03-2679 | 3rd Cir. | Jun 10, 2004
COMPANY ALDISERT, Circuit Judges
v. (Filed June 10, 2004)
COUNTY OF ALLEGHENY,
PENNSYLVANIA; Robert A. Goldman (Argued)
BOARD OF PROPERTY Pittsburgh, PA l5234
ASSESSMENT, APPEALS
AND REVIEW OF ALLEGHENY Attorney for Appellants
COUNTY;
KEVIN MCKEEGIN, an individual; Charles P. McCullough PATRICIA MCCULLOUGH, an County Solicitor individual; Caroline P. Liebenguth (Argued)
JERRY SPEER, an individual; Assistant County Solicitor JAM ES SKINZER, an individual; Isobel Storch DEBORAH BARON, an individual; Solicitor FREDERICK VALENCENTI, an Board of Property Assessment individual Office of Allegheny County Law
Department Pittsburgh, PA l5219
Herbert S. Gass, Jr.; John Zitelli; Diane Zitelli; *Jeff Corsello; Attorneys for Appellees regarding market values in making the OPINION OF THE COURT final assessments. On August 9, 2002, Appellants filed SLOVITER, Circuit Judge. this action pursuant to 42 U.S.C. § 1983 in the Western District of Pennsylvania
Appellants, pro pe rty-owning seeking a declaratory judgment that taxpayers in Allegheny County, filed this Appellees, the County of Allegheny, the Board and individual Board members, [1] suit asserting that the Allegheny County Board of Property Assessment, Appeals violated their due process rights by and Review (the Board) has adopted a encouraging hearing officers to seek out ex policy, custom or practice in processing parte evidence of market values and to appeals from property tax assessments that consider such evidence after the hearings, violates their rights to due process. The without affording the property owners District Court dismissed this action for notice or the opportunity to respond to the lack of subject-matter jurisdiction because new evidence. Appellants also claimed of the Tax Injunction Act, 28 U.S.C. § that hearing officers made arbitrary and 1341. Because the Tax Injunction Act capricious recommendations to the Board deprives federal courts of jurisdiction to as to the assessed value of each of their review challenges to a state property tax properties. system where the state provides a plain,
The Board moved to dismiss the speedy and efficient remedy, we will case on the ground that the Tax Injunction affirm the decision of the District Court. Act and principles of comity prevent I. federal courts from exercising subject- matter jurisdiction over a challenge to a Appellants, Herbert S. Gass, Jr., state tax system. Appellants responded John and Diane Zitelli, Jeff and Lynn that although the Tax Injunction Act bars Corsello, Michael Leahy, Domenic and federal jurisdiction over challenges to a A n n a D i P i l a to , a n d R o b i n h i l l state’s assessment, levy, or collection of Development Company, appealed their property taxes, it does not bar challenges real property assessments in 2001 and to a state’s post-payment appeals 2002 to the Board pursuant to the procedures. procedures set out in Section 207.01, et seq. of the Administrative Code of The District Court referred the Allegheny County. The Board’s hearing motion to dismiss to Magistrate Judge Ila officers held appeals hearings for each of the Appellants and made recommendations [1] The named Board members are Kevin to the Board for final resolution of their McKeegin, Patricia McCullough, Jerry tax liability. Appellants allege that the Speer, James Skinzer, Deborah Baron, and Board considered ex parte evidence
Frederick Valencenti. Jeanne Sensenich for a Report and where a plain, speedy and efficient remedy Recommendation (R&R). Magistrate may be had in the courts of such State.” Judge Sensenich issued a thorough, well- 28 U.S.C. § 1341. Although the express reasoned report recommending that the language of the Tax Injunction Act only District Court grant the Board’s motion to refers to injunctive actions, the Supreme dismiss for lack of subject-matter Court has held that the Tax Injunction Act jurisdiction. She reasoned that if a federal also prohibits federal courts from issuing court could award damages or declare a declaratory judgments holding state tax state tax system unconstitutional, it could laws unconstitutional. California v. Grace halt the proper functioning of state Brethren Church, 457 U.S. 393, 408 government in a manner that was (1982). antithetical to principles of comity. Judge
A.
Sensenich thus rejected Appellants’ asserted distinction between the taxing Appellants’ first argument is that power and the appeals process. Finally, the Tax Injunction Act does not apply Judge Sensenich found that, in light of because they have not asked the District recent additions to Pennsylvania law, Court to “enjoin, suspend or restrain the Pennsylvania’s courts provide a “plain, assessment, levy or collection of any tax.” speedy, and efficient” remedy through the Appellants’ Br. at 10 (quoting 28 U.S.C. § process for appeal of tax assessments. The 1341). Appellants argue that they only District Court adopted the R&R as the challenge the post-collection appeals opinion of the court and granted the process, which does not implicate the Board’s motion to dismiss for lack of Commonwealth’s ability to assess, levy, or jurisdiction. collect taxes as described in the text of the
Tax Injunction Act. [2] On appeal, Appellants argue that 1) the Tax Injunction Act does not apply to As noted above, Judge Sensenich their challenge to Pennsylvania’s post- rejected their attempt to distinguish their payment appeals process; 2) even if the challenge from the type of challenge Tax Injunction Act applies to their case, covered by the Act. She concluded that: the federal courts still have jurisdiction
[appellants] ultimately [] because Appellants lack a plain, speedy challenge the methods used and efficient remedy at state law; and/or 3) by the Board to assess the Tax Injunction Act is unconstitutional.
II.
property values (i.e., state law. the Board improperly
In determining whether the remedy considers ex parte in Pennsylvania courts is “plain, speedy evidence regarding and efficient,” we are guided by the market values after Supreme Court's decision in Rosewell v. the appeal hearings La Salle National Bank, 450 U.S. 503 are concluded to (1981). In Rosewell, a taxpayer d e t e r m i n e challenged Illinois’ real estate tax refund assessment values) procedure, which required taxpayers to pay and not the appeal the tax first and then attempt to contest the process itself. This assessment and obtain a refund. The is exactly the type of plaintiff in Rosewell refused to pay her tax claim contemplated assessments because they were set at a b y C o n g r e ss in “discriminatory level.” Id. at 518 n.22. enacting the Tax The plaintiff filed a Section 1983 action Injunction Act . . . . and the defendants moved to dismiss for lack of jurisdiction. Because the Court found at the outset that the Tax Injunction
App. at 15. We agree. The appeal process Act “generally prohibits federal district is directed to the Board’s ultimate goal and cour ts fr om enjoining state ta x responsibility of determining the proper administration,” the Court focused on the amount of tax to assess – a power of question of whether Illinois provided an “assessment” that explicitly falls within adequate state remedy. Id. at 512. the ambit of the Tax Injunction Act. Appellants’ prior payment of the tax does In Rosewell, the Court construed not change the fact that they seek to enjoin “plain, speedy and efficient” to mean that Pennsylvania’s finalization of assessments a state court must meet “certain minimal or re-assessments of taxes. Appellants’ procedural criteria,” but it did not require attempt to distinguish the appeals process that the state’s remedy be the best, most from the tax assessment is unpersuasive. convenient, or speediest one. Id.
(emphasis in original); see also id. at 518-
B.
21 (stating that two-year delay in state The Tax Injunction Act divests court, although regrettable, was not so federal courts of jurisdiction only if the egregious that it ran afoul of the Act’s state fails to provide a “plain, speedy and requirement of a “speedy” remedy). efficient” remedy in its court. Appellants Congress’ intent in requiring that the state argue that the federal courts have provide a plain, speedy and efficient jurisdiction over this case because remedy was to ensure that the taxpayer be Pennsylvania has failed to provide a afforded “a full hearing and judicial “plain, speedy and efficient” remedy at determination of the controversy,” id. at 513 (quoting testimony of Senator Bone, Injunction Act and dismissed the case for 18 Cong. Rec. 1416 (1937)), and be able to lack of subject-matter jurisdiction. Id. at appeal to the United States Supreme Court, 68-71. id. (quoting S. Rep. No. 1035, at 2 (1937)).
Shortly thereafter, we reaffirmed In light of the Supreme Court’s the continued vitality of that conclusion in reluctance “‘to interfere with the operation Balazik v. County of Dauphin, 44 F.3d 209" date_filed="1995-01-05" court="3rd Cir." case_name="Balazik v. County of Dauphin">44 F.3d 209 of state tax systems,’” and desire to “‘be (3d Cir. 1995), where we stated: faithful to the congressional intent to limit
Upon review of the state law drastically federal court interference with canvassed in Behe, we see no need state tax systems,’” we have stated that to rehearse those findings here, “we must construe narrowly the ‘plain, other than to note that since that speedy and efficient’ exception to the Tax time [that Behe was decided] the Injunction Act.” Sipe v. Amerada Hess Pennsylvania Supreme Court has Corp., 689 F.2d 396, 404 (3d Cir. 1982) made it easier for taxpayers to (quoting Grace Brethren Church, b y p a s s e x i s t i n g s t a t u t o r y 457 U.S. at 412, 413). procedures and bring an action directly in state court. We hold that We confronted a similar challenge Pennsylvania provides a “plain, to the one at bar in Behe v. Chester County adequate and complete” remedy for Board of Assessment Appeals, 952 F.2d § 1983 plaintiffs challenging state 66 (3d Cir. 1991). Behe and other taxation policies. homeowners who claimed that Chester County violated their constitutional rights Id. at 218 (emphasis added). Critically, by failing to revise property assessments Appellants point to no subsequent case law annually and causing differential tax or legislation that suggests that burdens between property taxes on newer Pennsylvania has made it more difficult to and older properties filed their suit in bring an action challenging tax assessment federal court pursuant to 42 U.S.C. § 1983. schemes in state court. They argued that the Tax Injunction Act
Other similarly-situated plaintiffs did not divest the federal courts of availed themselves of Pennsylvania’s court jurisdiction because the Pennsylvania system by filing an almost identical action courts did not provide a “plain, speedy and to the one before us in the Court of efficient” remedy for their claim . Common Pleas of Allegheny County. In Following an examination of the relevant 2002, they filed a class action, challenging, causes of action and procedures for inter alia, the County’s alleged practice of appealing tax assessments in Pennsylvania, permitting and encouraging the Appeals we concluded that Pennsylvania did Board to use ex parte evidence after provide a “plain, speedy, and efficient” hearings in violation of their due process remedy for the purposes of the Tax rights. Kowenhoven v. County of Allegheny, No. GD02-21763, slip op. at 1- the action, agreeing that there was an 3 (Ct. Com. Pl. of Allegheny County July adequate statutory remedy available. 10, 2003). The Board filed preliminary
However, its opinion included objections, including a claim that an language that was highly favorable to adequate statutory remedy existed. The Appellants, in that the court expressed court sustained the Board’s objections and concern that the Board’s internal dismissed the suit because the plaintiffs guidelines appeared to be inappropriate. had “an adequate statutory remedy, namely Id. at *2. On one hand, the Board sent a the appeal to the common pleas court for a memo to hearing officers and case de novo hearing” on their assessment reviewers directing that when making disputes. Id. at 3; see also Murtagh v. recommendations, “Hearing Officers and County of Berks, 715 A.2d 548, 550-51 Case Reviewers are not to reappraise the (Pa. Commw. Ct. 1998) (en banc) (citing property or submit post-hearing evidence.” Nat’l Private Truck Council, Inc. v. Okla. Id. at *1 (quoting Allegheny County Tax Comm’n, 515 U.S. 582 (1995)) Assessment Board Apr. 9, 2002 M emo to (taxpayer may not maintain Section 1983 Hearing Officers and Case Reviewers) action where state’s administrative process (emphasis in original). On the other hand, provides adequate remedy and taxpayer the same memo also provided that “[a] failed to exhaust administrative remedy); Hearing Officer and Case Reviewer who Jordan v. Fayette County Bd. of has personal knowledge of an area or more Assessment Appeals, 782 A.2d 642, 644 suitable sales comparables to those (Pa. Commw. Ct. 2001) (en banc) (same). introduced at a hearing may supply this Appellants here allege that they do i n f o r m a t i o n f o r t h e B o a r d ’ s not have an adequate remedy in state court consideration.” Id. The Commonwealth because the Court of Common Pleas of Court characterized the latter practice as Allegheny C ou nt y dismisse d th e “inject[ing] an improper element into the Kowenhoven action. At the time that process of adjudication,” id. at *4, which Appellants filed their briefs in this court, “appears to fly in the face of procedural the Kowenhoven plaintiffs’ appeal to the due process notions, which require that Commonwealth Court was still pending. parties be afforded an opportunity to They thus argued before us that the confront the witnesses against them . . . .” uncertainty of the pending appeal made the Id. at *2; see also id. at *4 (plaintiffs may availability of the state court remedy “challenge any improperly considered questionable or less than “plain.” evidence” and “improper evidentiary However, since then, the Commonwealth matters approved in the Board's memo are Court issued its opinion in Kowenhoven v. not permitted under the statute or the County of Allegheny, 2004 WL 769711 constitution”). The Commonwealth Court (Pa. Commw. Ct. Apr. 13, 2004). It further noted that if the plaintiffs filed a de affirmed the trial court’s order dismissing novo appeal asserting that the Board accepted and relied upon evidence not Board's policy memo results permitted under the tax assessment statute, in a violation of their the Board “will be required to reject that procedural due process improperly considered evidence and base rights, or more simply to a decision only upon evidence properly assert that the Board offered to the hearing officer which [the committed an error of law plaintiffs] had an opportunity to challenge, b y c o n s i d e ri n g s u c h or such additional evidence that may be evidence. then presented.” Id. at *4 (emphasis
Kowenhoven, 2004 WL 769711, at *4. added). Based on the above, we reject The Commonwealth Court rejected Appellants’ argument that Pennsylvania the argument made by the plaintiffs that provides inadequate remedies. The Tax they were entitled to pretermit the Injunction Act does not require that the administrative proceedings under Ward v. state courts provide a favorable substantive Village of Monroeville. 409 U.S. 57 outcome; instead, it only requires access to (1972) (holding that plaintiff challenging the state courts and an opportunity for constitutionality of statute authorizing meaningful review. Appellants’ failure to quasi-judicial proceedings was entitled to obtain relief in the state courts does not due process in quasi-judicial hearing impugn either the adequacy or the beyond de novo appeal to trial court). accessibility of the Commonwealth’s However, the Commonwealth Court held courts. And the Commonwealth Court’s that beca use th e plain tiffs were dicta regarding the impropriety of c h a l le n g i n g the ap plic atio n a n d Allegheny County’s procedures suggests interpretation of the assessment statute, that the court agrees with many of rather than its constitutionality, Ward did Appellants’ objections, but nonetheless not support their argument. Id. at *2-3; requires that they pursue the appropriate see also Jordan, 782 A.2d at 646 (holding statutory and administrative remedies in that attacks on the application of a statute, asserting those grievances. In short, rather than “frontal attacks” on a statute’s P e n n s y l v a n i a ’ s r e q u i re m e n t t h at constitutionality, do not trigger equity d i s s a t i s f i e d t a x p a y e r s p u r s u e jurisdiction and are appropriate for Board administrative remedies for as-applied review). The court thus concluded that challenges does not imply that they are under the local rules without an adequate remedy. applicable in this case, [the
Indeed, the Second Class County p l a i n t i f f s ] h a v e t h e Assessment law creates a seven-member opportunity to claim in an Board of Property Assessment, Appeals appeal to common pleas that and Review “[i]n order to more efficiently the implementation of the and equitably assess and value persons, process as enunciated in the property and subjects of taxation for such error by the board. county purposes . . . .” 72 P.S. §§ 5452.1-
72 P.S. § 5020-505.1.
2. The Board is tasked with “hear[ing] all cases of appeals from assessments, and all Pennsylvania provides for adequate complaints as to assessments, errors, notice to taxpayers of the appeals exonerations and refunds.” 72 P.S. § procedures. General County Assessment 5452.4(c). The Assessment Board of Law 72 P.S. § 5020-508 requires that the Allegheny County also has promulgated Board “give written or printed notice, at procedures and practices for Appeals least five days before the day of appeal, to Hearings, including requirements that every taxable inhabitant within the hearing officers must provide reports with respective” taxable area, along with “the factual findings, conclusions of law, and amount of the present assessment, recommendations to the full Board. valuation and ratio, the amount or sum of Kowenhoven, 2004 WL 769711, at *1 which he stands rated, and the rate per cent (citing Allegheny County’s Admin. Code of the tax, and of the time and place of § 207.07E). The General County such appeal.” The Board or its officers Assessment Law provides further must further give notice, by advertisement protections for dissatisfied taxpayers: in one or more local newspapers, at least
three weeks before the day of appeal, of W h e n e v e r t h r o u g h the time and place fixed for the appeal. 72 mathematical or clerical P.S. § 5020-509. Real estate owners who error an assessment is made feel aggrieved by an assessment of their more than it should have real estate may appeal from the decision of been, and taxes are paid on the Board of Property Assessment, such incorrect assessment, Appeals and Review to the local Court of the county commissioners, Common Pleas, and may further appeal to acting as a board of revision the Superior or Supreme Court. 72 P.S. §§ of taxes, or the board for the 5020-518.1-519. In short, Appellants have assessment and revision of a fully-developed administrative and taxes, upon discovery of judicial apparatus through which they may such error and correction of grieve their claims. Because the state the assessment shall so forum provides the procedural minimum inform the appropriate required and “plainly” is accessible to taxing district or districts, Appellants, the state court remedy is which shall make a refund adequate. to the taxpayer or taxpayers for the period of the error or Appellants argue that if the federal six years, whichever is less, courts were to assume jurisdiction of their from the date of application claim, it would not upset the primary for refund or discovery of purpose of the Act: preventing out-of- their constitutional claims in state court. [3]
state corporations from gaining unfair advantages in litigation. It is true that this
III.
court has previously suggested that one purpose of the Tax Injunction Act was to For the foregoing reasons, we will “deprive out-of-state corporations of an affirm the judgment of the District Court advantage over state taxpayers in being finding that it lacks subject-matter jurisdiction to review Appellants’ claim. able to threaten localities with protracted injunctive litigation in federal courts which induce[] the localities to compromise their tax claims.” Robinson Protective Alarm Co. v. City of Philadelphia, 581 F.2d 371" date_filed="1978-07-28" court="3rd Cir." case_name="Robinson Protective Alarm Company v. City of Philadelphia">581 F.2d 371, 375 (3d Cir. 1978). However, the Supreme Court in Rosewell did not accept the notion that the above-stated concern was the sole purpose of the Act. The Court instead clarified that, “first and foremost,” the Act was designed to prohibit federal judicial interference with local tax collection. Rosewell, 450 U.S. at 522 & n.29. As such, we reject Appellants’ interpretation of the legislative intent of the Act.
C.
Lastly, Appellants argue that the Tax Injunction Act is unconstitutional to the extent that it deprives them of a forum to adjudicate their constitutional claims. This argument is baseless. Because the Tax Injunction Act only prohibits federal jurisdiction where there is a “plain, speedy, and efficient” remedy at state law, the Act clearly provides for a forum in which Appellants may grieve their alleged deprivation. Where the state forum is adequate, parties may assert their constitutional claims in state court; where the state forum is inadequate, parties may [3] Because the federal courts do not have sue in federal court. Because the
jurisdiction to review Appellants’ claim, Pennsylvania state courts are open to we need not address the substance of Appellants, they may (continue to) pursue Appellants’ claim regarding the use of ex parte evidence during the appeals process.
NOTES
[2] Although Appellants’ initial complaint The Tax Injunction Act provides also requested damages, they clarified that “[t]he district courts shall not enjoin, during oral argument that they only seek suspend or restrain the assessment, levy or declaratory relief, the cost of the appeal collection of any tax under State law and attorneys’ fees.