Beattie v. Allegheny County

Decision Date11 October 2006
Citation907 A.2d 519
PartiesHenrietta BEATTIE, Gertrude Ellis, Karen Rummel, Sandra Walls, Kenneth Pierce, and Mon Valley Unemployed Committee, on their own Behalf and on Behalf of all others Similarly Situated, Appellants v. ALLEGHENY COUNTY, Pennsylvania, Daniel Onorato, Its Chief Executive and Manatron, Inc., Appellees.
CourtPennsylvania Supreme Court

Kevin Quisenberry, Pittsburgh, for Henrietta Beattie, et al.

Michael Henry Wojcik, George M. Janocsko, Pittsburgh, for Allegheny County, et al.

Before: CAPPY, C.J., CASTILLE, NIGRO, NEWMAN, SAYLOR, EAKIN and BAER, JJ.

OPINION

Justice SAYLOR.

This appeal raises the question of whether taxpayers may bypass administrative remedies and maintain an equitable class action in the trial court to assert a Uniformity Clause-based challenge to the real estate assessment system used by Allegheny County.

I.

Appellants filed a class-action equitable complaint in the Court of Common Pleas of Allegheny County, alleging that their properties had been over-assessed by the County, and stating more generally that the County's assessment system caused approximately 80,000 lower-valued homes to be over-assessed and resulted in an under-assessment of a significant number of higher-valued homes. In challenging the constitutionality of the assessment under the Uniformity Clause, see PA. CONST. art. VIII, § 1 ("All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws."), Appellants asserted that the County failed to follow its own mass appraisal standards, as set forth in the County's Assessment Standards and Practices Ordinance (the "Assessment Ordinance"). They also advanced a claim under Section 1983 of the federal Civil Rights Act of 1871, 42 U.S.C. § 1983, see generally Kowenhoven v. Allegheny County, ___ Pa. ___, ___ n. 4, 901 A.2d 1003, 1006-07 n. 4 (2006), based upon these same factual allegations.

According to the Complaint, the County carried out consecutive county-wide property reassessments for tax years 2001 and 2002, employing a Computer Assisted Mass Appraisal ("CAMA") system to produce the assessments.1 However, the valuation models designed by the County for use in the CAMA system contained certain features that Appellants alleged to be systemic flaws, including the exclusion of property sales for less than $10,000, disproportionate weight assigned to quantitative factors such as a home's square footage and number of bedrooms, and the dividing of the County into approximately 1,800 neighborhoods. Appellants asserted that the Assessment Ordinance, enacted in December 2001, requires that the Chief Assessment Officer certify, inter alia, that the yearly mass assessments produce price-related differentials ("PRDs") no greater than 1.03 on a county-wide basis, and that, although this certification was made, the assessments did not, in fact, comply with this requirement.2 Appellants additionally asserted that, while individual appeals from the yearly reassessments may be able to reduce an over-assessed property's valuation, because tax charges are the product of the assessment and millage, and millage is based upon the total assessed value of all properties in the county, "the under assessment of a substantial proportion of homes will cause lower valued homeowners to be overcharged for taxes even if their individual assessments [are] corrected." Complaint at ¶ 53; RR. 25a. In their prayer for relief, Appellants requested that the common pleas court, inter alia, enter an order which

requires that Allegheny County utilize that data which it has properly collected, supplement this data as necessary, reassess their properties as required for the purposes of tax rate correction, and notify plaintiffs of the individual relief which this produces.

RR. 27a.

The County filed preliminary objections, arguing that Appellants could challenge their assessments initially through a statutory appeal to the Board of Property Assessment Appeals and Review (the "Appeals Board"), and appeal any adverse decision to the common pleas court for a de novo hearing. In the County's view, this would constitute an adequate remedy at law so as to preclude injunctive and declaratory relief on the Complaint. The County also included an objection to all counts, alleging that the specificity of the allegations in the Complaint was insufficient to allow the County to determine accurately the particular bases or theories on which Appellants were seeking recovery. See RR. 42a; Pa.R.C.P. 1028(a)(3) (permitting preliminary objections based on insufficient specificity in a pleading).

By opinion and order dated March 27, 2003, the trial court dismissed the complaint, finding initially that Appellants could not pursue their Section 1983 claim because there was an adequate remedy under state law, namely, the administrative process referenced by the County for challenging tax assessments under the General County Assessment Law and the Second Class County Assessment Law. See Jordan v. Fayette County Bd. of Assessment Appeals, 782 A.2d 642 (Pa.Cmwlth. 2001); Murtagh v. County of Berks, 715 A.2d 548 (Pa.Cmwlth.1998). For similar reasons, the trial court found that Appellants could not circumvent this process to present their uniformity challenge in the court's equitable jurisdiction. In reaching this conclusion, the trial court initially noted that Appellants had failed to allege that the assessment system was deliberately operated to produce inequities or that any subclass of properties was consciously singled out for disparate treatment; to the contrary, the Complaint acknowledged that the system was designed to treat all properties in a similar fashion, but asserted that it had not done so. The court also faulted the Complaint for its lack of specificity:

While the prayer for relief seeks an order which requires Allegheny County to "utilize that data which it has properly collected," the complaint does not describe the manner in which the County failed to utilize the data which it properly collected. While the prayer for relief seeks an order directing the County to "supplement this data as necessary," the complaint does not describe the manner in which this should occur. While the prayer for relief seeks an order requiring the County to "reassess their properties as required for purposes of tax rate co[rr]ection," there is no specific correction that plaintiffs propose. What plaintiffs appear to be seeking is a court order directing the County to modify its system of assessing property until the alleged pattern of overassessment of properties under $50,000 is corrected.

Trial Court op. at 26 (alteration added). The court concluded by noting:

The relief plaintiffs seek — an order requiring Allegheny County to utilize that data which it has collected, supplement this data as necessary, and reassess plaintiffs' properties as required for the purpose of tax collection — asks this court to assume responsibility for the operation of the assessment system until the deviations between assessed values and fair market values for all groups of property are similar.

This is not an appropriate role for the court. Case law holds that the appeals process must be pursued where the county is operating a viable assessment system; courts should become involved in the county's operation of its assessment system only as a last resort.

Id. at 28-29.

A divided, en banc panel of the Commonwealth Court affirmed in a published decision. See Beattie v. Allegheny County, 847 A.2d at 185 (Pa.Cmwlth.2004). Initially, the majority recited the general rule requiring aggrieved parties to exhaust administrative remedies before seeking judicial review, noting that failure to comply with this prerequisite tends to interrupt the administrative process which, in turn, restricts the agency's opportunity to develop an adequate factual record, limits the agency in the exercise of its expertise, and impedes the development of a cohesive body of law in the relevant area. Id. at 189 (citing, inter alia, Jordan 782 A.2d at 646; Shenango Valley Osteopathic Hosp. v. Department of Health, 499 Pa. 39, 47, 451 A.2d 434, 438 (1982)). In analyzing the decisional law concerning the rule's application, the majority noted that an exception has been made where taxpayers are advancing a "frontal attack on the underlying taxing statute" that raises substantial constitutional issues. Id. at 189 (citing Borough of Green Tree v. Board of Prop. Assessments, Appeals & Review of Allegheny County, 459 Pa. 268, 328 A.2d 819 (1974)). The majority observed that, in rare cases, an exception to the exhaustion rule has also been recognized where "the balance between an administrative agency's exercise of its expertise and its ability to offer complete redress for an alleged wrong of egregious constitutional dimension falls in favor of proceeding in equity" in the trial court. Id.

In this regard, the Commonwealth Court majority indicated that, for example, where a county singles out a certain geographical subset of its territory for mass reassessment at present values, leaving the remainder of the county assessed at values from prior years, a trial court may declare that the county has begun a de facto county-wide reassessment and enjoin collection of taxes at the new levels until the entire county is reassessed.3 The majority disagreed, however, with the trial court's suggestion that the present case is distinguishable from cases such as City of Lancaster and City of Harrisburg on the basis that, here, the County did not consciously target a specific set of properties (i.e., lower valued homes) for discriminatory treatment. The majority pointed out that, under Fisher Controls Co. v. Commonwealth, 476 Pa. 119, 127, 381 A.2d 1253, 1257 (1977), improper discrimination can be shown even absent purposeful...

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