Konidaris v. Portnoff Law Associates

• Decision Date: 18 August 2008
• Docket Number: No. No. 15 WAP 2006,No. 14 WAP 2006.,14 WAP 2006.,No. 15 WAP 2006
• Citation: 953 A.2d 1231
• Parties: Jerry KONIDARIS and Theodora G. Konidaris, Individually and on behalf of all others Similarly Situated, Appellants/Cross-Appellees v. PORTNOFF LAW ASSOCIATES, LTD, Appellee/Cross-Appellant.
• Court: Pennsylvania Supreme Court

953 A.2d 1231

Jerry KONIDARIS and Theodora G. Konidaris, Individually and on behalf of all others Similarly Situated, Appellants/Cross-Appellees v. PORTNOFF LAW ASSOCIATES, LTD, Appellee/Cross-Appellant.

No. 14 WAP 2006.

No. No. 15 WAP 2006

Supreme Court of Pennsylvania.

Argued March 5, 2007.

Decided August 18, 2008.

Bernard S. Rubb, Esq., Sewickley, for Jerry Konidaris, et al. (14 WAP 2006)

Michael P. Malakoff, Esq., Malakoff, Doyle & Finberg, P.C., Pittsburgh, for amicus curiae Association of Community Organizations for Reform Now. (14 WAP 2006)

Kimberly Marie Colonna, Esq., Helen Louise Gemmill, Esq., McNees, Wallace & Nurick, L.L.C., Harrisburg, for Portnoff Law Associates, Ltd. (14 WAP 2006)

Stacey F. Vernallis, Esq., Michael G. McCabe, Goehring, Rutter & Boehm, Pittsburgh, for amicus curiae GLS Capital, Inc. (14 WAP 2006)

Thomas W. Corbett, Jr., Esq., P.A. Office of Attorney General, for Commonwealth of Pennsylvania. (14 WAP 2006)

Helen Louise Gemmill, Esq., Harrisburg, for Portnoff Law Associates, Ltd. (15 WAP 2006)

Bernard S. Rubb, Esq., Sewickley, for Jerry Konidaris and Theodara G. Konidaris. (15 WAP 2006)

Michael P. Malakoff, Esq., Malakoff, Doyle & Finberg, P.C., Pittsburgh, for amicus curiae Association of Community Organizations for Reform Now. (15 WAP 2006)

Stacey F. Vernallis, Esq., Goehring, Rutter & Boehm, Pittsburgh, for amicus curiae, Pittsburgh, for GLS Capital, Inc., (15 WAP 2006)

Ira Weiss, Esq., Pittsburgh, for amicus curiae West Jefferson Hills School District, et al. (15 WAP 2006)

BEFORE: CAPPY, C.J., and CASTILLE, SAYLOR, EAKIN, BAER and BALDWIN, JJ.

OPINION

Justice BAER.

We granted review in this case to determine whether a retroactive amendment to the Municipal Claims and Tax Liens Act ("MCTLA"), Act of May 16, 1923, P.L. 207, as amended, 53 P.S. § 7101, et seq. providing for the imposition on delinquent taxpayers of "reasonable attorney fees" incurred in a school district's collection of taxes, violates the Remedies Clause of the Pennsylvania Constitution,¹ which forbids any act of the General Assembly from impinging a vested right. Ieropoli v. AC & S Corp., 577 Pa. 138, 842 A.2d 919, 930 (2004). Concluding that the delinquent taxpayers fail to meet the high burden of demonstrating the unconstitutionality of the statutory amendment, we reverse the decision of the Commonwealth Court in part, reinstate the grant of partial summary judgment entered by the trial court, and remand for further proceedings.

The parties' arguments are closely tied to legislative enactments and judicial interpretations relating to the MCTLA. Accordingly, we begin with a brief history of the MCTLA, and in particular the 2003 retroactive amendment at issue in this case. Between 1923 and February 1996, the MCTLA allowed for the imposition of an attorney collection fee of five percent for claims resulting in a verdict or default judgment. See 53 P.S. §§ 7187, 7271 (originally providing for attorney fees of five percent but, as further discussed infra, amended by Act of Feb. 7, 1996, P.L. 1, No. 1, § 2, to permit the imposition of "reasonable attorney fees" pursuant to 53 P.S. § 7106). In recognition of the relative increase in legal fees over the century, the General Assembly in 1996 amended § 3 the MCTLA² to allow for the collection of "reasonable" attorney fees, rather than limiting the collectable fees to five percent. 53 P.S. § 7106 (as amended by Act of Feb. 7, 1996, P.L. 1, No. 1, § 1). The fee provision thus burdened the delinquent taxpayer with the reasonable attorney fees expended in collecting the taxes, rather than imposing the financial burden of collection on the municipality or school district. Pursuant to the dictates of the amendment, municipalities adopted ordinances and resolutions establishing a schedule of attorney fees. See 53 P.S. § 7106 (a.1).

Due to an apparent drafting omission, however, the statute as amended in 1996, spoke only to the collection of reasonable attorney fees for "municipal claims" rather than "tax claims."³ In March 2003, this Court held in Pentlong Corp. v. GLS Capital, Inc., 573 Pa. 34, 820 A.2d 1240 (2003), that § 3 of the MCTLA did not authorize taxing authorities to collect attorney fees on "tax claims" as opposed to "municipal claims" because the General Assembly failed to provide specifically for the collection of attorney fees expended in the collection of "tax claims."

In response, the General Assembly quickly amended the MCTLA to provide for the recovery from the delinquent taxpayers of reasonable attorney fees expended in the collection of "[a]ll municipal claims, municipal liens, taxes, tax claims and tax liens." 53 P.S. § 7106 (as amended by Act of Aug. 14, 2003, P.L. 83, No. 20, § 2, effective immediately)("Act 20"). Moreover, the General Assembly specified that the amendment "shall be retroactive to January 1, 1996." Act of Aug. 14, 2003, P.L. 83, No. 20, § 10. The legislative history in both the House and the Senate indicate that the amendment was intended to address this Court's interpretation in Pentlong, and to provide statutory authorization for taxing authorities to collect reasonable attorney fees expended in the collection of tax claims as well as municipal claims. Senator Jane Orie explained the purposes of the bill:

First, the amendments to the Municipal Claim and Tax Lien Act clarify the rights of municipalities and those who hold rights from municipalities in the process of collecting all claims under this Act. This is especially important to Allegheny County because the Municipal Claim and Tax Lien Act is the principal statute that governs tax collection and municipal claim enforcement actions in the County.

Second, these amendments reaffirm the General Assembly's intentions since the passage of the Act almost 80 years ago. Namely that the recoupment of costs expended to retain competent, experienced legal counsel to enforce claims for payment of taxes is a legitimate expense that should be recoverable against the small minority of property owners who are tax scofflaws.

Third, these amendments streamline the process of enforcing claims for taxes under the Act. These changes add the important benefit of reducing the costs and expenses associated with these actions.

Legislative Journal-Senate, July 28, 2003, at 859 (statement of Sen. Orie).

Turning to the facts of the case at bar, Appellants Jerry and Theodora Konidaris' ("Delinquent Taxpayers") failed to pay school taxes in 1998, 1999, 2000, and 2001 for their property located in the City of McKeesport, Allegheny County. The total of the delinquent taxes was $2147.59. The tax claim was secured by liens on the property in favor of the McKeesport School District.⁴ On three separate dates between August of 2000 and June of 2002, the School District requested that Appellee Portnoff Law Associates, LTD ("the Law Firm") collect the delinquent taxes. During the collection process, the Law Firm added $3779.97 to the total tax claim to account for various fees, including attorney fees. The Delinquent Taxpayers allegedly paid some of the taxes and the attorney fees attendant thereto in 2002, apparently without protesting the legality of the imposition of the attorney fees. Eventually, the Law Firm initiated sheriff sale proceedings on the property with respect to the 1998 and 1999 taxes.

A sheriff's sale scheduled for April 7, 2003, however, was stayed after Delinquent Taxpayers filed their complaint in the case sub judice on March 28, 2003, a week after this Court's decision in Pentlong rejecting the imposition of attorney fees incident to tax claims. The complaint sought to recover attorney fees paid to the Law Firm in connection with the collection of delinquent taxes, and declaratory relief to enjoin the Law Firm from adding fees incurred in the collection of any other tax lien against anyone that had been assigned to the Law Firm.⁵ The trial court stayed the then-pending sheriff's sale of the Delinquent Taxpayers' property and enjoined the Law Firm from proceeding to sheriff's sale on any other properties where attorney fees had been added to the lien.

In light of the passage of Act 20 on August 14, 2003, which would retroactively validate all the fees challenged by the Delinquent Taxpayers, the Law Firm petitioned the trial court to dissolve the prior stay of the sheriff's sale, which in turn would facilitate the recovery of the challenged attorney fees. After briefing and hearings, on December 15, 2003, the court granted the order to dissolve the stay in light of Act 20. On December 31, 2003, however, the court granted the Delinquent Taxpayers' request to stay the sheriff's sale based on the Delinquent Taxpayers' assertions that they were filing an interlocutory appeal with the Commonwealth Court, claiming that the ruling involved a controlling question of law.⁶ On April 2, 2004, the trial court issued yet another order staying the sale of the Delinquent Taxpayers' property, and enjoining the Law Firm from proceeding to sale on any other properties.

In August 2004, presumably to move this case to a final resolution, the trial court urged both parties to file cross-motions for summary judgment regarding the constitutionality of Act 20. The court and the parties apparently realized that if Act 20 retrospectively validated the previously imposed attorney fees, then the Delinquent Taxpayers would no longer be able to challenge the legal premise for the imposition of attorney fees.⁷ The Delinquent Taxpayers filed a motion for summary judgment claiming that the retroactivity provision of Act 20 violated the Remedies Clause of Article 1, § 11 of the Pennsylvania Constitution because the statute impinged their vested right not to pay attorney fees incurred in the collection of delinquent taxes. The Law Firm filed a cross-motion for partial summary judgment, asserting that the retroactivity provision was constitutional.

On September 21, 2004, the trial court denied the...