Kowenhoven v. County of Allegheny

OPINION BY President Judge COLINS.

Thomas and Katherine Kowenhoven, Robert and Michele DeWitt, and Daniel and Carol Holtgraver (Taxpayers) appeal an order of the Court of Common Pleas of Allegheny County that sustained preliminary objections filed by the County of Allegheny and the Board of Property Assessment Appeals and Review of Allegheny County (Board), resulting in the dismissal by the trial court of Taxpayers’ class action complaint. Taxpayers’ complaint sought declaratory and injunctive relief, asserting that the County’s assessment practices improperly permitted, and in fact encouraged, property assessment hearing officers and the Board to consider evidence obtained outside of the record developed before hearing officers, and thereby violated Taxpayers’ due process rights. The complaint also sought damages and attorney’s fees under 42 U.S.C. § 1983.

The Board filed preliminary objections including the claim that an adequate statutory remedy exists. The trial court dismissed the complaint, agreeing with the Board’s contention as to a statutory remedy. Taxpayers here contend that the trial court erred in concluding that an adequate statutory remedy exists.

Repeated here are Taxpayers’ pertinent factual averments. Section 207 of Chapter 7 of the Allegheny County Administrative Code, relating to the Board’s powers, provides the Board with the authority to engage hearing officers or appoint Board members to conduct hearings on assessment appeals. The hearing officer must provide a report, including findings of fact, conclusions of law and a recommendation, to the full Board. Section 207.07 E. As noted by Taxpayers in Paragraph 7 of their complaint, Section 5 of Board Rule IV indicates that, when a majority of Board members disagree regarding a hearing officer’s recommendation, the full Board must review the evidence submitted at the hearing, and any post-hearing submissions, namely proposed findings of fact and conclusions of law requested by the hearing examiner, and should apply accepted valuation methodology¹ in reaching a decision. Taxpayers refer to a Board memo relating to appeal procedures. The memo, as quoted (emphasis added) in the complaint, states in pertinent part:

When making recommendation, Hearing Officers and Case Reviewers are permitted to accept or discount evidence presented at a hearing based on their professional valuation judgment, knowledge of the area and/or verification of [data] in [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.

The terms of that memo indicate that a hearing officer, in rendering a recommendation, may consider more than the evidence validly admitted at a hearing. The second paragraph quoted suggests that the Board approves of hearing officers submitting their own personal understanding or beliefs concerning area values for the Board to consider in rendering its final decision. In this case, Taxpayers contend that such practice violates their due process right to a fair hearing, because, when evidence not offered on the record is considered by the Board, they are precluded from exercising the rights that are afforded in a due process hearing, most pertinently, the right to cross-examine witnesses, or the opportunity to be heard. In their individual cases, Taxpayers point to indications in the record, such as post-it notes, that support their contention that the Board considered such evidence in rendering its decisions.

Taxpayers rely upon the United States Supreme Court decision in Ward v. Village of Monroeville, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972), for the proposition that due process is required at every level of judicial proceedings, even quasi-judicial proceedings such as those before the Board. In that case, Ward was convicted by the Mayor of the Village of Monroeville of two traffic offenses and fined. Ward asserted that the system, which allowed an executive official — the mayor — to sit as a judge in the proceedings, violated his due process rights. The Supreme Court agreed, and rejected Monroeville’s argument, that the right to appeal de novo to a trial court corrected any unfairness a party experienced by allowing convictions by an interested executive to conduct a hearing at the first level of judicial proceedings. The Court stated

This “procedural safeguard” does not guarantee a fair trial in the mayor’s court; there is nothing to suggest that the incentive to convict would be diminished by the possibility of reversal on appeal. Nor, in any event, may the State’s trial court procedure be deemed constitutionally acceptable simply because the State eventually offers a defendant an impartial adjudication.

409 U.S. at 61, 93 S.Ct. 80.

The trial court here concluded that, unlike Ward, where the complainant challenged the constitutionality of the underlying statute on its face, Taxpayers here are essentially challenging the application of the statute to the assessment of their property. We note that the pertinent sections of the Administrative Code, quoted above, nowhere suggest that either hearing officers or the Board, in reviewing a hearing officer’s recommendation, may consider evidence from outside the record. However, as also quoted above, the Board memo makes just such a suggestion, by allowing hearing officers and case reviewers to supply information regarding comparable sales in an area to Board members, when they have “personal knowledge of an area or more suitable sales compara-bles to those introduced at a hearing.” The memo also suggests that officers may reject admitted evidence based upon their personal knowledge. Although such a process appears to fly in the face of procedural due process notions, which require that parties be afforded an opportunity to confront the witnesses against them, we must agree with the trial court that, unlike Ward, the challenge Taxpayers make here is to the implementation or interpretation by the Board of its powers under the Administrative Code.

The trial court, while recognizing the right to seek equitable relief when a party challenges the constitutionality of assessment legislation, noted that the Pennsylvania Supreme Court has limited that right to situations where a party raises a substantial constitutional question and there is no statutory remedy or the statutory remedy is inadequate. Borough of Green Tree v. Board of Property Assessment, Appeals and Review of Allegheny County, 459 Pa. 268, 328 A.2d 819 (1974).

In Jordan v. Fayette County Board of Assessment Appeals, 782 A.2d 642 (Pa. Cmwlth.2001), this Court looked to the Supreme Court’s decision in Borough of Green Tree, and rejected an attempt by taxpayers to obtain equitable relief where they argued that the assessment authority’s use of different assessment methods violated the Equal Protection Clause as well as the uniformity clause of the Commonwealth’s constitution.

In Borough of Green Tree, the Supreme Court thoroughly analyzed the existing law regarding the question of when equity lies to address challenges to the constitutionality of a taxing scheme. The Court there concluded that equity lies only when a constitutional challenge is raised and there is no statutory remedy or the remedy is inadequate. The Court included the following quotation from Bliss Excavating Co. v. Luzerne County, 418 Pa. 446, 451, 211 A.2d 532, 535 (1965): “The statutory procedure need not be followed only if it is inadequate to the task of resolving plaintiffs’ objections or its pursuit will cause them irreparable harm.”

The Court, in considering whether a statutory remedy is adequate looked to the role of the administering agency, and recognized that such agencies generally do not function to determine the constitutionality of statutes. Their primary function is to use their expertise in reviewing conflicts involving the particular subject matter over which they have such expertise, which, in the case of assessment authorities is, generally stated, familiarity with methods to determine property value. They are not presumed to have the expertise necessary to consider whether a statute is constitutional. Thus, the Supreme Court reasoned, “the more direct the attack on a 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.” 459 Pa. at 281, 328 A.2d at 825. The Court concluded that the constitutional challenge at issue was so direct that the benefit of judicial participation via equity far outweighed the delay, inconvenience, and expense involved with individual appeals. Id.

Although we recognize that the Supreme Court in Borough of Green Tree did not consider the question of whether a statutory remedy can ever be adequate when the process at issue violates a party’s due process right to a neutral adjudicator, as in Ward, we do not agree with Taxpayers that Ward supports their argument that the present statutory remedy is inadequate. While that decision does stand for the proposition that due process dictates that a party have a neutral, impartial adjudicator in the first instance, the challenge in that case was clearly a challenge to the statute that created the situation. In this case, the taxing statute has not created a system that violates Taxpayers’ due process rights. Unlike Ward, the statute does not set up a system where the adjudicatory officer or Board has an interest in the outcome of an assessment appeal. There is no claim here that the hearing officers or the Board are interested in a particular outcome. Rather, the Board’s implementation of the taxing statute may have resulted in a system that enables the Board to consider evidence outside the record.

In an appeal de novo, Taxpayers will have an opportunity to challenge any improperly considered evidence. They may assert that the improper evidentiary matters approved in the Board’s memo are not permitted under the statute or the constitution. In such appeal the trial court will appoint a Board of Viewers, Allegheny County Rule of Court A503(h), which will be required to reject that improperly considered evidence and base a decision only upon evidence properly offered to the hearing officer which Taxpayers had an opportunity to challenge, or such additional evidence that may be then presented. Unlike the driver in Ward, who had no opportunity to present his case to an impartial adjudicator, the hearing officer in this case is not necessarily partial to one party, or an advocate for the Board. Rather, the Board’s memo simply injected an improper element into the process of adjudication. Because Ward involved a statutory scheme that on its face placed a non-neutral person in a judicial capacity, and because the hearing officer in this case is not by statute an adjudicator with a personal interest in the outcome of an assessment appeal, we cannot conclude that the Ward holding, i.e., that subsequent de novo review is insufficient, applies in this case.

As noted above, under the local rules applicable in this case, Taxpayers have the opportunity to claim in an appeal to common pleas that the implementation of the process as enunciated in the Board’s policy memo results in a violation of their procedural due process rights, or more simply to assert that the Board committed an error of law by considering such evidence. Taxpayers have an opportunity to request discovery in a proceeding before a Board of Viewers, by filing a petition with the real estate tax appeal judge. If the judge rules against a taxpayer, the taxpayer may raise that decision as an error on appeal. Accordingly, we conclude that Taxpayers have an adequate statutory remedy to address their claims regarding the Board’s assessment appeal process.

Taxpayers also assert that the trial court erred in rejecting the claims they raise under 42 U.S.C. § 1983. However, we agree with the trial court’s conclusions with regard to this claim. As the court noted, this Court has recognized that the United States Supreme Court’s decision in National Private Truck Council, Inc. v. Oklahoma Tax Commission, 515 U.S. 582, 115 S.Ct. 2351, 132 L.Ed.2d 509 (1995), undermined a previous decision of our Supreme Court in Murtagh v. County of Berks, 535 Pa. 50, 634 A.2d 179 (1993), cert. denied, 511 U.S. 1017, 114 S.Ct. 1397, 128 L.Ed.2d 71 (1994), wherein the Court held that Taxpayers were entitled to bring a constitutional challenge to a county’s tax system under § 1983, without first exhausting their administrative remedies. Murtagh v. County of Berks, 715 A.2d 548 (Pa.Cmwlth.1998), petition for allowance of appeal denied, 557 Pa. 656, 734 A.2d 863 (1999). In our 1998 Murtagh decision we cited National Private Truck Council for the proposition that a taxpayer may not maintain a claim raised under § 1983 where the state’s administrative process provides a taxpayer with an adequate remedy. As noted by the trial court, this Court confirmed this holding in Jordan, cited above. Based upon these decisions, and upon our conclusion above that an adequate statutory remedy exists, we conclude that the trial court did not err.

ORDER

AND NOW, this 13th day of April 2004, the order of the Court of Common Pleas of Allegheny County is affirmed.

FRIEDMAN, J., concurs in part, dissents in part, and files opinion.

1 . Specifically, such methodology must be "consistent with the standards of nationally recognized assessment and appraisal industry organizations." Board Rule IV, Section 5.