always fall outside of the exception‘s scope—except perhaps in the most extreme of cases such as a total abdication of reassessment responsibilities or a “half-hearted attempt to fulfill this obligation by performing a partial countywide reassessment that targets certain properties.” Brief for Appellees at 24-25 n. 13.
Moreover, the County asserts that Appellants have an adequate administrative forum in which to raise their contentions about the 2001 and 2002 reassessments, arguing that the Appeals Board is capable of adjudicating their claims and that, to the extent that body commits error, the same can be rectified through a de novo appeal to the court of common pleas and subsequent appellate review in the ordinary course. See id. at 32-33 (“Like its counterparts in other counties in
III.
A central principle articulated by the plurality in Borough of Green Tree was that the Legislature retains the power to channel all issues, including constitutional ones, into a specified route of appeal, such as an administrative appeal before a state or local agency. See Borough of Green Tree, 459 Pa. at 277, 328 A.2d at 823; Kowenhoven, 587 Pa. at 557, 901 A.2d at 1010. Relying on prior cases, however, this Court recognized an exception for certain types of constitutional questions that the administrative process was ill-suited to resolve.5 In drawing the contours of this exception, the Borough of Green Tree plurality observed that bypassing the agency process within the framework of a direct attack on the enabling statute is inherently less likely to do violence to the agency‘s role as
After Borough of Green Tree, the Commonwealth Court permitted the exercise of equity jurisdiction in at least two cases where the assessment office undertook to reassess only a geographical subset of the county, see City of Lancaster, 143 Pa.Cmwlth. at 498, 599 A.2d at 300; City of Harrisburg, 677 A.2d at 354, and, in two additional matters, permitted the trial court to order a county-wide reassessment where the county‘s existing valuations were decades old and widespread, excessive non-uniformity had developed over time—a condition which could not be redressed either through individual appeals or through reassessment in only certain districts. See Millcreek Township, 714 A.2d at 1109; Ackerman v. Carbon County, 703 A.2d 82, 88-89 (Pa.Cmwlth. 1997). The County correctly notes that these decisions are distinguishable from the present dispute in that, here, no particular group of taxpayers has been singled out for disparate treatment, and the property values about which Appellants complain are “not the product of some old and stale countywide assessment, but rather [are] the result of a recently conducted countywide assessment designed to treat all properties in the same fashion.” Brief for Appellees at 23. In contrast to Millcreek Township and Ackerman, moreover, Appellants’ complaint centers on certain alleged inadequacies in the manner in which the mass reassessment was carried out, principally, the alleged exclusion of data concerning property transfers for very small sums of money, the alleged improper division of the County into neighborhoods, and the alleged inappropriate emphasis on considerations such as square footage and number of bedrooms.
Still, it cannot be denied that Appellants’ central contention is that they and thousands of similarly-situated low-value property owners have been subject to mass reassessments for 2001 and 2002 that (perhaps unintentionally) cause one subclass of property owners to be treated in an inferior manner as compared to another subclass. See Allegheny County v. Monzo, 509 Pa. 26, 41, 500 A.2d 1096, 1104 (1985) (“[W]here a method or formula of computing a tax will, in its operation or effect, produce unreasonably discriminatory results, the constitutional provision relating to uniformity is violated.“). Assuming the truth of this allegation, which we must in reviewing preliminary objections, see AM/PM Franchise Ass‘n v. Atlantic Richfield Co., 526 Pa. 110, 121, 584 A.2d 915, 921 (1990), Appellants are correct that many duplicative assessment grievances may be filed, all raising the same issue. This implicates the admonition that, “where relying solely on the statutory appeal mechanism would result in a ‘multiplicity of duplicative lawsuits and, in contrast, an action in equity would provide a tidy global resolution,’ the legal remedy should be deemed inadequate.” Kowenhoven, 587 Pa. at 553, 901 A.2d at 1008 (quoting Pentlong Corp. v. GLS Capital, Inc., 573 Pa. 34, 43-44, 820 A.2d 1240, 1245-46 (2003)). Moreover, while an appeal before the Board may be capable of lowering the assessment on any individual appellant‘s property, it does not appear that any systematic under-assessment of higher-value properties can be cured through a series of administrative appeals taken by members of the asserted class of lower-value property owners. Therefore, even if all low-value property owners have their valuations reduced to more accurate figures, the alleged discriminatory effect, though lessened, would remain.6
This still leaves the question of whether a substantial constitutional issue has been raised. See Shenango Valley Osteopathic Hosp., 499 Pa. at 48, 451 A.2d at 438 (reciting that both an inadequate statutory remedy and a substantial constitutional issue are necessary for equity). On this topic, there is some merit to the County‘s argument that this Court has not historically recognized the existence of such an issue apart
As discussed above, the Commonwealth Court has permitted the exercise of equity where certain features other than a facial statutory defect are present. That court‘s decisions which were premised upon a finding of an incomplete county-wide assessment, see, e.g., City of Lancaster, 143 Pa.Cmwlth. at 498, 599 A.2d at 300; City of Harrisburg, 677 A.2d at 354, are not particularly helpful here, as neither party disputes that the County actually completed its mass assessments for 2001 and 2002 before any taxes were levied. Arguably more relevant, however, are the decisions in Millcreek Township and Ackerman, where the trial court ultimately discerned pervasive county-wide inequities which rendered the overall assessment picture non-uniform. In both of those cases, the Commonwealth Court affirmed the trial court‘s decision to grant mandamus relief which directed county officials to per-
The County observes that there is a factual distinction between those controversies and the present one, as those cases entailed “old and stale countywide assessment[s]” due to “longtime neglect,” combined with the selective reassessment of certain properties. Brief for Appellees at 22-23. Here, by contrast, the mass assessments were undertaken recently and without any deliberate singling-out of a particular group of taxpayers for disparate treatment. See id. While all of this may be true, it does not disprove that an equally non-uniform assessment picture may result from a recently-completed county-wide mass reappraisal if the system used to implement the reappraisal contains certain defects. Therefore, the recentness of the County‘s 2001 and 2002 reassessments is not alone sufficient to preclude mandamus. The predicate question, as we see it, is whether a substantial constitutional issue can ever be present based solely upon the manner in which the governing taxing statute is applied.
We find that it can. Here, for instance, the County is required to reassess all of the several hundred thousand properties in the County every year, see
While equity jurisdiction thus may be exercised to entertain a complaint raising the type of constitutional infirmity alleged here, this does not end our inquiry because, to determine whether the trial court erred, account must also be taken of the specific features of the complaint and the manner of relief sought. As reflected in the Complaint‘s prayer for relief, Appellants were in essence seeking two separate forms of judicial directives. First, they wanted their own assessments lowered in accordance with what they considered to be the true values of their properties. Simply showing that their properties were over-valued, however, is a subject plainly within the ordinary grievance process prescribed by statute. What is at issue here, then, for purposes of equity, is Appellants’ contention that the CAMA system was applied incorrectly in a more general way, and hence, that the court should direct the County to re-apply it correctly so as to alter the valuations of tens of thousands of properties.
Properly understood, then, the equity relief Appellants sought in the trial court was in the nature of mandamus, as it subsumed an assertion (albeit perhaps an implicit one) that the County has a legal duty, imposed by Article I, Section VIII, to revise its mass assessments for 2001 and 2002, and that Appellants have a right, guaranteed by that same provision, to pay taxes according to the results of such revisions. See generally Delaware River Port Auth. v. Thornburgh, 508 Pa. 11, 20, 493 A.2d 1351, 1355 (1985) (action is one lying in mandamus if it is instituted to compel official performance of a duty where there is a legal right in the plaintiff and a corresponding duty in the defendant); Maute v. Frank, 441 Pa.Super. 401, 403, 657 A.2d 985, 986 (1995) (“[S]ince the complaint states a viable mandamus claim, we will treat that portion of the action as such, regardless of the fact that the complaint is not titled properly as one involving mandamus.“). Although Millcreek Township and Ackerman do not delineate
As quoted above, a central part of the trial court‘s basis for dismissal related to Appellants’ failure to plead with specificity in this regard. We believe the court expressed a legitimate concern. In the first place, although the complaint alleged that there was a systemic under-valuation in the highend properties and the opposite effect for low-end parcels, “taxation is not an exact science,” and hence, “perfect uniformity or absolute equality is not required,” Columbia Gas Transmission Corp. v. Commonwealth, 468 Pa. 145, 151, 360 A.2d 592, 595 (1976); instead, some practical inequalities are anticipated, and rough uniformity with a limited amount of variation is permitted so long as the taxing scheme does not impose substantially unequal tax burdens. See Leonard v. Thornburgh, 507 Pa. 317, 321, 489 A.2d 1349, 1352 (1985); Sablosky v. Messner, 372 Pa. 47, 57, 92 A.2d 411, 416 (1952). See generally 84 C.J.S. Taxation § 30 (2006). Thus, to support the proposition that the County was duty-bound to re-apply the CAMA system in an alternate manner, Appellants’ allegations would preliminarily have had to demonstrate the absence of rough or substantial equality in the present operation of the CAMA system. They would also necessarily have had to specify the manner in which the system should be re-applied so that constitutionally acceptable results would obtain.
This is not to say that mandamus relief was necessarily wrongly granted in Millcreek Township and Ackerman, where
For the reasons stated, the order of the Commonwealth Court, affirming the order of the common pleas court, is affirmed.
Justices CASTILLE, NEWMAN, EAKIN and BAER join the opinion.
Former Justice NIGRO did not participate in the decision of this case.
Chief Justice CAPPY files a concurring opinion.
Chief Justice CAPPY concurring.
I agree with the conclusion reached by the majority that the lower courts properly determined that Appellants may not proceed in equity with their tax assessment matter. Yet, I do not agree with the reasoning employed by the majority and thus cannot join the opinion.
As fully detailed by the majority, Appellants filed their action asserting that the Computer Assisted Mass Appraisal (“CAMA“) system applied by Allegheny County in conducting its property assessments is flawed and systematically places a greater proportional burden of property taxes on owners of lower valued properties. The majority states that equity jurisdiction “may be exercised to entertain a complaint raising
procedures as a prerequisite to informed constitutional decision making, then corresponding greater is the embarrassment caused to litigants by requiring conformity with the statutorily-prescribed remedy” (quoting Borough of Green Tree, 459 Pa. at 281, 328 A.2d at 825)); id. at 559, 901 A.2d at 1012 (“[G]iven that the general procedures of which Appellants complain can be facially tested against constitutional norms unaided by agency expertise, there is little practical difference between the present challenge and one in which the constitutional validity of a taxing statute is in issue.“). In any event, even if the addition of a distinct third element were appropriate, the concurrence offers no reason to suggest that both elements of the prevailing two-part inquiry should not be enforced. Thus, in light of our finding that Appellants have not satisfied the first prong—that is, that they have failed to raise a substantial constitutional issue in the context of their request for mandamus (a proposition with which the concurrence does not appear to disagree)—we see no need to address any proposed additional requirement at this juncture.
I disagree with the majority‘s conclusion that in general, equity jurisdiction may be exercised in matters such as the one sub judice. The Majority arrives at its conclusion via application of a two-pronged test. The Majority states that equity jurisdiction will lie where a taxpayer “(1) raise[s] a substantial constitutional issue, and (2) lack[s] an adequate remedy through the administrative appeal process.” M.O. 589 Pa. at 122, 907 A.2d at 524-25.
While the test as enunciated by the Majority is correct insofar as it goes, I find it to be incomplete. I believe it misses an important factor in our exhaustion of administrative remedies doctrine. Our exhaustion doctrine has us examine not only whether there is a substantial constitutional question and an adequate administrative remedy; it also directs us to question whether administrative input would be helpful. We have stated that “[t]he primary purpose of the exhaustion doctrine is to ensure claims will be addressed by the body having expertise in the area. This is particularly important where the ultimate decision rests upon factual determinations lying within the expertise of the agency, or where agency interpretations of relevant statutes or regulations are desirable.” Lehman v. Pennsylvania State Police, 576 Pa. 365, 839 A.2d 265, 275 (2003). I believe cases such as the matter sub judice clearly warrant administrative agency involvement. Determining whether a property assessment was properly done is beyond cavil a fact-intensive inquiry, one in which the agency‘s expertise would be most welcome. The fact that this matter raises a macro, county-wide challenge does not render agency involvement unnecessary; if anything, specialized administrative knowledge could prove even more helpful in such a complex matter.
Accordingly, while I agree with the result reached by the majority, I cannot join its reasoning.