Thomas and Katherine KOWENHOVEN, Robert and Michelle Dewitt, and Daniel and Carol Holtgraver, Appellants, v. The COUNTY OF ALLEGHENY and the Board of Assessment of Allegheny County, Appellees.
Supreme Court of Pennsylvania.
Argued Sept. 12, 2005. Decided July 18, 2006.
901 A.2d 1003
trator only had jurisdiction over that grievance. Council‘s October 28, 2002 decision based upon the October 8, 2002 incident was not grieved and hence became final; the arbitrator‘s jurisdiction is not implicated here. The arbitrator‘s decision involved the question of mootness relating to the only grievance before him—a matter not within our narrow certiorari scope of review.
Michael Henry Wojcik, Esq., Caroline P. Liebenguth, Esq., for Allegheny County.
Isobel Storch, Esq., Pittsburgh, for Allegheny County Board of Assessment.
CAPPY, C.J., and CASTILLE, NIGRO, NEWMAN, SAYLOR, EAKIN, and BAER, JJ.
OPINION
Justice SAYLOR.
The primary issue in this appeal is whether equity jurisdiction lies in the common pleas court to address a taxpayer‘s claim that the manner in which the county adjudicates tax assessment appeals violates constitutional due process guarantees.
I.
This action was commenced when Appellants filed a class-action complaint in the court of common pleas, invoking the court‘s equitable jurisdiction and naming as defendants Allegheny County (the “County“), as well as its Board of Property Assessment Appeals and Review (the “Board“). In the complaint, Appellants challenged certain aspects of the Board‘s procedures for disposing of tax assessment appeals, and sought, inter alia, declaratory and injunctive relief.
Within the County, tax assessment appeals are conducted pursuant to the Second Class County Assessment Law, the General County Assessment Law,1 and the Allegheny County Administrative Code. Pursuant to the latter, the Board designates a hearing officer to conduct hearings, issue findings of fact and cоnclusions of law, and make a recommendation to the full Board. See Allegheny County Administrative Code § 5-207.07(E). In the event that the recommendation is not accepted by a majority, the Board‘s rules require it to review any recordings and all evidence supplied at the hearing or through post-hearing submissions, and the Board‘s decision must be based upon valuation methodologies consistent with the standards of nationally recognized assessment and appraisal industry organizations. See Board Rule No. IV, § 5.
According to the complaint, in addition to its rules and the County Administrative Code, in April 2002 the Board issued a memo to hearing officers and case reviewers concerning practices and procedures,2 advising, in relevant part:
When making recommendations, Hearing Officers and Case Reviewers are permitted to accept or disсount evidence presented at a hearing based on their professional valuation judgment, knowledge of the area and/or verification of date [sic] in SMDA [Sabre Market Data Analysis].
Hearing Officers and Case Reviewers are not to reappraise the property or submit post-hearing evidence. A Hearing Officer or Case Reviewer who has
personal knowledge of an area or more suitable sales comparables to those introduced at a hearing may supply this information for the Board‘s consideration.... * * *
Every party deserves a well reasoned recommendation. Hearing Officers are encouraged to carefully consider the evidence. If the subject property is located in a market area the Hearing Officer is not familiar with, scrutinizing the marketplacе on SMDA is helpful to identify anomalies....
* * *
Assessments reflect values as of January 1 of the year for which the assessment is certified. Hearing Officers shall use their professional judgment and knowledge of the area in determining whether appreciation between 2001 and 2002 is applicable and the amount of appreciation that is appropriate. (2% is only a rule of thumb)....
Complaint at 5-6 (emphasis and bracketed text in original).3 Further, the complaint alleged that Appellants Thomas and Katherine Kowenhoven, Robert and Michele Dewitt, and Daniel and Carol Holtgraver each own a home located in the County. Each couple filed a timely appeal of their 2002 assessment which was determined by the Board following a hearing before a hearing officer. With respect to the Kowenhovens and Holtgravers, the hearing officer recommended a rеduction in their 2002 assessment, but the Board ultimately issued decisions maintaining the original assessments in place with no reduction. In both of these matters, post-it notes were affixed to the hearing officer‘s reports some time after the hearing and while the matters were pending before the Board, indicating disagreement with the hearing officer‘s recommendations and denoting a basis not introduced into evidence to justify maintaining the original assessments and thereby departing upward from the hearing officer‘s recommendation. As to Appellants Robert and Michelle Dewitt, the hearing officer recommended an increase in assessment, utilizing a three-percent appreciation rate, with which the Board agreed.
In light of the above, Appellants argued that the County‘s assessment practices improperly allowed the Board to consider evidence obtained outside of the record, thereby violating Appellants’ due process rights. Appellants also averred that the injection of post-hearing evidence in these and, it is believed, hundreds of other cases, was performed without notice to the taxpayer. Therefore, Appellants asked that the Board be directed to re-decide all cases in which it can be ascertained from the hearing files that evidence outside of the hearing was submitted for consideration as to tax years 2001 or 2002. Appellants also requested relief under Section 1983 of the federal Civil Rights Act of 1871 in the form of unspecified damages, fees, and costs. See
By opinion and order dated July 10, 2003, the trial court sustained the preliminary objections and dismissed the complaint, reasoning that, while a taxpayer may bring an equity action to mount a facial challenge to the constitutionality of a tax statute, such a proceeding may not be maintained to test the legality or constitutionality of the manner in which the statute is administered. See Tr. Ct. Op. at 5 (citing Borough of Green Tree v. Board of Prop. Assessments, Appeals & Review of Allegheny County, 459 Pa. 268, 328 A.2d 819 (1974) (plurality)). The trial court interpreted the allegations of the complaint as primarily raising an issue concerning whether the Board had followed its own rules in disposing of Appellants’ assessment grievances, noting:
There have been thousands of appeals filed with the Assessment Board from 2001 and 2002 assessments. If the courts became involved every time the procedures of the Assessment Board are not followed, the courts—rather than the Board of Assessment—would be operating the assessment program.
Trial Court Op. at 4. Apparently on this understanding of the complaint, the trial court rejected the state law equity claim because of the availability of an adequate statutory remedy, namely, a de novo appeal to the common pleas court. The court also dismissed Appellants’ Section 1983 claim based upon Murtagh v. County of Berks, 715 A.2d 548, 551 (Pa. Cmwlth. 1998) (en banc), which held that Section 1983 does not provide a basis for state courts to award damages when an adequatе legal remedy exists.
A divided Commonwealth Court affirmed. See Kowenhoven v. County of Allegheny, 847 A.2d 172 (Pa.Cmwlth.2004) (en banc). The majority proceeded on the understanding that Appellants’ challenge also—and centrally—included a contention that the methodology generally employed by the Board pursuant to the above-quoted practices and procedures memo was fatally flawed on due process grounds. In thus addressing Appellants’ constitutional claim, the Commonwealth Court majority acknowledged that, in Ward v. Village of Monroeville, Ohio, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972), the United States Supreme Court held that due process is required at every level of judicial and quasi-judicial proceedings. In Ward, the statute at issue permitted an interested executive to sit as a judge and conduct a hearing at the first level of judicial proceedings. See id. at 57-58, 93 S.Ct. at 82. While a party had the right to an appeal de novo to a trial court, the Supreme Court cоncluded that the statutory procedure could not be deemed constitutionally acceptable merely because the state eventually offered a defendant an impartial adjudication. See id. at 61-62, 93 S.Ct. at 83-84.
The Commonwealth Court majority distinguished Ward from Appellants’ situation, however, on two principal bases. First, it emphasized that the County Administrative Code does not affirmatively permit a hearing officer or the Board to consider extra-record evidence; thus, although stating that the Board‘s procedure “appears to fly in the face of due process
Judge Friedman filed a responsive opinion in which she agreed, as an initial matter, that the trial court had properly dismissed Appellants’ Section 1983 cause of action. However, she declined to join the majority‘s disposition of the other claims. She noted that Appellants’ complaint was in the form of a class action lawsuit, alleging that hundreds of real estate tax assessment decisions were tainted by the receipt of non-record evidence; she observed, in this regard, that, to defeat equity jurisdiction, the legal remedy provided must be “full, perfect and complete,” and 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. Pentlong Corp. v. GLS Capital, Inc., 573 Pa. 34, 43-44, 820 A.2d 1240, 1245-46 (2003). She also suggested that the majority‘s denial of equitable relief on the basis that Appellants have only advanced an as-applied challenged to the taxing statute is at odds with the general rule as expressed by this Court in Borough of Green Tree, which focuses on whether a substantial constitutional question is raised and an adequate statutory remedy is lacking.5 Finally, Judge Friedman indicated that, because agency expertise is unnecessary to resolve the constitutional question of whether the Board‘s alleged extra-record evidence policy violates due process, an important rationale for requiring administrative exhaustion is absent. See Kowenhoven, 847 A.2d at 176-80 (Friedman, J., concurring and dissenting).
In their presentations to this Court, the parties primarily differ concerning whether the statutory appeal route afforded to Appellants is adequate to protect their interests. Appellants focus on the asserted initial denial of rights and invoke the United States Supreme Court‘s guiding precept in Ward that due process must be observed at the initial stage of adjudication, as well as Pennsylvania decisional law to the effect that such process necessarily includes the ability to cross-examine adverse witnesses and otherwise challenge
II.
As a preliminary matter, we agree with the Commonwealth Court‘s understanding of the nature of the controversy, as directed to the procedures implemented by the Board affecting potentially hundreds of assessment appeals. This aspect of the dispute seems reasonably clear from a review of the “Class Action Allegations” section of the complaint, see Complaint at ¶¶ 58-64;
Due process principles apply to quasi-judicial or administrative proceedings, see generally Khan v. State Bd. of Auctioneer Exam‘rs, 577 Pa. 166, 842 A.2d 936 (2004), and require an opportunity, inter alia, to hear the evidence adduced by the opposing party, cross-examine witnesses, intro-duce evidence on one‘s own behalf, and present argument. See Callahan v. Pennsylvania State Police, 494 Pa. 461, 465, 431 A.2d 946, 948 (1981). Nevertheless, Appellees are correct in stating that Borough of Green Tree suggests that the presence of equity jurisdiction correlates more closely with a facial challenge to the constitutional vаlidity of the taxing statute than with a claim addressing the manner in which the enactment is administered. See, e.g., Parsowith v. Commonwealth, Dep‘t of Revenue, 555 Pa. 200, 207-08, 723 A.2d 659, 662-63 (1999). They also find support for their position in a portion of that decision expressing that the Legislature generally retains the power to channel issues of a constitutional nature, like all other questions, into a specified route of appeal. See Borough of Green Tree, 459 Pa. at 277, 328 A.2d at 823. See generally Lincoln Phila. Realty Assocs. v. Board of Revision of Taxes of City & County of Phila., 563 Pa. 189, 204-05 n. 12, 758 A.2d 1178, 1187 n. 12 (2000) (collecting cases).
Ultimately, however—and importantly for this appeal—that decision did not purport to lay down a per se rule precluding jurisdiction absent a facial challenge to the governing statute, but instead focused on the adequacy of the legal remedy afforded, with facial challenges viewed as the category of claims most likely to be associated with the lack of an adequate legal remedy:
Our opinions in the past have generally shown an awareness that the more direct the attack on the statute, the more likely it is that exercise of equitable jurisdiction will not damage the role of the administrative agency charged with enforcement of the act, nor require, for informed adjudication, the factual fabric which might develop at the agency level. The reason, we believe, is that the determination of the constitutionality of enabling legislation is not a function of the administrative agencies thus enabled. The more closely it appears that the question raised goes directly to the validity of the statute the less need exists for the agency involved to throw light on the issue through exercise of its specialized fact-finding function or application of its adminis-trative expertisе. Further, the less need there is for compliance with an agency‘s procedures as a prerequisite to informed constitutional decision making, then correspondingly greater is the embarrassment caused to litigants by requiring conformity with the statutorily-prescribed remedy.
Borough of Green Tree, 459 Pa. at 281, 328 A.2d at 825. From this passage, and in the context of the opinion as a whole, it is evident, as Judge Friedman suggested, that Borough of Green Tree left room for equity jurisdiction in other settings in which requiring adherence to the statutory avenue would be of little benefit. See id. at 278, 328 A.2d at 824 (advising that the rule requiring litigants to utilize the statutorily-prescribed route of appeal “is not to be unthinkingly applied, but ... exception will be made where the statutory remedy is pointless or inadequate“); accord Pentlong Corp. v. GLS Capital, Inc., 573 Pa. 34, 47 n. 16, 820 A.2d 1240, 1248 n. 16 (2003).7
[T]his case calls for judicial declarations regarding the rights of private parties to whom a municipality has assigned its tax liens. Such matters are completely foreign to the scire facias procedure. With their distinct factual focus, scire facias proceedings are simply ill-suited for the resolution of the novel and purely legal challenges presented here. Moreover, even if thousands of delinquent taxpayers affected by GLS‘s collection policies were able to have their legal challenges to GLS‘s authority resolved through the scire facias procedure, they would have to do so individually in piecemeal litigation, which not only is inefficient, but is also likely to yield inconsistent results.
Pentlong, 573 Pa. at 46-47, 820 A.2d at 1247. On this basis, the Court determined that the legal remedy premised upon writs of scire facias was inadequate, and Pentlong‘s action in equity was maintainable. See id. at 47, 820 A.2d at 1248.
While any analogy between Pentlong and the present dispute is imperfect—for example, legal issues are not “completely foreign” to tax appeals de novo in the trial court—there is plainly some overlap, as the claimed procedural defect raises legal issues independent of the proper valuation of the properties that are the subject of the tax appeals. Just as
We also note that, if the allegations in the complaint are ultimately borne out, many of the taxpayers potentially affected by the Board‘s procedures may not have known that the final assessment in their particular case was reached on grounds other than the evidence and arguments presented through the appeal and hearing process in which they participated. See Complaint at ¶ 60. This adds support to the position that proceeding in equity is appropriate, as those taxpayers’ alleged lack of knowledge concerning how their grievances were resolved may have contributed to a number of individual decisions not to seek judicial review after an adverse ruling by the Board. Therefore, we conclude that the trial court should not have dismissed Appellants’ class-action equitable claim due to their ability to invoke the statutory appeal mechanism.
III.
Regarding Appellants’ request for a declaratory judgment, we note that, subsequent to Borough of Green Tree, as part of the Declaratory Judgments Act,9 the General Assembly formally abolished the principle precluding declaratory relief solely due to the existence of a statutory remedy, as it found that that precept had unreasonably limited declaratory judgments. Seе
IV.
As a final matter, we must determine whether the Commonwealth Court correctly held that Appellant‘s Section 1983 claim was properly dismissed. In Murtagh v. County of Berks, 535 Pa. 50, 62-63, 634 A.2d 179, 185 (1993), this Court indicated that a class of taxpayers challenging the constitutionality of a local taxing system could maintain a Section 1983 cause of action in state court without first exhausting administrative remedies, largely on the premise that issues of federalism and federal-state comity that tend to restrain the federal courts from intruding into state tax matters simply do not exist in the context of a state court proceeding.10 Two years later, however, the United States Supreme Court issued its decision in National Private Truck Council, Inc. v. Oklahoma Tax Comm‘n, 515 U.S. 582, 115 S.Ct. 2351, 132 L.Ed.2d 509 (1995), in which it explained that, where the state provides an adequate legal remedy, litigants cannot obtain Section 1983 declaratory or injunctive relief, whether they bring their suit in state or federal court. See id. at 589-91, 115 S.Ct. at 2355-56.11
The question, then, becomes whether an adequate Pennsylvania legal remedy exists for purposes of Section 1983. Notably, determining whether a remedy is adequate in this setting involves a different inquiry than the one employed above regarding the adequacy of Appellants’ statutory remedy. That analysis was undertaken to determine whether the trial court had equity jurisdiction, and focused upon such considerations as whether numerous duplicative lawsuits were likely to be filed, and whether administrative expertise and factual development would be helpful in resolving the constitutional issues raised. In the Section 1983 context, however, the lack-of-an-adequate-legal-remedy prerequisitе is motivated by the federal government‘s reluctance to interfere with state tax operations, and its resulting “hands-off approach.” National Private Truck Council, 515 U.S. at 586, 115 S.Ct. at 2354; see supra note 11. Therefore, the specific manner in which the taxpayer obtains relief—whether through administrative exhaustion or through an action in equity—is of little federal concern; what matters is that the litigant have some reasonable means within the state court system to obtain redress for a violation of federal rights. Cf. Rosewell v. LaSalle Nat‘l Bank, 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981) (addressing the meaning
Here, as we have concluded that equity jurisdiction exists in the trial court, the proceedings available to Appellants on remand will resolve whether the Board‘s adjudicative process is systemically flawed, as Appellants contend. The injunctive and/or declaratory relief they seek will presumably be forthcoming should they prevail on the merits, and Appellants do not challenge the sufficiency of the refund procedure provided by state law. Thus, while Appellants may ultimately be able to demonstrate that their state law remedy is inadequate if, for example, the Board suffers an adverse ruling and, nonetheless, continues to cause them injury through use of the same unconstitutional procedures, see National Private Truck Council, 515 U.S. at 591 n. 6, 115 S.Ct. at 2357 n. 6; Ramah Navajo Sch. Bd. v. New Mexico Taxation & Revenue Dep‘t, 127 N.M. 101, 106, 977 P.2d 1021, 1026 (N.M.Ct.App.1999), that situation is not currently before us. Hence, we find that Appellants’ state law remedy is presently adequate, thus removing an essential prerequisite to their ability to assert a Section 1983 cause of action.13 Cf. Gass v. County of Allegheny, 371 F.3d 134, 137-38 (3d Cir.2004) (stating that this Court‘s decisional law allowing aggrieved taxpayers to bypass statutory procedures and file for equitable relief in the court of common plеas has contributed to a “plain, adequate, and complete” remedy for purposes of the Tax Injunction Act, thereby precluding federal jurisdiction to entertain a Section 1983 claim).
Accordingly, the order of the Commonwealth Court is affirmed insofar as it upholds the dismissal of Appellants’ Sec-tion 1983 claim, and reversed in all other respects, and the case is remanded to the court of common pleas for further proceedings consistent with this Opinion.
Justice CASTILLE, Justice NEWMAN and Justice EAKIN and BAER join this opinion.
Former Justice NIGRO did not participate in the decision of this case.
Chief Justice CAPPY files a concurring and dissenting opinion.
Chief Justice CAPPY, concurring and dissenting.
I agree with the Majority that Appellants’ claim pursuant to
At issue is whether in seeking relief under state law, Appellants can pursue their claims in equity rather than following the statutorily-mandated procedure of taking a de novo appeal to the trial court from an unfavorable decision of the Board of Property Assessment Appeals and Review
In the instant matter, the question is whether Appellants have qualified for this exception by establishing that a de novo appeal to the trial court from an unfavorable decision by the Board is not adequate or complete. The Majority concludes that Appellants have shown that such a remedy is not adequate or complete and thus qualify for the exception. The Majority provides several bases of support for this conclusion. First, the Majority reasons that allowing this class action matter to proceed in equity would achieve the laudable goal of avoiding “a multiplicity of individual de novo appeals to the trial cоurt....” M.O. at 559, 901 A.2d at 1012 (relying on Pentlong, supra). The Majority also finds that this matter should be allowed to proceed in equity because “the general procedures of which Appellants complain can be facially tested against constitutional norms unaided by agency expertise....” Id. Finally, the Majority concludes that equity jurisdiction was properly invoked based on the speculation that “many of the taxpayers potentially affected by the Board‘s procedures may not have known” that the decision in their appeals was premised on evidence which is allegedly dehors the record. Id. at 559, 901 A.2d at 1012. Thus, equity will lie because some taxpayers may have failed to pursue their statutorily-allowed appeal because they were ignorant of this potential due process claim.
I am unconvinced by this reasoning. First, I do not believe that Pentlong hоlds that equity jurisdiction may be invoked simply because such invocation will avoid having multiple matters proceed through the legislatively-endorsed appeals process. It is true that the Pentlong Court‘s concern over piecemeal litigation supported the Court‘s decision to allow the plaintiffs to forego the statutory remedy and invoke equity jurisdiction. See Pentlong, 820 A.2d at 1246. Yet, what drove the Pentlong decision was not simply that equity jurisdiction would provide “a tidy global resolution” to that controversy. Id. Rather, the Pentlong Court noted that that matter involved “purely legal challenges....” Id. at 1247. In Pentlong, there was no simmering question of fact; in that matter, it was undisputed that the County of Allegheny (“County“) sold its title and rights over thousands of tax liens located within the County. Thus, that matter was well-suited to resolution via a class action in equity. In contrast, in the matter sub judice, there are open questions as to whether all members of the class had the assessment appeals determined via reliance on evidence dehors the record. A “tidy global resolution” will thus not be afforded by a class action in equity.
I also reject the Majority‘s reasoning that equity jurisdiction is proper here because “the general procedures of which Appellants complain can be facially tested against constitutional norms unaided by agency expertise....” M.O. at 559, 901 A.2d at 1012. By stating that “agency expertise” is not needed here, the Majority implies that equity is properly invoked because funneling
Finally, the Majority reasons that equity is properly invoked because some taxpayers may have declined to take a statutory appeal as they may have been unaware that the Board relied on evidence dehors the record in determining their assessment appeals. Even if we accept such speculation as true, I do not see how it rendеrs the statutory process inadequate or incomplete. As noted by the Commonwealth Court, the statutory process allows taxpayers to ferret out information via discovery. See Commw. Ct. slip op. at 8. And any constitutional issues which a taxpayer would wish to raise could adequately and completely be addressed to a trial court in a de novo appeal.
I fear that the Majority‘s interpretation of when a statutory remedy is incomplete and inadequate is so broad that the exception threatens to engulf the rule. As I believe that Appellants have not shown that the statutory remedy is either incomplete or inadequate, I dissent to that portion of the majority‘s order and would affirm the order of the Commonwealth Court.