Green v. SCHUYLKILL CTY. BD. OF ASSESSMENT APPEALS

Decision Date22 May 2001
Citation772 A.2d 419,565 Pa. 185
PartiesRobert C. GREEN and Judith A. Green, Appellants, v. SCHUYLKILL COUNTY BOARD OF ASSESSMENT APPEALS, Appellee.
CourtPennsylvania Supreme Court

Michael P. Weinstein, Milford, for Robert C. Green.

Frank Robert Cori, Orwigsburg, Mary Kay Bernosky, for Schuylkill County Bd. of Assessment Appeals.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN, SAYLOR, JJ.

OPINION

SAYLOR, Justice.

Appeal was granted in this case to address the standards of proof applicable in real estate tax assessment appeals.

Appellants, Robert C. Green and Judith A. Green ("Taxpayers"), are the owners of a 6,344-square-foot, single-family residence situated on 1.8 acres in Schuylkill County. The residence is a two-story home, built in 1987, with, inter alia, a stone and brick exterior, a shingled roof, four bedrooms, two full baths, several partial baths, a four-car garage, and a basement that is 60 percent finished. In 1997, pursuant to a countywide reassessment, Taxpayers' home was assessed based upon a fair market value of $612,580. Taxpayers appealed the assessment to the Schuylkill County Board of Assessment Appeals (the "Board"), which denied the appeal following a hearing. Taxpayers then appealed the Board's decision to the Court of Common Pleas of Schuylkill County.

At the de novo hearing before the trial court, the Board introduced the official assessment record into evidence and then rested. To counter the Board's evidence, Taxpayers presented the testimony of Anthony Matsell, a real estate appraisal expert, who offered the opinion that the fair market value of Taxpayers' property, as of January 1, 1996, was $360,000. The path by which he reached this conclusion was explored in depth on direct and cross-examination.

At the outset, Mr. Matsell explained that he had considered the three methods of valuation specified in Section 402 of the General County Assessment Law, 72 P.S. § 5020-402, namely, the cost approach method, the comparable sales method, and the income approach.1 According to Mr. Matsell, the cost approach method was not a reliable indicator of the property's fair market value because Taxpayers' property, given its geographical location, was over-improved. Consequently, he reasoned, "people in that market area won't pay the amount it would cost to reproduce this house," which he estimated at $500,614, since they would not be able to recoup that amount in a later sale.2 More generally, the expert noted, he had never seen a buyer rely on the cost approach in determining how much to pay for a residential property. As for the income approach, Mr. Matsell testified that this method of valuation was also inappropriate for Taxpayers' property, a personal residence that does not generate any income.

Accordingly, Mr. Matsell explained, he relied primarily upon the comparable sales method—"comparing your property against similar properties that had sold on the market [recently]"—in establishing a fair market value for the property. Owing to the over-improved nature of Taxpayers' property, Mr. Matsell had a "very, very hard time finding anything like it." Homes in Taxpayers' neighborhood ranged in value from $150,000 to $300,000, with an average of $180,000, and most were 3,000 to 3,500 square feet in size; countywide, Mr. Matsell "found no properties that [had] sold in excess of ... $400-450,000."3

Accordingly, Mr. Matsell chose, as the best available "comparables," the following three properties:

1. A 3,900-square-foot residence situated on 1.76 acres, located within a block of Taxpayers' residence, with an actual sale price in 1995 of $335,000 and an adjusted sale price of $360,000;4

2. A 3,000-square-foot residence situated on 1.285 acres, located within a block of Taxpayers' residence, with an actual sale price in 1995 of $252,500 and an adjusted sale price of $351,000; and

3. A 3,400-square-foot residence situated on .8 acre, located 1.5 miles from Taxpayers' property, with an actual sale price in 1993 of $415,000, and an adjusted sale price of $444,000.

Although Comparable # 3 had the highest sale price, Mr. Matsell relied most heavily on Comparables # 1 and # 2 in valuing the subject property because, as he explained, they were "only a block away from the subject and more within [its] market area"; in addition, they had sold more recently than Comparable # 3. Using the comparable sales method, Mr. Matsell calculated the fair market value of Taxpayers' home as $360,000, adding that "nobody's paid anything much more than I have appraised the subject property at." After Mr. Matsell concluded his testimony, Taxpayers rested; the Board did not present any testimony or evidence in rebuttal.

The trial court accepted the valuation of $360,000 reached by Taxpayers' expert. In its opinion, the trial court explained that it had found some aspects of the expert's testimony (for example, his conclusion that Taxpayers' property was super-improved) to be credible.

On the other hand[, the trial court continued,] we did find portions of Matsell's testimony suspect. For example, while he opined that it was impossible to find a comparable sale in excess of the value he had placed upon this particular property in the market area, comparable number 3 on his market report showed an unadjusted sales value of $415,000 for a similar sized parcel with less improvements. After adjustments, comparable number 3 had an adjusted sales price of $444,000, which was in contradiction to his testimony as to the maximum fair market value that the subject property could demand within the market area. Furthermore, his testimony that he could find no properties that sold in excess of $400,000 to $450,000 was contradicted by his own testimony under cross-examination. Nor did we find compelling Mr. Matsell's reasons for relying more so on his number 1 and number 2 comparables, rather than comparable number 3.

Trial Court Opinion at 4 (citations omitted).5 Ordinarily, the trial court explained, it would have dealt with such a situation by applying the settled principle that the factfinder is free to believe all, part, or none of the evidence.

The property here was a residential parcel within a relatively narrow geographic area to which most finders of fact, including the trial court, could reasonably assess some valuation. In so doing we normally would consider the cost approach, as limited by testimony as to overimprovement, as well as a revealing comparable which would have set a fair market value somewhat above that of the expert witness.

Id. at 4-5. In the trial court's view, however, the Commonwealth Court's decision in 841 Associates v. Board of Revision of Taxes, 674 A.2d 1209 (Pa.Cmwlth.1996), meant that such latitude was no longer available to it. In 841 Associates, the Commonwealth Court had held that "[i]f the expert witness is credible, then the unrebutted evidence of valuation given by the witness must be accepted by the trial court. It is the expert's valuation that the trial court must accept[,] not just a piece of her testimony." Id. at 1214 (citations omitted). Interpreting 841 Associates in the context of the case sub judice, the trial court concluded that where, as here, the taxpayer's expert "was not without credibility" and the Board had failed to offer expert testimony of its own, the valuation reached by the taxpayer's expert had to be accepted.

The Board appealed to the Commonwealth Court, arguing that the trial court had erred in interpreting 841 Associates. A divided court en banc agreed. Rejecting the possibility that the trial court had "painted 841 Associates with too broad a brush," the majority explained that

the plain language of our opinion in that case supports the trial court's approach.... Followed literally, 841 Associates imposes upon the trial court the Hobson's Choice that it must either credit or discredit an unrebutted expert's testimony in its entirety, and mandates that the trial court must accept an expert's final valuation even where it has found incredible one or more component(s) of the testimony necessary to calculate that value.

Green v. Schuylkill County Bd. of Assessment Appeals, 730 A.2d 1017, 1020-21 (Pa.Cmwlth.1999) (en banc) (emphasis in original). This was incorrect, the majority concluded: under controlling precedent, particularly this Court's decision in Westinghouse Elec. Corp. v. Board of Property Assessment of Allegheny County, 539 Pa. 453, 652 A.2d 1306 (1995), "the fact-finder is not constrained to accept the ultimate opinion of an expert merely because the witness is unrebutted and has provided some credible testimony." Id. at 1021 (footnote omitted; emphasis in original). To the contrary, the only constraint upon the fact-finder's determination of fair market value is that it must be supported by expert testimony found to be credible, and may not be based, even in part, upon the assessment record once any expert testimony is credited.

Id. at 1022 (citation deleted; emphasis in original). Accordingly, the majority overruled 841 Associates and remanded the case sub judice to the trial court with instructions "[to] determine the weight to accord the expert's testimony and, based upon the evidence of record found to be credible, determine the fair market value for the property at issue." Id. at 1022.

In a dissenting opinion, Judge Pellegrini, joined by Judge Flaherty, expressed disagreement with the majority's conclusion "that the trial court can pick and choose among the factors used by the expert, reweigh them, and then arrive at its own independent opinion of value." Id. at 1022 (Pellegrini, J., dissenting). In fact, asserted the dissent, settled precedent precludes the trial court from finding a fair market value different from that found by an expert whose testimony is unrebutted. See id. at 1023.

We allowed appeal to determine whether it is the Commonwealth Court's decision in 841...

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