Gass v. County of Allegheny

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
6-10-2004
Gass v. Allegheny
Precedential or Non-Precedential: Precedential
Docket No. 03-2679
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"Gass v. Allegheny" (2004). 2004 Decisions. Paper 560.
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PRECEDENTIAL *Lynn Corsello;
Robinhill Development Company,
UNITED STATES COURT OF Appellants
APPEALS FOR THE THIRD CIRCUIT
(*Per Amended Notice of Appeal filed
6/12/03)
No. 03-2679
On Appeal from the United States
HERBERT S. GASS, JR.; District Court for the
JOHN ZITELLI, an individual; Western District of Pennsylvania
DIANE ZITELLI, his wife; (D.C. Civil No. 02-cv-01394)
JEFF CORSELLO, an individual; District Judge: Hon. Joy F. Conti
LYNN CORSELLO, his wife;
MICHAEL LEAHY, an individual;
DOMENIC DIPILATO, an individual; Argued January 12, 2004
ANNA DIPILATO, his wife;
ROBINHILL DEVELOPMENT Before: SLOVITER, RENDELL, and
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, property-owning seeking a declaratory judgment that
taxpayers in Allegheny County, filed this Appellees, the County of Allegheny, the
suit asserting that the Allegheny County Board and individual Board members,1
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
to the Board for final resolution of their The named Board members are Kevin
tax liability. Appellants allege that the McKeegin, Patricia McCullough, Jerry
Board considered ex parte evidence Speer, James Skinzer, Deborah Baron, and
Frederick Valencenti.
2
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.
2
The Tax Injunction Act provides Although Appellants’ initial complaint
that “[t]he district courts shall not enjoin, also requested damages, they clarified
suspend or restrain the assessment, levy or during oral argument that they only seek
collection of any tax under State law declaratory relief, the cost of the appeal
and attorneys’ fees.
3
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. 503are 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 e njoining 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
4
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 209of 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 in g s t a tu 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
5
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 ti o n for th 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
Alleghe n y 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
6
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. 57outcome; 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 ation 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 ti s f ie d t a x p a ye 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
plaintiffs] have th 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
7
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
Whenever through
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-
8
state corporations from gaining unfair their constitutional claims in state court. 3
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
able to threaten localities with protracted jurisdiction to review Appellants’ claim.
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,
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. at522 & 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.