Circle of Seasons Charter Sch. v. Nw. Lehigh Sch. Dist.
| Decision Date | 14 March 2022 |
| Docket Number | 1255 C.D. 2020 |
| Citation | 273 A.3d 23 |
| Parties | CIRCLE OF SEASONS CHARTER SCHOOL, Appellant v. NORTHWESTERN LEHIGH SCHOOL DISTRICT |
| Court | Pennsylvania Commonwealth Court |
Mark D. Bradshaw, Harrisburg, for Appellant.
Jonathan M. Huerta, Bethlehem, for Appellee.
BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge,1 HONORABLE ANNE E. COVEY, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION BY JUDGE LEAVITT
Circle of Seasons Charter School (Charter School) appeals an order of the Court of Common Pleas of Lehigh County (trial court), which dismissed its complaint seeking a refund of real estate taxes that were erroneously collected by Northwestern Lehigh School District (School District) on Charter School's tax-exempt property. The trial court concluded that it lacked subject matter jurisdiction because Charter School failed to exhaust its statutory remedy for challenging the taxable status of its school property. Charter School contends that the trial court erred. First, Lehigh County (County) did not timely notify Charter School that its property's non-taxable status had changed so that Charter School could seek the statutory remedy. Second, the trial court's dismissal of its complaint with prejudice has left Charter School without recourse even though the taxes were illegally collected by the School District. We reverse the trial court's order and remand the matter for further proceedings in accordance with this opinion.
In 2013, the School District granted Charter School a charter under the Charter School Law.2 The School District renewed the charter on September 21, 2016, for a five-year term.
In May 2017, Charter School purchased two adjacent properties at 8380 and 8384 Mohr Lane in Fogelsville, Pennsylvania.
At the time of the purchase, the properties were tax exempt because they were part of the Lehigh Valley campus of Pennsylvania State University. Charter School acquired the properties to use as its school building and has used the two parcels "exclusively for charter school activities." Kimberly Heiman Declaration ¶6; Reproduced Record at 163 (R.R. ____). As such, Charter School's properties are exempt from "every kind of ... real estate tax." Section 1722-A(e)(1) of the Charter School Law, 24 P.S. § 17-1722-A(e)(1).3
On or around June 5, 2017, the County issued property assessment notices revising the tax status of Charter School's properties from "Non-Taxable Assessed" to "Taxable Assessed," effective January 1, 2018. Affidavit of Francis J. Unger, Jr., Director of Real Estate for Lehigh County, Exhibit A; R.R. 169-70. The undated notices stated that any appeal of the assessment revision had to be filed by July 17, 2017, or an "annual appeal" could be filed by August 1, 2017. R.R. 169-70. The assessment notices were not returned as undeliverable. Unger Affidavit ¶3; R.R. 168. Charter School asserts that it never received the County's assessment notices and, thus, could not have appealed either by July 17, 2017, or by August 1, 2017.
In July of 2017, the School District sent Charter School two invoices in the amounts of $101,413.57 and $10,387.19 for tax year 2017-2018. Affidavit of Leslie Frisbie, School District Business Administrator, Exhibit I; R.R. 173, 293-98. Charter School asserts it did not receive these invoices. In November 2017, the School District sent reminder tax invoices to Charter School for the 2017-2018 tax year in the amount of $122,980.84, which included a late payment penalty. Charter School asserts that the School District's invoices were unlawful because the properties did not have their tax status changed until January 1, 2018, and, further, Charter School never received a notice from the County revising the tax status of Charter School's properties.
On June 15, 2018, Charter School refinanced the properties. At settlement, the closing agent made a payment to the School District in the sum of $124,506.39 for "delinquent taxes" listed. Complaint, Exhibit B at 2; R.R. 26. On July 1, 2018, the School District billed Charter School $125,116.41, for taxes due on December 31, 2018, for the 2018-2019 tax year. In total, Charter School has paid $249,662.80 in real estate taxes, penalties, and interest for the 2017-2018 and 2018-2019 tax years.
In July of 2018, Charter School filed an "annual appeal" to the County of Lehigh Board of Assessment Appeals (Appeals Board). On September 20, 2018, the Appeals Board held a hearing on the matter of Charter School's exemption from real estate taxes. It agreed that Charter School's properties were non-taxable and ordered the tax rolls changed, effective January 1, 2019. The Appeals Board did not act upon the School District's real estate taxes due to be paid on December 31, 2018, or the taxes previously paid for the 2017-2018 tax year.
On June 6, 2019, Charter School made a formal demand that the School District refund the real estate taxes that it had received on Charter School's two properties. When the School District did not respond, Charter School filed the instant complaint on December 17, 2019. Count I asserted an action under the Tax Refund Law,4 and Count II asserted unjust enrichment by the School District, which was not entitled to the real estate taxes it had collected from Charter School by reason of Section 1722-A(e)(1) of the Charter School Law, 24 P.S. § 17-1722-A(e)(1). Charter School sought a judgment in the amount of $249,622.80, plus interest and the costs of suit.
The School District responded with preliminary objections, asserting that the trial court lacked subject matter jurisdiction and that Charter School's pleading was legally insufficient. The School District argued that Charter School failed to exhaust its statutory remedy under the Consolidated County Assessment Law (Assessment Law), 53 Pa. C.S. §§ 8801 - 8868, to challenge the County's revision of the properties’ status from non-taxable to taxable. This statutory remedy deprived the trial court of jurisdiction over Charter School's complaint.
The trial court agreed with the School District and dismissed Charter School's complaint "with prejudice."5 Trial Court Op., 11/9/2020, at 6. In so ruling, the trial court explained that Charter School did not provide a "record explanation" to support its claim that it did not receive the County's assessment notices. Id . at 4. Under the mailbox rule, proof of mailing raises a rebuttable presumption that the mailed item was received, and Charter School did not rebut this presumption. The trial court further found that Charter School learned of the taxable status of its properties by November 2017, after it received the School District's second tax invoices and "certainly" by June 15, 2018, "when the 2017 delinquent taxes were paid as line items on the settlement sheet." Id . at 5. The trial court reasoned that Charter School should have initiated an appeal "at least in 2018" and had it done so it "may well have been permitted to address the 2017 taxes[.]" Id. Nevertheless, the trial court found that the County's 2017 assessment notices lacked a mailing date, and this date is required pursuant to Section 8844(a) of the Assessment Law, 53 Pa. C.S. § 8844(a).6 Inexplicably, the trial court failed to appreciate that Charter School had filed an appeal "at least in 2018." Trial Court Op. 11/9/2020 at 5. However, that appeal, while successful, revised the tax status of Charter School's properties effective January 1, 2019. The Appeals Board addressed neither the 2017 nor 2018 taxes erroneously paid by Charter School. Notably, Charter School's properties were on the County taxable property rolls for one year, beginning January 1, 2018.
Charter School then filed the instant appeal.7
Before this Court, Charter School raises three issues. First, it argues that the trial court erred in holding that it lacked subject matter jurisdiction. Second, it argues the trial court erred in allowing the School District to retain taxes it collected even though the County's notice to Charter School was facially defective, and the School District knew Charter School did not owe the taxes. Third, it argues that the trial court erred by dismissing its complaint with prejudice.
Charter School explains that it never received the County's assessment notices stating that the properties had been added to the rolls of taxable properties and, thus, it could not file a timely appeal under the Assessment Law. Even so, the notices were facially defective, which rendered the notices void ab initio . When Charter School learned in 2018 that the County had revised the taxable status of the properties, it filed an appeal with the Appeals Board. The Appeals Board sustained Charter School's appeal, but as of January 1, 2019. Lacking any other recourse, Charter School filed an action under the Tax Refund Law to seek a refund of the 2017 and 2018 taxes paid to the School District. Alternatively, Charter School sought recovery under a theory of unjust enrichment, explaining that the School District knew that Charter School had purchased the properties for its school and knew the properties were tax exempt. Accordingly, the trial court had equity jurisdiction to consider Charter School's claims or, at a minimum, to transfer the matter to the Appeals Board for a nunc pro tunc appeal. By dismissing Charter School's complaint with prejudice, the School District has been allowed to "retain funds to which it is clearly not entitled." Charter School Brief at 22.
School District responds that the trial court properly dismissed Charter School's complaint. The County's notices of the change in the properties’ tax status were not returned as undeliverable. Even so, Charter School concedes that it waited until July 2018 to appeal. Because it paid the 2017 and 2018 taxes without protest, those payments are conclusive. The fact that the County's assessment notices lacked a mailing date is irrelevant. Charter School is simply "attempting to get a second bite at...
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Circle of Seasons: A Refresher on the Importance of Administrative Formalities
...of Seasons Charter School v. Northwestern Lehigh School District, 273 A.3d 23 (Pa. Cmwlth. 2022), the Pennsylvania Commonwealth Court reversed the trial court decision, and the matter was remanded to the common pleas court to transfer the matter to the County of Lehigh Board of Assessment A......