In Re: Appeal of Prospect Crozer LLC ~ Appeal of: Prospect Crozer LLC ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Appeal of Prospect Crozer LLC :
from the Decision of the Board of :
Assessment Appeals of Delaware :
County, PA : Nos. 1596 – 1599 C.D. 2019
: Nos. 1600 – 1629 C.D. 2019
Appeal of: Prospect Crozer LLC : Argued: March 10, 2022
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE STACY WALLACE, Judge
HONORABLE MARY HANNAH LEAVITT, Senior Judge
OPINION
BY SENIOR JUDGE LEAVITT FILED: September 28, 2022
Prospect Crozer LLC (Taxpayer) appeals 34 orders of the Court of
Common Pleas of Delaware County (trial court) that, collectively, assessed
Taxpayer’s real property at $74 million for tax years 2017, 2018, and 2019.1 On
appeal, Taxpayer argues that the 34 orders are null and void because the judge issued
them after he had forfeited his judicial office by assuming a position with the
Philadelphia Board of Revision of Taxes (Philadelphia Tax Board). Taxpayer also
challenges the orders on their merits because, inter alia, the trial court did not state
a reason for accepting the valuation of the taxing authority’s expert over that of
Taxpayer’s expert, which was necessary because the trial court accepted the
testimony of both experts. For the reasons that follow, we vacate the trial court’s
orders and remand the matter.
Background
Taxpayer owns 57.7 acres of land located in Upland Borough,
Delaware County, Pennsylvania. Part of this property has been developed with a 6-
1
On May 12, 2020, the Court granted Taxpayer’s application to consolidate all 34 appeals.
story hospital known as Crozer Chester Medical Center (Medical Center). The other
part of the property has been developed with several buildings and is known as
Crozer Theological Seminary (Seminary). For real estate tax purposes, the Medical
Center and Seminary properties are assessed as 34 separate parcels. Taxpayer
purchased this real property as part of its acquisition of the Crozer-Keystone Health
System on July 1, 2016.
For tax years 2017 through 2019, the Delaware County Assessment
Office assessed the Medical Center and Seminary properties at a combined value of
$80,166,493. Taxpayer appealed the assessment as excessive, and the Delaware
County Board of Assessment Appeals denied the appeal. Taxpayer then appealed
to the trial court, and the Chester Upland School District (School District)
intervened.
At the de novo hearing before the trial court, Taxpayer and the School
District stipulated that with the admission of the assessments of the Delaware County
Assessment Office, the School District established a prima facie case.2 Reproduced
Record at 1149a-83a (R.R. __). Taxpayer then submitted expert testimony and
documentary evidence to challenge the Delaware County assessments, and the
School District responded with its own expert and documentary evidence.
2
In tax assessment appeal proceedings, the taxing authority presents its assessment records into
evidence to establish the assessment’s presumed validity. Songer v. Cameron County Board of
Assessment Appeal, 173 A.3d 1253, 1256 (Pa. Cmwlth. 2017). The burden then shifts to the
taxpayer to present “sufficient competent, credible and relevant evidence” of the property’s fair
market value to overcome the assessment’s presumed validity. Id. at 1257. If the taxpayer meets
this burden, the tax assessment record loses its presumed validity. Green v. Schuylkill County
Board of Assessment Appeals, 772 A.2d 419, 425-26 (Pa. 2001) (citing Deitch Company v. Board
of Property Assessment, 209 A.2d 397, 402 (Pa. 1965)). If the taxing authority presents rebuttal
evidence, the trial court determines the weight to be afforded the conflicting evidence. Green, 772
A.2d at 426.
2
Taxpayer’s vice president for development, Frank Saidara, testified that
in January 2016, Taxpayer entered into an agreement to purchase the Crozer-
Keystone Health System, and the transaction closed on July 1, 2016. The transaction
involved numerous real properties owned by Crozer-Keystone Health System.
Saidara explained that Taxpayer and Integra Realty Resources – DFW, LLC (Integra
Realty) did their “best to come up with a qualified guess” to apportion purchase
prices among the properties acquired in order to calculate the real estate transfer
taxes. Notes of Testimony (N.T.), 1/14/2019, at 51; R.R. 97a. With respect to the
34 properties here, they estimated a total purchase price of $78 million, which
Saidara testified was “high.” Id.
Taxpayer’s real estate appraiser, Ryan Hlubb, prepared an expert report
of the fair market value of the Medical Center and Seminary properties, which was
submitted into evidence. The Seminary property of 36.2 acres is separated from the
Medical Center property of 21.5 acres by Medical Center Boulevard. Hlubb
separately valued the Medical Center and Seminary properties because they are not
used together.3
At the hearing, Hlubb first testified about his valuation of the Seminary
property. Hlubb used the sales comparison approach to establish its fair market
value.4 This approach assumes that an informed purchaser will pay no more for a
3
In fact, Taxpayer listed the Seminary property for sale and recently entered an option purchase
agreement for $5.35 million.
4
Fair market value, “while not easily ascertained, is fixed by the opinions of competent witnesses
as to what the property is worth on the market at a fair sale.” Grand Prix Harrisburg, LLC v.
Dauphin County Board of Assessment Appeals, 51 A.3d 275, 277 (Pa. Cmwlth. 2012) (quoting
Buhl Foundation v. Board of Property Assessment, Appeals and Review of Allegheny County, 180
A.2d 900, 902 (Pa. 1962)).
3
property than the cost of acquiring an existing property with the same utility.5 Hlubb
studied the Seminary property by collecting property tax records, site plans, and
interviewing the property owner. He noted that one of the buildings on the Seminary
property, Old Main, had been designated a historic building and cannot be
demolished. The other buildings had an economic life of five years, which meant
that they should be razed or put to another use.
Hlubb identified four comparable vacant land sales in Southeastern
Pennsylvania, where the price per acre ranged from $150,000 to $240,000. After
adjusting for topography and location, Hlubb concluded that the Seminary property
had a value of $165,000 per acre, or $5,971,515, from which he subtracted the cost
of razing, i.e., $867,833.6 Hlubb opined that the Seminary property had a fair market
value of $5.1 million for the 2017 and 2018 tax years. Based on updated market
data, Hlubb determined that the Seminary property had a value of $5.35 million for
tax year 2019.
Next, Hlubb testified about the fair market value of the Medical Center,
which is a 21.5-acre property with a 300-bed acute care hospital and parking
facilities to accommodate 1,500 cars. The Medical Center is a “special purpose
property,” meaning it has “a unique physical design, special construction materials,
5
Hlubb did not develop a cost approach because some buildings on the Seminary property dated
back to the 1840s. He also did not develop the income capitalization approach because there was
no market activity to suggest that the Seminary property could be leased. N.T., 1/14/2019, at 193;
R.R. 204a.
6
To calculate the Seminary property’s value, Hlubb multiplied $165,000 by the number of acres
of usable land, 36.19 acres, and arrived at $5,971,515. Hlubb Land Valuation Report at 46; R.R.
1507a. From there, he subtracted razing costs, which are the estimated costs for building
demolition and site grading. Using $7.50 per square foot as an appropriate unit of cost and
multiplying that number by 115,711 square feet for the buildings on the property, Hlubb’s
estimated razing costs were $867,833. Subtracting $867,833 from $5,971,515 resulted in the value
of $5,103,683, which Hlubb rounded to $5.1 million.
4
or [a] layout that particularly adapts its utility to the use for which it was built.” N.T.,
2/4/2019, at 174; R.R. 324a. The Medical Center’s location in a medical campus
zoning district also limits the number of potential buyers.7
To calculate the fair market value of the Medical Center property,
Hlubb used both a sales comparison and a cost approach. He developed the income
capitalization approach but only to test the validity of the other valuation approaches.
For the sales comparison approach, Hlubb identified four sales in the
region that were similar to the Medical Center: Memorial Hospital, Suburban
Community Hospital, Roxborough Memorial Hospital, and MedStar Southern
Maryland Hospital. After making the necessary adjustments to the sales, Hlubb
determined that the fair market value of the Medical Center property under the sales
comparison approach was $37.5 million for tax years 2017 and 2018 and $39.2
million for tax year 2019.8
Hlubb also used the cost approach, which is “based on the concept that
an informed investor would not willingly pay more for the subject property than
would be necessary to develop an alternative providing economically equivalent
benefits.” In re PP&L, Inc., 838 A.2d 1, 11 (Pa. Cmwlth. 2003). Hlubb testified
that there are two cost methodologies. The reproduction cost method estimates the
cost to construct an exact duplicate using the same materials, construction standards,
design, layout and quality. The replacement cost method estimates the cost to
construct a building of equal utility using modern materials and current design
standards. Hlubb used the replacement cost method.
7
The zoning district also allows, by special exception, group daycare homes, daycare centers,
parking structures and billboards.
8
Hlubb explained that the property’s fair market value had increased between 2018 and 2019
because of the improved market conditions. N.T., 2/5/2019, at 107; R.R. 446a. For 2018, he set
the price per square foot at $55, and for 2019, at $57.50. N.T., 2/5/2019, at 106; R.R. 445a.
5
Hlubb determined a total replacement cost of $328,592,804 for 2017
and 2018 and $345,419,938 for 2019, to which he added a land value of $4.3 million
for each tax year. For 2017 and 2018, he estimated depreciation at $296,061,870,
and for 2019 at $309,113,292. Hlubb arrived at a cost valuation of $36.8 million for
2017 and 2018 and $39.6 million for 2019.
Reconciling his sales comparison and cost valuations, Hlubb opined
that the fair market value of the Medical Center was $37.5 million for tax years 2017
and 2018 and $39.5 million for tax year 2019. Hlubb opined that the combined fair
market value of the Medical Center and Seminary properties was $42.6 million for
tax years 2017 and 2018 and $44.5 million for tax year 2019.
In response, the School District introduced the report of its expert real
estate appraiser, John J. Coyle, III, and offered his testimony. Coyle stated that the
highest and best use for the 57.7-acre property was as a hospital. He did not separate
the Medical Center from the Seminary in his valuation. Coyle also used the sales
comparison and cost approaches in his valuation.9
For the sales comparison approach, Coyle selected three hospital
facilities with parking garages. The three properties were part of the Community
Health System in Reading, Pennsylvania, which had been sold to Tower Health.
Each building ranged from 354,887 square feet to 362,703 square feet and had sale
prices ranging from $91.54 per square foot of building area, including the land, to
$172.39 per square foot of building area, including the land.
After taking into consideration the differences between those sales and
the subject property, Coyle opined that the entire 57.7-acre property should sell at
9
Coyle did not use the income approach, explaining that the income approach examines the
economic benefits of property ownership in comparison to the risks of ownership and arrives at a
conclusion. For a hospital business, market data was needed, but it was not available.
6
$105 per square foot of building area, including the land. Multiplying the 703,081
square feet of gross building area of the 57.7-acre property by $105 produced a
market value of $73,823,505, which he rounded to $73.8 million.
For the cost approach, Coyle used a reproduction cost method. Coyle
testified that the International Association of Assessing Officers defines
“reproduction cost new” as “the cost of constructing new property reasonably
identical with the given property except for the absence of physical depreciation
using the same materials[,] construction standards, design, and quality of
workmanship computed on the basis of prevailing prices and on the assumption of
normal competency and normal conditions.” N.T., 3/20/2019, at 56-57; R.R. 1012a-
13a. Coyle explained that reproduction cost does not have to price an exact duplicate
building, only one reasonably identical.
To develop the fair market value of the land, Coyle looked at three sales
of vacant land. The first involved land in Richland Township, Bucks County, that
was purchased by a hospital. The second involved a sale of land along Interstate 80
in Monroe County. The third involved land in Middletown Township, Bucks
County, that was purchased by a hospital. Coyle explained that he made an upward
adjustment for market conditions and a small downward adjustment for physical
features. With these adjustments, the unit sale price ranged from $172,000 to
$180,262 per acre. He estimated the market value of the subject land to be $175,000
per acre, which he multiplied by 57.7 acres. This produced a total land value of
$10,109,750, which he rounded to $10.1 million.
To estimate the reproduction cost of the Medical Center, Coyle used
Taxpayer’s building plans to develop a separate price for the foundation, the
substructure, the superstructure, the exterior closure for the roofing, and the interior
7
construction and systems. He separated the mechanical systems into plumbing,
heating, ventilating, fire protection and electrical. He then did a separate breakout
for the cancer center, the mechanical services building, the front parking garage, and
the rear parking garage. Instead of breaking the Seminary buildings into components
for evaluation as he did for the Medical Center buildings, Coyle used the same unit
cost for each building. Coyle estimated a reproduction cost of $260,891,800 for all
the buildings, for both the Seminary and Medical Center properties.10
To estimate depreciation, Coyle used two methods: the observed
condition breakdown and the aged-life technique. The first method produced a
depreciated reproduction cost of $64,367,600. The age-life technique produced a
depreciated reproduction cost of $65,222,900. Adding a land value of $10.1 million
produced valuations of $74,467,000 and $75,322,900. Reconciling those two
numbers, Coyle opined that the real property had a fair market value of $75 million
under the reproduction cost approach.
Reconciling his sales comparison estimate of $73.8 million with his
reproduction cost estimate of $75 million, Coyle opined that the fair market value of
the 57.7-acre property was $74 million for tax years 2017 and 2018 and $73 million
for the tax year beginning January 1, 2019.
On cross-examination, Coyle explained that there is a commonsense
approach to estimating reproduction costs and a textbook definition. He disagreed
that the reproduction cost approach requires an “exact replica of everything [that is]
at that property[.]” N.T., 3/18/2019, at 18; R.R. 957a. Coyle offered, for example,
that in doing a reproduction cost, he would not use the cost of a new cucumber
10
Coyle testified that the Seminary buildings should be razed because of their age.
8
marigold tree but, rather, the cost of some reasonable vegetation in its place. N.T.,
3/18/2019, at 19; R.R. 958a.
Coyle acknowledged that he did not use a standard reproduction cost
approach. Rather, he “blend[ed] the reproduction and replacement cost methods
with the intent to reflect [the] cost of reproduction[.]” N.T., 3/18/2019, at 26; R.R.
965a. To do an exact duplicate for a hospital complex, he would have needed about
25,000 drawings. Instead, he used the basic information he was given and his own
observations of the property. Coyle clarified that he did not do a replacement cost
analysis. He explained that “a replacement cost analysis redesigns the facility and
eliminates excess construction costs.” N.T., 3/18/2019, at 31; R.R. 970a. For
example, the size of a building could be changed or different materials used in a
replacement cost analysis.
On October 11, 2019, in a five-page adjudication, the trial court
concluded that the fair market value of the Medical Center and Seminary property
was $74 million for tax years 2017, 2018 and 2019. The trial court found that both
experts agreed that a proper appraisal of the fair market value of the properties used
a reconciliation of a sales comparison and cost approach. The trial court made the
following findings:
8. The court heard testimony from Mr. Coyle whose
reconciliation of the sale comparison approach and the cost new
approach which resulted in his conclusion that the total fair
market value of the subject properties was $74 million for tax
years 2017, 2018, and 2019.
9. The court also accepted the testimony of Mr. Hlubb, on
behalf of Prospect, who testified that the value under [the] cost
approach (which combined total depreciation as a reduction
against total replacement cost (new) of the buildings and then
added the land value) resulted in a fair market value of $36.8
9
million for tax years 2017 and 2018 and a fair market value of
$39.6 million for tax year 2019.
10. There did not appear to be any significant externalities
which suggested a change in fair market value during the subject
tax years.
11. The court concluded that the value of $74 million is a valid
and accurate assessment of the fair market value of the
properties.
Trial Court Adjudication at 3-4, Findings of Fact Nos. 8-11; R.R. 3056a-57a.
Taxpayer appealed.
Appeal
Before this Court,11 Taxpayer raises four issues. First, Taxpayer has
filed an Application to Vacate Orders on Appeal Because of Structural Error.12 This
application asserts that the presiding judge, the Honorable John L. Braxton, forfeited
his judicial office by taking a position with the Philadelphia Tax Board and, thus,
lacked authority to issue the 34 orders on appeal here. Second, Taxpayer argues that
the trial court did not make adequate findings of fact or explain how it determined
the fair market value of Taxpayer’s property after accepting the testimony of both
experts. Third, Taxpayer argues that the trial court erred by accepting the
methodology of the School District’s expert, which used a reproduction cost analysis
that is flawed and has no support in the real estate appraisal profession. Fourth,
11
Our review in tax assessment matters determines whether the trial court abused its discretion,
committed an error of law, or reached a decision not supported by substantial evidence. Douglass
Village Residents Group v. Berks County Board of Assessment Appeals, 84 A.3d 407, 408 n.3 (Pa.
Cmwlth. 2014). Our standard of review for questions of law is de novo, and our scope of review
is plenary. Id.12
Taxpayer filed its application to vacate on March 6, 2020, and the Court referred the application
to the merits panel.
10
Taxpayer argues that the trial court erred by allowing the report of Integra Realty to
be used to cross-examine Taxpayer’s witnesses.
Article V, Section 17(a) of the Pennsylvania Constitution prohibits a
judge from holding “an office or position of profit in the government of the United
States, the Commonwealth or any municipal corporation or political subdivision
thereof[.]” PA. CONST. art. V, §17(a). In its application to vacate, Taxpayer asserted
that Senior Judge Braxton held a “position of profit” with the Philadelphia Tax
Board at the same time he served as a judge on the instant tax appeals, which
rendered his 34 orders null and void. The School District responded that Taxpayer’s
application to vacate was untimely filed and, further, that the Pennsylvania Supreme
Court approved Senior Judge Braxton’s completion of this judicial assignment after
his appointment to the Philadelphia Tax Board
Taxpayer supported its application to vacate with affidavits and public
record searches that it attached thereto. Following argument before the merits panel,
the Court concluded that a record was needed on Taxpayer’s assertion of
incompatible service and the School District’s response thereto. Accordingly, the
Court entered an order remanding this matter to the trial court with directions to
develop an evidentiary record on the following factual questions:
(1) The date on which Senior Judge Braxton assumed his position
on the Philadelphia Board of Revision of Taxes and began
receiving compensation therefor;
(2) Whether Senior Judge Braxton’s continued work on the
above-captioned assessment appeals of Prospect Crozer, LLC
while simultaneously serving on the Philadelphia Board of
Revision of Taxes was approved in writing or in some other way
by the Pennsylvania Supreme Court; and
(3) The date on which Prospect Crozer, LLC learned that when
Senior Judge Braxton issued the orders in the above-captioned
11
appeals, he had already assumed his position with the
Philadelphia Board of Revision of Taxes.
Court Order, 3/17/2022.
Remand Hearing
On April 20, 2022, the trial court conducted a hearing.13 The record
consists of a stipulation of the parties; Taxpayer’s public record searches and
affidavits; and the testimony of Senior Judge Braxton.
Taxpayer’s affidavits related to how it learned of Senior Judge
Braxton’s dual service. Leslie Gerstein, an attorney at the firm of Klehr, Harrison,
Harvey, Branzburg, LLP, attested that she observed Senior Judge Braxton
participating in hearings of the Philadelphia Tax Board in late Fall of 2019. Luke
McLoughlin, an attorney at the firm Duane Morris, LLP, attested that on or about
December 18, 2019, he attended a hearing at the Philadelphia Tax Board where he
observed a nameplate for Senior Judge Braxton. In February 2020, McLoughlin
learned from the City of Philadelphia Law Department that Senior Judge Braxton
was elected to the Philadelphia Tax Board on May 16, 2019. McLoughlin then
submitted a Right-to-Know Law14 request for information on the date of Senior
Judge Braxton’s first paycheck for his service on the Philadelphia Tax Board;
13
The remand hearing related to applications to vacate filed by Taxpayer in the following
consolidated appeals: In re: Appeal of Prospect Crozer LLC from the Decision of the Board of
Assessment Appeals of Delaware County, PA (Pa. Cmwlth., Nos. 1596-1629 C.D. 2019, filed
September 28, 2022); In Re: Appeal of Prospect Crozer LLC Tax Assessment Appeals (Pa.
Cmwlth., Nos. 1630-1633 C.D. 2019, filed September 28, 2022); In Re: Appeal of Prospect Crozer
LLC from the Decision of the Board of Assessment Appeals of Delaware County, PA (Pa. Cmwlth.,
Nos. 1727-1728 C.D. 2019, filed September 28, 2022); and Chester-Upland School District v.
Chester City Board of Revision of Taxes and Appeals (Pa. Cmwlth., Nos. 386-387 C.D. 2020, filed
September 28, 2022). Participating in the remand hearing were multiple taxing authorities: Chester
Upland School District, Springfield School District, Springfield Township, and the City of
Chester. The County of Delaware also appeared at the hearing.
14
Act of February 14, 2008, P.L. 6, 65 P.S. §§67.101-67.3104.
12
McLoughlin received that information on June 5, 2020. Alan Kessler, also an
attorney with Duane Morris, LLP, attested that in January 2020, he tasked the firm’s
librarian with determining when Senior Judge Braxton began serving on the
Philadelphia Tax Board, but the librarian was unsuccessful. Kessler also attested
that in January 2020, he learned from Gerstein that she had seen Senior Judge
Braxton participating in a hearing before the Philadelphia Tax Board in the Fall of
2019.
Taxpayer also submitted a record certification from Geoff Moulton, the
Court Administrator of Pennsylvania, dated March 20, 2020. That certification
stated as follows:
After an examination by the Administrative Office of
Pennsylvania Courts (“AOPC”) of its records pertaining to the
time period from 2017 through 2020, as well as an examination
of the records of the Prothonotary of the Supreme Court of
Pennsylvania, I hereby certify there is no record of entry of an
order, decision, or other determination of the Supreme Court of
Pennsylvania, the Chief Justice, or any other justice, or AOPC
approving simultaneous service, by the Honorable John L.
Braxton on the Philadelphia Board of Revision of Taxes and as
a senior judge within Pennsylvania’s Unified Judicial System.
Any such record or entry would be in my custody as Court
Administrator of Pennsylvania.
N.T., 4/20/2022, at 29, Exhibit C-7.
The School District offered the testimony of Senior Judge Braxton. He
testified that in or around June 2017, he was assigned the instant tax matter and all
related tax appeals. He stated that he was elected to the Philadelphia Tax Board on
May 16, 2019.
13
On June 24, 2019, while he was presiding over another one of
Taxpayer’s related tax appeals,15 Senior Judge Braxton informed the parties that he
was retiring from judicial service because he “had been elected by the Board of
Judges of Philadelphia County” to the Philadelphia Tax Board. N.T., 4/20/2022, at
63. Senior Judge Braxton testified that he did not know “the actual date” that he
began sitting on the Philadelphia Tax Board, explaining that he had to go through
orientation before hearing cases. Id. Senior Judge Braxton agreed that he received
his first compensation for his position with the Philadelphia Tax Board on June 16,
2019. Acknowledging that he did not discuss his compensation with the parties on
June 24, 2019, Senior Judge Braxton explained that by telling the parties of his
appointment, he was telling them that he was “being paid.” Id. at 84.
Senior Judge Braxton testified that he advised Joe Mittleman, Director
of Judicial District Operations for the AOPC, that he had been appointed to the
Philadelphia Tax Board and talked about “whether or not [he] should finish things
or just walk away.” N.T., 4/20/2022, at 65, 68. Senior Judge Braxton retired from
judicial service on January 24, 2020.
On May 4, 2022, the trial court issued a report on the factual questions
set forth in this Court’s March 17, 2022, order.
Regarding the date on which Senior Judge Braxton assumed his
position on the Philadelphia Tax Board and began receiving compensation therefor,
the trial court summarized the evidence as follows. Both the testimony of Senior
Judge Braxton and the Declaration of the Director of Human Resources for the City
of Philadelphia established the date of Senior Judge Braxton’s appointment to the
15
See Chester-Upland School District v. Chester City Board of Revision of Taxes and Appeals (Pa.
Cmwlth., Nos. 386-387 C.D. 2020, filed September 28, 2022).
14
Philadelphia Tax Board as May 19, 2019. The parties stipulated that Senior Judge
Braxton received his first paycheck from the Philadelphia Tax Board on June 16,
2019. The trial court credited Senior Judge Braxton’s testimony that he began
hearing cases as a member of the Philadelphia Tax Board sometime in the Fall of
2019 but did not remember the exact date because he had to undergo orientation
before hearing cases.
Regarding the question of whether Senior Judge Braxton’s work on
Taxpayer’s assessment appeals, while simultaneously serving on the Philadelphia
Tax Board, had been approved by the Pennsylvania Supreme Court, the trial court
summarized the evidence as follows. A March 2020 record certification from Geoff
Moulton, the Court Administrator of Pennsylvania, stated that “there is no record or
entry of an order, decision, or other determination of the Supreme Court of
Pennsylvania, the Chief Justice or any other Justice, or AOPC approving
simultaneous service, by [Senior Judge Braxton], on the [Philadelphia Tax Board]
and as a senior judge within Pennsylvania’s Unified Judicial System.” Trial Court
Op., 5/4/2022, at 4, Finding of Fact No. 7.b. Senior Judge Braxton submitted his
resignation as a senior judge in late 2019 and officially ended his judicial service on
January 24, 2020. The trial court credited Senior Judge Braxton’s testimony that he
informed Mittleman of his election to the Philadelphia Tax Board; the complex
nature of his judicial assignments; that he could finish up those cases or walk away;
and that Mittleman told him to finish his judicial assignments. Senior Judge
Braxton’s communications with the AOPC were oral not written.
Regarding the date that Taxpayer learned that Senior Judge Braxton
adjudicated its assessment appeals after assuming his position on the Philadelphia
Tax Board, the trial court summarized the evidence as follows. On June 24, 2019,
15
Senior Judge Braxton informed counsel for the parties that he was “going to be
sitting in Philadelphia as a member of the Board of Revision of Taxes[.]” Id. at 6,
Finding of Fact No. 8.c. Senior Judge Braxton advised the parties that “as soon as I
leave here, I’m going to do that other post. And that’s why I can’t linger here. I
have to get this matter done. And the AOPC, the Supreme Court wants me to just
finish this and then I will go on to my next assignment . . . . I’m going to be sitting
in Philadelphia as a member of the Board of Revision of Taxes over there.” Id. at 6,
Finding of Fact No. 8.d. The affidavits from Gerstein, McLoughlin, and Kessler, as
well as the email exchange between McLoughlin and the Philadelphia City Law
Department, demonstrated that Senior Judge Braxton began hearing cases for the
Philadelphia Tax Board in the Fall of 2019. Id. at 6, Finding of Fact No. 8.b.
The trial court credited Senior Judge Braxton’s testimony that he timely
notified representatives of the AOPC of his appointment to the Philadelphia Tax
Board and received approval to complete his outstanding judicial assignments. Trial
Court Op., 5/4/2022, at 7, Finding of Fact No. 10.
On or about May 4, 2022, Taxpayer submitted supplemental findings
of fact to the trial court to address new evidence. Specifically, it sought to admit
into evidence an email exchange with the AOPC (Exhibit C-19) and a copy of an
affidavit from Mittleman (Exhibit C-20), which refuted Senior Judge Braxton’s
characterization of their conversations.16 Taxpayer explained that neither was
available at the time of the April 20, 2022, evidentiary hearing. In response, the
School District moved to strike and preclude Taxpayer’s submissions.
16
As part of his duties as Director of Judicial District Operations, Mittleman facilitated the
assignment of senior judges to local districts. Mittleman Affidavit, ¶¶1-2.
16
By order dated May 4, 2022, the trial court granted the School District’s
motion as to Exhibit C-19. It did so for the stated reason the record was closed at
the end of the hearing on April 20, 2022, and Taxpayer had not requested to keep
the record open for an affidavit from Mittleman. Trial Court Order, 5/4/2022, at 2.
On May 5, 2022, Taxpayer sought reconsideration, explaining that the
Mittleman affidavit only became available on May 4, 2022. Further, the trial court’s
order striking Exhibit C-19 did not refer to Exhibit C-20.
On May 18, 2022, the trial court denied reconsideration. It clarified its
order of May 4, 2022, and struck both Exhibits C-19 and C-20, for the stated reason
that the record closed on April 20, 2022. Accordingly, the trial court refused to
supplement the record with after-discovered evidence.
Following the transmittal of the trial court’s order to this Court, the
parties filed supplemental briefs.
Analysis
I. Senior Judge Braxton’s Incompatible Service on the Philadelphia Tax
Board
Taxpayer asserts that Senior Judge Braxton was precluded from serving
simultaneously as a senior judge and a member of the Philadelphia Tax Board.
Article V, Section 17(a) of the Pennsylvania Constitution prohibits a judge from
holding another “position of profit” with any Federal, State or municipal body.
Taxpayer contends that as of June 16, 2019, when Senior Judge Braxton began
receiving compensation for his position on the Philadelphia Tax Board, he forfeited
his authority to serve as a judge in Taxpayer’s tax appeals. His issuance of the 34
orders on October 11, 2019, constituted a structural error, which requires those
orders to be vacated and the tax appeals remanded for a decision by another judge.
17
The School District responds that Taxpayer waived this challenge to
the 34 orders because it knew of this alleged structural error on June 24, 2019, when
Senior Judge Braxton informed the parties of his appointment to the Philadelphia
Tax Board. However, Taxpayer waited until March of 2020 to file its application to
vacate. Taxpayer’s failure to seek Senior Judge Braxton’s disqualification at the
earliest opportunity precludes it from raising the issue at the appellate stage of the
proceeding. Alternatively, the School District argues that Senior Judge Braxton was
directed to complete his judicial per diem assignment notwithstanding his
appointment to the Philadelphia Tax Board.
A structural error is “a constitutional violation affecting the ‘framework
within which the trial proceeds, rather than simply an error in the trial process
itself[.]’” Commonwealth v. Baroni, 827 A.2d 419, 420 (Pa. 2003) (citing Arizona
v. Fulminante, 499 U.S. 279, 310 (1991)). Structural errors “infect the entire trial
process.” Interest of J.M.G., 229 A.3d 571, 587 (Pa. 2020) (Todd, J., concurring)
(quoting Brecht v. Abrahamson, 507 U.S. 619, 630 (1993)). Structural errors are
unlike “‘trial error,’ because trial errors may ‘be quantitatively assessed in the
context of other evidence presented in order to determine whether [they were]
harmless beyond a reasonable doubt.’” Interest of J.M.G., 229 A.3d at 586-87
(Todd, J., concurring) (quoting United States v. Gonzalez-Lopez, 548 U.S. 140, 148
(2006)).17 Courts address structural errors primarily in criminal cases, but structural
errors may also taint a civil case. Interest of J.M.G., 229 A.3d at 587 n.2 (Todd, J.,
concurring) (citing Bruckshaw v. Frankford Hospital of City of Philadelphia, 58
A.3d 102, 113-14 and n.6 (Pa. 2012) (court officer’s removal of presumptively
17
For trial errors, a reviewing court “‘can make an intelligent judgment’ about whether the error
might have affected the fact-finder.” Interest of J.M.G., 229 A.3d at 587 (Todd, J., concurring)
(quoting Satterwhite v. Texas, 486 U.S. 249, 258 (1988)).
18
competent juror without notice to the court or the parties was error for which
prejudice was presumed, “suggestive” of structural error)).
The Pennsylvania Constitution prohibits a federal office holder from
holding state office, and it authorizes the General Assembly to identify other
incompatible offices. Article VI, Section 2 states:
No member of Congress from this State, nor any person holding
or exercising any office or appointment of trust or profit under
the United States, shall at the same time hold or exercise any
office in this State to which a salary, fees or perquisites shall be
attached. The General Assembly may by law declare what
offices are incompatible.
PA. CONST. art. VI, §2. Pursuant to Article VI, Section 2, the General Assembly has
declared, for example, that one cannot simultaneously hold the office of magisterial
district judge and the office of prothonotary or clerk of court. Section 4 of the Act
of May 15, 1874, P.L. 186, 65 P.S. §4. See also Commonwealth ex rel. Fox v. Swing,
186 A.2d 24, 25 (Pa. 1962).
Regarding judges, the Pennsylvania Constitution was amended in 1968
to specify positions incompatible with a judicial office. Article V, Section 17 of the
Pennsylvania Constitution states, in relevant part, as follows:
(a) Justices and judges shall devote full time to their judicial
duties, and shall not engage in the practice of law, hold office
in a political party or political organization, or hold an office
or position of profit in the government of the United States,
the Commonwealth or any municipal corporation or political
subdivision thereof, except in the armed service of the United
States or the Commonwealth.
(b) Justices and judges shall not engage in any activity prohibited
by law and shall not violate any canon of legal or judicial
ethics prescribed by the Supreme Court. Justices of the peace
shall be governed by rules or canons which shall be
prescribed by the Supreme Court.
19
PA. CONST. art. V, §17(a)-(b) (emphasis added). Article V, Section 17 illustrates “a
special constitutional intention to maintain the purity of the bench” by singling “out
the judiciary for pointed instructions on judicial comportment.” PENNSYLVANIA
CONSTITUTIONAL CONVENTION 1967-68, REFERENCE MANUAL NO. 5, Part IV, §3, at
148 (1968). Our Supreme Court has explained that Article V, Section 17(a) prohibits
a Pennsylvania judge from simultaneously serving as a federal court judge. Simmons
v. Tucker, 281 A.2d 902, 904 (Pa. 1971). It is not a matter of discretion for the
Pennsylvania judge.
In Simmons, the Honorable Barron P. McCune, a judge of the Court of
Common Pleas of Washington County, was nominated to the position of United
States District Judge for the Western District of Pennsylvania. His appointment was
confirmed by the United States Senate on December 16, 1970, and his commission
was issued on December 18, 1970. On December 28, 1970, Judge McCune resigned
from state judicial service, effective January 4, 1971. A question was raised about
the date the vacancy occurred for purposes of electing his replacement. A would-be
candidate claimed that the vacancy occurred on December 18, 1970, when Judge
McCune received his commission as a federal judge. The Pennsylvania Supreme
Court disagreed. Noting that one does not hold office as a federal judge until the
oath of office is administered, the Supreme Court concluded that there was no
incompatibility because Judge McCune resigned 18 days before his federal office
began on January 22, 1971. Nevertheless, the Supreme Court agreed that under
Article V, Section 17(a), “the offices of Common Pleas judge and federal district
judge are incompatible.” Simmons, 281 A.2d at 904.
An “office of profit” is one that pays compensation to the office holder.
The office of “recorder for the Mayor’s Court” was held to be an “office of profit”
20
that a judge could not hold. Commonwealth v. Conyngham, 65 Pa. 76, 83-84 (1870).
The Philadelphia Tax Board is a municipal corporation or political subdivision of
the Commonwealth, and a member of the Philadelphia Tax Board receives an annual
salary of $70,000. THE PHILADELPHIA CODE §20-304(7) (2020). A member of the
Philadelphia Tax Board holds a “position of profit.” PA. CONST. art. V, §17(a). In
sum, the offices of a “common pleas judge” and member of the Philadelphia Tax
Board are “incompatible.” Simmons, 281 A.2d at 904; Conyngham, 65 Pa. at 84.
Further, the “applicable rule, which is generally held in all American
jurisdictions, holds that where a single person holds two incompatible offices, the
acceptance of the second ipso facto vacates the first.” Fauci v. Lee, 38 Misc. 2d 564,
567 (N.Y. Sup. Ct. 1963); see also Commonwealth ex rel. Crow v. Smith, 23 A.2d
440, 442 n.3 (Pa. 1942) (stating that an official holding two incompatible offices is
required to abandon one of them); DeTurk v. Commonwealth, 129 Pa. 151, 160
(1889) (noting common law rule that where incompatible offices are derived from
common source, acceptance of the second automatically vacates the first); Opinion
of the Justices, 647 A.2d 1104, 1105 (Del. 1994); Stubbs v. Lee, 64 Me. 195, 198
(1874); Scott v. Strobach, 49 Ala. 477, 485 (1873).
It was structural error for Senior Judge Braxton to issue the
adjudications on Taxpayer’s appeals while he also served on the Philadelphia Tax
Board. This structural error cannot be waived implicitly or explicitly, or by
agreement of the parties. It is not unlike the well-established principle that parties
cannot agree to confer subject matter jurisdiction on a tribunal where it does not
exist. Greenberger v. Pennsylvania Insurance Department, 39 A.3d 625, 629 n.5
(Pa. Cmwlth. 2012). A judge that violates Article V, Section 17(a) of the
Pennsylvania Constitution forfeits his judicial office.
21
Litigants have a right to have decisions made by a judge validly holding
his office. A trial conducted by a judge that lacks capacity is tainted by structural
error which cannot be waived. See generally Commonwealth v. Martin, 5 A.3d 177,
218-19 (Pa. 2010) (Saylor, J., concurring);18 In re Adoption of K.M.G., 240 A.3d
1218, 1235 (Pa. 2020) (failure to appoint an attorney to represent child’s legal
interests constituted a structural error that was non-waivable).
That a judge’s incompatible service may also implicate the Code of
Judicial Conduct does not mean this Court cannot consider how a judge’s
incompatible service affects the constitutionality of a trial. As our Supreme Court
has explained, courts have a “solemn obligation to protect, safeguard and uphold
[constitutional] rights.” Commonwealth v. Koehler, 229 A.3d 915, 936 (Pa. 2020).
This Court is required to examine the limits imposed by any constitutional provision,
and if there is a violation, grant appropriate relief.
The School District argues that Article V, Section 17(a) applies only to
commissioned judges and justices, not to senior judges. It notes that Article V,
Section 17(a) requires judges to work “full time,” but senior judges work part-time.
18
Justice Saylor observed that there is a split of authority among jurisdictions about whether a
structural error can be waived. Compare Mains v. Commonwealth, 739 N.E.2d 1125, 1128 n.3
(Mass. 2000) (“Our cases have held that even structural error is subject to the doctrine of waiver.”),
with State v. Aragon, 210 P.3d 1259, 1262 (Ariz. 2009) (declining to apply waiver principles to
structural error). Justice Saylor explained that
[o]n the one hand, structural error, by definition, impacts the basic integrity of the
trial, which must be assured to maintain public confidence in the criminal justice
system. On the other hand, there is the possibility, if all structural errors are treated
as non-waivable, for the defense to omit an objection to assure a reversal on appeal
in the absence of an acquittal.
Martin, 5 A.3d at 218 (Saylor, J., concurring) (quoting Reid v. State, 690 S.E.2d 177, 181 (Ga.
2010) (reflecting the position that structural error is waivable)). In his concurrence, Justice Saylor
favored a fact-based assessment of the particular structural error to decide whether the error was
waivable.
22
Further, magistrate judges are permitted to have a law practice and other
employment.19 To support its assertion that senior judges are exempt from the
prohibition on dual service, the School District directs the Court to In re Cain, 590
A.2d 291 (Pa. 1991).
In In re Cain, a senior judge was convicted of a violation of the Hobbs
Act, 18 U.S.C. §1951. The Judicial Inquiry and Review Board filed a petition to
remove the senior judge because his conviction rendered him ineligible to serve.
The question was whether the mandate that a convicted judge be removed applied
to senior judges. Former Article V, Section 18(l) of the Pennsylvania Constitution
stated:
A justice, judge or justice of the peace convicted of misbehavior
in office by a court, disbarred as a member of the bar of the
Supreme Court or removed under this section eighteen shall
forfeit automatically his judicial office and thereafter be
ineligible for judicial office.
Former PA. CONST. art. V, §18(l) (emphasis added). The Supreme Court explained
that “judicial office” referred to the duties of a “justice, judge or justice of the peace,”
which are performed by senior judges. In re Cain, 590 A.2d at 292. Accordingly,
the senior judge’s conviction automatically rendered him ineligible for judicial
office.
The School District contends that had “justice” and “judge” included
senior judges within the ambit of former Section 18(l), then the Supreme Court
19
In In re Murphy, 10 A.3d 932, 938 (Ct. Jud. Disc. 2010), the Court of Judicial Discipline of
Pennsylvania explained that in Article V, Section 17(b) of the Pennsylvania Constitution, “justices
and judges” are treated separately from “justices of the peace.” PA. CONST. art. V, §17(b)
(“Justices and judges shall not engage in any activity prohibited by law and shall not violate any
canon of legal or judicial ethics prescribed by the Supreme Court. Justices of the peace shall be
governed by rules or canons which shall be prescribed by the Supreme Court.”).
23
would not have had to consider whether the term “judicial office” included the work
of a senior judge, as it did in In re Cain. It notes that Article V, Section 17(a) does
not expressly refer to “senior judges,” and it does not use the phrase “judicial office.”
When construing the Constitution, “[o]ur ultimate touchstone is the
actual language of the Constitution itself.” Jubelirer v. Rendell, 953 A.2d 514, 528
(Pa. 2008) (citing Stilp v. Commonwealth, 905 A.2d 918, 939 (Pa. 2006)). Further,
“because the Constitution is an integrated whole, effect must be given to all of its
provisions whenever possible.” Jubelirer, 953 A.2d at 528 (citing Cavanaugh v.
Davis, 440 A.2d 1380, 1382 (Pa. 1982)). Article V, Section 17(a) applies to “judicial
duties,” and senior judges assume judicial duties. In re Cain established that it is the
work performed, not the appellation that is determinative. Following that logic, we
conclude that Article V, Section 17(a) applies to senior judges. Further, had the
proscription against incompatible service not applied to senior judges, that
exemption would have been provided in Section 17(b), as it was for magistrate
judges. Because senior judges perform “judicial duties,” they are subject to
Article V, Section 17(a).
The School District argues that the AOPC authorized Senior Judge
Braxton to complete his outstanding judicial assignments while simultaneously
serving on the Philadelphia Tax Board. Taxpayer responds that Senior Judge
Braxton’s testimony about Mittleman’s out-of-court statements were hearsay.
Indeed, Taxpayer’s hearsay objection was sustained by the trial court, which
instructed Senior Judge Braxton “not to testify as to what any third party told him.”
N.T., 4/20/2022, at 67. Contrary to its own ruling, the trial court then used those
hearsay statements to find that Mittleman “authorized” Senior Judge Braxton “to
complete his conflict cases[ and] the present matters[.]” Trial Court Op., 5/4/2022,
24
at 5, Findings of Fact No. 7.i. The School District responds that Mittleman’s
statements to Senior Judge Braxton were properly considered because they
constituted verbal acts, i.e., the AOPC orally authorized his continued judicial
service after assuming his position with the Philadelphia Tax Board by a verbal act.
“[A] ‘verbal act’ is a statement which creates legal rights, duties or
responsibilities offered for their legal significance alone.” Municipality of Bethel
Park v. Workmen’s Compensation Appeal Board (Hillman), 636 A.2d 1254, 1256
n.2 (Pa. Cmwlth. 1994). The statements are not offered to establish the truth of the
matter asserted but, rather, for some other relevant purpose.20
We reject the School District’s argument for several reasons. First, the
question was whether the Supreme Court, or one of its justices, had directed Senior
Judge Braxton to serve as a senior judge notwithstanding the inception of his service
on the Philadelphia Tax Board. Second, the School District did not establish that
Mittleman, an employee of the AOPC, had authority to approve service on the
Philadelphia Tax Board by a senior judge. Without that foundation, Mittleman’s so-
20
Treatise authority describes “verbal acts” as follows:
Oral or written expressions of offer and acceptance, or the exchange of promises
that create a contract are examples. The dispositive provisions of a will are verbal
acts, although statements of fact in a will may be hearsay. Statements made by the
parties to a conspiracy in forming that conspiracy are verbal acts. Statements made
in an attempt to corrupt a juror or intimidate a witness are verbal acts. A statement
giving notice is a verbal act, and in a case in which it is relevant whether a party
had received notice, evidence of the statement containing the notice is not hearsay.
Instructions may be verbal acts.
The term “verbal act” also applies to statements that accompany conduct and
explain the intent of that conduct.
Leonard Packel & Anne Bowen Poulin, Nonhearsay – Statements Offered as Verbal Acts, 1
WEST’S PA. PRAC., EVIDENCE §801-2 (4th ed. 2021) (footnote omitted).
25
called verbal acts are irrelevant. In any case, the AOPC cannot waive the
Pennsylvania Constitution.
The School District next argues that the Supreme Court’s Rules of
Judicial Administration regulate senior judges, and those rules do not bar a senior
judge from extra-judicial employment. Taxpayer responds that the Rules of Judicial
Administration cannot trump the Constitution. See PA. CONST. art. V, §10(c)
(authorizing Supreme Court to prescribe general rules of practice, procedure and
administration that are consistent with the Constitution). We agree. The Rules of
Judicial Administration must be read in conjunction with the express constitutional
prohibition against judges “hold[ing] an office or position of profit in the
government of the United States, the Commonwealth or any municipal corporation
or political subdivision thereof[.]” PA. CONST. art. V, §17(a).21
Finally, the School District argues that Taxpayer has waived its
constitutional challenge to the tax proceeding because it did not move to disqualify
Senior Judge Braxton until after it received an unfavorable result on its tax appeals.
Reilly v. Southeastern Pennsylvania Transportation Authority, 489 A.2d 1291, 1300
(Pa. 1985). The School District argues that the recusal of a jurist must be sought
“when the party knows of the facts that form the basis for the motion to recuse,”
Lomas v. Kravitz, 170 A.3d 380, 390 (Pa. 2017), and facts that “should have been
21
Taxpayer also argues that Senior Judge Braxton’s position with the Philadelphia Tax Board was
incompatible with his temporary assignment to the trial court to adjudicate tax assessment appeals
and cites to Canon 3.1 of the Pennsylvania Code of Judicial Conduct, CODE OF JUDICIAL CONDUCT
CANON 3.1 (requiring judges to regulate their extrajudicial activities to minimize risk of conflict
with their judicial activities). The Code of Judicial Conduct, however, is not “intended to be the
basis for litigants to seek collateral remedies against each other or to obtain tactical advantages in
proceedings before a court.” CODE OF JUDICIAL CONDUCT, Preamble (7). Should a judge violate
the standards of conduct, that is a matter for the Pennsylvania Supreme Court to address pursuant
to Article V, Section 10(a) of the Pennsylvania Constitution, PA. CONST. art. V, §10(a) (relating to
exercise of general supervisory and administrative authority over all courts).
26
known” are to be considered in determining timeliness. Goodheart v. Casey, 565
A.2d 757, 764 (Pa. 1989). Where the disqualification is requested after judgment is
entered, then it must be shown that the facts could not have been presented earlier
“in the exercise of due diligence.” Reilly, 489 A.2d at 1301.
Here, Taxpayer acknowledges that it learned of Senior Judge Braxton’s
appointment to the Philadelphia Tax Board on June 24, 2019, when Senior Judge
Braxton stated:
The good Judges of the City of Philadelphia have elected me to
another post to which I’m going to leave – as soon as I leave
here, I’m going to do that other post. And that’s why I can’t
linger here. I have to get this matter done. And the AOPC, the
Supreme Court wants me to finish this and then I will go on to
my next assignment, which will be something that probably Mr.
Kessler is well familiar with. I’m going to be sitting in
Philadelphia as a member of the Board of Revision of Taxes over
there.
Taxpayer Application to Vacate Orders, Exhibit H; N.T., 6/24/2019, at 219
(emphasis added). Taxpayer reasons that there is a difference between an
appointment to an incompatible position and service thereon, as the Supreme Court
explained in Simmons, 281 A.2d. 902. We agree. Senior Judge Braxton did not state
that his duties for the Philadelphia Tax Board would overlap with his duties as a
member of the judiciary. To the contrary, his statement implied that he would
complete his judicial duties before he began his service on the Philadelphia Tax
Board.
The affidavits showed that Taxpayer learned through counsel that
Senior Judge Braxton’s nameplate appeared in the Philadelphia Tax Board’s hearing
room on December 18, 2019. In late January 2020, Taxpayer’s counsel learned that
Senior Judge Braxton was observed hearing cases on the Philadelphia Tax Board in
27
the Fall of 2019. In February of 2020, Taxpayer’s counsel learned that Senior Judge
Braxton had been elected to the Philadelphia Tax Board on or about May 16, 2019,
but could not confirm when Senior Judge Braxton began his service or started to
receive compensation. On June 5, 2020, in response to a Right-to-Know request,
Taxpayer’s counsel learned that Senior Judge Braxton began receiving
compensation for his service on the Philadelphia Tax Board as of June 16, 2019.
In Lomas, 170 A.3d at 390, the developer’s recusal motion, filed one
month after the relevant facts had been disclosed, was rejected as untimely filed.
Here, Taxpayer did not begin to learn of simultaneous service until December 2019,
and did not receive firm confirmation of Senior Judge Braxton’s compensation for
service with the Philadelphia Tax Board until June 5, 2020.
Taxpayer exercised due diligence. It learned in December of 2019 that
Senior Judge Braxton may have started his position at the Philadelphia Tax Board
before completing his judicial assignments on Taxpayer’s tax appeals. Taxpayer
then took prompt and reasonable steps to ascertain the facts before filing an
application to vacate in March of 2020. Given this history, we reject the School
District’s contention that Taxpayer’s application to vacate was untimely filed. The
facts had to be determined before appropriate relief could be sought.
More to the point, Reilly and Lomas govern motions to disqualify, but
Taxpayer did not file a motion to disqualify Senior Judge Braxton. Rather, it filed
an application to vacate the 34 orders that are the subject of this appeal on the basis
that the entire proceeding was unconstitutional. The presiding judge forfeited his
judicial office by June 16, 2019, when he assumed a “position of profit” with the
Philadelphia Tax Board. The 34 orders that are the subject of this appeal were issued
on October 19, 2019, and, thus, are null and void.
28
We reject the School District’s waiver argument. Taxpayer filed an
application to vacate 34 orders on grounds that they were null and void; it did not
file a motion to recuse.22 In any case, Taxpayer acted with due diligence to
investigate if and when Senior Judge Braxton began to work for the Philadelphia
Tax Board and thereby forfeited his judicial office.
Senior Judge Braxton forfeited his judicial office no later than June 16,
2019, when he began to receive compensation in his “position of profit” on the
Philadelphia Tax Board. PA. CONST. art. V, §17(a). The 34 orders he issued in this
case are nullities because they were issued after he forfeited his judicial office.
Accordingly, we grant Taxpayer’s application and vacate the trial court’s orders.
II. Assessment Adjudications
Taxpayer argues that the trial court erred by omitting an explanation of
the reasons for its decision. In tax assessment appeals, the trial court weighs the
testimony and valuations provided by the experts and arrives at a valuation based on
the credibility assigned to their opinions. Here, the trial court deemed both experts
credible but relied entirely on Coyle’s valuation without explanation. Taxpayer
contends that the trial court’s adjudications are inadequate as a matter of law.
The School District responds that Taxpayer simply challenges the
weight assigned to each expert’s opinion by the trial court. The School District
acknowledges that the trial court was required to give reasons for its decision. See
Westinghouse Electric Corporation v. Board of Property Assessment, Appeals and
Review of Allegheny County, 652 A.2d 1306, 1312 (Pa. 1995) (stating that “[i]n
22
In Lomas, the developer’s recusal motion, filed one month after the relevant facts had been
disclosed, was rejected as untimely filed. Here, the facts were not finally confirmed until June 5,
2020, after the application to vacate was filed on the basis of information received from public and
private sources.
29
making a determination in a tax assessment appeal, the trial court must state the basis
and reasons for its decision”). However, the School District argues that the trial
court’s adoption of Coyle’s opinion of fair market value constitutes the explanation.
In a tax assessment appeal, the trial court hears the matter de novo and
is the finder of fact. Grand Prix Harrisburg, 51 A.3d at 280. As such, the trial court
has exclusive province over all matters of credibility and evidentiary weight.
Additionally, the trial court has the discretion to choose which valuation method to
use to value a particular property. Id. The trial court’s findings will not be disturbed
if they are supported by substantial evidence in the record. Herzog v. McKean
County Board of Assessment Appeals, 14 A.3d 193, 200 (Pa. Cmwlth. 2011).
Nevertheless, “the trial court must state the basis and reasons for its decision.”
Green, 772 A.2d at 433 (quoting Westinghouse Electric Corporation, 652 A.2d at
1312). Additionally, if an appraiser uses an invalid methodology, his opinion is not
competent and cannot support a valuation. Grand Prix Harrisburg, 51 A.3d at 280.
Here, the trial court found that both experts agreed that the proper way
to value the Medical Center and Seminary properties was by a replacement cost
method. It stated that “[w]hile [the experts] differed in some details, both experts
agreed that a proper appraisal of the fair market value of the properties entailed an
evaluation through a cost of replacement analysis.” Trial Court Adjudication,
10/11/2019, Finding of Fact No. 7; R.R. 3056a. This is inaccurate. Coyle used
reproduction cost, not replacement cost, to value the Medical Center and Seminary
properties. Further, Taxpayer challenges Coyle’s reproduction cost approach as sui
generis and without support in the appraisal profession.
The trial court accepted Coyle’s testimony that the fair market value of
Taxpayer’s real property was $74 million for the 2017 and 2018 tax years, and $73
30
million for the 2019 tax year. The trial court also accepted Hlubb’s testimony that
this property’s “fair market value was $36.8 million for tax years 2017 and 2018 and
. . . $39.6 million for tax year 2019.” Trial Court Adjudication, 10/11/2019, Finding
of Fact No. 9; R.R. 3056a. In actuality, Hlubb opined that the fair market value was
$42.6 million for 2017 and 2018 and $44.5 million for tax year 2019. Inaccuracies
aside, the trial court did not explain how Hlubb’s testimony could be accepted but
not used, or why it chose to use $74 million for all three tax years. Likewise, the
trial court mis-stated Coyle’s opinion for 2019; it was $73 million, not $74 million.
To set his fair market value of the Medical Center and Seminary
properties, Coyle blended elements of reproduction cost and replacement cost
methodology. Hlubb used replacement cost in his cost evaluation, which is
authorized by the Appraisal Institute. By contrast, Coyle cited the International
Association of Assessing Officers, but Coyle is not an assessor. The disciplines of
assessor and appraiser are different. The trial court did not consider, and resolve,
the differences in the cost approaches used by each expert, including the different
methods used to depreciate the cost valuations.
The School District contends that because the trial court did not depart
from Coyle’s opinion of value, no additional explanation is required. In support, it
cites Westinghouse Electric Corporation, 652 A.2d 1306. In that assessment appeal,
the trial court found all the expert testimony competent. In the end, however, the
trial court made its own finding of fair market value, essentially “split[ting] the
difference” between the two experts’ opinions of value. Id. at 1311. The Supreme
Court affirmed, explaining that where a trial court is presented with conflicting
testimony of equally credible experts, it may choose a fair market value between the
two values. Id. at 1312. Westinghouse Electric Corporation is inapposite. Here,
31
the trial court did not reject both experts’ valuations of the property; rather, the trial
court accepted both.
Further, the School District overlooks this Court’s precedent that,
although a trial court may deem one expert more credible than the other, it must
explain that decision. See Grand Prix Harrisburg, 51 A.3d at 282. In Grand Prix
Harrisburg, the taxpayer challenged the 2009 real estate assessment of its property,
which was a hotel. The taxpayer’s expert prepared an appraisal report of the
property’s fair market value using the sales comparison approach and the income
approach. By combining the two approaches, the taxpayer’s expert settled on a fair
market value of $9 million for the property. The taxing authorities’ expert
determined that the property had a value of $13,150,000 using the income approach
and a value of $12,322,000 using the sales comparison approach. The trial court
held that the property’s fair market value was $13,150,000, crediting the taxing
authorities’ expert that a buyer would rely on the income of a property when
purchasing a hotel.
On appeal, the taxpayer challenged the trial court’s stated reasons for
its determination. The critical difference between the two experts was the
capitalization rate that each chose to produce an income valuation, which difference
the court did not address. Likewise, the trial court did not address the difference in
the experts’ sales comparison approach valuations or the admission by the taxing
authorities’ expert that the income approach value was too high. Concluding that
the trial court needed to address these issues, we vacated the order and remanded the
matter.
Here, the trial court accepted the testimony of both experts, even though
each expert used different methods and sources to develop their expert valuations.
32
The trial court did not address Coyle’s blending of the reproduction cost and
replacement cost methodologies or Taxpayer’s challenge thereto.
The trial court did not explain the basis of its fair market value of $74
million or how it resolved the conflict between the expert opinions and
methodologies. This will be required in the adjudication issued upon remand.
Effective judicial review of an assessment requires a clear statement of “the basis
and reasons for [the court’s] decision.” Westinghouse Electric Corporation, 652
A.2d at 1312. Accordingly, the trial court, by a newly assigned judge, must provide
an explanation for whatever valuation it sets for the 57.7-acre property that is the
subject of this tax assessment appeal.23
Conclusion
Senior Judge Braxton vacated his position as senior judge by operation
of law on June 16, 2019, when he began to receive compensation for his
incompatible service on the Philadelphia Tax Board, which was a “position of profit
in the government of the United States, the Commonwealth or any municipal
corporation or political subdivision thereof.” PA. CONST. art. V, §17(a). The 34
orders issued on Taxpayer’s tax appeals are null and void. We grant Taxpayer’s
application to vacate the trial court’s orders. This requires a remand of these matters
for a decision by a newly assigned jurist that will state “the basis and reasons for [the
court’s] decision.” Westinghouse Electric Corporation, 652 A.2d at 1312. The trial
23
We do not address Taxpayer’s challenge to the use of the Integra Realty report. It may or may
not be relevant to the new valuation on remand.
33
court, on remand, may supplement the record if deemed appropriate but may not
supplant the existing record.
_____________________________________________
MARY HANNAH LEAVITT, President Judge Emerita
Judge Fizzano Cannon did not participate in the decision in this case.
34
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Appeal of Prospect Crozer LLC :
from the Decision of the Board of :
Assessment Appeals of Delaware :
County, PA : Nos. 1596 – 1599 C.D. 2019
: Nos. 1600 – 1629 C.D. 2019
Appeal of: Prospect Crozer LLC :
ORDER
AND NOW this 28th day of September, 2022, Prospect Crozer LLC’s
Application to Vacate Orders on Appeal Because of Structural Error is GRANTED,
and the orders of the Court of Common Pleas of Delaware County, dated October
11, 2019, are VACATED. This case is REMANDED for a new decision in
accordance with the foregoing opinion.
Jurisdiction relinquished.
_____________________________________________
MARY HANNAH LEAVITT, President Judge Emerita